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The Ladder

A Blog from New America's Asset Building Program

Summarizing the Research: Asset Effects for Children with Disabilities

December 23, 2011
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During one of our recent events, Sheldon Garon of Princeton University and Ray Boshara of the Federal Reserve Bank of St. Louis referred to the weak household balance sheet as one of the core economic challenges of our time, suggesting that households must focus on asset-building rather than rely on credit and debt.

Postal Banking to the Rescue of the US Postal Service

December 22, 2011
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Like millions of others this holiday season, perhaps you’ve already made the trip to your local, friendly Post Office. While you were there, did you hear how the US Postal Service is in financial trouble? Was there talk among your neighbors in line about closing the local branch or losing Saturday deliveries?

The USPS financial problems are not a surprise. Reforms enacted in 2006 required the USPS to save up to 75 years health and retirement benefits—unlike every other Federal agency. Without these provisions, it’s like the USPS would be in the black and not the red. That’s not to say there isn’t room for improvement or modernization. But there is another way to remake the USPS that wouldn’t depend on shutting down offices or laying off mail carriers—low-cost banking.

Currently, there are millions of lower-income Americans who don’t own a bank account where they can save or conduct basic financial transactions. They fend for themselves in the high-cost and poor-quality alternative financial sector of payday lenders and check cashers. Recognizing the nefarious practices of this fringe sector was one of the factors which led to the creation of the Consumer Financial Protection Bureau. Once that agency gets up and running, they have a mandate to shut down abusive practices that have flourished without proper oversight. But even if the CFPB succeeds, we may still be left with scores of families who find it difficult to access a simple savings or transaction account. This isn’t a market segment the banks have been dying to serve.

Not only do unbanked families have to spend more of their limited resources managing their money but they don’t have a place to store and build up their savings. In fact, the small saver has largely been abandon in recent years. Traditionally, the US Savings Bond program was designed to serve the needs of the small saver, but that program has been refocused on larger and more institutional savers. Most banks have actually quick selling these as well, directing interested parties to the Treasury website.

The Postal Service could step into the breach.

Assets and the Poor 20 Years Later

December 22, 2011

Bob Friedman has a really nice post up over at CFED's in-house blog, The Inclusive Economy. In it he commemorates the 20th anniversary of the publication of Michael Sherraden's seminal work, "Assets and the Poor," the book that essentially launched the asset building field and details his introduction to the book.

Washington Post Series Features Real-life Scott's Tots

December 21, 2011
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Two businessmen walk into an auditorium full of fifth grade students and announce to the children, most from poor families, that they will all have their college educations paid for. For fans of The Office, this scene might conjurer up memories of Scott's Tots, the group of Scranton, PA students sponsored by Dunder Mifflin's regional manager Michael Scott.

Our Daughters, Our Wealth: Gender Equality for Economic Growth

December 19, 2011

“If it could rid itself of gender discrimination, the average developing country would grow at least two percentage points faster each year.”  At least so argues Marcelo Giugale, the World Bank’s Director for Poverty Reduction and Economic Management in Africa, in a recent op-ed that likens the current state of many global economies to one in which “half of all machines [are] misplaced: tractors [are] sent to hospitals, brain scanners to barber shops, hair driers to construction sites, cranes to car factories and crash-test dummies to farms.”

Banking On Bikes

December 19, 2011
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Thanks to a new partnership between Capital Bikeshare, Bank on DC, United Bank, and the District Government Employees Federal Credit Union (DGEFCU), previously unbanked Washington, D.C. residents now have the opportunity to kill two birds with one stone: sign up for a debit or credit card and access a growing regional network of shareable bikes. An announcement from DDOT reads, “The partnership was conceived to promote a healthy and environmentally-friendly form of transit, along with the benefits of financial stability and security.”  In exchange for opening an account with the participating institutions, Bank On DC account holders get a $25 discount off an annual membership for Capital Bikeshare (bringing the cost to $50). While it will be interesting to see if this reduced rate is affordable for the target population, the initiative is an exciting example of creative thinking and cross-sector collaboration.

Unmet Social Needs and Health

December 19, 2011
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The Robert Wood Johnson Foundation (RWJF) recently released findings from a study of American physicians about the links between health and unmet social needs. These needs included basic necessities like adequate nutrition, access to public transportation, and safe housing. Physicians overwhelmingly identified unmet needs as fundamentally related to their patients' health conditions, particularly among lower-income patient populations. Unfortunately, four out of five doctors surveyed (a sample of 1000 primary care physicians and pediatricians) said they did not feel confident in their capacity to meet these needs, which limited the effectiveness of the care they provided. Over half of surveyed doctors said their patients did not have access to the resources they needed to stay healthy. As Jane Lowe of RWJF noted in a press release, "America’s physicians understand that our health is largely determined by forces outside of the doctor’s office. Housing, employment, income and education are key factors that shape our health, especially for the most vulnerable among us.”

Why Financial Literacy Isn't Enough, and What to do About it?

December 19, 2011

Originally posted on www.youthsave.org

A new blog post, “Why Financial Literacy Fails (and What to Do About It)” takes a strong jab at the efficacy of financial literacy interventions saying “Time and again, [its] efforts have failed. They don’t make any noticeable difference in the way we spend and save.” While mixed results from studies measuring the impacts of financial education indicate that the jury is still out on its effects on individuals’ financial behaviors, the author goes on to make a valid point with which I whole-heartedly agree: “financial literacy isn’t enough.” That is, financial success is not necessarily determined by how well individuals can calculate interest rates, but how well they are able to delay gratification for immediate consumption, control their emotions, and overcome other psychological barriers that prevent most human beings from making rational choices, such as saving. 

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