Consumers Need Education, Incentives to Save More

By By Mark Huffman, ConsumerAffairs.com, May 5, 2008

While the world wrestles with the economic fallout of the subprime mortgage implosion, some consumer groups say it's time for the U.S. to confront its "culture of debt."

The coalition, which includes the Institute for American Values, New America Foundation, Demos, Institute for Advanced Studies in Culture, Public Agenda, and others, is calling for a campaign to promote a new thrift culture that would promote savings and sustainability.

"In recent decades, new predatory lending institutions have moved into the malls and Main Streets of America," said David Blankenhorn, president of the Institute for American Values. "In the private sector, they include payday lenders, some franchise tax preparers, auto title lenders, subprime credit card issues, subprime mortgage lenders, and private student loan companies.

"'Anti-thrift' institutions promise 'fast cash' and 'free money' at usurious interest rates and trap many Americans in a cycle of debt. The public sector has its own anti-thrift institution -- the state owned and operated lottery," he said.

The groups have compiled a report with recommendations for encouraging consumers to save more. The report calls for a marketing campaign along the lines of those against drunk driving and smoking. The report also urges increased support for credit unions and development of new sources of low interest loans.

The report calls for creation of a pro-thrift institutional environment that would encourage financial health, regular savings and wealth building for all Americans. Among its recommendations:

The report also calls for:

• Repurposing the state lottery to include a savings ticket feature
• Return to usury rate caps on small loans
• Establish Matched Savings Accounts for Children
• Expand and improve school savings programs.