Asset Building Program: Policy Papers

In Califonia's current legislative session, the Asset Building Program is advancing a comprehensive legislative package of state policy intiatives to broaden savings and ownership opportunities for Californians. … more

Overview

U.S. Savings Bonds are a convenient, secure, and low-cost product that facilitate savings.  Today, an estimated 55 million people hold U.S. Savings Bonds. Bonds retain a reputation as an easy-to-use and trusted brand-- even though they have not been actively marketed since 2003. It is a product that is especially attractive to small, first-time, or shorter-term savers. Bonds may be purchased for as little as $50 and redeemed as early as twelve months after purchase. They are backed by the U.S. government-- so there is no risk

We are in the midst of a period of intense and frustrating contradictions for our country in general and for community finance.  Just take these examples:

The ASPIRE Act - Universal, lifelong savings accounts at birth The ASPIRE Act promotes lifetime savings, financial literacy, and opportunities for all young adults by establishing a progressively funded savings account for every child born in America. Each account receives $500 at birth. Households below national median income receive up to an additional $500 at birth and

Introduction/Background

In recent years, the role that savings and assets play in shaping people's lives has increasingly captured the attention of researchers, policy analysts and elected officials. Their interest in savings and building wealth has grown along with an increased awareness of specific policy tools and interventions, such as matched savings accounts available for lower-income workers. The launch of the SEED Initiative in October 2003 was an important marker in this process because it introduced the

The rental housing market in the United States is characterized by a fundamental disconnect between rents and household incomes. It has been this way for decades. Millions of Americans simply earn too little to afford to rent a decent home. To meet these families' basic needs for shelter, the federal government spends more than $25 billion each year to provide rental assistance to more than four million poor and near-poor households. This assistance is delivered through a mix of housing vouchers and deep

As a result of the current financial crisis, consumers are more concerned about their personal finances than ever before.  Household confidence in job security and future employment prospects, income stability, and the ability to preserve and build assets is plummeting; meanwhile, high fuel and food prices and tightening credit conditions are placing more pressure on households to maximize their financial decisions.

In the fall of 2007, Countrywide Financial, then the nation's largest mortgage lender, had a curious new idea -- or, more precisely, an old one. It would no longer import foreign capital through Wall Street to make subprime loans. Instead, it would depend entirely on deposits from savers, who would finance each other's mortgages -- kind of like that humble thrift institution run by George Bailey in the movie It's a Wonderful Life."

One of the most important lessons the subprime mortgage crisis holds for us is just how poorly informed many Americans are when it comes to making important financial decisions. Clearly, there is a need for basic financial education. But when, where, and how should such education be delivered? Financial literacy programs aimed at high school students do not appear to be effective, and few adults are willing to expend the time, money, and effort to acquire the sort of general education that would help them make good… more

Introduction

Executive SummaryComprehensive strategies for educating children and youth so they can become effective managers of money and successful navigators of a complex financial marketplace have not yet emerged from the dialogue and debate surrounding financial education. A rich and growing body of research about adult financial education exists, but youth financial education research has been slower in developing. While some consensus has emerged regarding best practices for adult financial education, these strategies and approaches cannot simply be reengineered down to more age-appropriate versions and imposed on… more

Baker, C. and D. Dylla (2007). "Analyzing the Relationship Between Account Ownership and Financial Education." New America Foundation. Abstract: Account ownership and financial knowledge are understood to be critical components of financial stability and wealth accumulation. Presumably, combining financial education and accounts reinforces the positive effects of each on the other and enhances the recipient's financial well being. To date, however, no testing of this hypothesis has been undertaken. This report sets out to do that. It presents a review of programs across the country that… more

Although the State of California currently offers its residents a 529 college savings plan through the ScholarShare program, the investment vehicle lacks incentives that encourage low- and middle-income individuals to participate in the program. Other U.S. states offer a variety of attractive incentives, such as matching contributions and state tax deductions. Californians are ready to adopt a stronger and more incentive oriented 529 plan that will encourage families to build savings for their children's college education. Postsecondary

Financial services decisions can have enormous consequences for household well-being. Households need a range of financial services-to conduct basic transactions, such as receiving their income, storing it, and paying bills; to save for emergency needs and long-term goals; to access credit; and to insure against life's key risks. But the financial services system is exceedingly complicated and often not well-designed to optimize household behavior. In response to the complexity of our financial system, there has been a long-running debate about the

Overview

Each year the federal government provides hundreds of billions of dollars in incentives for families to save and build wealth through the tax system. Low-income families, however, are not eligible for most of these tax incentives because they are poor. Low income families, like any other household, need to save to gain economic mobility and financial stability. Research has also shown that despite their low incomes, poor families can and do save when presented with the right incentives and methods… more

Overview

Over the past two decades, policymakers, academics, and others have pursued an array of policies and strategies to help lower and middle income households build savings and assets and access reasonably-priced financial products. While progress has been made, there have been few advances to delivering a high-value, affordable financial product at scale.

This paper, written for Furman Center at New York University in May 2008 by New America Foundation's Ellen Seidman and the Center for American Progress' Andrew Jakabovics, discusses asset disposition lessons learned from previous financial crises -- including the activities of the New Deal-era Home Owners Loan Corporation, the Resolution Trust Corporation formed in the wake of the savings and loan crisis, and the Department of Housing and Urban Development's more recent Asset Control Area program to dispose of foreclosed… more

The current economic downturn, triggered in part by excessive household debt and deflating housing prices, underscores the central role asset ownership plays in the economic security of American families and the broader economy. Broad asset ownership, whether through savings or investment, has the potential to connect economic opportunity with economic security and ensure that every member of society is afforded a real stake in the commonwealth. Assets are important not only because they can be deployed productively or tapped to help individuals and families weather unexpected events, but… more