WASHINGTON -- The Independent Bankers Association of America has endorsed legislation to require banks to cash government checks and provide low-cost services to the poor.
The community banking lobby joined forces this week with the influential American Association of Retired Persons in supporting the so-called lifeline requirement.
Their joint endorsement substantially increases the likelihood that a lifeline provision will be included in the banking reform bill moving through Congress -- even though much of the rest of the industry adamantly opposes the provision.
"We will continue to fight it, but it makes our argument much harder," said an angry Edward Yingling, chief lobbyist for the rival American Bankers Association.
Robert Hawkins, president-elect of the Independent Bankers, said that AARP negotiated in good faith and helped develop legislative language acceptable to both sides. That language, he said, has been incorporated in the bill to be considered by the Senate Banking Committee.
The lifeline compromise is similar to the provisions included in the draft bill unveiled this week by Senate Banking Committee Chairman Donald W. Riegle Jr., D-Mich.
Mr. Riegle's bill, which is expected to be the subject of committee votes later this month, would require all financial institutions to offer a low-cost account that would feature either government check cashing or basic transaction services.
Institutions would be permitted to charge fees sufficient to yield a profit on the accounts.
In return, they would be required to cash checks issued by the federal government or the institution's own state or local government for up to $1,500.
Customers that chose basic banking could maintain transaction accounts with balances of $25 to $750. The institution would be required to permit at least 10 withdrawals a month.