As Congress moves toward passing an enormous bailout package to solve the current credit crisis, we’ve been thinking about what this means for the savings and asset policy. It’s impossible to predict all of the outcomes from this kind of action. Some pundits aren’t even sure that the bailout will have its desired effect, and no one is certain about the unintended consequences.
One thing that is certain, however, is that this should not and can not be a “one-fell swoop” approach to dealing with the credit crisis. Clearly, this bailout should just be the first step in a series of actions to revamp our financial system and restore faith and confidence in our economy and financial industry.
This major step is going to need to be accompanied by a number of small, but critical, steps; some to help provide reliable, low-risk options for savers, and all aimed at restoring a sense of faith and credibility in the economy and, in many ways, the government.
Smart, low-cost policy proposals which would enhance individual savings opportunities already exist–such as rebuilding the U.S. Savings Bond Program. Savings Bonds have been a key support for the federal government and a reliable, safe investment for American families for almost a hundred years.
Led by the Doorways to Dreams Fund (D2D), a coalition of national and local organizations, the Savings Bond Working Group has been championing the effort to return the U.S. Savings Bonds purchase option to the tax form. (Yep, taxpayers did have this option in the past, but it was eliminated by the IRS; and yep, our organization is a member of the SBWG).
In recent years, the IRS has made purchasing savings bonds more difficult and less attractive. In economically volatile times like these, people need a sense of comfort when they make the effort to save their money. U.S. Savings Bonds are secure, provide market-rate returns, and are a recognizable brand product. A universal savings product that has the benefit of being attractive to small savers who may want to set aside as little as $50, or purchase for a gift.
With engagement from the Treasury Department, D2D and community partners are piloting this idea (more info on this in a future guest post), but the results are promising.
We should recognize this moment as an opportunity to consider more than just how to get through the next week or month. We have an opportunity to improve the ease and likelihood of American household saving and realize the micro- and macro-level benefits that come along with it,
Improving access to Savings Bonds is just one small piece of the puzzle. We’ll be offering more as time goes on. And it seems we aren’t the only ones discussing ways to encourage savings. Thanks to Matt for the heads up.