Tuesday, November 29, 2011

Bank On

I visited the Legal Aid Society of Orange County today. I spoke to the liason there for Bank On.
Apparently, there is a very nice brochure given to the under-banked written in English and Spanish. This brochure explains what the Bank On initiative does.

I think this addresses my concern regarding lack of access to the internet. Anecdotally, the Legal Aid lawyers commented that some clients do have access to Smart Phones and receive Legal Aid that way rather than through a PC from home.

Interesting. We will be working closely will Legal Aid Orange County in the coming months and will report and what we learn!

Sunday, November 27, 2011

Financial Empowerment through Financial Education

Financial Education is one of the fundamental ways, I believe, to protect oneself from the next 'bubble' collapse. It has always amazed me that any stock broker allowed an individual to put retirement savings in stocks. Equity has 100% risk. You learn that when you take the Series 7 brokers exam. I believe that the brokerage industry saw so much potential commission dollars in selling stocks that they forgot to educate the customer. the customer of all financial products, even mortgages, needs to educate themselves.

The new Consumer Protection Agency is charged with that task-Financial Education. The Treasury Department on its blog recently described its efforts on Financial Education. It has continued to develop a program called Bank On.

Bank On supports the efforts of communities to help the Unbanked and Underbanked. those are individuals who do not have checking or savings accounts or under utilize those accounts resulting in payments to cash checks, the use of payday loans and the the risk of complete financial failure when things go wrong.

At first I felt like laughing when I read about these efforts. The Fed's are making sure the poor have all of their money in the banks that screwed us all over. Currently, sitting in midtown Manhattan I see what all the banking fees we pay goes towards. Beautiful restaurants few of us can afford to eat in, buildings few of us can afford to live in and many, many, many, many stores some of us will NEVER be able to step into except as tourists oooo-ing and aaaaah-ing over the pretty, pretty things. New York City is the heart of American Finance and it has a lot to answer for. On the other hand so does the Department of the Treasury and perhaps this new effort to develop Bank On is part of that.

Bank On participants include the Federal Reserve, Cities for Financial Empowerment and the FDIC. Bank On connects community leaders with banks, credit unions, savings and loans and non-profits in order to provide guidance to the under banked. In Orange County, California this is done through the United Way. It claims to have opened over 4000 bank accounts and to have increased financial self-sufficiency primarily in Santa Ana a heavily Hispanic city in OC. Bank On Orange County also offers free tax preparation and "asset building opportunities." I do not know what that might mean and I cannot guess. I approve of this effort in theory.

Much of this initiative is online. I find this problematic since the under banked probably do not have computers or smart phones. Well, maybe they have smart phones which might help. Here is a link to some perhaps reliable statistics on smart phone ownership by age group. Here is the Pew Organization, one of the supports of Bank On, stating that only 35% of Americans use Smart Phones. Those making less than $30, 000 a year, likely under banked, only 22% own a smart phone. So, while Bank On is interesting and maybe helpful in theory if it relies on computer ownership or a smart phone, then it is less than helpful. That is if it requires the community of the under banked to find resources online.

Having said that, this is an interesting initiative that gives me some degree of hope. I have long believed that the long road out of this recession, particularly for California, is through community action and effort. Bank On was started in 2006 by the the San Francisco Office of Financial empowerment. It links cities to community services for citizens.

As I have mentioned several times before on this blog. The financial services industry in East Africa spends a tremendous amount of effort on financial education. Many of the mistakes that led us to this recession was a failure of understanding and greed but mostly ignorance in my opinion. This is easily remedied. Hopefully more of this financial support and education will continue in the states. We desperately need it in California.