A Card to Borrow Your Future; Can Access to Credit Encourage Savings?
For a quarter-century, a Boston inventor has been obsessed with a single idea: an innovation that would give millions of American workers the chance to borrow their own money from their 401(k) savings plans using a new kind of credit card.</br></br>In 1980 the inventor, an animated fellow named Francis Vitagliano, shared his concept with an MIT professor, Franco Modigliani. The Italian-born economist had been writing for 20 years about his theory of how and when people spend and save money during their lifetime, the so-called Life-Cycle Hypothesis. Modigliani's work would win him the 1985 Nobel Prize in Economics, but the call from Vitagliano would, he thought, give him a way to test his theory in real life.</br></br>The men became champions for this new financial instrument, spending untold sums for a patent on the card idea, trying to sell it to banks and credit card companies, and withstanding a barrage of criticism from members of Congress and the financial community.</br></br>Franco Modigliani died last year at age 85. But tomorrow in Washington, Francis Vitagliano, now 55, is scheduled to watch as the 401(k) card is unveiled at a financial conference. Appearing on a panel will be an official of ING, the global financial services company that has licensed Patent No. 5206803 and is preparing to introduce the new card to employers and their k-plan participants soon, after receiving final regulatory approval from the state of Connecticut.</br></br>In this time of worry about the American retirement system, the card will once again cause a flap -- but possibly not as much as it has in the past. Whatever the immediate outcome, this is not the last stop for the controversial card as it does or does not become a staple of American getting and spending. And the tale of how it came to exist is one worth telling.