The Asset Building News Week is a weekly Friday feature on The Ladder, the Asset Building Program blog, designed to help readers keep up with news and developments in the asset building field. This week's topics include poverty, consumer protection, and banking services.
A variety of economists told the Associated Press
that they expect the United States poverty rate to rise to the highest level since 1965. The 2011 Census is likely to indicate that poverty rates have risen to 15.7% (it will be released in November). The increase is twofold: More Americans are becoming poor, and this poverty is becoming more severe.
from the Economic Policy Institute indicates that, in addition to rising poverty rates, America’s safety net is weak compared to other peer countries. High rates of childhood poverty remain unaddressed due to the United States’ exceptionally low rate of social expenditure. Summing up these worrisome statistics, the report concludes, “peer countries are much more likely than the United States to step in where markets and labor policy fail in order to lift their most disadvantaged citizens out of poverty.”
Earl Ofari Hutchinson explains
why the issue of poverty has remained largely absent from both parties in the presidential campaign. Hutchinson argues that an absence of lobbying resources, combined with an engendered culture of self-deprecation, cause poor Americans to continue to remain “nameless, faceless, and voiceless,” and therefore a subject of relative disinterest for presidential candidates.
One of the responsibilities of the CFPB is to shield consumers from predatory lenders. The CFPB has announced that it will be writing and enforcing rules regarding prepaid cards, and many advocates are asking the organization to abolish overdraft fees and payday loans. This press release
details their position. Pamela Chan and Bill Margeson here with the Asset Building Program recently submitted two sets of comments to the CFPB. The first
makes recommendations to the CFPB about the prepaid card market, and the second
responds to a proposed rule that would allow the CFPB supervisory capacities of nonbank entities.
In the Huffington Post Blog
, Elizabeth Warren, a candidate for Massachusetts Senate and longtime supporter of the CFPB, defends the importance of its mission. She writes, “Markets work when people can evaluate the prices and risks of different products, then pick the ones that work best for them. But when the terms of the deal are hidden, competition doesn't work.” The organization so far has worked to achieve greater transparency throughout the financial realm. Mitt Romney has pushed for CFPB’s repeal, but so far the organization has made impressive and well-received gains in its attempt to “level the playing field.”
According to Jennifer Teschner, head of the Center for Financial Services Innovation, large banks are seeing greater incentives to respond to the needs of low-income consumers
. As more and more Americans begin to experience financial hardship, “Bankers… acknowledge that they see a new opportunity to earn revenue from the poor, but they also say that want to meet legitimate customer demand for financial services that go beyond the checking account and the credit card. In the process, they say, perhaps they can help repair the banking industry's reputation for exploiting poor people.” Teschner also points out that “The term "underbanked" comprises more than just low-income customers.” People who choose not to use traditional banks range “from immigrants and people without established credit histories to young and tech-savvy consumers who prefer to use online services and prepaid cards instead of checking accounts.”
Sallie Mae and the CFPB are expected to support student-loan reform at an upcoming Senate hearing. According to this article
, nationwide increasing levels of student loan debt will likely “act as a drag on economic recovery.” Ideas for reform include modifying bankruptcy policies and clarifying private loan definitions. According to Sallie Mae, currently outstanding educational debt in the United States totals $1 trillion.
The Asset Building Program will be hosting the event “Building Better Savings Products
” next Tuesday, July 31st. The event will showcase innovative new ideas on how to help Americans achieve financial success by saving, and will feature Sherrie Rhine, Sarika Abbi, and Caroline Schultz. The event will be moderated by senior policy analyst Pamela Chan.
Reid Cramer, Director of the Asset Building Program, spoke on Wisconsin Public Radio
this past Tuesday. He discussed the importance of asset building and his recent article in the Washington Monthly, "The Assets Agenda."
Sandy Weill, creator of Citigroup, is now calling for the breakup of America's largest banks
. In order to protect taxpayers, Weill argues, investment banking should be separated from regular banking.
Housing Assistance Council research director Lance George examines different conceptions of homeownership
and how these nuances make a difference in rural America. George explains that homeownership is not a binary measurement, but can be described in three ways: renting, owning with a mortgage, or owning without a mortgage. Research shows that mortgage-free homeownership is more common in rural areas than in cities. “Home values and assets may be lower in rural areas, but the level of mortgage-free homeowners is not an insignificant statistic,” writes George.
The Urban Institute released a report
showing that “Most unemployed workers with labor market disadvantages do not collect unemployment insurance.” During 2010, only 44% of Americans experiencing unemployment collected unemployment insurance.