Remarks by Board President LaMar Davis, September 2010

PICB Board President

Remarks by Board President LaMar Davis

on the sponsorship of our new partners and our commitment to Financial Literacy

September 2010

Reflections on Financial Literacy

I am delighted to welcome Bank of America and Cathay Bank to our growing list of financial partners with Partners In Community Building, Inc. (PICB) I want to commend both banks for this partnership and the opportunity given to PICB for tomorrow. I also want to commend both institutions for their excellent leadership. Both Banks are committed, and capable in providing services to the communities they serve. PICB is committed to becoming one of the world’s best financial educators and is deeply committed to making financial education a priority in this country. I decided to take advantage of these partnerships to speak about the benefits of economic and financial education and about why such education matters to Partners In Community Building, Inc. and the importance of focus and clarity in our goals and expectations..

The Benefits of Education

We at PICB believe that knowledge of economics and finance is crucial for individuals to survive in a market economy. Knowledgeable and astute consumers promote competition among providers, which benefits us all. Personal financial security enhances individual well-being. Increasing national savings allows us to invest more productively for tomorrow. our social fabric and national image are intimately connected to our material aspirations. The United States cannot be the land of opportunity unless all of our citizens have both the tools and the ability to use them to improve their lives and livelihoods.

Partners In Community Building, Inc. is a small grassroots not-for profit that opened it doors for business in 2005 and became a HUD certified counseling agency in 2008 educating our customers in financial literacy, foreclosure prevention, homeownership as well as tenant and landlord education to name a few. To this end we believe that everyone should have affordable, safe, decent housing and an understanding of how to become sustainable in the communities where they reside.

The financial and economic education that we provide our communities relating to process set in a market economy and the imbalance can and will be addressed by our work with our partners and that of many others. Changes in our financial system–including the increasing complexity and diversity of product offerings–have created consumer demand for improved education.

The Work of Partners In Community Building, Inc.

Partners In Community Building, Inc. has a special interest in economic and financial education and has for several years conducted financial literacy training and working with partners like The Attorney General office, Lawyers Committee for Better Housing, Legal Aide Foundation, FDIC, CITI Bank, Country Financial, Harris Bank, Marquette Bank, Woodstock Inst., Community Investment Corporation , Metropolitan Tenants Association, US Bank, Illinois Housing Development Authority, National Community Investment Corporation , University of Chicago, University of Illinois, Illinois Institute of Technology, HUD, and others to encourage programs and information aimed particularly at students, educators, and consumers. In part, these activities arise from the role PICB plays in implementing the financial and economic education. our charge is to promote economic growth and affordable housing requires public understanding and approval of the policies our partners implement.

Today, PICB continues to offer educational products and support to teachers, students, and consumers who want to understand how we work very hard in the fields of consumer education and financial literacy training. For example, PICB created the BottomLine Financial Literacy Program. The project was piloted in 2007, with several Banks being an active partner. Today we are working together with our partners to highlight the importance of financial education, increase consumer awareness of local educational opportunities, and encourage research into the most effective educational approaches to educating the public. I am very proud and humble by the level of our commitment and of our partners the support we provide.

Forever Chairman Greenspan has said, “educated consumers are simply less vulnerable to fraud and abuse.” And when millions of educated consumers make good personal financial choices, our economy is strengthened in fundamental ways. A strong and flexible economy means that resources are directed to the areas of greatest need, productivity and innovation are supported, and the ability to withstand shocks is enhanced.

Goals and Expectations

As committed counselors and educators who believe deeply in the power and effectiveness of financial and economic education, we must be clear about our goals and expectations. Such clarity helps us allocate our resources appropriately, target the areas of greatest need, and ensure a sustainable commitment to the most-effective educational initiatives.

Vice Chairman Roger W. Ferguson, Jr. of the Federal Reserve said “education is not likely to work if presented in a one-size-fits-all package, and it often works best when employed in conjunction with other targeted initiatives. This is particularly true for low- and moderate-income consumers

Data from the Indiana State University Networks Financial Institute statistics showed;

  • Only a quarter of Americans feel well informed about managing household finances.
  • Between 25 and 56 million Americans do not have a bank account.
  • From 1992-2000, disposable personal income rose 47 percent, but personal spending climbed by 61 percent. At the same time, the overall personal savings rate fell from 8.7 percent of disposable income in 1992 to zero in 2000.
  • At the end of 2002, American households owed an average balance of $8,940 on all credit cards, up 36% since 1997; this figure represents an increase of 173% over the previous decade.
  • 98% of banks responding to a Consumer Bankers Associations’ survey said they sponsor financial literacy programs and/or support such efforts through partnerships.
  • Personal savings as a percentage of disposable personal income decreased from 11.2% in the early 1980s to 0% in the first and second quarters of 2005.
  • In a 2003 survey, the median reported value of all household retirement savings was only $40,000, and 25% of those surveyed had no retirement account at all. Only 47% of Americans are either somewhat or very confident that they will have saved enough for retirement.
  • Consumer bankruptcy filings in 2003 hit a record of nearly 1.7 million or an average of nearly one in every seven households over the past decade. The bad debt costs the average U.S. family more than $500 annually through higher consumer prices.
  • Average credit card debt per U.S. household rose from $2,985.00 in 1990 to $8,562.00 in 2002.

Young Adults (College Age and Beyond)

  • Young adults between 20 and 24 represent the fastest growing segment of bankruptcy filings; in fact, more people will file for bankruptcy in 2004 than will graduate from college.
  • The average credit card debt among graduate students who carry cards is $7,831 per student, an increase of 59% over 1998’s average debt of $4,925.
  • Consistent with 1998 and up from 2000, graduate students carry an average of six cards each, and 96% of all graduate students carry credit cards.
  • Credit card debt among young adults between the ages of 25 and 34 has increased 55%, while credit card debt among the youngest adults, between 18 and 24, has skyrocketed 104% since 1982.
  • Americans aged 25-34 have the second highest rate of bankruptcy (just after those aged 35 to 44). The bankruptcy rate among 25-34 year olds increased between 1991 and 2001, indicating the GenXers were more likely to file bankruptcy than were young baby Boomers at the same age.

It can be expected that economic and financial literacy can keep people from making uninformed decisions;However, it cannot keep them from making bad decisions. We are aware that education will not always overcome circumstances. Unemployment happens to even the most financially literate, as do medical emergencies.

Thus, though successful financial education programs will help individuals minimize or avoid the worst consequences of financial setbacks, education will not necessarily reduce the frequency of financial emergencies.

In conclusion, we must continue research to identify programs that are effective, and we must use what we learn to develop improved approaches.


LaMar Davis
Board President