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DENVER - CoPIRG executive director Danny Katz testified in favor of SB21-148, titled Creation Of Financial Empowerment Office, sponsored by Senator Julie Gonzales and called on the Colorado Senate's Finance Committee to approve the bill.
**UPDATE - the bill passed the Senate Finance Committee. Thanks Senator Pettersen, Lee, Bridges, and Winter for voting yes.**
Statement by Danny Katz, executive director of CoPIRG
"For the past two years, I’ve been working with a number of other consumer advocates and community groups to identify ways we can expand across Colorado some of the good financial empowerment programs we see in some of our cities.
Many Coloradans are struggling to make ends meet. This was the case even before the pandemic. Based on what we found over the last two years, there are examples from cities in Colorado and across the country of financial empowerment and consumer protection strategies that can make a difference.
The most effective municipal financial empowerment strategies combine the following characteristics:
- Expanding access to banking products with lower fees and easier account access - Check cashing fees, high-cost loans, and delays in getting access to your money add up quickly. Access to safe and affordable banking has been shown to have a significant impact on financial stability and avoiding predatory traps, and is a critical first step towards building wealth. Cities have been able to expand options for their residents by working with the public and private sector to identify needs and elevate options.
- Expanding free one-on-one financial coaching centered around individual consumers - Financial coaching is a model for financial education that goes far beyond financial literacy training. Financial coaching is a free, one-on-one approach that starts with the participant’s goals. The coach then works with people for a series of sessions to help assess their situation, opportunities for change and to help them develop the skills and habits needed to reach their goals. Cities have helped develop and expand these programs, sometimes housed at a municipal office or embedded in a city-run program or by collaborating with the public or private sector.
- Strong consumer protections - At the same time that people are working to increase their financial management skills and avoid costly fees and high interest rates, they are often getting taken advantage of by unscrupulous actors. In response, many cities have programs to help consumers know their rights and create opportunities for them to share their complaints with enforcement agencies. One resource is a navigator program - a one-stop shop for residents to call in to identify problems and get connected to resources that already exist like housing or food assistance.
Each one of these strategies can be helpful but taken together, they can truly expand financial empowerment and consumer protection in a community.
Here in Colorado the national nonprofit Cities for Financial Empowerment Fund (CFE Fund) partnered with the City of Denver in 2013 to tailor these strategies to local needs. Denver is now held up as a national model for the ways they have helped residents decrease consumer debt by over $6.2 million, raise their credit scores by an average of 49 points, and increase savings by over $2.5 million. They have partnered with local banks and credit unions to help them provide low-rate credit-building consumer and small business loans, which have a nearly zero percent default rate. They have also helped 212 families buy homes and every borrower at risk of foreclosure avoid it.
These strategies are not just a model for urban communities. The Rural Local Initiatives Support Corporation (LISC) served 230 new clients by opening seven new rural Financial Opportunity Centers across the country since last spring. Clients working on improving their credit scores have already seen an average increase of 50 points.
In an effort to support what is happening well in some communities and expand what is working across the state, I’m asking that you support the creation of a state Office of Financial Empowerment (OFE) in the Attorney General’s office.
With two full time staff, I believe the OFE will be able to impact Coloradans across the state by filling some key gaps. The OFE will be able to identify safer banking products that have been developed in some parts of Colorado and help expand access to them to other parts of the state. The OFE can help develop tools that cities can use to roll out navigator programs or develop training and curriculums to make financial empowerment services more easily embedded into city programs and services. The OFE can identify additional resources to pull down for local financial empowerment programs, whether from the federal government or philanthropic entities. The OFE can also help identify trends that can be acted on by regulatory authorities.
At a time when cities have been innovating and developing good strategies to expand financial empowerment services and consumer protection programs at the local level that can help bring more financial stability to residents, it is important for the state to have the capacity to augment and leverage what’s happening so more communities can benefit from what’s working.
Please vote yes on SB21-148 and create an Office of Financial Empowerment in Colorado."
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