According to a joint report from the Asset Funders Network (AFN) and the University of Wisconsin Center for Financial Security, more than half of all employees in the United States say they are financially stressed, with nearly one-in-three employees admitting to being distracted in the office due to personal finance issues. As a response to this troubling data, the two detailed how embedding financial coaching services into the workplace provides and effective model for promoting greater financial health for employees. Their research included innovative approaches employers believe increase recruitment and retention while impacting their employees’ financial well-being.

To read the full report,click here.

The Consumer Financial Protection Bureau (CFPB) recently announced plans to end supervisory examinations for Military Lending Act (MLA) violations.

The MLA, established by Congress in 2006, is a statute designed to protect military service members and their families from predatory lending as it was discovered these loans were undermining the morale, financial stability, and general readiness of military personnel. The MLA caps the interest on all loans made to service members and their families at 36 percent.

Since 2012, the CFPB has been responsible for supervisory examinations of banks, lenders, and other financial institutions to ensure MLA compliance. However, the CFPB has chosen to relinquish its role as supervisor of MLA provisions.

To read a full legal analysis of what this change means for military personnel, their families, and predatory lending,click here.

Consumers in states where predatory lenders are expelled report being relieved and many adapt by employing a variety of safer financial strategies, including budgeting and borrowing from family. However, even once predatory lenders are driven out, payday lenders are finding legal loopholes – such as overdraft loans, installment loans, and auto title loans – that enable them to prey upon the most vulnerable in the community again.

Read the entire National Consumer Law Center report to learn more about what happens when states restrict high-cost loans by clicking here.

We are counting on you to lift your voice to push back against potentially harmful changes to the Community Reinvestment Act (CRA). CRA is a landmark civil rights law to end discrimination that was once common in America’s banking and housing markets.

While some strides have been made, the lack of investment in low-income areas and communities of color remains a persistent concern. Even still, regulators have proposed ideas that may substantially weaken the law via an Advanced Notice of Proposed Rulemaking (ANPR).  We need you to speak up to ensure CRA is strengthened, not weakened. 

We only have until Nov. 19 to comment on these ideas and urge regulators to consider CRA reforms that more effectively hold banks accountable for equitable investments and help them more flexibly respond to community needs.

In order to simplify the process, we have drafted a letter at the end of this email for our members to use that outlines our concerns and suggestions.

• Please open a new document, paste the draft letter, just add in your personal and organizational details in the sections in bold as appropriate.

• Where the data by congressional district is referenced, please refer to the table below. If you do not know your district,click hereto find it!

• Lastly, follow this link directly (https://www.regulations.gov/docket?D=OCC-2018-0008), click "comment now" to upload your document and then submit it!

Thank you for your advocacy. There is power in community voices coming together to protect critical resources and push for urgently needed reforms. For more background on CRA basics, the proposed changes and our concerns related to ANPR, click here to find the PowerPoint presentation from our joint NCRC-Prosperity Indiana webinar.

For questions, contact Kathleen Lara at klara@prosperityindiana.org.

Congressional District    Current Representative 

1                                       Pete Visclosky

2                                      Jackie Walorski

3                                      Jim Banks

4                                      Todd Rokita

5                                     Susan Brooks

6                                     Luke Messer

7                                     Andre Carson

8                                     Larry Bucshon

9                                     Trey Hollingsworth

DRAFT LETTER

(Date)
Comment regarding “Reforming the Community Reinvestment Act Regulatory Framework”

RE: Docket ID OCC-2018-0008

(Name of Your Organization) appreciates the opportunity to comment regarding the Office of the Comptroller of the Currency’s (OCC) Advance Notice of Proposed Rulemaking (ANPR) regarding the Community Reinvestment Act (CRA). Since 1996, banks have issued almost $2 trillion in loans and investments in low- and moderate-income communities, ensuring more individuals have the opportunity prosper and become homeowners, more businesses receive loans to grow and thrive, and more community development organizations can expand their work to revitalize neighborhoods. CRA is a critical tool to address equity in lending, access to credit, and investments in underserved communities.

(Your organization’s name) is based in (city or neighborhood), and (describe services and mission). In carrying out this work, it is clear how CRA has motivated banks to provide loans and investments for affordable housing and economic development in areas and/or for projects that would otherwise not receive this critical capital. (Describe here in a few sentences an example of CRA financing that has addressed a critical need and/or is innovative.)

With that in mind, (Name of Your Organization), has strong concerns about how the proposed changes weaken regulators’ and communities’ ability to ensure CRA-related investments are indeed responsive to community needs. The OCC’s proposal significantly diminishes the importance of assessment areas on CRA exams, which are essential in combating lending inequities. Using data collected from the CRA and the Home Mortgage Disclosure Act (HMDA) from 2012 through 2016 to examine loan volumes, the National Community Reinvestment Coalition (NCRC) estimates that if these proposed changes were to be implemented, the losses in mortgage and small business loans in low- and moderate-income (LMI) census tracts would be between 10 and 20 percent. In Indiana, that would mean LMI neighborhoods could lose up to $1.28 billion in home and small business lending nationally over a five-year time period. In the Congressional district in which we operate, the loss would be (insert the appropriate data from the table above).

Specifically, we are concerned that an OCC idea, commonly called the one ratio, would make CRA exams considerably less effective in evaluating how banks are meeting local needs, particularly in hard-to-serve areas that are economically divested in very rural or urban areas. The one ratio would consist of the dollar amount of a bank’s CRA activities (loans, investments, and services to low- and moderate-income borrowers and communities) divided by the bank’s assets. The ratio is supposed to reflect CRA effort compared to a bank’s capacity.

This approach cannot tell an examiner, a bank, or a member of the public how responsive a bank is to its various service areas. Currently, CRA exams evaluate and rate bank performance in assessment areas where banks have branches, and examiners are required to solicit and consider comments from community members about performance in assessment areas. This is central to the intent of CRA because these public comments offer insight on the practical impacts of CRA investments or areas for improvement. The one ratio replaces assessment areas or significantly diminishes the importance of assessment areas and public input on CRA ratings. Regulators must not devalue the public input process or weaken standards; rather, they should increase communication between all stakeholders about ways to more effectively meet community needs.

(Add any details about how your organization has engaged banks and/or CRA examiners in discussions about local needs and proposed financing and/or bank lending. Describe how these discussions may be diminished if assessment areas become less important on CRA exams.)

Additionally, we agree that changes in banking and technology require innovation to increase services to communities in need, but research has shown that low- and moderate-income consumers rely on branches for access to loans and banking services. This is a critical tool to combat reliance on predatory lending operations that are often pervasive in divested communities and disproportionately impact communities of color. If CRA exams dropped branches from consideration, the amount of lending and bank services in low- and moderate-income neighborhoods would decrease significantly. (Add your experience about bank branches in lower income neighborhoods or helping your modest income clients who are unfamiliar with banks get loans via bank branches).

Accordingly, the proposal’s discussion of the need to expand CRA exams to assess bank lending in areas beyond bank branches does so in support of the one ratio concept. Instead, the OCC should establish assessment areas for geographies where banks do not have branches but engage in a significant amount of business to gain a better understanding of service needs and opportunities in those areas.

Regarding the question within the ANPR about whether CRA consideration should be broadened for additional activities and populations, consumer and community development advocates like (Your Organization Name) have significant concerns that this would allow financing of CRA-eligible projects that do not directly serve low- and moderate-income neighborhoods and populations. By awarding points for financing or activities that do not address lack of access to banking or community development needs in lower income neighborhoods, the CRA’s mission of addressing inequality and redlining will be diluted.

In terms of expanding populations served by CRA, CRA exams must evaluate lending and services to people and communities of color. Since racial disparities in lending persist, it is essential that CRA must include lending, investing, and service to people and communities of color in its evaluations. The Joint Center for Housing Studies of Harvard University’s 2018 State of the Nation’s Housing report noted that the homeownership rate between black and white Americans is widening nationally. “Between 1994 and 2016, black homeownership rates increased just 0.3 percent while white rates rose 2.2 percent, widening the black-white gap to 29.2 percent,” according to the report.

(Add your thoughts and experiences related to serving communities of color and addressing racial disparities in lending).

One important way to more effectively address lending disparities would be for regulators to consider whether mortgage servicing companies, credit unions and insurance companies should also be subject to CRA-style exams. We suggest requesting public comment on this approach, which has long been a discussion among community development advocates who recognize we need to broaden CRA applicability to more ably address lending inequality.

To summarize, (Your Organization) agrees that CRA modernization is essential, but only in ways that boost lending and access to banking for underserved communities. We agree that CRA ratings must be reformed, but in ways that foster more inclusive investments, not contract current obligations. We also urge regulators to examine assessment areas that include geographies outside of bank branch networks in which banks make high volumes of loans. In order to continue working towards greater equity in lending, we urge regulators to examine lending and services to people and communities of color. Lastly, (Your Organization) believes the one ratio approach will diminish the importance of branches, assessment areas, and public input and result in a decrease of lending and access to banking in the communities that need it the most.

Investments through CRA are catalytic to divested markets and neighborhoods. These investments and capital infusions are often the first-in dollars, meaning it drives rehabilitations, loans, and developments that then spur broader market interest, resulting in larger scale revitalization and quality of life improvements. We urge the OCC to work with national, state and local consumer and community advocates to enact the kinds of reforms needed to ensure more individuals, businesses and communities can access credit, capital and opportunity.

Thank you for your thoughtful consideration of these comments.

Sincerely,

(Your Name)

The United States Census Bureau recently unveiled its eighth Supplemental Poverty Measure (SPM) report, detailing the prevalence of poverty in our society and estimating the differences between the official measure of poverty and the poverty measures that take account of non-cash benefits and nondiscretionary expenses. 

The 2017 report showed slight improvement in the SPM poverty rate (.1 percent decrease). However, the 2017 SPM rate was 1.6 percentage points higher than the official poverty rate of 12.3 percent, indicating that there is still work yet to be done. 

The most helpful anti-poverty measures is Social Security, moving 27 million Americans out from under the poverty threshold many of whom, unsurprisingly, are 65 years of age or older. Refundable tax credits, Supplemental Nutrition Assistance Program (SNAP), various housing subsidies and Supplementary Nutrition Program for Women, Infants, and Children (WIC) also proved useful, lifting a combined 14.9 million people out of poverty (see graph below).

While strides have been made to alleviate the SPM in our country and there is no apparent discrepancies in poverty between 2016 and 2017, there is still room for improvement, namely in number of people struggling with medical and work related expenses.

To read the full U.S. Census Bureau report,click here.

To read the National Low Income Housing Coalition’s recap,click here.

ALICE is an acronym for Asset Limited, Income Constrained, Employed. These households have incomes above the Federal Poverty Level but struggle to afford basic household necessities. In the words of Indiana United Ways Board Chair, Ron Turpin, “ALICE gets up each day to go to work, but still faces financial barriers – working jobs that offer no healthcare, vacation, or paid sick leave. These workers hold jobs that are critical to the success and vitality of our communities, yet they often struggle to afford food, rent, child care, and transportation, and have little left over for saving and investing.”

The 2018 ALICE report updates the cost of basic needs in the Household Survival Budget for each county in Indiana and the number of households earning below the amount needed to afford that budget (the ALICE Threshold) for the period of 2010 to 2016. It also highlights emerging trends that will affect ALICE families in the future.

Highlights from the report include:

• In 2016, 39 percent of Indiana households live below the ALICE Threshold, meaning they could not afford basic needs such as housing, child care, food, transportation, health care, and technology. This is an increase of 10 percent from 2010.

• The cost of basic household expenses in Indiana increased steadily to $52,836 for a family of four (two adults with one infant and one preschooler) and $19,620 for a single adult — significantly higher than the FPL of $24,300 for a family of four and $11,880 for a single adult. The cost of the family budget increased by 23 percent from 2010 to 2016.

• Low-wage jobs continued to dominate the landscape in Indiana, with 65 percent of all jobs paying less than $20 per hour. Although unemployment rates fell during this period, wages remained low for many occupations. With more contract work and on-demand jobs, job instability also increased, making it difficult for ALICE workers to meet regular monthly expenses or to save.

Emerging trends include:

• The Changing American Household — Shifting demographics, including the rise of the millennials, the aging of the baby boomers, and domestic and foreign migration patterns, are having an impact on who is living together in households and where and how people work. These changes, in turn, influence the demand for goods and services, ranging from the location of housing to the provision of caregiving.

• Market Instability — Within a global economy, economic disruptions, natural disasters, and technological advances in other parts of the world trigger rapid change across U.S. industries and cause shifts in supply and demand. This will increasingly destabilize employment opportunities for ALICE workers.

• Growing Health Inequality — With technological advances in health care outpacing the ability of many households to afford them, there will be increasing disparities in health according to income. The societal costs of having large numbers of U.S. residents in poor health will also grow.

Click here to download the full report.

For the past decade, the Local Initiatives Support Corporation (LISC), a national community development organization with an office in Indianapolis, has cultivated an asset-building model called the Financial Opportunity Center (FOC) that bundles one-on-one financial coaching and employment services to help low-wealth families move closer to financial independence.  FOC services are delivered by highly trained coaches in familiar settings – typically organizations with deep roots in the neighborhoods they serve.  Despite good results from this one-on-one approach and people’s stated desired to continue working with a coach, it is often difficult to retain them in a long-term coaching relationship.  To that end, LISC has worked with the Common Cents Lab at Duke University’s Center for Advanced Hindsight to test an approach to improved coaching retention based on the principles of behavioral economics.

According to the chief researcher on the project, Emory Nelms, “Regardless of how strong our intentions are, setting goals and forming intentions does not always translate into behavior. In fact, research has consistently found an ‘intention-action gap.’ We don’t always follow through or behave in the way we wanted to, often falling short of our goals in consequence.”

Based on insights from a detailed behavioral diagnosis, Duke designed potential interventions to address barriers faced by coaching participants. LISC tested two of these in twenty-four FOCs in ten different cities:

• A visual goal-setting exercise in which participants select one of eight photographs that best captures the vision of their  financial future.

• A postcard which participants write to themselves in the future as a reminder of what they want their financial future to be.

Initial results are promising.  Controlling for individual participant characteristics and variations among the sites, the visual goal setting exercise increased average retention.  Participants attended more sessions within three months of enrolling in the program.  While the postcard did not further increase retention, writing the postcard seems to have increased the average number of sessions attended and decreased the average number of days between sessions.

Nelms think there are several reasons why these interventions had positive effects.  He notes: “The visual goal setting exercise leveraged the emotional power of photographs to help participants better connect with their long-term goals. . . . When we “see” a photograph, we do not just see static images. Instead, we intuitively connect them as part of a broader context or story. These stories make it far easier for us to connect emotionally with images and photographs. This emotional connection is important because it helps participants to build intrinsic motivation as they work towards their goal.”

These interventions prompt us to reflect on reasons why participants fade from coaching.  Says Nelms: “It’s easy for us to think that ‘this just isn’t the right time for them’ or that ‘they will come back when they are ready.’  This places the responsibility with the participant when in fact the problem may be that we are not engaging them in the most effective manner.”  Thus a decision to engage with financial coaching may not be due to individual motivation. Other factors may be in play.  We should be alert to different ways of communicating with people about their financial goals in order to help them bridge the intention-action gap.

Read the full study from the Common Cents Labhere.

Tom Orr is a Senior Program Officer with LISC Indianapolis and a member of the Indiana Assets & Opportunity Network Steering Committee.

As a valued member of the Indiana Assets and Opportunity Network, you understand just how life-changing access to an affordable loan can be to the clients you serve. However, traditional payday loans can have predatory interest rates attached to them, heaping a heavy burden upon a borrower who is already facing difficult circumstances.

Community Loan Centers (CLC) exist to provide an alternative, fairly-priced loan program to low-income families. On Wednesday, August 29, the Network hosted a free webinar featuring special guest Matt Hull, executive director of the Texas Association of Community Development Corporations, examining how CLCs are helping families in 16 markets across seven states. Topics covered include:

• What is payday lending and why are alternatives needed?

• What is a Community Loan Center and how does it operate?

• How can you bring a Community Loan Center to your community?

CLICK HERE TO ACCESS THE WEBINAR.

To learn more about becoming a CLC partner or how you can be informed of upcoming Network webinars and events, contact Logan Charlesworth, Network Manager.

Are you saving enough for retirement? Many of us believe we are but, unfortunately, statistics show that’s just not the case here in Indiana.

According to a National Financial Capability Study, research participants were asked five questions covering aspects of economics and finance encountered in everyday life. Only 35 percent of Hoosiers (and 37 percent of U.S. adults) could correctly answer 4 or 5 out of 5. Furthermore, a Retirement Income Literacy Survey conducted by the American College New York Life Center for Retirement Income found that 74 percent of Americans age 60-74 failed a 38-question retirement literacy quiz.

Many Americans aren’t prepared for retirement, which could threaten their financial security later in life. Federal lawmakers have taken notice of the retirement shortfalls facing Americans, prompting them to take action.

In order to help Hoosiers – and all Americans – plan adequately for retirement, Indiana Senator Todd Young (R) has proposed a Commission to the Subcommittee on Primary Health and Retirement Security to assess retirement security. The Network wholeheartedly supports Senator Young’s proposal and applauds him for his leadership on this matter.

MEDIA: NETWORK APPLAUDS SENATE EFFORT TO PROTECT SERVICEMEMBERS
Donnelly, Colleagues Urge CFPB to Uphold Financial Protections

August 17, 2018

WASHINGTON, D.C. – Today, Senator Donnelly and 48 other senators sent a letter to acting Consumer Financial Protection Bureau (CFPB) Director Mick Mulvaney, calling on the bureau to continue supervision of lending made to active duty servicemembers and their families to ensure that lenders are complying with the Military Lending Act (MLA). This letter follows recent reports that the Bureau is planning to suspend regular monitoring of payday lenders and other companies for violations of the act.

“The Indiana Assets and Opportunity Network commends Senator Donnelly and his fellow senators for their leadership in insisting servicemembers are protected from predatory lending practices,” said Kathleen Lara, Prosperity Indiana's Policy Director.

Lara added, “These loans cause a cycle of debt that destabilizes families and contributes to a lack of combat readiness, which is why it is particularly critical that men and women in uniform can depend on the CFPB to ensure lenders are complying with the law.”

The MLA was passed in 2006 with bipartisan support to offer vital consumer protections to active duty military servicemembers against predatory lenders. Payday lenders often locate their storefronts near military bases to market their high interest loans to servicemembers. Because the exorbitant annual percentage rates create a cycle of debt, the MLA caps the APR to servicemembers and their dependents at 36 percent.

Prepared prior to enactment of the MLA, a 2006 Department of Defense report to Congress found, "Predatory lending undermines military readiness, harms the morale of troops and their families, and adds to the cost of fielding an all-volunteer fighting force."

Since then, the CFPB has reported that their enforcement actions have yielded $130 million in relief for servicemembers, veterans and their families.

“Servicemembers and their families are vulnerable to predatory lending in ways the civilian population is not,” according to Amy Carter, the Indiana Institute for Working Family's Policy Analyst for Veterans Affairs.

Carter said, “The CFPB needs to be proactive in examining lenders and not rely on those already bearing the weight of national security to report financial abuse.”

“For years service members and their families were preyed upon by unsavory lenders.  Commanders had to get involved to help their troops get out of the grips of these shysters.  I remember when I commanded troops and I spent far too many hours dealing with these efforts instead of insuring my troops were trained and that my equipment was ready in very short notice.  When Congress passed legislation and enforcement was put in place one could easily see the difference," said Brigadier General James L. Bauerle USA (Ret.).

He continued, "I recognize they intent to reduce government over-reach and recent events point out how government can abuse their power.  However, this is an area where the proposed actions will most certainly impact our military readiness as it was before the current laws were put in place.”

This letter can be found here: https://www.donnelly.senate.gov/newsroom/press/donnelly-group-of-senators-urge-administration-not-to-abandon-financial-protections-for-servicemembers.

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The Indiana Assets & Opportunity Network was created to increase asset acquisition for low-wealth Hoosiers and strengthen local economies through policy advocacy and capacity building in partnership with organizations and coalitions.

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