On June 19, 2015, Governor Greg Abbott of Texas signed into law HB 1626, which was introduced by the Young Texans Legislative Caucus Chair, Rep. Eric Johnson.
HB 1626 aims to reduce the number of "banking deserts" in Texas by establishing "banking or credit union development districts" that encourage mainstream financial institutions to establish branches where there is a demonstrated need for their services.
According to the Federal Deposit Insurance Corporation (FDIC), about 36 percent of Dallas-area households are deemed "unbanked" or "underbanked," meaning they either have no bank account at all or rely mostly on check cashers and other non-bank providers for financial services. Furthermore, four in ten Texas households (or about 38 percent) fall into one of these categories, compared to about 27 percent of households nationwide.
HB 1626 allows county and municipal governments, in conjunction with a financial institution, to apply to the Finance Commission of Texas and the Texas Credit Union Commission to establish a "banking or credit union development district." If approved, the city's treasury will deposit funds into the district's depository so that the bank or credit union could begin to offer its financial services to members of the community.
In exchange for opening branches in these districts, the financial institution will pay below-market rates on the city's deposits, and will be eligible for tax breaks and other incentives.
HB 1626 will go into effect on September 1, 2015.