The federal government is banking on two programs to remove the "un" from the unbanked.

Both initiatives are designed to reach out to the millions of people who don't have bank accounts. Many of these people rely instead on check-cashing services, which charge 1 percent to 6 percent of the value of a check.

The Clinton administration's solution is to encourage banks to offer federally subsidized accounts to poor people and recipients of government checks. The premise is that these accounts will save these people money while ushering them into the banking system.

And your bank is being asked to lend them a helping hand. "Getting people into the financial mainstream is our goal," a Treasury spokeswoman says. "We're trying to get them out of the check-cashing environment."

It's too early to tell how successful these initiatives will be. One is just being rolled out and the other is on the drawing board. The accounts might be the right thing for you or someone you know, maybe a relative who receives a monthly Social Security payment.

The check is in the modem
The first program, called Electronic Transfer Accounts, provides inexpensive bank accounts for people who receive retirement, benefit, wage or salary payments from the federal government. The federal payment is deposited electronically. A bank can charge no more than $3 a month for the account and must allow at least four withdrawals or balance inquiries a month, free.

The other program, called First Accounts, is under development and the accounts will arrive in the summer. When President Clinton announced the initiative in January, he said the program would result in bank accounts similar to ETAs. They will primarily be targeted for working poor people who don't receive government checks.

The programs are entirely voluntary. Banks don't have to offer the accounts, and no individual is required to get one.

Vice President Al Gore and Treasury Secretary Lawrence H. Summers proudly unveiled the ETA program in July 1999. So far, about 500 banks with 4,100 branches have agreed to offer the low-cost accounts, says Cathy Donchatz of Treasury's Financial Management Service. Most of those banks are still working out details and aren't offering accounts yet.

As a result, scarcely 1,000 people have accounts so far. Almost 900 of those accounts are at the Banco Popular de Puerto Rico, based in San Juan.

Too soon to tell
Donchatz is sensitive to perceptions that these numbers portend failure. For months, she says, Treasury quietly recruited banks to offer the accounts. A marketing push has just begun to publicize the accounts among federal check recipients. The campaign includes inserts in check envelopes and contacts with community groups.

"We didn't want to tell the recipients about the ETA while they didn't have any financial institutions in the area to sign up," Donchatz explains.

Now that a few people are signing up, will the program work?

"I'm hoping it does serve a need," says Josh Silver, vice president of policy and research for the National Community Reinvestment Coalition. "There are 12 million people who are unbanked, probably including a subset of the population that receives Social Security checks and other benefits from the federal government. I would hope that ETAs would serve as a transition to where account holders eventually would say, 'Yeah, I'll open a regular checking or savings account.' It's an alternative to check-cashing stores."

The ranks of the unbanked include people who can't get an account because they have a history of writing bad checks, folks who live in neighborhoods without bank branches, people who can't get to a bank during work hours and skeptics who distrust banks. Perhaps the biggest group of the unbanked comprises people who believe they can't afford to have accounts because of fees and mandatory minimum balances.

Plusses and a big minus
The accounts have advantages and one big drawback. The main advantage is the maximum fee of $3 a month. Another advantage -- a big one in neighborhoods burdened with crime, icy sidewalks or isolation from bank branches -- is that government checks are deposited into accounts directly. Thieves can't steal checks from mailboxes and recipients don't have to go on hazardous or long treks just to deposit their checks.

The chief drawback is that recipients can't write checks on these accounts. Instead, they can withdraw cash from a teller, whether flesh-and-blood or automatic. If the bank gives the user a debit card, it can be used at point-of-sale terminals in stores.

But to pay, say, utility bills, users will have to pay in cash at a walk-up window or mail a cashier's check or money order. With the latter method, they'll have to shell out more than the total of their utility bill because both the check and the money order have to be paid for.

First Accounts will share many similarities with ETAs, including the low fees and the inability to write checks. The no-check-writing rule is essential to securing banks' cooperation.

"Before ETAs, you had banks that offered low-cost checking accounts," Silver says. "Treasury tried to design them so they don't displace low-cost checking accounts."

Kindling community karma
In other words, the feds didn't want to step on bank toes. Although the accounts would seem rather unprofitable at first glance, with their $3 maximum monthly fees, banks have a couple of reasons for offering the accounts.

First, the bank collects a federal subsidy of $12.60 each time an ETA is opened.

More important, banks get brownie points from federal agencies that enforce the Community Reinvestment Act, a law that requires banks to furnish credit to people and businesses in poor neighborhoods. Regulators are willing to let banks count these accounts as CRA activities.

Silver says he wishes the federal government had waited to find out whether the federally subsidized accounts are drawing in the unbanked or whether people are just switching over from checking accounts with higher fees. It's too soon to know yet.

There is one other advantage to ETAs and First Accounts: They can restore access to the banking system for people who were banished from it for financial mismanagement.

Here's how: Most banks won't give checking or savings accounts to people who are in the ChexSystems database for writing bad checks. But banks can't reject applicants for ETAs because of their ChexSystems record. A similar rule probably will apply for First Accounts.

Donchatz says that some ETA account holders understood this immediately.

"What we found were a lot of people did not really want check-writing capability," she says, "because they'd had problems in the past with managing that checkbook."