David Jackson: Good morning, everyone. My name is David Jackson, and I'm a senior adviser in the Community and Economic Development group here at the Atlanta Fed. Welcome to the next in our series of Inclusive and Resilient Recovery webinars, or IRR. The data tell us that not all recoveries happen equally, and that data also tell us that Black communities and other communities of color don't recover as quickly as others. This series allows us to take a look at that and think about, talk about, and plan for ways to ensure that this recovery is more equitable. Next slide, please.

CED is Community and Economic Development at the Atlanta Fed. We work at the intersection of research and engagement. We try to learn what's going on on the ground, what the challenges and opportunities are. And in our research team, we work to find data and best practices that allow us to bring solutions and work with communities to help overcome these obstacles.

You might ask, why does the Fed engage in this work? The central bank's mandate of stable prices and maximum employment includes us working to improve economic mobility and resilience for all people, so everyone can participate in the economy. Today, we're introducing Inclusive and Resilient Recovery's second topical area of focus, household financial well-being. We understand that our neighborhoods, communities, and region as a whole don't work without people circulating money. People can't circulate money when they can't afford what they need to thrive. A close look at household financial well-being can show us what interventions make sense to get people more financially stable. It also draws our attention to the importance of wealth when it comes to weathering economic shocks and importantly, the racial wealth gap's impacts across our region.

As we all know, COVID-19 has exacerbated disparities between Black and white communities. We hope that the lens of household financial well-being can ground us in these realities in the day-to-day experiences of regular people, who like us, have bills to pay and loved ones to take care of. Thank you for being here, and now I'll turn it over to our moderator, Julie.

Julie Siwicki: Yes. Hi, everyone. Thank you for being here. Welcome. For all the reasons David just shared, we think that the lens of household financial well-being is a helpful one. And I guess I should also introduce myself. My name is Julie Siwicki, I'm an adviser in the Community and Economic Development function here at the Atlanta Fed. So, I'm here today to bring these ideas to you around financial well-being, and what we're really interested in is what you think about these ideas. Especially those of you joining us who are working to bring more resources to our underresourced communities here in the Southeast.

So, I want to be direct also and say that I did not grow up in these communities. My race, my class, my background in general has made it so I'm always trying to position myself as a learner in this space. So, at the end of the day, we really want to hear how these ideas are resonating with your experiences. In what ways is the household financial well-being lens valuable to your work? And in what ways might it be missing the mark a little bit? We want to hear back from you and keep this conversation going.

So, a quick overview of our agenda today, we're going to start off with new research from our colleague here at the Atlanta Fed. Nisha Sutaria will present that. And then we will have a panel of experts first from the Consumer Financial Protection Bureau [CFPB] and the Aspen Institute's Financial Security Program. They'll share a definition and a framework for thinking about household financial well-being. And finally, we'll try to square the research and the framework that we're sharing with what's going on on the ground. So, Monica Rodriguez Lucas and Andy Posner are here from the Capital Good Fund CDFI to share what they've been doing recently. And Hope Wollensack is here from the Economic Security Project to share about their work happening here in Georgia.

We will have time at the end to address some questions from you, our audience, so please don't be shy about posing them in the Q&A box that you should see on your Zoom screen. So, I will now turn it over to my colleague Nisha Sutaria who will share this new research, and it's about rainy day funds and how they've impacted people's experiences over the past year and a half.

Nisha Sutaria: Thank you, Julie. Hi everyone. My name is Nisha Sutaria and I'm a research analyst for the Community and Economic Development team here at the Atlanta Fed. I appreciate this opportunity to help kick off this webinar with a quick high-level overview of household-level savings data that we've explored and that I've learned a great deal about as someone new to understanding household economic stability. And the intersection of that with the history of structural racism that we have an explicit priority to study now. We want to share this today about savings because we understand that savings is inextricably tied to household financial well-being.

From a broader perspective, for us here at the Atlanta Fed, household financial well-being is tied to economic mobility and resilience, and it's our explicit priority to look at this and address how structural racism contributes to racial wealth and income gaps. A long history of discriminatory policies and practices have directly impacted the ability to save and subsequently achieve true and equitable household financial well-being. One way that we think about resilience is a household's capacity to weather unexpected expenses or shocks to their income. And the data that we examine, this capacity we measure, is the rainy day fund. And this is defined as three months of saved income.

The data that we looked at comes from the Federal Reserve Board Survey of Household Economics and Decisionmaking, otherwise known as SHED, which measures the economic well-being of U.S. households and identifies potential risks to their finances. The survey includes modules on a range of topics of relevance to household financial well-being, including savings. So, we encourage you to take a look at this data, and I think we'll include the link for that data in the chat. And we'll also include a link to the article that I worked on with Julie Siwicki, and I'll share a few insights from that now. So, the SHED data was collected in October of 2019, and therefore the SHED data helps us shed some light on the state of financial well-being for households pre-pandemic. So, if we look here, I'll walk through a few stark disparities that we're able to see in pre-pandemic savings across income level, housing tenure, and race and ethnicity.

According to the SHED data, approximately one in two households, 47 percent of households, do not have a rainy day fund in October 2019. Now, if you look at different groups within this national sample, we find that nearly three-quarters of households with less than $40,000 in annual income don't have a rainy day fund. We see that two-thirds of renters don't have a rainy day fund. And we also see that over 6 in 10 Black and Hispanic households lack these savings as well. We did some work to dig into the intersectional disadvantages across these groups. We understand that Black and Hispanic households are more likely to be extremely low-income renters than white households. And we understand this pattern can be traced to the ongoing reality of racial discrimination in labor and housing markets alike, which we also discussed in our article.

So next, I want to turn our attention to how households without a rainy day fund are impacted differently in facing hardships. So, without the saving safety net offered by personal savings, households are more vulnerable to hardship. And the SHED data show that in 2019, without a rainy day fund, those without a rainy day fund more frequently experienced certain financial hardships that are now, of course, being observed as economic consequences of the COVID-19 pandemic. Let's take a look at a few of these hardship scenarios. Looking at bill payments, when they were surveyed, 30 percent of household respondents without the three months of savings said that they struggled to pay bills on time that month versus only 4 percent of those who did have a rainy day fund. In terms of moving due to an eviction, we know that missing rent payments puts tenants at risk of being evicted. While only a small percentage of households attributed a recent move to eviction, those without rainy day funds reported experiencing an eviction at a much higher rate, 6 percent versus just 1 percent that did have the savings.

And finally, looking at forgoing a doctor's visit, households with no rainy day fund also reported more limited health care uptake. Twenty-three percent missed a doctor's visit due to the cost versus 6 percent amongst households that had the rainy day fund available. So finally, looking at the next slide, we wanted to compare the SHED pre-pandemic data trends to what was happening since the onset of the pandemic with unemployment and job loss. And we see here that Black and Hispanic workers were disproportionally represented in this unemployment data and consequently, Black and Hispanic households, which were already less likely to have a rainy day fund before the pandemic, are facing a disproportionately high risk of needing one during the crisis due to unemployment.

This data from the U.S. Bureau of Labor Statistics show us that unemployment rates for these groups, which were historically trending higher than the general population already, grew steeply during the pandemic. And while they've improved between April 2020 and April 2021, they remain higher than they were before the pandemic. And something else, a resource from the Atlanta Fed that may be interesting and helpful for you to look at is the Unemployment Claims Monitor that offers additional evidence of this lopsided representation of Black and Hispanic workers among unemployment claims that have been filed during the pandemic. And given our focus here in the southeastern states, we see that that disparity there is more pronounced.

And so just thinking about this data, we really need to think about how these differences by race and ethnicity must be understood in the context of structural racism. And we dig into some of these topics in that research. The lack of savings for Black and Hispanic households is rooted in a history of discrimination that has impacted intergenerational income and wealth. And as we examine the intersectional disadvantage across these structural barriers in the housing market and the labor market, we can see how and why the household financial well-being of Black and Hispanic households is particularly vulnerable. Many factors rooted in the legacy of the labor market discrimination that we looked into contribute to disproportionally high unemployment rates today. Occupational segregation leaves Black and Hispanic workers not only disproportionately employed in lower-wage jobs but also in jobs concentrated in industries that were hardest hit by the pandemic, including transportation, as well as accommodation and food services.

Barriers to educational attainment as well as discrimination against Black and Hispanic workers with comparable qualifications to their white peers contribute to these labor market dynamics. And we know that homeownership is a critical intergenerational wealth-building opportunity and that the discriminatory practices and systemic barriers in the housing market have historically disadvantaged Black and Hispanic people. And despite policies like redlining being abolished, continue to disadvantage them today in things like the cost of and access to mortgage credit. So you can read more about our analysis in this article, and please reach out to us with any questions you may have. And if you have any questions now, I'll do my best to address them in the chat. Thank you for this opportunity to speak today and like all of you, I'm now looking forward to hearing from our esteemed panelists. Back to you, Julie.

Siwicki: Thank you, Nisha, for sharing that with us and for underscoring some of the context around all of the important data that you're sharing. So, now it is my pleasure to invite our guests to help us understand these patterns through the lens of household financial well-being. Without further ado, I am thrilled to introduce our panelists. We have from the Consumer Financial Protection Bureau, Irene Skricki here, she's a senior financial education program analyst. And from Aspen Institute Financial Security Program, we welcome Genevieve Melford who's the director of insights and evidence there.

We'll hear from Irene and Gen first, and then we'll also bring on, like I said, Monica Rodriguez Lucas and Andy Posner from the Capital Good Fund. Like I said, this is a CDFI, they operate in Florida and other select states across the country. Andy is their founder and CEO, and Monica is an immigration loan specialist. And finally, we have Hope Wollensack here from the Economic Security Project where she's a senior strategist and she also directs the Old Fourth Ward Guaranteed Income Initiative in the office of Atlanta city council member Amir Farokhi.

So, thank you all so much for being here. I'm going to start by asking Irene, if you could just zoom out for a minute here and tell us, what is household financial well-being and how do we know what this definition is?

Irene Skricki: Sure. Thank you, Julie. And first I just want to say, I'm trying to turn my video on, and it says that it's being blocked by the host. So, if you really don't want to see me, that's okay but if you would like to see me, okay, start my video. All right. Sorry about that.

And I hope it will look okay. I'm actually separately on the phone because I was told my audio wasn't so good. Well, thank you, it is great to be here, it's great to see you, Julie, great to be on a panel with Genevieve, who I worked with for many years at the CFPB before she went off to the greener pasture of the Aspen Institute. But we always joke that we love to talk about conceptual frameworks together. And so, this is a really fun opportunity for us to actually talk on a webinar about our favorite topic of conceptual frameworks around household financial security.

So, I will quickly present to say a few words about the CFPB's version of financial security, which is called financial well-being. I do have to acknowledge that the developer of that concept was really Gen Melford when she was at the bureau [CFPB]. So, we worked on it together, it was primarily her. So hopefully, I'll do her work justice. But while at the bureau, she and I and others really worked on the idea of what is the end goal of financial education? That was our entry point because the CFPB has a mandate to work on financial education. And everyone doing financial education is trying to do something different, they're trying to do savings or improve credit scores or reduce financial crisis. But ultimately, what is it everyone is trying to get to? It's not just a better credit score, it's to a longer-term sense of financial well-being, which is really going to be individualized to each consumer.

And so, after the process of talking to consumers and others to get a consumer-derived definition, we came up with the four-part definition you see up on the screen. I'm sure some of you have heard it before, but it really looks at four elements, control over your day-to-day, month-to-month finances. So, being able to pay your bills on time, not having too much debt, and all that. Secondly, capacity to absorb a financial shock, which is really having a cushion against unexpected expenses and emergencies and different ways to cope with that, including things like health insurance savings, good credit, and the like. Third is being on track to meet your financial goals, so having financial goals and then making progress toward those. And then fourth is the financial freedom to make choices to enjoy life, the things you want to do. Eat out, go back to school to pursue a degree, and work less to spend more time with your family, donate to your religious institution. That's going to be different for everybody, but people want to have the ability to do those things.

And those break into a nice little four-part grid, as you can see, which could be described as security and freedom of choice in the present and in the future. So, that is the idea that that's something people are working toward, nobody really has all these things perfect all the time. But this is what people strive toward as they think about financial well-being, according to what consumers told us and some other research we did. So just quickly, after developing this consumer-derived definition of financial well-being and its main components, we next engaged in the task of converting that definition into a concrete measurement tool. I'll just say a few words about this, but a tool that practitioners and researchers could use in their work. And so, with the support of experts and doing state-of-the-art methodology. And when I say, we, I really mean Genevieve developed a 10-item scale that has been tested and validated that gives you a single number to measure financial well-being as defined by the consumer.

And so, I'll just quickly, if you go to the next slide, Julie, or actually, Mary, I guess, sorry, is controlling the slides. Again, many of you may have seen this, but this 10-question thing, and you'll note the questions are not about, what's your income? What's your savings? It's about how you feel about where you are. I could handle an unexpected expense, I could enjoy life because of the way I'm managing my money. I'm behind in my finances. They're really about how people feel about where they are, but, of course, they linked to those four core parts of the definition. And so if you take this little quiz and use a special scoring methodology, you come up with a number between 1 and 100 that is a measurement of financial well-being.

So, we've then done some national survey research to learn more about the state of financial well-being in America. We've explored how practitioners can use the scale and the score that comes out of it. So, there's lots more that could be said about all that than we have time for today. But just quickly, I'll note that organizations like the type of groups who are on this call, the groups that are doing financial coaching or credit counseling or other types of work, have been using the scale, the definition, and particularly the scale to track client progress, to evaluate programs and compare programs. And also as a way to start conversations with the people that they're working with. As you can see, these are actually open-ended questions that may get people to talk more than just like, "Hey, what's your credit score?" Right? So, it's been used in a number of ways.

So there's lots more that could be said on these topics, but the short version is this financial well-being definition and scale is something that all of you might want to consider using as you look at how to bring about an inclusive recovery especially for struggling households. And I'll end by just noting that the financial well-being work, we're very cognizant of the structural issues that affect household financial security, which is something I know that's a framing issue for this webinar. And the factors that drive financial well-being include many examples of social and economic, contextual dynamics, things that are important influences on financial well-being, like access to jobs, good financial products, public benefits and supports, where you grew up, all of that we get is important to well-being, and it's hidden here in different ways. But I think to turn to a more explicit way to talk about some of that, Gen has another related conceptual framework where you will see those things more explicitly. So, I will stop here, and I guess Julie will direct the next question to Genevieve.

Siwicki: Thank you, Irene. And I think where you left off is a good transition to what I want to bring up with Gen. First, I'm being told that I need to state the thing that you may have heard us at the Federal Reserve System say, which I missed at the beginning. But everything you're hearing today is, well, not a reflection of the Federal Reserve System, it is really just coming from us as individuals and speakers. And they may give me more official language, but just to put that out there so you all know. And now I am going to ask you, Gen, with this definition that has been so well thought out, so well tested, what do people need to have in order to have financial well-being as reflected in that definition?

Genevieve Melford: Yeah. Thanks, Julie. And thanks, Irene, for that great setup. So, the measurement tool that Irene just told you about, right? That set of questions that can produce one quite precise number quantifying this state of being that is our goal for everyone in America. That measurement tool has actually enabled a large body of research over about the last five years to really shed light on the question that you just asked, Julie. And so, what I'm going to do in my remarks here for a minute, just to give people a preview, I'm going to give you a really, just the high-level takeaways about what research says about what people need to have financial well-being. And then I'm going to show you that conceptual framework that Irene teased that we've developed at the Aspen Institute Financial Security Program that goes a little deeper into really what these components are and how they work together and how we can use that as a diagnostic.

So, if we could start with my first slide please, Mary, thank you. So, this is my really high-level tour, and I will just flag that I wrote a blog post really going into all the details of all of this research that maybe Jasmine could share in the chat or if not, people can reach out to me later if you want to see it, that kind of gives all the details. I'm just going to do the really high-level takeaways here. So, in all of this body of research around financial well-being, and I will say very importantly, we now have longitudinal data. There are now panels that look at people's financial lives and measure their financial well-being at multiple points in time, which is really critical to giving us confidence in what's really driving this.

So, the three key insights are, the first thing is about having positive cash flow, right? By which I simply mean a household's income minus their expenses. And that is really the foundation of people's financial lives. And this longitudinal research shows that income and expense changes are actually driving changes in financial well-being over time. So that probably isn't surprising that income minus expenses is the foundation, but it's nice to have the empirical evidence of it. So, the second insight coming out of the research is that liquid savings—and as we already just heard this from Nisha—are key, right?

So, early research by the CFPB found that liquid savings is the single variable most highly correlated with financial well-being. And I want to emphasize even more so than income, right? And I think there are several good reasons for that. One is that, of course, you can't have liquid savings if you don't have positive cash flow, so it's an indication that you already have that first part. And also that when you do have liquid savings, they are that incredibly important protection against material hardship, as you've just heard about from Nisha. So, studies confirmed that having higher levels of liquid savings protect, over time, against declines in well-being in the face of relatively limited expense shocks. But the final insight I want to mention from the research before we move on, is that, despite the tremendous value of liquid savings, really demonstrated in study after study after study, including some really new ones, looking at people's experience during the pandemic. So important.

However, research also shows that these personal savings cannot protect people's financial well-being against really big or more persistent shocks, like job loss or major medical expenses. So, the implication of that is that broader safety nets provided by government, employers, and other institutions are a necessary complement to the personal safety nets that people develop through their own real hard work and also access to income-producing opportunities. And I scarcely need to say that the importance of social safety nets has clearly been enormous over the past year, right? Last spring, over 30 million people found themselves suddenly out of work. And that's a kind of shock that virtually no one can protect themselves against. So, that's a perfect example of what social safety nets are for.

And so, at my program, the Aspen FSP, we took these three insights that I've just shared, as well as all of our other research over the last five years into a lot of different aspects of people's financial lives. And while we're shouting people out, I want to shout out Julie as my former colleague who did some of that really important research several years ago at Aspen. So, we put all of that research together to develop a framework in more, greater detail and map out what people need to have financial security and well-being and why. And my hope is that this framework can really give all of us here today who are just talking with each other and those of you we're engaging with in the audience, give us all a common language and a shared mental map for seeing how all the different issues and solutions that are being discussed on the webinar today fit together to impact the financial well-being of people and families.

So, next slide, please, Mary. And a quick word about vocabulary. We are the Aspen Institute Financial Security Program. This is a framework for financial security, but we have adopted as our definition of financial security the CFPB's definition of financial well-being that you've just heard. So, we're all talking about the same thing here. And so, of course, as Irene said, financial well-being or security, it's a state of being, right? It's an outcome goal. And so what the rest of this framework does is really give us a diagnostic to see why households may not be financially secure and where we can focus solutions for an inclusive and resilient economic recovery. And so, this framework really illustrates how financial security rests on three interconnected pillars. And they're labeled one, two, three. I know there's a lot to see here, but we'll start with the area labeled one.

So, that first pillar, routinely positive cash flow, as I just said a moment ago, is the foundation. And the detail I want to dig into here just to get your wheels turning is that people need to have reliably more income coming in than the cost of meeting their basic needs, right? They need that to be able to pay their bills and to have extra money to put into savings, but that income can be from any source or combination of sources, right? There's all kinds of labor income, there's nonlabor income like capital income, like income from benefits and transfers. So just to say, let's think broadly about what income means. And I suspect we'll talk more about that later in the conversation. And then, of course, the cost of basic needs is something that can fluctuate or can be addressed in a number of ways.

But the second pillar is personal financial resources. So that's your liquid savings, other financial cushions, your wealth. And as we've already talked about, research shows that that pillar is critical for maintaining stability in the face of smaller income or expense shocks. And it also, though, provides the resources that people can invest in family well-being, asset building, and economic mobility. So that's the stuff that you and your family personally own. That's what personal resources is, right? And I just want to take a moment to talk a little bit about the dynamic between these, right? Because it's not just three separate pillars, these things are all interrelated. So, when your cash flow is reliably positive, you can build savings and wealth, right? So that's the arrow going from cash flow to personal resources. And then, of course, you can use that wealth to increase your income, to reduce your cost of living, and thereby boost your cash flow further, right?

So, when everything is working as it should, there can really be a virtuous cycle there. But and this is really important to emphasize because so many people do not have positive cash flow right now, and frankly didn't before the pandemic. We need to note that when income does not reliably cover core cost of living expenses and also allow for savings, the consequences are often unmanageable debt, late fees, and other expenses that further weaken cash flow in a vicious cycle of financial stress and instability. And I think that's a situation that we'll be talking more about later today.

So, the third pillar of public and private benefits is equally critical to the first two. So, there's a wide range of public employer and third-party benefits that can boost the other two pillars in many ways and compensate for the other two pillars and invest in strengthening them. So, these benefits can provide households with income and they could also reduce cost of living expenses, right? Things like the cost of food, housing, medical care, etc. And that would reduce your expenses there by boosting your cash flow, and benefits can also support household wealth building and economic mobility directly. And also protect households from risks that are too big to self-insure against, of all kinds, which could be the macro risk of a recession or it could be the personal risk of a major medical experience.

So, the big takeaway here is that households need some combination of all three of these pillars to build and maintain financial security or well-being. And they work together, so we have to consider the strength of all three of them. And many of our speakers today are going to be shedding light on the extent to which households are lacking some of these key elements and why, and what can be done about it. So that's just a framework for thinking about everything that everybody else will be talking about. And I will end it there. Thanks, Julie.

Siwicki: Great. Thank you so much. And I think I will just ask Irene if there's anything else you'd add before we move on about the CFPB's perspective on the things that could be done to enable financial well-being.

Skricki: Yep. Well, just quickly, I guess, I have a couple more slides and that will finish up my part. So first, there we go, here it comes. Slide incoming. I didn't say too much about the financial well-being score that comes out of that 10-question scale, but I mentioned it was a score from 1 to 100. The national average as of a couple of years ago was 54, so it was set to be that's average. But we then did some additional research through a survey, a representative survey, to look at different score bands, very low to very high. And we looked at what the characteristics of people in those score bands tended to have, and it may be a little hard to see on your screen, but essentially, you'll see a lot of the same issues that were brought up at the first presentation as well as in Gen's that you'll see that there's a high correlation of low savings and people in the low-score band, high savings at the higher end, issues around debt, personal resources, food insecurity, a lot of the same issues and things like health insurance.

Again, those benefits issues are all correlated with the well-being score, which one, it tells you a few things but certainly that the score is actually a good way to capture some of these more objective indicators. They're correlated. And so, we're certainly seeing that even when using it. Remember, this is a subjective score, how people feel they're doing, but it actually does connect very much to their actual objective scores. I'll just note that, we did this research pre-COVID and I think we'd be interested in seeing how...I'm sure the general correlations will be very much the same, but whether national averages go higher or lower, or whether things change, I'm hoping we can find out more flavor of what the last difficult year means for financial well-being and how we see changes over time as we come out of that into the recovery.

And then just the last thing, just one more slide about what could help people have well-being, the things that are connected to it. We did do some regressions, again, the “we” really refers to Ms. Melford and the contractors working for her. But really looking at if we have this well-being score, we can see how people think they're doing, what are the drivers of that? And essentially, we found that the objective facts of your financial life are predictive of well-being. That makes sense. That's what we just saw on that previous chart, that people who have more savings and less debt and things like that, are going to have more well-being. But then, what causes that? It's not just your salary because it's not just the amount of money you have alone, whatever this could access. So, of course, financial behavior, day-to-day actions, will help move toward a better financial situation.

And then, the biggest predictor of financial behavior, and this by the way, it's holding constant demographics, income, other things that we could hold constant. We found that financial skill and financial confidence, but I'll mention mainly financial skill here, were very predictive of behavior, which is predictive of situation, which is predictive of well-being. And financial skill is interesting. It's not knowledge, not that knowledge isn't important, but it's really knowing how to find information from reliable sources, knowing how to process it. How does it relate to you? And then knowing how to execute decisions based on it. And that type of skill, you don't have to know everything about mortgages, but you have to know how to find the information and then how to act on it and use it. And that is, we're doing more research now, we think is something that people who are actually working in the field can teach, can help people with. So, it's something that we think people can take action on.

So again, there's a lot written on that, the bureau's website, but just wanted to put out there that financial skill and financial confidence interrelates to all of these things and is a pretty big predictor. So, I will stop there unless, Gen, if you want to add any final words, or I think that's it for our team. So, we're happy to answer questions when we get to that point.

Siwicki: Thank you so much, Irene. Thank you, Gen. There's a lot of very helpful framing information for everything else we're going to talk about today. I'm hearing that savings are really important, which goes back to everything Nisha was sharing with us. I'm hearing also that the safety net is important and also that cash flow is crucial. And so, I want to bring in our panelists from the Capital Good Fund now, which I think of the work that they do as helping to bridge that cash flow gap. And, of course, they'll be able to talk a lot more about that. I'm going to start off by asking Andy, you who have founded and run the Capital Good Fund, what do you do to bridge the cash flow gap and, importantly, how has the pandemic affected the work that you do?

Andy Posner: Yeah. Thank you so much, Julie. And thank you, everyone. It's a pleasure to be here and I do want to put up, we had a couple of slides. Oh, perfect. So first of all, I'm Andy Posner, as Julie said, I'm the founder and CEO and I have my colleague, Monica Rodriguez Lucas, who's our immigration loan specialist. So happy to tell you about how we bridge cash flow and also some of the trends we've been seeing and how we've reacted to the pandemic. Next slide. So, we're a nonprofit community development financial institution operating in a number of states, including Florida. And we offer small-dollar personal loans, everything from a $300 payday alternative loan up to a $50,000 energy-efficiency loan, and really it's our smaller loans that are designed to help folks bridge their cash flow. And, in particular, you see there at the top left, our crisis relief loan.

This is part of our three-pronged response to the pandemic, although we have always offered payday alternative-style products. But one of the things we recognize is that financial coaching and financial literacy is really important, but you really can't get around the fact that people are still going to have issues and they're often going to need a way to bridge them. And as many of you guys know, absent an equitable loan product, people are going to get a payday loan or pawn shop or get an auto title loan or something like that and pay high, double- or triple-digit interest rates. So, our crisis relief loan is $300 to $1,500. We're charging just 5 percent interest and we have a 12-month term. And people can use this loan for things like rent, utilities, security deposits, vehicle repair. A lot of people have needed to buy iPads and things like that for their kids to do schooling via Zoom.

And then additionally, a lot of folks have taken out those predatory loans to bridge cash flow before they learned about us, and then we're able to refinance that at a much lower rate. And then another thing is that we report to the credit bureaus, which is really important because as people build their credit, it gives them access to more and more mainstream products and that'll further enable them to weather future financial shocks. Next slide.

Again, I mentioned that we had a three-pronged response to the pandemic and the first one was, as I talked about already, the crisis relief loan. And we've already done 1,800 crisis loans, and unfortunately, volume has not slowed down; in fact, it's actually picked up. There've been ebbs and flows, for example, when enhanced unemployment expired at the end of Q3, there was a big uptick in people needing access to capital. But now, even as people are starting to go back to work, they have new types of needs. For example, more people are repairing their car now that they're driving to work again than they were at the start of the pandemic. The other thing that we did was we already had almost 3,000 active accounts when the pandemic hit, so we offered everyone a no-questions-asked, three-month deferment, and about 15 percent of our clients have taken us up on that.

And actually, our portfolio-at-risk is back to pre-pandemic levels, it's at 2.9 percent. And a lot of that is just due to the fact that we work with clients. And then lastly, we took our normal coaching program and we modified it to better meet the needs of people in this moment. So normally, coaching is about certainly dealing with your current debts, but a lot of it is middle- and long-term planning. Whereas now we found that people are just trying to survive, and, as I was mentioning before of our social safety net, one of the biggest challenges people have had is, how the hell do I navigate all these different programs, applying for unemployment insurance, SNAP benefits, Medicaid? So, we created a crisis hotline and a more condensed version of our coaching that's more focused on getting through this emergency and just staying afloat rather than middle- and long-term planning. Did I answer your question, Julie?

Siwicki: Yes, definitely. We're getting there. Definitely, through all of these great insights. Monica, I know you work directly with a lot of these loan applicants. So from your perspective, what trends have you, could you talk a little bit more about the trends that you've seen over the past year with folks coming to you looking for loans and if there's anything in particular that stands out about clients in Florida, which is in our region, we'd be interested to hear those, too.

Monica Lucas Rodriguez: Yes, definitely. Good afternoon, everyone. And thank you, Julie, for your question. You can go into the next slide. I will start by mentioning that what we see here is that it has created a lot of stress and anxiety for people. We used to see before that the majority of our applications were for things like car repairs or security deposits. Down here in Florida, usually the requirement to move into a new place is three months. They will ask you for security deposit, first and last month, so we will see that very often. But now, it's more for things like rent and basic things like just paying for groceries. And this is something very alarming, because these are things that are basic needs for people.

A lot of clients will mention that the eviction moratorium is not being followed by a lot of the owners of these properties. And they're getting harassed and unfortunately, law enforcement is not doing enough to protect the people staying in this household. So, they end up being either homeless or needing to find somewhere else to move. So, that's where we are coming in to try to help with that money for either rent or whatever it is that they need. Another thing that is important to mention is that Florida's economy is “open,” but this is creating, as well, a lot of stress because people are being forced to turn back into work, when they don't feel completely secure about not getting sick or contaged by this virus, right?

So, this has not necessarily been very positive because these people are being forced to do this. So it is affecting. And as well, before we used to see that the majority of the people that were applying for loans, they do have a job, but now we see that basically, their income is unemployment income when they're applying for the help. I don't know if there's anything else. Andy, I know you wanted to jump in and mention a couple of things as well.

Posner: Yeah. A couple other trends that we've seen. I mean, as I alluded to before, just obviously state and federal policy have been transformational and probably have staved off a Great Depression. And, for example, as I mentioned before, when the enhanced unemployment benefits expired, our portfolio risks jumped from, at the time, 3.8 to 5.2. And, of course, it was devastating for families. We worked with them and we got that back down, but we can just see whether there's a stimulus payment or enhanced unemployment or moratoria, even if they're not always being followed, are tremendously important. Additionally, the fact that predatory lenders are allowed to charge in Florida 268 percent, I believe, that's just a terrible injustice in normal circumstances, but now it's just compounding suffering.

Another thing that we've noticed is that the people that are coming to us now are folks that probably wouldn't normally come to us. Looking at the income, the average income of a crisis relief loan borrower, pre-pandemic, it's $3,300. Normally, someone coming to us for a $1,000 loan, we would expect them to have about $2,800 of income. So, they were doing better off and they were perhaps not used to coming to a nonprofit. And the other thing is, the percentage of our borrowers that are self-employed is two times what we normally would see. So, it's a lot of people in the gig economy, sole proprietors, who have been hit particularly hard by the pandemic that have been coming to us.

Siwicki: Really helpful to see all of this through the lens of your work. We'll have a chance to hear a little bit more about that once we open it up to you in the Q&A session. First though, I want to bring our last panelist into this conversation, too. Because Hope, I know that you and your team have paid really close attention to how people are faring financially this past year, too. So, could you tell us a little bit about what you've learned? I know you work is focused in Georgia and what you're seeing on the ground here.

Hope Wollensack: Yes, absolutely. How is my audio?

Siwicki: You're great.

Wollensack: Actually, a minute. Just give me one second.

Siwicki: I think you're muted now. And you're back.

Wollensack: All right. Terrific. Let me know if it goes out at some point. Sorry for that. Trying to dial in from my phone. Well, thanks for having me here. Yes, over the past year my organization has been looking at household financial well-being and thinking about the challenges folks have been facing and potentially bold solutions to some of those challenges. So, if you would share my slides, I'm happy to share what we've been working on. I'm based in Atlanta, Georgia. And for the past year, I was leading the Old Fourth Ward Economic Security Task Force. This was the task force of about 30 community members, including residents of the Old Fourth Ward neighborhood in Atlanta, who are looking into the root causes of economic insecurity and also considering what could be some bold solutions to address that insecurity.

During July and August of 2020, sort of the heat of the pandemic recession, we administered a survey to 403 Old Fourth Ward neighborhood residents. And it was a 26-question, multiple select survey asking about all types of aspects of financial security and insecurity. First, we have huge gratitude to the folks who were able to complete that survey, especially during such a challenging time. For those of you who may not be familiar with Atlanta, the Old Fourth Ward is located in the center of the city. It is the neighborhood where Martin Luther King was born. It is facing intense gentrification. It's home to the largest concentration of Section 8 housing in the Southeast. Unless someone here will correct me on that, I believe so. And it's also home to a lot of million-dollar newly constructed homes. So high levels of inequality within a very small concentrated area.

In our survey, what we found is probably not surprising, given many of the stats that were shared here today. It was on par with much of the data that we heard from Aspen Institute and the SHED data as well. And many of the top-line statistics we were hearing at the time around unemployment and financial precarity. But we wanted to understand how this was playing out on a neighborhood level, and here is just some of what we found. First, we found Black residents were much more likely to experience economic insecurity than their white neighbors, much like national trends. And those racial disparities have persisted, have been exacerbated since the start of COVID-19. We found lower-income workers who were disproportionately Black. And so, keep that in mind, as we share some of these survey findings, were far more likely to report a decrease in earnings since the start of COVID-19.

Survey respondents also reported a really high rate of unemployment, it was about one in five survey respondents who were unemployed at the time that we administered the survey. About one in three Black respondents was unemployed at the time that we administered the survey. So, you can imagine within a concentrated area the community level impacts that that would have. But truly, one thing we wanted to get at—there are other folks, I think, who have potentially more refined tools for measuring some of the hard numbers—is that we wanted to understand the true measure of financial stability and security or insecurity, is how often one has to worry about their finances. And so, what we found is that one, 56 percent of all respondents feel anxious about their finances on a regular basis. Black respondents were three times more likely than their white neighbors to report such anxiety every day.

And so, we think about the impact that has on one's ability to show up to the job that they have, to be able to take care of their kids, to be able to manage what might come up in one of their most challenging times. It can be a lot and it can be overwhelming. And some of the open-ended feedback that we received also helped to illustrate that. But certainly, right? Being able to take care of your finances on the day to day is what helps one to feel at least that baseline level of financial security. We can head to the next slide.

We asked 26 questions, but our final question on the survey was in regard to guaranteed income. We were considering this as a potential program. And so, we did not use the word guaranteed income, but we asked folks, "If you were given an extra $500 every month, what are the ways in which you might spend it? Please select all that apply." And if given an increase in income, Black respondents were more likely to spend that on basic needs like housing, food, or health care than their white neighbors. Again, this is not surprising because they are more likely to be unemployed and unable to meet basic needs and also have lower wages, lower levels of income. And so, I think what this really helps to illustrate, in addition to some of the open-ended feedback that we received, was just folks are struggling to cover their basic needs. And it is actually quite difficult to navigate other systems, to explore other solutions, when their basic needs are not covered.

For example, some of what we heard from the respondents was that childcare was a huge issue, but also transportation to work was a huge issue. There were times when they weren't able to cover their rent, there were times where, if they had a modest increase in their savings or a modest increase in their income and wages, that their benefits would be decreased dramatically. And that was a huge concern for them. And so, they really felt like they were in a bit of a trap, both being not able to cover their basic expenses, but also not really having a path forward, without that level of income stability. So, in a series of listening sessions that followed up...we can head to the next slide.

In a series of listening sessions that followed up our survey, we asked folks about what it meant to be financially secure and what that meant for them and people in their community. And really four trends emerged. Being able to afford basic necessities, occasionally being able to spend on enjoyment like a family dinner out to a restaurant, or maybe a vacation somewhere, or being able to buy shoes or hair bows for their kid without having to think about it. More time with less stress. Stress and anxiety was constantly an issue that came up with folks that we talked to, that they were just very stressed about the situation that they were in.

And then, finally, not just scraping by. Much like each individual's desires for themselves may vary, but everyone wants to be able to achieve their goals and usually provide a better life for their kids if they have them. And so, many of the residents that we spoke to wanted to move into better housing. Many of them lived in Section 8.They want to be able to move into better housing. But unfortunately, that requires first month, last month, and a deposit, and potentially a car if you live in the Atlanta area. Probably many of you know if you're living in the South and so, in Georgia, the asset limit is about $2,000 in savings to qualify for most public benefits before your benefits are diminished. So many folks noted occasionally, they would get close to saving $1,000 or $1,500, but it was never going to be enough to change their circumstance. And they were worried that if they were to move from Section 8 housing, or if they were to make other investments, what if later that their benefits would be decreased and that they may never get those benefits back. And so, it was a lot of feelings of just, security was not just something that was momentary or something that was provided even for six months, it was something that they really viewed as they would need a change in their financial circumstances over the long term in order to actually feel secure.

And then finally, I'll share just a few quotes from residents that we spoke to. This was during a series of listening sessions. And we asked what financial security would feel like. And here are some of the responses that we received. Again, we're grateful to the residents that the Old Fourth Ward for being willing to participate in these listening sessions. It was to develop programming for the area, but certainly, it was a challenging time. It was, it is, and continues to be a challenging time for folks.

Siwicki: Thanks, Hope. Thank you for sharing these really grounding results from your survey. And I think the quotes especially help to get that across. So, I hope folks had a chance to take a look at those. There are a couple of things that I want to make sure we touch on before we get to some of these great questions coming in from the audience. I know a few of you have mentioned the idea of financial coaching, financial education. And I know that CFPB, you also spend a lot of time figuring out how to do this well. What and this is a question for all of our great panelists. I know I talked with Irene about it, talked a little bit to Andy and Monica about this, too. What are the...oh, yeah, and feel free to bring your videos back on so folks can see. What are the benefits and also the limitations of financial education programs when it comes to making people more financially secure?

Posner: I'd be happy to give our perspective because we do financial coaching. But over the last 12 years, having seen probably 15,000 people apply for small personal loans and really diving into their financials, the philosophy that we've developed is that when it comes to poverty, those families are often the most financially adept. And so, we believe very strongly that the issue is not a lack of knowledge of how to manage money, but a lack of money to manage. Which is not to say that people couldn't do a better job of financial management and building their credit and the like, but we look more at structural inequities and systems. Whether that's racism or disinvestment in communities first. And so we also have to keep in mind there's an opportunity cost to somebody going to a financial literacy program, right? For us coaching has to be the right intervention for the right person at the right time, but it's not a carte blanche solution to poverty, is our perspective.

Siwicki: Anyone want to add anything else to that before we move on?

Wollensack: Yeah. I think that is our approach, and I guess the last thing I'll add is that after the task force and the series of listening and engaging with community members, we came to the conclusion that a guaranteed income, and by that we mean sort of unconditional cash transfers to members of a particular community, was a strong solution given the way community members themselves were expressing the issues that they were facing. And lots of times when you talk about just giving unconditional cash to folks, people get really concerned, "Well, are you going to coach them on how they're going to spend the cash?" And truly, I think it's what we believe about the root of the problem. Do we believe that the root of the problem is individual deficit? Do we believe that the root of the problem is...and we should be spending the vast majority of our time and resources on, let's say, teaching people to manage less, or do we truly believe that what people have is not sustainable for themselves, their families, and their communities?

And that, if given those buffers, which, thank you to the Aspen Institute for sharing some of that data. If given some of those buffers, they now have the freedom, choice, agency, mental bandwidth to pursue some of their choices and to pursue some of their goals in the best approach, that's good for them. As Andy mentioned, folks who don't make a lot of money are some of the most financially savvy people out there. We asked folks if they were experiencing cash shortfalls, what they were doing, and people were listing all types of solutions. Unfortunately, there aren't a lot of good solutions if your expenses are higher than your income.

So, I think that when we look at these structural reasons why inequality is pervasive and why it's concentrated in communities of color, it leads us to the conclusion that shortfalls of cash isn't a deficit of character, it's simply that you do not have the income to cover what you need. And so, I think it's a question of which approach you tend...what you believe is the root cause of the issue, that leads you toward…and what community members I think in in many ways are saying versus what you believe is the root cause of the issue will lead you to what you think is the most effective and probable solution.

Melford: Julie, if I could, I'd just like to piggyback on what Andy and Hope talked about. First of all, just absolutely agree with Hope that people need to have routinely positive cash flow. And if they do not have that, then actually on our team at Aspen, we've done a big review of evidence on cash transfer programs in the U.S. and internationally and showing that unrestricted cash transfers are an enormously effective and actually efficient way to inject that money to boost household cash flows. And then actually, the broad review of evidence shows all those downstream benefits that we've posited from having a positive cash flow essentially, right? I mean, both the being able to pay your bills and be less stressed but also being able to save and make mobility and well-being investments in your family and all that stuff. And that it's way more efficient to just transfer cash than in-kind benefits, because people have a lot of variability in the specific things that they need to spend money on, and even the best informed program designer can't know everything that people need to spend money on. So just big support for what Hope said.

But the other thing I want to add, and this is actually referencing something Andy said a little bit earlier, is that during the pandemic, an incredibly important role of financial coaching has been helping people connect to benefits. I learned a lot from my colleagues at Neighborhood Trust Financial Partners in New York who spent a lot of time during the pandemic specifically trying to help people apply for and connect to enhanced safety net benefits and cash transfers during the pandemic. And what they observed is that a bunch of folks are on both the wrong side of what they call the banking divide and the wrong side of the digital divide. And not being connected to digital infrastructure and not being connected to banking infrastructure, both of those have enhanced how hard it's been for a lot of people, who really needed these benefits, to get them. So I just want to add in that that's been a really important role of financial coaching this year and being that connection to help people connect to benefits that they could get is actually huge and can help people boost their cash flow through that way.

Skricki: And Julie, I'll weigh in, too. This is a very interesting question and there's lots of history behind people's feelings about financial education versus other structural things. I mean, the obvious answer is you need all of it, so certainly you've got to attend to all of those larger structural things that are happening and opportunity and jobs and access to benefits. At the bureau, we have a...the bulk of the bureau was actually trying to make sure that financial products are fair and accessible and aren't harming people, so that's a huge part of the picture. The financial well-being piece was saying, "For where we can help people manage their money better, let's figure out ways to make it easier for them." So, it's not just about willpower but about having systems that actually make the right choices simpler and automated savings, all the things people know about.

And also, one other aspect to that is that being poor, you don't only have less money, but you often pay more for things, and that's being documented in many ways. One thing that we're working on, and particularly working on, is the issue of credit and visibility. So, about 20 percent of Americans do not have a credit score; either they have no credit history at all, or their history is old enough or new enough, in some cases, that it isn't scorable. Without a credit score, you actually can end up paying more for your utility deposit, for your cell phone deposit, for, obviously, any credit, or you might be able to get access to credit or might get higher-cost credit. And so, all of those things can add up on your balance sheet. Not only you may not be making as much money, but you may be paying more for a lot of things.

And so, we've got things that we promote like credit building loans, which was mentioned earlier in the presentation, to help people get into the mainstream credit system, improve their credit score, and then that presumably will lower costs, as well as all the things one could do around financial education and then all the benefits and other things people mentioned. And you need all of it. And I think that's the easy answer to say we need all that, but I think those are all pieces of the puzzle to this issue.

Lucas Rodriguez: If I can jump in and add something as well. I have to say, for example, one of the things that was mentioned on Gen's slide, I think it's very important because it's not only, when you look at cash flow, right? It is very important, but when you have other things that would help you with that cash flow like programs and things that would help people. Talking about Florida, for an example, let's say if you try to get a scholarship for one of your kids to go to college, right? You either try different ways, it has to be with either their grades or sports, but if you want to put your kids in good sports, it costs a lot of money, right? And if you have programs in communities that are for sports, they're not necessarily good enough or competitive enough for your kid to manage to be a star and get a scholarship for a good college, right?

So, there are many things that are together to help people to come out, right? Of this problem. And it's more than just people's...maybe they're spending too much money on buying a shirt that is brand, or maybe they're spending too much money because they buy coffee every single day. But it's much more than that. Right now here, we have a big problem with housing because there's so many people coming from the North, buying properties down here in Florida, that the prices are going up 10 percent or even more, they're coming with cash to buy the houses cash and they're paying even $100,000 more for houses. So, people that live here are unable to afford to buy a house. So, having programs in place that protect people and help them in other different areas will definitely help them to have better cash flow as well.

Siwicki: Thanks, Monica. Thanks, everyone. This was really a buzzy question, and I'm glad that we got to hear all of your thoughts here. Definitely, I'm hearing the value of having an individual one-on-one ability to connect with people and bridge them to resources. And I'm also hearing there are a lot of systems at play here. We're hearing about incomes that are too low, we're hearing about exploitation...that it costs more to be poor. We're hearing about credit scores and how those affect opportunity for folks. So I want to talk about systems, and specifically, if there any ideas that have not been put on the table yet that can help us think about how to reverse these systems at play so that there aren't so many inequities, especially by race and ethnicity, when it comes to household financial well-being.

And one thing that hasn't really come up as much yet, at least that I haven't heard, is this idea of wealth and the role that wealth plays in promoting financial security. We've talked a lot about income and it's, of course, great to have income that's higher than your expenses, so that you can start to build wealth. But at the same time, a lot of people start off with a lot of wealth and a lot of people don't. So how do we think about systems that might be able to reverse that dynamic when it comes to helping people be more financially well off? And other dynamics as well?

Posner: Well, I think I can jump in. I mean, we think a lot about systems change because our mission is to create pathways out of poverty. And we have tremendous impact with each loan, but we're not going to micro-loan our way out of poverty. And so, we've started as an organization to branch out into advocating for other policies that we would call pro-poor. I mean, for example, you can't have mass incarceration and a country that doesn't have poverty, right? Or overpolicing in Black and Brown communities. But the fact that you have stagnant wages and a lack of affordable housing and predatory lending, I mean, unfortunately, these are all working in concert. And so, if we don't start to look at these issues holistically, we can't really end the racial wealth gap and tackle persistent poverty in America. And that's not a simple and neat solution or answer, but it's—based on my decade of experience, at least—the only one.

Melford: This is...oh, please go ahead, Hope.

Wollensack: I think the way I view it is that stabilizing your income is certainly foundational to being in a position where you can even begin to think about how one would generate wealth. But also, certainly, for communities, many communities actually across all racial groups, but especially communities of color, that, as long as there is extraction and exploitation, it's going to be extremely difficult to build wealth. That even modest increases in income, personal savings, you probably will not get to the level where you're holding significant amounts of wealth. I think we look at, obviously, homeownership rates between Blacks and whites across the country, and that being a significant place where wealth is held.

But I will say that, I think, if we want to get past these and not just talk about the problem, although an authentic analysis of the problem is essential, I think we have to start talking about one, holistic solutions to… What we've been doing, maybe it is good, but also we need to consider bold new approaches and integrating bold new programmatic ideas at scale. And so, I think about what guaranteed income would look like at scale and how it would move a lot of people, not just from poverty but it would help folks who are in the middle class, across all racial groups. And also when I talk about guaranteed income, I'm talking about it as a complement, not to replace the social safety net, it's in addition to current benefits.

And I think about programs like “baby bonds” and other proposals, but Darrick Hamilton has been the champion of other proposals that really are probably targeted universalism. These are broad programs, but really would have an outsized benefit to communities of color, particularly Black communities. And I think that it's important that we probably pursue some of those programs if we want to make a dent in this. Tinkering on the margins is not going to get us there, and if it does, it's going to take hundreds of years, if not more. And so, we need to be willing to think about and try bold solutions. Now, what does the baby bonds program look like with a guaranteed-income program? Where does that start to get us and start being really ready to explore programs that are both bold but also remove the emphasis from the individual to prove their deservingness, to prove their savviness, to prove how skilled they are in order to be eligible for them?

Melford: That is beautifully said. I cannot improve in any way on what Hope said. I just wanted to give an even bigger framework for thinking about wealth and reversing trends. So, on one hand, and as Hope said, there's this question of net income and do people even have access to that? And in thinking about that question and how big a change we're going to have to make to make that available to Americans broadly, thinking about it my mind goes to the charts showing how wages have been like this [indicating flat] for 40 years, right? And especially slow-growing specifically for workers of color, right? And then the cost of living has gone like this [indicating a steep rise]. And so, this is literally why almost half of all jobs in America today don't even pay for the most basic needs, right? I mean, I'm talking shelter, food, etc.

So, just to think, we have an enormous context in which, workers—and I mean people who are in the labor force working for labor income—are not able to even meet their basic needs, let alone have the net income to invest in wealth. So that's one-half of the systems equation I just want to flag. And then the other half is, if you have net income, what is your opportunity to invest in income- or wealth-generating assets, right? So, are there safe, affordable ways for you to invest in those things? And I just want to flag the issue, for example, of student loan debt, right? So, people are trying to do the right thing, they're trying to go to college because they know that's the path forward. And just tremendous amounts of student loan debt are really impeding people from being able to build net wealth, for example.

So, there's a whole huge structural problem, I think, with workers' ability to earn that income and then a whole set of barriers to being able to access truly wealth-generating assets of various kinds. But that was even less of a proactive answer, but I do think that, as we think about systems, we have to think about both halves of that.

Siwicki: Great. Yes. Thank you. So important to keep this in mind. I want to make sure our audience questions get a chance to get thrown in the mix here. There are a lot of really good ones coming through. And I also mentally noted this to myself, just to correct something I remember saying a minute ago, which is that a lot of people start off with wealth and a lot of people don't. When really, that's not true. Most people don't start off with a lot of wealth to help buffer against these shocks and other things that come up in life. So just for the record, let me set that straight that really wealth is weighted toward a very small percentage of people.

So, let me ask this top question from the audience out here asking them. And it has to do with lending and it has to do with what our audience calls bridging loans. A lot of times you hear that people who start taking out small loans to bridge their cash flow end up in a cycle and can't get out. I guess, this is probably for Monica and Andy, have you experienced people falling into a cycle and how do you help them break out of it? Whether it's with your loans or other loans that they're taking on.

Posner: And I apologize. There's someone mowing a lawn outside, so I hope there's not too much background noise. Certainly, I mean, it's a function of being a responsible lender versus an irresponsible one. First of all, we don't do payday-type loans. Our loans are all installment, so there's no expectation of paying it off in two weeks and then having to do a rollover. Additionally, we limit the total amount of indebtedness that a borrower can have at any given time with us. And every time they reapply for a loan, we underwrite it. And we look at their total indebtedness, including nonbank loans.

Obviously, it's hard to control what people do outside of us, but in terms of the loans that we make, we build in those protections into our underwriting.

Siwicki: Great. Thanks, Andy. Anything else to add, Monica? Other panelists? Thoughts on breaking out of loan cycles?

Lucas Rodriguez: No, I was actually just going to say the same thing. It's the way we try to underwrite these loans. We just want to make sure that they don't fall into a cycle with us. It is a very important part and we always let the clients know that in case they're denied, we mention that the reason they're denied is because of that. We don't want to create a financial burden for them, it's the opposite.

Siwicki: And let me ask another question that has gotten a fair number of up votes here. It's about the credit reporting services like Credit Karma and Credit Sesame. It's possible that people are seeing their credit, I hope I'm asking this question right. Could it be possible that people who feel they're better off credit-wise because they're using these services have a false sense of financial well-being because they see maybe they have a decent credit score and maybe that doesn't capture the whole picture? Curious about your responses to that idea.

Skricki: Gen, this is the classic question we always...this is a version of a question that we often get asked about financial well-being. It's, what if people have an incorrect sense of their well-being or are overly optimistic? I mean, I'm not sure that seeing a reasonably accurate credit score makes you more or less optimistic, but, I mean, certainly the way the scale was tested, just, for example, in the context of well-being, is it's looking at your personal sense of your overall situation. It's not, how do you feel? The questions are intentionally designed to be not how do you feel this minute? Can you pay your bills right now? It's meant to get people to think more broadly.

And so the research and the way it was developed suggests that people generally have a pretty good sense of where they are and so, I think we're fairly confident that it's measuring something very clear. And Gen can chime in here and she's always more coherent on this point. But it's just interesting because I think our research on credit score issues at the bureau in the past is that, a lot of people, there are actually quite a few people who think their credit score is worse than it is, because they don't fully understand what goes into a credit score.

In groups we've heard people say that they think that every time they incur a late fee or an overdraft fee of some sort, that that affects their credit. Well, it doesn't, right? I mean, you only get reported to a credit bureau if you're more than 30 days or 60 days late, not if you're 15 days late and pay a fee. So, some people have the mistaken sense that their credit is actually quite bad, but it might not be. In some cases, it's the reverse. I mean, my sense is, personally, this is, just to be clear, that seeing your credit score would generally give you a somewhat more accurate sense of your overall standing. But again, the traditional well-being measurement is really meant to get you to think, if your sense of well-being doesn't include the need for credit in the future, maybe your credit score is not relevant to your sense of well-being. I mean, it's highly correlated, of course, but there may be cases where someone who no longer needs credit might actually have lots of savings, might be perfectly fine with a low credit score because they're doing...

So, it's going to be highly individual, though it generally follows the correlations you would think. One of the questions I'll just quickly answer that was in the set of questions in the Q&A was how financial well-being scores vary by race. And the data is in our reports, you can see it, but it's exactly what you'd think. And generally, whites have higher credit scores, African Americans racked up lower. So, it follows your traditional trends. But Gen, if you want to add anything to that, but I don't think to see your credit score alone is going to, in my opinion, would give you a false sense of where you stand financially, in most cases.

Melford: Totally. I agree with everything you said.

Siwicki: All right. There are a lot of other questions that have come in that I was hoping to get to. And I'm being told that we should probably wrap up because we don't want to go over time today. So, before we get to a couple of closing points that I would like to make sure we get to at the very end, I want to let our panelists share any last thoughts they may have to close us out. And it's okay if you don't. I know nobody's fully prepped for this, but, Gen, Irene, are there any last thoughts you'd like to leave our audience with?

Skricki: No, I just want to thank you for the opportunity to be here. It was fun. It was great to hear the other presenters and the discussion, and the questions were really cool. So, thank you very much for the opportunity to be here.

Melford: I'll plus one to that and just maybe leave us on the forward-looking design note that I, like so many, probably all of our panelists here, are really delighted that policy solutions are being designed and implemented to invest in families, right? And to invest in people and get them the resources they need to have financial stability and well-being. And what I hope and the thought I'll leave all of us leaving our wheels turning on is that the design and implementation of these exciting new opportunities matters a ton. Everything from how hard is it to find and get engaged in the system of that thing to how onerous are the requirements, and do they have things like asset limits, which will flat-out impede mobility and well-being? So just the details about the design and the implementation of all of these policies matter a lot. So that'll be my final word. Thank you so much. This has been a total pleasure.

Siwicki: Thank you. Monica, Andy, any last words?

Posner: I'll tell you that the pandemic has exposed a lot of inequities that were preexisting, and we want to make sure and encourage everyone to not turn their backs on those inequities, just because, hopefully in the next six months or so, things will start to recover. Structural racism, persistent poverty are not going to go away, so these conversations need to continue to happen and lead to policy change.

Lucas Rodriguez: Sorry, I was muted. I was just saying that I'll definitely agree to Andy in what he said and what everybody else has said. I think there's a lot of work still to be done, but it's great to see that changes are coming and hopefully they'll continue to happen, and we'll be in a better place.

Siwicki: Thanks. And we'll let you round this out, Hope.

Wollensack: Just thank you for being here. And I'm sure folks are leading work in their communities and so it is always great to be in community with folks who are maybe also considering innovative new ideas. I'm always happy to connect. The thing that I'll say is that from that task force and community survey, there is a guaranteed-income program launching in Atlanta, which is really exciting. And so, if that is of interest, please feel free to connect with me. I'm always happy to meet with other folks who are thinking about some of those solutions.

Siwicki: Well, thank you so much to all of you, our panelists. Thank you to my colleagues at the Fed: David, Nisha, Mary, and Jasmine, who have been making sure everything goes smoothly today. You've all brought us a really powerful set of insights and we place a high value on that as we start to explore this idea of household financial well-being, particularly in our southeastern communities. And I think, like I said earlier, we think this lens on community development is an important way to focus on how families experience the economy and how they interact with the larger systems that include some and essentially exclude many others. So, thank you to our audience. We want to hear from you. Do you agree on that point? We want to hear how this is resonating in your experience, in your communities, so that we can make sure that we follow this line of inquiry in a way that that brings value to your work and really builds on everything that you know.

Before we close, I do want to point everyone to a few resources and upcoming events. At the Atlanta Fed, we have quite a few initiatives going on, especially in our Community and Economic Development function. So, you can see some of them are focused on people, some of them are focused on communities. And this is just a few examples that we've listed on this last slide. And you can see all of this and more on our website, I also want to draw your attention to the Racism and the Economy series. This is a collaborative effort across all 12 Federal Reserve Banks. And the next one will happen on June 2, with a focus on entrepreneurship. All of the previous sessions are recorded and you can find them online. And those have focused on education, employment, housing, and the economics profession. I highly encourage you to take a look at those.

There's a Financial Markets Conference that the Atlanta Fed is hosting May 17 through 18. There's a little bit of information there, which you can find more information online. And finally, we're planning the next webinar in this series, our Inclusive and Resilient Recovery series, for mid-July. And that's when we'll talk more about household financial well-being and how the safety net impacts it. You may have heard of the Atlanta Fed Advancing Careers initiative, and we'll have some insights from those folks. So, I think that's it on this resource slide. And so, the last slide is just to thank you, again, for joining us. There's some ways to stay in touch here. We really hope you will stay in touch. And I think I'll leave it at that. Thank you all again. Have a great afternoon.