Across California and the nation- in New York, Los Angeles, San Francisco, and Sacramento- money is the subject of buzz, new ideas, and VIP events. Specifically, the topic is the lack of money- the have-nots, the why-nots, and trendsetting solutions.

For once the subject is not just the typical California budget woes. Those aren't new (yet somehow the designers bring them back every season). It's banking development districts (BDDs), and the new models of community-building and economic development being tried on by cities. And it's the poverty measure, and the work being done to revamp its outmoded form and function.

BDDs create incentives to encourage banks and credit unions to locate in low-income areas that lack mainstream financial institutions, and are fast becoming the subject of local buzz. On October 30th the Los Angeles City Council announced it was unanimously passing a motion directing the city attorney to draft a BDD ordinance.

Today the city of Los Angeles made its second attempt to bring under-banked and unbanked Angelenos to the financial mainstream. Two months after Mayor Villaraigosa launched Bank on LA, City Councilmember Richard Alarcón launched the Banking Development Districts (BDDs) Initiative. Los Angeles has recognized the need for placing affordable financial services at the hands of its people and is taking major steps toward eliminating dependency on fringe financial institutions.

 While 1.5 million households are unbanked state-wide, Los Angeles has the third highest percentage of unbanked households nation-wide. For the Angelenos who do not have a simple checking or savings account, BBDs are a promising way to gain access to the appropriate financial services and products necessary to get connected to savings and asset building. Research shows that a full time worker conducting business with non-traditional financial institutions can pay tens of thousands of dollars in fees in a life time. This is a chunk of money large enough to start a small business, send a child to college, build a retirement or put a down-payment on a house.

Each morning, New America's Next Social Contract Initiative scans the leading media outlets for must-read analysis on the economic crisis and recovery efforts. Today's highlights include:

Housing Starts Decline to Record Low
Calculated Risk, http://calculatedrisk.blogspot.com/, 16 December 2008
Total housing starts were at 625 thousand (SAAR) in November, by far the lowest level since the Census Bureau began tracking housing starts in 1959.

Much of the discussion during our current financial crisis revolves around whether certain institutions are "too big to fail." Forgotten in the wreckage, however, is the relative success of the community bank -- the small-scale "relationship" bank where individual savers and borrowers are members of the same community. In fact, the failure rate among big banks is eight times greater than among small banks so far this year.

This Thursday November 20th, the Asset Building program and the Washington Monthly will explore ways to encourage the health and number of small-scale financial institutions as a means of thwarting the tendency toward excessive consolidation in financial services and restoring a mutuality of interest between borrowers and lenders. Our own Ellen Seidman and Phil Longman will discuss the role of these institutions in climbing out of our current economic mess and preventing more trouble down the road. They will be joined by Doug McGray (Fellow, New America), Joshua Rosner, (Managing Director, Graham Fisher & Co), and Jan A. Miller (President & CEO, Wainwright Bank & Trust Company).

We hope you join us for what promises to be a lively discussion. Click here to RSVP.