Paulson proposes financial overhaul

By MARTIN CRUTSINGER, AP Economics Writer 13 minutes ago

WASHINGTON - The Bush administration Monday proposed the most far-ranging overhaul of the financial regulatory system since the stock market crash of 1929 and the ensuing Great Depression.

The plan would change how the government regulates thousands of businesses from the nation's biggest banks and investment houses down to the local insurance agent and mortgage broker.

Treasury Secretary Henry Paulson unveiled the 218-page plan in a speech in Treasury's ornate Cash Room. He declared that a strong financial system was important not just for Wall Street but also for working Americans.

The administration's plan was already drawing criticism from Democrats that it does not go far enough to deal with abuses in mortgage lending and securities trading that were exposed by the current credit crisis.

The plan, which would require congressional approval for its biggest changes, seeks to trim a hodge-podge collection of overlapping jurisdictions that date back to the Civil War.

It would give the Federal Reserve more power to protect the stability of the entire financial system while merging day-to-day bank supervision into one agency, down from five at present.

It also would create one super agency in charge of business conduct and consumer protection, performing many of the functions of the current Securities and Exchange Commission.

It would propose eliminating the Office of Thrift Supervision and the Commodity Futures Trading Commission, merging their functions into other agencies.

It would ask Congress to establish a federal Mortgage Origination Commission to set recommended minimum licensing standards for mortgage brokers, many of whom now operate outside of federal regulation, and it would also take a first step toward federal regulation of the insurance industry by asking Congress to establish an Office of Insurance Oversight inside the Treasury Department.

Paulson acknowledged in his remarks that most of the changes will not occur until after a lengthy debate in Congress, leaving it to the next administration to deal with the biggest changes proposed by the report. He also said the Bush administration's focus would remain on getting through the current severe credit crisis, which has roiled financial markets since last August.

President Bush's aides said Monday after the announcement that Bush was happy to let Paulson be the lead figure on this issue.

"The president's point of view is that he trusts Secretary Paulson to put forward what he thinks is a constructive plan," White House press secretary Dana Perino told reporters traveling with Bush aboard Air Force One to Ukraine on Monday.

She said administration officials will work with lawmakers in hopes of having constructive conversations. Asked if Bush's goal is to get the overhaul approved before he leaves office, Perino said: "We'll have to see. It's a big attempt."

"Secretary Paulson has been working on this package for about a year, so it's not like pulling a rabbit out a hat," Perino added. "It's very constructive, deliberate thinking amongst the best minds in economics."

For his part, Paulson rejected Democratic charges that it was lax regulation of mortgage brokers and the financial industry that had led to the current problems.

"I do not believe it is fair or accurate to blame our regulatory structure for the current market turmoil," he said. "I am not suggesting that more regulation is the answer or even that more effective regulation can prevent the periods of financial market stress that seem to occur every five to 10 years."

Banking groups raised strong objections to the plan while other industry groups had mixed reactions.

"Dismantling the thrift charter and crippling state banking charters will weaken banking in America," said Edward Yingling, president of the American Bankers Association.

In Congress, House Financial Services Committee Chairman Barney Frank, who is working on his own regulatory revamp, called Paulson's proposal a "constructive step forward" but said it wouldn't give the Federal Reserve enough authority to carry out its expanded job to police the stability of the entire financial system.

Many Democrats said that Congress' first priority should be to deal with the current mortgage crisis that is threatening millions of Americans with the loss of their homes and that an extensive debate on a regulatory overhaul should not occur until a new president is in office next year.

Senate Banking Committee Chairman Christopher Dodd, D-Conn., said in an appearance on CBS' "Early Show" that it was not a failure of the regulatory scheme but "a failure of leadership" that led to the current crisis.

The proposed overhaul would be the most extensive since the current regulatory system was created in response to the 1929 stock market crash and the Great Depression.

It comes at a time when the financial system faces its most severe credit crisis in two decades, one that has resulted in billions of dollars of losses for big banks and investment houses and the near-collapse of Bear Stearns, the country's fifth-largest investment bank.

The rising tide of bad debt has made it harder for consumers and businesses to get credit, further weighing on an economy struggling with a prolonged housing slump and soaring energy prices. Many economists believe the country is already in a recession.

For an economic reform

By Steven Rix (aka politiquesusa)

Just a few modest thoughts I wrote previously on Renegade eye's blog.


Since the 70s until now there has been around 24 economic crisis in the world. It's almost 1 crisis every year and a half. The 1st economic crisis in the US was in 1907, I believe, when Theodore Roosevelt tried to redistribute wealth to citizens and this date is important to understand that the power of the President in the financial economic world became very limited: there is a need to impose economic reforms but our economic system is autistic as long as they won't control the invisible hand of the finance gurus. Even with rigid economic rules, the traders (the french Jerome Kerviel for example) can bet large amounts of money with the full complicity of the banks without being detected by the conventional financial audits.
Simply put, the economic crisis are the results of the banks taking too many risks by gambling too much money, and after each economic crisis the credit costs become more expensive. Since the XXth century the banks are allowed to gamble their "synthetic trade" while it was completely forbidden during the XIXth century: lots of economic deregulations are unfortunately the product of the economic crisis, and this is why it is important to reform the system.
The simple rule would be to go back to Adam Smith's theory where we have to control the economy to avoid financial crisis. If you let the finance to herself, she will become instable. Besides any crisis does not really depend on a unique model - I personally think it's not healthy to compare the actual crisis to the crisis of the 30s - but it rather comes from historical, social, political characteristics in different capitalisms; so in other words we can't really expect how bad the crisis can be and how low it can go. The main breaking point in an economic crisis will come when everybody will start phreaking out on the markets, and they'll have to start spending their economies because they can't afford to buy products. Which means we should fight inflation first (possibly). An economic crisis deals also with newtonian theories: it's possible to slow down a crisis but it will always crash at some point.

This XXIst century is a new fight for us like I told you earlier. It has nothing to do with marxism and it has everything to do with the population against the financial institutions for many reasons. One of the main reasons come that finances have been segragating black americans until the year 2000. Black americans were charged more on their insurance premiums than white people. The banks may have done it for statistical reasons but it does not excuse them from segagrating people for economic reasons. In the book "a financial history of modern US corportate scandal from Enron to reform" the author quotes in page 532:

Several insurance companies were still charging some black policyholders higher premiums than whites in 2000. Rates in the 1960s for blacks had been as much as 25 percent more than for whites because of longevity differences,
but that disparity was dropped for new policies after civil rights activists protested against it. Some of the insurance companies failed to reduce the premiums
for existing policies; those payments continued right into the year 2000. Chicago, Detroit, Philadelphia, and Los Angeles adopted ordinances requiring firms contracting with those cities to disclose any links they might have had with slavery before the Civil War. Lehman Brothers had to disclose that one of its original brothers was a slaveholder and JPMorgan Chase had to reveal that it had some tangential ties with the Citizens Bank of Louisiana that accepted slaves as collateral for loans.
Insurance companies and other financial institutions were asked to pay for some old sins. Lawsuits were filed against FleetBoston, Aetna and CSX, New York Life Insurance Company, Lehman Brothers, Norfolk Southern Railway, Liggett (the tobacco company), and Lloyd’s of London, among others, seeking reparations for their having exploited slaves before the Civil War.

Sex Hormones, Mood Stabilizers Found In Drinking Water Of 41 M Americans

A vast array of pharmaceuticals _ including antibiotics, anti-convulsants, mood stabilizers and sex hormones _ have been found in the drinking water supplies of at least 41 million Americans, an Associated Press investigation shows.

To be sure, the concentrations of these pharmaceuticals are tiny, measured in quantities of parts per billion or trillion, far below the levels of a medical dose. Also, utilities insist their water is safe.

But the presence of so many prescription drugs _ and over-the-counter medicines like acetaminophen and ibuprofen _ in so much of our drinking water is heightening worries among scientists of long-term consequences to human health.

In the course of a five-month inquiry, the AP discovered that drugs have been detected in the drinking water supplies of 24 major metropolitan areas _ from Southern California to Northern New Jersey, from Detroit to Louisville, Ky.

Water providers rarely disclose results of pharmaceutical screenings, unless pressed, the AP found. For example, the head of a group representing major California suppliers said the public "doesn't know how to interpret the information" and might be unduly alarmed.

How do the drugs get into the water?

People take pills. Their bodies absorb some of the medication, but the rest of it passes through and is flushed down the toilet. The wastewater is treated before it is discharged into reservoirs, rivers or lakes. Then, some of the water is cleansed again at drinking water treatment plants and piped to consumers. But most treatments do not remove all drug residue.

And while researchers do not yet understand the exact risks from decades of persistent exposure to random combinations of low levels of pharmaceuticals, recent studies _ which have gone virtually unnoticed by the general public _ have found alarming effects on human cells and wildlife.

"We recognize it is a growing concern and we're taking it very seriously," said Benjamin H. Grumbles, assistant administrator for water at the U.S. Environmental Protection Agency.

Members of the AP National Investigative Team reviewed hundreds of scientific reports, analyzed federal drinking water databases, visited environmental study sites and treatment plants and interviewed more than 230 officials, academics and scientists. They also surveyed the nation's 50 largest cities and a dozen other major water providers, as well as smaller community water providers in all 50 states.

Here are some of the key test results obtained by the AP:

_Officials in Philadelphia said testing there discovered 56 pharmaceuticals or byproducts in treated drinking water, including medicines for pain, infection, high cholesterol, asthma, epilepsy, mental illness and heart problems. Sixty-three pharmaceuticals or byproducts were found in the city's watersheds.

_Anti-epileptic and anti-anxiety medications were detected in a portion of the treated drinking water for 18.5 million people in Southern California.

_Researchers at the U.S. Geological Survey analyzed a Passaic Valley Water Commission drinking water treatment plant, which serves 850,000 people in Northern New Jersey, and found a metabolized angina medicine and the mood-stabilizing carbamazepine in drinking water.

_A sex hormone was detected in San Francisco's drinking water.

_The drinking water for Washington, D.C., and surrounding areas tested positive for six pharmaceuticals.

_Three medications, including an antibiotic, were found in drinking water supplied to Tucson, Ariz.

The situation is undoubtedly worse than suggested by the positive test results in the major population centers documented by the AP.

The federal government doesn't require any testing and hasn't set safety limits for drugs in water. Of the 62 major water providers contacted, the drinking water for only 28 was tested. Among the 34 that haven't: Houston, Chicago, Miami, Baltimore, Phoenix, Boston and New York City's Department of Environmental Protection, which delivers water to 9 million people.

Some providers screen only for one or two pharmaceuticals, leaving open the possibility that others are present.

The AP's investigation also indicates that watersheds, the natural sources of most of the nation's water supply, also are contaminated. Tests were conducted in the watersheds of 35 of the 62 major providers surveyed by the AP, and pharmaceuticals were detected in 28.

Yet officials in six of those 28 metropolitan areas said they did not go on to test their drinking water _ Fairfax, Va.; Montgomery County in Maryland; Omaha, Neb.; Oklahoma City; Santa Clara, Calif., and New York City.

The New York state health department and the USGS tested the source of the city's water, upstate. They found trace concentrations of heart medicine, infection fighters, estrogen, anti-convulsants, a mood stabilizer and a tranquilizer.

City water officials declined repeated requests for an interview. In a statement, they insisted that "New York City's drinking water continues to meet all federal and state regulations regarding drinking water quality in the watershed and the distribution system" _ regulations that do not address trace pharmaceuticals.

In several cases, officials at municipal or regional water providers told the AP that pharmaceuticals had not been detected, but the AP obtained the results of tests conducted by independent researchers that showed otherwise. For example, water department officials in New Orleans said their water had not been tested for pharmaceuticals, but a Tulane University researcher and his students have published a study that found the pain reliever naproxen, the sex hormone estrone and the anti-cholesterol drug byproduct clofibric acid in treated drinking water.

Of the 28 major metropolitan areas where tests were performed on drinking water supplies, only Albuquerque; Austin, Texas; and Virginia Beach, Va.; said tests were negative. The drinking water in Dallas has been tested, but officials are awaiting results. Arlington, Texas, acknowledged that traces of a pharmaceutical were detected in its drinking water but cited post-9/11 security concerns in refusing to identify the drug.

The AP also contacted 52 small water providers _ one in each state, and two each in Missouri and Texas _ that serve communities with populations around 25,000. All but one said their drinking water had not been screened for pharmaceuticals; officials in Emporia, Kan., refused to answer AP's questions, also citing post-9/11 issues.

Rural consumers who draw water from their own wells aren't in the clear either, experts say.

The Stroud Water Research Center, in Avondale, Pa., has measured water samples from New York City's upstate watershed for caffeine, a common contaminant that scientists often look for as a possible signal for the presence of other pharmaceuticals. Though more caffeine was detected at suburban sites, researcher Anthony Aufdenkampe was struck by the relatively high levels even in less populated areas.

He suspects it escapes from failed septic tanks, maybe with other drugs. "Septic systems are essentially small treatment plants that are essentially unmanaged and therefore tend to fail," Aufdenkampe said.

Even users of bottled water and home filtration systems don't necessarily avoid exposure. Bottlers, some of which simply repackage tap water, do not typically treat or test for pharmaceuticals, according to the industry's main trade group. The same goes for the makers of home filtration systems.

Contamination is not confined to the United States. More than 100 different pharmaceuticals have been detected in lakes, rivers, reservoirs and streams throughout the world. Studies have detected pharmaceuticals in waters throughout Asia, Australia, Canada and Europe _ even in Swiss lakes and the North Sea.

For example, in Canada, a study of 20 Ontario drinking water treatment plants by a national research institute found nine different drugs in water samples. Japanese health officials in December called for human health impact studies after detecting prescription drugs in drinking water at seven different sites.

In the United States, the problem isn't confined to surface waters. Pharmaceuticals also permeate aquifers deep underground, source of 40 percent of the nation's water supply. Federal scientists who drew water in 24 states from aquifers near contaminant sources such as landfills and animal feed lots found minuscule levels of hormones, antibiotics and other drugs.

Perhaps it's because Americans have been taking drugs _ and flushing them unmetabolized or unused _ in growing amounts. Over the past five years, the number of U.S. prescriptions rose 12 percent to a record 3.7 billion, while nonprescription drug purchases held steady around 3.3 billion, according to IMS Health and The Nielsen Co.

"People think that if they take a medication, their body absorbs it and it disappears, but of course that's not the case," said EPA scientist Christian Daughton, one of the first to draw attention to the issue of pharmaceuticals in water in the United States.

Some drugs, including widely used cholesterol fighters, tranquilizers and anti-epileptic medications, resist modern drinking water and wastewater treatment processes. Plus, the EPA says there are no sewage treatment systems specifically engineered to remove pharmaceuticals.

One technology, reverse osmosis, removes virtually all pharmaceutical contaminants but is very expensive for large-scale use and leaves several gallons of polluted water for every one that is made drinkable.

Another issue: There's evidence that adding chlorine, a common process in conventional drinking water treatment plants, makes some pharmaceuticals more toxic.

Human waste isn't the only source of contamination. Cattle, for example, are given ear implants that provide a slow release of trenbolone, an anabolic steroid used by some bodybuilders, which causes cattle to bulk up. But not all the trenbolone circulating in a steer is metabolized. A German study showed 10 percent of the steroid passed right through the animals.

Water sampled downstream of a Nebraska feedlot had steroid levels four times as high as the water taken upstream. Male fathead minnows living in that downstream area had low testosterone levels and small heads.

Other veterinary drugs also play a role. Pets are now treated for arthritis, cancer, heart disease, diabetes, allergies, dementia, and even obesity _ sometimes with the same drugs as humans. The inflation-adjusted value of veterinary drugs rose by 8 percent, to $5.2 billion, over the past five years, according to an analysis of data from the Animal Health Institute.

Ask the pharmaceutical industry whether the contamination of water supplies is a problem, and officials will tell you no. "Based on what we now know, I would say we find there's little or no risk from pharmaceuticals in the environment to human health," said microbiologist Thomas White, a consultant for the Pharmaceutical Research and Manufacturers of America.

But at a conference last summer, Mary Buzby _ director of environmental technology for drug maker Merck & Co. Inc. _ said: "There's no doubt about it, pharmaceuticals are being detected in the environment and there is genuine concern that these compounds, in the small concentrations that they're at, could be causing impacts to human health or to aquatic organisms."

Recent laboratory research has found that small amounts of medication have affected human embryonic kidney cells, human blood cells and human breast cancer cells. The cancer cells proliferated too quickly; the kidney cells grew too slowly; and the blood cells showed biological activity associated with inflammation.

Also, pharmaceuticals in waterways are damaging wildlife across the nation and around the globe, research shows. Notably, male fish are being feminized, creating egg yolk proteins, a process usually restricted to females. Pharmaceuticals also are affecting sentinel species at the foundation of the pyramid of life _ such as earth worms in the wild and zooplankton in the laboratory, studies show.

Some scientists stress that the research is extremely limited, and there are too many unknowns. They say, though, that the documented health problems in wildlife are disconcerting.

"It brings a question to people's minds that if the fish were affected ... might there be a potential problem for humans?" EPA research biologist Vickie Wilson told the AP. "It could be that the fish are just exquisitely sensitive because of their physiology or something. We haven't gotten far enough along."

With limited research funds, said Shane Snyder, research and development project manager at the Southern Nevada Water Authority, a greater emphasis should be put on studying the effects of drugs in water.

"I think it's a shame that so much money is going into monitoring to figure out if these things are out there, and so little is being spent on human health," said Snyder. "They need to just accept that these things are everywhere _ every chemical and pharmaceutical could be there. It's time for the EPA to step up to the plate and make a statement about the need to study effects, both human and environmental."

To the degree that the EPA is focused on the issue, it appears to be looking at detection. Grumbles acknowledged that just late last year the agency developed three new methods to "detect and quantify pharmaceuticals" in wastewater. "We realize that we have a limited amount of data on the concentrations," he said. "We're going to be able to learn a lot more."

While Grumbles said the EPA had analyzed 287 pharmaceuticals for possible inclusion on a draft list of candidates for regulation under the Safe Drinking Water Act, he said only one, nitroglycerin, was on the list. Nitroglycerin can be used as a drug for heart problems, but the key reason it's being considered is its widespread use in making explosives.

So much is unknown. Many independent scientists are skeptical that trace concentrations will ultimately prove to be harmful to humans. Confidence about human safety is based largely on studies that poison lab animals with much higher amounts.

There's growing concern in the scientific community, meanwhile, that certain drugs _ or combinations of drugs _ may harm humans over decades because water, unlike most specific foods, is consumed in sizable amounts every day.

Our bodies may shrug off a relatively big one-time dose, yet suffer from a smaller amount delivered continuously over a half century, perhaps subtly stirring allergies or nerve damage. Pregnant women, the elderly and the very ill might be more sensitive.

Many concerns about chronic low-level exposure focus on certain drug classes: chemotherapy that can act as a powerful poison; hormones that can hamper reproduction or development; medicines for depression and epilepsy that can damage the brain or change behavior; antibiotics that can allow human germs to mutate into more dangerous forms; pain relievers and blood-pressure diuretics.

For several decades, federal environmental officials and nonprofit watchdog environmental groups have focused on regulated contaminants _ pesticides, lead, PCBs _ which are present in higher concentrations and clearly pose a health risk.

However, some experts say medications may pose a unique danger because, unlike most pollutants, they were crafted to act on the human body.

"These are chemicals that are designed to have very specific effects at very low concentrations. That's what pharmaceuticals do. So when they get out to the environment, it should not be a shock to people that they have effects," says zoologist John Sumpter at Brunel University in London, who has studied trace hormones, heart medicine and other drugs.

And while drugs are tested to be safe for humans, the timeframe is usually over a matter of months, not a lifetime. Pharmaceuticals also can produce side effects and interact with other drugs at normal medical doses. That's why _ aside from therapeutic doses of fluoride injected into potable water supplies _ pharmaceuticals are prescribed to people who need them, not delivered to everyone in their drinking water.

"We know we are being exposed to other people's drugs through our drinking water, and that can't be good," says Dr. David Carpenter, who directs the Institute for Health and the Environment of the State University of New York at Albany.

Moses was high on drugs: Israeli researcher

JERUSALEM (AFP) - High on Mount Sinai, Moses was on psychedelic drugs when he heard God deliver the Ten Commandments, an Israeli researcher claimed in a study published this week.

Such mind-altering substances formed an integral part of the religious rites of Israelites in biblical times, Benny Shanon, a professor of cognitive psychology at the Hebrew University of Jerusalem wrote in the Time and Mind journal of philosophy.

"As far Moses on Mount Sinai is concerned, it was either a supernatural cosmic event, which I don't believe, or a legend, which I don't believe either, or finally, and this is very probable, an event that joined Moses and the people of Israel under the effect of narcotics," Shanon told Israeli public radio on Tuesday.

Moses was probably also on drugs when he saw the "burning bush," suggested Shanon, who said he himself has dabbled with such substances.

"The Bible says people see sounds, and that is a clasic phenomenon," he said citing the example of religious ceremonies in the Amazon in which drugs are used that induce people to "see music."

He mentioned his own experience when he used ayahuasca, a powerful psychotropic plant, during a religious ceremony in Brazil's Amazon forest in 1991. "I experienced visions that had spiritual-religious connotations," Shanon said.

He said the psychedelic effects of ayahuasca were comparable to those produced by concoctions based on bark of the acacia tree, that is frequently mentioned in the Bible.

Audiophile Deathmatch: Monster Cables vs. a Coat Hanger

Marketing s...tuffs in a placebo society

Whether or not Monster Cables are worth it is a war that has raged since home theater immemorial. A poster at Audioholics was put in a room with five fellow audiophiles, and a Martin Logan SL-3 speaker set at 75Db at 1000KHz playing a mix of "smooth, trio, easy listening jazz" that no one had heard before. In one corner, Monster 1000 speaker cables. In the other, four coat hangers twisted and soldered into a speaker cable.

Seven songs were played while the group was blindfolded and the cables swapped back and forth. Not only "after 5 tests, none could determine which was the Monster 1000 cable or the coat hanger wire," but no one knew a coat hanger was used in the first place.

Further, when music was played through the coat hanger wire, we were asked if what we heard sounded good to us. All agreed that what was heard sounded excellent, however, when A-B tests occured, it was impossible to determine which sounded best the majority of the time and which wire was in use.

It's possible these guys weren't super-hardcore audiophiles that might not be able to tell the difference. Ignoring the main point for a second, we don't really recommend re-wiring your home theater after a firesale on wire hangers. [Audioholics via Consumerist]

Americans are 'financially illiterate' - survey

By Catherine Clifford, CNNMoney.com staff writer

Americans don't understand debt, which may be one reason that they have too much of it, according to a survey released Tuesday.

The survey presented 1,000 people with a hypothetical scenario about credit card debt and asked them to compute how long it would take to pay it off. Only 35.9% of the 1,000 respondents could figure out how many years it would take for the amount they owe on their credit cards to double. A full 18.2% did not know how to respond and 31.9% of those surveyed over-estimated the timeframe.

The survey by Harvard Business School and Dartmouth College professors and TNS asked respondents to assess their debt levels. Those who said they felt they were carrying too much debt were found to be "wildly wrong" when it came to using compound interest to calculate how long it would take to pay off that debt.

Of those polled, 26% said they consider the debt they are carrying to be unmanageable, while 61% said their debt level was "just right."

Americans don't realize they're unaware of some of the complexities of personal finance - like compound interest - said Bob Neuhaus, the executive vice president and the head of the financial services sector in the U.S. for TNS. "If financial literacy was higher, you would see more caution in the use of consumer debt. It would not eliminate the problem, but it would mitigate [it]."

The survey draws attention to a large problem without an easy solution. "Even those with a college degree don't have an understanding of the basic finance ideas," said Annamaria Lusardi, Professor of Economics at Dartmouth College.

However, there are smaller, more manageable steps that can make a difference. Harvard Business School Professor Peter Tufano, a self-proclaimed believer in financial education, does not see credit as inherently bad, but he said that debt services are much more complicated now than they were a generation ago. He said credit card companies could help by creating more consumer friendly credit contracts that plainly spell out the terms, and bills that itemize outstanding debt so consumers can grasp the reality of how they spend money and how long it will take to pay.

A lack of savings could be compounding the consumer debt problem. Another nationwide survey of 1,000 Americans released Monday by the American Savings Educational Council (ASEC) and America Saves found that a mere 53% of Americans have adequate savings with only 28% saving the recommended 10% of their annual income.

Three-quarters of Americans surveyed said that they spend less than their income and save the difference, which may provide enough for an emergency unexpected expense, but only a little over 50% have enough savings to provide for a comfortable standard of living in retirement.

However, those who make more money are able to sock away more for a rainy day, according to the savings survey. Ninety-percent of the high-income group (those earning at least $75,000 annually) say they have adequate savings, but only 48% of the low-income group (those earning below $35,000 annually) can say the same. And 81% of the high-income group report saving at least 5% of their income, compared with 34% of the low-income group.

Regardless of income or level of financial literacy, there is one unifying lesson: have a plan. "Having a financial plan increases savings and financial stability," said Stephen Brobeck, executive director of Consumer Federation of America.