CFK Reports From: Expanding the Envelope of Anti-Poverty Initiatives
Event: Symposium
Organized By: Brookings Metropolitan Policy Program
Where/When: July 18, 2006; The National Press Club

Report By: Kate Carta

This symposium focused on the often overlooked opportunities that public and private leaders have to assist lower income families by bringing down the prices for basic necessities in their everyday lives. Bruce Katz, vice president and director of the Brookings Metropolitan Policy program, introduced the panelists: Diana L. Taylor, Superintendent of Banks, New York State Banking Department; Dwight Evans, Pennsylvania House of Representatives; and Mike Kreidler, Insurance Commissioner for the state of Washington.

Bruce Katz pointed to a number of market realities as reasons why low income families pay too much for basic necessities. Among these are the higher costs of doing business, unscrupulous behavior in the market and the lack of information and financial knowledge on goods and services provided to lower income families. He suggested that the private and state sectors should engage the community and businesses to reach out to lower income families. Katz also said that it may be necessary to use zoning laws and regulations to stop unscrupulous business practices that take advantage of lower income consumers. He maintained that private and state sectors have a responsibility to provide low income consumers with the information they need to make the best choices in buying products and services.

Diana Taylor explained that the role of government is to create an environment where property is protected and that people have fair and equal access to information. She wants a level playing field for consumers and said that the New York State Banking Department’s mission is to supervise state chartered banks. Taylor said that there is a tension between national and state regulators because federal and state banks follow different rules. According to Taylor, it is the state’s responsibility to help people with banking issues because the federal laws are not as stringent. She said that what’s needed are changes in supply and demand, motivation and education. Regarding supply and demand, Taylor said that the supply of products needed should be offered at a fair price. Selling their products at fair market value should provide businesses with the motivation to do business with lower income families. Lastly, Taylor said that financial literacy and education should be provided to people. She suggested that there should be anti-predatory lending laws, disclosure laws and better legislation in place to protect consumers. She offered a number of solutions to the problem that include providing low income people access to credit and loans, and encouraging them to start savings accounts. Taylor emphasized the importance of consumer education—people need know what questions to ask when it comes to financial matters.

The Honorable Dwight Evans stated that three vital measures that must be taken to help disadvantaged families: increase their income; decrease their expenses; and increase their assets. Evans spoke passionately about the need for lower income families to have access to fresh food, particularly given the high rates of obesity. His supermarket/fresh food initiative is an attempt to encourage entrepreneurs to develop fresh food markets in underserved communities like York, Harrisburg, and Gettysburg, which are among the few cities in Pennsylvania that do not have supermarkets. Evans said poverty existed before Hurricane Katrina brought it to the nation’s attention and that you can not subsidize people out of poverty.

Mike Kreidler said that there is a correlation between insurance and income and that in the state of Washington, it is against the law to use one’s credit history to deny them insurance coverage. He decried the fact that too many minorities face discrimination, usually based on their age and income, when trying to get insurance. Kreidler wants to ban the use of credit scoring that is used against many people when they are attempting to get insurance protection. He stated that lending and insurance policies vary between insurance companies and asserted that insurance companies should be required to prove that they are not discriminating against people based on their age or race.

The Brooking report, From Poverty, Opportunity: Putting the Market to Work for Lower Income Families, analyzes national data and data from 12 major metropolitan areas across the country and addresses the issue of how to put the market to work for lower income families.