New America Foundation

In California, 28 percent of adults don’t have a checking or savings account, according to the US Census. Nationally, the estimate is that 10 percent of all households don’t have accounts. In San Francisco, the Brookings Institution estimates that one in five San Francisco adults---and half of its Blacks and Latinos—don’t have accounts. The un-banked are most likely to be people of color, less educated, and have lower incomes. For example, a Harvard poll of Hurricane Katrina evacuees in the Superdome found that seven out of ten evacuees did not have checking or savings accounts.

Through an array of policies and programs, the public sector plays a significant role in the expansion of wealth and its distribution. Yet federal policy has historically discouraged asset building among households with fewer resources. The unintended consequence of this approach is that it creates a disincentive to engage in the types of activities which can help a family move up and out of poverty, namely savings and asset building.

The 1996 welfare reform law which created the Temporary Assistance for Needy Families (TANF) program gave states far more flexibility in determining the best ways to move their neediest families from dependence on cash assistance towards economic self-sufficiency. Policymakers have issued a series of short-term extensions to TANF in recent years while attempting to build a consensus on how it should be reauthorized. Therefore, an opportunity exists to build upon existing -- and incorporate new -- asset building strategies into the eventual reauthorization of TANF.

Starting a business is a principal way for a select but significant number of low-income people to accumulate assets that give them a stake in society. On an individual level, self-employment can help people exit poverty and build wealth. On a community level, small businesses help to anchor communities and provide diverse goods and services that respond to local needs. However, low-income entrepreneurs are not well-served by either mainstream financial institutions or government programs.

On May 13, 2004, the Federal Communications Commission approved a Notice of Proposed Rulemaking (NPRM) proposing to allow a new generation of wireless devices to utilize vacant television channel frequencies in each market. This so-called TV band “white space” consists of frequencies that are allocated for television broadcasting but are not actually in use in a given area. The FCC’s proposed rulemaking is pending but currently inactive.

What are asset-building policies?

Given the size and scope of tax refunds issued by the federal government each year, the tax filing process is a logical place to support and encourage savings behavior. In fact, the forms that IRS prepares for taxpayers are a nexus where individual behavior and institutional structures coincides.

The recent hurricanes wrought havoc on families and communities across the Gulf Coast and poignantly revealed how the debilitating effects of poverty persist across the country. The President has wisely proposed asset-based ideas as the core of his policy response—a urban homesteading act to encourage the ownership of land and homes, a Gulf opportunity zone to foster business ownership, and worker recovery savings accounts for job training and education. While insufficient in their scope, these proposals identify a promising path for federal policy efforts.

While consuming only a tiny fraction of the Department of Housing and Urban Development’s (HUD) budget, the Family Self-Sufficiency (FSS) program is one of the nation’s largest programs designed to help working poor families increase their savings and build assets. The program has three primary components -- stable, affordable housing, asset-building escrow accounts and work-promoting case management -- that function together to help families build assets and increase their earnings.