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NEW YORK, American Express today announced the launch of its American Express Token Service, a suite of solutions designed to enable its card-issuing partners, processors, acquirers and merchants to create a safer online and mobile payments environment for consumers.

With American Express Token Service, traditional card account numbers are replaced with unique “tokens,” which can then be used to complete payment transactions online, in a mobile app or in-store with a mobile Near Field Communication (NFC)-enabled device. By using tokens, merchants and digital wallet operators will no longer need to store consumers’ sensitive payment account information in their systems. In addition, tokens can be assigned for use with a specific merchant, transaction type or payment device to provide further protection against fraud.

Based on EMVCo’s Payment Tokenization Specification and Technical Framework published earlier this year, American Express Token Service offers the following features:

a token vault to store and map tokens to card account numbers,
the ability to issue tokens,
lifecycle management services to create, suspend, resume or delete tokens and
additional fraud and risk management services, such as authorization and payment data validation capabilities, for card-issuing financial institutions.
American Express Token Service is available in the U.S., and international rollout is expected to begin in 2015.

“We believe our payments network is a tremendous asset to American Express – one that will allow us to offer our customers new features and technologies to meet their evolving spending needs,” said Paul Fabara, President, Global Banking and Global Network Business, American Express. “As we move ahead, we are excited to bring these new capabilities to our customers and look forward to continuing to serve them.”

American Express also announced that it has developed network specifications for Host Card Emulation (HCE). American Express’ HCE specifications provide its card-issuing partners with additional security options and solutions for payments made with mobile NFC-enabled devices that support Android OS KitKat. With HCE, card issuers use a secure cloud server to store their customers’ card account details, which can be transmitted from the cloud server to an NFC-enabled mobile device and then to a Point-of-Sale terminal in a fast, secure manner. American Express’ HCE specifications are available today globally.

Briefing for press at CARTES SECURE CONNEXIONS
American Express will be present at CARTES SECURE CONNEXIONS in Paris from 4th-6th November, when two executives will be participating in conference sessions.

JJ Kieley, Vice President, Head of Network Commercialization, Global Network Business, American Express, will present “The Future of Connected Commerce” and discuss recent industry developments in contactless and mobile payments. JJ will speak on Tuesday, 4th November at 9:40-10:10 am in Conference Room 1 during the conference track, “mPOS & iBeacons: Always more Innovation for Connected Commerce.”

Karen Czack, Vice President, Global Chip Products, Global Network Business, American Express, will join a panel on the “U.S. EMV Migration” and discuss the current progress and ongoing migration considerations. Karen will speak on Wednesday, 5th November at 11:00-12:30 pm in Conference Room 3 during the conference track, “EMV: Challenges & Benefits.”

About American Express
American Express is a global services company, providing customers with access to products, insights and experiences that enrich lives and build business success. The American Express Global Network Business brings together a diverse community of financial institutions, merchants, business partners and technology providers to build valued customer relationships and business success. Through its global payments network, American Express provides safe, reliable and convenient ways for consumers and businesses to make payments and process transactions online and at millions of merchant locations around the world. The American Express network is also delivering innovative products and capabilities in the online and mobile commerce space, enabling a wide range of payment capabilities and solutions, including chip-enabled and contactless products.

NEW YORK– American International Group, Inc. (AIG) today announced that it has expanded excess casualty liability limits for Class 1 railroads in the U.S. and Canada to $1 billion per occurrence. This coverage for catastrophe losses would be in excess of $1.5 billion in underlying limits, and is one of the largest capacities offered to the rail industry by a single insurer.

AIG is responding to the demands of North America’s largest rail companies contending with record rail traffic and the growing number of rail cars carrying potentially hazardous materials, such as crude oil. The Association of American Railroads has reported U.S. rail demand is at a 7-year high. The Association also reported U.S. Class 1 railroads (including the U.S. Class 1 subsidiaries of Canadian railroads) transported more than 407,000 carloads of crude oil in 2013, up from 9,500 carloads in 2008, an increase of nearly 4,300%.

“These expanded limits are another way AIG’s scale and innovation is meeting the needs of our critical infrastructure clients and the customers they serve,” said Russ Johnston, President, Casualty Americas. “The Class 1 railroads are seeing strong growth and a resulting increase in risks they need to cover. AIG is one of the few carriers that can provide customers the large limits and risk expertise to meet this need.”

Derailments are the most common type of accident risk faced by Class 1 railroads in the U.S. and Canada, and they can be caused by a wide range of factors.

“Rail companies need additional coverage to help protect their balance sheets,” said Jeremy Johnson, President & Chief Executive Officer, Lexington Insurance Company. “This billion dollar coverage will help Class 1 railroads address expanding risks while continuing to serve the growing needs of transportation customers in North America.”

The excess coverage is provided by Lexington Insurance Company and other affiliated AIG Companies. Lexington is the largest domestic excess and surplus lines carrier in the U.S.

American International Group, Inc. (AIG) is a leading international insurance organization serving customers in more than 130 countries and jurisdictions. AIG companies serve commercial, institutional, and individual customers through one of the most extensive worldwide property-casualty networks of any insurer. In addition, AIG companies are leading providers of life insurance and retirement services in the United States. AIG common stock is listed on the New York Stock Exchange and the Tokyo Stock Exchange.

Additional information about AIG can be found at www.aig.com | YouTube: www.youtube.com/aig |Twitter: @AIGInsurance | LinkedIn: http://www.linkedin.com/company/aig |

AIG is the marketing name for the worldwide property-casualty, life and retirement, and general insurance operations of American International Group, Inc. For additional information, please visit our website at www.aig.com. All products and services are written or provided by subsidiaries or affiliates of American International Group, Inc. Products or services may not be available in all countries, and coverage is subject to actual policy language. Non-insurance products and services may be provided by independent third parties. Certain property-casualty coverages may be provided by a surplus lines insurer. Surplus lines insurers do not generally participate in state guaranty funds, and insureds are therefore not protected by such funds.

SAN FRANCISCO, For the sixth straight year, Wells Fargo & Company (NYSE: WFC) is America’s top SBA lender in dollar volume, approving a record $1.6 billion in SBA 7(a) loans for small businesses in federal fiscal year 2014 (Oct. 1, 2013 – Sept. 30, 2014). The company increased its dollar volume of SBA 7(a) loans by 10 percent from a year ago. An SBA preferred lender in all 50 states, Wells Fargo also is the second largest SBA lender by units, extending 4,036 SBA 7(a) loans in federal fiscal year 2014, a 16 percent increase in units from the prior year.

“At Wells Fargo, we work hard to help America’s small business owners, and we are incredibly proud to earn their business and increase our lending to businesses across the country each of the last six years,” said Donna Serres, new head of Wells Fargo’s SBA Lending Division. “Through the SBA loan program, we know the financing that we provide helps drive economic growth at a very local level, and helps communities we serve succeed financially by providing local businesses access to the capital they need to thrive and grow.”

During the six-year period Wells Fargo has been the No. 1 SBA lender, the company has increased its SBA 7(a) lending 72 percent in units and 96 percent in loan dollars from federal fiscal year 2009 to 2014.

“Our growth in SBA lending during the last few years underscores the importance of SBA loan programs for thousands of creditworthy small businesses,” said Serres. “SBA loans provide options for creditworthy entrepreneurs and small business owners who may not be able to obtain a conventional loan that meets their business needs.”

Among the customers who worked with Wells Fargo to expand a business with an SBA loan this year is business owner, Larry Chavez. His Albuquerque-based business, Dreamstyle Remodeling, is a leading home improvement and remodeling company in the Southwest. Over the past seven years, the company has gone from 40 employees to 240.

“To grow and strengthen our business for the future, it was important for us to find the right financing,” said Chavez. “Working with Wells Fargo, we secured an SBA loan that gave us the opportunity to expand into new markets, and introduce innovative ideas and products.”

Wells Fargo is the No. 1 SBA 7(a) lender in dollars in 10 states: Arizona, California, Colorado, Minnesota, North Dakota, Nevada, New Mexico, Oregon, South Carolina and Texas – and the No.1 SBA 7(a) lender in number of loans (units) in 8 states: Alaska, Arizona, California, Georgia, North Carolina, New Mexico, South Carolina and Virginia.

In addition to being the No. 1 SBA lender in dollars, for the 12th consecutive year Wells Fargo continues to be the nation’s No. 1 small business lender for loans under $100,000 and loans under $1 million categories, according to the most recent Community Reinvestment Act (CRA) data (2002-2013).

About Wells Fargo
Wells Fargo & Company (NYSE: WFC) is a nationwide, diversified, community-based financial services company with $1.6 trillion in assets. Founded in 1852 and headquartered in San Francisco, Wells Fargo provides banking, insurance, investments, mortgage, and consumer and commercial finance through more than 8,700 locations, 12,500 ATMs, and the internet (wellsfargo.com), and has offices in 36 countries to support customers who conduct business in the global economy. With approximately 265,000 team members, Wells Fargo serves one in three households in the United States. Wells Fargo & Company was ranked No. 29 on Fortune’s 2014 rankings of America’s largest corporations. Wells Fargo’s vision is to satisfy all our customers’ financial needs and help them succeed financially. Wells Fargo perspectives are also available at Wells Fargo Blogs and Wells Fargo Stories.

Wells Fargo serves approximately 3 million small business owners across the United States and loans more money to America’s small businesses than any other bank (2002-2013 CRA government data). To help more small businesses achieve financial success, in 2014 Wells Fargo introduced Wells Fargo Works for Small BusinessSM – a broad initiative to deliver resources, guidance and services for business owners. For more information about Wells Fargo Works for Small Business, visit: WellsFargoWorks.com.

The Financial Stability Board (FSB) has today issued for public consultation policy proposals consisting of a set of principles and a detailed term sheet on the adequacy of loss-absorbing and recapitalisation capacity of global systemically important banks (G-SIBs).

The proposals respond to the call by G20 Leaders at the 2013 St. Petersburg Summit to develop proposals by end-2014. They were developed by the FSB in consultation with the Basel Committee on Banking Supervision (BCBS) and will, once finalised, form a new minimum standard for “total loss-absorbing capacity” (TLAC). The new TLAC standard should provide home and host authorities with confidence that G-SIBs have sufficient capacity to absorb losses, both before and during resolution, and enable resolution authorities to implement a resolution strategy that minimises any impact on financial stability and ensures the continuity of critical economic functions.

By strengthening the credibility of authorities’ commitments to resolve G-SIBs without exposing taxpayers to loss, TLAC in conjunction with other measures should act to remove the implicit public subsidy from which G-SIBs currently benefit when they issue debt and incentivise creditors to better monitor G-SIBs’ risk-taking. It should also help achieve a level playing field internationally, reducing G-SIBs’ funding cost advantage and ensuring they compete on a more equal footing within their home and foreign markets.

TLAC adequacy will need to take account of individual G-SIBs’ recovery and resolution plans, their systemic footprints, business models, risk profiles and organisational structures. The principles and term sheet therefore provide guidance for home and host authorities on how to determine a firm-specific Pillar 2 TLAC requirement in addition to the common Pillar 1 TLAC minimum. The calibration and composition of firm-specific TLAC requirements should be determined in consultation with Crisis Management Groups and subject to review in the FSB’s Resolvability Assessment Process (RAP).

In early 2015, the FSB will, with the participation of the BCBS and the Bank for International Settlements (BIS), undertake comprehensive impact assessment studies to inform the calibration of the Pillar 1 element of the TLAC requirement for all G-SIBs. The TLAC proposals will be finalised by the time of the next G20 Leaders’ Summit in 2015 taking account of the results of this consultation and of the impact assessments.

Mark Carney, Chair of the FSB, said: “Agreement on proposals for a common international standard on total loss-absorbing capacity for G-SIBs is a watershed in ending “too big to fail” for banks. Once implemented, these agreements will play important roles in enabling globally systemic banks to be resolved without recourse to public subsidy and without disruption to the wider financial system.”

At the Seoul Summit in 2010, the G20 Leaders endorsed the FSB policy framework for reducing the moral hazard of SIFIs which set out the FSB’s agenda for addressing the risks arising from global systemically-important financial institutions (G-SIFIs). It consisted of requirements for assessing the systemic importance of institutions, for additional going-concern loss absorbency, for increased supervisory intensity, for more effective resolution and for stronger financial market infrastructure.

The FSB’s report to the G20 on Progress and Next Steps Towards “Ending Too Big To Fail” of September 2013 set out the further actions required from the G20, the FSB and other international bodies to complete the policy initiative to end “too-big-to-fail”. It identified the need to develop a proposal on the adequacy of loss-absorbing capacity in resolution as one of the important outstanding issues to be addressed in the initiative.

The FSB was established to coordinate at the international level the work of national financial authorities and international standard setting bodies and to develop and promote the implementation of effective regulatory, supervisory and other financial sector policies in the interest of financial stability. It brings together national authorities responsible for financial stability in 24 countries and jurisdictions, international financial institutions, sector-specific international groupings of regulators and supervisors, and committees of central bank experts. The FSB also conducts outreach with 65 other jurisdictions through its six regional consultative groups.

The FSB is chaired by Mark Carney, Governor of the Bank of England. Its Secretariat is located in Basel, Switzerland, and hosted by the Bank for International Settlements.

Bank of America Merrill Lynch, a leader in card services for middle-market, large corporate and public sector clients, today announced that it has enhanced its global card capabilities with new products, services and geographies. The expanded capabilities are the latest developments of a multi-year investment strategy, and reflect the continuing importance of card products to creating optimal working capital solutions for corporations and public entities.

“Everything we’ve done over the last year to enhance our global card programs has been in direct response to client demand,” said Kevin Phalen, head of Global Card and Comprehensive Payables in Global Transaction Services (GTS). “The feedback we receive from clients at our proprietary conferences and day-to-day interactions is critical to designing our investment plans and determining how and where to expand our geographic footprint. We look forward to growing our business with new and existing clients in 2015 and beyond.”

Some of the significant enhancements introduced over the last year include:

Expanded the country footprint: The global reach of our card programs was extended to Guatemala and Turkey.
Enhanced delivery capabilities: We now provide real-time account management and integrated global data consolidation in Hong Kong and India.
Investments in servicing: For our clients’ corporate travelers, we continue to invest in our phone and mobile based solution set. The enhanced functionality allows users to access data and live support via their preferred channel anywhere around the globe, 24×7.
B2B card solutions: We expanded our B2B payment solution utilizing virtual card accounts cards into the Asia Pacific region. Today, clients can enjoy the working capital benefits of the solution in 27 countries across Asia Pacific, EMEA, Latin America and North America.
Chip and PIN: In April, the company announced the expansion of chip and PIN technology to all Purchasing and Travel credit card products available to clients in the United States. The bank has been a leader in chip and PIN technology, having been the first issuer to offer the enhanced security to U.S. travelers, enabling them to make successful transactions at overseas merchants and un-manned terminals.
Mobile solutions: We launched a mobile application of Global Reporting and Account Management, the expense reporting solution for card programs. Executives who are on the go can now leverage the tool’s capabilities to help control spending, optimize profits and facilitate compliance with their own travel policies.
“Improved transparency and tighter control over expenses continue to be hot topics for organizations of all sizes in every region around the world,” said Percy Batliwalla, head of Sales for GTS. “As card programs grow in efficacy and sophistication, they are becoming an increasingly powerful tool for treasury departments – providing them the granular information they need to better manage and forecast their finances.”

Visit the Bank of America Merrill Lynch website for further information about the bank’s Card and Comprehensive Payables Solutions.

Bank of America
Bank of America is one of the world’s largest financial institutions, serving individual consumers, small businesses, middle-market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk management products and services. The company provides unmatched convenience in the United States, serving approximately 48 million consumer and small business relationships with approximately 4,900 retail banking offices and approximately 15,700 ATMs and award-winning online banking with 31 million active users and more than 16 million mobile users. Bank of America is among the world’s leading wealth management companies and is a global leader in corporate and investment banking and trading across a broad range of asset classes, serving corporations, governments, institutions and individuals around the world. Bank of America offers industry-leading support to approximately 3 million small business owners through a suite of innovative, easy-to-use online products and services. The company serves clients through operations in more than 40 countries. Bank of America Corporation stock (NYSE: BAC) is listed on the New York Stock Exchange.

“Bank of America Merrill Lynch” is the marketing name for the global banking and global markets businesses of Bank of America Corporation. Lending, derivatives, and other commercial banking activities are performed globally by banking affiliates of Bank of America Corporation, including Bank of America, N.A., member FDIC. Securities, strategic advisory, and other investment banking activities are performed globally by investment banking affiliates of Bank of America Corporation (“Investment Banking Affiliates”), including, in the United States, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Merrill Lynch Professional Clearing Corp., both of which are registered broker-dealers and members of SIPC, and, in other jurisdictions, by locally registered entities. Merrill Lynch, Pierce, Fenner & Smith Incorporated and Merrill Lynch Professional Clearing Corp. are registered as futures commission merchants with the CFTC and are members of the NFA. Investment products offered by Investment Banking Affiliates: Are Not FDIC Insured • May Lose Value • Are Not Bank Guaranteed.

Information received since the Federal Open Market Committee met in September suggests that economic activity is expanding at a moderate pace. Labor market conditions improved somewhat further, with solid job gains and a lower unemployment rate. On balance, a range of labor market indicators suggests that underutilization of labor resources is gradually diminishing. Household spending is rising moderately and business fixed investment is advancing, while the recovery in the housing sector remains slow. Inflation has continued to run below the Committee’s longer-run objective. Market-based measures of inflation compensation have declined somewhat; survey-based measures of longer-term inflation expectations have remained stable.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with appropriate policy accommodation, economic activity will expand at a moderate pace, with labor market indicators and inflation moving toward levels the Committee judges consistent with its dual mandate. The Committee sees the risks to the outlook for economic activity and the labor market as nearly balanced. Although inflation in the near term will likely be held down by lower energy prices and other factors, the Committee judges that the likelihood of inflation running persistently below 2 percent has diminished somewhat since early this year.

The Committee judges that there has been a substantial improvement in the outlook for the labor market since the inception of its current asset purchase program. Moreover, the Committee continues to see sufficient underlying strength in the broader economy to support ongoing progress toward maximum employment in a context of price stability. Accordingly, the Committee decided to conclude its asset purchase program this month. The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. This policy, by keeping the Committee’s holdings of longer-term securities at sizable levels, should help maintain accommodative financial conditions.

To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that the current 0 to 1/4 percent target range for the federal funds rate remains appropriate. In determining how long to maintain this target range, the Committee will assess progress–both realized and expected–toward its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments. The Committee anticipates, based on its current assessment, that it likely will be appropriate to maintain the 0 to 1/4 percent target range for the federal funds rate for a considerable time following the end of its asset purchase program this month, especially if projected inflation continues to run below the Committee’s 2 percent longer-run goal, and provided that longer-term inflation expectations remain well anchored. However, if incoming information indicates faster progress toward the Committee’s employment and inflation objectives than the Committee now expects, then increases in the target range for the federal funds rate are likely to occur sooner than currently anticipated. Conversely, if progress proves slower than expected, then increases in the target range are likely to occur later than currently anticipated.

When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent. The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run.

Voting for the FOMC monetary policy action were: Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Lael Brainard; Stanley Fischer; Richard W. Fisher; Loretta J. Mester; Charles I. Plosser; Jerome H. Powell; and Daniel K. Tarullo. Voting against the action was Narayana Kocherlakota, who believed that, in light of continued sluggishness in the inflation outlook and the recent slide in market-based measures of longer-term inflation expectations, the Committee should commit to keeping the current target range for the federal funds rate at least until the one-to-two-year ahead inflation outlook has returned to 2 percent and should continue the asset purchase program at its current level.

Statement Regarding Purchases of Treasury Securities and Agency Mortgage-Backed Securities Leaving the Board

Saving for retirement and health care expenses was a priority for employees of all ages during the first half of 2014, according to the latest Bank of America Merrill Lynch 401(k) Wellness Scorecard. This semiannual report reveals trends in the behaviors of financial benefit plan participants, along with employers’ adoption of 401(k) design features in plans serviced by Bank of America Merrill Lynch.1 Key insights from the new report include:

Health savings account (HSA) usage grew 33 percent during the first six months of the year, with more than 384,000 workers now utilizing these tax-advantaged vehicles to prepare for qualified near- and long-term medical expenses. While Baby Boomers (38 percent) and Gen Xers (39 percent) make up the majority of account holders, Millennials (23 percent) are also using HSAs early in their careers.
Millennials are also taking positive retirement savings actions. Nearly 40,000 of these younger workers enrolled in their employer’s 401(k) plan for the first time during the first half of the year – a 55 percent increase from the same six-month period last year. Across all generations, the report found a 37 percent increase among first-time contributors.
“Seeing younger generations more vigorously engaged with workplace savings vehicles is encouraging,” said David Tyrie, head of retirement and personal wealth solutions for Bank of America Merrill Lynch. “These actions represent significant steps toward achieving long-term financial wellness in an era of rising health care costs, increasing longevity and self reliance due to fewer pension plans.”

Trends in employee behaviors revealed through this report are consistent with insights garnered from Merrill Lynch and Age Wave’s ongoing series of retirement studies. In particular, our recent health study found that health care expenses are people’s top financial concern for later life, which makes planning for them an essential part of holistic retirement preparation.2 In addition, our recent work study found that Millennials expect to rely primarily on personal savings and income to fund their retirement.3

Mobile participation on the rise
Employee engagement with Bank of America Merrill Lynch’s Benefits OnLine® Mobile optimized site increased 41 percent – with approximately 170,500 unique users accessing their benefits via mobile device during the first half of the year, up from 120,500 during the same period last year. This further demonstrates that participants want to receive education and information about their benefit plans, along with tools to better manage their finances, in a manner that reflects their on-the-go lives.

Plan sponsors often find mobile access to plan information to be the ideal way to reach Millennials, as well as hard-to-engage employees such as those in industries with limited access to desktop computers. Bank of America Merrill Lynch has introduced ongoing enhancements to its mobile benefits platform since 2012, providing employees access to detailed information in their 401(k), equity, defined benefit and non-qualified deferred compensation plans through a unified mobile experience.

Employers make saving easier, automatic
Employers continue to seek proactive ways to help their employees achieve their retirement goals and improve their overall financial wellness. Results from the report show that:

During the 12-month period ending June 30, 2014, the number of 401(k) plans combining auto enrollment and auto increase grew 19 percent compared to one year early, with 213 plans now using these features in tandem.
Nearly all employers (94 percent) that added auto enrollment during the first half of this year also added auto increase, compared to 50 percent during the same period last year.
Overall, more plan sponsors are adding voluntary auto increase to their plans, with a 63 percent increase in adoption of this feature during the last 12 months. And employees are responding, as evidenced by a 27 percent increase in the number of participants using auto increase.
Advice Access4 is a professional saving and investment advice service – offered online, via phone and in person – tailored to an employee’s life stage and individual situation. Employer adoption of this service as a resource for their workforce increased 6 percent year-over-year (June 30, 2013 to June 30, 2014). Similarly, plan participant usage of the service increased 8 percent during this period, to nearly 210,000 users – 34 percent of whom are Millennials, 26 percent are Baby Boomers.
“With intuitive plan design strategies, companies are making access to financial benefit plans and decision-making about enrollment and contribution rates easier, and helping employees achieve better outcomes through personalized education and advice,” said Steve Ulian, head of institutional business development for Bank of America Merrill Lynch. “By further integrating how employees save for retirement and long-term health care costs, employers can help people see a more complete picture of their financial wellness and make informed choices.”

Bank of America
Bank of America is one of the world’s largest financial institutions, serving individual consumers, small businesses, middle-market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk management products and services. The company provides unmatched convenience in the United States, serving approximately 48 million consumer and small business relationships with approximately 4,900 retail banking offices and approximately 15,700 ATMs and award-winning online banking with 31 million active users and more than 16 million mobile users. Bank of America is among the world’s leading wealth management companies and is a global leader in corporate and investment banking and trading across a broad range of asset classes, serving corporations, governments, institutions and individuals around the world. Bank of America offers industry-leading support to approximately 3 million small business owners through a suite of innovative, easy-to-use online products and services. The company serves clients through operations in more than 40 countries. Bank of America Corporation stock (NYSE: BAC) is listed on the New York Stock Exchange.

Bank of America Merrill Lynch is a marketing name for the Retirement Services business of Bank of America Corporation. Banking activities may be performed by wholly owned banking affiliates of BAC, including Bank of America, N.A., member FDIC. Brokerage services may be performed by wholly owned brokerage affiliates of BAC, including Merrill Lynch, Pierce, Fenner & Smith Incorporated (“MLPF&S”), a registered broker-dealer and member SIPC.

WASHINGTON – In order to help retirees manage their savings and ensure they have a stream of regular income throughout retirement, the U.S. Department of the Treasury and the Internal Revenue Service issued guidance today designed to expand the use of income annuities in 401(k) plans. The guidance (Notice 2014-66) makes clear that plan sponsors can include deferred income annuities in target date funds used as a default investment, in a manner that complies with plan qualification rules. This option is voluntary for plan sponsors and participants.

“As boomers approach retirement and life expectancies increase, income annuities can be an important planning tool for a secure retirement,” said J. Mark Iwry, Senior Advisor to the Secretary of the Treasury and Deputy Assistant Secretary for Retirement and Health Policy. “Treasury is working to expand the availability of retirement income options for working families. By encouraging the use of income annuities, today’s guidance can help retirees protect themselves from outliving their savings.”

Many employer-sponsored 401(k) plans offer so-called target date funds as a default investment for participants who do not affirmatively elect a different investment. Target date funds get their name from the fact that their allocation of investments shifts gradually from equities to fixed income as participants approach an intended target retirement year.

A deferred income annuity provides an income stream that generally continues throughout an individual’s life but is not intended to begin until some time after it is purchased. This can provide a cost-effective solution for retirees willing to use part of their savings to protect against outliving the rest of their assets, and can also help them avoid overcompensating by unnecessarily limiting their spending in retirement.

Today’s guidance provides plan sponsors an additional option to make it easier for employees to consider using lifetime income. Instead of having to devote all of their account balance to annuities, employees use a portion of their savings to purchase guaranteed income for life while retaining other savings in other investments.

Under today’s guidance, a target date fund may include annuities allowing payments, beginning either immediately after retirement or at a later time, as part of its fixed income investments, even if the funds containing the annuities are limited to employees over a specified age. The guidance makes clear that plans have the option to offer target date funds that include such annuity contracts either as a default or as a regular investment alternative.

In an accompanying letter, the Department of Labor today confirmed that target date funds serving as default investment alternatives may include annuities among their fixed income investments. The letter also describes how ERISA fiduciary standards can be satisfied when a plan sponsor appoints an investment manager that selects the annuity contracts and annuity provider to pay the lifetime income.

In July, the Treasury Department and IRS issued final rules on the use of longevity annuities – a type of deferred income annuity that begins at an advanced age – in 401(k) plans and IRAs as part of a broader coordinated effort with the Department of Labor to encourage lifetime income and enhance retirement security. Today’s guidance is another step reflecting the continuing commitment of the Administration to work in a variety of ways to further bolster retirement security and saving.

The Lloyds Bank Spending Power Report for September finds that consumer confidence has dropped for the second time this year, falling six points to 146. September also saw a 15 point fall in sentiment towards the UK’s economic situation from last month, to 275 points reflecting a level of uncertainty leading up to the Scottish Referendum. The current situation also saw a dip in confidence, dropping 13 points to 176.

For the third month in a row, continued falls in spending left overall essential spend around 0.5% lower than this time last year. Among categories of essential spending, there has been no growth on food and drink spend in the last three months. This could be attributed to supermarket price wars, which are having an impact on the frontline for consumers.

The fall in spending on fuel continues to accelerate, with average spending around 6% lower than this time last year, keeping a lid on the rise in the cost of living. The growth rate on gas and electicity is also slowing, with customer spend around 5% lower than this time last year.

Patrick Foley, Chief Economist at Lloyds Bank, said: “While confidence has moderated a little this month, consumer sentiment remains positive overall, reflecting the signs of continued economic recovery. Though wage growth remains only muted, with essential expenditure placing less demand on household finances, consumers are finding more scope for discretionary spending.”

Consumer sentiment towards the country’s financial situation remains stable from Augustwith the balance of opinion up 32 percentage points from this time last year, although the net sentiment balance remains negative at -27%. Despite continuing to be the most positive region, opinion has declined across Greater London from a balance of 5% to -12%, reducing the gap over the regions. Similarly, a drop in sentiment across Northen Ireland (-26% to -45%) this month brings it amongst the least positive regions, alongside Wales (-44%).

Feelings towards the housing market have remained broadly stable since June with a balance of -12%, reflecting a levelling off of price rises seen during the summer. This continues to see a positive improvement of six percentage points compared to this time last year. As a presumed result of uncertainty ahead of the referendum, September also saw a notable decline in opinion across Scotland (-26% from -14% in August). This brings Scotland amongst the least positive regions in September, along with the North East (-23%).

Attitude towards the current employment situation saw an eight point decline in September to -26%, after a fairly strong increase in August. This could be due to wage growth remaining low, with employment growth slowing following strong rates seen in the first half of the year. This decline has lead to a fall in both the current and economic indices with a 13 and 15 point drop respectively. However, this is still a 31 percentage point improvement in opinion compared to this time last year.

Consumers’ sentiment about their own personal financial situation remains a positive balance from last month at 18%. Opinion across Greater London saw a decline of 22 percentage points this month, taking the balance of opinion to -14%. This, together with an increase of 21 percentage points across the West Midlands, sees the West Midlands being the most positive region for September (28%).

Greg Coughlan, Director of Personal Current Accounts at Lloyds Bank said: “Despite the decline in sentiment we have seen this month, this is only the second dip of 2014. Overall we have instead noticed a continued improvement in consumer confidence throughout the course of the year, especially as consumers report stability in their own finances. The decline in spending over the last few months also shows that people are becoming more savvy with their money.”

The balance of opinion on future discretionary income between those feeling they will have more versus less money in the next six months remains at 5% for the third consecutive month. Wales saw a 26 percentage point increase in September to 14%, making it the the most negative region in August to the most positive in September, alongside Greater London at 12%. Those in the North East continue for the second consecutive month to be the most negative at -7%.

Sentiment towards future saving remains stable with a balance of 12%. All regions hold a positive balance for September, with Wales being the most positive region after a 16 percentage point increase to 22%,. A drop of nine percentage points across Yorkshire and Humberside made it the most negative region at 2%.

Meanwhile, the balance of opinion on future spending remains negative at -3% this month from -1%. A 17 percentage point drop across Greater London saw the region hold a -4% balance. Scotland is the most negative region with a balance of -9%, a six percentage point decline from August.

The distribution of income and wealth in the United States has been widening more or less steadily for several decades, to a greater extent than in most advanced countries.1 This trend paused during the Great Recession because of larger wealth losses for those at the top of the distribution and because increased safety-net spending helped offset some income losses for those below the top. But widening inequality resumed in the recovery, as the stock market rebounded, wage growth and the healing of the labor market have been slow, and the increase in home prices has not fully restored the housing wealth lost by the large majority of households for which it is their primary asset.

The extent of and continuing increase in inequality in the United States greatly concern me. The past several decades have seen the most sustained rise in inequality since the 19th century after more than 40 years of narrowing inequality following the Great Depression. By some estimates, income and wealth inequality are near their highest levels in the past hundred years, much higher than the average during that time span and probably higher than for much of American history before then.2 It is no secret that the past few decades of widening inequality can be summed up as significant income and wealth gains for those at the very top and stagnant living standards for the majority. I think it is appropriate to ask whether this trend is compatible with values rooted in our nation’s history, among them the high value Americans have traditionally placed on equality of opportunity.

Some degree of inequality in income and wealth, of course, would occur even with completely equal opportunity because variations in effort, skill, and luck will produce variations in outcomes. Indeed, some variation in outcomes arguably contributes to economic growth because it creates incentives to work hard, get an education, save, invest, and undertake risk. However, to the extent that opportunity itself is enhanced by access to economic resources, inequality of outcomes can exacerbate inequality of opportunity, thereby perpetuating a trend of increasing inequality. Such a link is suggested by the “Great Gatsby Curve,” the finding that, among advanced economies, greater income inequality is associated with diminished intergenerational mobility.3 In such circumstances, society faces difficult questions of how best to fairly and justly promote equal opportunity. My purpose today is not to provide answers to these contentious questions, but rather to provide a factual basis for further discussion. I am pleased that this conference will focus on equality of economic opportunity and on ways to better promote it.

In my remarks, I will review trends in income and wealth inequality over the past several decades, then identify and discuss four sources of economic opportunity in America–think of them as “building blocks” for the gains in income and wealth that most Americans hope are within reach of those who strive for them. The first two are widely recognized as important sources of opportunity: resources available for children and affordable higher education. The second two may come as more of a surprise: business ownership and inheritances. Like most sources of wealth, family ownership of businesses and inheritances are concentrated among households at the top of the distribution. But both of these are less concentrated and more broadly distributed than other forms of wealth, and there is some basis for thinking that they may also play a role in providing economic opportunities to a considerable number of families below the top.

In focusing on these four building blocks, I do not mean to suggest that they account for all economic opportunity, but I do believe they are all significant sources of opportunity for individuals and their families to improve their economic circumstances.

Income and Wealth Inequality in the Survey of Consumer Finances
I will start with the basics about widening inequality, drawing heavily on a trove of data generated by the Federal Reserve’s triennial Survey of Consumer Finances (SCF), the latest of which was conducted in 2013 and published last month.4 The SCF is broadly consistent with other data that show widening wealth and income inequality over the past several decades, but I am employing the SCF because it offers the added advantage of specific detail on income, wealth, and debt for each of 6,000 households surveyed.5 This detail from family balance sheets provides a glimpse of the relative access to the four sources of opportunity I will discuss.

While the recent trend of widening income and wealth inequality is clear, the implications for a particular family partly depend on whether that family’s living standards are rising or not as its relative position changes. There have been some times of relative prosperity when income has grown for most households but inequality widened because the gains were proportionally larger for those at the top; widening inequality might not be as great a concern if living standards improve for most families. That was the case for much of the 1990s, when real incomes were rising for most households. At other times, however, inequality has widened because income and wealth grew for those at the top and stagnated or fell for others. And at still other times, inequality has widened when incomes were falling for most households, but the declines toward the bottom were proportionally larger. Unfortunately, the past several decades of widening inequality has often involved stagnant or falling living standards for many families.

Since the survey began in its current form in 1989, the SCF has shown a rise in the concentration of income in the top few percent of households, as shown in figure 1.6 By definition, of course, the share of all income held by the rest, the vast majority of households, has fallen by the same amount.7 This concentration was the result of income and living standards rising much more quickly for those at the top. After adjusting for inflation, the average income of the top 5 percent of households grew by 38 percent from 1989 to 2013, as we can see in figure 2. By comparison, the average real income of the other 95 percent of households grew less than 10 percent. Income inequality narrowed slightly during the Great Recession, as income fell more for the top than for others, but resumed widening in the recovery, and by 2013 it had nearly returned to the pre-recession peak.8

The distribution of wealth is even more unequal than that of income, and the SCF shows that wealth inequality has increased more than income inequality since 1989. As shown in figure 3, the wealthiest 5 percent of American households held 54 percent of all wealth reported in the 1989 survey. Their share rose to 61 percent in 2010 and reached 63 percent in 2013. By contrast, the rest of those in the top half of the wealth distribution–families that in 2013 had a net worth between $81,000 and $1.9 million–held 43 percent of wealth in 1989 and only 36 percent in 2013.

The lower half of households by wealth held just 3 percent of wealth in 1989 and only 1 percent in 2013. To put that in perspective, figure 4 shows that the average net worth of the lower half of the distribution, representing 62 million households, was $11,000 in 2013.9 About one-fourth of these families reported zero wealth or negative net worth, and a significant fraction of those said they were “underwater” on their home mortgages, owing more than the value of the home.10 This $11,000 average is 50 percent lower than the average wealth of the lower half of families in 1989, adjusted for inflation. Average real wealth rose gradually for these families for most of those years, then dropped sharply after 2007. Figure 5 shows that average wealth also grew steadily for the “next 45” percent of households before the crisis but didn’t fall nearly as much afterward. Those next 45 households saw their wealth, measured in 2013 dollars, grow from an average of $323,000 in 1989 to $516,000 in 2007 and then fall to $424,000 in 2013, a net gain of about one-third over 24 years. Meanwhile, the average real wealth of families in the top 5 percent has nearly doubled, on net–from $3.6 million in 1989 to $6.8 million in 2013.

Housing wealth–the net equity held by households, consisting of the value of their homes minus their mortgage debt–is the most important source of wealth for all but those at the very top.11 It accounted for three-fifths of wealth in 2013 for the lower half of families and two-fifths of wealth for the next 45. But housing wealth was only one-fifth of total wealth for the top 5 percent of families. The share of housing in total net worth for all three groups has not changed much since 1989.

Since housing accounts for a larger share of wealth for those in the bottom half of the wealth distribution, their overall wealth is affected more by changes in home prices. Furthermore, homeowners in the bottom half have been more highly leveraged on their homes, amplifying this difference. As a result, while the SCF shows that all three groups saw proportionally similar increases and subsequent declines in home prices from 1989 to 2013, the effects on net worth were greater for those in the bottom half of households by wealth. Foreclosures and the dramatic fall in house prices affected many of these families severely, pushing them well down the wealth distribution. Figure 6 shows that homeowners in the bottom half of households by wealth reported 61 percent less home equity in 2013 than in 2007. The next 45 reported a 29 percent loss of housing wealth, and the top 5 lost 20 percent.

Fortunately, rebounding housing prices in 2013 and 2014 have restored a good deal of the loss in housing wealth, with the largest gains for those toward the bottom. Based on rising home prices alone and not counting possible changes in mortgage debt or other factors, Federal Reserve staff estimate that between 2013 and mid-2014, average home equity rose 49 percent for the lowest half of families by wealth that own homes.12 The estimated gains are somewhat less for those with greater wealth.13 Homeowners in the bottom 50, which had an average overall net worth of $25,000 in 2013, would have seen their net worth increase to an average of $33,000 due solely to home price gains since 2013, a 32 percent increase.

Another major source of wealth for many families is financial assets, including stocks, bonds, mutual funds, and private pensions.14 Figure 7 shows that the wealthiest 5 percent of households held nearly two-thirds of all such assets in 2013, the next 45 percent of families held about one-third, and the bottom half of households, just 2 percent. This figure may look familiar, since the distribution of financial wealth has concentrated at the top since 1989 at rates similar to those for overall wealth, which we saw in figure 3.15

Those are the basics on wealth and income inequality from the SCF. Other research tells us that inequality tends to persist from one generation to the next. For example, one study that divides households by income found that 4 in 10 children raised in families in the lowest-income fifth of households remain in that quintile as adults.16 Fewer than 1 in 10 children of families at the bottom later reach the top quintile. The story is flipped for children raised in the highest-income households: When they grow up, 4 in 10 stay at the top and fewer than 1 in 10 fall to the bottom.

Research also indicates that economic mobility in the United States has not changed much in the last several decades; that mobility is lower in the United States than in most other advanced countries; and, as I noted earlier, that economic mobility and income inequality among advanced countries are negatively correlated.17

Four Building Blocks of Opportunity
An important factor influencing intergenerational mobility and trends in inequality over time is economic opportunity. While we can measure overall mobility and inequality, summarizing opportunity is harder, which is why I intend to focus on some important sources of opportunity–the four building blocks I mentioned earlier.

Two of those are so significant that you might call them “cornerstones” of opportunity, and you will not be surprised to hear that both are largely related to education. The first of these cornerstones I would describe more fully as “resources available to children in their most formative years.” The second is higher education that students and their families can afford.

Two additional sources of opportunity are evident in the SCF. They affect fewer families than the two cornerstones I have just identified, but enough families and to a sufficient extent that I believe they are also important sources of economic opportunity.

The third building block of opportunity, as shown by the SCF, is ownership of a private business.18 This usually means ownership and sometimes direct management of a family business. The fourth source of opportunity is inherited wealth. As one would expect, inheritances are concentrated among the wealthiest families, but the SCF indicates they may also play an important role in the opportunities available to others.

Resources Available for Children
For households with children, family resources can pay for things that research shows enhance future earnings and other economic outcomes–homes in safer neighborhoods with good schools, for example, better nutrition and health care, early childhood education, intervention for learning disabilities, travel and other potentially enriching experiences.19 Affluent families have significant resources for things that give children economic advantages as adults, and the SCF data I have cited indicate that many other households have very little to spare for this purpose. These disparities extend to other household characteristics associated with better economic outcomes for offspring, such as homeownership rates, educational attainment of parents, and a stable family structure.20

According to the SCF, the gap in wealth between families with children at the bottom and the top of the distribution has been growing steadily over the past 24 years, but that pace has accelerated recently. Figure 8 shows that the median wealth for families with children in the lower half of the wealth distribution fell from $13,000 in 2007 to $8,000 in 2013, after adjusting for inflation, a loss of 40 percent.21 These wealth levels look small alongside the much higher wealth of the next 45 percent of households with children. But these families also saw their median wealth fall dramatically–by one-third in real terms–from $344,000 in 2007 to $229,000 in 2013. The top 5 percent of families with children saw their median wealth fall only 9 percent, from $3.5 million in 2007 to $3.2 million in 2013, after inflation.

For families below the top, public funding plays an important role in providing resources to children that influence future levels of income and wealth. Such funding has the potential to help equalize these resources and the opportunities they confer.

Social safety-net spending is an important form of public funding that helps offset disparities in family resources for children. Spending for income security programs since 1989 and until recently was fairly stable, ranging between 1.2 and 1.7 percent of gross domestic product (GDP), with higher levels in this range related to recessions. However, such spending rose to 2.4 percent of GDP in 2009 and 3 percent in 2010.22 Researchers estimate that the increase in the poverty rate because of the recession would have been much larger without the effects of income security programs.23

Public funding of education is another way that governments can help offset the advantages some households have in resources available for children. One of the most consequential examples is early childhood education. Research shows that children from lower-income households who get good-quality pre-Kindergarten education are more likely to graduate from high school and attend college as well as hold a job and have higher earnings, and they are less likely to be incarcerated or receive public assistance.24 Figure 9 shows that access to quality early childhood education has improved since the 1990s, but it remains limited–41 percent of children were enrolled in state or federally supported programs in 2013. Gains in enrollment have stalled since 2010, as has growth in funding, in both cases because of budget cuts related to the Great Recession. These cuts have reduced per-pupil spending in state-funded programs by 12 percent after inflation, and access to such programs, most of which are limited to lower-income families, varies considerably from state to state and within states, since local funding is often important.25 In 2010, the United States ranked 28th out of 38 advanced countries in the share of four-year-olds enrolled in public or private early childhood education.26

Similarly, the quality and the funding levels of public education at the primary and secondary levels vary widely, and this unevenness limits public education’s equalizing effect. The United States is one of the few advanced economies in which public education spending is often lower for students in lower-income households than for students in higher-income households.27 Some countries strive for more or less equal funding, and others actually require higher funding in schools serving students from lower-income families, expressly for the purpose of reducing inequality in resources for children.

A major reason the United States is different is that we are one of the few advanced nations that funds primary and secondary public education mainly through subnational taxation. Half of U.S. public school funding comes from local property taxes, a much higher share than in other advanced countries, and thus the inequalities in housing wealth and income I have described enhance the ability of more-affluent school districts to spend more on public schools. Some states have acted to equalize spending to some extent in recent years, but there is still significant variation among and within states. Even after adjusting for regional differences in costs and student needs, there is wide variation in public school funding in the United States.28

Spending is not the only determinant of outcomes in public education. Research shows that higher-quality teachers raise the educational attainment and the future earnings of students.29 Better-quality teachers can help equalize some of the disadvantages in opportunity faced by students from lower-income households, but here, too, there are forces that work against raising teacher quality for these students. Research shows that, for a variety of reasons, including inequality in teacher pay, the best teachers tend to migrate to and concentrate in schools in higher-income areas.30 Even within districts and in individual schools, where teacher pay is often uniform based on experience, factors beyond pay tend to lead more experienced and better-performing teachers to migrate to schools and to classrooms with more-advantaged students.31

Higher Education that Families Can Afford
For many individuals and families, higher education is the other cornerstone of economic opportunity. The premium in lifetime earnings because of higher education has increased over the past few decades, reflecting greater demand for college-educated workers. By one measure, the median annual earnings of full-time workers with a four-year bachelor’s degree are 79 percent higher than the median for those with only a high school diploma.32 The wage premium for a graduate degree is significantly higher than the premium for a college degree. Despite escalating costs for college, the net returns for a degree are high enough that college still offers a considerable economic opportunity to most people.33

Along with other data, the SCF shows that most students and their families are having a harder time affording college. College costs have risen much faster than income for the large majority of households since 2001 and have become especially burdensome for households in the bottom half of the earnings distribution.

Rising college costs, the greater numbers of students pursuing higher education, and the recent trends in income and wealth have led to a dramatic increase in student loan debt. Outstanding student loan debt quadrupled from $260 billion in 2004 to $1.1 trillion this year. Sorting families by wealth, the SCF shows that the relative burden of education debt has long been higher for families with lower net worth, and that this disparity has grown much wider in the past couple decades. Figure 10 shows that from 1995 to 2013, outstanding education debt grew from 26 percent of average yearly income for the lower half of households to 58 percent of income.34 The education debt burden was lower and grew a little less sharply for the next 45 percent of families and was much lower and grew not at all for the top 5 percent.35

Higher education has been and remains a potent source of economic opportunity in America, but I fear the large and growing burden of paying for it may make it harder for many young people to take advantage of the opportunity higher education offers.

Opportunities to Build Wealth through Business Ownership
For many people, the opportunity to build a business has long been an important part of the American dream. In addition to housing and financial assets, the SCF shows that ownership of private businesses is a significant source of wealth and can be a vital source of opportunity for many households to improve their economic circumstances and position in the wealth distribution.

While business wealth is highly concentrated at the top of the distribution, it also represents a significant component of wealth for some other households.36 Figure 11 shows that slightly more than half of the top 5 percent of households have a share in a private business. The average value of these holdings is nearly $4 million. Only 14 percent of families in the next 45 have ownership in a private business, but for those that do, this type of wealth constitutes a substantial portion of their assets–the average amount of this business equity is nearly $200,000, representing more than one-third of their net worth. Only 3 percent of the bottom half of households hold equity in a private business, but it is a big share of wealth for those few.37 The average amount of this wealth is close to $20,000, 60 percent of the average net worth for these households.38

Owning a business is risky, and most new businesses close within a few years. But research shows that business ownership is associated with higher levels of economic mobility.39 However, it appears that it has become harder to start and build businesses. The pace of new business creation has gradually declined over the past couple of decades, and the number of new firms declined sharply from 2006 through 2009.40 The latest SCF shows that the percentage of the next 45 that own a business has fallen to a 25-year low, and equity in those businesses, adjusted for inflation, is at its lowest point since the mid-1990s. One reason to be concerned about the apparent decline in new business formation is that it may serve to depress the pace of productivity, real wage growth, and employment.41 Another reason is that a slowdown in business formation may threaten what I believe likely has been a significant source of economic opportunity for many families below the very top in income and wealth.

Inheritances
Along with other economic advantages, it is likely that large inheritances play a role in the fairly limited intergenerational mobility that I described earlier.42 But inheritances are also common among households below the top of the wealth distribution and sizable enough that I believe they may well play a role in helping these families economically.

Figure 12 shows that half of the top 5 percent of households by wealth reported receiving an inheritance at some time, but a considerable number of others did as well–almost 30 percent of the next 45 percent and 12 percent of the bottom 50. Inheritances are concentrated at the top of the wealth distribution but less so than total wealth. Just over half of the total value of inheritances went to the top 5 percent and 40 percent went to households in the next 45. Seven percent of inheritances were shared among households in the bottom 50 percent, a group that together held only 1 percent of all wealth in 2013.43

The average inheritance reported by those in the top 5 percent who had received them was $1.1 million. That amount dwarfs the $183,000 average among the next 45 percent and the $68,000 reported among the bottom half of households. But compared with the typical wealth of these households, the additive effect of bequests of this size is significant for the millions of households below the top 5 that receive them.

The average age for receiving an inheritance is 40, when many parents are trying to save for and secure the opportunities of higher education for their children, move up to a larger home or one in a better neighborhood, launch a business, switch careers, or perhaps relocate to seek more opportunity. Considering the overall picture of limited resources for most families that I have described today, I think the effects of inheritances for the sizable minority below the top that receive one are likely a significant source of economic opportunity.

Conclusion
In closing, let me say that, with these examples, I have only just touched the surface of the important topic of economic opportunity, and I look forward to learning more from the work presented at this conference. As I noted at the outset, research about the causes and implications of inequality is ongoing, and I hope that this conference helps spur further study of economic opportunity and its effects on economic mobility. Using the SCF and other sources, I have tried to offer some observations about how access to four specific sources of opportunity may vary across households, but I cannot offer any conclusions about how much these factors influence income and wealth inequality. I do believe that these are important questions, and I hope that further research will help answer them.

1. See Salvatore Morelli, Timothy Smeeding, and Jeffrey Thompson (2014), “Post-1970 Trends in Within-Country Inequality and Poverty: Rich and Middle Income Countries (PDF) Leaving the Board,” IRP Discussion Paper Series 1419-14 (Madison, Wis.: Institute for Research on Poverty, March). Return to text

2. For income inequality in the past 100 years, see Anthony B. Atkinson, Thomas Piketty, and Emmanuel Saez (2011), “Top Incomes in the Long Run of History (PDF) Leaving the Board,” Journal of Economic Literature, vol. 49 (March), pp.3-71. For wealth inequality, see Emmanuel Saez and Gabriel Zucman (2014), “Wealth Inequality in the United States since 1913: Evidence from Capitalized Income Tax Data Leaving the Board,” working paper and slides (October, 14, 2014). For income inequality before 1913, see Peter H. Lindert and Jeffrey G. Williamson (2012), “American Incomes 1774-1860 Leaving the Board,” NBER Working Paper Series 18396 (Cambridge, Mass.: National Bureau of Economic Research, September). Return to text

3. See Alan B. Krueger (2012), “The Rise and Consequences of Inequality in the United States (PDF),” speech delivered at the Center for American Progress, Washington, January 12. Return to text

4. Asset questions in the SCF are based on the value at the time of the survey. Since most interviews were completed between April and December 2013, some of the asset values do not reflect price increases experienced in late 2013, and none reflect increases in 2014. Income questions in the SCF refer to the prior calendar year, so the 2013 survey reports 2012 income. See Jesse Bricker, Lisa J. Dettling, Alice Henriques, Joanne W. Hsu, Kevin B. Moore, John Sabelhaus, Jeffrey Thompson, and Richard A. Windle (2014), “Changes in U.S. Family Finances from 2010 to 2013: Evidence from the Survey of Consumer Finances,” Federal Reserve Bulletin, vol. 100 (September), pp. 1-41. Return to text

5. “Households” and “families” are used interchangeably in these remarks because the SCF uses both interchangeably to describe its respondents. Return to text

6. The share of income that went to the top 5 percent of households–a threshold of $230,000 in gross income in 2013–rose from 31 percent of income reported by all respondents in 1989 to 37 percent in 2007. The income share for this group fell in the financial crisis, to 34 percent in 2010, then rose in the recovery, regaining a 37 percent share in 2013. Return to text

7. The top half of the distribution, except for the top 5 percent, earned 53 percent of all income in 1989 but only 51 percent in 2010. In 2013, households in the “next 45 percent” had incomes between $47,000 and $230,000. While income has rebounded for the top 5 percent in the recovery, the share that went to the next 45 percent declined further to 49 percent in 2013. The bottom half of the distribution saw their share of income fall from 16 percent in 1989 to 15 percent in 2007, edge up in 2010, and then reach a new low for the survey last year at 14 percent. Return to text

8. Largely because of losses in income from financial holdings, the share of total income received by the top 5 percent of households fell 3 percentage points from 2007 to 2010, with the next 45 percent and lower half of households each gaining about half of that share. Some of the nominal income losses for households below the top 5 percent were offset by larger-than-normal transfer payments during the recession. Return to text

9. All SCF income and wealth data prior to the 2013 survey are adjusted for inflation by expressing the values in 2013 dollars. Return to text

10. In the 2013 SCF, 17 percent of all families reporting zero or negative net worth also reported they were underwater on their home mortgages. Return to text

11. Housing wealth includes the net equity in primary residences and other residential real estate. Return to text

12. The house price data used are from CoreLogic, and data track price changes at the Core Based Statistical Area level between the survey month in 2013 and June 2014. The average increase in home prices over this period was 8 percent. No adjustments are made to account for possible changes in mortgage leverage. Return to text

13. Home price gains in 2013 and 2014 are estimated to have raised the home equity of home-owning households in the next 45 percent of households in the wealth distribution by 12 percent, and by 9 percent for home-owning households in the top 5 percent of the wealth distribution. Return to text

14. The SCF defines financial assets as liquid assets, certificates of deposit, directly held pooled investment funds, stocks, bonds, quasi-liquid assets (including retirement accounts), savings bonds, whole life insurance, other managed assets, and other financial assets. Return to text

15. In 1989, the top 5 percent of households held 54 percent of financial assets, the next 45 percent (that is, home-owning households in the 50th through 95th percentiles of the wealth distribution) held 42 percent, and the bottom half held 4 percent. Return to text

16. See Pew Charitable Trusts (2012), Pursuing the American Dream: Economic Mobility across Generations (PDF) Leaving the Board (Washington: PCT, July). Return to text

17. See Raj Chetty, Nathaniel Hendren, Patrick Kline, Emmanuel Saez, and Nicholas Turner (2014), “Is the United States Still a Land of Opportunity? Recent Trends in Intergenerational Mobility Leaving the Board,” NBER Working Paper Series 19844 (Cambridge, Mass.: National Bureau of Economic Research, January (revised May 2014)). See also Organisation for Economic Co-operation and Development (2010), “A Family Affair: Intergenerational Social Mobility across OECD Countries (PDF) Leaving the Board,” in Economic Policy Reforms: Going for Growth 2010, pp.183-200 (Paris: OECD); and Alan B. Krueger (2012), “The Rise and Consequences of Inequality in the United States (PDF),” speech delivered at the Center for American Progress, Washington, January 12. Return to text

18. Business assets in the SCF include both actively and “non-actively” managed businesses but do not include ownership of publicly traded stock. Return to text

19. See, for example, Janet Currie and Douglas Almond (2011), “Human Capital Development before Age Five,” ch. 15 in David Card and Orley Ashenfelter, eds., Handbook of Labor Economics, vol. 4 (Holland: Elsevier), pp. 1315-1486. Return to text

20. Homeownership by parents is strongly associated with economic success for children; see Thomas P. Boehm and Alan M. Schlottmann (1999), “Does Home Ownership by Parents Have an Economic Impact on Their Children? Leaving the Board” Journal of Housing Economics, vol. 8 (September), pp. 217-32. Ninety-seven percent of top-earning families with children own a home, compared with fewer than half of the bottom 50 percent of families with children; educational attainment of parents is strongly predictive of outcomes for children that determine earnings. See Ayana Douglas-Hall and Michelle Chau (2007), “Parents’ Low Education Leads to Low Income, Despite Full-Time Employment Leaving the Board” (New York: National Center for Children in Poverty, Columbia University, November). A considerable body of literature establishes the correlation between educational attainment of parents and their children. Other research has identified that this relationship is causal; see, for example, Philip Oreopoulos, Marianne E. Page, and Ann Huff Stevens (2006), “The Intergenerational Effects of Compulsory Schooling,” Journal of Labor Economics, vol. 24 (October), pp. 729-60. Eighty-six percent of top-earning households in the SCF with children are headed by a college graduate, compared with 12 percent in the bottom half of households with children; children raised by a single parent earn less as adults. See Mary Ann Powell and Toby L. Parcel (1997), “Effects of Family Structure on the Earnings Attainment Process: Differences by Gender,” Journal of Marriage and Family, vol. 59 (May), pp. 419-33. Only 4 percent of top-earning households with children are headed by unmarried parents, compared with 47 percent for the lower half of households with children. Return to text

21. Distributional statistics for families with children are based on a sorting of only families with children. Return to text

22. Congressional Budget Office historic budget data. Income security programs include UI, SSI, SNAP EITC, and other family support and nutrition programs. Return to text

23. See Jeffrey P. Thompson and Timothy M. Smeeding (2013), “Inequality and Poverty in the United States: The Aftermath of the Great Recession (PDF),” Finance and Economics Discussion Series 2013-51 (Washington: Board of Governors of the Federal Reserve System, July). Return to text

24. See James J. Heckman, Seong Hyeok Moon, Rodrigo Pinto, Peter A. Savelyev, and Adam Yavitz (2010), “The Rate of Return to the HighScope Perry Preschool Program,” Journal of Public Economics, vol. 94 (1-2), pp. 114-28; and Clive R. Belfield, Milagros Nores, Steve Barnett, and Lawrence Schweinhart (2006), “The High/Scope Perry Preschool Program: Cost-Benefit Analysis Using Data from the Age-40 Followup,” Journal of Human Resources, vol. 41 (Winter), pp. 162-90. Return to text

25. The share of four-year-olds in state-funded pre-K programs increased from 14 percent in 2002 to 27 percent in 2010 but has been 28 percent since. Head Start enrollments have been fairly steady since 2005. Forty-one percent of four-year-olds were enrolled in federally funded Head Start or state-funded pre-K education programs in 2013. See National Institute for Early Education Research (2013), The State of Preschool 2013: State Preschool Yearbook (PDF) Leaving the Board (New Brunswick, N.J.: Rutgers Graduate School of Education). For analysis of Head Start enrollment by age, see the Annie E. Casey Foundation KIDS COUNT Data Center Leaving the Board. Return to text

26. See Organisation for Economic Co-operation and Development (2013), “How Do Early Childhood Education and Care (ECEC) Policies, Systems and Quality Vary across OECD Countries? (PDF) Leaving the Board” Education Indicators in Focus Series 11 (Paris: OECD, February). Return to text

27. See Organisation for Economic Co-operation and Development (2013), Education at a Glance 2013: OECD Indicators (PDF) Leaving the Board (Paris: OECD). Return to text

28. See Education Week (2014), Quality Counts 2014: District Disruption and Revival Leaving the Board (Bethesda, Md.: Editorial Projects in Education, January). Return to text

29. See Eric A. Hanushek (2011), “The Economic Value of Higher Teacher Quality,” Economics of Education Review, vol. 30 (June), pp. 466-79; or, for estimates of the future earnings students gain by having a better teacher, see Raj Chetty, John N. Friedman, and Jonah E. Rockoff, “The Long-Term Impacts of Teachers: Teacher Value-Added and Student Outcomes in Adulthood,” Leaving the Board unpublished paper, Harvard University. Return to text

30. See Eric Isenberg, Jeffrey Max, Philip Gleason, Liz Potamites, Robert Santillano, Heinrich Hock, and Michael Hansen (2013), Access to Effective Teaching for Disadvantaged Students (PDF) Leaving the Board, report NCEE 2014-4001, prepared for the Institute of Education Sciences (Washington: U.S. Department of Education, Institute of Education Sciences, National Center for Education Evaluation and Regional Assistance); and Kati Haycock and Eric A. Hanushek (2010), “An Effective Teacher in Every Classroom: A Lofty Goal, But How to Do It? (PDF)” Leaving the Board Education Next, vol. 10 (Summer), pp. 46-52. Return to text

31. Better and more-experienced teachers tend to move to better-resourced schools, including those with more active outside funding, or those with more-advantaged students, such as magnet schools. Even within schools, more experienced and higher performing teachers are more likely to teach Advanced Placement classes which tend to serve more advantaged students. The result is that lower income and lower achieving students are more likely to be taught by less experienced and lower performing teachers. See Charles Clotfelter, Helen Ladd, Jacob Vigdor, and Justin Wheeler (2007), “High Poverty Schools and the Distribution of Teachers and Principals,” North Carolina Law Review, vol. 85 (2), pp. 1345-79; Charles Clotfelter, Helen Ladd, and Jacob Vigdor (2005), “Who Teaches Whom? Race and the Distribution of Novice Teachers,” Economics of Education Review, vol. 24 (August), pp. 377-92; and Hamilton Lankford, Susanna Loeb, and James Wyckoff (2002), “Teacher Sorting and the Plight of Urban Schools: A Descriptive Analysis,” Education Evaluation and Policy Analysis, vol. 37 (Spring), pp. 37-62. Return to text

32. See Sandy Baum (2014), Higher Education Earnings Premium: Value, Variation, and Trends (PDF) Leaving the Board (Washington: Urban Institute, February). Return to text

33. Taking into account the cost of paying for education and years spent in college and not working, economists at the Federal Reserve Bank of New York estimate that the lifetime return to a college degree is 15 percent. See Jaison R. Abel and Richard Deitz (2014), “Do the Benefits of College Still Outweigh the Costs? (PDF)” Leaving the Board Federal Reserve Bank of New York, Current Issues in Economics and Finance, vol. 20 (3). Return to text

34. Education debt in the SCF reflects the total amount of debt outstanding at the time of the survey. Return to text

35. Education debt-to-income ratio is calculated based on what SCF respondents reported as their usual income. Numbers are for families with education debt. Return to text

36. The SCF does not ask households whether they started businesses that closed, so reported business ownership and wealth is largely related only to those businesses that succeed. Return to text

37. Distributional statistics for business ownership and assets exclude outliers with large negative net worth. Return to text

38. Business wealth took a big hit due to the recession and has only partly recovered for most families. For the bottom half of the distribution, the $20,000 average in business wealth in 2013 was down from $29,000, after adjusting for inflation, in 2007. The nearly $200,000 held by the next 45 percent with businesses was down from $228,000 in 2007. The $4 million in business wealth of the top 5 percent in 2013 was down, in real terms, from $4.4 million in 2007. Return to text

39. See, for example, Robert Fairlie (2004), “Earnings Growth among Young Less-Educated Business Owners,” Industrial Relations, vol. 43 (July), pp. 634-59; Douglas Holtz-Eakin, Harvey S. Rosen, and Robert Weathers (2000), “Horatio Alger Meets the Mobility Tables,” Small Business Economics, vol. 14, pp. 243-74; and Vincenzo Quadrini (2000), “Entrepreneurship, Saving, and Social Mobility,” Review of Economic Dynamics, vol. 3 (January), pp. 1-40. Return to text

40. See Business Dynamics Statistics, U.S. Census Bureau. For analysis documenting the decline in new and young firms, see John Haltiwanger, Ron Jarmin, and Javier Miranda (2012), Where Have All the Young Firms Gone? (PDF) Leaving the Board Business Dynamics Statistics Briefing, May. For a discussion of the link between a decline in young firms and constrained credit access, see Michael Siemer (2014), “Firm Entry and Employment Dynamics in the Great Recession (PDF),” Finance and Economics Discussion Series 2014-56 (Washington: Board of Governors of the Federal Reserve System, July). Return to text

41. See Steven J. Davis and John Haltiwanger (2014), “Labor Market Fluidity and Economic Performance (PDF),” Leaving the Board paper prepared for “Re-Evaluating Labor Market Dynamics,” a symposium sponsored by the Federal Reserve Bank of Kansas City, held in Jackson Hole, Wyo., August 21-23. Return to text

42. This topic is discussed extensively in Thomas Piketty (2014), Capital in the 21st Century, trans. Arthur Goldhammer (Cambridge, Mass.: Belknap Press). Return to text

43. Reported inheritances can have been received at any point in the respondent’s life. As with other forms of wealth cited in these remarks, inheritances have been adjusted for inflation and are expressed in 2013 dollars.

WASHINGTON – The U.S. Department of the Treasury today announced that eligible states and local governments can now apply for and receive grants to support the recovery of communities affected by the Deepwater Horizon oil spill. Interim Final Rules governing the funding became effective today, allowing the States of Alabama, Louisiana, Mississippi and Texas, along with 23 Florida Gulf Coast counties and 20 Louisiana coastal parishes, to receive funding under the Resources and Ecosystem Sustainability, Tourist Opportunities, and Revived Economies of the Gulf Coast States (RESTORE) Act.

“Treasury is working in support of the states and communities that were impacted by the Deepwater Horizon oil spill as they select environmental and economic renewal projects for funding,” said David Lebryk, Fiscal Assistant Secretary at the U.S. Department of the Treasury. “We look forward to continuing to work with our state, county and parish partners on the awarding of these grants.”

The Deepwater Horizon oil spill released millions of barrels of crude oil in the Gulf waters, and caused extensive damage to marine and wildlife habitats, fishing, and tourism. On July 6, 2012, President Obama signed the RESTORE Act into law, establishing a trust fund within Treasury with 80 percent of the civil penalties to be paid by parties responsible for the Deepwater Horizon oil spill under the Federal Water Pollution Control Act. To date, civil penalties and interest deposited into the trust fund exceed $653 million.

Under an Interim Final Rule, published on August 15 and effective today, 35 percent of the Gulf Coast Restoration Trust Fund is divided equally among the five states for ecological and economic restoration. The States of Alabama, Louisiana, Mississippi, and Texas each receive a share for projects and programs they select. In Florida, the state’s allocation goes to 23 coastal counties for projects they choose. A second Interim Final Rule, also effective today, finalizes an additional allocation for 20 parishes in Louisiana.

On September 15, Treasury posted several funding opportunity announcements that give the states, counties, and parishes the opportunity to submit grant applications for Direct Component funds. Treasury is ready to begin reviewing applications upon receipt.

Treasury will also provide grants for centers of excellence research programs using 2.5 percent of the trust fund, divided equally among the five Gulf Coast States. On September 15, Treasury posted the funding opportunity announcement for these grants as well. The centers of excellence will focus on science, technology, and monitoring. In addition to these grant programs, the Interim Final Rule published in August describes requirements for RESTORE Act programs administered by other federal agencies.

Treasury is one of several federal entities working to implement the RESTORE Act. The Gulf Coast Ecosystem Restoration Council, a federal entity composed of the five Gulf Coast States and six federal agencies, will use 30 percent of the trust fund for projects selected by the council, and administer grants to the states pursuant to council-approved state expenditure plans using an additional 30 percent. The National Oceanic and Atmospheric Administration will use the remaining 2.5 percent of the trust fund for a program focused on advancements in monitoring, observation, and technology. For more information on the Gulf Coast Ecosystem Restoration Council, please visit http://www.restorethegulf.gov/.

NEW YORK— American International Group, Inc. (AIG) today announced that it has expanded excess casualty liability limits for Class 1 railroads in the U.S. and Canada to $1 billion per occurrence. This coverage for catastrophe losses would be in excess of $1.5 billion in underlying limits, and is one of the largest capacities offered to the rail industry by a single insurer.

AIG is responding to the demands of North America’s largest rail companies contending with record rail traffic and the growing number of rail cars carrying potentially hazardous materials, such as crude oil. The Association of American Railroads has reported U.S. rail demand is at a 7-year high. The Association also reported U.S. Class 1 railroads (including the U.S. Class 1 subsidiaries of Canadian railroads) transported more than 407,000 carloads of crude oil in 2013, up from 9,500 carloads in 2008, an increase of nearly 4,300%.

“These expanded limits are another way AIG’s scale and innovation is meeting the needs of our critical infrastructure clients and the customers they serve,” said Russ Johnston, President, Casualty Americas. “The Class 1 railroads are seeing strong growth and a resulting increase in risks they need to cover. AIG is one of the few carriers that can provide customers the large limits and risk expertise to meet this need.”

Derailments are the most common type of accident risk faced by Class 1 railroads in the U.S. and Canada, and they can be caused by a wide range of factors.

“Rail companies need additional coverage to help protect their balance sheets,” said Jeremy Johnson, President & Chief Executive Officer, Lexington Insurance Company. “This billion dollar coverage will help Class 1 railroads address expanding risks while continuing to serve the growing needs of transportation customers in North America.”

The excess coverage is provided by Lexington Insurance Company and other affiliated AIG Companies. Lexington is the largest domestic excess and surplus lines carrier in the U.S.

American International Group, Inc. (AIG) is a leading international insurance organization serving customers in more than 130 countries and jurisdictions. AIG companies serve commercial, institutional, and individual customers through one of the most extensive worldwide property-casualty networks of any insurer. In addition, AIG companies are leading providers of life insurance and retirement services in the United States. AIG common stock is listed on the New York Stock Exchange and the Tokyo Stock Exchange.

Additional information about AIG can be found at www.aig.com | YouTube: www.youtube.com/aig |Twitter: @AIGInsurance | LinkedIn: http://www.linkedin.com/company/aig |

AIG is the marketing name for the worldwide property-casualty, life and retirement, and general insurance operations of American International Group, Inc. For additional information, please visit our website at www.aig.com. All products and services are written or provided by subsidiaries or affiliates of American International Group, Inc. Products or services may not be available in all countries, and coverage is subject to actual policy language. Non-insurance products and services may be provided by independent third parties. Certain property-casualty coverages may be provided by a surplus lines insurer. Surplus lines insurers do not generally participate in state guaranty funds, and insureds are therefore not protected by such funds.

The Royal Swedish Academy of Sciences has decided to award The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel for 2014 to Jean Tirole “for his analysis of market power and regulation”. Jean Tirole, French citizen. Born 1953 in Troyes, France. Ph.D. 1981 from Massachusetts Institute of Technology, Cambridge, MA, USA. Scientific Director at Institut d’Économie Industrielle, Toulouse School of Economics. The Prize amountis SEK 8 million.

Jean Tirole is one of the most influential economists of our time. He has made important theoretical research contributions in a number of areas, but most of all he has clarified how to understand and regulate industries with a few powerful firms.

Many industries are dominated by a small number of large firms or a single monopoly. Left unregulated, such markets often produce socially undesirable results – prices higher than those motivated by costs, or unproductive firms that survive by blocking the entry of new and more productive ones.

From the mid-1980s and onwards, Jean Tirole has breathed new life into research on such market failures. His analysis of firms with market power provides a unified theory with a strong bearing on central policy questions: how should the government deal with mergers or cartels, and how should it regulate monopolies?

Before Tirole, researchers and policymakers sought general principles for all industries. They advocated simple policy rules, such as capping prices for monopolists and prohibiting cooperation between competitors, while permitting cooperation between firms with different positions in the value chain. Tirole showed theoretically that such rules may work well in certain conditions, but do more harm than good in others. Price caps can provide dominant firms with strong motives to reduce costs – a good thing for society – but may also permit excessive profits – a bad thing for society. Cooperation on price setting within a market is usually harmful, but cooperation regarding patent pools can benefit everyone. The merger of a firm and its supplier may encourage innovation, but may also distort competition.

The best regulation or competition policy should therefore be carefully adapted to every industry’s specific conditions. In a series of articles and books, Jean Tirole has presented a general framework for designing such policies and applied it to a number of industries, ranging from telecommunications to banking. Drawing on these new insights, governments can better encourage powerful firms to become more productive and, at the same time, prevent them from harming competitors and customers.

The IMF-World Bank Annual Meetings starting this week in Washington will discuss how to break through prolonged low growth and generate more growth and more jobs, IMF Managing Director Christine Lagarde said.

Addressing a news conference October 9 at the start of the Meetings, Lagarde noted that the IMF’s World Economic Outlook had trimmed its growth forecasts for the global economy.

“In the face of what we have called the risk of a new mediocre, where growth is low and uneven, we believe that there has to be a new momentum and that is what we will be discussing with the membership in the coming days.
“This new momentum—with, hopefully more growth, more jobs, better growth, better jobs—is certainly something we would call on the membership to produce,” Lagarde declared.

She said the IMF has noted growing country specificity in its analysis, where within each group of economies some countries are progressing and others are lagging behind. She said the IMF recommends action in three particular areas.
• Monetary policy where, particularly in the euro zone and Japan, more accommodative monetary policy is needed going forward to support the economy. At the same time the U.S. Federal Reserve is probably going to normalize its monetary policy and the IMF would urge emerging market and low-income and developing countries to prepare for heightened volatility.
• Fiscal policy, where more growth-friendly measures can be put in place as outlined in the IMF’s latest Fiscal Monitor that called attention to fiscal policies adjusted to support job market reforms. In addition, financial policies should be aimed at reducing excesses to make the financial system sounder, and strengthen its ability to help the recovery—as set out in the IMF’s latest Global Financial Stability Report.
• Increased investment in infrastructure can effectively support growth in the short term, by putting people to work through major construction projects or maintenance jobs. Infrastructure investment can also impact the supply side in the medium term by facilitating and accelerating the creation of value.

Responses to Ebola
Lagarde said the IMF was in a position to respond to challenges the world is facing, noting that she had met earlier with country representatives and officials coordinating responses to the Ebola outbreak in West Africa.

“It’s absolutely fine if those countries increase their fiscal deficit,” she stated, adding this was an indication of how the IMF mobilizes resources and revisits traditional standards. Last month the IMF provided a total of $130 million of emergency financial assistance to Guinea, Liberia, and Sierra Leone, the three West African countries at the center of the Ebola epidemic.

Lagarde noted that many low-income and developing countries are posting impressive growth rates. Such thriving economies make the Ebola epidemic even more threatening, she observed, because its effects might jeopardize economic recovery and waste hard-won gains.
Global Policy Agenda

Lagarde highlighted the IMF’s Global Policy Agenda, which will be discussed (see box) with the IMF’s policy-setting body, the International Monetary and Financial Committee during the Annual Meetings. She said the Agenda outlined the strategic direction of the IMF’s work over the next 12 months.

Aim higher, try harder
Aiming higher and trying harder to lift growth and build resilience is the collective goal targeted by the Global Policy Agenda that will be presented to senior officials by IMF Chief Christine Lagarde at the 2014 Annual Meetings.

The Global Policy Agenda, which will be discussed with the IMF’s policy-setting body—the International Monetary and Financial Committee—at its meeting on October 11, outlines policy priorities for the IMF’s 188 members and what the Fund can do to assist. It also offers a progress report on goals discussed by the membership and the Fund at the 2014 Spring Meetings in Washington.

The report says the IMF’s latest snapshot of the global economy looks uneasily familiar: a brittle, uneven recovery, with slower-than-expected growth and increasing downside risks. Bold and resolutely executed policies are needed to lift growth, build resilience, and achieve coherence.

Responding to questions, Lagarde noted that measures have been taken by the European Central Bank to address the risks inherent in persistent low inflation, and added the IMF hopes more will be done in this area. The IMF has also pointed to the potential risk of recession in the euro area, “but if the right policies are decided and if both surplus and deficit countries do what has to be done, it is avoidable.”

Pointing to significant IMF engagement with Arab countries, Lagarde noted that much had been achieved in areas such as reducing subsidies and raising the efficiency of public finance in health and education and in providing safety nets for the poor. The IMF would continue to be involved, but the region needs the attention and the financial support of the international community, Lagarde stressed.

Lagarde said approval of the IMF’s 2010 quota and governance reforms “is an absolute must. It has to be implemented, and everybody knows that it is currently stuck before the U.S. Congress.” She said she hoped that the U.S. authorities would understand the importance of having an IMF that is representative of the global economy.

A weak and uneven global economic recovery continues, but reflecting different evolutions across various countries and regions, says the IMF’s latest World Economic Outlook (WEO).

The IMF forecasts global growth to average 3.3 percent in 2014―unchanged from 2013―and to rise to 3.8 percent in 2015. The weaker than expected growth outlook for 2014 reflects setbacks to economic activity in the advanced economies during the first half of 2014, and a less optimistic outlook for several emerging market economies, says the report.

Potential growth rates—that is, the pace at which annual output can expand without pushing up inflation—are also being revised down. “These worse prospects are in turn affecting confidence, demand, and growth today,” says Olivier Blanchard, Economic Counsellor and head of the IMF’s Research Department.

Two underlying forces weigh on global recovery, according to Blanchard. “In advanced economies, the legacies of the precrisis boom and the subsequent recession, notably high debt burdens and unemployment, still cast a shadow on the recovery, and low potential growth ahead is a concern.” Several emerging markets are also adjusting to lower potential growth.

Across the globe, investment has been weaker than expected for some time. As a result, “global growth is still mediocre,” says Blanchard.
At the same time, Blanchard notes, economic evolution is becoming more differentiated in major countries and regions, with the pace of recovery reflecting various country-specific conditions.

Growth prospects vary in advanced economies
In advanced economies, growth is forecast to rise to 1.8 percent in 2014 and 2.3 percent in 2015.
Much of the projected strengthening in activity reflects faster growth in the United States following a temporary setback in the first quarter of this year. Employment growth has been strong, and household balance sheets have improved amid favorable financial conditions and a recovering housing market.

In the euro area, recent growth disappointments highlight lingering fragilities. A gradual, but weak recovery is projected to take hold, supported by a sharp compression in interest spreads for stressed economies and record-low long-term interest rates in core euro area economies.
In Japan, GDP contracted more than expected in the second quarter of 2014 in the wake of an increase in the consumption tax. Looking ahead, private investment is forecast to recover and growth to remain broadly stable in 2015.
Emerging markets are adjusting to slower growth

Growth in emerging market and developing economies will continue to account for the lion’s share of global growth. Still, at 4.4 percent for 2014, the growth forecast is a bit weaker than in the April 2014 WEO. This slowdown is due to lackluster domestic demand and the impact of increasing geopolitical tensions, especially on Russia and neighboring countries.
• In China, growth is expected to decline slightly in 2014-15 to 7.4 percent, as the economy transitions to a more sustainable path. Growth is expected to remain strong elsewhere in emerging and developing Asia.
• In Latin America, the growth rate is forecast to decrease by half this year, to around 1.3 percent, due to declining exports as well as domestic constraints. Growth is expected to rebound to around 2.2 percent in 2015.
• In sub-Saharan Africa, stronger growth is expected because of supportive external demand conditions and strong investment demand, although prospects vary across countries.
• In the Middle East and North Africa, the recovery remains fragile even as growth is expected to start picking up modestly on the back of improving domestic security conditions and improving external demand. Similar considerations underpin modest improvements in activity in Russia and other economies of the Commonwealth of Independent States.

Considerable downside risks
The October WEO emphasizes the increase in downside risks—both in the short and medium term—that could dent global confidence and growth.
• Heightened geopolitical risks could prove more persistent, and they could also worsen. The result could be sharply higher fuel prices, trade disruptions, and further economic distress.
• Easy financial conditions, and the resulting search for yield, could fuel financial excess. Markets may have underpriced risks by not fully internalizing the uncertainties around the global outlook. A larger-than-expected increase in U.S. long-term interest rates, geopolitical events, or major growth disappointments could trigger widespread disruption.
• In advanced economies, secular stagnation (a situation of a persistent shortfall of investment relative to saving, even with near-zero interest rates) and low potential growth continue to be important medium-term risks—despite continued very low interest rates and increased risk appetite in financial markets. Protracted low inflation or outright deflation, particularly in the euro area, could pose a risk to activity and debt sustainability in some countries.
• For emerging markets, potential growth could be even lower than projected, if supply-side constraints prove more protracted.
Raising potential

In the face of weaker-than-expected global growth for the first half of 2014 and increased downside risks, growth may again fail to pick up or may fall short of expectations. This underscores that, in most economies across the globe, raising actual and potential output must remain a priority, the IMF says.

In advanced economies, there remains a need to avoid prematurely normalizing monetary policy. Fiscal adjustment must be tuned in both pace and composition to support the recovery and lay the groundwork for long-term growth and jobs. In this context, an increase in public infrastructure investment could provide a boost to demand in the short term and help raise potential output in the medium term in those countries with clearly identified infrastructure gaps (such as structure maintenance/upgrading in United States and Germany) and efficient public investment processes.
The scope for emerging market economies to use macroeconomic policies to support growth varies and is more limited in countries with external vulnerabilities. At the same time, emerging markets will need to deal with monetary policy normalization in the United States and possible shifts in financial market sentiment.

For both advanced and emerging market countries, there is a general, urgent need for country-specific structural reforms to strengthen potential growth or make growth more sustainable. For many countries, this means improving labor and product markets, including reforms to lower the costs of hiring on regular employment contracts and facilitating greater labor force participation (many advanced European economies and Japan), and easing barriers to doing business and investment in the services.

“The challenge for both advanced and emerging market economies, is to go beyond the general mantra of ‘structural reforms,’ to identify which reforms are most needed, which reforms are politically feasible,” says Blanchard.
More generally, Blanchard adds, policymakers need to “reestablish confidence through clear plans to deal with both the legacies of the crisis and the challenge of low potential growth.”

Pasadena, Calif. – Green Dot Corp. (NYSE: GDOT) and Walmart (NYSE: WMT) today announced the nationwide rollout of GoBank, a checking account product available exclusively on the retailer’s shelves. The checking account, from Green Dot Bank, Member FDIC, is designed for today’s “on-the-go” customer, providing a host of modern features and a linked MasterCard debit card. GoBank doesn’t charge overdraft fees, minimum balance fees or monthly fees with qualifying direct deposits. The product will be available nationwide by the end of October.

“Many so-called ‘free’ checking accounts aren’t really free because they have high overdraft fees. In fact, an independent study by Bretton Woods estimates that consumers pay approximately $218 – $314 per year for a basic checking account,” said Steve Streit, founder and CEO of Green Dot Corporation and chairman of Green Dot Bank. “No other checking account makes it this easy and affordable to manage your everyday finances. GoBank is breaking down the barriers to traditional banking and brings the benefits of a FDIC-insured checking account that’s loaded with features to a large segment of Americans.”

GoBank, a full-featured checking account, is offered as part of Walmart’s checking alternatives category.

“Walmart customers want easier ways to manage their everyday finances and increasingly feel they just aren’t getting value from traditional banking because of high fees,” said Daniel Eckert, senior vice president of services for Walmart U.S. “Adding the GoBank checking account to our shelves means our customers will have exclusive access to one of the most affordable, inclusive and easy-to-use checking accounts in the industry. GoBank gives our customers yet another option as to how they manage their money. When our customers have options, they win.”

Green Dot believes customers will find the product particularly compelling noting the following features and functions:

Low, Fair and Simple Fees: GoBank’s pricing makes it one of the most affordable checking accounts in the banking industry. There are no minimum balance requirements or overdraft fees — not even NSF fees on bad checks. And with a qualifying direct deposit of just $500 per month, the monthly membership cost of $8.95 is waived. GoBank also features an industry-leading network of 42,000 free ATMs.

Easy Money Management: GoBank comes with a range of features that on-the-go, mobile-centric consumers need, including instant person-to-person payments, pay-anyone bill pay, innovative budgeting tools and more.

Expanded Access: Neither a ChexSystems score nor credit bureau rating is used as the basis for determining customer eligibility. Instead, GoBank uses proprietary underwriting techniques to allow almost any consumer who passes ID verification to open an account.
Additional features and benefits of GoBank include:

Quick Account Set-Up: Setting up a GoBank account can take just minutes after purchasing a starter kit for $2.95. After set-up, customers can immediately use their starter debit MasterCard for purchases until their personalized card arrives in the mail.

Transparent Fee Structure: GoBank’s $8.95 monthly cost is waived in any month with qualifying direct deposits totaling $500 or more. Other fees include a 3 percent foreign transaction fee and out-of-network ATM fees (typically $2.50 for an out-of-network ATM plus any fee the ATM owner may assess). The full overview can be found at GoBank.com/NoWorries.

Early Paycheck Availability: GoBank also offers early payroll direct deposit so customers can get their paycheck deposited earlier than their normal payday if their employer notifies GoBank of a deposit in advance.

Advice on Spending from “Fortune Teller” feature: “Remember that time you won the lottery? I don’t either.” This is a response a customer might see from GoBank’s “Fortune Teller,” if they try to spend beyond their budget. “Fortune Teller” crosschecks the price of an item with a customer’s planned income and expenses, and if they can’t afford it, they’ll be advised in real-time to pass on the purchase.

Send Money Instantly: Customers can instantly send money to each other at no charge via email or text message.
Money Vault: The Money Vault is an integrated bank account, with deposits insured by the FDIC, where customers can easily put money away. In real time, they can move money into the vault for safekeeping or out of the vault to be accessed with their debit MasterCard.

About GoBank
GoBank is the award-winning bank account available at select Walmart locations and made to be used on your mobile phone, with no overdraft or penalty fees ever. With GoBank, members have full access and control of their money from participating Walmart locations, as well as their iPhone, iPod Touch or Android device, and can withdraw cash from more than 42,000 fee-free ATMs in the U.S. People can sign up for a GoBank account by purchasing a GoBank starter kit at participating Walmart stores, and can manage their account on their mobile phone or computer. In March, GoBank was named a Gold Winner for 2013 PYMNTS Innovator Awards. For more information about GoBank, visit https://GoBank.com. You can also visit https://facebook.com/GoBank or https://twitter.com/GoBank.

GoBank is a brand and trademark of Green Dot Bank, Member FDIC, which also operates under the brands Green Dot Bank and Bonneville Bank. Deposits under any of these trade names are deposits with a single FDIC-insured bank, Green Dot Bank, and are aggregated for deposit insurance coverage. 2014 Green Dot Bank. All rights reserved.

About Green Dot Corporation
Green Dot Corporation and its wholly owned subsidiary bank, Green Dot Bank, are focused exclusively on serving Low and Moderate Income American families with modern, fair and feature-rich financial products and services, including prepaid cards, checking accounts and cash processing services distributed through a network of some 95,000 retail stores, neighborhood financial service centers and via digital channels. The Company is headquartered in Pasadena, California with Green Dot Bank located in Provo, Utah.

About Walmart
Wal-Mart Stores, Inc. (NYSE: WMT) helps people around the world save money and live better – anytime and anywhere — in retail stores, online, and through their mobile devices. Each week, more than 245 million customers and members visit our 11,053 stores under 71 banners in 27 countries and ecommerce websites in 11 countries. With fiscal year 2014 sales of over $473 billion, Walmart employs more than 2 million associates worldwide. Walmart continues to be a leader in sustainability, corporate philanthropy and employment opportunity. Additional information about Walmart can be found by visiting http://corporate.walmart.com on Facebook at http://facebook.com/walmart and on Twitter at http://twitter.com/walmart. Online merchandise sales are available at http://www.walmart.com and http://www.samsclub.com.

Wells Fargo Advisors (WFA), the brokerage unit of Wells Fargo & Company (NYSE:WFC), today announced the launch of the Income Center, an extension of the firm’s proprietary Envision® planning process. The Income Center is a suite of applications that provides clients nearing or in retirement, a detailed view of their retirement income and offers them the ability to explore various retirement income solutions with their advisor.

Generating enough income in retirement is the top issue clients want to discuss with financial advisors. The Income Center is designed to help clients make purposeful distributions from their portfolios.

“Once you reach retirement age, there is an even greater need to have a deeper understanding of your retirement income plan,” said Warren Terry, managing director of FA Platform, Wells Fargo Advisors. “The biggest question comes after a client knows they can retire, but may not know where their “retirement paycheck” is going to come from. These tools are critical to helping clients understand how they will achieve their goals throughout their retirement.

”The new features, which are intended for clients who have an Envision plan and are nearing retirement age, include:

Income Dashboard – Displays current retirement income situation
Income Strategies – Offers scenarios to add more income to the portfolio
Portfolio Withdrawal – Shows where additional income will come from in the current portfolio if there is a shortfall
According to the recent Wells Fargo/Gallup Investor and Retirement Optimism Index, nearly half of investors, (46%) are worried about outliving their savings, including half of non-retirees and more than a third (35%) of retirees.

“With increased longevity, today’s pre-retirees need to think about having enough money to facilitate a sound retirement,” said Karen Wimbish, director of Retail Retirement, Wells Fargo.

Wells Fargo Advisors also launched ‘Income Generation’ – a comprehensive program of enhanced tools and training materials – for advisors to work with clients on building a retirement income plan.

About Wells Fargo Advisors

With $1.4 trillion in client assets as of June 30, 2014, Wells Fargo Advisors provides investment advice and guidance to clients through 15,189 full-service financial advisors and 3,472 licensed bankers. This vast network of advisors, one of the nation’s largest, serves investors through locations in all 50 states and the District of Columbia. Wells Fargo Advisors is the trade name used by two separate registered broker-dealers and non-bank affiliates of Wells Fargo & Company: Wells Fargo Advisors, LLC and Wells Fargo Advisors Financial Network, LLC (members SIPC). Statistics include other broker-dealers of Wells Fargo & Company.www.wellsfargoadvisors.com

Investment products and services are offered through Wells Fargo Advisors, LLC.Envision® is a registered service mark of Wells Fargo & Company and used under license.

About Wells Fargo (Twitter @WellsFargo)
Wells Fargo & Company (NYSE: WFC) is a nationwide, diversified, community-based financial services company with $1.6 trillion in assets. Founded in 1852 and headquartered in San Francisco, Wells Fargo provides banking, insurance, investments, mortgage, and consumer and commercial finance through more than 9,000 locations, 12,500 ATMs, and the internet (wellsfargo.com), and has offices in 36 countries to support customers who conduct business in the global economy. With approximately 265,000 team members, Wells Fargo serves one in three households in the United States. Wells Fargo & Company was ranked No. 29 on Fortune’s 2014 rankings of America’s largest corporations. Wells Fargo’s vision is to satisfy all our customers’ financial needs and help them succeed financially. Wells Fargo perspectives are also available at Wells Fargo Blogs and Wells Fargo Stories.

Bolder policies can inject a new momentum into the world economy to help it overcome what has been so far a disappointing recovery, IMF Managing Director Christine Lagarde said.

In a Washington speech heralding next week’s IMF-World Bank Annual Meetings, Lagarde said the IMF’s main job now is to help the global economy shift gears and overcome a brittle and uneven recovery that is beset by risks.

She told an audience at the Georgetown University School of Foreign Service October 2 that the world economy is at an inflection point. “Yes, there is a recovery but, as you all know—and we can all feel it—the level of growth and jobs is simply not good enough.”

The world needs to aim higher and try harder, Lagarde stated. This means “bolder policies to inject a ‘new momentum’ that can overcome this ‘new mediocre’ that clouds the future.”

The Annual Meetings of the IMF and the World Bank Group each year bring together around 10,000 central bankers, ministers of finance and development, private sector executives, and academics to discuss issues of global concern, including the world economic outlook, poverty eradication, economic development, and aid effectiveness.

Weak growth, modest pickup
Six years after the financial crisis began, there is continued weakness in the global economy, and only a modest pickup is foreseen for 2015, Lagarde observed. Among advanced economies, the rebound is expected to be strongest in the United States; modest in Japan; and weakest in the euro area.

Led by Asia, and China in particular, emerging market and developing economies are expected to continue to help drive global activity. For them too, however, it is likely to be at a slower pace than before.

For the low-income developing countries, including sub-Saharan Africa, economic prospects are rising but, as debt builds up in some countries, they need to be watching as well. In the Middle East, the outlook is clouded by difficult economic transitions and by intense social and political strife.

The world economy risks getting stuck with a mediocre level of growth—low growth for a long time, Lagarde said. “If people expect growth potential to be lower tomorrow, they will cut back on investment and consumption today. This dynamic could seriously impede the recovery, especially in advanced economies that are also grappling with high unemployment and low inflation.”

Migration to ‘the shadows’
Lagarde also pointed to concern that financial sector excesses may be building up, especially in advanced economies. Asset valuations are at an all time high; spreads and volatility are at an all time low.

Also worrying is the migration of new market and liquidity risks to the “shadows” of the financial world—part of the less-regulated, nonbank sector, which is growing rapidly in some countries. In addition developments in Ukraine, the Middle East, and in countries affected by the Ebola outbreak represent geopolitical risk.

Generating new momentum
Faced with these events, the world economy can muddle along with sub-par, mediocre growth, Lagarde said. “Or it can aim for a better path where bold policies would accelerate growth, increase employment, and achieve a ‘new momentum.’ ”

A more balanced policy toolkit would use both the demand and supply side of the economy. Monetary policy has provided important support to demand during the crisis, Lagarde observed. Now it needs more support from other policies, specifically
• Growth- and job-friendly fiscal policies, such as addressing tax evasion, supporting more efficient public spending, and cutting payroll taxes;
• Structural reforms to raise productivity, competitiveness, and employment through training programs; encouraging women to join the labor force; opening up product and service markets; and reforming energy subsidies; and
• Boosting efficient public investment in infrastructure, which can be a powerful impetus for growth and jobs.
Still, in many advanced economies, these policies would only go so far unless the flow of credit to the economy is improved. “We need insolvency regimes that can help banks and the private sector effectively deal with their debt burdens—to free up their balance sheets so credit can flow back and grease the wheels of the economy.” Lagarde said.

How to galvanize the globe
But given “mediocre” growth and the policy “momentum” needed to overcome it, galvanizing global cooperation in such an effort involves multilateralism and the role of the IMF, Lagarde said.

Noting that 2014 marks the IMF’s 70th anniversary, Lagarde said the IMF had been a forum for cooperation throughout its history, including through the financial crisis. She cited examples of global economic cooperation in action during this crisis.

”Perhaps most prominent has been the G-20 nations coming together— including to provide additional resources to the IMF— to bolster confidence and safeguard the global financial system.” She noted that the G-20 recently announced further progress in developing strategies to lift medium-term growth by a collective 2 percent of GDP by 2018— holding the promise of more growth and jobs.

“Seventy years on, we continue to adapt to fulfill our raison d’être—to safeguard stability by helping countries through economic fallouts, and forging cooperative solutions to global problems. For you and for generations to come,” Lagarde said.

Officials from the 188 members of the IMF and the World Bank are attending the 2014 Annual Meetings. Under the broader umbrella of the formal sessions, there will be a host of meetings of different official groups, including the Group of Twenty advanced economies and emerging markets, the Commonwealth Finance Ministers, and the Group of Seven. There will also be meetings with civil society, academics, and the private sector.

This courtesy of www.imf.org

WASHINGTON, World Bank Group President Jim Yong Kim today called for economic growth that creates more just societies, and he defined the institution’s goal of boosting shared prosperity as the World Bank Group’s way of tackling the global challenge of inequality.

Speaking at Howard University in Washington DC on the eve of the World Bank/IMF Annual Meetings, Kim explained how under his leadership, the World Bank Group has set two twin goals: ending extreme poverty by 2030 and boosting shared prosperity among the poorest 40 percent in developing countries. Kim today told attending students and faculty what the second goal – boosting shared prosperity – means in the fight against inequality, and how to make progress in achieving it.

“We are working to ensure that the growth of the global economy will improve the lives of all members of society not only a fortunate few,” said Kim. “To accomplish this, the World Bank Group aims to achieve specific income-related and social goals: We want to raise the earnings of the lowest 40 percent of income earners in developing countries and improve their access to life’s essentials, including food, health care, education and jobs.”

Citing a report from Oxfam International which stated that the world’s richest 85 people have as much combined wealth as the poorest 3.6 billion, Kim said that boosting shared prosperity is also important to the pursuit of justice.

“Think about that: A group far smaller than the number of people in this room possesses more wealth than half the world’s population. With so many Africans, as well as Asians, and Latin Americans, living in extreme poverty, this state of affairs is a stain on our collective conscience. Protecting an individual’s ability to reap financial reward for hard work and success is extremely important. It creates motivation; it drives innovation; and it permits people to help others. At the same time, what does it mean that so much of the world’s enormous wealth has accrued to so few?,” asked Kim.

Kim noted that inequality in societies is a greater issue than income, and he pointed to the Ebola crisis as a failure to share knowledge and infrastructure equitably with countries in Africa.

“For the first time in the history of the World Bank Group, we have set a goal that aims to reduce global inequality,” said Kim. “As the spread of the Ebola virus in West Africa shows, the importance of this objective could not be more clear. The battle against the infection is a fight on many fronts – human lives and health foremost among them. But it is also a fight against inequality. The knowledge and infrastructure to treat the sick and contain the virus exists in high and middle income counties. However, over many years, we have failed to make both accessible to low income people in Guinea, Liberia and Sierra Leone. So now, thousands of people in these countries are dying because, in the lottery of birth, they were born in the wrong place.”

Kim stated that increasing individual incomes, while important, is only part of the equation for boosting shared prosperity. “We need economic growth to deliver benefits that create more just societies. So, in addition to changes in income, boosting shared prosperity also focuses on improving gender equity and low income people’s access to food, shelter, clean water, sanitation health care, education and job opportunities.”

“Boosting shared prosperity is the World Bank Group’s way of tackling the challenge of inequality,” said Kim.

In his speech at Howard, a historically black university, Kim stated that the commitment to equality is evident in the Bank Group’s diversity efforts.

“The Bank is probably one of the most diverse institutions in Washington. Our employees are citizens of over 100 countries and speak almost as many languages,” said Kim. “We have made progress in expanding the diversity of the World Bank Group, but we can do better. For example, for years, we have fallen short in recruiting African Americans to our ranks. That is changing. We have asked some of the most thoughtful national leaders on diversity to help us build a broad and sustained outreach to highly qualified African American candidates. We have also begun a process to establish concrete targets that will result in senior managers hiring more diverse staff. I expect to see the results of our determined activity this coming year.”

Kim noted that Howard and the World Bank Group are in discussions about creating internships for doctoral candidates in economics to work with our Development Economics Vice President’s office.

“These internships would allow the doctoral students a chance to immerse themselves in development policies and programs affecting countries around the world. I hope that this program and my presence encourage many of you to prepare your resumes. Twenty-nine Howard graduates currently work at the Bank. We are always looking for the best and the brightest, and we have found many of them here.”

Kim noted that Dr. Martin Luther King was not only a civil rights leader but a leader in the global fight against poverty.

“Four days before his death, Dr. King gave one of his final sermons. Standing only a few miles from here at Washington’s National Cathedral, he called poverty a ‘monstrous octopus’ that ‘spreads its nagging, prehensile tentacles into hamlets and villages all over our world.’ He said that he had seen it in Latin America, Africa and Asia, in addition to Mississippi, New Jersey and New York. He spoke of the challenge ‘to rid our nation and the world of poverty.’”

In closing, Kim asked the assembled students and faculty to take on the Bank Group’s twin goals:

CUPERTINO, California ―Apple® today announced Apple Pay™, a new category of service that will transform mobile payments with an easy, secure and private way to pay. Apple Pay works with iPhone® 6 and iPhone 6 Plus through a groundbreaking NFC antenna design, a dedicated chip called the Secure Element, and the security and convenience of Touch ID™. Apple Pay is easy to set up, so hundreds of millions of users can simply add their credit or debit card on file from their iTunes Store® account. Apple Pay will also work with the newly announced Apple Watch™, extending Apple Pay to over 200 million owners of iPhone 5, iPhone 5c and iPhone 5s worldwide.

Apple Pay supports credit and debit cards from the three major payment networks, American Express, MasterCard and Visa, issued by the most popular banks including Bank of America, Capital One Bank, Chase, Citi and Wells Fargo, representing 83 percent of credit card purchase volume in the US.* In addition to the 258 Apple retail stores in the US, some of the nation’s leading retailers that will support Apple Pay include Bloomingdale’s, Disney Store and Walt Disney World Resort, Duane Reade, Macy’s, McDonald’s, Sephora, Staples, Subway, Walgreens and Whole Foods Market. Apple Watch will also work at the over 220,000 merchant locations across the US that have contactless payment enabled. Apple Pay is also able to make purchases through apps in the App Store℠.

“Security and privacy is at the core of Apple Pay. When you’re using Apple Pay in a store, restaurant or other merchant, cashiers will no longer see your name, credit card number or security code, helping to reduce the potential for fraud,” said Eddy Cue, Apple’s senior vice president of Internet Software and Services. “Apple doesn’t collect your purchase history, so we don’t know what you bought, where you bought it or how much you paid for it. And if your iPhone is lost or stolen, you can use Find My iPhone to quickly suspend payments from that device.”

Apple Pay will change the way you pay. When you add a credit or debit card with Apple Pay, the actual card numbers are not stored on the device nor on Apple servers. Instead, a unique Device Account Number is assigned, encrypted and securely stored in the Secure Element on your iPhone or Apple Watch. Each transaction is authorized with a one-time unique number using your Device Account Number and instead of using the security code from the back of your card, Apple Pay creates a dynamic security code to securely validate each transaction.

“JPMorgan Chase has been pleased to collaborate on Apple Pay to create a better, faster and safer payments system, which puts the customer first, creating an exceptional customer experience for consumers and merchants. Everyone wins,” said Jamie Dimon, chairman and CEO, JPMorgan Chase & Co.

“We’re providing our customers with tools to make their financial lives better, including our 30 million digital banking customers,” said Brian Moynihan, CEO of Bank of America. “For them, better means simple and convenient. Apple Pay is another exciting move in that direction.”

“Apple Pay is the kind of innovative thinking that brings the worlds of online and offline commerce closer together,” said Ken Chenault, CEO of American Express. “We’re excited to work with Apple to offer Card Members and merchants a simple and secure way to make purchases in stores and on apps.”

Online shopping in apps with iPhone is also as simple as the touch of a finger. Users can pay for physical goods and services including apparel, electronics, health and beauty products, tickets and more with Touch ID. Checkout can happen with a single touch, so there’s no need to manually fill out lengthy account forms or repeatedly type in shipping and billing information, and card details are kept private and are not shared with the online merchant. For example, quickly order grill accessories for a backyard BBQ from the Target app, easily request a ride with Uber without having to create an account first or avoid the lunch line by using Rapid Pick-Up and paying ahead in the Panera Bread app. Simply make your selection and when ready to buy, use Apple Pay to complete the transaction.

Starting in October, with iPhone 6 and iPhone 6 Plus, Apple Pay will be available in the US as a free update to iOS 8. Apple Pay will work in stores with iPhone 6, iPhone 6 Plus and Apple Watch. Apple Pay APIs will be available to developers in iOS 8 so they can enable purchasing physical goods within their apps on iPhone 6 and iPhone 6 Plus.

*American Express, Bank of America, Capital One Bank, Chase, Citi and Wells Fargo at availability with additional banks coming quickly thereafter including Barclaycard, Navy Federal Credit Union, PNC Bank, USAA and U.S. Bank.

Apple designs Macs, the best personal computers in the world, along with OS X, iLife, iWork and professional software. Apple leads the digital music revolution with its iPods and iTunes online store. Apple has reinvented the mobile phone with its revolutionary iPhone and App Store, and is defining the future of mobile media and computing devices with iPad.