American Savings Promotion Act

Mr. President, I am on the floor this afternoon to speak briefly about the American Savings Promotion Act, H.R. 3374.

My understanding is that this bill may soon pass the Senate--it was passed by the House of Representatives in September--and I wish to speak briefly about its value to our country, to its citizens, and to our country's future.

I believe this is a fairly narrow circumstance with broad consequences. I believe if there is a primary responsibility we have in being a citizen of this country, it is to make sure, among other things, that we pass on to future generations of Americans the opportunity to pursue the American dream--to be able to have an idea to pursue a business plan, to save for your family's and children's education, to save for your own retirement, to prepare yourself for a bright financial future. Unfortunately, many Americans struggle to do that.

Certainly, one of the aspects of that circumstance is there is very little savings that goes on in our country today. People are unable or unwilling, or perhaps undisciplined, in a way that allows them to prepare for their financial security and their financial future. The problem is--and statistics bear this out--people aren't saving. The reality is, according to a recent survey, 44 percent of American households lack the savings to cover basic expenses for 3 months if unemployment or medical emergency or another crisis leads to a loss of stable income. Many Americans have the inability--almost the majority of Americans have the inability to care for themselves and their families if there is an emergency or a problem for more than 3 months. That is something we ought to try to resolve.

I also think there has been over a period of time a disparity of incomes. We want to make certain those at the lowest income levels have an opportunity to increase their income and to increase their financial stability. In fact, the Senator from Oregon, Senator Wyden, and I created sometime ago the Senate Economic Mobility Caucus, trying to make certain that people have a chance to move up the ladder of economic success and security in our economy and in our country. Senator Wyden and I came together to bring some of the best minds from conservative to more liberal thought-provoking organizations and policy organizations to visit with Republican and Democratic Senators and their staffs about what ideas are out there that might increase the chances that a person or a family has the chance to improve their financial circumstances.

One of the ideas that arose from that caucus's discussions was this legislation called the American Savings Promotion Act, again, with the realization that people are not saving for their own financial security, that they lack stability in times of emergency and difficult economic challenges to care for themselves, how can we encourage Americans to save more?

One of the ideas that came forth in this regard is the opportunity to link savings to prizes. When I first heard this, I thought it sounded a little bit odd, a little bit like a gimmick. But the reality is with little savings, people still believe--in fact, 20 percent of Americans believe that winning the lottery is a meaningful strategy to build wealth. Americans spend more than $60 billion every year on lottery

tickets and families earning the least spend the highest percentage of their earnings on lottery tickets despite the long odds of winning.

This legislation is not about a lottery, but about allowing financial institutions the opportunity to provide prizes for those who save, who open a savings account and deposit money into that account. In our country, because of the way financial institutions are regulated, that has been an opportunity in a number of States in credit union financial institutions for a period of time. In fact, the statistics and the facts that arise from that experiment or that experience indicate that savings increases when there is a prize associated with the savings behavior. So it is one of the reasons this makes sense. Prize-linked savings is an innovation, a tool to encourage savings while offering the chance to win a larger prize.

We know these programs work because of the evidence in the States that I mentioned in which credit unions have been offering these prizes associated with savings, and that has occurred in Nebraska and North Carolina and Washington. Since 2009, over 50,000 accountholders have collectively saved more than $94 million, and it only is available in the credit union setting and not available in a bank setting because of Federal barriers that prevent banks and thrifts from offering these prize-linked savings products.

With the passage of this legislation--again, which is a pretty straightforward, commonsense kind of opportunity--this legislation will update Federal laws to allow States to expand prize-linked savings to other financial institutions beyond credit unions.

Increasing savings is a win-win for individuals. It is certainly valuable to boost the financial institutions' accounts and an improvement to the American economy.

This legislation was introduced by me, with the cosponsorship efforts of Senator Sherrod Brown, the Senator from Ohio, in an effort to create one more opportunity, one more piece of encouragement for people to save for their own financial well-being, to care for themselves and their families, and to increase the savings rate in this country for the benefit of the entire economy, but most importantly for the benefit of low-income individuals who need a boost of encouragement to save.

I wish to thank my colleagues in the House. As I say, this legislation passed in the House where Congressman Kilmer and Congressman Cotton led the effort in the House, and my colleague, the Senator from Ohio, Senator Brown, for his efforts in supporting this legislation here in the Senate. It is an opportunity for us to do something modest but useful, something based upon common sense, and something that accomplishes a goal we all should have of making certain the American dream is alive and well, that individuals and families take personal responsibility for themselves and their family members. We all know that increased savings, preparing for any kind of circumstance or emergency that comes our way, is something that ought to be encouraged.

I appreciate that it is likely that later today or tomorrow H.R. 3374 will pass, again, an example of where we have been able to work together and bring new ideas to the cause of making certain that everybody has the opportunity to increase their economic value, to increase the economic worth for their family available for the future, to pay their bills, and to make certain their future is bright, again, in my mind making sure the American dream is more alive and all American families are better off.

Mr. President, I thank you for the opportunity to address the Senate, and I suggest the absence of a quorum.

Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 3374) to provide for the use of savings promotion raffle products by financial institutions to encourage savings, and for other purposes, as amended.

Mr. Speaker, I ask unanimous consent that all Members have 5 legislative days within which to revise and extend their remarks and submit extraneous materials for the Record on H.R. 3374, as amended, and currently under consideration.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I would like to thank Mr. Kilmer, Mr. Cotton, and Ms. Tsongas for their efforts in drafting the legislation that is before us this evening.

The American Savings Promotion Act is bipartisan legislation that would remove Federal barriers and allow financial institutions to offer savings promotion raffles.

Studies show that Americans are not saving enough, whether for an emergency or for their retirement. This lack of savings is more pronounced among those with lower incomes. H.R. 3374 seeks to reverse this trend and encourage savings by offering depositors chances to win prizes based on their deposit activity.

This legislation would simply amend Federal law to allow depositors to enter into a lottery in lieu of accruing interest, with the number of raffle tickets based on the size of their deposit.

The American Savings Promotion Act is a commonsense bill that will provide consumers greater access to the financial services they want and need. Allowing financial institutions the ability to provide innovative products is a simple way to encourage consumers to open savings accounts, incentivize saving, and foster healthier financial habits.

Mr. Speaker, I urge adoption of this bipartisan legislation, and I reserve the balance of my time.

Mr. Speaker, I continue to reserve the balance of my time.

Mr. Speaker, I would just like to thank Representative Cotton of Arkansas for his leadership on this bill and for the leadership of his cosponsors. I urge my colleagues to pass the bill as submitted.

I yield back the balance of my time.

Mr. Speaker, I submit the following correspondence between the Financial Services Committee and the Judiciary Committee on H.R. 3374, as amended.

House of Representatives,

Committee on the Judiciary,

Washington, DC, September 12, 2014.

Hon. Jeb Hensarling,

Chairman, Committee on Financial Services, Washington, DC.

Dear Chairman Hensarling, I am writing concerning H.R.

3374, the ``American Savings Promotion Act,'' which was

referred primarily to your Committee, and additionally to the

Committee on the Judiciary.

As a result of your having consulted with the Judiciary

Committee on the provisions in our jurisdiction and in order

to expedite the House's consideration of H.R. 3374, I agree

to discharge our Committee from further consideration of this

bill so that it may proceed expeditiously to the House floor

for consideration. The Judiciary Committee takes this action

with our mutual understanding that by foregoing consideration

of H.R. 3374 at this time, we do not waive any jurisdiction

over the subject matter contained in this or similar

legislation, and that our Committee will be appropriately

consulted and involved as the bill or similar legislation

moves forward so that we may address any remaining issues in

our jurisdiction. Our Committee also reserves the right to

seek appointment of an appropriate number of conferees to any

House-Senate conference involving this or similar

legislation, and asks that you support any such request.

I would appreciate your response to this letter confirming

this understanding, and would request that you include a copy

of this letter and your response in the Congressional Record

during the floor consideration of this bill.

Sincerely,

Bob Goodlatte,

Chairman.

House of Representatives,

Committee on Financial Services,

Washington, DC, September 12, 2014.

Hon. Bob Goodlatte,

Chairman, Committee on the Judiciary, Washington, DC.

Dear Chairman Goodlatte: Thank you for your letter of even

date herewith regarding H.R. 3374, the American Savings

Promotion Act.

I am most appreciative of your decision to forego

consideration of H.R. 3374 so that it may move expeditiously

to the House floor. I acknowledge that although you are

waiving formal consideration of the bill, the Committee on

the Judiciary is in no way waiving its jurisdiction over any

subject matter contained in the bill that falls within its

jurisdiction.

In addition, if a conference is necessary on this

legislation, I will support any request that your committee

be represented therein.

Finally, I shall be pleased to include your letter and this

letter in the Congressional Record during floor consideration

of H.R. 3374.

Sincerely,

Jeb Hensarling,

Chairman.

I thank the gentlewoman for yielding.

I would also like to thank Chair Capito and Ranking Member Meeks, as well as Chairman Hensarling and Ranking Member Waters, for their efforts to move the American Savings Promotion Act to the floor of the House today.

Mr. Speaker, my legislation would remove Federal barriers that today prevent some financial institutions from being able to offer innovative financial products, known as prize-linked savings accounts. These safe, regulated financial products are designed to make savings fun. The more you save, the more chances you have to win. As a Dire Straits fan, I called this idea the ``Money for Nothing'' concept. If you make deposits, you get more chances to win, and even if you don't win, you get to keep the money you saved.

Many families understand the importance of saving money to help them manage expected costs like college or retirement and unexpected costs that they might face, whether it is a trip to the emergency room or repairing their cars, but we know too many Americans struggle to set aside a little bit of cash every month. Nearly a quarter of Americans report they wouldn't be able to come up with at least $2,000 in 30 days. Another 19 percent said they could, but they would have to begin pawning or selling their possessions or taking out payday loans.

The idea behind prize-linked savings accounts is based on the recognition that people are significantly motivated by rewards, and when it comes to saving money, the idea of earning pennies on the dollar just isn't all that attractive to a lot of folks, particularly those who don't have a lot to save in the first place. Prize-linked savings accounts seek to step into that gap and provide savers with a product that keeps folks excited about saving by offering cash prizes.

The research shows that prize-linked savings accounts are actually working to boost savings. The National Bureau of Economic Research recently published an analysis of these accounts, finding that the data ``demonstrate clearly'' that individuals save at a higher rate when they are offered the use of prize-linked savings accounts. Unfortunately, under Federal law, only some financial institutions are able to offer these products.

My legislation, which I am proud to have worked on with Representative Tom Cotton, alongside Senators Jerry Moran and Sherrod Brown, would clear away the Federal obstacles so that more financial institutions can offer these products. It accomplishes this without establishing a new government program, without spending scarce Federal dollars, and without preempting State laws.

Over the past 4 years, an estimated 50,000 account holders have saved more than $94 million using prize-linked savings accounts. Even if those members don't win a big cash prize, they are strengthening their financial cushions to withstand whatever life throws at them while developing a habit of saving.

Mr. Speaker, I urge my colleagues to support the American Savings Promotion Act.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I rise in support of H.R. 3374, the American Savings Promotion Act, which has been offered by my colleague from Washington (Mr. Kilmer). This bill is an example of the innovation Democrats bring to addressing the concerns of the chronically unbanked.

Building on the success of credit unions offering such programs, this bill enables banks to offer similar products, vastly increasing the reach of this creative savings product.

Prize-linked savings accounts encourage customers to set aside savings by combining the more mundane task of setting aside money with the excitement of playing the lottery. Customers are always eligible to withdraw the principal of their savings account but forego accrued interest for the chance of winning all of the interest of participants in the program.

Such programs have been offered in South Africa, resulting in more than $200 million being set aside in savings accounts by more than 750,000 individuals who had largely not set up a bank account. In Washington State, credit unions that offer such accounts have found that these accounts are helping to build an ethic of frugality.

Today, credit unions are permitted to offer such programs if State law permits them, which includes four States: Washington, Michigan, Nebraska, and North Carolina. However, even though these States permit prize-linked savings accounts, Federal banking laws prevent banks from offering them because of a decades-old prohibition on participation in a lottery.

Mr. Kilmer's bill retains the general prohibition against lotteries but permits banks to offer prize-linked savings if the bank's State also allows them.

It is not a secret that this country does not save enough, that we are not preparing for the unexpected or even for how we will afford college tuition expenses or retirement. We also know that, once someone begins to pile on debt, it can be nearly impossible to dig out. Mr. Kilmer's bill enables our constituents to say ``no'' to debt by encouraging good savings habits.

I reserve the balance of my time.

Mr. Speaker, I yield such time as he may consume to the gentleman from Washington (Mr. Kilmer), the author of the bill.

Mr. Speaker, I yield back the balance of my time.

Mr. President, I ask unanimous consent that the Banking, Housing, and Urban Affairs Committee be discharged from further consideration of H.R. 3374 and the Senate proceed to its immediate consideration.

Mr. President, I ask unanimous consent that the bill be read a third time and passed and the motion to reconsider be considered made and laid upon the table with no intervening action or debate.