Despite the recent performance of the economy and the role of the housing bubble, we know that families will continue to aspire to own their own homes. They will do so for a variety of good reasons. For many, homeownership represents a path to stability, community, and long-term wealth building. But how to we rebuild our housing policy in ways that are constructive and supportive of economic stability rather than economic armagedon.
My perspective on this questions is presented in this recently published peice in Shelterforce magazine. The key is a new policy regime and regulatory framework that mitigates the inherent risks of the process. If done right — by matching buyers with appropriate mortgage products in a transparent and fair manner — we can make homeownership work for a broad range of American families, even those with low incomes and few resources.
Here is a sample of the argument:
Thursday, November 19th the Congressional Savings and Ownership Caucus (CSOC) is holding it's first event of the 111th Congress--"Advancing Economic Mobility Through Savings: Savings, Ownership and the American Dream."
The CSOC is a bi-partisan Congressional organization devoted to exploring, debating, and advancing policies to build savings and assets for all Americans, particularly those with lower incomes and fewer resources. The CSOC is Co-Chaired by Rep. Jim Cooper (D-TN), Rep. Tom Petri (R-WI), Rep. Earl Pomeroy (D-ND), and Rep. Joe Pitts (R-PA). The Asset Building Program has helped to organize the Congressional Savings and Ownership Caucus since 2005. You can learn more about some of the work of the CSOC here.
The event will feature the release of a new report on savings and economic mobility, the report is being released by the Economic Mobility Project of the Pew Charitable Trusts and was co-authored in part by Reid Cramer and Rourke O'Brien from the Asset Building Program.
The event is from 1PM until 2PM in room 2456 of the Rayburn building.
After several months of debate in Congress and the media, the proposal to create a Consumer Financial Protection Agency (CFPA) has recently taken some important steps toward becoming a reality. Earlier this week, Senate Banking Committee Chairman Chris Dodd included the CFPA in legislation to restructure the nation's financial regulatory system. This comes after the House Financial Services Committee approved a bill last month that would create the agency and which the full House is expected to vote on it in early December. The proposal has also received some support from important voices in the private sector and field of economics. Mark Zandi, chief economist at Moody's Economy.com wrote a piece this past Sunday in the Philadelphia Inquirer endorsing the creation of the agency.
President Obama originally called for the creation of a CFPA earlier this year as a major piece of a bold plan to revamp the regulation of the nation's financial system. The new agency would be charged with investigating consumer complaints, making rules, and enforcing regulations for a variety of financial products including mortgages, credit cards and bank accounts. The CFPA would also conduct research and promote financial education. New America's, Ellen Seidman, testified on the President's proposal before the House Financial Services Committee back in June. Click here to see her detailed analysis of the CFPA.
A report released by the Financial Access Initiative in October 2009 points out that 2.5 billion people or half of the world's adult population is unbanked. This means that they do not use formal or semi-formal financial institutions.
It also shows that socio-economic and demographic factors are not the only determinants of financial inclusion. For example, countries such as India have far wider usage of formal financial services despite the fact that large numbers of its population reside in rural areas.
Some key points:
Across California and the nation- in New York, Los Angeles, San Francisco, and Sacramento- money is the subject of buzz, new ideas, and VIP events. Specifically, the topic is the lack of money- the have-nots, the why-nots, and trendsetting solutions.
For once the subject is not just the typical California budget woes. Those aren't new (yet somehow the designers bring them back every season). It's banking development districts (BDDs), and the new models of community-building and economic development being tried on by cities. And it's the poverty measure, and the work being done to revamp its outmoded form and function.
BDDs create incentives to encourage banks and credit unions to locate in low-income areas that lack mainstream financial institutions, and are fast becoming the subject of local buzz. On October 30th the Los Angeles City Council announced it was unanimously passing a motion directing the city attorney to draft a BDD ordinance.
In this version of New America's weekly podcast, Media Relations Manager Kate Brown sits down with Mark Huelsman, Program Associate with New America's College Savings Initiative to discuss the connection between savings and college completion, the advantages of 529 college savings plans, the ability of low-income families to save for higher education, and policy proposals to help them do just that.
Pew's Economic Mobility Project (EMP) released a new report today, "Renewing the American Dream: A Road Map to Enhancing Economic Mobility in America." The report comes from the Principals of the EMP, leaders from Brookings, Heritage, AEI, Urban and New America (our own Ray Boshara to be exact).
The "Road Map" reflects the intent of this diverse group of thinkers that "more can and must be done to make the American Dream accessible to all Americans," and provides more than 25 policy recommendations for improving human capital, social capital and the ability of Americans to build financial capital.
EMP's work in recent years has gone a long way toward clarifying the realities of economic mobility in the United States--and the American Dream doesn't always meet perfectly with the facts at hand.
"42% of Americans born to parents on the bottom rung of the income ladder...remain at the bottom as adults--a figure that is nearly twice the percentage seen in many other industrialized nations.
Reid Cramer has a piece up in today's Christian Science Monitor. In it, he makes the case for strengthening the American economy through increased levels of household saving--fostered by the automation of savings.
"When the recession took hold in 2008, it seemed that this problem (of low savings rates0 might self-correct, since people spend less when faced with job loss or diminishing home assets. True to form, savings soared, topping off at 6.2 percent in May - the highest since 1995. Yet by August, the rate had fallen to a mere 3 percent.
That's a signal that we shouldn't assume a new, more responsible era has already dawned. The recession may have converted many Americans to thrift in the short term, but we shouldn't squander the opportunity to put in place protections that can help families weather future downturns and create a strong economy for the long term."
In particular, he makes the case for AutoSave and for a universal system of children's savings accounts. It's a good piece, and timely given the recent remarks by Secretary Geithner on the importance of savings.
Just last year, tuition and fees at four-year public colleges rose 6.5 percent. Unfortunately, this continues a decades-long trend of rising college costs, even during periods of economic unease and low inflation. Escalating prices have also coincided with stagnation in need-based financial aid availability, the result of which has been mounting levels of student debt for low and middle-income families. In this context, there has been greater reliance on savings, particularly through 529 college savings plans, in order to increase college affordability and reduce debt.
But there is also an emerging body of research linking savings to important educational and behavioral benefits, as well as college completion.
The Obama Administration has indicated that saving, broadly, will help lay a new and sustainable foundation for economic growth, and that saving for college in particular can help America regain its global education lead. How can college savings plans be reformed to help achieve these goals, particularly for low and moderate income families? What has the Obama Administration learned from its recent review of 529 plans? How are states, through their 529 plans, helping families combat the rising cost of higher education? And how are families actually saving for college, given the current economy?
Join the New America Foundation's College Savings Initiative this Thursday, November 5th, for a discussion of these questions and more, featuring Alan B. Krueger, Assistant Secretary for Economic Policy at the U.S. Treasury Department. This event will also feature commentary by Dan Ebersole, State Treasurer of Georgia, Margaret Clancy of the Center for Social Development at Washington University in St. Louis, and Scott Buchanan of Sallie Mae.
A live webcast of the event can be seen on the event page.
Secretary of the Treasury Tim Geithner was on Meet The Press this weekend to discuss the state of the economy following last week's announcement of actual growth in the GDP. The summary of his remarks basically boils down to "This is good news, but we're by no means out of the woods. Oh, and stimulus=good." Yet there are some interesting nuggets in the details of his remarks. For instance, the Administration continues to speak favorably about personal saving, and hint at more efforts to promote saving in the future.
According to the transcript, Secretary Geithner said:
"Well, again, I think it's -- it's good news and it shows that, when you act with force, you can stabilize a crisis like this and, you know, start to repair the damage and bring things back.
But this is going to be a different recovery than the past, because Americans are going to have to save more. A lot of damage was caused by this crisis. It's going to take some time for us to grow out of this. It could be a little choppy; it could be uneven; and it's going to take a while. But I think, again, this is encouraging signs."