Bankruptcy

CFED Releases State Financial Report Cards

By Chris Kramer

In late September, the Center for Enterprise Development released data reflecting extensive research on economic conditions in all fifty states. The findings reveal alarming realities about the current financial situation for millions of Americans.

Summary of the Findings

The CFED introduces its findings with the analogy of a house built on sand, claiming that, even when our economy was booming, wealth disparities between the very rich and the poor prevented the country from being truly economically healthy.

The study found, among other things:

• Racial disparities: Minority households are more than three times as likely as white households to have a high-cost mortgage, more than twice as likely to be ?asset poor? (with insufficient funds to sustain them in crisis), and four times as likely to be unbanked.
• Wealth gap: The difference between wealthy and poor Americans is enormous ? for every dollar owned by a household in the highest fifth of wealth, families in the lowest fifth own only two cents.
• Gender differences: Households headed by females make only 83 cents for every dollar earned by male-headed households.
• Revolving debt jump: Since 2007 ? 2008, when the last ?scorecard? was released by the CFED, median revolving debt has increased by 64 percent, to nearly $3,000.

Policy Suggestions from the Report

With the findings, the CFED also included suggestions for policies to correct or improve the economic disparities. Specifically, the suggestions include:

• Earned Income Tax Credits and Individual Development Accounts: These would encourage families to set money aside by giving them tax breaks for putting part of their incomes in savings
• Protections from Predatory Lenders: The CFED recommends that more states adopt lending caps for payday lenders and other restrictions on predatory loans.
• Financial Literacy Education: To increase general knowledge about and understanding of economic tools and policies, the Center recommends instituting mandatory financial literacy education in public schools.

Learn More

For a detailed look at the findings in your state, you can check out the interactive map on the Center?s website. Get started by clicking on your state and checking out the numbers recorded. You may want to compare your state to others in your region to see how you stack up.

Additional Resources

2009 ? 2010 Assets Opportunity Scorecard (PDF)

Full post as published by The Bankruptcy Blog on September 26, 2009 (boomark / email).