Did you know that since 2003, when the subprime market really took off, April has been Financial Literacy Month? Now you do. But in an age where financial expertise seems so discredited what qualifies someone to be financially literate?

It’s a fair question. Unfortunately, the answers aren’t reassuring. First, as Konczal notes, “financial literacy” as a course of study doesn’t exactly exist in the economics field. There’s no incentive to get published on it; there’s little academic research as a result. What fills the gap? As we pointed out, subprime lenders align themselves with mainstream financial literacy groups and fund their efforts as a way to distract from the controversies surrounding their products. Konczal explains the problem goes even further, with unqualified “experts” dispensing their alleged personal finance wisdom.

There’s little academic backing, there’s no money for journals, research grants, conferences, the development of theory and expertise that is deployable into policy. That leaves the field wide open to be funded by credit card companies, subprime lenders, and others with a vested interest in certain modes of thought becoming the norm. And for expertise to be filled by people who come from motivational speaking backgrounds, and theory to end up as a mess of common-sense adages and low-level morality plays. The theme of Financial Literacy Month for 2008 was “Financial Responsibility Begins with Me”; why didn’t they call it “caveat emptor”?

One of the biggest hurdles facing the creation of legitimate and useful financial literacy programs will continue to be funding for non-biased, professional counselors.  It’s not a great time to push the government to provide more money to the nation’s Cooperative Extension System — but that national educational network remains a valuable source of credible personal finance research. And as we said, some corporations are beginning to incorporate financial literacy into their human resources responsibilities, given the problem of employees burdened with distracting financial problems.

In the end, that may really be what it takes to get untainted financial literacy education going — the overwhelming debt crisis facing American consumers. Maybe the government and the private sector will come to realize that partnering with credit card companies and subprime lenders isn’t going to get the job done. As Calculated Risk has repeatedly asked, why aren’t consumers being educated on the perils of not paying their credit card bills off in full every month? Probably because, in the absence of untainted financial literacy advice, a company like Visa is backing a high-profile financial literacy initiative. It seems unlikely advising people to pay off their credit cards is the focus of that effort.

As credit tightens, so will the need for legitimate financial literacy education. And as consumer debt becomes something harder to ignore, maybe the unholy alliance of creditors with a stake in the game and financial literacy education programs often aimed at younger borrowers in particular, will finally come to an end.

On television it’s hard to miss the wildly popular band of slackers singing ruefully from a shabby apartment or while waiting tables in pirate regalia. The ruined credit that led to their financial misfortune might have been sparkling if only they’d tracked their status on freecreditreport.com.

The Federal Trade Commission is not amused. It has long believed that the company that owns freecreditreport.com is deliberately diverting people from a government-mandated site where consumers can get free credit reports by law, and using the reports as a lure for a $14.95 monthly service that alerts subscribers to important changes in their credit status.

The government even has put together a spoof video of those popular ads, with singers letting consumers know they can check their credit reports for free. But beyond the ads, the story explains, is the $1 billion credit monitoring industry, which allows consumers to check for real-time changes to their reports. With the exception of identity theft victims, few consumers have a need for that kind of monitoring. And if they do, they can check their credit themselves, without charge, several times a year.

The problem is that some consumers sign up unwittingly for these monitoring services, thinking they’re getting a one-time free credit score check, and finding themselves instead locked into a monthly fee as high as $30. And such services are peddled not just by those freecreditreport.com singers, but by the big three credit bureaus and major credit card companies.

The fact that consumers are signing up — and paying — for services they can get for free from the government tells you a lot about the state of financial literacy in this country. Our story mentioned car title dealers, payday lenders and other fringe banking services that cater mostly to low- and moderate-income consumers. But the Times story makes clear financial literacy knows no income boundaries, with consumers being tripped up by mainstream lenders as well. Magic Johnson isn’t the only celebrity endorsing predatory businesses, like Rent-A-Center. Former New York Times Sunday Business columnist Ben Stein got fired after doing commercials for a shady credit reporting company.

Good luck to the government trying to educate consumers about this. It won’t be easy. When I called up the New York Times piece to write this post, all kinds of ads for free credit scores and credit monitoring companies popped up on my screen. And as we mentioned, financial literacy efforts in this country often don’t come just from the government or other unbiased sources, but from corporations and lenders with a stake in the game.

Visa, for example, announced recently its goal of helping 20 million people worldwide with financial literacy skills, attracting some positive publicity for the effort. Wonder if the advice will include paying off your credit card balance in its entirety each month, or, better yet, avoiding the plastic altogether.

It seems Dallas police were confused when, after pulling drivers over for other suspected violations, the police checked their in-car computers and a pull-down menu listed the “non-English speaking driver” charge as an option. The violation actually referred to a federal law governing commercial drivers that the Dallas police now say they don’t even enforce. However, at least 39 non-commercial drivers were fined $204 for their limited language skills.

Dallas Police Chief David Kunkle said on Friday that they would be reimbursed.

Although Dallas police don’t seem to have been attempting to enforce any immigration laws in these incidents, there’s a parallel to the ongoing controversy over a federal program that allows local police around the country who stop Latinos for minor traffic violations to check their legal status, then turn them over to federal immigration authorities for deportation if they can’t prove they’re in the United States legally.

The federal program, known as 287(g), deputizes some local police to enforce federal immigration law. But abuse of that power, often due to similar misunderstandings by local police officers, has at times led to the deportation of legal U.S. residents and even citizens, and prompted angry complaints from immigrants’ advocates.

Ultimately, much of the problem — in Dallas and beyond — seems to come from a lack of training of local police. The revelation that non-English speakers were getting fined in Dallas therefore could end up casting more attention on the 287(g) program, to the extent that local officials are wrongly arresting immigrants due to a lack of training on immigrants’ rights, local law enforcement authority, and what actually constitutes a crime.

“Don’t count it out,” Schumer said.

On Friday, the Senate Finance Committee will meet in another of the week’s marathon sessions to mark up the panel’s health reform proposal, sponsored by Chairman Max Baucus (D-Mont.). That bill doesn’t have a public option — pushing privately run health care cooperatives instead — but both Schumer and Sen. John Rockefeller (D-W.Va.) are hoping to change that via the amendment process. Those proposals are unlikely to pass the Finance Committee, where several Democrats have voiced a reluctance to accept the public option. But Schumer pointed out that finance panel is more conservative than the Senate as a whole, which in turn is more conservative than the House. He meant that there are plenty of opportunities for the public option down the road if the committee shoots down the proposals tomorrow.

“This is the starting gate,” Schumer said.

Both Schumer and Rockefeller ruled out the co-op model as an alternative, claiming it simply won’t provide the competition needed to force private insurers to keep rates affordable. Rockefeller also went after the trigger model, saying, “I’m not a big fan of triggers, because triggers won’t work.”

Rockefeller also chastised those who have written off the public option as a part of the larger reforms. “Don’t fall victim to this feeling that this is not going to happen,” Rockefeller said. “You’re creating a problem for us.”

Neither senator would say that he’d hinge his support for the final bill on whether a strong public option is included. “We don’t want to draw any lines in the sand,” Schumer said.

But Rockefeller implied that he won’t have to make that choice. “We’re going to have some form of public option in the final bill,” he predicted.

Prepare for fireworks tomorrow.

From the FRC blast:

Jones, President Obama’s “green jobs” czar, was caught using profanity in reference to Republicans; Jennings has directed his profanity at God Himself! Jones merely signed his name to a conspiracy myth about the September 11 attacks; but Jennings has spent decades actively and successfully promoting myths about homosexuality to schoolchildren as founder of the radical Gay, Lesbian and Straight Education Network (GSLEN). Van Jones was done in by two key charges and one taped quote; FRC documented at least seven outrageous facts about Jennings and five inflammatory quotes in documents we released in June (see www.stopjennings.org).

Unfortunately, Jennings has now taken his office at the Education Department-where he will be charged with implementing laws like the “Safe Schools Improvement Act,” introduced as H.R. 2262. This bill to combat “bullying” and “harassment” is like a “hate crimes” law for schools-but without being limited to actual violence. Cutting down on bullying and harassment of anyone is a worthy goal, but naming “sexual orientation” and “gender identity” as protected categories makes this bill more about advancing the homosexual agenda than keeping schools safe.

The count was 253 to 171, with six Republicans voting for the measure and four Democrats voting against.

Sponsors of the bill say it will save $90 billion over the next decade — money that would be pumped back into the realm of student-aid by funding Pell grants and keeping rates low.

Speaking at a health reform rally at the University of Maryland earlier in the day, President Obama said the bill will eliminate “unwarranted subsidies” to the insurance industry, “money that doesn’t do anything to make your loans any cheaper.”

It’s unclear when the Senate will consider the proposal.

Although $10 billion in stimulus funds for education has been granted to the state, those funds come with a caveat, as outlined by the U.S. Department of Education:

As part of the state’s application, each governor must include an assurance that the state will maintain the same level of support for elementary, secondary, and postsecondary education in FY 2009 through FY 2011 as it did in FY 2006.

This is to ensure that states use stimulus dollars to fund innovation and improvement in schools, rather than merely to plug budget holes. If California fails to ensure that its schools will receive the same amount of money from the state general fund as they did in 2006, the state will no longer qualify for stimulus funds for education.

But Schwarzenegger’s proposal leaves education funds unaccounted for until the state borrows money from local governments.  According to the Chronicle:

The flaw in Schwarzenegger’s proposal centers on his plan to borrow $2 billion from local governments, which would then be used to pay for education. That move would free up $2 billion in the state’s general fund, which carries the $26.3 billion shortfall.

As a result, the Chronicle reports, California would not meet the Department of Education’s condition that the state maintains its 2006 level of support for education. The money borrowed from local governments would replenish funds to 2006 levels, but the stimulus provision requires that state funding remain consistent.

Although California has received much of the $10 billion in stimulus funds it was allocated for education, Schwarzenegger’s maneuver could end up jeopardizing the rest of the money, and the initial grants may need to be repaid to the government. Secretary of Education Arne Duncan has warned both Tennessee and Pennsylvania lawmakers against similar proposals, but neither state suffers from as dire a budgetary crisis as California. With an unbalanced budget looking him down the nose nine days after California’s new fiscal year began, Schwarzenegger will need to find a sufficient compromise soon — one that isn’t as potentially crippling as his current proposal.

Though Justice Clarence Thomas didn’t agree (he doesn’t think the court should “second-guess” school officials when it comes to discipline), the eight justices in the majority ruled that given that there was no apparent danger to other students, strip-searching Savana Redding, now a 19-year-old college student, was an unconstitutional overreaction.

The decision, Safford United School District v. Redding (08-479), is available here.

The court didn’t rule out strip-searches at schools completely, however; seven justices ruled that today’s decision applied only to future strip-searches, so neither Redding nor anyone else who’s ever been unconstitutionally humiliated in this manner has any remedy.

–

You can follow TWI on Twitter and Facebook.

With tuitions, fees, and room and board at dozens of colleges now reaching $50,000 a year, the ability to sustain private higher education for all but the very well-heeled is questionable. According to the National Center for Public Policy and Higher Education, over the past 25 years, average college tuition and fees have risen by 440 percent — more than four times the rate of inflation and almost twice the rate of medical care. Patrick M. Callan, the center’s president, has warned that low-income students will find college unaffordable.

Meanwhile, the middle class, which has paid for higher education in the past mainly by taking out loans, may now be precluded from doing so as the private student-loan market has all but dried up. In addition, endowment cushions that allowed colleges to engage in steep tuition discounting are gone. Declines in housing valuations are making it difficult for families to rely on home-equity loans for college financing. Even when the equity is there, parents are reluctant to further leverage themselves into a future where job security is uncertain.

Even though we’re still in the middle of this economic mess, it’s worth pondering what the long-term outcome will be once the recession finally ends. There’s been plenty written about a new frugality, with consumers changing their ways for good, and saving more and spending less. I haven’t totally signed on to that one. If the economy should somehow pick up, I think many consumers could easily revert to their old free spending habits. They always have in the past.

But when you think about much more limited access to credit — no more using your house as an ATM — combined with higher college costs, it’s a different story. We could very well end up with lower and middle income families finding college simply out of reach. That’s not something being watched closely right now, given our attention is focused on the banking and foreclosure crises.

The authors of the Chronicle piece –Joseph Marr Cronin, the former Massachusetts secretary of educational affairs, and Howard E. Horton, the president of New England College of Business and Finance – suggest it’s time to start. They’re trying to call this bubble before it bursts – which means at least one lesson from this financial crisis is sinking in, at least for some.

Though the full Second Circuit Court of Appeals declined to re-hear the case, suggesting a majority of judges agreed with Sotomayor, columnists from Richard Cohen of The Washington Post and Stuart Taylor at National Journal to Ed Whelan at National Review have attacked Sotomayor for allowing the city of New Haven to consider the racial impact of determining promotions based purely on an exam that had a racially disparate impact.

If we lived in a society where the law forbids ever taking race into account, then the critics might be right. But we don’t live in a race-blind society and our laws — such as the Civil Rights Act, under which New Haven could have been sued for discrimination if it had promoted only white firefighters — acknowledge that.

Take, for example, the No Child Left Behind Act, one of the signature acts of the Bush administration, signed into law in 2002 with the overwhelming support of both Republicans and Democrats in Congress. That law, recognizing that minority children in this country have historically not done as well in school as white kids, explicitly requires school districts to categorize student success by, among other things, race. And the outcomes make a big difference for the district. If minority children are performing below a certain level, schools are penalized, and eventually can even be closed. So schools have an incentive to target extra resources toward minority students that aren’t performing well to ensure they meet the law’s targets.  Isn’t that a race-based standard?

Did any of the Republicans who sponsored the law – including John Boehner (R-Ohio) in the House and Judd Gregg (R-N.H.) in the Senate complain about that?  Not that I can tell.

When President George W. Bush and his fellow Republicans included race-based criteria in their legislative agenda, it wasn’t illegal discrimination or affirmative action; it was compassionate conservatism. When a Latina woman is among a group of judges who acknowledge racial realities, she’s a hard-left liberal with a “very expansive” reading of the constitution that’s guided by “her personal feelings” rather than the law.

When President George H.W. Bush nominated Sotomayor to the U.S. District Court for the Southern District of New York, the Princeton and Yale graduate, former prosecutor and commercial litigator, sailed through Senate confirmation with ease. But when President Clinton nominated her to the Court of Appeals, Republicans stalled her nomination for more than a year — reportedly because they knew that a spot on the highly-regarded Second Circuit would situate her well for a future appointment to the U.S. Supreme Court.

TWI’s David Wiegel has written about how Republicans are itching to use President Obama’s first Supreme Court nomination to galvanize Republican loyalists — something The New York Times picked up on this past weekend.

These latest attacks on Sotomayor’s legal opinions are just that — politics, not principle.