Law may bring benefits of banking to the poor.

• Position: Electronic Funds Transfer Act of 1999 - Interview - Statistical Data Included

Michael Stegman is director of the Center for Community Capitalism at UNC Chapel Hill's Frank Hawkins Kenan Institute of Private Enterprise. His new book, Savings for the Poor: The Hidden Benefits of Electronic Banking, examines the Electronic Funds Transfer Act of 1999.

BNC: What will EFT-99 mean for people without bank accounts?

Stegman: EFT-99 initially required all federal-benefit recipients beginning in 1999 - the law was actually passed in '96 - to have all benefits delivered through direct deposit. You can't deliver a Social Security check to a disabled person by direct deposit if they don't have an account. The law mandated the U.S. Treasury Department to bring those unbanked benefit recipients into the banking system. When Treasury realized banks weren't prepared for this onslaught, and community-based organizations wanted to know more about what the costs would be, the administration stretched out this mandate, It is going to be a conversion to electronic-benefits delivery but at a slower pace. What it still means is that for millions of people who don't have credit histories, who can't take advantage of mainstream credit products and loans - they get them from payday lenders, fringe bankers - this law has the ability to bring them into that mainstream system.

Whom does this affect?

Both nationally and in North Carolina about 13% of families are believed not to have a banking account of any kind. That includes about a third of all minority households and as much as a quarter of all renters. It's even estimated that about 15% of all working-poor families are unbanked. North Carolina ranks ninth in the country for the number of federal-benefit recipients that still receive their benefits by check as opposed to direct deposit. Close to 20% who still receive them by check probably don't have any bank accounts at all. That would be about 120,000 in North Carolina. One of the populations I'm concerned about is families making the transition from welfare to work - people who are going into the work force who have to use money with no bank account.

You argue EFT-99 could make low-income people financially independent.

You can't begin the process of asset building - incrementally saving for education, for a down payment on your first home - if you don't have a bank account. Bringing people into the mainstream system provides them the opportunity to save, but it doesn't necessarily encourage savings. We have IRAs and tax incentives for...