California State Assemblyman Matt Dababneh

California State Assemblyman Matt Dababneh

Governing in the Digital Age

California State Assemblyman Matt Dababneh talks tech and the need to improve financial literacy for all

Back Q&A Jul 15, 2015 By Rich Ehisen

At 34, Assemblymember Matt Dababneh is one of the youngest members of the California Legislature. But his youth can be deceiving. Dababneh is a political veteran who spent eight years in Washington D.C. as a top aide to Congressman Brad Sherman. During his short stint in the Assembly, Dababneh has forged a reputation as a tech-savvy, pro-business lawmaker and earned himself the chairmanship of the Assembly Banking and Finance Committee. We sat down with him recently to talk about a few of his key agenda items.

You’ve authored legislation that would make California one of the first states to have a digital driver’s license. What’s the benefit of this?
Bio: Thirty-four-year-old Matt Dababneh (Dem.) was elected to the California State Assembly in 2013. He represents the 45th Assembly District, which includes the communities of Calabasas, Northridge and Sherman Oaks. Dababneh graduated from the University of California, Los Angeles, and was on the staff of the John Kerry for President campaign in 2004. Prior to being elected to the state assembly, he was the district chief of staff and senior aide to U.S. Congressman Brad Sherman.

California has always been at the forefront of technologies that make people’s lives easier, and digital driver’s licenses are just another example of how we can lead the way. The states like Delaware and Iowa that are moving forward on this aren’t exactly tech hubs. They don’t have Silicon Valley in their backyard like we do. So when I was approached by people looking at this issue, I thought this was the right time to look at creating a pilot program. Hopefully within the next two years the public can have a digital form of their driver’s license on their smartphone, the same way they are already using digital boarding passes, Apple Pay or Google Wallet. But we want to make sure we’re doing it in a safe and secure way, so it’s not only more efficient and easier for our constituents to use but also a safer option as well.

How close are we to actually having this become reality?

If we get it to the governor’s desk and he signs, it’ll be a 2-year process. That would enable the DMV to work with the California Highway Patrol to create a pilot program that would then be tested for an additional year. So really we’d be looking at something around the end of 2016, early 2017 before anything was available to the public. We also want to make sure we have a true check-and-balance approach in which the DMV presents its findings to the Assembly and that we adapt and change the timeframe if we need more time to get it right. The goal is to make sure this is a more secure and efficient product than what we currently have. But I also don’t see us replacing the traditional driver’s license any time in the near future. We just want to supplement it.

You are also a supporter of digital currencies like Bitcoin, but you have authored a bill to regulate these currencies and license their sellers. Some digital currency supporters say licensing regulations actually make them less safe and stifles innovation. What do you consider a fair balance of regulation?

“We’ve been very thoughtful with that question, which is why we’ve included innovators in this field within the debate. It’s also why we didn’t have any registered opposition to the bill. [Assembly Bill 1326] gives the Department of Business Oversight the ability to require everyone that’s going to be either storing or transmitting virtual currency to be licensed and pay a fee. We don’t want the fee to be onerous or kill innovation, but we do want it to be a basic barrier to entry to ensure that those who are in the field are serious and have the capital reserves necessary to protect the people that are storing digital currency with them. We’ve seen a number of situations in the past year where people have stored millions of dollars in somebody’s storage vehicle — like MtGox — and lost their savings. So I think we have a duty, much like we do with banks or other financial institutions who store and transmit currency, to make sure we’re protecting consumers. A lot of players in this industry like the idea of having a license, they like the idea of the legitimacy it’s going to give them. New York is working on something similar.”

Related: Do Millennials Hate Government? Assemblymember Matt Dababneh on how he appeals to young voters
Speaking of New York, regulators there have asked for anti-money-laundering protections and state-level suspicious activity warnings. You’ve opted not to put those things into this legislation. Why not?

“New York has a different situation. We wanted to make sure we had a bill that we could pass this year. It’s obviously a delicate balance, but we think our bill is going to be a first good step. Maybe in the future we’ll need to go further to plan out the challenges we face. You don’t always have to hit a home run. Sometimes you want to start with a single or double to make sure you’re starting the process and the discussion.”

What other areas should government be taking digital?

“With more and more people relying on their cell phone to get information, we’re trying to make government more easily accessible, such as by allowing people the ability to use digital signatures for government documents. I was able recently to sign my mortgage, insurance and health care documents through digital signature software on my smartphone while I was at the airport. We should be able to offer more government services that way. I’ve also sponsored a piece of legislation this year to make state government agencies as accountable as private entities. If a private company has a data breach now, it has to report that in a certain period of time and provide certain protections to those consumers who have been affected by the breach. We want to make sure the government agencies storing and protecting your data also report breaches in a timely manner and, if a breach happens, provide the same security to our constituents who are affected.”

AB 1326 Assemblyman Dababneh this year penned Assembly Bill 1326, which would make it a crime in California to operate a virtual currency business without first registering with the commissioner of business oversight and paying a $5,000 application fee, among other requirements. Businesses would also have to file multiple annual audits to prove solvency. The bill has been approved by the committee on banking and finance, where Dababneh also serves as chair, and now it’s headed to the appropriations committee for another review. If appropriations approves the bill, it will go to a vote on the Assembly floor and after that would also need to be passed by the Senate and signed by Gov. Brown before becoming law.
Improving financial literacy for students is another area of focus for you. What more should we be doing?

“We do a terrible job at financial literacy. The average high school graduate gets less than an hour of financial literacy or any type of personal financial responsibility training. Whether you’re talking about student loan debt or credit card debt or something else, it all comes back to financial literacy. One of the nice things about being in a new era of longer terms (in the Assembly) is that I don’t have to look at every issue within a spectrum of one or two years or with emergency fixes. Because we’re in a situation where I can chair the Assembly Banking Committee for hopefully a few years longer than my predecessors, I can start looking at issues like this in the long term.

For example, there are immediate things we need to do regarding payday loans and the products lenders are offering, but we can also start looking at why so many people are relying on payday loans. Why are people going to title loans? Why do we have an issue with credit card and student loan debt? Huge debt like this is making it harder to invest or save for the future. And a lot of this comes down to increasing financial literacy. Making sure people understand how their credit score works. Making sure they understand the decisions they make at 18, 19 years old can affect them into their 20s and 30s when they want to buy a home or a car or, because a lot of employers are checking credit scores now, even apply for a job. So we want to make sure we’re working with industry, education and community groups to increase financial literacy.”

And not just for young people, correct?

“Right. We’re also doing it with seniors and communities that have traditionally been left behind in some of these discussions. But we really feel it’s important to start talking to these kids at a young age about financial literacy. Young people are like a sponge. They absorb this information, and then hopefully they’ll also share that with their parents. Why do cereal makers advertise mostly to children? Because they know those children have influence over their parents. So we’re hoping that if we can get to the young people, it will start reflecting not only in their ability to understand these issues and help them as they get older and go on to the workforce and become consumers, but hopefully also help give their parents some information as well.”