Financial Services

Meet Gary Bloch, a family practice doctor living and working in Toronto, Canada. Dr. Bloch takes the time with each patient he sees to remind them to fill out their tax returns, knowing that many will see a refund and be able to claim various tax credits. As he explains in this piece for The Globe and Mail, "The link between health and income is solid and consistent – almost every major health condition, including heart disease, cancer, diabetes, and mental illness, occurs more often and has worse outcomes among people who live at lower income. As people improve their income, their health improves. It follows that improving my patients’ income should improve their health."

The connection between income and health is both clear and simple: if patients collect the refunds and tax credits they are eligible for, they will boost their income and be much better able to meet their immediate health care needs and stay healthy in the long term.

As I've written about in the past, health problems compound financial ones and vice versa. I would guess that by initiating these conversations about income and tax filing with patients, Dr. Bloch is learning a great deal about possibly the largest sources of stress in his patients' lives, is better able to understand any financial limitations patients' may have in following his medical directives, and is gaining the trust of his patients.

Editor’s note: This post was authored by Vishnu Sridharan, Director of the Make Your Path (MY Path) Program at Mission SF Community Financial Center in San Francisco, California and a former member of the Global Assets Project at New America. 

To mark the launch of Financial Literacy Month in April, the Council for Economic Education will release a new set of standards to establish what youth should know about money by the end of 4th, 8th, and 12th grade. The state of Florida is considering passing a bill that requires that “financial literacy must be included in high school graduation requirements.” An increase in attention to financial literacy is a positive development. However, growing research shows that financial literacy alone is “not sufficient,” and that what genuinely impacts the economic trajectory of youth is the ability and opportunity to act on their knowledge. As such, we might be better off focusing not on financial literacy initiatives as such, whose primary aim is to impart information, but instead on financial capability initiatives, which also include a strong behavioral component.

Last month, we wrote about a recent push in Hawaii to eliminate the state’s TANF asset test. A new report and proposed legislation suggest that similar changes are on the horizon in Arkansas. Let’s explore why it’s so important that these reform proposals are emerging right now.

The Los Angeles Times has a piece out today about the phenomenon of "no press release" clauses that are a regular part of FDIC settlements with banks. Essentially, "the government cut[s] a deal with the bank's lawyers to keep [the settlement] quiet: a 'no press release' clause that required the FDIC never to mention the deal 'except in response to a specific inquiry.'"

The Times explains that "Since 2007, 471 U.S. banks have failed, nearly depleting the FDIC deposit-insurance fund with $92.5 billion in losses. Rather than sue, the agency has typically preferred to settle for a fraction of the losses while helping the banks avoid bad press." The settlements the Times explored cover a whole range of alleged banking violations, including "reckless loans to homeowners and builders; falsified documents; inflated appraisals; lender refusals to buy back bad loans." Furthermore, "At least 10 [of the] undisclosed settlements involved officers and directors accused of contributing to the collapse of their own banks."

These "no press release" clauses allow banks to avoid major hullabaloo following even multi-million dollar settlements with the FDIC. Theoretically, settling has benefits for both the FDIC and the banks in question: "Defendants benefit by settling because they can avoid admitting guilt and limit the damages they might face in court. The FDIC benefits by collecting money without the hassle and expense of litigation." But, as the Times points out, the phenomenon of "no press release" clauses is both an aberration from past policy and raises some serious concerns about the transparency of settlements and the effectiveness of government regulation of bank actions.

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 wealth inequality, the sequester, housing, employment, debt, and the safety net.

Editor's note: This blog post was authored by Karen Harris, Director of Asset Opportunities at the Shriver Center.

For many retired Americans, the potential for financial insecurity is great. Although our government provides a modest monthly Social Security check ($1,152 on average) to retirees, Social Security was never meant to be the sole source of an individual’s retirement income. While $1,152 might be just barely enough money for a young healthy individual, being elderly is much more expensive. Among people who reach the age of 65, 70% will eventually require long-term health care and 30% will eventually receive nursing home care. The average cost of a semi-private nursing home room is $215 per day or $78,000 per year. Yet, according to the Social Security Administration, Social Security benefits constitute 50-90% of income for more than 33% of Social Security Recipients, and 90 to 100% for more than 31% of recipients. This means that about two out of three Social Security recipients over-rely on Social Security.

In order for retirees to avoid over-relying on Social Security, they must prepare during their working years. However, 49% of Americans say they are not saving any money for retirement. A 2012 Woodstock Institute Report shows that the lack of savings is primarily a problem of access to savings mechanisms. The report finds that across all Illinois state legislative districts at least 50% of full-time workers are not offered an employer sponsored retirement savings plan. As the Assets Report infographic shows, lower-income workers are much less likely to have access to these plans.

In order to address this widespread retirement problem, the Illinois Asset Building Group (IABG), along with the Shriver Center, AARP, SEIU and many other organizations are working to pass S.B. 2400/H.B. 2461 The Automatic IRA Program Act. This bill, sponsored by Senator Daniel Biss and Rep. Deborah Mell, would provide all full time workers in Illinois access to retirement savings accounts.

Editor’s note:This blog post was authored by Jerry Kelly, National Director of the U.S. Department of the Treasury’s Ready.Save.Grow. campaign. 

Encouraged by recent economic gains and lower levels of household debt, Americans are seeking greater financial stability by making saving a priority.

According to the U.S. Bureau of Economic Analysis, we saved 6.5 percent of our disposable personal income in December 2012, up from 3.4 percent in December 2011. That translates to $805.2 billion in annual savings.

At the same time, however, the Corporation for Enterprise Development (CFED) reports that almost half of our households don’t have enough savings to fall back on in the event of an emergency.

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 the household balance sheet, cash and payments, higher education, housing, and public benefits.

Last year I analyzed four myths about payday lending that the Pew Charitable Trust’s “Payday Lending in America” project proved to be highly suspect in the first iteration of their study on borrowers. Their newest report (How Borrowers Choose and Repay Payday Loans) goes into more depth, revealing a love-hate relationship between borrowers and high-cost, short term loans. The report tells a conflicting story of dependence, need, stress, relief, and any other emotion associated with finances that you could think of. Borrowing from the Mythbusters again, here’s the skinny on Pew’s new report.

This is America Saves Week, which is an annual campaign that encourages nationwide discussion on savings and promotes good savings behavior. For those of us in the asset-building field, this is an opportunity to elevate research on the relationship between savings and life outcomes. This research can help justify the importance of good savings behavior, especially when these habits and behaviors start early in life. So in honor of America Saves Week, here are some of the research highlights from the asset-building field. Specifically, these highlights come from our research at the Assets and Education Initiative (AEDI) at the University of Kansas School of Welfare, where we are studying the relationship between children's savings and their financial and educational outcomes later in life.