Earlier this month, Governor Arnold Schwarzenegger signed and vetoed a number of bills that aim to strengthen consumer protection, improve access to health care, and strengthen access to education.

Bills signed into law:

Consumer Protection and Accountability

• AB 260 (Lieu)will rein in mortgage brokers by requiring them to act in a borrower’s best interest and prohibit them from steering borrowers to loans with worse terms than other loans they qualify for.
• AB 1160 (Fong) will require mortgage lenders to provide translated mortgage summary documents to a borrower in the language in which it was negotiated.
• AB 119 (Jones) will prevent HMOs and insurers from charging men and women different rates for the same health insurance policies in the individual market.
• AB 329 (Feuer) requires lenders to give more and clearer information to those interested in reverse mortgages, which let seniors borrow again their homes’ equity.

Access to Health Care

• AB119 (Jones) prohibits health insurers from charging different premiums to women than to men.
• AB 108 (Hayashi) imposes a two-year time limit in which insurers have to rescind, cancel or limit individual health policies based on fraud.
• AB 359 (Nava) will make modern breast cancer screening available to low-income women. This measure will increase access to digital mammography in publicly supported breast cancer screening programs.
• AB 119 (Jones) will prevent HMOs and insurers from charging men and women different rates for the same health insurance policies in the individual market.

Access to Higher Education

• AB 669 (Fong) authorizes the University of California, the California State University, and community colleges to classify foster youth or low-income student as a resident for tuition purposes until her or she has resided in the state for the minimum time needed to become a resident.
• AB 1393 (Skinner) requires the University of California, the California State University and California Community Colleges to give priority for on-campus housing to emancipated foster youth.

Employment Access

• AB 287 (Beall) establishes a committee to examine strategies and incentives that increase employment and microenterprise opportunities for people with developmental disabilities.

Bills vetoed:

Consumer Protection and Accountability

• SB 20 (Simitian) would have required financial privacy security breach notices t inform potential victims of identity theft about the nature of the breach, and to include contact information for credit reporting agencies.
• AB 943 (Mendoza) would have prohibited a prospective employer from using consumer credit reports in the hiring process unless the report is related to job duties.

Access to Health Care

• AB 98 (De La Torre) would have required most insurers to cover maternity services. This is the third time Schwarzenegger has vetoed this bill.
• AB244 ( Beall) would have mandated most health insurers to provide coverage for all diagnosable mental illnesses.

California is taking important steps towards strengthening consumer protection, particularly in housing. We commend the legislature and the Governor in leading this effort. The picture in health access is mixed with some marginal improvements and some lost opportunities. There were also some positive improvements in educational access and interesting developments to study the employment and microenterprise opportunities in the state for people with disabilities.

“If you work hard your whole life, you ought to have every opportunity to retire with dignity and financial security,” stated President Obama in his weekly address on September 5, 2009. In the same speech, Obama announced new bold initiatives to expand the range of choices for workers who want to save for retirement.

The new initiatives will:

• Expand opportunities for automatic enrollment in 401(k) and other retirement savings plans
• Make it easier for more than 100 million families to save a portion or all of their tax refunds
• Enable workers to convert their unused vacation or other similar leave into additional retirement savings
• Help workers and their employers better understand the available options for tax-favored retirement saving through clear, easy-to-understand language.

We commend President Obama and Secretary Tim Geithner for their leadership in promoting financial security for millions of Americans who do not have access to a retirement plan at work.

A growing body of research indicates that adequate health insurance coverage is a key component of family financial security. In 2007, 62% of all bankruptcies were related to medical debt and approximately half of all mortgage foreclosures in the following year were also caused by medical debt or illness. This means, families without health insurance are an illness away from asset poverty as medical bills can quickly consume a lifetime of savings.

The recently released, Assets and Opportunity Scorecard, gave California a “D” grade because of the high levels of uninsured children and adults in the state. An Asset Support Center brief explores emerging opportunities as well as efforts underway to expand health insurance coverage at the county and state level.

I suppose I should not be surprised. More than 75% of voters in my poll said they really did believe that renting was the new American Dream. After all, San Francisco is a city of renters (and dreamers), and the poll results below are close to the distribution of residents who own compared to those who rent.

The question of how much we should incent renting versus owning is among the most supercharged political lightning rods in the Bay Area. Accordingly, I received a range of comments from a readers, friends and colleagues.

Dennis O’Brien sent me a message wondering whether the huge subsidies we have for homeownership (including, as he pointed out, the temporary $8k incentive for home purchase in the stimulus bill) distort the market.

Nathan Nayman sent me this link to a Rasmussen Reports poll showing that 59% of Americans think buying a home is the best investment a family can make.

I know that Rasmussen polls often reflect a more conservative point of view. But these poll numbers would be unsurprising to me even if they had come from a source known to lean toward the left. I still see a very strong desire to buy homes among the thousands of families that we serve at EARN.

I heard from many folks who work in real estate. Many of them believe the results of this poll reflect the incredible frustration many Bay Area residents feel over the difficulty of buying a home.

The range of comments I received, combined with the overwhelming poll results, reminded me of a Rorschach test. None of the polls I post on this blog have any real scientific value. But they are legitimate reflecting points about mood and perspective.

This conversation will continue to rage as the economy, and our collective view of our futures continue to evolve.The poll results could mean that we are clear that huge mistakes were made in the way we shaped homeownership opportunities through public policy and market structure. The poll results may reflect deep frustration and resignation over how difficult it is to buy homes here. These results could mean that one really frustrated reader voted again and again 300 times to make a point (see my previous point). I’m quite curious to see what you think these poll results mean.

It would be a huge impediment to upward mobility among working class people if we, as a nation, downgraded the importance of homeownership. Before I go any further, let me make a few things clear. I’m not one of those people who hate renting. I have lived in rental housing for virtually my entire life, and it has suited me just fine. I didn’t own a home until 5 years ago. I have nothing against renting, and believe it is the right choice for anyone who makes that choice. It’s also the right choice for anyone who can’t really afford to buy a home.

Affordable rental options must remain an important part of creating prosperity for low and moderate income workers. But I believe that homeownership is an especially powerful sparkpoint for Americans. Particularly for moderate income workers who do homeownership right - with fixed rate, long term financing, and a realistic plan to pay the full cost of ownership.

Achieving the dream of homeownership is the kind of life-changing experience that galvanizes people of modest means to continue driving toward successes that had previously seemed impossible - like graduating from college, or beginning to save for retirement for the first time ever. In the case of homeownership, there are also strong corollary benefits - it can lead to greater civic participation, and it seeds economic success for the children who live in homes owned by their parents.

Have you noticed the growing chorus around the nation, questioning whether homeownership should still be the cornerstone of the American Dream? It would be tragic if the institution of homeownership were the baby thrown out with the particularly fetid bathwater brewed by the mortgage mess.

Should renting really be the new American dream?

How the engine of homeownership ought to be built, and ought to run is one of our most important national conversations. I don’t propose to have the answers to these questions here. I’m just making a case to keep ownership as one of our cornerstones for prosperity. I certainly agree that we need to align the carrots and sticks of policy and market power properly, so we don’t drive people to make poor choices when it comes to buying homes.

But let’s not move all the carrots toward renting. For millions of Americans who have moved into the middle class, homeownership was the catalyst in a formula for creating multi-generational prosperity for families. Success begets success. And the success of homeownership led millions of these folks to make choices they would not have had they not owned homes.

When done properly (and it can be done well. EARN, and groups like us, have astonishingly low foreclosure rates among our clients - far smaller than the national average) homeownership helps grow aspiration. It can make other dreams come into focus for folks who buy homes - especially people experiencing upward mobility for the first time.

What do you think? Do you believe in this formula I’m arguing for, or do you think this is just alchemy? Make your voice heard by voting in the poll below. As usual, I promise to blog on the results!

I recently had a blinding flash of the obvious. Much of the social sector is ignoring a vast, powerful layer of infrastructure that can help us all achieve our goals of creating prosperity for hard working, low income Americans: the nearly ubiquitous mobile phone. In places like Bangladesh and Kenya, incredibly valuable innovation is helping connect the poor to the financial mainstream by leveraging mobile phones. Grameenphone is a fascinating, bold example of this.

The potential for mobile technology all became crystal clear for me recently - even if it was a blinding flash of the obvious. In January, I took a two week learning sabbatical to Asia, funded through the Irvine Foundation Leadership Award, where I visited a number of nongovernmental organizations in Hanoi and Manila. I visited outstanding groups like the East Meets West Foundation in Vietnam, and the Knowledge Channel Foundation in the Philippines. Perhaps it was being around the visionary leaders of these groups – John Anner at East Meets West, and Rina Lopez-Bautista at the Knowledge Channel – that helped me understand what an opportunity we have.

Asia is light years ahead of the US in the way people there use mobile phones. I experienced this myself, buying a phone. I got a sim card for my phone when I arrived in Manila and it was loaded with features, including options to make payments to other network users.

In a visit with the Philippines Central Bank, I learned that 10% of the Philippines GDP comes from remittances, much of it sent through mobile phone networks.

Some mobile phone analysts believe that all virtually all Americans will have a mobile phone by 2013. The ubiquity of cell phones among Americans represents a highly underutilized infrastructure to leverage for prosperity. EARN will be focusing our collective intelligence on how to “cultivate our own garden”, to make it even easier for our clients to save, and hope others will join us in finding ways to innovate in this exciting area of opportunity.

Recent Census Bureau data finds that incomes declined and poverty increased for low -and middle - income Californians in 2007.

This reversal in trend is exacerbated by steadily increasing unemployment rate. In July 2008, California’s unemployment rate reached 7.3% —the highest level in 12 years. That’s not all; to cope with the current economic downturn, employers are cutting workers’ hours. This has profound implications in a state where nearly 29% of its households are asset poor - in other words, living paycheck to paycheck. Because many households lack the savings necessary to weather unexpected financial emergencies like job loss, we are seeing more and more families turning to public assistance programs like CalWORKs, Food Stamps, and Healthy Families program to make ends meet.

As California faces what many economists expect to be an extended period of slow economic growth, it seems our state’s workers and their families have little to celebrate this Labor Day.

To learn more, download California Budget Project’s new report, Labor Day 2008: Little to Celebrate.

Almost half of all LA residents live in asset poverty, according to the Local Asset Poverty Index (LAPI), a tool developed by the Asset Policy Initiative of California (APIC) to help local leaders understand asset poverty in their communities.

To be exact, 46% of households in Los Angeles are asset poor. This means they do not have enough savings to live at the federal poverty line for 3 months, if there is an interruption in income. If there is a job loss or a medical emergency a household is just a few months away from becoming dependent on public assistance, losing housing, or worse.

Asset poverty is even more magnified for minorities. Latinos and African Americans have the highest asset poverty rates in the city. Approximately 62% of Latinos, 57% African Americans, and 30% of whites are asset poor.

Asset Poverty vs. Income Poverty

LA City Councilmember Alarcon, Greuel, and Wesson commissioned an Ad Hoc Committee to End Poverty in Los Angeles. This committee is creating a living document that will outline recommendations, a timeline, and priorities for addressing poverty in LA. View asset poverty data presented at the July 8th hearing.

Countrywide Financial Corporation, one of our nation’s largest mortgage lenders is under heat for allegedly selling high cost, subprime loans to borrowers who would otherwise qualify for more favorable loans.

Inside the Countrywide Lending Spree, an article recently published in the New York Times, accused Countrywide for swindling many of its borrowers by only offering high cost or subprime loans to clients during the mortgage lending boom. For years brokers and sales representatives in the subprime unit were unable to input borrowers’ cash reserves when assessing risk and determining the kind of loan the borrower would get access to. This meant the borrower was able to show fewer assets and thus posed a higher risk, ultimately giving lenders free reign to offer high cost or even subprime loans to clients.

According to this article, one of the reasons subprime loans are lucrative for Countrywide is because “…investors who bought securities backed by the mortgages were willing to pay more for loans with prepayment penalties and those whose interest rates were going to reset at higher levels. Investors ponied up because pools of subprime loans were likely to generate a larger cash flow than prime loans that carried lower fixed rates.” Therefore, the company’s incentive structure provides higher commission rates to brokers who sell risky subprime loans. For example, a broker who sold subprime loans made 0.50 percent of the loan’s value while receiving only 0.20 percent on loans that were slightly more favorable.

Last year 45 percent of Countrywide’s loans carried adjustable rates and because Countrywide has a large presence in California, more than 46 percent of Countrywide’s clients are Californians.

“As of June 30, almost one in four subprime loans that Countrywide services was delinquent, up from 15 percent in the same period last year, according to company filings. Almost 10 percent were delinquent by 90 days or more, compared with last year’s rate of 5.35 percent.”

The “spin” coming from spokespeople in the lending industry, and from elected officials on both sides of the aisle is that the current crisis was spurred by consumers’ irresponsible choices. But stories like the NYT piece on Countrywide’s incentive structure force us to re-evaluate the way we should consider the context in which these choices were made. Is this not similar to the debate about where to draw the line between allowing people to purchase cigarettes knowing they cause cancer? Rather than placing the blame solely on consumers, policy makers should take a hard look at the way the lending industry and its regulators operate.

Last week’s rollercoaster ride in Wall Street marked the beginning of a credit crunch that will ultimately hurt the chances of low- and moderate-income families from achieving the American dream of homeownership. Everyone agrees that a credit crunch will mean that working families will have a harder time getting a mortgage.

Harder, however, does not mean impossible.

Families with low incomes will have to think and plan further ahead to save money towards a downpayment, clean up their credit reports, and learn as much as possible about all the ins and outs of the home-buying process. Matched-savings programs like those offered by IDA providers may be the bridge to help low-income families get to sustainable homeownership.

And with no more cheap credit, asset-building advocates may now move a much more aggressive policy agenda on savings. For the past several months, we tried to sound off the alarm on the negative savings rates not seen since the Great Depression. Now, policy makers may be more receptive to our ideas on increasing savings, particularly among low-income families.

While these silver linings may not seem all that bright, they do present a way for asset-builders to look through the dark clouds of the current crisis as we continue to move our agenda forward.