THANKS FOR HANGING IN THERE


WITH US.


I AM ADRIENNE HARRIS,


TOWSLEY POLICYMAKER


IN RESIDENCE HERE AT THE 


UNIVERSITY OF MICHIGAN


AND FORMER SPECIAL ASSISTANT TO


PRESIDENT OBAMA AT THE


ECONOMIC COUNCIL.


I WILL MODERATE OUR


DISTINGUISHED PANEL HERE


TODAY.


I KNOW EACH PRESENTER HAS A


BIT OF A PRESENTATION AND THEN


WE WILL MOVE INTO THE


DISCUSSION.


WHY DON'T WE GO DOWN THE LINE


QUICKLY AND DO INTRODUCTIONS


AND THEN MOVE THROUGH EACH OF


THE PRESENTATIONS?


SURE.


GOOD MORNING, GOOD


AFTERNOON.


I AM MELISSA KOIDE.


I RUN FINREG LAB.


I AM LISA SERVON PROFESSOR


AND CHAIR OF THE CITY AND


REGIONAL PLANNING DEPARTMENT


AT THE UNIVERSITY OF


PENNSYLVANIA.


I AM WILLY ELLIOTT,


UNIVERSITY OF MICHIGAN AND A


PROFESSOR HERE.


THANK YOU.


OKAY.


I'M GOING TO MOIKS -- MIX IT


UP.


I AM STANDING UP AND WAKE


EVERYBODY UP.


HOLD ON THOUGH.


LET ME GET MYSELF ORGANIZED.


SO I AM SAD NICK SMITH IS NOT


HERE BECAUSE I AM GOING TO


ALSO CLAIM THAT MICHAEL BARR


GAVE ME MY FIRST JOB TOO, KIND


OF SORT OF IF YOU DON'T COUNT


THE YOGURT SHOP AND THE


HOSPITAL AND X RAY DEPARTMENT


IN COLLEGE.


NOW YOU CAN GUESS HOW OLD IS


MICHAEL IN LIGHT NICK SMITH


GAVE HIM HIS FIRST JOB AND YOU


CAN BE MY FIRST JOB.


LIKE YOU HEARD, I AM MELISSA


KOIDE AND PROBABLY THE ONLY


START UP IN THE ROOM.


WE ARE SOMEWHAT OF A DIFFERENT


TYPE OF START UP.


WE ARE A NONPROFIT RESEARCH


ORGANIZATION, AND I MENTIONED


MICHAEL BARR BECAUSE I WORKED


FOR THE U.S. TREASURY


DEPARTMENT TWICE.


I WAS A STAFFER IN THE CLINTON


ADMINISTRATION AND MORE


RECENTLY I WAS THE DEPUTY


ASSISTANT SECRETARY FOR


CONSUMER POLICY IN THE OBAMA


ADMINISTRATION.


A LOT OF WHAT YOU ARE GONNA


HEAR ME TALK ABOUT REALLY


HARKINS BACK TO WHAT WE WANTED


TO UNDERSTAND, BUT WE WERE


INSUFFICIENTLY ABLE TO


UNDERSTAND WHEN IT COMES TO,


AND I USE THIS WITH INTENTION,


WHEN IT COMES TO THE ROLE OF


DATA AND TECHNOLOGY IN THE


FINANCIAL SYSTEM, AND IN


PARTICULAR IN THE RETAIL


FINANCIAL SERVICES SECTOR.


I USE THE WORD DATA AND


TECHNOLOGY AS OPPOSED TO FIN


TECH.


FINTECH IS A NEBULOUS TERM


AND IT RAISES QUESTIONS BANK


VERSUS NONBANK.


AND I THINK IN PART WHAT WE


ALL DESPERATELY NEED IS MORE


FACT-BASED INSIGHT ABOUT THE


FOUNDATIONAL ISSUES WHEN IT


COMES TO DATA USE IN FINANCIAL


SERVICES AND ALSO NEW


TECHNOLOGY BEING DEPLOYED IN


THE FINANCIAL SYSTEM AND IN


FINANCIAL SERVICES.


AND SO THAT IS WHAT HAS LEAD


ME TO STAND UP FINREG LAB


WHICH IS A NONPROFIT


ORGANIZATION.


LET ME USE MY SLIDES TO BE MY


GUIDE AND LET ME FIGURE OUT


HOW TO USE THIS AND PUT


GLASSES ON.


I FEEL LIKE I AM PUTTING ON MY


HELMET HERE.


SO OUR PURPOSE AT FINGERLAB


AND WE ARE A YEAR AND A HALF


OLD NOW IS REALLY IF YOU THINK


ABOUT AND ASSESS WHAT ARE THE


POTENTIAL WAYS DATA AND


TECHNOLOGY CAN BE HARNESSED


FOR GOOD AND IN PARTICULAR HOW


DATA AND TECHNOLOGY CAN BE


UTILIZED TO EXPAND FINANCIAL


ACCESS AND INCLUSION.


WE HAVE BEEN VERY FOCUSED IN


THE U.S., BUT WE ARE THINKING


ABOUT THESE ISSUES IN A GLOBAL


CONTEXT.


HOW CAN WE HELP TO GENERATE


FACT-BASED INSIGHTS THAT WILL


ULTIMATELY INFORM PUBLIC


POLICY BECAUSE, AGAIN, GIVEN


THE FOUR AND A HALF YEARS I


WAS MOST RECENTLY A A TREASURY


AND EVEN TO SOME EXTENT IN THE


PRIOR PERIOD, WITHOUT HAVING A


DEEP SORT OF EMPIRICAL


ASSESSMENT ABOUT WHAT THE


TRADEOFFS ARE, BOTH WHAT THE


BENEFITS MAY BE AND ALSO WHAT


THE POTENTIAL RISKS AND MAJOR


CONSIDERATIONS ARE, IT IS


REALLY HARD AND BEING CANDID,


IT IS HARD FOR REGULATORS TO


HAVE A LEVEL OF CONFIDENCE.


AND FRANKLY AT SOME LEVEL TO


EVEN TAKE ON A LEVEL OF


RESPONSIBILITY TO THEN THINK


ABOUT HOW DO WE EVOLVE OUR


GUIDANCES AND OUR REGULATIONS


AND EVEN OUR LAWS?


WE REALLY NEED TO UNDERSTAND


AS POLICY MAKERS, IMPLICATIONS


BETTER AS WE THINK ABOUT THE


NEED TO INVOLVE PUBLIC


POLICY.


AND HOPEFULLY WITH THE


INSIGHTS THAT WE ARE


GENERATING DIRECTLY AT FINREG


LAB, BUT WE ARE ALSO TRYING TO


FOSTER AND BRING IN FROM OTHER


RESEARCHERS AND ACADEMIC


INSTITUTIONS TO POLICY MAKERS


ESPECIALLY AT THE FEDERAL


LEVEL.


IT WILL HELP TO INFORM NOT


ONLY PUBLIC POLICY, BUT THE


BROADER FINANCIAL


MARKETPLACE.


FRANKLY THE MARKETPLACE IS


LOOKING FOR SOME SENSE OF WHAT


MAY BE THE RULES OF THE ROAD


AND WHERE ARE THE RISKY AREAS


AND HOW DOES IT TAKE ADVANTAGE


OF THE TECHNOLOGY AND DATA TO


EXTEND PRODUCTS AND SERVICES


AND ADVICE AND NEW CHANNELS TO


CONSUMERS AND SMALL BUSINESSES


AND COMMUNITIES.


SO WHAT IS THE STATE THAT WE


ARE IN RIGHT NOW?


YOU HEARD A LITTLE OF THIS


EARLIER AND IT REALLY IS A


REALLY SET OF CRITICAL ANCHOR


POINTS THAT WE HAVE TO THINK


ABOUT.


THIS IS SOMEWHAT OF AN


OUTDATED METHOD OF ASSESSING


OUTDATED PRODUCTS AND


SERVICES.


WON'T GO INTO IT IN TOO MUCH


DETAIL, BUT IT CALIBRATES OUR


UNDERSTANDING OF WHO REALLY IS


STRUGGLING AND WHO IS NOT


CONNECTED TO SAFE AND SECURE


FINANCIAL PRODUCTS AND


SERVICES.


WE HAVE 33.5 MILLION


HOUSEHOLDS WHO ARE BY FDIC


DEFINITION UNDER BANKED.


YOU HEARD THE STATISTICS


EARLIER.


WE HAVE A LOT OF PEOPLE IN


THIS COUNTRY WHO ARE LIVING IN


POVERTY.


IT IS HARD TO BELIEVE.




AMERICANS ARE LIVING IN A


STATE OF POVERTY.




WITH AN ANNUAL FINANCIAL


EMERGENCY, COVERING THOSE


EXPENSES, AND 34% OF AMERICANS


WHO EXPERIENCE ANNUAL INCOME


VOLATILE TEE.


WHICH FRANKLY ALL OF US IN THE


ROOM GET THAT AND KNOW THAT


AND HAVE THOSE EXPERIENCES


OURSELVES.


THAT'S ACTUALLY A RELATIVELY


LOW PERCENTAGE.


AND THEN WE THINK ABOUT


GLOBALLY THOSE WHO ARE


DISCONNECTED FROM SAFE


PRODUCTS AND SERVICES.




SERVED ANNUALLY -- I'M SORRY.


THEY ARE NOT CONNECTED TO A


FORMAL FINANCIAL SYSTEM ACROSS


THE GLOBE.


FOUR OF THE FIVE STATISTICS OR


THREE OF THE FIVE ARE THINGS


THAT FALL OUTSIDE THE


FINANCIAL SYSTEM.


THESE ARE MATTERS OF INCOME.


THESE ARE MATTERS OF WEALTH.


THESE ARE MATTERS OF


INEQUALITY OF INCOME AND


WEALTH.


AND THOSE THINGS HAVE TO BE


THOUGHT ABOUT IN MANY


DIFFERENT WAYS BY SOCIETY AND


BY POLICY MAKERS.


BUT A LOT OF THESE DATA POINTS


ARE IMPORTANT AND THEY COME


BACK TO HOW IMPORTANT BEING


TIED TO GOOD FINANCIAL


PRODUCTS AND SERVICES ARE AND


THAT'S WHERE I THINK MANY OF


US BOTH REALIZE THIS TIDAL


WAVE OF TECHNOLOGY AND THE


POTENTIAL OF DATA AND WHAT IT


MAY MEAN FOR HELPING TO DRIVE


LOWER COST ACCESS, LOWER COST


-- LOWER COSTS ASSOCIATED WITH


ACTUALLY BUILDING AND


PROVIDING PRODUCTS TO


ESPECIALLY LOW AND MODERATE


INCOME CONSUMERS AND MAY OFFER


A POTENTIAL BENEFIT.


IT MAY IMPROVE AND OPEN UP


CHANNELS AND MOBILE DEVICES


AND ONLINE ACCESS AND LOWER


COSTS, PERSONALIZED, TIMELY


INFORMATION THAT IS REALLY


ABOUT WHAT THAT INDIVIDUAL OR


WHAT THAT HOME REALLY NEEDS


BOTH IN THE IMMEDIATE


FINANCIAL NEEDS, BUT ALSO IN


THEIR MIDLAND LONGER TERM


FINANCIAL GOALS AND


ASPIRATIONS FOR THEMSELVES AND


FOR THEIR FAMILIES.


I THINK THAT'S WHY A LOT OF US


GET QUITE EXCITED ABOUT TRYING


TO UNDERSTAND WHAT DOES TECH


AND DATA MEAN IN THE FINANCIAL


SYSTEM?


HOW ARE WE THINKING ABOUT


INVOLVING POLICY SO THAT IT


REALLY IS FINANCIAL SERVICES


SUPPORTING DIGNITY AND NOT


TAKING THAT AWAY.


WE ALSO KNOW THE RISK.


THE BIG RISK THAT MANY OF US


ARE VERY AFRAID OF ARE THE


REALITIES THAT THIS TECHNOLOGY


AND THIS DATA MAY EXACERBATE


ESPECIALLY IN THIS COUNTRY THE


GENERATIONS OF RACIAL AND


INCOME AND ECONOMIC INEQUALITY


THAT EXISTS.


AND REALLY PRESSING FOR ALL OF


THIS IS TO UNDERSTAND HOW DOES


THAT TECHNOLOGY WORK?


WHAT DOES THE DATA DO WHEN


USED IN THE FINANCIAL SYSTEM


AND HOW DO WE MAKE SURE WE


DON'T EXACERBATE RED LINING


INSTANCES THAT HAVE HAPPENED


FOR GENERATIONS?


SO LOTS OF PRESSING QUESTIONS


AND WE HERE ARE NOT GOING TO


ANSWER AWFUL THESE.


BUT YOUNG WE QUITE TALKED


ABOUT THEM IN A TANGIBLE WAY


YET, BUT WHAT ARE SOME OF THE


ISSUES AND WHAT ARE SOME OF


THE OPPORTUNITIES?


CLEARLY ANXIETY AND CONCERN


ABOUT RED LINING AND


DISCRIMINATION BEING


PERPETUATED WITH DATA AND


TECHNOLOGY IS TOP OF ALL OF


OUR LISTS.


NOT UNDERSTANDING HOW THESE


NEW ALGORITHMS AND THESE


MACHINE-LEARNING ALGORITHMS


SPIT OUT OUTPUT


AND IT IS ULTIMATELY WHAT


DECIDES A CREDIT DECISION, FOR


INSTANCE.


THAT'S ANOTHER CONCERN THAT A


LOT OF US HAVE.


BUT THEN THERE ARE ALSO


POSITIVES AND POTENTIALS.


I ELUDED TO THIS A MINUTE


AGO.


CONSUMER FINANCIAL DATA.


IS THERE A WAY THAT WE


CONSUMERS COULD BE ACCESSING


OUR FINANCIAL INFORMATION AND


TAKING ADVANTAGE OF A


TECHNOLOGY TOOL THAT IS


HELPING US INDIVIDUAL LIES


WHAT OUR GOALS ARE AND WHAT


OUR NEEDS ARE?


IT RAISES QUESTIONS, WELL WHAT


ARE THE BUSINESS MODELS UNDER


THOSE PERSONAL FINANCIAL


MANAGEMENT TOOLS AND ARE THE


INCENTIVES ALIGNED OR NOT


ALIGNED WITH THAT INDIVIDUAL


NEED AND ASPIRATION?


ONE OF THE QUESTIONS, AND THIS


IS THE ONE THAT WE HAVE TAKEN


ON AT FINGERLAB RIGHT NOW AND


THAT'S THE QUESTION OF COULD


WE BRING IN DATA INTO CREDIT


UNDERWRITING METHODS --


TRADITIONAL CREDIT


UNDERWRITING METHODS AND WOULD


NEW DATA HELP A LENDER BETTER


CREDIT RISK ASSESS A CONSUMER


OR A SMALL BUSINESS?


WOULD THE INCLUSION OF NEW


DATA POTENTIALLY HELP A LENDER


DO THIS IN A WAY THAT A


SOUTHBOUND RAT, MORE ACCURATE


THAN WHAT THEY WOULD SEE WITH


A TRADITIONAL FICO SCORE OR


CREDIT HISTORY DATA?


AND WOULD IT ENABLE THE LENDER


TO DO SOMETHING THAT IS A MORE


PRUDENT DECISION AND IS IT


MORE PRUDENT FOR THE CONSUMER


THEN IN TERMS OF WHAT THE


CREDIT IS THAT THEY MIGHT


GET?


I WILL TALK ABOUT THAT IN A


FEW MINUTES AND LOTS OF OTHER


TOPICS.


NEW TECHNIQUES ON PRIVACY SORT


OF ALLOWING CONDITIONING ABOUT


WHO YOU SHARE YOUR DATA WITH.


ARE THERE WAYS THAT CAN BE


USED TO GET AFTER SOME OF THE


NEEDS THAT WE HAVE AROUND


KNOWING WHO IS IN OUR


FINANCIAL SYSTEM OR KNOW YOUR


CUSTOMER TYPES OF REQUIREMENTS.


THE LIST GOES ON.


I MEAN WE CAN ALL SIT AND COME


UP WITH MANY, MANY MORE.


WE STEP BACK AND TRY TO THINK


ABOUT WHERE DOES THIS


POTENTIAL FOR BIG CHANGE


REALLY SIT?


THESE ARE THE MASTER


CATEGORIES THAT WE HAVE


IDENTIFIED AND WHERE WE WANT


TO SPEND OUR TIME.


WE ARE DIGGING INTO THE ISSUES


OF DATA AND UNDERWRITING, BUT


THERE ARE CLEARLY OTHER


APPLICATIONS TOO.


I JUST SPOKE ABOUT A FEW OF


THEM, SO I AM NOT GOING TO


SPEND A LOT OF TIME ON THIS


PAGE.


LOTS OF POTENTIAL USES FOR


DATA AND TECHNOLOGY FROM


SOLVING IS SOMEBODY WHO THEY


SAY THEY ARE UNDER KNOW YOUR


CUSTOMER OBLIGATIONS, ARE


THERE MORE EFFICIENT WAYS OF


KNOWING WHO ARE THE BAD GUYS


IN OUR FINANCIAL SYSTEM AND


ROOTING THEM OUT.


HOW IS TECHNOLOGY HELPING TO


LOWER THE COST OF PRODUCTS


THAT HAVE BEEN DELIVERED


THROUGH A MOBILE DEVICE, AND


IS THE INFORMATION GENERATED


THROUGH THE MOBILE DEVICE


POTENTIALLY A WAY TO HELPING


THAT CONSUMER BETTER MANAGE


THEIR FINANCES?


THE LIST GOES ON AND ON.


BUT, IN ORDER FOR THOSE BIG


OPPORTUNITIES TO REALLY BE


SORTED AND FOR GUIDE RAILS TO


BE WRITTEN, WE HAVE TO COME


BACK TO THE POLICIES THE LAWS


VEE IN PLACE RIGHT NOW.


AND I JUST LISTED A FEW, BUT


MANY OF THESE ARE LAWS THAT WE


ARE QUITE FOCUSED ON IN THIS


WORK WE ARE DOING LOOKING AT


UNDERWRITING.


I THINK WHAT IS IMPORTANT TO


REALIZE HERE, ALL OF THESE


LAWS, MANY DATE BACK TO THE




IN FACT, 1970, WHEN I WAS


BORN, AND EVEN MORE RECENTLY




OF THESE HAVE BEEN WRITTEN IN


THE PAST 10 YEARS.


NONE OF THEM CONTEMPLATED THE


WORLD WE ARE LIVING IN NOW


WITH THE UBIQUITOUS AMOUNT OF


DATA USED OR NOT USED FOR LOTS


OF DECISIONS IN OUR LIVES, AND


SO HOW THEN ARE THESE LAWS AND


REGULATIONS GOING TO BE


UPDATED?


THAT'S WHERE WE LIKE TO THINK


WE CAN OFFER A LITTLE HELP.


WHAT DO WE DO?


FIRST AND FOREMOST WE TALK TO


POLICY MAKERS AND WE TALK TO


REGULATORS AND WE REALLY TRY


TO HONE IN ON WHAT ARE THE TOP


OF MIND ISSUES WHERE WE AS AN


INDEPENDENT ORGANIZATION CAN


GO OUT AND BUILD A TIMELY


RESEARCH PROJECT OR EVEN


IDEALLY AN EXPERIMENT WHERE WE


CAN ASSESS SOME OF THESE VERY


TOPICAL AND TIMELY MATTERS


THAT REGULATORS ARE SEEKING


INFORMATION ON.


WE THEN COLLABORATE WITH


OTHERS.


WE LEVERAGE EXTER NATIONAL


PARTNERS AND ACADEMIC


INSTITUTIONS AND FINANCIAL


MOD -- MODELING SHOPS THAT DO


THE ANALYSIS AS VENDORS TO


FINGERLAB AND LEVERAGING OTHER


PARTNERSHIPS WITH EVEN


CONSULTANTS WHERE WE HAVE A


DEEP BREADth OF LEGAL


EXPERTS, LAWYERS AND OTHERS


WHO ARE COMING ON BOARD AND


HELPING AS WE ARE PROBING BOTH


THE SPHERE -- THE EXPERIMENT


SIDE OF THE RESEARCH WE BUILD,


BUT THE POLICY AND THE LEGAL


ANALYSIS WORK WE ARE DOING.


AND THEN WE SHARE THE FACTS


AND THE INSIGHTS.


LET ME HOP TO THE NEXT ONE.


THIS REFLECTS IT A LITTLE


MORE.


PART OF THE AMBITION AND PART


OF WHAT WE HAVE BEEN DOING


ALONGSIDE BUILDING AN


EXPERIMENT INCURS AND YOU


PICKED THIS UP IN A ROOM,


POLICY DOES NOT HAPPEN IN A


VACUUM AND THERE ARE A LOT OF


STAKEHOLDERS THAT HAVE TO BE


ENGAGED IN THE CONSIDERATION


AND IN THE PROCESS.


AND IN LIGHT OF THAT, WE RUN


POLICY-WORKING GROUPS BASED ON


THE PARTICULAR AREA OF


RESEARCH THAT WE ARE


UNDERTAKING.


WE THEN BUILD 30 TO 60 PEOPLE


WORKING GROUPS -- ACTUALLY


THOSE ARE THREE WORKING


GROUPS, BUT TO DEEP DIVE


ASSESS WHAT THE CURRENT LAWS


SAY ABOUT THAT PARTICULAR DECK


ENOLOGY OR DATA USE --


TECHNOLOGY OR DATA USE.


WHAT ARE THE POTENTIAL WAYS


THE LAWS OR THE POLICIES OF


THE REGULATIONS COULD BE


EVOLVED, MINDFUL OF THE


CONSIDERATIONS AND THE


TRADEOFFS AND THE RISKS TO


CONSUMERS AND THE BEN --


BENEFITS TO THE INDUSTRY?


WE PRODUCE REPORTS THAT


REFLECT THE INPUT THAT CAME


THROUGH THE WORKING GROUP


PROCESSES ALONG WITH THE


EXPERIMENT INSIGHTS.


AND NOW I WILL TALK CONCRETELY


ABOUT OUR EXAMINATION OF CASH


FLOW DATA AND UNDERWRITING.


SO HERE IN THE U.S. WE KNOW


THAT THERE ARE ABOUT




LACK A SUFFICIENT CREDIT


HISTORY TO SCORE THEM UNDER


TRADITIONAL UNDERWRITING


MEANINGS.


THIS IS HISTORY THAT GENERATES


THE FICA -- FICO SCORE.


THEY HAVE STEEP CREDIT AND


PAYING HIGH COSTS TO ACCESS OF


CREDIT AS A SOLE PROPRIETOR.


AND SO ONE OF THE THEORIES


GOING AND ONE OF THE AREAS OF


STRONG INTEREST AMONG


REGULATORS IS THE QUESTION OF


ARE THERE OTHER TYPES OF DATA


THAT FEELS FRANKLY SAFE


BECAUSE THEY ARE FINANCIAL IN


NATURE, BUT THAT ACTUALLY


COULD HELP LENDERS PRUDENTLY


CREDIT RISK ASSESS THESE






THAT INTEREST HAS ULTIMATELY


LANDED ON THE FOCUS OF LOOKING


AT CASH FLOW DATA.


AND THAT MEANS LOOKING AT WHAT


IS THE INFORMATION IN AN


INDIVIDUAL OR IN A SMALL


BUSINESS' BANK ACCOUNT.


WHAT ARE THE TRANSACTION


ACTIVITIES?


IMPORTANTLY IT COULD MEAN A


LOT OF OTHER THINGS TOO.


THERE IS A LOT OF INFORMATION


AS IF I OF US WHO PULL OUR


BANK ACCOUNT UP, WHO IS THE


MERCHANT AND WHERE IS THE


MONEY GOING?


WHAT ARE THE DATES IT WAS


SENT?


SOMETIMES IT IS TIME STAMPED.


THERE IS SAW LOT OF


INFORMATION IN THE BANK


ACCOUNT PICTURE.


WHAT REGULATORS AND WE AND


OTHERS IN THE BROADER


FINANCIAL STAKEHOLDER SECTOR


WANT TO KNOW IS DOES THE


INFORMATION THAT COMES IN AND


OUT OF A BANK ACCOUNT, THE


TRANSACTION DATA INFORMATION,


IS THAT A WAY TO BETTER ASSESS


THESE INDIVIDUAL NEEDS TO


ACCESS CREDIT.


WHAT WE HAVE DONE IS SOUGHT


ABOUT AN EXPERIMENT THAT SEEKS


TO ANSWER THAT QUESTION.


WE HAVE BEEN ABLE TO GET LOAN


LEVEL DATA FROM TWO, THREE,


FOUR, FIVE LENDERS.


WE HAVE AN ADDITIONAL LENDER


AND THESE ARE SMALL LENDERS.


THEY ARE A CREDIT CARD


PROVIDER AND INSTALLMENT LOANS


AND IT IS A PROVIDER OF AN


OVERDRAFT PRODUCT AND THEY


ARE USING CASH FLOW


INFORMATION IN ORDER TO CREDIT


RISK ASSESS AND EXTEND THE


CREDIT.


IT IS CERTAIN NONCREDIT


PRODUCTS TO CONSUMERS AND


SMALL BUSINESSES.


WE ARE SETTING OUT TO ANSWER


QUESTIONS.


FIRST AND FOREMOST, DOES THE


DATA ALLOW THE LENDER TO


EXTEND CREDIT TO THOSE


BORROWERS?


AND WE HAVE PERFORMANCE DATA


THAT WE CAN ASSESS HOW


ACCURATE WAS THE PREDICTION


ACCORDING TO THE CASH FLOW


DATA.


WE ARE COMPARING THAT TO


CONSUMERS WHO ARE NOT IN TOUCH


WITH CASH FLOW.


THE SECOND QUESTION IS, DOES


THAT -- DOT BORROWERS PERFORM


BETTER WITH THE CASH FLOW


UNDERWRITING?


AND THEN THE THIRD IMPORTANT


QUESTION FROM A POLICY


STANDPOINT IS DO WE SEE


DIFFERENCES BETWEEN PROTECTED


AND NON PROTECTED CLASSES?


DO WE SEE INDICATIONS OF THE


IMPACT RISK?


I DON'T WANT TO GET AHEAD OF


MY SKIS.


I WILL USE THIS TO WET YOUR


APPETITE.


WE WILL ACTUALLY BE RELEASING


THE FINDINGS OF THIS RESEARCH


IN MAY.


IT IS COMING TO HURRICANE


WHAT -- IT IS COMING TO LEARN


WHAT WE LEARN.


AND SO THEN A PART OF THE


PROCESS OF THE POLICY ISSUES.


WHAT WE CAN DO IS CONVENE 60


PEOPLE IN YEUN AND THERE ARE


POLICY MAKERS WHO ARE SITTING


AT THE TABLE WITH US AND THE


LARGE BANKS AND THE NONBANK


LENDERS.


WE NEED TO DEEP DIVE AND THINK


ABOUT AND ASSESS AND CONSIDER


THE OPTIONS IN TERMS OF


EVOLVING THOSE LAWS AND THE


POLICIES.


AND NOT SURPRISING THE CREDIT


INFORMATION ECOSYSTEM, WE ARE


NOW TALKING ABOUT A VERY


DIFFERENT FLOW OF A VERY


DIFFERENT TYPE OF DATA FOR


UNDERWRITING.


WE ARE TALKING ABOUT CASH FLOW


DATA FROM A BANK ACCOUNT


FLOWING TO WHAT WE CALL AN END


USER WHICH ARE THE LENDERS.


IT IS FLOWING THROUGH THESE


INTERMEDIARIES.


THIS IS NOT SOMETHING SOME


WOULD ARGUE WAS CONTEMPLATED


UNDER THE FAIR CREDIT


REPORTING ACT.


THESE ARE THE ECOSYSTEM


QUESTIONS WE ARE DIGGING DEEP


INTO FAIR AND INCLUSIVE ACCESS


IS AROUND FAIR CREDIT


LENDING.


IT WAS AN ENGAGING


CONVERSATION WITH BANKS AND


WITH ACADEMICS AS WE WERE


THINKING ABOUT HOW IS FAIRNESS


DEFINED?


WHAT ARE THE EXPECTATIONS?


IF YOU DO SEE DIFFERENCES


BETWEEN PROTECTED CLASS AND


NON PROTECTED CLASS, ONE OF THE


TOPICS THAT WE SPENT A FAIR


BIT OF TIME TALKING ABOUT IS


WHAT IF WE SEE RESULTS WHERE


HISPANIC FEMALES HAD BEEN


ASSESSED AT SAY 50% UNDER


FICO, BUT YET WITH THE CASH


FLOW DATA WE ARE NOW SEEING


MORE -- OR HISPANIC FEMALES


BEING ASSESSED AT A GREATER


RATE OF 70%.


BUT IN COMPARISON TO WHITE MEN


, WHERE IT IS 70% -- [NO


AUDIO].


WHEN WE ARE TALKING ABOUT A


NONCREDIT-REPORTING AGENCY


SYSTEM AND CONSUMERS ARE


HAVING DATA PULLED FROM THEIR


BANK ACCOUNT AND MOVING


THROUGH A THIRD PARTY TO AN


END USER AND OF COURSE ISSUES


AROUND WHO IS IN THAT


RESPONSIBILITY WHEN THAT DATA


IS FLOWING.


MORE ON THAT ONE TOO.


SO I AM HAPPY TO SHARE THIS


DECK.


IT HAS SOME OF THE POIGNANT


QUESTIONS WE ARE DIGGING INTO


IN EACH OF THE WORKING GROUPS.


I THINK THE REAL NOTE IS WE


WILL BE RELEASING THE REPORT


IN MAY.


WE ARE LOOKING FOR PEAKED


BACK.


WE -- FOR FEEDBACK.


WE ARE LOOKING FOR


CONVERSATION.


WE ARE HOPING THE RESEARCH


FINDINGS COMBINED WITH THE


DEEP DIVE POLICY ISSUES WILL


HELP TO FURTHER THE


CONVERSATION AS WE THINK ABOUT


HOW WE ARE MAKING SURE THE


POLICY -- IS THE STATE OF


TECHNOLOGY AND DATA AND


FINANCIAL SERVICES EVOLVED?


WE ARE REALLY THOUGHTFULLY


CONSIDERING HOW WE ARE


BALANCING THE TRADEOFF.


ALL RIGHT.


AND HERE IS THE TEAM.


I WANT TO POINT OUT BECAUSE


MANY OF YOU KNOW SOME OF THE


PEOPLE IN THIS TEAM.


IT IS QUITE EXCITING.


 EXCITING.


WE HAVE KELLY COCHRAN WHO


JOINED US AS OUR DEPUTY A


MONTH AGO.


WAYNE FULL WHO COMES WITH A


BACKGROUND OF LINCOLN LABS.


STEVEN WHO WAS WORKING FOR


FSCARD WHICH IS A CREDIT CARD


PRODUCT THAT WAS SPECIFICALLY


AIMED AT LOW AND MODERATE


INCOME HOUSEHOLDS.


IT IS A GREAT TEAM AND A GREAT


BOARD AND I LOOK FORWARD TO


HEARING YOUR QUESTIONS.


[APPLAUSE].


WE WILL GO THROUGH EACH OF


THE PRESENTATIONS AND THEN


COME BACK FOR Q AND A.


HI, EVERYONE.


GOOD AFTERNOON.


MY NAME IS LISA SERVON AND I


TEACH AT THE UNIVERSITY OF


PENNSYLVANIA, AND I HAVE BEEN


DOING WORK ON CONSUMER


FINANCIAL SERVICES FOR ABOUT


SEVEN YEARS.


WHEN I THOUGHT ABOUT COMING


TODAY I REALLY WAS THINKING


ABOUT THE TITLE OF THE


CONFERENCE WHICH IS CONSUMER


PROTECTION IN THE AGE OF


UNCERTAINTY.


I THINK A LOT OF THE PANELISTS


TODAY AND THE SPEAKERS HAVE


REALLY BEEN TALKING ABOUT THE


PROTECTION PIECE OF CONSUMER


PROTECTION, THE LAWS, THE


REGULATIONS, THE WAYS IN WHICH


WE PROTECT CONSUMERS.


AND SO I REALLY WANT TO FOCUS


ON THE CONSUMER PIECE WITH A


LITTLE PERSONAL FAITH OF THE


PEOPLE WE ARE TALKING ABOUT


AND THE UNCERTAINTY PIECE.


AND WHEN I WAS THINKING ABOUT


THIS I REALLY THOUGHT, WELL,


THERE ARE A FEW KINDS OF


UNCERTAINTY THAT ARE IMPORTANT


IN THE CONVERSATIONS WE ARE


HAVING.


ONE IS THIS UNCERTAINTY IN THE


POLITICAL ENVIRONMENT.


IT IT HAS REALLY CHANGED THE


CONTEXT IN WHICH CONSUMERS ARE


BOWING PROTECTED AND THE WAY


WE ARE THINKING ABOUT CONSUMER


PROTECTION.


THE SECOND WHICH IS THE ONE I


WANT TO SPEND MORE TIME


TALKING ABOUT IS FINANCIAL


UNCERTAINTY.


SO IN TERMS OF FINANCIAL


UNCERTAINTY I WANT TO TALK


ABOUT HOW IT HAS BECOME


INCREASINGLY WIDESPREAD.


IT IS SO WE HAVE MORE AND MORE


FAMILIES WHO FEEL AS THOUGH


THEY ARE LIVING IN FINANCIALLY


PRECARIOUS SITUATIONS.


AND THAT IS CHANGING.


WE KNOW FROM RESEARCH THAT 40%


OF AMERICANS COULD NOT COME UP


WITH $400 IN THE EVENT OF AN


EMERGENCY.


THAT MEANS THAT IT IS NOT JUST


THAT THEY HAVE -- THEY DON'T


HAVE $400 IN THEIR BANK


ACCOUNT, BUT THERE IS NO ONE


THEY COULD EVEN ASK FOR.


THEY DON'T HAVE A CREDIT CARD


THEY COULD CHARGE $400 ON.


IMAGINE THE KINDS OF THINGS


THAT HAPPEN TO US ON A REGULAR


BASIS, AN APPLIANCE BREAKS


DOWN, CLASSIC EXAMPLE, A CAR


BREAKS DOWN, A MEDICAL


EMERGENCY.




PAYCHECK TO PAYCHECK.


SO WHEN WE THINK ABOUT AND AS


MELISSA TALKED ABOUT SOME OF


THESE LAWS NOT CHANGING SINCE


THE 1970s, THE WORLD IN


WHICH PEOPLE ARE EARNING AN


INCOME AND TRYING TO MAKE ENDS


MEET HAS CHANGED A LOT.


THE FINANCIAL SITUATION, THE


FINANCIAL TOOLS THEY HAVE TO


MANAGE THAT AND THE POLICY


SITUATION HAVEN'T REALLY


CHANGED TO ACCOMMODATE


THOSE -- THIS CHANGE.


THERE ARE REALLY THREE KEY


TRENDS THAT ARE DRIVING THIS


WIDESPREAD FINANCIAL


UNCERTAINTY.


THE FIRST IS DECLINING WAGES.


SINCE THE 1970s WAGES HAVE


BEEN GOING DOWN FOR PEOPLE.


THE SECOND IS INCREASED INCOME


VOLATILE TEE.


IT IS DEFINED AS SHIFT OF MORE


THAN 25% IN SOMEONE'S INCOME


FROM ONE YEAR TO THE NEXT.


BECAUSE OF THAT, PEOPLE ARE


MUCH LESS ABLE THAN THEY USED


TO BE TO BE ABLE TO FIGURE OUT


HOW MUCH MONEY IS COMING INTO


THE HOUSEHOLD FROM WEEK TO


WEEK OR MONTH TO MONTH.


A LOT OF THIS IS BECAUSE THERE


IS LESS ATTACHMENT BETWEEN


EMPLOYERS AND EMPLOYEES


BECAUSE PEOPLE HAVE SHIFTED


FROM FULL TIME TO PART-TIME


JOBS, AND THAT MANY OF THESE


JOBS ARE SCHEDULED AND ARE IN


AN ON DEMAND WAY.


PEOPLE DON'T KNOW IF THEY ARE


WORKING AT AN HOURLY JOB


WHETHER THEY WILL BE SCHEDULED


FOR 10 HOURS A WEEK OR 40


HOURS A WEEK.


INCOME VOLATILE TEE HAS


DOUBLED OVER THE LAST 30


YEARS.


IT HAS CREATED HUGE CHANGE.


AND THE THIRD CHANGE IS THE


RETRACTION OF THE PUBLIC AND


PRIVATE SAFETY NET.


SO WE KNOW THE SOCIAL WELFARE


SITUATION, THE SOCIAL WELFARE


SYSTEM IS MUCH MORE FRAYED


THAN IT USED TO BE.


AND EVEN IF YOU DO HAVE A


GOOD, STABLE JOB, IT IS VERY


LIKELY YOUR COST FOR HEALTH


INSURANCE HAS GONE UP, RETIRE


MEANT PLAN IS MUCH LESS SECURE


AND MUCH MORE DEFINED BY WHAT


YOU CONTRIBUTE THAN WHAT YOU


WILL GET BACK FROM THAT


EMPLOYER.


SO ALL OF THESE THINGS HAVE


COMBINED TO CREATE A SITUATION


IN WHICH PEOPLE HAVE A VERY


HARD TIME FEND -- SPENDING,


PLANNING, SAVING AND FIGURING


OUT HOW THEY WILL MANAGE THEIR


FINANCIAL LIVES.


I WANTED TO REALLY UNDERSTAND


HOW THOSE SITUATIONS WERE


AFFECTING CONSUMERS ON THE


GROUND, AND I WANTED TO KNOW


WITH THE THREE FRIENDS IN THIS


INCREASING FINANCIAL


INSTABILITY, I SAW THE DATA


THAT SHOWED THAT MANY MORE


PEOPLE WERE USING ALTERNATIVE


FINANCIAL SERVICES LIKE CHECK


CASHERS, PAYDAY LENDERS,


PAWNBROKERS, ET CETERA.


IN ORDER TO UNDERSTAND THAT IN


A DIFFERENT WAY I GOT A JOB AS


A TELLER.


I WORKED FOR FOUR MONTHS AT A


CHECK CASHER IN THE SOUTH


BRONX IN NEW YORK.


I ALSO WORKED AS A PAY DAY


LENDER AND LOAN COLLECTOR IN


OAKLAND, CALIFORNIA.


I ALSO STAFFED A HOTLINE


CALLED THE PREDATORY HEALTH


HOTLINE RUN BY A LAW CENTER TO


TALK WITH PEOPLE ABOUT HOW


THEY WERE HAVING DIFFICULTY


PAYING BACK THOSE PAY DAY


LOANS.


LOANS THAT WERE MADE IT THEM


EVEN THAT WERE ILLEGAL.


ONE OF THE THINGS COMING OUT


OF THAT RESEARCH THAT WAS MOST


SURPRISING TO ME, AND THIS IS


PARTICULARLY TRUE FOR THE


PEOPLE WHO HAD TAKEN OUT SMALL


DOLLAR CREDIT WAS HOW MANY OF


THOSE PEOPLE HAD ATTRIBUTES OF


MIDDLE CLASS AMERICANS.


I THINK WHEN WE THINK OF THE


GROUP WE ARE PROTECTING FROM


THE PRACTICES AND WHETHER THEY


WERE MAINSTREAM OR ALTERNATIVE


FINANCIAL INSTITUTIONS WE


OFTEN THINK OF LOW AND


MODERATE INCOME PEOPLE AND WE


THINK OF PEOPLE OF COLOR AND


HISTORICALLY DISADVANTAGED


NEIGHBORHOODS, AND THAT'S


TRUE.


THE SURPRISING THING TO ME WAS


HOW MANY OF THESE PEOPLE WERE


PEOPLE WHO OWNED THEIR HOMES,


HAD COLLEGE EDUCATIONS AND


WERE MAKING MORE THAN $50,000


OR $60,000 A YEAR.


THAT GROUP, THOSE THREE


ATTRIBUTES I JUST DESCRIBED IS


THE FASTEST GROWING GROUP OF


PAYDAY LOAN USERS.


THAT'S BECAUSE OF THE INCREASE


IN FINANCIAL INSTABILITY AND


THE LACK OF GOOD OPTIONS FOR


PEOPLE WHO FIND THEMSELVES IF


THOSE EMERGENCIES THAT ARE


BECOMING INCREASINGLY COMMON.


I WANT TO TELL YOU JUST TWO


STORIES FROM THE PEOPLE -- THE


HUNDREDS OF PEOPLE I HAVE


INTERVIEWED.


WHAT I DID WAS I WORKED BEHIND


THE COUNTERS OF THESE STORES.


I TOOK THE CALLS ON A HOTLINE


FOR A MONTH, AND THEN I CAME


OUT FROM BEHIND THE COUNTER


AND INTERVIEWED HUNDREDS OF


PEOPLE WHO WERE THE CUSTOMERS


OF THESE BUSINESSES, BOTH THE


TWO I WORKED WITH AND OTHERS


AROUND THE COUNTRY.


I WILL JUST TALK ABOUT TWO OF


THESE THEMES THAT RELATE BACK


TO THE TREND I TALKED ABOUT.


ONE IS LOW WAGES AND


UNPREDICTABLE INCOME.


THE OTHER HAD TO DO WITH


MEDICAL EXPENSES WHICH IS A


HUGE DRIVER OF BANKRUPTCY AND


SMALL DOLLAR CREDITS USAGE.


FOR THE STORY I WILL TELL YOU


ABOUT TODAY, TWO OF THEM, WE


INTERVIEWED PEOPLE AT THREE


POINTS IN TIME.


WE FIRST GOT A HUGE DATA SET


FROM A SUBPRIME CREDIT BUREAU


CALLED CLARITY SERVICES WHICH


HAS A CONTRACT WITH A LOT OF


THESE SMALL DOLLAR CREDIT


USERS.


WHAT HAPPENED WAS WHEN YOU


APPLY FOR A PAYDAY LOAN, THAT


LENDER WOULD CHECK IN WITH


THIS SUBPRIME CREDIT BUREAU


AND FIND OUT IF YOU WERE


CREDIT WORTHY.


I DIDN'T KNOW BEFORE I DID THE


RESEARCH THAT THE SECOND TIER


CREDIT BUREAU EVEN EXISTED.


WE GOT THE DATA FROM CLARITY


AND CLEANED THE DATA AND


ADMINISTERED A SURVEY AND THEN


WE ASKED PEOPLE ON THE SURVEY


IF THEY WOULD BE WILLING TO BE


INTERVIEWED.


WE INTERVIEWED PEOPLE IN THREE


DIFFERENT STATES, CALIFORNIA,


TEXAS AND FLORIDA BECAUSE THEY


HAVE VERY DIFFERENT REGULATORY


ENVIRONMENTS AND WE WANTED TO


SEE THE DIFFERENCE AND WE


INTERVIEWED THEM IN THREE


POINTS OF TIME.


GROUND 0, A YEAR LATER, AND A


YEAR AFTER THAT.


FOR A NUMBER OF THOSE PEOPLE


WHO AGREED TO BE INTERVIEWED


THEY AGREED TO GIVE US ACCESS


TO THEIR PERSONAL DATA.


I WILL NOT SHOW THIS BECAUSE I


DON'T HAVE ENOUGH TIME TODAY,


BUT I CAN SEND YOU A PAPER IF


YOU ARE INTERESTED THAT


CREATES A TIMELINE AND MAPS


THAT CONSUMER DATA TOGETHER


WITH THE KIND OF EVENTS THAT


PEOPLE SAID WERE HAPPENING IN


THEIR LIVES THAT WERE DRIVING


THE USE OF THIS CREDIT.


LET ME TELL YOU ABOUT ANNA


FIRST.


ANNA LIVES IN CENTRAL FLORIDA.


SHE WORKS FOR A MAJOR HOTEL


CHAIN THAT ALSO TELL -- SELLS


TIMESHARE PROPERTIES.


SHE IS A PRIMARY BREADWINNER


IN HER FAMILY.


SHE IS MARRIED.


SHE HAS A COUPLE OF CHILDREN.


HER HUSBAND WORKS IN AND OUT


OF CONSTRUCTION, BUT HE IS THE


PRIMARY CAREGIVER FOR THE


FAMILY.


ANNA'S SALARY WORKS IN A WAY


THAT SHE GETS A BASE SALARY,


AND SHE GETS A COMMISSION


BASED ON HOW MANY PROPERTIES


SHE SELLS.


FOR HERSHEY CAL -- FOR HER,


SHE MANAGED -- SHE FIGURES OUT


THE COMMISSION SHE GOT WAS


ALWAYS ENOUGH TO PAY THE


RENT.


EVERYTHING ELSE SHE MADE AND


HER HUSBAND IN AND OUT OF


CONSTRUCTION PAID FOR


EVERYTHING ELSE.


THE FOOD, THE LIGHTS, THE


PHONE BILLS, ET CETERA.


WHAT HAPPENED WAS ON A


PARTICULAR DAY AFTER ANNA HAD


BEEN WORKING THERE FOR FIVE


YEARS, THE COMPANY DECIDED TO


CHANGE THE COMMISSION


FORMULA.


HER INCOME DROPPED


PRECIPITOUSLY.


THIS IS INTERESTING, RIGHT?


HERE IS SOMEBODY WITH A STABLE


JOB.


A LOT OF HER SITUATION STAYS


THE SAME, BUT HER INCOME


CHANGES DRAMATICALLY FROM A


STABLE SITUATION TO AN INCOME


SHOCK WHERE HER INCOME IS


UNSTABLE.


THAT DRIVES HER TO START USING


PAYDAY LOANS WHICH SHE HAS A


HARD TIME PAYING BACK BECAUSE


HER INCOME IS NEVER GOING UP


WITH THE COSTS SHE IS


OCCURRING.


EVENTUALLY BY THE TIME WE


INTERVIEWED HER THE THIRD TIME


HER HUSBAND HAD GOTTEN A FULL


TIME JOB BECAUSE HE NEEDED TO


TO STABILIZE THE FAMILY'S


INCOME.


HOWEVER, WHEN WE ASKED ANNA


HOW SHE WAS FEELING AND HOW


SHE HAD MANAGED TO GET OUT OF


DEBT BECAUSE SHE WAS NO LONGER


USING THESE LOANS SHE TOLD US


THAT SHE CASHED OUT HER


RETIREMENT ACCOUNT IN ORDER TO


PAYOFF THE DEBT AND START WITH


A CLEAN SLATE.


SO I INTERVIEWED A LOT OF


PEOPLE WHO WERE MAKING ONE


EXPENSES DECISION TO TAKE OUT


LOANS LIKE THIS WHICH THEY


DIDN'T REALLY WANT TO DO, AND


THEN SOMETIMES TRADING THAT


OFF FOR ANOTHER DECISION, BUT


ALSO GOING TO AFFECT HER


NEGATIVELY OVER THE LONG RUN


WHICH WAS CASHING OUT HER


ENTIRE RETIREMENT PLAN.


SOMETIMES WHEN YOU LOOK AT THE


DATA OF PAYDAY LENDING USE OR


SMALL CREDIT WE MAY THINK OF


IT AS A GOOD OUTCOME, BUT


OFTENTIMES WE ARE MAKING OTHER


BAD DECISIONS AT THE SAME


TIME.


NOT A GREAT STORY.


THE SECOND STORY IS PAULA'S


STORY AND MEDICAL DEBT.


WE HEARD STORY AFTER STORY


AFTER STORY ABOUT PEEM WHO


COULD NOT -- PEOPLE WHO COULD


NOT MANAGE MEDICAL EXPENSES.


WHEN WE TALK HEALTH CARE AND


WHO HAS INSURANCE AND WHO


DOESN'T HAVE INSURANCE, MANY


PEOPLE HAD INSURANCE AND STILL


COULDN'T MANAGE.


PAULA HAS WORKED FOR THE SAME


TELECOMMUNICATIONS COMPANY FOR




SHE AND HER HUSBAND WORK FULL


TIME.


WHEN WE ASKED HOW SHE THOUGHT


HER SALARY WAS SHE SAID WE


MAKE DECENT MONEY.


IT SHOWS WHERE TO -- THEY


CHOSE TO LIVE OUTSIDE DALLAS


BECAUSE IT HAD A GOOD SCHOOL


SYSTEM.


HER YOUNGEST SON HAS A MEDICAL


CONDITION THAT REQUIRES ON


GOING MEDICAL ATTENTION.


I THINK I JUST DID THAT.


THERE WE GO.


SOME PROVIDERS DON'T TAKE HER


INSURANCE.


YOU ARE IN A SITUATION WHERE A


LOT OF PROVIDERS AND SOME ARE


REALLY WORKING AND HER SON IS


STABLE.


WHILE SOME OF THOSE -- SHE


WORKED FOR THE SAME COMPANY,


BUT THE PROVIDERS HAVE GONE


FROM TAKING HER INSURANCE TO


NOT TAKING HER INSURANCE.


SHE DOESN'T WANT TO SWITCH


BECAUSE HER SON'S CONDITION IS


STABLE USING THE PROVIDERS SHE


USES.


SHE HAS TO PAY UP FRONT EVEN


THOUGH SOME OF THESE EXPENSES


ARE COVERED SHE HAS TO PAY UP


FRONT FOR MANY OF THE COSTS,


AND THEN IT TAKES A LONGTIME


TO GET REIMBURSED.


THIS IS ANOTHER SUB CATEGORY


OF PROBLEMS THAT MANY PEOPLE


EXPERIENCE AS A MISMATCH


BETWEEN THEIR INCOME AND THEIR


EXPENSES.


HAVING EXPENSES AND WHEN THOSE


EXPENSES WOULD GET


REIMBURSED.


MEANWHILE THERE WERE BUDGET


CUTS IN THE PUBLIC SCHOOL


DISTRICT THAT CHANGED THE


ABILITY OF THE SCHOOL DISTRICT


TO ACCOMMODATE HER SON'S


CONDITION.


HER FAMILY THEN MOVED HER SON


TO A PRIVATE SCHOOL WHICH ADDS


TO THEIR EXPENSE.


AT THE SAME TIME AS ALL OF


THIS IS HAPPENING THE EMPLOYER


PROVIDED HEALTH INSURANCE THAT


SHE AND HER HUSBAND GET


CHANGES DRAMATICALLY SO THAT


THEIR COSTS ARE INCREASING,


BUT INCOME IS NOT.


WHAT USED TO BE A SMALL


DEDUCTIBLE IS NOW $2800 THAT


THEY HAVE TO COVER EVERY YEAR


BEFORE THEY CAN START TO GET


THINGS COVERED.


AND SO WHAT I WANT TO KIND OF


PULL OUT FROM THOSE TWO


EXAMPLES IS THAT THESE ARE TWO


VERY COMMON KINDS OF


SITUATIONS PEOPLE ARE FINDING


THEMSELVES IN WHEN YOU THINK


BACK TO THE INCOME VOLATILE


TEE ISSUES.


SOMETIMES THEY ARE INVISIBLE,


BUT THEY ARE HAPPENING TO


MIDDLE CLASS FAMILIES.


TO WRAP UP I WOULD SAY WHAT WE


NEED NOW IS A CONSUMER


FINANCIAL SERVICES SYSTEM THAT


ENSURES ACCESS TO SAFE AND


AFFORDABLE FINANCIAL SERVICES


FOR ALL-AMERICANS AND HAVE THE


HONOR OF CONSUMER ADVISORY


BOARD WHEN RICH CORDRAY WAS


DIRECTOR.


I AM SADDENED BY THE DIRECTION


THAT AGENCY HAS TAKEN IN TERMS


OF ITS LEADERSHIP.


WE NEED A REGULATORY


ENVIRONMENT THAT TRULY


PROTECTS CONSUMERS.


I ALSO THINK WHENEVER WE ARE


HAVING THE DISCUSSIONS LIKE WE


ARE HAVING HERE TODAY AND


TOMORROW, WE ALSO NEED TO


THINK ABOUT THE MACRO TRENDS


THAT ENABLE PEOPLE TO ATTAIN


FINANCIAL HEALTH.


WE NEED TO BE FOCUSED ON


CONSUMER PROTECTIONS AND THE


REGULATORY ENVIRONMENT.


WE ALSO NEED TO BE THINKING


ABOUT LIVING WAGES AND A


SUPPORTIVE SAFETY NET FOR WHEN


WORK DOESN'T WORK.


THANK YOU.


[APPLAUSE].


I AM GOING TO DO MORE OF A


CONVERSATIONAL PIECE, I


THINK.


MAYBE I AM TIRED.


I DON'T KNOW.


I THINK THIS IS A GOOD WHERE I


AM COMING IN ON THIS


CONVERSATION.


I AM ACTUALLY REWRITING MY


THOUGHTS IN MY MIND NOW.


I WILL GIVE UH COPY -- YOU A


COPY OF MY TALK SO YOU CAN


POST IT WITH MORE DETAIL, BUT


I AM KIND OF GOING TO TALK


ABOUT -- I CAN SEE MY


OBJECTIVE -- TWO OBJECTIVES.


ONE IS GOING TO START WHERE


YOU LEFT OFF AND TALK ABOUT


WHY ASSETS ARE IMPORTANT IN


THINKING ABOUT PROTECTION.


IT IS NOT JUST ABOUT


REGULATIONS, BUT HAVING PEOPLE


IN A POSITION THAT THEY DON'T


HAVE TO RELY ON IT IN THE


FIRST PLACE.


THEN I WILL QUICKLY TALK ABOUT


A BASKET OF TOOLS THAT MAYBE


WE CAN USE TO LEAD THE


CONVERSATION ON HOW WE MAY


BUILD AS -- ASSETS FOR PEOPLE


SO WE CAN HAVE RESERVES FOR --


WHEN THINGS COME UP AND THEY


CAN PLAN THEIR LIVES OUT.


THE FIRST THING IS AND I WISH


I HAD IT READY, BUT WE ARE


DOING A PAPER ON WHITE WEALTH


AND EQUALITY.


OFTEN TIMES IN OUR


CONVERSATIONS WE TALK ABOUT


THE BLACK-WHITE GAP.


IT MAKES US THINK WEALTH AND


EQUALITY IS A BLACK PROBLEM OR


LIMITED TO CERTAIN SEGMENTS OF


PEOPLE OR GROUP.


IT IS AN AMERICAN PROBLEM,


RIGHT?


I MEAN, THERE ARE TONS OF


WHITE HOUSE HOLDS WHO LACK


WEALTH, AND AS I SAY WE WILL


PUT A PAPER OUT NEXT WEEK ON


THAT TOPIC.


 I WAS DOING A BOOK AND


LOOKING FOR DATA, BUT THERE


ISN'T DATA THAT LOOKS


SPECIFICALLY AT -- OR VERY


LITTLE DATA.


I COULDN'T FIND ANY.


MAYBE YOU CAN.


IT SPECIFICALLY LOOKS WITHIN


HOUSEHOLDS OF WHITE FAMILY'S


DEBT -- NOT DEBT, BUT ASSETS,


WEALTH ACCUMULATION.


THAT IS IMPORTANT TO


UNDERSTAND.


ASSETS ARE IMPORTANT, AND THAT


IS AN AMERICAN PROBLEM.


HOPEFULLY WE CAN GET SOME


UNITED EFFORTS IN TRYING TO


CREATE POLICIES AROUND THINGS


LIKE REDISTRIBUTING WEALTH,


WEALTH TRANSFER, THINGS THAT


HAVE BEEN VERY UNAMERICAN TO


TALK ABOUT, BUT YET FIT WITHIN


OUR SYSTEM OF BELIEFS, I


BELIEVE, AROUND EFFORT AND


ABILITY LEADING TO DESIRED


OUTCOMES.


IF YOU DON'T HAVE THE


NECESSARY ASSETS IN YOUR


PORTFOLIO IN A CAPITALIST


SOCIETY, YOU REALLY CAN'T


ACHIEVE THE SAME WITH YOUR


EFFORT AND ABILITY.


WE HAVE SEEN THAT IN THE


NEWSPAPER WITH THE COLLEGES.


THAT'S A REALLY UNIQUE -- I


SAY UNIQUE -- BUT FLAMBOYANT


WAY OF LOOKING AT IT, BUT IT


HAPPENS ALL ALONG THE SYSTEM.


LET ME JUMP INTO THE


SOLUTION.


ASSETS ARE IMPORTANT AND OFTEN


TIMES WE FOCUS ON INCOME --


EVEN LOW INCOME PEOPLE FOCUS


ON INCOME AND NOT ON THEIR


WEALTH.


IT DOESN'T ALLOW THEM TO BE


ABLE TO WEATHER THE STORMS.


IT HAS HELPED US CREATE A


SYSTEM IN WHICH WE ONLY THINK


ABOUT PEOPLE'S SURVIVAL.


DO THEY HAVE ENOUGH TO MAKE IT


THROUGH THE DAY?


THAT'S NOT REALLY ALLOWING


THEM TO THRIVE AND TO TAKE


PART IN THE AMERICAN DREAM.


AND SO WE HAVE TO DO SOMETHING


WITH WEALTH AND EQUALITY.


THEN IT IS A BIGGER PROBLEM AS


WE INNOVATE AND SO MUCH IS


AUTOMATED AND WAGES ARE


STAGNANT AND THERE IS GLOBAL


COMPETITION THAT PEOPLE CAN'T


RELY ON THEIR INCOME.


THEY HAVE TO HAVE ACCESS TO


ASSETS.


WHAT I WILL TALK ABOUT TODAY


ARE A PACKAGE OF TOOLS.


ONE IS A CHILDREN'S SAVINGS


ACCOUNT.


WHAT IS A CHILDREN'S SAVINGS


ACCOUNT?


I WILL KEEP IT SIMPLE.


IT IS PROVIDING A CHILD, A


FAMILY, A HOUSEHOLD WITH A


SAVINGS ACCOUNT.


OFTENTIMES THESE CHILDREN


SAVINGS ACCOUNTS ARE


ADMINISTERED THROUGH THE 529


PROGRAM, IF YOU HAVE HEARD OF


IT.


IT IS A STATE COLLEGE SAVINGS


PLAN.


THEY HAVE BEEN THOUGHT OF AS


OR MORE RECENTLY FOCUSED ON


PROVIDING COLLEGE ACCESS,


RIGHT, A WAY TO GO TO


COLLEGE.


IT IS REALLY MEANT TO BE FOR


OVERALL ECONOMIC DEVELOPMENT


THROUGHOUT THE CHILD'S


LIFETIME.


SO WHILE WE FOCUSED VERY MUCH


ON PAYING FOR COLLEGE, WE CAN


THINK ABOUT THEM AS WAYS OF


BUILDING ASSETS NOT ONLY FOR


COLLEGE, BUT BUYING A HOME, A


BUSINESS, OR OTHER THINGS


THROUGHOUT THEIR LIFESPAN.


BUT RIGHT NOW BECAUSE OF THE


POLICY INTEREST IS REALLY


AROUND COLLEGE, IT WILL FOCUS


MORE ON COLLEGE ENROLLMENT.


AND NOT ONLY DO THEY GET A


BANK ACCOUNT, BUT ESPECIALLY


THEY GET A ONE TO ONE MATCH.


SOMETIMES IT IS A HIGHER MATCH


LIKE A 5-1 MATCH.


EVERY DOLLAR YOU PUT IN


ANOTHER DOLLAR IS PUT IN AND


THERE ARE INCENTIVES.


THESE PROGRAMS ARE STREAM


LINED IN THE BEGINNING AND IT


IS ABOUT HAVING AN ACCOUNT AND


HAVING A MATCH AND HAVING AN


INITIAL DEPOSIT.


THE INITIAL DEPOSIT CAN RANGE


FROM $5 TO $1,000 IN THOSE


ACCOUNTS.


THEY TYPICALLY START AT


BIRTH.


SOME START AT KINDERGARTEN AS


WELL.


THERE ARE SOME THAT START EVEN


LATER IN LIFE, LIKE EIGHTH


GRADE OR SO.


BUT THE PLAN IS REALLY FOR


THEM TO BE EARLY ON SO THAT


PEOPLE CAN ACCUMULATE WEALTH


OVER TIME.


AND SO EVEN WHEN THEY ARE


SAVING SMALL AMOUNTS OF MONEY,


YOU SAVE SMALL AMOUNTS OF


MONEY OVER A LONG AMOUNT OF


TIME IN AN INVESTMENT ACCOUNT


IT CAN BE QUITE A BIT OF MONEY


IN THE END.


THERE IS A GOOD BODY OF


RESEARCH DEVELOPING AROUND


THIS -- AND WHEN I SAY THAT


WHAT DO I MEAN?


ARE THERE QUESTIONS THAT


HAVEN'T BEEN ANSWERED?


SURE.


THERE ARE QUESTIONS THAT NEED


TO BE ANSWERED, BUT THERE ARE


RANDOMIZED CONTROL TRIALS IN


EXISTENCE.


ONE IS IN OKLAHOMA AND IT HAS


BEEN GOING ON.


THE KIDS ARE JUST STARTING TO


HIT AND THE FIRST STARTED WITH


BIRTH.


WE WILL START TO GET SOME


DATA.


IT IS IMPORTANT TO UNDERSTAND


THAT WHEN WE THINK ABOUT THESE


SAVINGS ACCOUNTS WE INITIALLY


THINK ABOUT HOW DO WE


ACCUMULATE ASSETS AND THAT'S


WHAT I STARTED TO TALK ABOUT,


BUT WE FOUND THERE IS A LOT OF


INDIRECT EFFECTS AND WHAT DO I


MEAN BY THAT?


THEY FOUND IT IMPROVES KIDS'


SOCIAL AND EMOTIONAL


DEVELOPMENT AT AGE FOUR.


IT IMPROVING -- IT IMPROVES


PARENTS' EXPECTATION OF


PARENTS FOR KIDS TO GO TO


COLLEGE.


IT CHANGES THE WAY YOU THINK


ABOUT THEIR FUTURE.


WE THINK -- THIS IS ONE OF THE


REASONS I THINK THAT IT MAY BE


A GOOD TOOL FOR A WEALTH


TRANSFER IN THE FUTURE.


NOT ONLY BECAUSE OF THE


ABILITY TO ACCUMULATE ASSETS,


BUT IT WORKS WELL WITH


EXISTING SYSTEMS.


SO A HEAD START PROGRAM AND


OUR OBJECTIVE THERE AND IN OUR


SOCIAL AND EMOTIONAL


DEVELOPMENT PROGRAMS, IT WORKS


IN CONJUNCTION WITH ALL OF


THESE THINGS AND SO I THINK IT


CAN BE MORE IMPORTANT THAN


GIVING PEOPLE CASH.


SECONDLY PEOPLE CAN ADD MONEY


TO THE ACCOUNT.


WE HAVE TALKED ABOUT


INDIVIDUAL FAMILIES STAYING IN


THESE ACCOUNTS, BUT YOU CAN


THINK ABOUT THIRD PARTIES


PUTTING MONEY INTO THESE


ACCOUNTS.


LIKE WITH INITIAL DEPOSITS A


LOT OF TIMES THOSE COME FROM


FOUNDATIONS AND SOMETIMES THEY


COME FROM CITY FUNDING AND


SOMETIMES IT IS STATE


FUNDING.


THERE IS A PLETHORA OF WAYS


PEOPLE CAN CHANNEL MONEY INTO


THE ACCOUNT.


THE INNOVATIONS IS WHERE


EMPLOYERS THINK ABOUT THE


ACCOUNT.


WE SHOULDN'T THINK ABOUT IT AS


AN INDIVIDUAL SAVINGS ON THEIR


OWN BECAUSE WHAT YOUR RESEARCH


TELLS US AND WHAT WE KNOW IS


THAT LOW INCOME PEOPLE HAVE


SMALL AMOUNTS OF MONEY TO


SAVE.


AT THE END OF THE DAY THEY ARE


NOT GOING SAVE THEIR WAY OUT


OF POVERTY.


I DON'T WANT TO IMPLY TO YOU


THAT THESE SAVINGS ACCOUNTS


ARE A WAY FOR INDIVIDUALS BY


THEMSELVES TO GET THEMSELVES


OUT OF POVERTY, BUT THEY ARE A


VEHICLE FOR US TO PHYSICAL OUT


OTHER WAYS TO GET MONEY INTO


THESE ACCOUNTS AND AT THE SAME


TIME THEY THEMSELVES HAVE THE


ABILITY TO CONTRIBUTE TO THAT


AND WE THINK IT IS IMPORTANT


IN AND OF ITSELF.


ONE OF OUR TOPICS FOR THE --


YOU CAN HIT ME WITH TIME.


I WANT TO MAKE SURE I GET TO


THE CONTRACT.


WHAT WE FIND WITH THE SAVINGS


ACCOUNTS IS THE BEST WAY TO DO


THEM IS HAVING THEM


AUTOMATICALLY ENROLLED IN THE


PROGRAM.


THIS IS NOT NOVEL BECAUSE WE


DID 401K'S AND OTHER AREAS OF


ECONOMICS, BUT WHAT WE FOUND


AND TESTING IT IS THAT


AUTOMATIC ENROLLMENT IS THE


BEST WAY.


THAT WAY YOU CAN GET EVERYBODY


IN.


WE THOUGHT THE INITIAL DAYS OF


A CHILDREN'S ACCOUNT, OH


EVERYBODY WILL TAKE ADVANTAGE


OF IT.


THERE ARE ALL KINDS OF REASONS


PEOPLE DON'T TAKE ADVANTAGE OF


IT.


IF YOU PUT THEM IN IT, IT


WON'T LEAVE.


OR VERY FEW, LESS THAN 1%.


MAYBE ONE OR TWO FAMILIES


BECAUSE OF RELIGIOUS REASONS


HAVE LEFT THESE PROGRAMS OF


AUTOMATIC ENROLLMENT.


IN THE STATE OF MAINE EVERY


KID GETS $500 AT BIRTH INTO


THEIR ACCOUNT AND THERE ARE




$50 BILLION THEY HAVE PUT IN


AND ANOTHER $68 MILLION THEY


HAVE SAVED INTO THIS ACCOUNT.


SO OVER THE LAST SEVEN TO


EIGHT YEARS.


THEY START OFF WITH ABOUT 40%


OF PEOPLE TAKING UP THE


PROGRAM.


AFTER 2014 RETROACTIVELY


THEY ADDED THE


PEOPLE IN AND THEN THEY GAVE


EVERYBODY THE ACTS.


AND NOW 99.9% OF THE PEOPLE


HAVE AN ACCOUNT WITH $500 IN


MAINE.


SO WHEN WE THINK ABOUT


INCLUSION WE DO HAVE TO THINK


ABOUT HOW DO WE GET EVERYBODY


IN?


THERE ARE MANY REASONS WHY LOW


INCOME FAMILIES IN PARTICULAR,


BUT MANY OTHER FAMILIES WILL


NOT START UP THESE TYPES OF


ACCOUNTS.


TYPICALLY A WAY THESE PROGRAMS


WORK IS -- WHICH IS A POLICY


THING.


SOMETIMES THEY LOOK AND SAY


THIS IS THE WAY IT IS


HAPPENING.


REALLY IT IS THE CAUSE OF


POLICY AND WE CAN CHANGE THE


POLICY.


THE WAY IT WORKS IS WITH THESE


ACCOUNTS THE FAMILIES IF THEY


WANT TO SAVE THEIR OWN MONEY


HAVE TO OPEN UP AN ADDITIONAL


ACCOUNT.


THEY OPEN UP AN ACCOUNT THAT


THE FOUNDATION,


THE CITY, THE STATE OWNS.


THE FAMILIES MAY WANT TO SAVE


AND THEY HAVE TO OPEN UP


ANOTHER ACCOUNT.


IT IS THE SAME ACT -- ACCOUNT,


BUT IT IS ANOTHER ACCOUNT IN


THE ACCOUNT.


IT IS IN THEIR NAME AT THE


BANK OR CREDIT UNION IN THEIR


OWN NAME.


FIVE MINUTES.


I WILL DO IT.


I HAVE SOME OTHER PIECES I


WANT TO ADD.


WHAT WE HAVE FOUND IS LOW


INCOME PEOPLE CAN AND DO SAVE


AND THERE HAVE BEEN SOME


CONTROL TRIALS NOT IN THE CSA


WORLD, BUT IN THE WORLD THAT


SHOWS THAT IS THE CASE.


THEY SAY IT IS LESS FREQUENT.


THE SAVINGS MAY BE SPORADIC.


AND ALSO THERE IS A NUMBER WHO


DON'T SAVE.


IT IS AN INTERESTING


QUESTION.


I THINK THE PROBLEM WITH MANY


ASSET BUILDING PROGRAMS IS


THAT THEY RELY ON PEOPLE'S


CURRENT INCOME.


THEIR INCOME IS NOT GOOD.


A LOT OF THESE THINGS ARE


DEVELOPED BECAUSE PEOPLE DON'T


HAVE VERY MUCH MONEY.


YOU ASK THEM TO TAKE OUT OF


THAT MONEY AND SAVE.


THERE ARE PROBLEMS IN THAT.


ONE OF THE INNOVATIONS WE ARE


STARTING TO LOOK AT ARE


REWARDS CARDS.


WHAT ARE REWARDS CARDS?


I WISH I HAD MY KEY CHAIN.


IF YOU HAVE A KEY CHAIN YOU


PROBABLY HAVE A LOYALTY CARD.


YOU GO TO THE STORE AND YOU


GET A REBATE TO YOUR ACCOUNT.


EVERY TIME THEY SAVE IT IS 1%


TO 4%.


EVERY TIME THEY PURCHASE AN


ITEM AT THE STORE, FOOD STAMPS


OR HOWEVER ELSE THEY PURCHASED


IT THEY GET A REBATE THAT GOES


TO THEIR SAVINGS ACCOUNT.


I WOULD ARGUE THAT THE INTENT


IS NOT TO BUILD HUGE AMOUNTS


OF ASSETS IN A SHORT PERIOD OF


TIME, BUT OVER TIME IT GETS


$100 IN THEIR ACCOUNT PER


YEAR.


SO OVER A NUMBER OF YEARS IT


CAN BE A SUBSTANTIAL AMOUNT OF


MONEY.


AND WE DO HAVE SOME RANDOMIZED


CONTROL TRIALS WE ARE DOING


AROUND THE REWARDS PROGRAM.


WE CERTAINLY WANT TO SEE MORE,


BUT THE EARLY RESULTS ARE


STRONG.


WHERE THEY ARE STRONGEST IS


ENGAGEMENT.


THE INTERESTING THING IS WHEN


WE THINK ABOUT LOW INCOME


PEOPLE WE HAVE A NARRATIVE IN


SOCIETY THAT THEY HAVE


CONFLICTING VALUES.


SO THEY MIGHT NOT BE FUTURE


ORIENTED OR THEY DON'T WANT TO


SAVE OR THESE KINDS OF


THINGS.


IT IS NOT THAT THEY DON'T WANT


TO SAVE REALLY, BUT THEY DON'T


HAVE THE MONEY TO SAVE.


THERE ARE TRADEOFFS THAT MOST


PEOPLE ARE ASKED TO MAKE.


DO I EAT TODAY?


DO I NOT EAT TODAY?


DO I PAY WITH MONEY FROM MY


KIDS' COLLEGE INITIATION?


THESE ARE HARD TRADEOFFS THAT


MOST PEOPLE WILL NOT MAKE.


MOST OF US WHO HAVE MONEY SAVE


BECAUSE WE HAVE 401K PLANS.


IT IS EASY.


IT IS NOT WHETHER WE WILL GO


ON VACATION OR NOT.


WE ARE PUTTING AWAY EXTRA


MONEY.


THAT'S NOT THE CASE FOR THEM.


ONE OF THE GREAT THINGS WE SEE


ABOUT THE REWARDS CARDS IS IT


INCREASES ENGAGEMENT IN THE


ACCOUNTS.


THESE PEOPLE WANT TO SAVE FOR


THEIR FAMILIES AND FOR THEIR


KIDS.


WE CAN PROVIDE THEM WITH THE


KINDS OF MEANS THAT WORK FOR


THEM AND WE WILL MAKE


DECISIONS TO DO THAT.


HOPEFULLY THEY ARE MAKING


DECISIONS FOR THEIR KIDS AND


THEIR BEST INTEREST.


IT IS THE FACT THEY HAVE


LITTLE MONEY.


IF YOU GIVE THEM AVENUES TO DO


THAT THEY WILL DO THAT.


SOME PROGRAMS HAVE INCENTIVES


WHERE IF YOU DO CERTAIN THINGS


THEY WILL PUT MONEY IN YOUR


ACCOUNT FOR DOING IT.


THESE LOW INCOME FAMILIES DO


THEM AT EQUAL OR HIGHER RATE,


SAVING WITH A REWARD CARD


PROGRAM.


AND SO IT IS NOT A MATTER OF A


VALUE SYSTEM.


IT IS A MATTER OF PROVIDING


THEM WITH THE KINDS OF TOOLS


THAT WILL WORK IN THEIR


ENVIRONMENT IN THEIR WORLD,


WITH THEIR INCOME.


BEYOND THAT I THINK WE SHOULD


THINK ABOUT -- SO THAT TO ME


IS A WAY OF REALLY HELPING


FAMILIES BE ENGAGED AND THERE


IS EVIDENCE TO SHOW THAT THERE


ARE IMPORTANT REASONS WHY WE


WANT PEOPLE TO HAVE THE


OPPORTUNITY TO BE ENGAGED


BECAUSE IT INCREASES OTHER


EFFECTS, RIGHT?


WE ARE NOT JUST TRYING TO GIVE


THEM MONEY.


WE WANT TO CREATE A WHOLE


NUMBER OF OTHER EFFECTS.


AND SO BY ALLOWING THEM THE


OPPORTUNITY TO PARTICIPATE IN


SAVING FOR THEIR KID TO GO TO


COLLEGE HELPS IMPROVE


EXPECTATIONS TO OTHER THINGS


THAT IS MORE SO THAN HANDING


OUT MONEY, PER SAY.


YOU STILL HAVE TO GIVE THEM


MONEY.


AT THE END OF THE DAY THEY


HAVE TO PAY FOR THE ASSET


WHETHER IT IS A BUSINESS, A


HOME OR THE EMERGENCY.


I DON'T WANT ANYONE TO GET


FIXATED ON FINANCIAL


EDUCATION.


FINANCIAL EDUCATION WITHOUT


MONEY, I DON'T KNOW WHAT IT


DOES FOR YOU, RIGHT?


OR IF YOU HAVE AN ACCOUNT AND


DON'T PROVIDE WAYS TO GET


MONEY IT WON'T HAVE THE FULL


SENSE.


WE NEED TO BE CONSCIENTIOUS OF


THAT.


HOPEFULLY WE CAN HAVE


QUESTIONS AND ANSWERS AND TALK


ABOUT RESEARCH AND WHATEVER


ELSE.


SOME OTHER WAYS -- SO WHILE


THESE REWARDS CARDS GIVE


FAMILIES A WAY TO CONTRIBUTE


TO THEIR KIDS AND THEY FEEL


LIKE THEY ARE PARTAKING IN IT


WHICH IS IMPORTANT TO THE


WHOLE VALUE SYSTEM, THEY ARE


NOT ENOUGH.


I RECOGNIZE THAT.


EVEN THOUGH THEY CAN PRODUCE


MANY EFFECTS THAT ARE


IMPORTANT AND WE SPEND LOTS OF


MONEY ON IN OTHER WAYS,


ADDITIONAL WAYS TO THINK ABOUT


IT, ONE WAY IS AN EARLY REWARD


SCHOLARSHIP.


WHAT IS THAT?


WHAT THAT IS THE COLLEGE


BOARD, IF YOU ARE FAMILIAR


WITH IT ON THINK TANK IN DC,


THEY DO A LOT OF WORK ON


COLLEGE TRENDS.


ANYHOW THEY SUGGESTED TAKING A


PIECE OF THE PELL GRANT, 5% OR




ACCOUNT AT FIFTH GRADE, START


PUTTING IT THEN INTO A CHILD'S


SAVINGS ACCOUNT AS A WAY TO


BUILDING ASSETS TO AN


ACCOUNT.


WHAT THAT DOES IS -- WE THINK


WE FULLY UNDERSTAND.


IT EMPOWERS KIDS.


I AM A HIGH SCHOOL DROP --


DROPOUT WHO WAS HOMELESS FOR


PERIODS OF TIME, AND I CAN


TELL YOU I DIDN'T THINK ABOUT




THE REST OF YOU DID.


EVEN NOW I STILL DON'T -- I


GRADUATED WITH MY PHD IN THREE


YEARS AND NOT BECAUSE I WAS


PROFESSIONALLY SMART, BUT


BECAUSE I ALWAYS FELT LIKE


SOMETHING WAS GOING TO HAPPEN


BECAUSE THAT WAS MY LIFE


EXPERIENCE.


I FELT LIKE I HAVE TO GET OUT


BEFORE THINGS FALL APART ON


ME.


I WANT YOU TO UNDERSTAND THAT


GIVING PEOPLE WHO GROW UP WITH


ASSETS, YOU SAY JUST BORROW


THE MONEY.


WE CRITICIZE, BUT PEOPLE


SHOULDN'T GROW UP WITH THE


SENSE OF -- IT GIVES YOU


SOMETHING AND IT ALLOWS TO YOU


NAVIGATE YOUR SURROUNDINGS AND


YOUR WORLD IN A DIFFERENT


WAY.


IT IS NOT JUST ABOUT PROVIDING


THEM ASSETS ON THE FAR END,


BUT IT IS ABOUT PROVIDING THE


ASSETS THAT THEY GROW UP WITH,


WHAT EVERYBODY ELSE GROWS UP


WITH SO THEY CAN THINK ABOUT


THEIR FUTURES IN AN EXTENDED


TIME PERIOD AND PLANNING FOR


IT.


WE HAVEN'T EVEN BEGUN TO STUDY


THOSE TYPES OF BARGAINING


POWER ISSUES THAT GROWING UP


WITH ASSETS CREATES.


SO BY TAKING A SCHOLARSHIP AND


A WHOLE MIND-SET -- THE


CHALLENGE IS TO CONVERT THE


MIND-SET.


PUT MONEY ON THE BACK END IS


HOW WE PERCEIVE WHAT PEOPLE


WILL DO WITH THE MONEY.


GIVING THEM ON THE FRONT END


IN AN ACCOUNT IT IS


PROTECTED.


SO THEY CAN'T USE IT FOR OTHER


THINGS ANYHOW, BUT YOU ALLOW


THEM TO GROW UP WITH THAT


ASSET.


EARLY AWARD SCHOLARSHIPS IS


ONE WAY.


NOT ONLY THE FEDERAL


SCHOLARSHIPS, BUT THINKING


ABOUT YOUR FOUNDATION, RIGHT?


THE LOCAL PLACES THAT CAN DO


THAT.


P CARDS, WHAT ARE P CARDS?


IT IS LIKE A REWARDS CARD FOR


A COMPANY.


YOU HAVE A PURCHASING CARD


HERE AT THE SCHOOL.


THEY ARE THINKING ABOUT HOW


THEY MAY LEVERAGE THEIR P


CARD.


THERE ARE FEES THAT CREDIT


CARD COMPANIES CHARGE YOU AND


FINANCIAL SYSTEMS CHARGE YOU.


PART OF THE FEE IS TAKING THE


BANK INSTITUTION AND THEY


AGREE TO PUT AND GIVE BACK A


PORTION OF THAT FEE AND PUT IT


INTO AN ACCOUNT FOR KIDS.


LIKE IN LONG BEACH, CALIFORNIA


THEY HAVE TAKEN A PIECE OF


THEIR PROCUREMENT, AND THIS IS


A PILOT THAT STARTS IN THE


FALL, SO I DON'T HAVE THE DATA


FROM IT YET, BUT THEY CAN


ESTIMATE ACCURATELY BECAUSE


THEY CAN BASE IT ON LAST


YEAR'S EXPENDITURES AND THEY


WILL SAY WE WILL HAVE


$15 MILLION A YEAR FROM USING


A P CARD.


YOU PUT THAT INTO THE


CHILDREN'S SAVINGS ACCOUNTS TO


HELP BUILD ASSETS.


I THINK THESE KINDS OF


THINGS -- AND I DON'T CARE IF


YOU DECIDE ON P CARDS OR


WHATEVER ELSE.


IT IS IMPORTANT THAT WE JUST


ARE THINKING ABOUT WHAT ARE


WAYS TO HELP LOW INCOME


FAMILIES BUILD MONEY IN THESE


ASSETS AND INTO THESE SAVINGS


ACCOUNTS AND HELP THEM BUILD


FOR THE FUTURE.


I KNOW I AM OUT OF TIME.


DON'T THINK ABOUT IT AS WE


HAVE TO DO REWARDS CARDS.


WE HAVE TO DO P CARDS.


THINK ABOUT HOW CAN WE


INNOVATE?


A LOT OF YOU ARE BRIGHT AND


YOUNG AND YOU CAN FIND WAYS TO


INNOVATE AND HELP LOW INCOME


PEOPLE BUILD ASSETS BECAUSE


ASSETS ARE TREMENDOUSLY


IMPORTANT TO HAVE A STABLE


LIFE.


THANK YOU.


[APPLAUSE].


I ACTUALLY WANTED TO SAY


EACH OF YOU TOUCHED ON THIS


THEME.


WE SEE THE IMPACT OF WEALTH


AND EQUALITY AND INCOME AND


EQUALITY ON POOR COMMUNITIES


AND COMMUNITIES OF COLOR, BUT


IT IS A MUCH WIDER SPREAD


ISSUE THAN THAT.


SO I AM WONDERING FOR THIS


ROOM OF COMMUNITY ADVOCATES


AND POLICY MAKERS, HOW WE


THINK ABOUT THIS DISCUSSION,


RIGHT?


THERE IS OBVIOUSLY GROUPS OF


PEOPLE WHO ARE


DISPROPORTIONATELY AFFECTED BY


THE PAY GAP AND THERE ARE


OTHER INEQUITIES.


PEOPLE WITH ETHNIC NAMES ON


THE SAME RESUME AND THE WHITE


NAME MORE LIKELY TO GET THE


JOB.


WE THINK ABOUT A FORMERLY


INCOURSE -- FORMERLY INCOURSE


RATED PERSON WHO IS WHITE WILL


HAVE A BETTER CHANCE OF


GETTING A JOB THAN A PERSON OF


COLOR.


AS YOU ARE FRAMING THE


CONVERSATION WITH POLICY


MAKERS YOU THINK ABOUT THE


RESEARCH, HOW DO YOU NAVIGATE


THIS TENSION BETWEEN FOCUS ON


THOSE WHAT WE KNOW ARE


DISPROPORTIONATELY AFFECTED


AND NOT JUST FOR FINANCIAL


REASONS, BUT STRUCTURAL


REASONS, AND MAKING THESE SET


OF ISSUES MORE BROADLY


APPEALING AND MORE BROADLY


IMPORTANT TO THE GROUP OF


STAKEHOLDERS?


THE FIRST THING THAT COMES


TO MY MIND IS WHEN YOU SAY


MORE BROADLY APPEALING, I AM


ASSUMING YOU ARE MEANING TO


THE BROADER --


IT IS TO PEOPLE -- IT IS


REALLY HARD TO UNFORTUNATE --


UNFORTUNATELY IT IS HARD TO


PASS LAWS THAT TARGET A


PARTICULAR DISADVANTAGED


GROUP.


WE SEE A LOT OF PUSH BACK


AGAINST AFFIRMATIVE ACTION.


WE KNOW THAT.


AND SO ONE OF THE THINGS I


THINK OF IN AN ANSWER TO THAT


QUESTION IS THE POLITICAL


THEORISTS WHO TALK ABOUT


TARGETING AND IT IS THE IDEA


THAT IF YOU MAKE GOOD POLICY


THAT IT WILL PROTECT EVERYONE


LIKE THEY DO.


IN TERMS OF THIS CONVERSATION


IT WILL DISPROPORTIONATELY


HELP THOSE PEOPLE WHO ARE


SUFFERING DISPROPORTIONATELY.


IT ISN'T TO SAY WE SHOULDN'T


HAVE CONVERSATION ABOUT


TARGETING OR FOCUSING ON


PARTICULAR GROUPS.


I THINK RECOGNIZING THAT BLACK


AND LATINO FAMILIES LOST MUCH


MORE IN TERMS OF THEIR


ASSETS.


WE KEEP MEANING TO TELL THAT


STORY, BUT STRATEGICALLY I


OFTEN THINK THAT WE MIGHT GET


FARTHER IF WE PUSH FORWARD


THOSE UNIVERSAL POLICIES THAT


WILL HELP EVERYONE.


LIKE A CHILD'S SAVINGS


ACCOUNT, THEY WILL HELP --


SOME PEOPLE WILL SAY WHY ARE


YOU GOING TO START THAT


SAVINGS ACCOUNT FOR SOMEBODY


WHO IS ALREADY WEALTHY?


BECAUSE THAT'S WHAT YOU NEED


TO DO TO GET THE LEGISLATION


PASSED.


THOSE ACCOUNTS WILL


DISPROPORTIONATELY AFFECT THE


KIDS WHO WOULDN'T HAVE A


SAVINGS WHEN THEY GRADUATED


FROM HIGH SCHOOL.


I WOULD JUMP IN ON THAT.


AND SO THIS IS MAYBE -- SO


MICHAEL, HE WOULD TALK ABOUT


AND I THINK IT IS RELEVANT AND


IMPORTANT AND UNIVERSAL.


I THINK IT IS IMPORTANT TO GET


EVERYBODY'S ACCOUNT.


YOU CAN PUMP RESOURCES.


WHEN EVERYBODY HAS AN ACCOUNT


YOU CAN PUMP RESOURCES IN A


VARIETY OF WAYS.


I ALSO THINK THAT WE LIVE IN A


MOMENT THAT IS DIFFERENT,


THANK GOD AND IT IS SCARY IN


SOMEWAYS, BUT WE CAN SEE THE


OPPORTUNITY TO TALK ABOUT FREE


COLLEGE AND OTHER THINGS.


WE DO NEED TO CHANGE OUR FRAME


OF THOUGHT.


HIGHWAY CAN THEY EVER SO MUCH


-- HOW CAN THEY EVER SOLVE


WEALTH AND EQUALITY BY GIVING


EVERYBODY THE SAME THING.


EVEN -- I DON'T KNOW THE


NAMES.


ANYHOW, TALKING ABOUT


REPARATIONS.


IF EVERYBODY HAS AN ACCOUNT WE


CAN PUMP MONEY IN, BUT WE HAVE


TO THINK ABOUT -- HERE IS THE


BEST EXAMPLE.


IF WE ARE ALL SICK AND HAVE


THE FLU, RIGHT, NOW THERE IS


NOTHING WORSE THAN THE FLU.


YOU WILL DIE WITHOUT A


VACCINATION.


I HAVE IT AND YOU HAVE IT.


I HAVE IT WORSE, BUT IN EITHER


CASE WE ARE BOTH GONNA DIE.


I NEED A BIGGER DOUGHS OF --


DOSE OF IT THAN YOU DO, BUT WE


BOTH NEED THE VACCINE.


WE HAVE A COMMON INTEREST IN


THAT VACCINE BEING MADE EITHER


WAY BECAUSE WE WILL BOTH DIE


WITHOUT IT EVEN IF I NEED


MORE.


AND REALLY THAT'S KIND OF THE


CASE WITH WEALTH.


THAT'S WHY WE GET THIS WHITE


WEALTH PAPER COMING OUT.


YOU KNOW WHAT, THIS CAN FIX US


ALL.


WE ALL NEED THIS.


EVEN IF SOMEONE ELSE NEEDS A


BIGGER DOSE, YOU NEED A DOSE


TOO.


AND SO WE HAVE A COLLECTIVE


INTEREST IN DEVELOPING


POLICIES LIKE THAT.


I DO THINK THAT'S THE BIGGEST


CHALLENGE, RIGHT?


HOW DO WE BEGIN TO HAVE -- IT


IS NOT JUST TAKING A POSITION


OF WELL WE CAN'T GET THIS


PASSED.


WHAT DO WE NEED TO DO TO GET


IT DONE AND HOW DO RECHANGE


THE NARRATIVE TO MAKE IT


HAPPEN?


YOU CAN'T JUST TELL PEOPLE TO


FORGET THEIR VALUES.


HOW DID THE WEALTH TRANSFER


WITHIN AMERICAN VALUES SO THAT


YOU AND I AND ALL OF US CAN


GRAB UH HOLD OF US -- GRAB UH


HOLD AND MOVE IT FORWARD.


I THINK PART OF THE


CHALLENGE IS THE SYSTEM ISSUE


STILL AND THIS IS WHERE DATA


MAY ACTUALLY HELP TO OVERCOME


IT.


WE THINK ABOUT THE 45 MILLION


PEOPLE WHO DON'T HAVE A CREDIT


HISTORY OR THEY MAY NOT HAVE A


CREDIT HISTORY BECAUSE THERE


WAS NO COSIGNER OR AN ABILITY


TO GET CREDIT WHEN THEY WERE


YOUNGER.


LOTS OF FACTORS ARE IN THAT


MASSIVE NUMBER OF PEOPLE, BUT


YET THE ABILITY TO GET CREDIT


IS PREDICATED ON HAVING A


HISTORY AT SOME LEVEL.


SO THINK ABOUT ACCESS TO THE


FINANCIAL SYSTEM AND THE WAY


PEOPLE ARE IDENTIFYING TO GET


INTO THE FINANCIAL SYSTEM.


IT IS A VERY SIMPLE WAY THAT


IS YOUR BANK YOU MAY BE


APPROACHING TO OPEN ACCOUNT


ACCOUNT WITH.


ARE YOU IN THE CREDIT BUREAU?


OR MAYBE YOU ARE IN THE CREDIT


BUREAU, BUT YOUR ADDRESS


CHANGED A LOT BECAUSE YOU


MOVED MORE AND THAT IS


SOMETHING THAT IS MORE COMMON


AMONG LOWER INCOME INDIVIDUALS


AND FAMILIES.


AND SO THEN YOU ARE RED


FLAGGED.


I TEND TO THINK ABOUT PART OF


WHAT WE ARE TRYING TO SORT OUT


IS WHERE CAN MORE NUANCED


INFORMATION IN THE DIFFERENT


APPLICATIONS POTENTIALLY


OVERCOME WHAT OUR PROCESSES


AND SYSTEMS TENDED TO


EXACERBATE AND WHAT ARE THE


DIFFERENCES THAT DIVIDE US BY


INCOME OR BY ETHNICITY RATES.


ANY QUESTIONS ?


WAKE UP, EVERYBODY.


COME ON.


HI, EVERYBODY.


THANK YOU FOR BEING HERE.


MY NAME IS JESSICA.


OKAY, SEVERAL OF YOU ELUDED TO


BEHAVIORAL ECONOMICS IN


DECISION MAKING.


CAN YOU ALL ELABORATE A LITTLE


ON THAT?


YOU TALKED ABOUT THE OPT IN


VERSUS OPT OUT AND THAT


DIFFERENTIAL PERCENTAGE.


I WOULD BE CURIOUS TO HEAR


YOUR THOUGHTS ON YOUR WORK.


SURE.


I THINK ONE OF THE WAYS I CAN


SEE THAT PLAYING OUT IN THE --


IN TERMS OF THE BEHAVIOR THAT


I SAW IN TERMS OF PEOPLE


MAKING THEIR DECISIONS, I


THINK WHEN PEOPLE ARE USING


EXPENSES, ALTERNATIVE


FINANCIAL SERVICES THERE IS A


PERCEPTION THAT THEY DON'T


UNDERSTAND THAT THE COST --


HOW HIGH THE COSTS ARE AND IF


THEY KNEW BETTER THEY WOULD


MAKE OTHER CHOICES.


IN MANY CASES I WOULD USE A


BANK OR A CHECK CASHER.


WHEN I WAS TRYING TO THINK


ABOUT HOW TO EXPLAIN WHAT


PEOPLE DID, IN MANY CASES IT


WAS RATIONAL BEHAVIOR.


THAT'S NOT BEHAVIOR


ECONOMICS.


IT IS ACTUALLY CHEAPER TO DO


THAT THAN TO DO WHAT I WOULD


DO.


IN OTHER CASES I FELT LIKE THE


SCARCITY THEORY THAT WAS PUT


FORTH BY ELDERS ACTUALLY


HELPED TO EXPLAIN.


AND THAT IDEA IS REALLY THAT


PEOPLE WHEN THEY ARE IN A


SCARCITY MIND-SET AND WHEN


THEY HAVE A PROBLEM WHICH IS


LIKE WHAT YOU WERE TALKING


ABOUT IN TERMS OF MAKING A


CHOICE BETWEEN BUYING


GROCERIES AND SAVING OR PAYING


THE REPRESENT OR DOING


SOMETHING ELSE.


IT CREATES A PRESSURE ON THAT


DECISION MAKING MOMENT IN


WHICH THEY ARE DECIDING WHAT


WILL RELIEVE THE PRESSURE IN


THE SHORT-TERM WITHOUT


THINKING AS MUCH BECAUSE THEY


DON'T HAVE -- IT IS ACTUALLY


SOMETHING PSYCHOLOGICAL THAT


IS HAPPENING THAT MAKES THE


DECISION TO RELIEVE THE


PRESSURE IN THE MOMENT MAKE


MORE SENSE.


I HAVE A FEW THINGS AND I


THINK IT IS AN INTERESTING


QUESTION AND ONE I GRAPPLE


WITH.


IT IS A THEORY OF SAVING AND


IN BEHAVIORAL APPROACHES.


I WOULD SAY THIS WITH REGARD


TO 2 THINGS.


ONE IS I THINK MOST OF OUR


MAINSTREAM INSTITUTIONS WORK.


WE HAVE SEEN THEM WORK EVERY


DAY FOR UPPER INCOME TEAMS.


 FAMILIES.


SO I THINK WHEN WE TALK ABOUT


GETTING EVERYBODY INCLUDED


THAT'S AN INCOMPLETE QUESTION


BECAUSE IT IS NOT JUST ABOUT


GETTING THEM INCLUDED, BUT


THEN GIVING THEM THE MEANS TO


BE ABLE TO USE THOSE


INSTITUTIONS EFFECTIVELY,


RIGHT?


SO DON'T JUST GIVE ME A BANK


ACCOUNT, BUT GIVE ME MONEY I


CAN USE IT IN WAYS THAT ARE


PRODUCTIVE.


THE TENSION OF BEHAVIORAL --


THOUGH I RESPECT AND


APPRECIATE IT, BUT ARE THESE


THINGS ABOUT ONE CHANGING


THEIR BEHAVIOR?


ON SOME LEVEL THEY ARE.


ARE THEY ABOUT INSTITUTIONS?


I TEND TO BELIEVE IT IS ABOUT


GIVING THEM ACCESS TO THE


INSTITUTION AND NOT THE


BEHAVIOR.


AT THE SAME TIME -- ONE MORE


QUICK EXAMPLE AND I WILL BE


QUIET.


MICHAEL WOULD TALK ABOUT LIKE


SAVINGS ACCOUNTS BEING AN


INSTITUTIONAL SOLUTION.


HOWEVER, THE REALITY IS WE


CAN'T MAKE PEOPLE SAVE THEIR


CHECKS.


THERE IS STILL A CERTAIN


AMOUNT OF BEHAVIOR THAT HAS TO


TAKE PLACE.


I THINK BEHAVIOR ECONOMICS HAS


A LOT TO OFFER EVEN IN THESE


KINDS OF MODELS.


AT SOME LEVEL THERE IS A


BEHAVIOR THAT WE HAVE TO TAKE


PLACE AND THEY CAN -- THEY ARE


KIND OF -- FOR ME THEY ARE ON


A SECOND TIER INSTEAD OF THE


FRONTIER.


OFTEN TIMES YOU SAY DO THE


BEHAVIORAL THING.


TEACH THEM FINANCIAL EDUCATION


OR WHATEVER ELSE.


THAT IN AND OF ITSELF IS NOT


SUFFICIENT, BUT IT IS NOT AN


EITHER-OR ARGUMENT.


THINGS LIKE MENTAL ACCOUNTS WE


ARE THINKING ABOUT THOSE


THINGS AND IT IS REALLY


ENLIGHTENING ON HOW PEOPLE'S


STRUCTURE AND USE THEIR


MONEY.


WE STILL HAVE THIS PROBLEM


WHERE PEOPLE DON'T HAVE MONEY


AND WE HAVE A PROBLEM THAT


THERE ISN'T ACCESS TO


INSTITUTIONS.


WE HAVE TO SOLVE THOSE


PROBLEMS AND THE BEHAVIOR CAN


COME ALONG WITH THAT.


I DON'T KNOW IF THAT IS


HELPFUL.


HI, I AM DAN AND I AM A


RETIREE, BUT I HAVE 30 YEARS


OF CORPORATE FINANCE


EXPERIENCE AND WORKED


EXTENSIVELY IN CAPITAL


MARKETS.


THANK YOU VERY MUCH FOR YOUR


TALK HERE, BUT PROFESSOR


ELLIOTT, I HAVE TO SAY I AM


DISAPPOINTED.


I THANK YOU FOR YOUR TALK, BUT


I AM DISAPPOINTED.


WE ARE NOT ADDRESSING WHAT THE


REAL ISSUE IS HERE, AND THIS


IS COMING FROM MY OWN


EXPERIENCE IS THAT MODERN


FINANCE IS PARASIT --


PARASITIC.


THIS SAVINGS PLAN WHAT WOULD


PREVENT AN EARNEST YOUNG PERSON


AND NOW HE HAS A SAVINGS


ACCOUNT SO HE WILL GO TO A FOR


PROFIT SCHOOL AND GET SOME


KIND OF A CRAPPY DEGREE AND


SUCK HIS SAVINGS AWAY AND NOW


HE HAS NOTHING.


WHAT WE HAVE SEEN IS SINCE THE


LATE 70s WITH THE ADVENT OF


DEREGULATION AND ADVANCES IN


MICROECONOMICS AND THE BLACK


MARKET AND WITH THE ADVANCE OF


PC'S FINANCES TOOK OFF AND


WHAT HAPPENED?


WELL GLOBAL ECONOMIC GROWTH


WENT DOWN.


THE IMS AND THEY RECOGNIZED


THAT FINANCE WAS TOO BIG.


EVEN THE CHIEF ECONOMISTS LIKE


THE BANK OF ENGLAND IS


RECOGNIZING THAT FINANCE


PROVIDES NO VALUE.


MAYBE WHAT WE NEED IS


FINANCIAL REPRESSION.


I KNOW THIS IS QUICK TOED --


QUICK FODDER.


MAYBE WHAT WE NEED IS A CHANGE


IN THE BANKRUPTCY LAW.


BANKRUPTCY LAWS CHANGED IN




AND MAYBE THAT NEEDS TO


CHANGE.


MAYBE WE NEED A FINANCIAL


TRANSACTION TAX.


MAYBE WE NEED MASSIVE INCREASE


IN CAPITAL TO THE BANKS.


THAT'S WHAT NEEDS TO BE


ADDRESSED.


I'M SORRY, BUT THAT'S MY


THOUGHT.


I APPRECIATE THAT.


I WOULD SAY THAT -- I WOULD


CALL THAT TINKERING AROUND.


I WOULD RATHER NOT GO TO


BANKRUPTCY.


YOU NEED BANKRUPTCY LAWS.


I THINK YOU NEED A CHANGE.


EVEN SOMETHING AROUND COLLEGE


DEBT, ALL OF THAT STUFF AROUND


BANK -- BANKRUPTCY NEEDS TO BE


CHANGED.


I AM NOT ARGUING THAT.


BUT IT WOULD BE NICE AND I AM


SOMEONE WHO HAS GONE BANKRUPT


BEFORE TO NOT GO BANKRUPT.


REGARDLESS OF THE LAWS AND


HAVE THE POSITION OF GROWING


UP IN A FAMILY WITH WEALTH,


AND I DON'T THINK WE SHOULD


THINK ABOUT THESE EXCLUSIVELY


FOR COLLEGE AND THEY SHOULD BE


AS -- REALLY IT IS A PLATFORM


FOR ADDITIONAL ASSETS.


IT DOESN'T MEAN WE DON'T NEED


TO ADDRESS FINANCIAL


REGULATIONS AND THINGS THAT


WILL MAKE A GOOD SYSTEM SO


THAT WHEN THEY GET THE MONEY


IT IS NOT ALL TAKEN FROM THEM


THROUGH CORRUPT LAWS, RIGHT?


FAVORRISM AND


INSTITUTIONALISM.


YOU DON'T WANT TO ARGUE THE


TWO.


THEY ARE BOTH NEEDED AND IN


THIS CASE NEEDED.


THANK YOU, EVERYBODY.


MY NAME IS EMILA.


PROFESSOR ELLIOTT, I HAVE A


VERY SPECIFIC QUESTION FOR YOU


AND THEN I HAVE A BROADER


QUESTION FOR THE WHOLE PANEL.


I AM INTERESTED IN HEARING


SOME OF THE NUTS AND BOLTS OF


THE ROYALTY CARD.


YOU KNOW, IT DOESN'T SOUND


LIKE IT IS A CREDIT CARD, BUT


IF IT WASN'T, HOW DID YOU GET


DIFFERENT BUSINESSES TO AGREE


TO ENGAGE IN THIS, AND -- TO


ENGAGE IN THIS AND HOW DID YOU


BUILD THE INFRASTRUCTURE?


AND THEN TAKING IT BROADLY TO


THE PANEL, A LOT OF WHAT WE


ARE TALKING ABOUT ON THIS


FINANCIAL INCLUSION PANEL IS


HOW PEOPLE ARE BEING EXCLUDED


OR NOT EQUAL TO OTHER


INSTITUTIONS THAT EXIST.


AND I AM CURIOUS TO HERE


Y'ALL'S THOUGHTS ON USING


DIFFERENT INSTITUTIONS AND


PROGRAMS AND PARTNERSHIPS, AND


I AM WONDERING IF YOU DID WITH


THE LOYALTY CARD TO TRY TO


CAPTURE DIFFERENT SEGMENTS OF


THE POPULATION TO PULL THEM IN


TO THESE SYSTEMS THAT DO


EXIST.


AND HOW CAN WE BE USING THESE


PARTNERSHIPS AND ENGAGEMENTS


TO BE ULTIMATELY BUILDING MORE


INCLUSION?


I WILL SIMPLY SAY THAT THE


NUTS AND BOLTS WE CAN DISCUSS


AFTERWARDS IN A GROUP THAT


CREATED THE REWARDS CARD.


IT IS NOT A CREDIT CARD, AND


THAT MAKES IT DISTINCT.


LET'S TALK ABOUT THAT


AFTERWARDS.


I WILL JUST TALK ABOUT ONE


EXAMPLE FROM MY OWN RESEARCH


IN TERMS OF THINKING ABOUT


OTHER INSTITUTIONS AND HOW TO


PULL PEOPLE IN.


EVERYTHING WE TALKED ABOUT


TODAY HAS BEEN EITHER


MAINSTREAM OR ALTERNATIVE


FINANCIAL SERVICES.


THERE IS A WHOLE OTHER SEGMENT


OF THE CONSUMER FINANCIAL


SERVICES SYSTEM WHICH IS


INFORMAL FINANCIAL SERVICES


THAT WERE USED IN THE


COMMUNITIES WHERE I WORKED.


ONE OF THE MECHANISMS SOME OF


YOU PROBABLY KNOW WHICH IS


ROTATING SAVINGS AND CREDIT


ASSOCIATIONS.


ANYBODY NOT KNOW WHAT THOSE


ARE?


A COUPLE OF YOU.


I WILL BE VERY QUICK.


LET'S SAY A GROUP OF 10 PEOPLE


DECIDE TO SAVE TOGETHER.


MELISSA IS THE BANKER.




THIS WEEK.


THAT'S THE BEAUTY.


YOU ARE MESSING UP MY


EXAMPLE.


MELISSA IS THE BANKER AND SHE


WILL KEEP THE THOUSAND DOLLARS


SHE COLLECTED.


SHE PUT IN $100 TOO.


THE NEXT WEEK I GET THE POT OF


A THOUSAND DOLLARS AND THE


NEXT WEEK BILLY GETS -- WILLY


GETS THE POT AND IT IS A FREE


NO COST SMALL BORROWER LOAN


FOR MELISSA AND ME, THE PEOPLE


AT THE FRONT OF THE LINE AND


IT FORCES SAVINGS AT THE END


OF THE LINE.


THOSE WORK INCREDIBLY WELL IN


A LOT OF COMMUNITIES.


THERE ARE PEOPLE WHO ARE UPPER


MIDDLE CLASS DOING THEM FOR


GENERATIONS AND THEY CONTINUE


TO PARTICIPATE IN THEM BECAUSE


FOR LOTS OF REASONS.


THERE ARE PROBLEMS, RIGHT?


ONE PROBLEM IS THAT MELISSA


COULD RUN AWAY WITH THE


MONEY.


I COULD RUN AWAY WITH THE


MONEY AND DISAPPEAR AND THEN


IT IS HARD TO HOLD ME


ACCOUNTABLE BECAUSE THERE IS


NO PAPER.


ALSO, MY CREDIT SCORE IS NOT


GETTING BUILT BY PAYING INTO


THAT EVEN THOUGH I HAVE BEEN


DOING FOR 20 YEARS.


THERE IS A PROGRAM IN AN AREA


CALLED THE MISSION ASSET


FUND.


MAYBE YOU HAVE HEARD OF THEM.


MISSION ASSET FUND TOOK THIS


IDEA THAT IS HAPPENING


INFORMALLY AND FORMALIZED IT.


WHAT THEY ARE DOING IS


CREATING THESE LENDING CIRCLES


AND MAKING SURE THAT IF


SOMEBODY DOESN'T PAY BACK


THERE IS INSURANCE IN THE


REPORTING TO CREDIT BUREAUS


AND TRYING TO MOVE PEOPLE INTO


BANKS WHEN THEY ARE STABLE


ENOUGH TO DO THAT.


I THINK THERE ARE LOTS OF


EXAMPLES LIKE THAT.


THE REASON I LIKE THAT ONE IS


INSTEAD OF TRYING TO CHANGE


PEOPLE'S BEHAVIOR, IT WAS


BUILDING ON SOMETHING PEOPLE


WERE ALREADY DOING AND SAYING


HOW CAN WE MAKE THIS MORE


ROBUST.


WHAT I WILL ADD IS THINKING


ABOUT ESPECIALLY FOR THE LOWER


INCOME PEOPLE AND HOUSEHOLDS


WHO ARE RECEIVING FEDERAL


BENEFITS OR STATE ASSISTANCE


AND THEN THERE IS THE ANNUAL


TAX REFUND MOMENT WHERE SOME


OF US IN GOVERNMENT AND AT THE


FEDERAL LEVEL HAVE SOUGHT TO


LEVERAGE THOSE MONEY TRANSFER


PAYMENTS.


IT IS AN OPPORTUNITY TO DRY


SAVINGS ACTIVITY AND THE


PRODUCT I WAS TALKING ABOUT


EARLIER.


I HAVEN'T KEPT UP WITH AS


MUCH.


THERE ARE CHALLENGES WITH


THESE THINGS.


I THINK WHEN YOU NEED TO PUSH


YOURSELF TO THINK ABOUT WHY


SOME OF THESE EFFORTS WORK


WELL.


SOME OF IT IS ON THE REALITY


OF THE HOUSEHOLD AND WHAT THEY


ARE DEALING WITH BECAUSE I


DON'T THINK WE HAVE HAD THE


LEVEL OF RESEARCH.


RACHEL SCHNEIDER FOR


INSTANCE.


I AM NOT SURE WHO IS THINKING


ABOUT HOW WE CALIBRATE THE


LEARNINGS INTO THEN THINKING


ABOUT THOSE SIGNIFICANT


INNINGS -- INSTITUTIONS WHO


ARE ON A ROUTINE BI-WEEKLY


BASIS.


DISTRIBUTING MONEY,


DISTRIBUTING BENEFITS AND


TRYING TO THINK ABOUT HOW TO


LEVERAGE THE MONEY MOMENTS.


IT IS EITHER AROUND TRYING TO


FACILITATE EVEN EMERGENCY


SAVINGS AND ACCUMULATIONS OR


FINANCIAL MANAGEMENT TYPES OF


TOOLS.


I DO KNOW THAT THERE HAS BEEN


MORE EFFORT RECENTLY AT THE


STATE LEVEL THINKING ABOUT


STATE BENEFITS.


THERE ARE SOME INTERESTING,


DARE I SAY, COMPANIES TRYING


TO BUILD AND OPERATING THAT


WAY.


MORE TO THINK ABOUT.


BUT PARTNERSHIP ESPECIALLY


WITH FOUNDATIONAL INSTITUTIONS


THAT ARE CREDIBLE AND TRUSTED


LIKE AN IMPORTANT POTENTIAL


LEVER TO DO THINGS AT SCALE.


DO WE HAVE TIME FOR ONE


MORE?


SO MY QUESTION WOULD BE THE


STRUCTURE OF ALL OF IT -- WE


STARTED TO GET TO THAT IN


THESE QUESTIONS, BUT IS


SOMETHING LIKE POSTAL BANKING


OR PARTNERSHIPS WITH -- AND


HOW DO YOU GET THESE ACCOUNTS,


GET SOMEBODY TO MANAGE THE


ACCOUNTS?


ONE OF THE GOALS IS TO MAKE


SURE MORE AND MORE PEOPLE HAVE


ACCESS TO A FINANCIAL


ACCOUNT.


I COME FROM TECHNOLOGY LAW


WHERE ALL OF THESE PEOPLE ARE


PROMISING SO MANY THINGS


OUTSIDE OF SYNTEC, BUT WHEN I


WORK DAY-TO-DAY THEY SAY IT


WILL CHANGE MOBILITY, BUT YOU


HAVE TO USE A CREDIT CARD TO


USE UBER AND THEY SYSTEMS FOR


UBER AND THERE IS ADVANCED


TECHNOLOGY THAT IS SUPPOSED TO


IMPROVE EVERYONE'S LIVES.


WHEN THEY SAY THEY WILL


IMPROVE LOW INCOME'S LIVES


THEY FORGET THAT WHEN YOU


DON'T HAVE ACCESS TO BANKING


AND A CREDIT CARD AND DEBIT


CARD, YOU ARE NOT -- THEY ARE


AT A HUGE DISADVANTAGE.


 I AM WONDERING IF POSTAL


BANKING AN OPTION.


IS IT EASIER TO HAVE A GLOBAL


BANK TO WORK WITH THESE


PEOPLE?


ACTUALLY THE PANEL --


[INAUDIBLE] WE WE HAVE AN


EXPERT IN THE AUDIENCE, TERRY


FREEMONT TO TALK ABOUT POSTAL


BANKING.


TERRY?


WE WERE TALKING ABOUT POSTAL


BANKING AND SOMEBODY IS


LOOKING AT THE 529 PLATFORM.


EVERY STATE HAS ONE OF THOSE.


AND SO IT IS ALREADY IF PLACE


AND THERE NEEDS TO BE POLICY


TWEAKS IN THEM.


RIGHT NOW THEY FAVOR HIGHER


INCOME FAMILIES.


IF YOU TACK A PORTION ON IT


CAN BE USED MORE LIVELY.


BUT THERE ARE OTHER SYSTEMS WE


CAN THINK ABOUT.


ONCE YOU DO AUTOMATIC


ENROLLMENT AND YOU PUT


EVERYBODY IN THEY ARE BANKED,


RIGHT?


AND THEN YOU MIGHT CHANGE THE


FLEXIBILITY NOT ONLY USED FOR


COLLEGE, BUT OTHER ASSETS AND


THINGS LIKE THAT.


THE SYSTEM IS IN PLACE AND NOW


IT IS A MATTER OF GETTING


EVERYBODY HOOKED UP TO IT,


RIGHT?


I THINK TOO ONE OTHER THING


I WOULD SAY, I SAID SOMETHING


AT THE BEGINNING OF MY REMARKS


ABOUT HOW WE HAVEN'T REALLY


ALTERED THE BANKING OR THE


KIND OF FINANCIAL SERVICES


SYSTEM TO MEET THE REALITIES


OF WORK.


ONE OF THE THINGS THAT WAS


IMPORTANT TO THE PEOPLE I


WAITED ON WAS TO GET THEIR


CASH AS QUICKLY AS POSSIBLE.


THE FACT THAT YOU HAVE PEOPLE


LIVING -- MANY MORE PEOPLE


LIVING CLOSE TO THE EDGE AND


THEY WOULD -- MANY OF THEM HAD


ACCOUNTS.


THEY CAME TO THE CHECK CASHING


STORE AND THEY HAD A BANK


ACCOUNT.


IF THEY DEPOSITED THEIR CHECK


IN THE BANK ACCOUNT THEY


WOULDN'T GET IT FOR THREE OR


FOUR DAYS.


IN THE MEANTIME THEY RISKED


HAVING LATE FEES ON A LOT OF


THINGS IF THEY COULDN'T PAY


THOSE THINGS.


IT WAS ACTUALLY WORTH IT TO


PAY THE ALMOST 2% OF THE FACE


VALUE OF THE CHECK TO CASH IT


TO DO THOSE OTHER