Atlanta Fed Hosts Last in Series of Asset-Building Forums: According to the Bureau of Economic Analysis, Americans Spent More Than They Earned Last Year, Registering a Savings Rate of Minus .5 Percent. This Negative Savings Trend Persists in 2006, Raising Concern about How Households Would Manage an Economic Downturn or Income Interruption
Montoya, Nancy, Partners in Community and Economic Development
To address these concerns, the Federal Reserve and CFED (formerly the Corporation for Enterprise Development) hosted Innovations in Asset-Building Policy, Products and Programs, a broad partnership to explore market-based approaches to increasing the number of American families who are sang and building wealth.
Between June 2005 and April 2006, this four-part series of forums across the country invited leaders in economic policy, community development, philanthropy and the financial industry to consider ways of promoting and supporting asset-building activities.
The role of financial institutions in wealth-building
The last of four regional forums, "Tapping Emerging Markets: Financial Institutions' Role in Wealth Building," was held at the Federal Reserve Bank of Atlanta in April 2006. The day-long working meeting brought together senior-level representatives from key financial institutions such as J.P. Morgan Chase, Citigroup, Bank of America and Wells Fargo, including those in product development, community development, government affairs and related positions. Participants came from as far away as Puerto Rico.
The forum's objective was to inform financial institutions about the characteristics of low- and moderate-income savers and engage them about innovative ways to reach this market segment. Participants explored the roles financial institutions can play in expanding savings and investment products and services for low-income individuals as a means of boosting their market share. Spotlighting practical, real-world innovations in new product development, sessions focused on what individual financial institutions, and the sector as a whole, can do to tap into new market opportunities.
Simplifying the application process
In a brief inroduction, Atlanta Fed President Jack Guynn framed concern about asset-building through the experience of Hurricane Katrina and the tragedy that can befall those who are most financially vulnerable after a natural disaster.
Presentations by nationally recognized experts on reaching the unbanked followed. Ellen Seidman from ShoreBank Center for Financial Services Innovation and Lisa Mensah with the Aspen Institute's Initiative for Financial Security focused on the business opportunity for financial institutions that capture the largely untapped profit in the unbanked and under-banked market.
Mensah noted a recent survey which indicated almost two-thirds of those who bank use non-bank financial services as well. More surprisingly in this age of free checking, free bill-paying and other banking incentives, the unbanked and under-banked population reported they were not opposed to paying for competitive services that fit their needs.
Ray Boshara of the New America Foundation focused on local, state and federal policies that promote asset-building. He also described the financial industry's participation in programs that con be taken to scale for maximum impact and profitability.
Over lunch the forum participants heard presentations about banks' successful efforts to reach new markets. …