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The Ladder

A Blog from New America's Asset Building Program

Asset Building News Week, April 29-May 3

Published:  May 3, 2013
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The Asset Building News Week is a weekly Friday feature on The Ladder, the Asset Building Program blog, designed to help readers keep up with news and developments in the asset building field. This week's topics include retirement security, racial wealth disparities, housing, and homelessness.

Retirement (In)Security

We released a new paper this weekabout California’s efforts to democratize access to retirement savings account through legislation that will open up a 401(k) option to private sector workers in that state. Ina Jaffe for NPR reports that lawmakers in D.C. will likely watch California closely to evaluate the effectiveness of the model. The New York Times reported last week on a new threat to retirement security: what amount to pension advance scams. “The advances, federal and state authorities say, are not advances at all, but carefully disguised loans that require borrowers to sign over all or part of their monthly pension checks. They carry interest rates that are often many times higher than those on credit cards.” Colorlines follows up and identifies how “folks of color are more likely to find themselves the target of these unregulated financial services.” As Seth Freed Wessler explains: “This is often how structural racial inequality works: exclusion and discrimination from the past creates the conditions for new kinds of abuse in the present.”

James Kwak writes for The Atlantic about the inefficient and unfair way America subsidizes retirement savings for the wealthy and not the poor. He concludes: “We do have the money. It's just going to the wrong people.” Both Matt Yglesias and Felix Salmon had strong reactions to Tom Friedman’s NYT piece asserting that we live in “a 401(k) world.” As Matt Yglesias explains, the analogy certainly works but he’s not as cheerful about the implications: while Americans typically enjoy having broad consumer choice, “Middle class retirement savings isn't like that. We know roughly how much people need to put away in order to retire with a standard of living they'll be comfortable with. And we definitely know what kind of investment vehicles are most appropriate for middle class savers. And we have abundant evidence that, left to their own devices, a very large share of middle class savers will make the wrong choices.” Drawing on the work of Helaine Olen, Felix Salmon sums the situation up this way:  “the 401(k) is a way for both your government and your employer to disown you, and to leave your life savings to be raided by the financial-services industry and its plethora of hidden and invidious fees.”

Racial Wealth Disparities

The Urban Institute put out a new report and great accompanying video examining the roots and current state of America’s racial wealth gap. The New York Times and a number of other publications covered the report and featured some key players from the housing and asset-building research communities. We blogged about it here.

Housing and Homelessness

The San Francisco Chronicle discussed the need for targeted services designed to serve the country’s aging homeless population. "We need to approach the aging homeless situation as an aging and a health issue, not simply a homelessness issue," said Elaine deColigny, executive director of EveryOne Home, Alameda County's main homeless-help coordination agency. While the median age of a homeless person in America is now 53 years old, young people are also increasingly represented. As Minnesota’s Star Tribune reports, there’s been a jump in the number of homeless teenagers and 20-somethings. The two biggest drivers are youth aging out of foster care without effective transition programs and LGBTQ youth lacking support from their families. We’ve reported here before about the challenge New York City is facing in finding adequate and affordable housing for low-income families displaced by Hurricane Sandy six months ago. NPR has the latest on that story.

The Baltimore Sun reports that HUD has settled another housing discrimination case: “A mortgage lender based in Utah has agreed to pay a Baltimore woman $13,000 for denying her a loan because she was pregnant and on maternity leave.” I blogged earlier this week about a new study that documents the presence of discrimination in the rental market throughout Virginia affecting Latino rental applicants.

Obama announced his pick for the new director of the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac. His choice is Representative Mel Watt from North Carolina, who has supported principal reduction as one strategy to address the housing crisis.

Quick Hits

The Wall Street Journal features a map about the mortgage interest deduction that shows wide regional variation in how many tax filers claim the deduction.

Daniel Denvir writes for Philadelphia’s City Paper about the aggressive and sometimes illegal tactics debt collectors have been taking in hunting down old debts owed to the Philly court system. The “investigation has found that third-party collection agencies hired by the [court system] — including one agency whose owners owe the city millions of dollars — have threatened alleged debtors with arrest, outsourced work to a questionable subcontractor and engaged in alleged legal improprieties.” AlerNet looks at the state of debtors’ prisons in Ohio.

A team of journalists from ProPublica, Marketplace, and others report on their investigation of temp agenciesin the Chicago area who have been engaging in practices that have come under scrutiny as illegal and exploitative.

Bloomberg News took a look at income inequality across corporate America and found some serious gaps: “Across the Standard & Poor’s 500 Index of companies, the average multiple of CEO compensation to that of rank-and-file workers is 204, up 20 percent since 2009, the data show.”

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