American Savings Promotion Act

Floor Speech

Mr. MORAN. Mr. President, I am on the floor this afternoon to speak briefly about the American Savings Promotion Act, H.R. 3374.

My understanding is that this bill may soon pass the Senate--it was passed by the House of Representatives in September--and I wish to speak briefly about its value to our country, to its citizens, and to our country's future.

I believe this is a fairly narrow circumstance with broad consequences. I believe if there is a primary responsibility we have in being a citizen of this country, it is to make sure, among other things, that we pass on to future generations of Americans the opportunity to pursue the American dream--to be able to have an idea to pursue a business plan, to save for your family's and children's education, to save for your own retirement, to prepare yourself for a bright financial future. Unfortunately, many Americans struggle to do that.

Certainly, one of the aspects of that circumstance is there is very little savings that goes on in our country today. People are unable or unwilling, or perhaps undisciplined, in a way that allows them to prepare for their financial security and their financial future.

The problem is--and statistics bear this out--people aren't saving. The reality is, according to a recent survey, 44 percent of American households lack the savings to cover basic expenses for 3 months if unemployment or medical emergency or another crisis leads to a loss of stable income. Many Americans have the inability--almost the majority of Americans have the inability to care for themselves and their families if there is an emergency or a problem for more than 3 months. That is something we ought to try to resolve.

I also think there has been over a period of time a disparity of incomes. We want to make certain those at the lowest income levels have an opportunity to increase their income and to increase their financial stability. In fact, the Senator from Oregon, Senator Wyden, and I created sometime ago the Senate Economic Mobility Caucus, trying to make certain that people have a chance to move up the ladder of economic success and security in our economy and in our country. Senator Wyden and I came together to bring some of the best minds from conservative to more liberal thought-provoking organizations and policy organizations to visit with Republican and Democratic Senators and their staffs about what ideas are out there that might increase the chances that a person or a family has the chance to improve their financial circumstances.

One of the ideas that arose from that caucus's discussions was this legislation called the American Savings Promotion Act, again, with the realization that people are not saving for their own financial security, that they lack stability in times of emergency and difficult economic challenges to care for themselves, how can we encourage Americans to save more?

One of the ideas that came forth in this regard is the opportunity to link savings to prizes. When I first heard this, I thought it sounded a little bit odd, a little bit like a gimmick. But the reality is with little savings, people still believe--in fact, 20 percent of Americans believe that winning the lottery is a meaningful strategy to build wealth. Americans spend more than $60 billion every year on lottery tickets and families earning the least spend the highest percentage of their earnings on lottery tickets despite the long odds of winning.

This legislation is not about a lottery, but about allowing financial institutions the opportunity to provide prizes for those who save, who open a savings account and deposit money into that account. In our country, because of the way financial institutions are regulated, that has been an opportunity in a number of States in credit union financial institutions for a period of time. In fact, the statistics and the facts that arise from that experiment or that experience indicate that savings increases when there is a prize associated with the savings behavior. So it is one of the reasons this makes sense. Prize-linked savings is an innovation, a tool to encourage savings while offering the chance to win a larger prize.

We know these programs work because of the evidence in the States that I mentioned in which credit unions have been offering these prizes associated with savings, and that has occurred in Nebraska and North Carolina and Washington. Since 2009, over 50,000 accountholders have collectively saved more than $94 million, and it only is available in the credit union setting and not available in a bank setting because of Federal barriers that prevent banks and thrifts from offering these prize-linked savings products.

With the passage of this legislation--again, which is a pretty straightforward, commonsense kind of opportunity--this legislation will update Federal laws to allow States to expand prize-linked savings to other financial institutions beyond credit unions.

Increasing savings is a win-win for individuals. It is certainly valuable to boost the financial institutions' accounts and an improvement to the American economy.

This legislation was introduced by me, with the cosponsorship efforts of Senator Sherrod Brown, the Senator from Ohio, in an effort to create one more opportunity, one more piece of encouragement for people to save for their own financial well-being, to care for themselves and their families, and to increase the savings rate in this country for the benefit of the entire economy, but most importantly for the benefit of low-income individuals who need a boost of encouragement to save.

I wish to thank my colleagues in the House. As I say, this legislation passed in the House where Congressman Kilmer and Congressman Cotton led the effort in the House, and my colleague, the Senator from Ohio, Senator Brown, for his efforts in supporting this legislation here in the Senate. It is an opportunity for us to do something modest but useful, something based upon common sense, and something that accomplishes a goal we all should have of making certain the American dream is alive and well, that individuals and families take personal responsibility for themselves and their family members. We all know that increased savings, preparing for any kind of circumstance or emergency that comes our way, is something that ought to be encouraged.

I appreciate that it is likely that later today or tomorrow H.R. 3374 will pass, again, an example of where we have been able to work together and bring new ideas to the cause of making certain that everybody has the opportunity to increase their economic value, to increase the economic worth for their family available for the future, to pay their bills, and to make certain their future is bright, again, in my mind making sure the American dream is more alive and all American families are better off.

BREAK IN TRANSCRIPT

Source