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MORE ACCESS TO FINANCIAL INFORMATION AND INSTRUMENTS WILL HELP LESS-WELL-OFF HOUSEHOLDS AND BUSINESSES TO FLOURISH, ACCORDING TO THE FEDERAL RESERVE CHAIRMAN.
In our economy, the three principal means for household asset accumulation are through home ownership, small business ownership, and savings. As important as these are for the individual, they also represent distinct and important benefits to the broader economy and, therefore, play prominent roles in the operation of our financial markets and the priorities of our public policy.
BUILDING ASSETS THROUGH HOME OWNERSHIP
The choice to buy a home is a decision to plant a family's roots in a community with all the implicit incentives to make that community thrive. Where home ownership flourishes, it is no surprise to find increased neighborhood stability, more civic-minded residents, better school systems, and reduced crime rates.
Just as important is the effect of home ownership on a household's ability to accumulate assets. For most households, home ownership represents a significant financial milestone and is an important vehicle for ongoing savings. The Federal Reserve's 1998 triennial Survey of Consumer Finances indicates that home ownership represented 44% of gross assets for families earning $50,000 or less annually. Further, investment in residential property has been generally more stable than other types of investment, and it is perceived to be largely permanent.
With these important benefits, an increased rate of home ownership has been chosen by our society as a national priority, with many publicand private-sector resources devoted to achieving this goal. Indeed, measurable progress has been made toward this end, with the overall rate of home ownership reaching 68%, a new high, in the third quarter of last year. In assessing the opportunity for home ownership in under-served markets, the Census Bureau reports significant gains. The home-ownership rate for blacks and Hispanics, between 1997 and 2001, grew at more than double the pace for the general population. Additionally, the homeownership rate among households earning less than the median income increased more than three times the pace for households with incomes above the median.
INVESTING IN SMALL BUSINESS
Small business accounts for about half of private gross domestic product in our economy. It is an important vehicle for significant numbers of minority families to accumulate assets.
Recently released data from...