Cotton Questions Aging Committee Witnesses on Success of the American Savings Promotion Act
Contact: Caroline Rabbitt (202) 224-2353
Washington, D.C.- Today, during a Senate Aging Committee hearing, Senator Tom Cotton (R-Arkansas) questioned expert witnesses on the success of the American Savings Promotion Act, legislation he authored in 2014. Following his Q&A, Aging Committee Chairman Susan Collins (R-Maine) congratulated Senator Cotton on authoring legislation that's led to important savings for older Americans. Click here to watch the full video.
"I am very pleased to hear all of the conversation about the American Savings Promotion Act, which I authored along with Derek Kilmer in the House of Representatives. It corrects this very disparity between credit unions and banks so when individuals opened a savings account they could also have the possibility of winning a prize-a financial prize-as opposed to say a toaster, which is what I always remember as a teenager in Dardanelle, Arkansas being offered if I opened a savings account. Ms. Collinson, since the passage almost two years ago of the American Savings Promotion Act, what kind of progress have we seen in the financial services sector of taking advantage of the new opportunities that that bill allows?"
Background: The American Savings Promotion Act cleared the way for states to enable all interested financial institutions in their jurisdiction to offer innovative savings products known as savings promotion raffles, or prize-linked savings accounts. These types of products typically involve entry into a raffle, purchased by the deposit of a certain amount of money into a savings account. The individual retains the money accumulated in the account regardless of the outcome of the prize drawing. The accounts have been successful in attracting non-savers and encouraging personal savings. For instance, prior to this legislation, in Michigan and Nebraska, where some of these products were available through state-chartered institutions, 42,000 individuals had opened accounts and saved over $72 million.
The bill was passed through the House and Senate unanimously and was signed into law by President Obama on December 18, 2014.