( COLUMBUS )—Ohio Treasurer Richard Cordray said today he will ask the legislature to approve a savings incentive program based on the “linked deposit” framework the Treasurer's office has used successfully for the past 25 years to assist agriculture and small businesses.

During a speech to the Columbus Metropolitan Club, Cordray described the program, called “Save NOW,” as a tool to educate citizens about personal finance while helping them earn above-market interest rates on savings accounts and develop the habit of saving.

“The goal of SaveNOW is to promote financial responsibility and spark lifelong savings habits. This is an investment in Ohioans and the future of Ohio ,” Cordray said.

“For the first time in history, Americans are spending more than they earn. Ohio families especially are under extreme financial pressure right now with no margin for bad judgment, economic circumstances, or downright bad luck.

“As a state, and as a society, we are well beyond the point where this is someone else's fault, or someone else's problem.

“A debt-based economy is a fragile one, which operates under a different set of rules than we were taught—if we were lucky—when growing up. A credit-centered economy is based on consumer spending. There's nothing wrong with that, if the playing field is level. Unfortunately, when the product that is being created, packaged, and sold is debt instead of widgets, the way most of us think about the world is turned upside down.

“If the CEO's on Wall Street are making mistakes, which we have heard a lot about recently, how can we expect young people, pressured families or senior citizens living on fixed incomes to stay ahead of the game? Financial education and personal responsibility are the most important place to start. More responsible corporate practices and consumer financial safety is where I hope our efforts will lead us.”

Cordray outlined the steps of his proposal as follows:

1) Under current law, the Ohio Treasury can use 12 percent of its portfolio—about $600 million—for linked deposits. About $25 million dollars would be dedicated to fund a pilot version of SaveNOW.

2) The Ohio Treasury would place a certificate of deposit with participating banks who agree to provide savers an additional three percent interest incentive.

3) A citizen would open a savings account at a participating bank.

4) The saver would agree to complete ongoing financial education and the SaveNOW account would earn above-market rates.

Cordray added:

• There would be no limits on who can participate, or when a saver could withdraw funds. All it requires is for participants to set aside a small monthly sum of money in an amount that they decide is right for them.
• There would be no minimum deposit requirements or fees for use of the account.
• Participants are limited to $5,000 in the average daily balance.
• SaveNOW accounts would be limited to one per Ohio resident but may be opened by a parent, grandparents, or guardian for a minor or dependent adult. The program would be available initially on a first-come, first-serve basis until $25 million of deposits dedicated to the pilot project are used.

For more information about the program, go to

http://www.yourmoneynowonline.org/content/view/625/518/

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