Ownership & Assets

Ellen Seidman of the New America Foundation, who studies the financial-services industry, said the Consumer Products Safety Commission, the Federal Trade Commission and other consumer-protection efforts “have had a long history of being terribly underfunded,” making them less effective. There’s no guarantee a financial-products safety commission, strapped for funds, would escape the same fate -- especially when its goal is to intervene before “the bad stuff” gets to consumers, she said.

Rising living standards are part of the American story. Over the past century, the steady growth created the middle class, defused economic unrest and helped the nation absorb millions of working-class and immigrant families into the mainstream.

Against this backdrop, Jacob Hacker, a political scientist at the University of California at Berkeley who studies the risks facing Americans, says he sees a broad decline in the economic security of most Americans.

"Right now, we're really seeing the risks come home, and people are recognizing the extent to which their retirement savings are on the line when the stock market goes down drastically," said Jacob Hacker, a political science professor at the University of California at Berkeley who chronicled the advent of 401(k) plans in "The Great Risk Shift." LINK

One risk facing policy makers is that if the capital injections are seen as a government seal of approval, that could destabilize banks that don't receive investments, causing their customers to jump to other institutions, said Ellen Seidman, a former economic adviser in the Clinton administration.

Assignee liability would radically reshape that market by making everyone involved potentially responsible when things go bad. Investment banks that created mortgage-backed securities and investors who bought them would be liable for financial damage if mortgages turned out to be fraudulent. The financial industry opposed assignee liability, maintaining that it would cripple the market for asset-backed securities. Major ratings agencies later agreed that allowing unlimited damages would be disruptive.

If Bank of America follows through with the loan modifications, “it would begin to break a huge logjam,” said Ellen Seidman, who studies the financial-services industry at the New America Foundation. It would set an example for other lenders -- and for the government. “But I’d hold off on getting excited about the serviced loans,” Seidman said, “until we see something starting to happen.” LINK

Overview

Each year the federal government provides hundreds of billions of dollars in incentives for families to save and build wealth through the tax system. Low-income families, however, are not eligible for most of these tax incentives because they are poor. Low income families, like any other household, need to save to gain economic mobility and financial stability. Research has also shown that despite their low incomes, poor families can and do save when presented with the right incentives and methods to do so.

Overview

Over the past two decades, policymakers, academics, and others have pursued an array of policies and strategies to help lower and middle income households build savings and assets and access reasonably-priced financial products. While progress has been made, there have been few advances to delivering a high-value, affordable financial product at scale.

America's financial landscape is changing before our eyes. The absorption of major Wall Street investment banks by commercial banks threatens to create colossal universal banks that are too big to fail and might need to be bailed out in the future.

The New Saver's Act would introduce a series of new, innovative and low-cost initiatives to increase access to financial services and savings for all Americans.  Specifically, these initiatives would facilitate access to financial services during tax preparation; expand funding for low-income tax clinics; establish national savings performance measures; improve electronic transfer accounts; expand financial education; create children's savings accounts; expand the types of financial products eligible for the Saver's Credit; promote and facilitate access to U.S.