Giannoulias pushes federal savings accounts
Drafts resolution to establish IDAs

April 24, 2007

State Treasurer Alexi Giannoulias has drafted a resolution urging members of Illinois’ congressional delegation to support the federal Savings for Working Families Act, which encourages the working poor to save money.

The Savings for Working Families Act would establish Individual Development Accounts for nearly one million families.

IDAs are modeled after 401(k)s and other defined contribution plans and provide matching funds for each dollar saved. In addition, the act would require participants to take financial education courses.

“The Savings for Working Families Act would help lower-wage workers and their families achieve financial independence,” said Giannoulias, noting that the United States has a negative savings rate for the first time since the Great Depression.

“IDAs provide working Americans with strong incentives to build assets, receive financial education and access to basic banking services that they normally would not have,” he added. “IDAs help families save their way out of poverty and move towards long-term prosperity.”

Under the program, which has bipartisan support and the endorsement of President Bush, the federal government would provide tax incentives to banks and community organizations to offer savings accounts to low-income families. Participating families would receive a dollar-for-dollar match on the money they put away for education, buying a home or starting a small business.

Giannoulias urged state lawmakers to support a resolution he drafted that calls the Illinois congressional delegation to approve the act. State Rep. Marlow Colvin (D-Chicago) is sponsoring the resolution in the Illinois General Assembly.

“Saving money through IDAs can help working families attain and sustain greater financial strength and knowledge,” Colvin said. “It also gives our most vulnerable citizens a much needed alternative to high-interest payday loans, which can create an endless cycle of debt that becomes impossible for families to overcome.”

Fred Stupen, executive director of Asset Builders Community Development Corporation, a non-profit agency that promotes initiatives to improve the financial livelihoods of low-wealth individuals, applauded the effort.

“Accumulating assets through IDAs affects the next generation by reduced use of welfare, reduced school expulsion, increased high school graduation and increased college completion” Stupen said.