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Independent Financial Guidance Key to Making Americans "Financially Fit"

Just as Americans started handing over their wrenches in the 1950s when their cars became too difficult to maintain, today they must turn to professional guidance to help take care of their accounts.
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When you trace the roots of the record-busting foreclosure rate and the havoc that has wrought on the American economy over the last few years, San Francisco's mailboxes probably don't come to mind as a logical starting point. But they should.

Those mailboxes are where major banks first sowed the seeds of our current economic problems. Nearly fifty years ago today, over 100,000 people in San Francisco came home after work to find in their mail revolutionary plastic squares called "credit cards." At the time, banks were fighting a losing battle to sell this new product by trying to transform savings-conscious Americans into more credit-friendly consumers. In a last-ditch effort to win consumers over, bank executives staged a "credit card drop," blanketing the city with access to free credit cards.

It worked. A new, viral culture of debt emerged overnight. Starting with basically no cards in the 1950s, there are now over 640 million credit cards in circulation in the U.S. -- about three for every adult -- and nearly $1 trillion in outstanding credit card debt. Another $1.5 trillion is now owed on other debt products.

Yet, household debt in itself is not the cause of our economic problems.

Fact is, we are in this economic mess today because of a more fundamental problem: few people know how to effectively use financial products, whether they provide debt or savings. Just like the credit cards San Franciscans and other Californians found in their mailboxes 50 years ago, mortgages and other products never come with easy-to-read instructional manuals, carrying punishing consequences for ill-informed consumers with no access to independent financial advice.

If there is one lesson we can take from the foreclosure crisis and its disastrous ripple effects, it's that we must democratize access to sound and unbiased financial guidance, something only 20 percent of households -- mostly wealthy -- have access to. Just as Americans started handing over their wrenches in the 1950s when their cars became too difficult to maintain, today they must turn to professional guidance to help take care of their accounts.

You go to your mechanic to maintain your car--a highly sophisticated combination of steel and transistors -- and you go to a vast network of medical specialists to maintain your physical and mental health. Shouldn't we place a similar priority on maintaining financial health?

We think so. That is why San Francisco, the city where the bank-driven credit spiral took root, will be the first city in the country to provide unbiased, independent financial guidance to all of its residents by staging a "financial guidance drop." Over 1 million people today will receive an invitation to HelloWallet, a new web-based financial guidance service that has attracted support from the Rockefeller Foundation, Walter & Elise Haas Fund, and Levi Strauss Foundation. Independent from banks and capable of providing personalized guidance for the price of a cup of coffee, the service will help us put millions of dollars back in San Franciscan pockets by putting banks to work for our residents.

We are joined by a broad group of San Francisco's leading institutions, including foundations, unions, businesses, and non-profits who will work together over the next year to help make San Francisco one of the most financially fit cities in the country.

This is a problem that we can solve by working together and changing the way we get ahead. In the 1950s, that game-changer was a piece of plastic. Today, we are hopeful that it is independent financial guidance available to all.

Gavin Newsom is the Democratic Mayor of San Francisco

José Cisneros is the Treasurer of San Francisco