It started when San Francisco Mayor Gavin Newsom and Treasurer José Cisneros developed a program to encourage low-income families to qualify for the federal Earned Income Tax Credit program. The city was providing a modest financial incentive for households to apply for this anti-poverty effort.

Cisneros noted that many of the families receiving this government assistance did not have traditional bank accounts.

"It just tore me up to think that literally thousands of these people were taking these checks to check-cashing places, where they would have to pay $10, $15 or $30 to cash a check for $100 or $200," Cisneros said last week.

From his sense of injustice came an idea for a win-win situation: a program that could connect mainstream financial institutions with a potential base of customers that had not had access to traditional banking services. As Cisneros discovered, it wasn't just that bankers were skeptical of serving a low-income market. Many of the residents from poorer households were at least as wary of going into a bank, where the processes and costs seemed mysterious.

The program Bank on San Francisco, in which the city helped provide the moral inspiration and logistical assistance for banks to provide accounts to low-income residents, has become a national model. Nearly 25,000 checking accounts have opened and remain active since the program was established in 2006.

More than anything, it's been a matter of education. The banks are shown how they can offer "appropriate starter accounts for the unbanked," Cisneros said. The new customers are provided with financial management training. It seems to be working. Some 17 financial institutions are participating - including most of the big names in San Francisco banking. The average account balance is nearly $1,000.

Gov. Arnold Schwarzenegger recently joined several mayors and banking officials in announcing an effort to initiate a similar statewide initiative, "Bank On."

Matt Fellowes, director of the banking opportunities project for the Pew Charitable Trust, said the national interest in such a program has been growing rapidly. He said about 40 cities have contacted the trust for guidance on how they can inaugurate similar programs.

"A lot of these people have never had a bank account, and their families have never had a bank account, and when they walk into a bank it's very confusing ... the fees are not very transparent," Fellowes said. "These programs are meant to dispel some of that mystery."

They also are structured to address the specific needs of the poor: waiving minimum-balance requirements, allowing alternative forms of identification for immigrants, waiving one set of overdraft fees per year and allowing customers with overdraft histories to open accounts if they take financial-education courses.

One of the great injustices in this society is that the people who can least afford it end up spending the most for life's basics, from groceries to financial services. They not only end up spending far too much of their scarce dollars on these staples, they end up with inferior products. In the case of financial services, that means paying excessive fees while missing the opportunity to build a solid credit rating that could save money down the line.

A recent Brookings Institution study found that Americans spend $8 billion a year for financial services through "alternative" businesses such as check-cashing outlets, payday lenders and pawnshops. About 1 in 4 Latino households and 1 in 5 African American households do not have a bank account. The San Francisco program has shown that such a program can work, with education - for the bank and its new customers.

Its success, a product of government attention and industry-enlightened self-interest, is an uplifting exception to a year of depressing news about greed and neglect in financial services.