A few moments ago the Assembly approved AB 2123 (Lieu), which establishes the “California Financial Literacy Initiative.” This initiative will create a government program “for the purpose of providing resources and instruction to Californians” about how to be financially literate. The program will be overseen by the state controller, who, according to the bill, “has the experience and duty to lead an initiative to grow the state’s economy by bettering Californians’ financial literacy.”
Does it strike anyone else as hypocritical that our state controller and state lawmakers want to teach Californians “financial literacy”? I can’t speak to the “experience” of all state controllers past and future, but do we really want John Chiang teaching us about financial literacy? He’s currently defying the governor’s attempt to curtail government spending during the budget crunch. And lawmakers are 46 days past their constitutional budget deadline. If average citizens were 46 days past due on their bills, creditors wouldn’t be very forgiving. Odds are that when the budget is agreed upon, it won’t be truly “balanced” anyway (fuzzy math plus tax increases doesn’t equal balanced).
AB 2123 lists several reasons that such a new government program is necessary, one being that 7 other states “all created financial literacy programs to improve their citizens’ fiscal health.” Since when is it the responsibility of the state to “improve” citizens’ health—either physically or financially? The bill also states that “More than 40 percent of American families spend more than they earn.” Isn’t spending more than it took in the state government’s exact problem right now?
AB 2123 actually includes a statement that explains why it is not needed: “The growing negative economic effects of financial illiteracy has spurred the nonprofit and private sector to dramatically increase their investment in financial education and counseling…” This is exactly the right approach: the private sector, not the government, should be assisting consumers with their financial literacy. If the state controller wants to link to these valuable private sector resources on his web site, that’s better than establishing more government programs and bureaucracy.
The bill will also allow the state controller to create and oversee the “California Financial Services corps” to “provide clear, professional, and objective financial information to persons seeking personalized attention from individuals with financial literacy training or professional background.” I think something like this already exists: the private sector’s thousands of credit counseling and investment advising companies. Part of its ceaseless hubris, nanny government now thinks it can do JP Morgan’s job better.
It’s terribly disappointing that there were only three “No” votes against AB 2123: Assemblymen Joel Anderson and Alan Nakanishi were two of them. At least three members of the assembly understand the proper role of government—and perhaps the hypocrisy of approving financial literacy training that doesn’t specify state lawmakers.
August 15th, 2008 at 12:00 am
Meredith…important article, thank you for making us aware of this needless legislation. Wells Fargo has a fantastic program out there, which helps consumers of all ages with financial literacy issues. I’m sure other banks do, as well. You’re right, we don’t need this bill.
And what is even scarier is that the institution that takes the most money away from us is the one who would be teaching us about finances??? It’s like entrusting a bunch of teenage boys to teach girls a ‘dating literacy initiative.’ Yeesh!
Great story, Meredith.