Exam One Flashcards
Meant to address what is believed to be the biggest obstacles and issues for low-income consumers when managing a bank account
National Account Standards
Bank accounts with no overdraft fees, affordable to open an account, free deposits and withdrawals
What are some of the National Account Standards?
A state of being where a person can fully meet current and ongoing financial obligations, feel secure in their financial future, and be able to make choices that allow enjoyment for life
CFPB Financial Well-being
Control over day-to-day and month-to-month finances, Capacity to absorb financial shock, financial freedom to make choices to enjoy life, and being on track to meet financial goals
Four Central Elements to Well-Being
Excessive and abusive fees, loan flipping, promises of no credit checks, little transparency in terms and conditions, offering a product knowing the consumer has little to no chance of repayment
Characteristics of predatory products
Start Fresh!, Credit as an Asset, Start Smart
Bank On Louisville Educational Curriculums
Home/property, car, savings/cash, clothing and valuables, credit, stocks
Physical Assets
Education, skills/hobbies, network, family/friends, community, safety net
Personal Assets
A three part test that checks to ensure that banks are offering and administering products to people of all incomes
Community Reinvestment Act Regulators
Number and amount of loans in a specific area, Other data associated with lending, records of opening and closing branches in specific areas
The three parts of the community reinvestment test
The unfortunate situation where a person who is headed towards economic stability earns a wage increase, but the raise triggers the loss of benefits that are worth more than the raise
Cliff Effect
We underestimate the risks of some things (smoking) and overestimate the risk of others (flying). People have a limited time and capacity to deeply think before acting
Bounded Rationality
The amount of income needed to provide a decent standard of living and it makes sure that all full time workers have enough money to live above the federal poverty level
Living Wage
The lowest wage a business is allowed to pay its employees based on state and federal laws
Minimum wage
The human condition of being unable to obtain or provide a standard level of food, water, and/or shelter for you and your family
Poverty
The goods and services someone cannot obtain
Absolute poverty
Looks at how one social group compares to others
Relative poverty
Refers to families that prefer to manage their finances through cash transactions instead of more traditional financial services
Underbanking
Established “bank on in a box” and created a coalition playbook that can be accessed as well as startup and capacity grants. Created the National Account Standards. Created the National Data Hub.
Bank On 2.0
Not enough money for the minimum balance to open an account, distrust of financial institutions, high or unpredictable fees, identification/credit/or banking history problems, feeling unwelcomed, lack of understanding, overdraft fees, lack of access
Why do payday lenders thrive?
Grading certain areas which leads to the systematic denial of various services to residents of specific neighborhoods and communities (usually racial)
Redlining
His ideas stem from a series of observations he made in grad school that led him to believe that people’s behavior deviated from traditional economic models in predictable ways. Economics professor at Stanford, Cornell, and the University of Chicago.
Richard Thaler
Pushing someone in a good direction by making the process easier
Nudging
If you want people not to do something, make the process more difficult
Sludging
The founding director for the center for Social Development at Washington University. Father of Financial Empowerment and Asset Building. Creator of Individual Development Accounts. In 1991, wrote “Assets and the Poor: A New American Welfare Policy”
Michael Sherraden
A book written by Dan Airely. States that we are all far less rational in our decision making than standard economic theory assumes. Our irrational behaviors are neither random nor senseless, they are systematic and predictable
Predictably Irrational
Resources that can be drawn upon in times of need and leveraged for mobility
Assets
The first price we see for an item that becomes the norm in our minds. Moves like a bungee cord but we always come back to this price.
Anchor
Free Behavioral Economics
When something is free you think about social justice, and the consequences of looking greedy, and the welfare of your fellow citizens. However, if money is introduced you are likely to stop thinking about what is socially right and more about what you want
A continuum ranging from financial stress to financial satisfaction and focused in the lens of employment and the workplace.
Financial Wellness
When we think about our own gain and short term benefits rather than the gains of everyone and the long term benefits
Tragedy of the Commons
A website that uses a persons demographics to help them locate resources for their specific need
Louieconnect
Bank on program started here, K2C program which is a public program for creating savings accounts for children
San Francisco
Created the consumer financial protection bureau and gave the organization specific authority to regulate all payday lenders regardless of size. Created the Volker rule which restricts the way banks can invest and limits speculative trading and eliminating proprietary trading
Dodd-Frank Act
A service created in 1991 be the Fidelity National Information Services. It is an electronic database of any consumers who have had an account closed on them by a financial institution
Chexsystems
Benefit cards to buy food
SNAP/WIC
Pay heating and cooling bills
LIHEAP
Provides cash for a limited time to low income families working towards self-sufficiency
Welfare
Provides cash to low income seniors and people with disabilities
SSI/SSDI
Helps pay for college
FAFSA
Provides a source of income for you or your legal dependents
Social Security
Pays you money if you lose your job through no fault of your own
Unemployment
A process of accumulating, developing, and preserving financial, human, and social resources to increase the economic stability of individuals, families, and the community
Asset Building
A form of financial empowerment support that offers a relationship-based approach to encourage goal setting and self-accountability
Financial Coaching
The activities that lead to an increased understanding of financial and personal tools, resources, and services
Financial Education
Having enough resources to pay for food, healthcare, housing, and other basic needs; navigate short term crises, and begin building personal assets
Financial Stability
Being able to take effective action to pursue financial stability and weather downturns
Financial Capability
A persons knowledge about his/her own personal finances
Financial Literacy
A non-profit of financial counselors
Apprisen
Assists the community to attain social and economic equality through direct services, advocacy, financial education, and workforce development
Louisville Urban League
Provide job training services, disability assitance, and transportation assistance. Has two programs: Cars to Work and RISE
Goodwill
Free legal assistance for this in poverty. Only for civil issues and can assist with bankruptcies, basic rights, and expungement
Legal Aid Society
Providing affordable loans and financial coaching to promote small businesses and homeownership for all Louisvillians
LHOME
Metro United Way
Established and launched YaLift, a guaranteed income pilot program that selected 150 participants between 18-24 to receive 500 dollars a month for 12 months
A nationwide initiative focused on getting people reconnected to financial institutions and out of payday lending. It is an engine to collaboratively strengthen our community’s economic well-being through improved access to mainstream financial education and services.
Bank On Louisville
Created by the Dodd-Frank act and has issued several enforcement actions against payday lenders for reasons such as violating the prohibition on lending to military members and aggressive collection tactics
Consumer Financial Protection Bureau
A yearly scorecard for cities which provides data on household financial health, racial economic inequalities, and policy recommendations
Prosperity Now
A nationwide campaign that assists and encourages individuals to save money. You choose a savings goal and they help you reach that goal through reminders and education
America Saves
A nonprofit corporation that focuses entirely on local government financial empowerment initiatives
CFE Fund
OFE
Office of Financial Empowerment
IDA
Individual Development Accounts
LABC
Louisville Asset Building Coalition
LADDER
Louisville Alliance for Development through Diversity, Empowerment, and Resources
CFPB
Consumer Financial Protection Bureau
CFEC
Community Financial Empowerment Certification
CRA
Community Reinvestment Act
FDIC
Federal Deposit Insurance Corporation
CFE
Cities for Financial Empowerment
FDR
Franklin Roosevelt. Created the FDIC, the federal housing administration, social security, and minimum wage legislation
BOL Financial Partners
Chase, Citi, 5/3 bank, first financial, old national bank, PNC, Republic, Truist, U.S. Bank, woodforest
CFE Fund Cities
Albuquerque, Boston, Denver, Detroit, Hawaii County, Jackson, Lansing, LA, Louisville, Miami, New York, Philly, San Antonio, San Francisco, Shreveport, St. Louis, St. Paul, Tulsa
A bill that proposed the right to have useful jobs, right to earn enough for food, clothing, and recreation; farmers rights, no monopolies, right to decent home, adequate medical care, protection from economic fears of old age, sickness, accidents, and unemployment; a good education
FDR’s Second Bill of Rights
A city of compassion, A city of health, and a city of life long learners
Mayor Fischer’s Goals
Tylenol Tampering Incident
In Chicago in 1982, 7 people died after someone slipped cyanide into bottles of Tylenol in a store. It doesn’t take much to violate trust so the company had to spend years and million in marketing to show they had corrected their failures.
A experiment fone by authors that offered a new wonder painkiller (that was vitamin c) and electrical shocks. When sold at $2.50, this mix worked for 92% of people. When sold at 10 cents, it worked for about half.
Veladone
States with the highest poverty rates
Mississippi, Louisiana, West Virginia, Kentucky, Arkansas, Alabama, South Carolina, Tennessee, New Mexico, and Oklahoma
What is the average Payday loan interest rate?
469%
