Shannon P. O’Brien
Focus on information
Mitt Romney may have stolen the headlines of late, but Treasurer Shannon P. O’Brien is still running hard and fierce for governor, promising last week to maintain her push for consumer financial literacy.
O’Brien spoke Wednesday before a gathering of credit union officials at the Massachusetts Credit Union League’s annual Governmental Affairs Day at the Omni Parker House in Boston.
O’Brien spoke about her experiences as the commonwealth’s banker, managing the $23 billion that flows into and out of the state treasury annually, and her determination that financial literacy must carry through to all consumers within the state.
O’Brien’s job ranges from trying to determine the value of odd items of abandoned property – including everything from a gold tooth to a stale loaf of bread – to whistle blowing on cost overruns at the Big Dig and helping to create a finance plan that will save money for all tax and toll payers throughout the state.
But of most concern to her is debt – both the vast debt incurred by the state itself and the growing personal debt of its citizens.
“When you think about the fact that Massachusetts has the third highest debt of any state in the country, you know we have a lot of work to do to ensure we’re efficiently managing that debt. I’m very proud of the fact that our debt managers have done a terrific job literally shaving $200 million in costs off of our interest and debt service,” O’Brien said.
She also referred to the difficulties she encountered when her term as treasurer began in 1999, problems that included stolen lottery funds, money missing from the treasury and a lack of written policy on internal controls. “It was really frightening,” she said. More recently, O’Brien’s office has been criticized by state Auditor Joseph DeNucci for inadequate fiscal controls in its abandoned property division.
“Managing the state’s finances has obviously been a major focus of my administration as treasurer. But also, I’ve worked hard to help people manage their finances on a day-to-day basis,” she said, while promising to continue the efforts her office has initiated in that area if she is successful in her quest to occupy the governor’s seat.
“We have had a tremendous dedication to promoting financial literacy under my administration in the Treasurer’s Office,” she said. The inspiration for that dedication came from several statistics O’Brien shared with the audience.
Not only has the personal savings rate across the country been dipping at an “alarming rate,” but in Massachusetts it is acute. In 2001, O’Brien said the savings rate was the lowest recorded since 1959. That fact, coupled with increasing debt burdens carried by Bay state households, has reached worrisome heights, she said.
“The average household credit card debt has nearly tripled from $3,000 in 1990 to $8,500 as of July 2001. Moreover, total household debt, which includes credit cards, mortgages and car loans now actually exceeds an individual family’s disposable annual income,” said O’Brien.
While these facts are startling, said O’Brien, there is a sub-current within that trend which makes the outlook for women’s financial health even more stark.
Women currently make 72 cents for every dollar a man makes. While this is an improvement, it is still unsatisfactory, O’Brien said. Women also work in jobs where they’re less likely to have pensions and tend to take time off to raise children during their most productive earning years. But the good news is, women live longer. Even that presents problems, though; they have to make their money last longer into retirement. “So the starkest statistic that I have come across is that 71 percent of the elderly persons living in poverty are women. That’s one of the reasons why I initiated a program that teaches families but focuses on the specific needs of women across the state,” she said.
The Money Conference for Women, held two weeks ago, was an overwhelming success with little advertising. That proves that women are hungry for the most basic financial information, O’Brien said.
“What we were talking about was not derivatives or any highfaluting, complicated investment ideas. It was, how do you start to put together that budget? How do you plan for one and five and 10 years?” she said.
‘More Choices’
More than 1,600 women attended the conference. O’Brien cited one success story of a woman who, because of a past conference, went from spending $200 more a month than she was earning to saving $100 a month and putting money aside for her daughter’s college education. The woman, who now has a less stressful family life, also has gained financial security.
“So I know how important the work is we’ve done in the Treasurer’s Office to bring these lessons to people. That’s one of the reasons why, if I am governor, I want to work very hard to expand financial literacy,” said O’Brien. “This is something we can give in a very small, very inexpensive way that can truly make a positive difference in the quality of life that people have living here in Massachusetts.”
O’Brien listed other initiatives of which she is proud, such as the Savings Make Cents program, which educates school children on the advantages of saving money. She also cited her work on the Board of Bank Incorporation.
O’Brien named the mergers of Citizens Bank with US Trust and Fleet with BankBoston as particularly troubling to her for their effect on consumers. The results of her efforts relating to the mergers were Fleet reducing fees that saved $5 million for citizens across the state and Citizens Bank promising to retain US Trust’s fleet of surcharge-free SUM ATMs, she said.
“I believe if they [Citizens Bank] would have pulled those US Trust machines out of the SUM network … that could well have crippled that SUM fee-free network,” she said. The other benefit is that small banks, even without the capacity to purchase many ATM units, now can compete with larger banks via the SUM network.
“I think that’s good for the whole banking and credit union industry so that people understand we do have a way to get smaller banks and smaller entities to be competitive within this system,” she said.
However, even with the concerns about maintaining healthy competition within the state, O’Brien pointed out that Massachusetts has more than 500 financial institutions, while other states may have a fewer than a dozen.
“We have choice here in Massachusetts … but consumers can’t be smart consumers unless they understand what those choices are and how to make them,” she said, touting her office’s Bestvaluebanking.com Web site. While it’s not perfect, she said, the listing of fees and costs associated with bank products throughout the state is a good start to educating the public.
If consumers can save just $10 a month via use of the Web site, that can be invested and in 20 years yield $4,000.
“That’s what we can do in government. We can work to provide information. I don’t believe we should be overly regulatory. I think we should be giving people more choices. If we had more and smarter consumers, then we’re going to have a better and more competitive banking market,” O’Brien said.
