Opportunities to Expand Mission Impact

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Opportunities to Expand Mission Impact

• Presentation to the AHAC,
• Federal Home Loan Bank
• of Indianapolis

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CFED

• CFED works to expand economic opportunity by
  helping more people save and invest, succeed as
  entrepreneurs, contribute to and benefit from the
  economy.
• CFED operates at the nexus of public policy,
  private markets, and community practice by
  identifying and researching promising ideas,
  collaborating with public and private partners to
  test those ideas, and driving the application of
  proven models.

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Policy Environment

• Specific asset data for MI and IN
• 110th Congress new leadership
• 110th Congress new priorities
• Opportunities for FHLBank members and partners

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Grades by State
                                                
                                                  
                                                  
                                                
                               States
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Financial Assets Data
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Homeownership Assets Data
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New Leadership Priorities

• Democrats Control 110th Congress
• Key Members on Critical Committees
• Julia Carson (IN), House Financial Services
• Sander Levin, David Camp, (MI) House Ways and
  Means
• Evan Bayh (IN) Senate Banking
• Debbie Stabenow (MI) Senate Finance
• Policy issues -- mission investment, GSE
  Regulatory Reform, Public/Community Interest
  Directors, Affordable housing and community
  economic development are all high priorities

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New Opportunities

• Pension Bill
• Opt-out
• Savers Credit
• Split Refunds
• Public Interest Director Appointments
• GSE Regulatory Reform
• Savings Incentives
• National Housing Trust Fund

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H.R. 4 Pension Bill Sec. 902 Opt Outs

• Removes barriers for employers to offer qualified
  automatic contribution arrangements for
  employees.
• Behavioral research has shown that requiring
  employees to opt-out -instead of opting-in
  -significantly increased low-income workers'
  participation in retirement plans.
• The bill provides the legal framework and
  guidance for an employer to automatically enroll
  employees into a retirement plan.
• The bill suggests setting the base contribution
  level at no less than 3 percent of an employee's
  salary, and to increase that contribution rate by
  1 percentage point a year until it reaches 6
  percent and no more than 10 percent.

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Savers Credit

• The Saver's Credit is made permanent and indexed
  for inflation.
• Reduces income taxes based on contributions up to
  2,000 to retirement savings of households
  earning less than 25,000 (single) 50,000
  (married) a year. 
• Income limits will rise with inflation
• Match amounts and rates vary between 10, 25 and
  50. There is no similar indexing of the credit
  amount, which will therefore lose value over
  time. 
• Unfortunately, the bill did not make the credit
  refundable, thus limiting its availability to
  only 5 million out of a possible 61 million
  households. Refundable credits enable households
  without a federal income tax income tax liability
  to be eligible for matches to their retirement
  account. 

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Split Refunds

• Beginning in 2007 for tax year 2006, taxpayers
  will have the option of having their tax refunds
  direct deposited in up to three accounts,
  including an Individual Retirement Account (IRA),
  a savings and/or a checking account, or
  childrens education account.
• IRS Form 8888
• The split tax refund presents working poor
  families with an opportunity to use their savings
  toward an asset building purchase that would
  improve their economic security. Many working
  poor families receive significant tax refunds,
  including the federal Earned Income Tax Credit
  (EITC) which in 2006, was worth up to 4,400.
• Telephone Excise Tax Refund (1040EZT). Taxpayers
  are eligible to file for refunds of all excise
  tax they have paid on long-distance service
  billed to them after February 28, 2003 and before
  August 1, 2006.
• Tax filers can claim this refund on their 2006
  tax returns and the IRS is preparing to announce
  a simplified method that individuals can use.
• Expected refund is 30-60

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Proposed Asset Policy Savings for Working
Families

• Federal tax credit to financial institutions that
  match the savings of 900,000 adults between ages
  18-60.
• Federal adjusted gross income does not exceed
  20,000 (single), 30,000 (head of household), or
  40,000 (married).
• accounts restricted to three uses that help
  low-income families build appreciating assets
  (1) buying a first home (2) receiving
  post-secondary education or (3) starting or
  expanding a small business.
• Financial institutions would be reimbursed for
  the matching funds they provide, plus a limited
  amount of the program and administrative costs
  incurred, specifically
• The aggregate amount of dollar-for-dollar match
  funding provided (up to 500 per person per year
  for four years), plus
• an annual 50 per account credit to maintain the
  account and provide financial education.

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The National Housing Trust Fund Legislation

• Produce, rehabilitate, preserve 1.5 million
  units of housing over next 10 years.
• Funded by 5 of after-tax profits from Fannie Mae
  and Freddie Mac -- 500 million
• Funds can be used for both grants and loans
  Co-ops are eligible uses as long as income
  requirements are met.
• Fund provides extremely low and very low-income,
  first-time home buyers with closing cost
  assistance, downpayment assistance, and interest
  rate buy-downs.
• The initial purchase price of the first home
  cannot exceed 95 percent of the median purchase
  price for the area and is subject to resale
  restrictions that are established by the
  participating grantee.
• Grants are competitive and will be distributed
  yearly 60 of Trust Fund assistance will be
  allocated to localities and 40 of Trust Fund
  assistance will be allocated to states At least
  half of the state allocation must be used in
  rural areas.

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Housing Trust Fund Eligibility Requirements
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www.cfed.org/

• www.cfed.org/go/advocacy
• Latest on legislation, track bills, send messages
• Carol Wayman
• cwayman_at_cfed.org
• [phone]