American Savings Promotion Act

Floor Speech

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Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I rise in support of H.R. 3374, the American Savings Promotion Act, which has been offered by my colleague from Washington (Mr. Kilmer). This bill is an example of the innovation Democrats bring to addressing the concerns of the chronically unbanked.

Building on the success of credit unions offering such programs, this bill enables banks to offer similar products, vastly increasing the reach of this creative savings product.

Prize-linked savings accounts encourage customers to set aside savings by combining the more mundane task of setting aside money with the excitement of playing the lottery. Customers are always eligible to withdraw the principal of their savings account but forego accrued interest for the chance of winning all of the interest of participants in the program.

Such programs have been offered in South Africa, resulting in more than $200 million being set aside in savings accounts by more than 750,000 individuals who had largely not set up a bank account. In Washington State, credit unions that offer such accounts have found that these accounts are helping to build an ethic of frugality.

Today, credit unions are permitted to offer such programs if State law permits them, which includes four States: Washington, Michigan, Nebraska, and North Carolina. However, even though these States permit prize-linked savings accounts, Federal banking laws prevent banks from offering them because of a decades-old prohibition on participation in a lottery.

Mr. Kilmer's bill retains the general prohibition against lotteries but permits banks to offer prize-linked savings if the bank's State also allows them.

It is not a secret that this country does not save enough, that we are not preparing for the unexpected or even for how we will afford college tuition expenses or retirement. We also know that, once someone begins to pile on debt, it can be nearly impossible to dig out. Mr. Kilmer's bill enables our constituents to say ``no'' to debt by encouraging good savings habits.

I reserve the balance of my time.

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