Opportunities to Expand Mission Impact

1. Opportunities to Expand Mission Impact Presentation to the AHAC, Federal Home Loan Bank of Indianapolis

2. 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.

3. Policy Environment • Specific asset data for MI and IN • 110th Congress: new leadership • 110th Congress: new priorities • Opportunities for FHLBank members and partners

4. Grades by State States

5. Financial Assets Data

6. Homeownership Assets Data

7. 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

8. New Opportunities • Pension Bill • Opt-out • Saver’s Credit • Split Refunds • Public Interest Director Appointments • GSE Regulatory Reform • Savings Incentives • National Housing Trust Fund

9. 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.

10. Saver’s 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. 

11. 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 children’s 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

12. 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.

13. 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.

14. Housing Trust Fund Eligibility Requirements

15. www.cfed.org/ www.cfed.org/go/advocacy Latest on legislation, track bills, send messages Carol Wayman cwayman@cfed.org (202) 207 0125