Financial Security in 2019: 5 Federal Policy Issues to Watch
At the end of last year, Prosperity Now’s Federal Policy team summed up the major policy developments from 2018 in our four campaign areas. We highlighted bills for widening access to credit, expanding manufactured housing, building savings through employer programs and tax refunds, keeping the Consumer Financial Protection Bureau (CFPB) independent and strong, and bolstering the Volunteer Income Tax Assistance (VITA) program.
With the start of a new year, we’re taking stock of the federal policy opportunities and challenges in 2019. Below, in no particular order, are some of the key issues and trends that need to be on every advocate’s radar.
1. Preventing Rollback of the Payday Lending Rule
Regulation of the payday lending industry is going to take center stage right out of the gate in 2019. At the end of January, the CFPB is expected to propose new regulations modifying the strong payday lending rule it finalized in October of 2017. The original rules took over five years to complete and were built on extensive consideration, research and stakeholder feedback. The centerpiece of these rules was an ability to pay requirement, which was key to ending predatory triple digit interest rates and high-fee loans that lead to a debt trap. Advocates will need to respond quickly and strongly if the CFPB proposes to weaken the ability to pay requirement or any other essential parts of the original payday lending rule.
2. A Historic Expansion of Free Tax Preparation
Last year, advocates came very close to finally making the VITA program permanent after nearly 50 years of serving low-income tax filers. The House passed the VITA Permanence Act in April, but unfortunately it did not pass in the Senate. This year, we look forward to building on the momentum of your advocacy in 2018 and getting VITA permanence across the finish line.
The Senate also voted to increase VITA funding by $5 million to a total of $20 million for fiscal year (FY) 2019. However, with the protracted federal government shutdown, it looks like VITA will be level-funded at FY2018 levels ($15 million) in FY2019. Getting this close to a funding increase still puts us in a strategic position to get $20 million or even double funding to $30 million in FY2020. The push to increase VITA funding for FY2020 officially begins later this month in Congress, so stay tuned!
3. Bold New Proposals to Narrow the Racial Wealth Divide
This year, we’re likely to see Senator Cory Booker (D-NJ) reintroduce several bold proposals to reverse growing racial wealth inequality, including the American Opportunity Accounts Act. As we’ve explained before, Senator Booker’s legislation would seek to ensure that every child in the country has the economic resources to build long-term wealth and achieve economic prosperity.
Over the next year, we intend to work with members of Congress to introduce legislation that would establish an audit of government policies and programs that determines their impact on the racial wealth divide.
4. Opportunities to Help Working Families Build Short-Term Savings
We’re looking forward to getting several savings bills reintroduced in the 116th Congress. These include two pieces of legislation to build emergency savings: the Strengthening Financial Security Through Short-Term Savings Plans Act and the Refund to Rainy Day Savings Act. We discussed them in more detail in our recap of 2018.
We’ve also been working on a proposal around a new matched savings program for saving in the near term. Taking what we’ve learned from 20 years of the Assets for Independence program, it’s time to expand and enhance proven ideas to help working families make major opportunity-building investments, like higher education, homes and vehicles. Stay tuned for our upcoming policy proposal coming out next month and new legislation later this year.
5. Ensuring Sensible Housing Finance Reform
After a decade in conservatorship, it is unlikely the Government Sponsored Enterprises (GSEs) – Fannie Mae and Freddie Mac – will undergo significant reorganization this year by Congress.
With that said, President Trump has nominated a new Director for the Federal Housing Finance Agency (FHFA), Mark Calabria, who is currently Vice President Pence’s chief economist. The FHFA has authority over the GSEs, and while Calabria could not oversee a wholesale restructuring of Fannie and Freddie, he does have some power to influence their future, including the implementation of Duty to Serve.
Make a New Year’s Resolution to Double Down on Your Advocacy in 2019!
2019 is already shaping up to be an exciting year, with both challenges and opportunities that could have a significant effect on the financial security of households across the country. For more details about this year’s federal policy priorities, check out our new two-pagers: Affordable Homeownership, Financial Security, Consumer Protections and Tax Reform.
In 2018, we made great strides in our advocacy efforts, and this year, we can reach even greater heights, but only with your help. Sign up for our Advocacy Center today and keep abreast with policy developments and opportunities to act.