How have consumers, particularly poor, elderly, and unbanked consumers, fared amid the availability and prevalence of alternatives to traditional banking services? Learn more about the conference here.
Transcript:
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