WASHINGTON, D.C. – During America Saves Week, with more than one-third of Ohioans reporting that they have no savings account, U.S. Sen. Sherrod Brown (D-OH) urged the Ohio legislature to pass legislation allowing banks and credit unions to offer prize-linked savings (PLS) accounts to promote Ohioans’ financial security.

PLS accounts are safe, regulated accounts that incentivize savings by offering account holders the opportunity to win prizes as they accumulate savings. But an outdated federal law had kept most banks and credit unions from offering these accounts. In December, the House and Senate unanimously passed the American Savings Promotion Act, coauthored by Brown, to encourage personal savings by allowing certain banks, thrifts, and credit unions to offer PLS products. But without action from the Ohio legislature, Ohioans will be unable to benefit from the federal law and banks and credit unions will still be prohibited by state law from offering these accounts to their customers.

“In light of the pressing need to promote saving among Ohio households, I urge you to consider legislation that will allow Ohio’s financial institutions to offer prize-linked savings accounts to their customers,” Brown wrote in a letter sent to the legislature. “Many Ohioans are a single event away from financial disaster. We have a unique opportunity to work with Ohio’s community partners and financial institutions to strengthen the economic security of all of Ohio’s households.”

Several organizations echoed Brown’s call to expand Ohioans’ savings opportunities.

“Wright-Patt Credit Union supports efforts to change Ohio law to allow credit unions to participate in prize-linked savings programs,” said Doug Fecher, CEO of Wright-Patt Credit Union in Fairborn – Ohio’s largest credit union. “As I stated in testimony before Congress in 2014, these programs have been successful in other states, and have resulted in consumers savings tens of millions of dollars. Establishing savings habits helps consumers avoid predatory lending practices that can result in mounting debt and create long-term financial setbacks. We applaud the Senator for suggesting this change.”

“Prize linked savings combines safe and growing savings with some fun,” said David Rothstein of Neighborhood Housing Services of Greater Cleveland. “At a time with limited savings options, this would help Ohio families save for housing, education, and other goals.” NHS of Greater Cleveland runs the Cleveland Saves program, the first of America Saves coalitions.

“Financially vulnerable Americans have embraced saving and building financial security where state policy has enabled innovative prize-linked savings (PLS) products to come to market,” said Tim Flacke, Executive Director, Doorway to Dreams. “By transforming the act of saving from mundane to fun, exciting, and immediately gratifying, we’ve seen first time savers, long-term saving, and new customers for financial service firms.  We would love to see these benefits for Ohioans.”

“Prize Link Savings (PLS) is an innovative, locally-driven strategy to boost family savings, and it’s showing wonderful results for low- and moderate-income households,” said Andrew Levere, President of the Corporation for Enterprise Development. “Senator Brown deserves great praise for successfully passing the American Savings Promotion Act last year, which reduces federal restrictions and will allow the PLS field to expand and grow throughout the country.”

More than 40 percent of American households lack enough savings to cover basic expenses for three months. According to the Pew Foundation’s Economic Mobility Project, 71 percent of children born to high-saving but low-income parents move up from the bottom income quintile over one generation. This is compared to only 50 percent of children from similarly low-income households whose parents did not save.

The full letter to the Ohio legislature is below.

The Honorable Keith Faber                            The Honorable Cliff Rosenberger                  

President, Ohio Senate                                    Speaker, Ohio House of Representatives

1 Capitol Square                                             77 South High Street, 14th Floor

Columbus, OH 43215                                     Columbus, OH 43215

 

The Honorable Joe Schiavoni                         The Honorable Fred Strahorn

Minority Leader, Ohio Senate                         Minority Leader, Ohio House of Representatives

1 Capitol Square, 3rd Floor                             77 South High Street, 14th Floor

Columbus, OH 43215                                     Columbus, OH 43215

 

 

Dear President Faber, Speaker Rosenberger, Minority Leader Schiavoni, and Minority Leader Strahorn:

 

According to the Federal Deposit Insurance Corporation (FDIC), more than one third of Ohioans do not have a savings account. This week, 58 public and private organizations across Ohio are participating in the nationwide America Saves campaign to bolster household savings. Ohio’s participating high schools, universities, nonprofits, and financial institutions recognize the urgent need to address the growing savings crisis with financial education and new tools to promote saving for the future.

 

I know that we all share their commitment to promoting asset building among Ohio households. Last year, Congress unanimously passed and President Obama signed legislation to promote savings through accounts at traditional banks and credit unions. The bipartisan American Savings Promotion Act, which I authored with Senator Jerry Moran (R-KS), amended an outdated law to allow federally-chartered financial institutions to offer prize-linked savings accounts. These accounts are designed to encourage individuals to save and have been proven to increase savings among the most financially vulnerable households.

 

But removing federal barriers to prize-linked savings accounts is only the first step. Without action from the Ohio General Assembly, Ohio banks and credit unions will be unable to offer these beneficial products to their customers.

 

Our neighboring state of Michigan pioneered prize-linked savings accounts and has proven their value. In just five years, Michigan account holders saved over $87 million in nearly 45,000 prize-linked savings accounts. Following Michigan’s success, 10 additional states have passed legislation to allow their financial institutions to offer these beneficial savings vehicles.    

 

In light of the pressing need to promote saving among Ohio households, I urge you to consider legislation that will allow Ohio’s financial institutions to offer prize-linked savings accounts to their customers. This small change could open the door for individuals across Ohio to increase their savings and gain additional financial independence.

 

Many Ohioans are a single event away from financial disaster. We have a unique opportunity to work with Ohio’s community partners and financial institutions to strengthen the economic security of all of Ohio’s households. Thank you for your consideration.

 

Sincerely,

Sherrod Brown

United States Senator

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