The Ladder

The BEA is out with November's numbers on Personal Income and Outlays, including the new personal savings numbers. While the personal savings amount increased slightly--to $525.1 billion from $516.7 billion--from October to November, the rate stays essentially flat at 4.7%.

Calculated Risk has a pretty graph showing the recent trend, reprinted here, which shows the trend for the year. CR also guesses that we might see personal savings reach as high as 8%. I'm skeptical that we'll see numbers that high, and skeptical that even these numbers are here to stay without more policy interventions to promote saving in the long run. However, I'd be delighted to be wrong.

Once again, San Francisco is lending a helping hand to its hardworking residents. On Thursday, Mayor Gavin Newsom and City Treasurer Jose Cisneros will launch Payday Plus SF, a low cost emergency loan program as an alternative to the city’s many payday lenders.

The program is the natural result of adding a dense concentration of highly-motivated asset building advocates to a dense concentration of high-interest payday lenders. And in contrast to some payday loans, its numbers make sense.

H.R. 4173, which would implement significant reforms and improve consumer protection significantly, is on the floor of the House as we speak. Others will comment on the bill as a whole, but I want to draw attention to what is now one tiny little piece of that bill.

Congresswoman Niki Tsongas and her staff introduced a series of amendments related to credit scoring practices and the impact of asset limits in federal means-tested programs on the banking behavior of consumers. All three amendments have been included in the "Manager's Amendment" and are part of the legislation that the House will vote on (and likely pass) in the coming days. The assets limit amendment is a simple one, it directs a research unit within the new consumer protection agency to:

"research, analyze and report on: experiences of traditionally underserved consumers, including un-banked and under-banked consumers, regarding consumer financial products or services, and the impact of Federal policies, including resource limits in means-tested Federal benefit programs, on such consumers in influencing banking behavior."

Today, the Asset Building Program released a new paper that examines the policy rationale for implementing a universal system of children’s savings accounts (CSAs) in the United States.

“A growing chorus, including President Obama, now believes that a prosperous future for our country will depend on the creation of a save-and-invest economy that will enable all Americans to accumulate savings and assets. While in the short-term, public investment should be expanded in order to stabilize the economy, any long-term plan for sustainable economic growth will have to involve increased household savings over an extended time horizon. One promising approach to that goal is children’s savings accounts (CSAs), which would be established at birth for every American.

This paper makes the case for establishing a universal system of children’s savings accounts (CSAs) in the United States. It provides a brief overview of the essential components of a CSA and how they would work, and the rationale and evidence for a CSAs plan.”