Main Findings

"We cannot rebuild this economy on the same pile of sand. We must build our house upon a rock. We must lay a new foundation for growth and prosperity – a foundation that will move us from an era of borrow and spend to one where we save and invest."
– President Barack Obama, April 2009

Executive Summary pdf

President Obama has spoken on several occasions of the need for America to move from an era of borrow and spend to one where we save and invest. But to do that we need to understand the many factors that contribute to the financial security of U.S. households and the hard choices that individuals and families face when trying to balance short- and long-term term financial needs. Also required is a clear understanding of the ways in which public policies encourage or discourage families in their efforts to gain a more solid financial foothold in the economy. For more than three decades, CFED has worked to raise awareness about the importance of creating sensible and broadly applicable policies that help Americans build and protect assets and overcome the hurdles that keep us from building real economic security.

Now in its fourth edition, the 2009-2010 Assets & Opportunity Scorecard continues this tradition. By assessing 92 distinct performance and policy measures and five interrelated Issue Areas (Financial Assets & Income, Businesses & Jobs, Housing & Homeownership, Health Care and Education) the Scorecard offers insights that will help policymakers, practitioners, researchers and advocates build a stronger foundation for our future.

The first step toward building a new, stronger foundation is taking stock of the current state of asset ownership and financial security. The reality is sobering: The Federal Reserve reported that from 2007 to 2009, U.S. households lost $14 trillion in wealth, a sum representing nearly a quarter of all personal wealth and the largest loss of wealth in generations.1 The scope and speed of economic decline is unprecedented. But even before the overall picture deteriorated so rapidly, the extent of economic vulnerability in America was spreading ever wider.

The findings in the 2009-2010 Assets & Opportunity Scorecard give credence to the claim that in the years leading up to the financial crisis, the façade of financial prosperity was indeed built on a foundation of sand. Even as leading indicators such as net worth were still on the rise and seemingly telling a story of increasing prosperity, there was compelling evidence that Americans –especially low- and moderate-income individuals and families – were becoming
more financially overextended and vulnerable. Consider these facts:2

A closer look at the Scorecard data also reveals deep disparities and economic disadvantages faced by minority households. Minority households are more than twice as likely to be asset poor, three times as likely to have a high-cost mortgage loan and four times as likely to be unbanked. While 71.5% of white Americans own their homes, only 48% of minorities are homeowners. Roughly one in three whites has a four-year college degree, compared with a rate of only one in five for minorities.

This financial disparity between minority and white households has persisted over the years, raising serious questions about the basic fairness of an economic system that continues to produce such outcomes.

The breadth and depth of the current recession – and its impact on financial security – invite a reassessment of both the equity and productivity of our existing economic policies. Fundamentally, public policy should create and support an opportunity structure where families and communities can prosper. To do so, governments must employ the range of strategies at their disposal. They should remove counterproductive barriers to saving and building assets; they should create incentives to encourage all families to save; and they should ensure broad access to sound financial and insurance products so families can protect the assets they accumulate.

The federal government currently provides a host of incentives to encourage asset building. In Fiscal Year (FY) 2005, the federal government provided more than $360 billion in tax subsidies to incentivize asset building. However, because these incentives are delivered via tax breaks, they are unavailable to the millions of low- and moderate- income Americans who have limited or no tax liability. More than 45% of the FY 2005 benefits went to the top 1% of households, whose average income exceeded $1 million. In contrast, the lowest 60% of households by income received less than 3% of the benefits.3 Policies to create parallel opportunities for those with lower incomes have been debated, but Congress has yet to provide meaningful incentives to save and invest for all income groups.

Federal policymakers also have taken steps – though many argue too few, too late – to protect homeowners and prevent future foreclosures. In 2008, the Federal Reserve required lenders to begin verifying borrowers' income and ensuring they have the ability to repay before making a loan. Unfortunately, federal enforcement has been inconsistent. In 2006 and 2007, federal policymakers capped the interest rates payday lenders could charge military personnel, but those protections have yet to be extended to all individuals. Currently, Congress is considering important ways to expand health insurance coverage to protect families from losing their assets due to a medical emergency or illness. But as of this writing, it is uncertain which measures, if any, will be approved.

Federal policymakers also have taken steps in recent years to remove some of the barriers to creating a personal safety net for very low-income people: the 2008 Farm Bill lessened the disincentives to save by making the asset test in the federal food assistance program less harsh. Unfortunately, it did not eliminate the punitive test entirely, and other programs such as Supplemental Security Income still impose unnecessary asset caps that relegate many people with disabilities to a poverty-line existence.

At the state level, policymakers face similar issues with a broad set of policy tools available to them. They have the opportunity both to supplement federal programs and to create initiatives of their own. In recent years, state policymakers have added potency to federal policies (e.g., by enacting state Earned Income Tax Credits); exercised authority where they have discretion (by eliminating asset limits in public benefit programs); taken the lead where the federal government has failed to step up (by regulating payday lending for all individuals); and adopted innovative policies where no federal policy exists (by creating new incentives for families to save for college).

Looking across the states, we see that many have taken positive policy actions: a majority of states have taken steps to remove barriers to savings, create new incentives to build assets and protect the assets families already have. Yet most states need to take important additional actions to strengthen their policies: for only one of the 12 state policy priorities that CFED assesses in the Scorecard do a majority of states have a policy rated as "strong" or "very strong."

State Policy Priority Adoption, June 2009

1Flow of Funds Accounts of the United States: Flows and Outstandings. (2009, First Quarter, June 11). Washington, DC: Board of Governors of the Federal Reserve System. This figure also includes losses by nonprofit organizations.
2The Scorecard draws from a number of data sources, and uses the most recent data available. The outcome data in the 2009-2010 Scorecard were collected primarily from sources published between 2006 and 2008. Full citations for all source material are available at
3Woo, L. & Bucholz, D. (2007). Return on Investment? Getting More from Federal Asset-Building Policies. Washington, DC: CFED.