Newborns typically are mailed birth certificates and Social Security cards within weeks of leaving the hospital. In at least two states they could soon be receiving other important documents: savings account statements.

A bill being considered in the California Legislature would create savings accounts for every child born in the state after Jan. 1, 2008. Each account would be seeded with $500 in state funds, and the money could be used only for specific purposes, such as college or technical education or buying a first home...

All states and the District of Columbia offer 529 college savings programs, and at least eight states offer financial incentives, such as matching deposits, to encourage families to save...

But the program being considered in California would be the first in which a state would set up accounts for all newborns - regardless of family income - and make the initial deposit.

The April 25 hearing is to be held in the Senate Revenue and Taxation committee. Jim Evans, spokesman for Sen. Darrell Steinberg, D-Sacramento, said the senator authored bill on behalf of the New America Foundation, a Washington nonprofit that promotes asset-building programs for the poor.

"There's a crisis - not enough people are savings and building assets in today's society," Mr. Evans said. "We think if you seed accounts with $500 in state money, that will encourage families to put additional funds into these accounts to buttress the original investment..."

For the complete article, please visit the American Banker website.