JAMES A. JOHNSON COMMUNITY FELLOWS SPRING MEETING
QUESTION AND ANSWER SESSION
MARCH 23, 2004, SAVANNAH, GEORGIA
Joan Ling: How do you guys address underground income in your wealth-
building strategies? For example, in Los Angeles County, there is an estimate that, oh,
about 30 percent of the income of low-income communities come from undocumented
underground sources, and it’s not being counted right now towards the kind of asset
leveraging, asset building strategies that you guys are talking about, and how do you
incorporate that?
James Head: Well, I’ll let Jim also take a shot at this. My sense is that, in terms
of sort of these models, it is not sort of incorporated and looked at specifically. I think
that there are efforts in the context of these models to build institutions within
communities that can capture assets and can keep assets in communities. I think those
institutions are being designed in a way in which they would also capture and keep
underground economy resources, and that’s – I think that that’s sort of a traditional
economist sort of approach to this, that part of it is that the economies and communities
in terms of their economic strength are measured many times by the number of times a
dollar will turn over in their community and economists try to sort of measure it by
looking for institutions in the community that will demonstrate that people shop in the
community versus sort of sending their dollars outside of the community.
And in that context, I don’t think that there’s a whole lot of caring whether or not
the money – except in terms of banks and the IRS, in terms of whether it’s underground
money versus above ground money. The question is whether or not you can create
institutions that will keep money flowing and turning over and therefore equaling sort of
a stronger sort of economy than having the money sort of flow out and not flow back in.
Jerry Brant: I think the other thing that you need to look at, if you’re looking at
this so-called underground economy or cash economy, is what’s going on in that same
neighborhood as far as trading and bartering for services. I know in our area we have a
lot of that -- you know, I’ll fix your car if you do this for me -- and, you know, it’s also
helping people to accumulate assets in a nontraditional sense, or at least what some
people think is nontraditional.
Brad Lander: Two more things, sort of following up on Joan’s point – I’m Brad
Lander form the Pratt Center in Brooklyn, New York – first, I mean, I was only half
kidding. I mean, I don’t think we think about how the affordable housing construction,
another kind of asset building that we do, leaks out. We’re part of a little study now
which sadly is showing that indeed, you know, you write these big checks for the
contractors and they get paid out in cash on street corners to immigrants because – I
mean, that’s who’s building housing in New York City, and I assume in a bunch of other
places as well.
And it’s a real combination of things. It’s a combination of folks being
undocumented, a combination of some folks preferring to get paid in cash because then
they don’t feel like they’re getting squeezed by all these payday lenders, except they’re
just getting squeezed by their contractors. And so we’re talking with some of the unions
about the possibility of trying to build some affordable housing. I think we would look
for something other than just union construction, given some of the kind of historic
problems that sort of enfranchises people in the labor unions, but what some alternative
model is for making sure that that money then winds up in the hands of people in our
neighborhoods and builds and doesn’t just leak out.
And I guess the last thing to say is I think another emerging area that this points to
is more generally sort of what immigrant – community development looks like in
immigrant communities, which is something I think we have, you know, only very short-
term experience of.
Aaron Gornstein: I just wanted to bring up the issue of the administrative costs of
this – of IDAs. And to me, you know, $500 to $800 a year isn’t – doesn’t sound that high
to me, and to expect – especially since the nonprofits that are doing this are doing much
more than just – they’re doing financial literacy, they’re doing other services whether it’s
around getting people into homeownership or training programs, rather than just kind of a
clerical function with the savings account. So I think it’s important to recognize that.
And second, don’t you think if it’s scale, if we did get more people involved and if we
did get some government support for it, those administrative costs could go down for the
nonprofits rather than saying, well, we should have the banks administer this because the
nonprofits – it’s running too much money for them to do it.
James Head: I don’t know. I think that the administrative cost probably actually
does not fully reflect the full cost. I mean, when you look at these programs just sort of
from an implementation standpoint and on their face, they are highly, highly labor
intensive. A lot of work goes into the case management, a lot of work goes into support
services, and I think some of that actually is not captured by these evaluations that look at
the costs. Whether you could combine that with other kinds of services that these
particular populations would ordinarily also need and get from the standpoint of sort of
integrating financial literacy and other kinds of financial services into it, I think, is a
question and a place for exploration in terms of cost efficiency.
To some extent you’re pointing to an issue that has – I mean, I think that is really
a very tension filled issue around do you go with a model that emphasizes the nonprofit
sector at the front end of this or do you with a model that has the banks at the front end?
Do you go with a model where they’re much more joint partners in how you divide up
responsibilities? It goes a little bit back to the point that you were making about the fact
that banks, you know, are looking at these models and they’re – and comparing them in
terms of can I make this a – one bank used to call it for me a brown paper bag account,
which means that it’s similar to the thousands of other accounts that I have but I don’t
have to treat it differently? Or is it going to be one of those unique ones that will – and
that’s a question that we also had on the lending side when banks were just first getting
affordable housing lending, for example, which we don’t hear a discussion about as much
today because they figured it out.
I think that there’s room for a greater level of bank involvement and participation.
I believe that you’re going to have to incentivize that for them. I mean, I don’t think that
they’re going to come to it on their own. They won’t see millions and millions of people
waiting to get to them for an account and to put their $800 a year or whatever it may be in
the bank. And so I think the question is what we can get from a policy standpoint and
from an implementation standpoint from them if we’re willing to incentivize it for them?
And I think incentive means tax breaks and some other things that would make it
attractive.
But this discussion with the nonprofit sector, I think, ultimately you’re going to
need both to do it. I think the question of – there’s a lot of work still being done on trying
to really analyze the cost and the work being done by DQD (ph) in Boston is just around
the fact that you could streamline some of the costs if you could just make these
electronic system approaches in terms of the way they go. It’s like Jim’s point again, that
if – rather than of having somebody pay for something over to somebody, if you can push
the send button and get it over there, then we ought to be able to reduce some of the
costs.
Joan Ling: Thank you for touching on that question about the cash economy,
particularly in immigrant communities that are hot markets in this country. I’d like to tie
that in with weak market local economies in this country. It seems to me that as we
struggle with addressing the pattern of immigrant economic development in American
cities, the other side of it is in the weak local economies and the jobs and businesses
going and manufacturing factories going away.
That as the building and financial services really have to be designed in such a
way that deals with dropping income, and I’m curious to see how you address – how you
would address that because it seems like we are living in a more and more bifurcated
country, both regional – you know, because regional differences are getting more and
more exaggerated and income polarization is getting bigger and bigger. And that, I think,
would have an impact on even how you’re going to address these asset building and
financial services strategies in different type of low-income neighborhood. Is it in a hot
economy, local economy or in a weak local economy? Could you speak a little bit about
that?
James Head: What you may be referring to is the notion that, especially in other
areas like rural areas where there’s a eroding job base, or where – you have rural areas
where there’s not the kind of competitiveness, so wages are either stagnant or getting
lower. Whether or not IDAs or IDA approaches can be a value in those areas – part of
the IDA strategy has been to also target employers to see if there’s a way to craft or to
incentivize employers to use IDAs for their employees as a way to either bolster or mirror
401(k) plans or to create plans. In many places where you – the situation that you
describe, the employers probably don’t offer anything.
So a part of the thought about IDAs is can you incentivize it or make employers
see it as a benefit that they could offer and be competitive and what the employers will
say is yeah, we’d more than happy to do that if it didn’t cost us anything, and so the effort
is to really figure out how to make that happen. I think part – the other part of it to me is
that obviously this is a strategy where you’ve got to have the right combination of things.
I mean, in some ways I think that strategy is probably is one – we started this strategy
probably in a place where it was the most hard – hardest to do because a lot of it did
evolve and begin to germinate around welfare reform and as a way to help and bolster
people who were moving from welfare to work.
A lot of the literatures suggests that that is the hardest place to start, that generally
you want to start where you’ve got fairly stable income, and in most senses you want to
start where you have income where the person has a certain level of disposable income
that you can – through the strategies that Jim talked about, can move their behavior in a
direction in which they’re willing to not dispose of that income but to save it. And that’s,
I think, an ongoing discussion that we continue to have.
I would think that this strategy probably has its best approach for middle to upper-
income people who are stable in terms of income, and who are not that far away from
being able to get into the home market or to start a small business or to do some of the
other things that it’s much harder to do over the long haul with people who are much
more low-income. Now, my friends argue with me about that because then I sound even
more like a capitalist to them than probably what I am, but I think that’s the reality.
So the short answer to your question, I think, is that it would be very difficult to
put one of these programs in place, an IDA program especially, in an environment, in a
community where you’ve got real job instability, I think, unless you incentivize it in that
way. But the experimentation is that this could be a potential stepping stone to traditional
savings plans for workers, if you can at least get the behavior moving forward, if you can
get some base of savings there that would then allow people to, in a stepped way, move
up.
Kil Huh (Manager, Urban and Metropolitan Policy, Fannie Mae Foundation): In
a declining market an asset building strategy wouldn’t really be the answer, you know. I
think that when people are losing jobs and losing income, how do you then have an asset
building strategy that speaks directly to that point? And I think the answer to Joan’s
question is not necessarily – I mean, like it’s not necessarily appropriately answered in
this frame. It’s a bunch of different strategies of community development, community
revitalization, economic development, along with an asset development strategy.
And then part of it is the financial services piece, which is helping these families
who have shrinking incomes to manage the assets they have in the most productive
manner possible, and then treat that one part as a piece in a larger, comprehensive
approach to confronting the challenges of a weak market, as you put, as opposed to just
saying how does an asset development strategy work within a weak and declining
market? So I think that’s where you were going.
Brad Lander: The flip side is that the problem of IDAs in hot market
communities is that they’re generally nowhere near enough to get you a down payment to
purchase a home in the area where you’ve done the savings, and that, I think, you could
at least imagine communities where because real estate values were depressed that, if you
were working, an asset development strategy could enable you to become homeowners,
and that you could potentially use – I mean, if folks can buy and improve a home that can
help the local economy even if jobs otherwise are declining.
But, I guess, this also flags a little bit – and I want to try Tim’s question again but
in a slightly different way because I say there’s a political question here about this as a –
partly this whole argument around IDAs and wealth building were adopted as a political
argument to get out the box of talking about welfare and income transfer and income
supports, and into talking about something that would seed, that would be better sold to
the American public as a kind of – but I say there’s a complicated question because we
have an economy which is increasingly unequal in lots of different ways, certainly on
income grounds as well as on wealth grounds.
The political trade-off between something that you can sell to people and that
might make a difference in terms of we actually get something passed, and trying to make
a stiffer argument -- like, I guess, I don’t see it as something that in a deep way – looking
back at the front quote that James gave here, that’s really a meaningful challenge, that
kind of deepening inequality in the American economy. And it’s certainly the “Black
Wealth/White Wealth” as a book, says, look we not only have an income inequality
problem, we have a deep wealth inequality problem, and in some ways it’s a very sharp
critique of the ways that our economy’s increasingly unequal.
And I do worry that the solutions in order to be politically palatable are so nice
and friendly that they in fact don’t challenge that inequity at all in the name of getting
something passed. And, I mean, I feel that it’s a real tension because you yell and scream
about inequality and if you don’t do – and, I mean, that’s nice and good but we don’t
wind up with new policy around it.
Jim Carr: I wanted to answer your question, because one of the fascinating things
about wealth creation is that wealth is not created where it’s already been done, right?
The real wealth creation is where you find an emerging market and you exploit that
market and you make great gain, and one of the great things for the community
development industry is that many of our activities are located in those very markets that
are stagnant. And a problem is that by time they cease to be stagnant, for a variety of
reasons, we have not positioned ourselves and the residents who we work with, in order
to take advantage of those rising equity values, and so as a result the consumers end up
getting priced out or the neighborhood remains stagnant, but sort of either/or. It’s
stagnant or it’s growing but the consumers aren’t benefiting.
So, I would say, the answer to your question in a serious way is it depends. If the
reason that the wheels are falling off a neighborhood is because of some structural
economic issues for which they’re – you know, if they’re macrotrinsic (ph) you can’t
help or influence. Then in that environment, trying to stabilize consumers in that
environment to me would seem to be not necessarily working in their best interest. The
question is where are those macroeconomic forces taking economic productivity and how
can those consumers become part of it, not necessarily staying in place and falling
behind? And IDA or no other program would necessarily be useful or beneficial to them.
But on the other hand, if the market’s stagnant because of fundamentals of missed
opportunities, to me, that’s a different conversation because that’s where real emerging
market investments can and should be made, and so if there are things that can be
changed by local government policies, by perceptions, by things that you can change as a
developer, then that to me is the kind of environment that in fact is right for real wealth
appreciation, but I would not look at a stagnant market as the place where you say well, I
shouldn’t invest and I shouldn’t do something. I don’t know that IDA is the asset
building, but the flat markets represent the real opportunities for people because marginal
gains can result in significant increases in total wealth.
James Head: Building a little bit on what was being said, I mean, some of the
quotes that come out of the Shapiro book, the latest Shapiro book, I think, is instructive
on your point from the standpoint of in 1999 black families owned just 10 cents of wealth
for every $1 owned by the typical white family, and when you looked at inheritance,
what he says is that black baby boomers will inherit 13 cents for every $1 inherited by
white boomers. Homeownership rates for blacks is 25 percent less than for whites, 74.2
percent to 48.2 percent. On average, African-Americans pay mortgage interest rates
about a third of a percent higher than whites.
My sense is that the ultimate issue, and, I think, that the answer to your question
was right, that if you’ve got a place where the issue is that you don’t have jobs then an
asset development strategy is not going to go over well with folks. You need a jobs
strategy. But what I would suggest is that – what we’ve done in the past, however, is that
we’ve sort of done these things in a piecemeal way, and that going forward that we ought
not to be going to communities trying to develop jobs strategies that don’t attach an asset
development component to it, that don’t attach a component to build financial institutions
like Jim talked about, that that, I think, is one of the keys to this. And maybe there’s no
way to catch up in a capitalistic system, but I think that if it’s the system that we’re
playing with, there are some inroads that we can make, I think, in terms of that system.
And I think that the policy piece comes when people begin to see that you can
have fairly significant gains if you can put these things in place. I think that that’s where
people get on the bandwagon. I think people will get on the bandwagon about IDA when
they see the questions that you all have asked being answered. That actually it does
prompt people to save, that you can make it universal in terms of everybody who wants
an opportunity to save, that it will lead people to assets like homeownership. In
California, it’s – the issue of homeownership is not an issue for folks so the discussion
there is around whether or not you can use this in a way to also subsidize or to get into
rental situations that may lead ultimately to home ownership situations.
So those, I think, are some of the creative things that are beginning to move to the
forefront, but it’s the package, I think, that we’re learning in a small way that’s important
here. And I like the notion – I think that the first – the next place we’ll be what Shapiro
is suggesting, is that what we will also have to do is we will have to create ways for
whoever it is to have greater levels of disposable income and you do that by dealing with
healthcare – healthcare reform, you do that by dealing with childcare, you do that by
dealing with transportation, and other kinds of things that people are spending disposable
dollars on that they could then redirect to other places. And trust that through education
and other things that one of the other places they will redirect it is to savings and to asset
development and investment.
Kil Huh: Your point on the inheritance, I think, is a really interesting point of
discussion to, I guess, get people thinking about these issues, but at the same time, I
would suggest that that inheritance statistic that Oliver threw out is absolutely
meaningless because when people actually access that inheritance it’s usually – I would
even posit that people are already well on their way to having an established career and
have by and large gone down a particular direction. And when they actually get that
inheritance is not going to be doing them much good.
James Head: But he actually redefines it. He redefines it in a way that suggests
that basically people take the inheritance before – for example, before their parents die.
Kil Huh: Right, but then that’s a gift.
James Head: Yes.
Kil Huh: So what I would actually is that – that one of the silences is that – you
know, you have to really think about the timing of when you intervene, and I think it’s
really important that – like one of the ideas that you had mentioned that you didn’t really
follow up on was that whole notion of that child tax credit. Well, it’s more than that it’s
actually the $6,000 idea that Ray Boshara has been promoting with the New America
Foundation as well as what’s going on in England. One of the wealth building initiatives
that Blair had is that each family will be given $6,000 – and it’s going to be a pilot
program – but that’ll be put into a savings account at like 7 or 8 percent interest and then
it’ll eventually grow to a certain point where you’ll get a lump sum at a particular point to
actually access for education or for home ownership or for some sort of business
opportunity.
So I think that there’s a lot of discussion that still needs to go on with respect to
when you exactly access this wealth, and I think those are questions of intergenerational
wealth transfer are really important and vital and often get overlooked with respect to
these conversations around wealth inequity.
Susie Sinclair-Smith (Director, Policy and Leadership Development, Fannie Mae
Foundation): That was my question and I was not going to pose it quite in such a detailed
way, but I was wondering what you see the opportunities are in terms of this
intergenerational wealth? I mean, the way you presented it, it’s very – it paints a picture
of the stark inequities, but I do wonder – and Jim’s wonderfully optimistic way of
looking at where the opportunities are – if you do see opportunities around that
phenomenon and if there also communication issues around how to present it as a
phenomenon?
James Head: Well, the first thing I would say is that you should really read the
book because, I think, it – I think he does read – I mean, he examines the notion of the
fact that people confuse gifts with inheritance and will actually gifts inheritance and
inheritance gifts, and that that what some families will do is parlay – for example, on the
housing side, that they’ll parlay a gift of $14,000 for a down payment on a home that
what’s starting out as a loan from mother and father that turns into a gift until they pay it
back. And that for many families that then confuse this whether or not they feel that they
got into the home on their own or whether they got help to get into the home.
And his premise is that people of color will have much more of a difficulty doing
that. I think that the test of his premise is whether or not by income gains that have
occurred over the years, people of color will now, starting with a maybe a generation 10
years from now, be in a position – certainly, my son will be in a much better position
from the standpoint of both access to gifts and/or inheritance than I was. Now, I don’t
trust that he would do – he would save it necessarily but – (laughter) – that’s another
question, but he will be in a different place. And so I think part of the question is will
that make a difference for a number of generations past us, and I think that that’s one of
the premises.
I think one of his premises is that how much policy, how many things do we need
to do to ensure that some things will happen differently, but I don’t think in our parent’s
situation that there’s a whole lot other than maybe focusing on some of the institutional
changes and the institutional infrastructures that Jim talked about that would make it
easier for people to access services and less costly for them to access them.
Jim Carr: I think some of the statistics that Ray Boshara has recently produced
from the New America Foundation shows extraordinarily wealth disparities, and it’s not
just minority/non-minority, it’s rich and poor, and it just so happens that an extraordinary
number of minorities happen to be on that poor side. And then there are other
macroeconomic trends that are coming to the fore that will really have a decidedly
significant impact on the entire U.S. workforce, already are.
I mean, you look at the jobless recovery; many of those jobs are not coming back,
they’ve been eliminated. They’re no longer temporary layoffs; they are permanent
eliminations of job classifications in a way in which increasingly very high end, highly
educated job specialties are going to continue to be made, and they are things that require
more than just a good college education. They require real creativity, entrepreneurial
skills, a real understanding of market opportunity. So even things like high-end
programmers, which just a few years ago were really highly paid, are now being
automated. So the job market looks like it’s being bifurcated between those really highly
creative, requiring higher education, high skills, and then the other end of the extreme
market, which are the very low skills, things that cannot be routinized, like haircutters
and personal assistants and nannies and people who clean floors.
And unfortunately that’s kind of what the economy is beginning to look like, and
so in that kind of environment, those who don’t have now are not likely going to have
going into the future. So my own personal view is I’m really concerned about a lot of
macroeconomic trends that I see occurring, and I would say that that’s the downside.
If there’s an optimistic side, the optimistic side is that those trends effect minority
and non-minority households, and as more and more people become aware of the fact
that the job they used to have – and they have an MBA – no longer exists because it’s
been automated or because it’s now being performed in China or India – which by the
way, is not only taking low skill jobs now but is taking high skill jobs as well – maybe
those households will really understand the need to greatly expand the whole concept of
education and high quality education in a way that benefits all households better than it
currently does, sort of a re-look at how we educate our people to be competitive in the
markets.
Mike Anderson: James, I have a question about the whole reparation movement
in terms of wealth transfer. And is there any possibility that that really will take hold and
that in the next 25 years that you see that as a movement for addressing the differential
wealth between European-Americans and African-Americans?
James Head: The short answer is no. I think there’s no possibility of that taking
hold. I don’t see it happening.
Brad Lander: A comment about the trends -- I mean, I just think it’s hard not to
put on the table that we passed a tax bill that takes this so dramatically in the opposite
direction. I mean, talk about what we could do around wealth. Well, what we did around
wealth was say let’s give several hundred billion dollars of it to the people that already
have the most of it, and do everything we could possible to reverse American tax policy
with an eye toward having there be more wealth equity. I mean, the way that you could
change inheritance policy is by having it be more well distributed, and saying those
people that are inheriting several million dollars, you inherit a little less so that those
people who are inheriting nothing could inherit a few thousand, but instead we’re doing
exactly the opposite and making sure that those folks that inherit, that we don’t touch one
penny of it.
And so, I guess, this is just where I feel like these are very good, creative,
interesting, innovative programs that could transfer wealth to people in creative new
ways. It’s important to show they work, to bring them into the market, to do all kinds of
things that’d be good for neighborhoods and that should be saleable but if we give
everything away in the names of upward redistribution, there’s certainly not going to be
much if anything left in the name of equity. And I think it’s the same on the job – I
mean, I think that’s the same thing that was just described in where the jobs are, that what
haircutters and babysitters make could be more, right? I mean, we could distribute the
wealth and prosperity that exists in the country better. It would take a political will that
we certainly don’t have at the moment.
Jerry Brant: The financial institutions. I’ve been back here kind of simmering
because they always bother me. They’re the people that want to have their cake and eat
it, so to speak. And you can let me be on my soapbox and just vent or you can comment,
but what really gets me and it’s something that Brad said very early on in this, is that they
are the reason for a lot of the credit mess that these people have.
Let’s be honest, in a couple months we’re going to have a whole bunch of kids
graduate from high school, and within a couple weeks they’re going to get these letters,
and the letters are going to say, you’ve been approved – pre-approved for a $2,500 credit
card. And they take that and they have now started their problems. And they get another
letter in a couple of months and they’re pre-approved for another card and the next thing
you know, they’re five or $10,000 in debt and then they go buy a used car that somebody
will gladly finance. And then four or five years down the road they want to get married
and own a home, and they go to that financial institution and they say, your credit is a
mess.
Well, why is their credit a mess? And then they come to us and they say will you
counsel these people and will you make them homeowners? And gee, could we go set up
an IDA for them? (Laughter.) But no, that bank won’t service that IDA because it will
cost them money. (Laughter.)
James Head: I don’t know – I mean, I think that that’s – I think that’s probably
right, and I think that when you think about what’s happening with financial institutions
in the country and we’re getting the mega ones, it’s – there’s an equity here that, I think
that we ought to think about, but also, I think there’s a history here that we ought to think
about.
I can remember 20 years ago specifically having discussion with the chairman of
what was B of A, which was before that a North Carolina bank about community
development and about funding these kinds of things and being argued up and down that
they just – there was no market. They couldn’t make any money. That they couldn’t fit
them into a lending approach and a lending product that would really serve the
community and serve the bank.
And what, I guess, I’m encouraged a little bit about is that you don’t have that
discussion going on at least in the housing arena today. Now, it’s taken 20 years to get
there so I’m hoping it won’t take another 20 to get on some of these other things, but I
think that’s instructive, but the other thing I think is that there is also an important
component to this. I think that people cannot survive in this country without access to
financial services. I mean, I just – it just, I think, it’s – they’ll pay the money that Jim
was talking about. Having said that, I also think that there ought to be a cap on the
amount of profits a bank can make.
Jim Carr: I think the point is a fabulous point, and it’s a really well-taken point,
and in it’s on point. One of the reasons for the exponention of growth of the alternative
financial services industry is because of banks, in a variety of ways, actually helped to
promote the explosive growth of those institutions and provided them the capital to grow.
You really do need access to efficient, effective financial services – which is both a
product and the advice – and information if you’re going to really build wealth.
And the fact that institutions have misbehaved in a way that have undermined
consumers should not at the same time be a response that also says, well, so we’re going
to leave them out of the mix because they really need to be part of the mix and they need
to be held accountable. And so, I think one of the challenges for us is how do we hold
financial institutions accountable, and one of – the most powerful way to hold a financial
institution accountable is to demonstrate to them through someone else how profitable the
market was that they overlooked.
And so I think one of the challenges for the community development industry is
to really think very thoughtfully and comprehensively about how to link a lot of the
things that we are now putting together, together in a way really demonstrates the
viability of those consumer groups. And one of the things we know about the
communities that we serve is that those consumers tend to be very loyal. If you come in
the door and you treat them with respect, and you really give them something that’s
worth holding on to, they will stick with you, and I think that’s the best way to teach the
financial institution.
The one thing I will say on the very positive side, is that the financial institutions
with which we have reached out in all of our initiatives around the unbanked and
marginally banked households has been extraordinary, and in fact, we’ve actually even
reached out to the check cashers and payday lenders and others. We just had a
roundtable in November in which we invited them for a closed door session with many
mainstream financial institutions to talk about the issue of, is this a good deal, the product
and services that you offer? Forget is it – does it – you need to charge these things for
your cost structure, but on the receiving end, is this a good deal?
And around the table there was unanimous agreement that the consumer should be
able to process their financial transactions in a more efficient, lower cost way, and the
consumer – and the constituents at the table, or the participants at the table shared lots of
ideas about innovative partnerships that they would be willing to pursue, innovative
products, getting together in working groups. And I think that one of – I think the driving
reason for that is people see real profitability in these consumers to actually mainstream
them into products and services that make more sense for them, and there is concern, on
the one hand, of not wanting to get left behind.
So I think we have an obligation to the constituents that we serve to really show
and demonstrate and really work hard to get those partnerships to show that these
consumers are like anyone else, and given the opportunity to be put on a path toward
financial self-sufficiency and much improved credit opportunities they will perform like
other consumers. And so – but what we don’t have yet are the tools perfected that would
really begin to mainstream them, but those tools are en route; they’re coming.