Partners (Number 2, 2006)

Vol. 16, No. 2, 2006


Can Housing Be Green and Affordable?

Technical Education: A Remedy for Poverty?

Soaring Insurance Costs Make Housing Less Affordable

CRA Revisions: Flexibility and New Choices

Reverse Mortgages Provide Answers for Some (but Not All) Seniors

Recruiting Retirees Calls for Careful Planning

Atlanta Fed Hosts Last in Series of Asset-Building Forums

Spotlight on the District—Georgia and Eastern Tennessee



  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.


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 saving 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 can be taken to scale for maximum impact and profitability.

Over lunch the forum participants heard presentations about banks’ successful efforts to reach new markets. “Bank on San Francisco,” a broad-based initiative spearheaded by local elected officials, nonprofits and banks, enrolled 10,000 unbanked families into traditional bank accounts.

The Young Americans Bank, a Denver-based financial institution introduced by Richard Martinez, is designed specifically for children and young adults. It features special accommodations that make banking accessible to young people, including pull-out steps that let a small person meet eye-to-eye with their teller and kid-friendly disclosures. The bank now boasts over $14.4 million in assets and over 14,700 active customers from all 50 states and 9 foreign countries.

Brainstorming about the future
Lively feedback and a multitude of suggestions generated during discussions demonstrated the banking sector’s commitment to engage a broader segment of the citizenry in mainstream financial services.

Building on the morning’s thought-provoking presentations, forum participants broke into groups to identify three important ideas for moving the field forward. The following ingredients for progress emerged:

First, financial institutions agreed that reaching the unbanked population was not a “one-size-fits-all” proposition. They called for more in-depth research about the sub-populations who do not use traditional banking, offering support for a research agenda that would provide critical information about the banking behavior of non-banking sub-populations and effective marketing tactics for reaching them. By sharing this information, each unique institution could develop appropriate financial strategies and products.

Secondly, the groups saw the need for a communications network to share information, brainstorm, identify best practices and conduct other conversations about financial services for the un- and under-banked with the goal of sharpening their own institution’s success.

Finally, although they believed that getting to scale was an eventual goal, they agreed that the immediate need was to continue funding innovation and pilot programs to winnow out what works from what does not.

Board selects key participants to plan next steps
In preparation for the next steps of the CFED/Federal Reserve System’s partnership, the Federal Reserve Board of Governors will select participants from the previous four forums to develop a future agenda to continue the work of promoting asset-building. The initiative, which also includes a research “call for papers,” will present findings from the series at CFED’s bi-annual asset-building conference this year in Phoenix, Ariz., September 19–21.

For more information on the upcoming conference and the initiative please visit CFED’s website at If you or your institution is interested in joining the initiative, please contact Nancy Montoya at

This article was written by Nancy Montoya, regional community development manager in the Atlanta Fed’s New Orleans branch.