[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]




 
                 IMPROVING FINANCIAL LITERACY: WORKING
                   TOGETHER TO DEVELOP PRIVATE SECTOR
                       COORDINATION AND SOLUTIONS

=======================================================================

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
               FINANCIAL INSTITUTIONS AND CONSUMER CREDIT

                                 OF THE

                    COMMITTEE ON FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                             SECOND SESSION

                               __________

                           SEPTEMBER 28, 2006

                               __________

       Printed for the use of the Committee on Financial Services

                           Serial No. 109-124


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                 HOUSE COMMITTEE ON FINANCIAL SERVICES

                    MICHAEL G. OXLEY, Ohio, Chairman

JAMES A. LEACH, Iowa                 BARNEY FRANK, Massachusetts
RICHARD H. BAKER, Louisiana          PAUL E. KANJORSKI, Pennsylvania
DEBORAH PRYCE, Ohio                  MAXINE WATERS, California
SPENCER BACHUS, Alabama              CAROLYN B. MALONEY, New York
MICHAEL N. CASTLE, Delaware          LUIS V. GUTIERREZ, Illinois
EDWARD R. ROYCE, California          NYDIA M. VELAZQUEZ, New York
FRANK D. LUCAS, Oklahoma             MELVIN L. WATT, North Carolina
ROBERT W. NEY, Ohio                  GARY L. ACKERMAN, New York
SUE W. KELLY, New York, Vice Chair   DARLENE HOOLEY, Oregon
RON PAUL, Texas                      JULIA CARSON, Indiana
PAUL E. GILLMOR, Ohio                BRAD SHERMAN, California
JIM RYUN, Kansas                     GREGORY W. MEEKS, New York
STEVEN C. LaTOURETTE, Ohio           BARBARA LEE, California
DONALD A. MANZULLO, Illinois         DENNIS MOORE, Kansas
WALTER B. JONES, Jr., North          MICHAEL E. CAPUANO, Massachusetts
    Carolina                         HAROLD E. FORD, Jr., Tennessee
JUDY BIGGERT, Illinois               RUBEN HINOJOSA, Texas
CHRISTOPHER SHAYS, Connecticut       JOSEPH CROWLEY, New York
VITO FOSSELLA, New York              WM. LACY CLAY, Missouri
GARY G. MILLER, California           STEVE ISRAEL, New York
PATRICK J. TIBERI, Ohio              CAROLYN McCARTHY, New York
MARK R. KENNEDY, Minnesota           JOE BACA, California
TOM FEENEY, Florida                  JIM MATHESON, Utah
JEB HENSARLING, Texas                STEPHEN F. LYNCH, Massachusetts
SCOTT GARRETT, New Jersey            BRAD MILLER, North Carolina
GINNY BROWN-WAITE, Florida           DAVID SCOTT, Georgia
J. GRESHAM BARRETT, South Carolina   ARTUR DAVIS, Alabama
KATHERINE HARRIS, Florida            AL GREEN, Texas
RICK RENZI, Arizona                  EMANUEL CLEAVER, Missouri
JIM GERLACH, Pennsylvania            MELISSA L. BEAN, Illinois
STEVAN PEARCE, New Mexico            DEBBIE WASSERMAN SCHULTZ, Florida
RANDY NEUGEBAUER, Texas              GWEN MOORE, Wisconsin,
TOM PRICE, Georgia                    
MICHAEL G. FITZPATRICK,              BERNARD SANDERS, Vermont
    Pennsylvania
GEOFF DAVIS, Kentucky
PATRICK T. McHENRY, North Carolina
CAMPBELL, JOHN, California

                 Robert U. Foster, III, Staff Director
       Subcommittee on Financial Institutions and Consumer Credit

                   SPENCER BACHUS, Alabama, Chairman

WALTER B. JONES, Jr., North          BERNARD SANDERS, Vermont
    Carolina, Vice Chairman          CAROLYN B. MALONEY, New York
RICHARD H. BAKER, Louisiana          MELVIN L. WATT, North Carolina
MICHAEL N. CASTLE, Delaware          GARY L. ACKERMAN, New York
EDWARD R. ROYCE, California          BRAD SHERMAN, California
FRANK D. LUCAS, Oklahoma             GREGORY W. MEEKS, New York
SUE W. KELLY, New York               LUIS V. GUTIERREZ, Illinois
RON PAUL, Texas                      DENNIS MOORE, Kansas
PAUL E. GILLMOR, Ohio                PAUL E. KANJORSKI, Pennsylvania
JIM RYUN, Kansas                     MAXINE WATERS, California
STEVEN C. LaTOURETTE, Ohio           DARLENE HOOLEY, Oregon
JUDY BIGGERT, Illinois               JULIA CARSON, Indiana
VITO FOSSELLA, New York              HAROLD E. FORD, Jr., Tennessee
GARY G. MILLER, California           RUBEN HINOJOSA, Texas
PATRICK J. TIBERI, Ohio              JOSEPH CROWLEY, New York
TOM FEENEY, Florida                  STEVE ISRAEL, New York
JEB HENSARLING, Texas                CAROLYN McCARTHY, New York
SCOTT GARRETT, New Jersey            JOE BACA, California
GINNY BROWN-WAITE, Florida           AL GREEN, Texas
J. GRESHAM BARRETT, South Carolina   GWEN MOORE, Wisconsin
RICK RENZI, Arizona                  WM. LACY CLAY, Missouri
STEVAN PEARCE, New Mexico            JIM MATHESON, Utah
RANDY NEUGEBAUER, Texas              BARNEY FRANK, Massachusetts
TOM PRICE, Georgia
PATRICK T. McHENRY, North Carolina
MICHAEL G. OXLEY, Ohio


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on:
    September 28, 2006...........................................     1
Appendix:
    September 28, 2006...........................................    41

                               WITNESSES
                      Thursday, September 28, 2006

Beck, Ted, President and CEO, National Endowment for Financial 
  Education......................................................    13
Brobeck, Stephen, Executive Director, Consumer Federation of 
  America........................................................    29
Chernow, David S., President and Chief Executive Officer, JA 
  Worldwide......................................................    11
Cripe, Julie, President and COO, Omnibank (Houston, TX), on 
  behalf of American Bankers Association.........................    22
Kittell, Donald D., Executive Vice President, Securities Industry 
  Association....................................................    28
Kittle, David G., President, Principle Wholesale Lending, Inc. 
  (Louisville, KY), on behalf of the Mortgage Bankers Association    24
Pollack, Frank, President/CEO, Pentagon Federal Credit Union, on 
  behalf of National Association of Federal Credit Unions........    31
Sorgatz, Carl, CEO, Hawthorne Community Credit Union 
  (Napersville, IL), on behalf of Credit Union National 
  Association....................................................    26
Walter, Elisse B., Senior Executive Vice President, Regulatory 
  Policy and Programs, NASD......................................     9

                                APPENDIX

Prepared statements:
    Bachus, Hon. Spencer.........................................    42
    Hinojosa, Hon. Ruben.........................................    45
    Waters, Hon. Maxine..........................................    48
    Beck, Ted....................................................    52
    Brobeck, Stephen.............................................    74
    Chernow, David S.............................................    80
    Cripe, Julie.................................................    83
    Kittell, Donald D............................................   102
    Kittle, David G..............................................   116
    Pollack, Frank...............................................   123
    Sorgatz, Carl................................................   138
    Walter, Elisse B.............................................   151

              Additional Material Submitted for the Record

Bachus, Hon. Spencer:
    Statement of America's Community Bankers.....................   160
    Statement of the North American Securities Administrators 
      Association, Inc...........................................   164
Hinojosa, Hon. Ruben:
    Text of H. Res. 973..........................................   168
    Letter from the Financial Services Roundtable................   171
    Letter from the U.S. Hispanic Chamber of Commerce............   173
    Letter from Kirk W. Francis, on behalf of the Financial 
      Planning Association.......................................   174
    Letter from the Financial Planning Association...............   175
    Dear Colleague Letter regarding co-sponsoring H. Res. 973....   176


                 IMPROVING FINANCIAL LITERACY: WORKING
                   TOGETHER TO DEVELOP PRIVATE SECTOR
                       COORDINATION AND SOLUTIONS

                              ----------                              


                      Thursday, September 28, 2006

             U.S. House of Representatives,
             Subcommittee on Financial Institutions
                               and Consumer Credit,
                           Committee on Financial Services,
                                                   Washington, D.C.
    The subcommittee met, pursuant to notice, at 10:01 a.m., in 
the Rayburn House Office Building, Hon. Spencer Bachus 
[chairman of the subcommittee] presiding.
    Present: Representatives Bachus, Biggert, Sanders, Maloney, 
Moore, Carson, Hinojosa, and Baca.
    Mrs. Biggert. [presiding] This hearing of the Subcommittee 
on Financial Institutions and Consumer Credit will come to 
order. Without objection, all members' opening statements will 
be made a part of the record.
    The chairman, Mr. Bachus, is here, but we traded places for 
the moment. I will recognize myself for 5 minutes.
    I would like to thank Chairman Oxley and Chairman Bachus 
for agreeing to hold this hearing, and for their leadership on 
an issue that is near and dear to all of our hearts, financial 
literacy and economic education. I would also like to thank our 
witnesses, who represent some of the most active groups and 
effective programs in the country.
    I know many of you and your programs, and I know your 
insight will be invaluable to the committee. One particular 
witness today also happens to be a constituent from my district 
in Napersville, Illinois: Carl Sorgatz, who is here 
representing CUNA. Thanks to all of you for joining us.
    One of the first things that I did when I was elected to 
Congress back in 1998 was to go down to the Federal building in 
Chicago to observe the proceedings of the bankruptcy court. And 
I was struck by how many people who had gotten themselves into 
trouble, and they might never have, had they had had just one 
parent, a counselor, a teacher, or a friend, who taught them 
the basics of money and credit.
    In part, that is why we are here today, to make sure that 
we are effective in reaching those Americans who need us, 
whether they are school children, young adults, working 
families, or senior citizens. The witnesses here today 
demonstrate that there is no lack of interest in doing just 
that.
    When my friend and colleague, Ruben Hinojosa, and I founded 
the Congressional Caucus on Financial Literacy, we quickly 
learned how interested our colleagues are. Seventy-nine members 
of the House have now joined the caucus. And we literally began 
to hear from hundreds of private and public sector groups, not 
to mention government agencies with programs designed to serve 
the needs of these specific groups of Americans.
    But with so many organizations mobilized, so many unmet 
needs, and so many people asking what they can do to help, we 
urgently need to develop ways to coordinate our efforts, 
eliminate duplication programs, and keep pace with new demands.
    On the Federal level, we created, under the FACT Act in 
2003, the Financial Literacy and Education Commission, FLEC, 
housed at the Department of Treasury. Its mission was 
threefold: coordinate Federal efforts; create a hotline and Web 
site; and develop a national strategy to promote financial 
literacy among all Americans.
    In April, the commission released its report, aptly titled, 
``Taking Ownership of the Future.'' That's a good first step, 
but we need your help and your advice, as we move forward. I 
think my colleagues here would agree that this committee is 100 
percent committed, in a non-partisan way, to doing whatever we 
can to meet the challenge. In virtually every bill that crosses 
our desks, we are conscious of the need to educate and inform 
and elevate the level of financial literacy in this country.
    So, I look forward to hearing your views on a number of 
questions. First is, what works and what doesn't work? Where 
are the gaps? How could we tap into the private and nonprofit 
and local government efforts, and bring them into the Federal 
fold? Would a universal clearinghouse be helpful? What 
roadblocks are you facing? How can we answer those who want to 
join the effort when they ask us how they can help?
    All of you have great stories and insights. We have a lot 
to cover in a short time. So, unfortunately, it is not possible 
to include every contributing organization in this hearing 
today, and I cannot mention all of them. But I did want to 
thank the American Institute of Certified Professional 
Accountants for their report, ``360 Degrees of Financial 
Literacy,'' and for their national effort to improve the 
financial understanding of Americans. The AICPA is yet another 
national organization doing an outstanding job in improving 
financial literacy.
    So, thank you all again, and I will recognize the ranking 
member, Mr. Sanders, for an opening statement.
    Mr. Sanders. Thank you, Madam Chairwoman, and thank you, 
Mr. Bachus, for holding this important hearing. Clearly, the 
lack of financial literacy in this country is negatively 
impacting the economic wellbeing of millions of Americans.
    The truth is that 25 years ago, all that was needed to 
become financially literate in this country was a basic 
understanding of how to balance a checkbook and how to manage a 
savings account. Unfortunately, that is not the case today.
    Each and every year, consumers are being bombarded with 
over six billion--and I have one of them here--credit card 
proposals--six billion solicitations in mail. Many of these 
solicitations are highly deceptive and misleading. In addition, 
a significant number of consumers who receive financing from 
payday lenders are unaware that the interest rates on their 
loans can total as high as 700 percent.
    And anyone who has ever borrowed money to purchase a home 
realizes how complicated the mortgage lending process can be, 
for even the most astute consumer. Unfortunately, it seems that 
one has to have a law degree these days in order to understand 
all of the hidden transfer costs, the excessive late fees, and 
exploding interest rates that are being charged by not only 
predatory lenders, but also some of the most ``reputable 
banks'' in America.
    It shouldn't come as a surprise, therefore, that consumers 
aged 45 and older often lack the knowledge of basic financial 
and investment terms, according to a national survey conducted 
by AARP. Our young adults are in a similar situation; in a 
survey by the Jump$tart Coalition, high school seniors 
correctly answered an average of only 52 percent of questions 
on basic personal finances.
    Meanwhile, a number of trends in recent years have 
underscored the importance of financial literacy in everyday 
life. Since the second quarter of 2005, the personal savings 
rate has reached a level of roughly -1 percent--something that 
hasn't happened since the Great Depression. A record breaking 
two million Americans filed for bankruptcy last year. In fact, 
bankruptcy rates have more than quadrupled over the last 20 
years, etc., etc.
    Mr. Chairman--or Madam Chairwoman--clearly, we must do more 
to increase financial education in this country. But I would 
emphasize that while financial education is important, it is 
only part of what we have to do. I am growing increasingly 
concerned that some in the financial services industry are 
using the lack of financial literacy in this country as a way 
to receive a get-out-of-jail free card, if you like, for some 
of their blatantly deceptive and misleading tactics.
    In other words, financial literacy, yes. But we must also, 
through this Congress, stop the deceptive advertising that is 
permeating American society. For example, in my view, the 
credit card industry, payday lenders, and others should not be 
allowed to charge outrageous interest rates and sky-high fees. 
And that's why I have introduced legislation called the Loan 
Shark Prevention Act.
    Now, let me conclude, and tell you why we need to go beyond 
financial literacy. Right here, I have a proposal from American 
Express, which a staff member of mine recently received. And 
there it is, right in there, it says, ``Zero introductory APR. 
Pay no interest on new purchases for the first 12 months.'' 
There is a little footnote there, go to footnote four, ``See 
enclosed terms and conditions for details.''
    Well, you go, here is one of these long, single-spaced, 
tiny-worded documents, and there it says, ``The terms of your 
account, including APRs, are subject to change. The APRs for 
this offer are not guaranteed. APRs may change to higher APRs; 
fixed APRs may change to variable, or variable APRs may changed 
to fixed; we may change the terms, including APRs, at any time 
for any reason.''
    We may change it for any time and any reason, but they just 
told us in big print that you get zero interest? Now, you tell 
me what that is. I regard it as fraud. And we can have--and 
there are some six billion of these things that are sent out to 
American consumers all over America. I used to think I got all 
of them, but apparently some of you are getting them, as well.
    So, Madam Chairwoman, financial literacy is extremely 
important. But this Congress has to finally stand up to the 
credit card industry, it has to stand up to the banks, and it 
has to stand up to the people who are ripping off American 
consumers in a very deceptive and dishonest way. Thank you, 
Madam Chairwoman.
    Mrs. Biggert. The gentleman yields back, and now I am happy 
to recognize the chairman of the subcommittee, Mr. Bachus.
    Chairman Bachus. [presiding] Thank you. Today's hearing was 
requested by Mrs. Biggert. And that's appropriate, because Mrs. 
Biggert has really been the leader on our committee in 
stressing the need for financial literacy.
    As all of our panel knows, it is increasingly important for 
people to have a working knowledge of credit cards, of mortgage 
products, and even of investment plans. And this committee 
has--and Mr. Sanders mentioned--seen a lot of evidence. And 
when we go out in our community and talk to our constituents, 
we hear many heart-breaking stories about people who lacked 
financial literacy and really, not only the problems it 
creates, but in some cases the devastation that it creates.
    We have, as a committee, I think--one of our more 
substantial steps was recognizing the important role of 
financial literacy by including a financial literacy component 
in the legislation we call the FACT Act, the Fair and Accurate 
Credit Transaction Act. Title five of the FACT Act established 
the Financial Literacy and Education Commission, with the 
purpose of improving financial literacy and education.
    The FACT Act also mandated the GAO report on 
recommendations for improving financial literacy among 
consumers, and the GAO will be releasing their recommendations 
some time later this year. I look forward to hearing their 
insight, and also to Mrs. Biggert--or maybe Mr. Sanders, or 
someone else chairing a hearing concerning that, either this 
year or next.
    Mrs. Biggert and Mr. Hinojosa, who is here with us today, 
has joined us. There are 80 members--I'm a member--of the 
Financial Literacy Caucus. We are united in the goal of 
encouraging the private sector, and also the Federal Government 
and State governments, to take a role in promoting financial 
literacy, and in also making suggestions and giving us advice.
    And that is really what this hearing is about this morning. 
It's about both the private sector, private organizations--your 
organizations--as well as the Federal Government, and what role 
you are playing back in communities all over America, to ensure 
that people have the knowledge and the information to take full 
advantage of our credit markets and the financial products 
which are offered to all Americans.
    Let me close by simply saying again that I want to commend 
Mrs. Biggert. Each year in April she sponsors a resolution with 
Mr. Hinojosa--I know for the past 3 years--stressing financial 
literacy, reminding all of us that it is something that is an 
ongoing mission. And I believe that Mrs. Biggert and Mr. 
Hinojosa, and the work that they have done, has had an enormous 
impact on educating Members of Congress, their staffs, and even 
the American public about the importance of understanding 
financial transactions.
    And I commend the organizations today. Many of the 
organizations that are here at this first panel testifying have 
created unique ways of educating consumers on financial 
opportunities. I admire your efforts, I commend you, and I look 
forward to your testimony. I yield back the balance of my time.
    Mrs. Biggert. Thank you, Mr. Bachus. That resolution is 
always a tough battle on the Floor. Last year it passed by 423 
to 1, and I am still after that 1 to vote for it.
    I would like to recognize the gentlelady from New York.
    Mrs. Maloney. Thank you, Madam Chairwoman, and I thank all 
of the panelists for being here. I would like very much to be 
associated with the comments of my colleague, Mr. Sanders, on 
truth in advertising, and the comments of my colleague, Mr. 
Bachus, on the FACT Act, and the important GAO report that will 
be coming out.
    As a former teacher and a member of the Financial Literacy 
Caucus, I strongly support the subject of our hearing today. We 
know from scientific evidence, that financial literacy prevents 
abuse and enables individuals to better achieve their financial 
goals.
    For example, one effort that I observed almost 5 years ago, 
Freddie Mac conducted one of the first studies in this area, 
looking at some 40,000 mortgages, to see whether pre-purchased 
financial education reduced the 90-day delinquency rates. 
Borrowers receiving personalized financial education in 
preparation for a home purchase had a 34 percent lower 
delinquency rate: a remarkable statistic.
    Since then, other studies, including studies by the 
National Endowment for Financial Education have confirmed what 
common sense tells all of us: individuals who improve their 
financial literacy are better able to achieve their financial 
objectives, whether it is getting out of debt, purchasing a 
home, sending a child to college, or saving for retirement.
    As these studies show, while the benefits of financial 
literacy apply to all sectors of our society, those most 
vulnerable stand to benefit the most. The La Raza study, for 
example, confirms that minorities and those in lower income 
brackets are least financially knowledge, and that as a result, 
they often end up incurring significant unnecessary costs when 
they cash a check, get a loan, or otherwise use financial 
services.
    Financial literacy gives all Americans necessary tools to 
achieve their financial objectives. And I thank the gentlelady 
for her leadership, and my colleague, Mr. Hinojosa, for his. 
Thank you.
    Mrs. Biggert. Thank you very much. And I would like to 
recognize Mr. Hinojosa, from Texas, for his opening statement.
    Mr. Hinojosa. Thank you very much. It is indeed a pleasure 
for me, as the co-chair of the Financial and Economic Literacy 
Caucus, to work with my good friend and colleague, Judy 
Biggert.
    I want to express my sincere appreciation for you holding 
this extremely important hearing today. I also want to take 
this opportunity to thank you again for holding a hearing at my 
request on banking the unbanked and financial literacy in 
general in 2003.
    That particular hearing was very informative, enlightening, 
and comprehensive. I am glad that you have called yet another 
hearing on financial literacy, at the request of Congresswoman 
Biggert. These hearings inherently incorporate an assessment of 
ways to bank the unbanked.
    I believe that all of us here today share a common purpose: 
improving financial literacy for all Americans. It is a very 
daunting task, especially in light of the tremendous number of 
financial literacy programs, and the many comments, advice, and 
recommendations that we receive from off-the-Hill on the 
methodology to use, the exposure to give, and the oversight 
needed to coordinate and collaborate with these programs.
    The programs run the gamut from some preschool financial 
literacy programs such as the Money Mammals, programs geared 
toward K-12 students, college students, young adults, a few for 
those in mid-life, and several geared for those planning for 
their retirement, or already retired.
    There are too many programs to discuss and consider in one 
hearing. Madam Chairwoman, despite daily challenges of 
balancing work, family, and personal matters, it is important, 
now more than ever, that all Americans take time to increase 
their financial knowledge and plan for a secure future.
    Like most people, we all have hopes and dreams and life 
goals for ourselves and our families. These might include 
buying a home or a business, saving for college education for 
our children, taking a dream vacation, reducing taxes, or 
retiring comfortably. Too many Americans lack basic financial 
literacy to accomplish many of these goals.
    Last year, in 2005, one bankruptcy petition was filed for 
every 60 households, which was a 23 percent increase from the 
previous year. According to the Federal Reserve, revolving debt 
for American consumers totaled $805 billion in March of this 
year. Worse yet, the United States personal savings rate, based 
on the percentage of personal disposable income devoted to 
savings, was -.5 percent at one time last year--I repeat, the 
savings rate reached an all-time low of -.5 percent last year.
    And at the end of 2005, the savings rate increased to a 
dismal -2 percent. I think we all agree that a negative 
personal savings rate is unacceptable, and actions must be 
taken to remedy the problem. We must continue to work with our 
colleagues here on the Hill, work with the relevant Federal 
agencies, work with various associations, nonprofits and 
community-based groups, and yes, especially with the private 
sector. We must work with all of them if we are to obtain our 
goal of improving financial literacy rates across the United 
States.
    There is one area in particular that I have to address in 
my remarks this morning, and that is that we still need to find 
additional ways and means to bank the unbanked, and that is a 
tough order. Such action will help them, help their families, 
help the financial institutions with which they bank, and 
ultimately, help their communities, their counties, their 
States, and overall, our U.S. economy.
    Several of you who will testify today have done an 
admirable job of trying to find ways to bring Hispanics, 
African Americans, Native Americans, and Pan Asians into the 
banking system. I applaud you and your efforts in this area. It 
is essential that we work towards improving education, consumer 
protection, empowering individuals and families through 
economic and financial literacy in order to build stronger 
families, businesses, and communities.
    Having read his testimony, I must say that Mr. Beck, 
representing the National Endowment for Financial Education, 
has presented the most comprehensive plan for government 
involvement in the financial literacy cause. I agree with him, 
that the government can and should do the following: Lead by 
example and coordinate and communicate a unified message.
    We should sponsor a broad-based public awareness campaign 
comprised of a very ambitious, mass-market multi-media effort 
in support of a national financial literacy initiative on the 
scale of the current truth campaign, developed through the 
public education fund to discourage smoking among young people.
    I also like his idea of creating a literacy corps, because 
one-on-one financial counseling provides the greatest potential 
to affect positive change in the management of one's finances.
    Madam Chairwoman, 1-800 numbers and Web sites are fine. But 
one-on-one counseling does a much better job. It does the 
trick. This type of counseling was needed when Katrina hit the 
coast and thousands of people needed one-on-one financial 
counseling to put their lives back together. The government 
failed miserably in that arena.
    I am pleased to learn that the National Endowment for 
Financial Education has, for years, worked with the American 
Red Cross on pioneering financial education for consumers 
related to disaster preparedness and disaster recovery. I must 
note that the material was created in cooperation with the 
AICPA Foundation, and it's available to all consumers through 
the American Red Cross in print, as well as online.
    Hopefully, the two groups also provide one-on-one financial 
counseling to victims of natural disasters such as that 
provided comprehensively by Operation Hope. It is my personal 
goal to succeed in ultimately integrating the term financial 
literacy into the everyday vocabulary.
    As I close, I want to say that I could go on and on for the 
remainder of the day, discussing all that needs to be done to 
improve financial literacy, which is exactly the problem. The 
Financial Literacy Education Commission published and released 
its national strategy for financial literacy. It was a good 
first step, but it is not the ultimate solution to all the 
financial literacy problems.
    Hence, the need for this and future hearings, and finding 
ways for the government and private sector to coordinate and 
collaborate on improving financial literacy.
    Madam Chairwoman, I want to thank you, your entire staff, 
as well as Chairman Bachus's leadership, and his staff: 
Danielle English, Dina Ellis and Emily Pfeiffer, and Jaime 
Lizarraga, with Congressman Frank--for all their contributions, 
not only to this hearing, but especially all of our efforts, as 
a group, towards this very worthwhile cause. We make a good 
team.
    And with that, I yield back the remainder of my time.
    Mrs. Biggert. Thank you very much, Mr. Hinojosa, and thank 
you for all that you have done for the cause, and it has been a 
real pleasure to work with you on this issue, and we will 
continue to make more headway as a team. Thank you so much for 
being here. I would just recognize Mr. Bachus for a procedural 
matter.
    Chairman Bachus. Thank you. I would like to, without 
objection, introduce the written testimony of two 
organizations. One is the American Community Bankers, which is 
not on our second panel, but they agreed to submit their 
testimony in writing because of time restraints. And I thank 
them, and they have played a very important role.
    The other one is the written statement of the North 
American Securities Administrators Association. This is 
actually the oldest international organization devoted to 
investor protection. The incoming president is Mr. Joe Borg, 
who is the Alabama securities commissioner in Alabama. But the 
reason that they are not testifying is not--they played a great 
role, but we limited our testimony at today's hearing to the 
private sector.
    After the GAO report gets in, we will have an additional 
hearing. And at that time, I fully expect their association and 
other government or associations made up of government 
witnesses to testify. So, without objection, I would like to 
introduce that.
    Mrs. Biggert. Without objection.
    Chairman Bachus. Thank you. I would also like to join with 
what Mr. Hinojosa said, and thank your staff Emily, Danielle 
English, and Dina Ellis, and--but your staff is very prominent 
in organizing this hearing. Thank you.
    Mrs. Biggert. Thank you very much, Mr. Chairman. And I now 
recognize the gentlelady from Indiana, Ms. Carson, for an 
opening statement. Three minutes.
    Ms. Carson. Thank you very much, Madam Chairwoman, and to 
all other people on the committee at this point--the ranking 
member.
    All of us on this committee understand how important 
financial literacy is to the American people. The savings rate 
for America is in the red. Wages are decreasing. As prices are 
increasing, personal bankruptcies have increased over the last 
decade, because of the growth of the credit card industry. 
Pension plans are being replaced with voluntary contribution 
retirement funds and financial products are becoming more and 
more complicated.
    Three years ago, I convened a financial literacy workshop 
for the Congressional Black Caucus. My guest was the Honorable 
Alan Greenspan, who did a tremendous job in articulating the 
need for financial literacy. We also had other experts there, 
following Mr. Greenspan, who enhanced the need for people to 
understand financial literacy.
    We have a pocket of students now who just reach out in 
their mailbox and get credit cards, and they don't worry about 
how they are going to pay for them, they just worry about how 
they are going to use them. And then, the credit card industry 
is left holding the bag if the parents don't--what it is.
    I believe that financial literacy courses should be 
mandatory for education, whether it be at the elementary level, 
the high school level, or the college level. People should 
teach students financial literacy. I am appalled at the way our 
young people spend their money: $200 tennis shoes, as opposed 
to going to a discount house and getting the same pair of 
tennis shoes. They just see what they want.
    I am concerned about these promises on rebates, where this 
industry promises you a rebate on something you purchased, and 
the rebate never comes in the mailbox.
    But I believe that, with us working together, that we will 
be able to resolve things.
    Finally, let me say that in Indiana, I created a consumer 
hotline where, before people sign their names the first time on 
mortgages, they call the consumer hotline to discern whether or 
not it would be the right thing to do, in terms of signing 
whatever contract was put before them. The number is 1-888-722-
WAIT. That is to wait before you sign your name. And it has 
been extremely successful, where the consumers around the State 
call up and ask questions about these promises to pay that have 
been placed before them.
    So, I think with the collaboration of all of us, that we 
will be able to address and redress some of the problems that 
occur in the consumer market, unnecessarily. So I appreciate 
very much all of you being here.
    And I am going to have to leave, because I have an Amtrak 
meeting at the same time, but thank you.
    Mrs. Biggert. Well, thank you for being here. And I will 
now introduce the first panel of witnesses. On my left, Ms. 
Elisse B. Walter, senior executive vice president, regulatory 
policy and programs, NASD. Welcome.
    Next, we have Mr. David Chernow, president and chief 
officer of Worldwide Junior Achievement. Welcome.
    And Mr. Ed Beck, president and CEO of National Endowment 
for Financial Education--NEFE, I believe it is pronounced. 
Welcome.
    Without objection, your written statements will be made a 
part of the record, and you will each be recognized for a 5-
minute summary of your testimony. We will start with Ms. 
Walter. You are recognized for 5 minutes.

STATEMENT OF ELISSE B. WALTER, SENIOR EXECUTIVE VICE PRESIDENT, 
              REGULATORY POLICY AND PROGRAMS, NASD

    Ms. Walter. Thank you. Madam Chairwoman, Ranking Member 
Sanders, and members of the committee, good morning. Thank you 
for inviting me to testify about NASD's efforts to educate 
investors.
    And thank you, too, for your support of the recently passed 
Military Personnel Financial Services Protection Act. A 
provision in this important legislation will enable NASD to 
make information about brokers available to investors in an 
easier-to-use format, via the Internet. We appreciate your 
leadership on this important legislation.
    Madam Chairwoman, NASD is the private sector securities 
regulator for the U.S. securities industry. By law, broker 
dealers must belong to NASD if they do business with the 
public. We write and enforce the rules governing them, and our 
mission is to ensure the protection of investors, and the 
integrity of the markets.
    NASD firmly believes that educating investors is the first 
line of defense in protecting them from harm. The more 
knowledgeable an investor is, the more she is able to make 
sound decisions and avoid costly mistakes.
    To determine how to reach investors better, NASD conducted 
a survey to assess where most people are when it comes to 
knowledge about investing. And we found an overwhelming number 
of investors realized they need to be better informed, and we 
have responded with a variety of resources.
    We have issued educational materials to alert investors to 
potential problems, and we provide plain English explanations 
of products and processes. We have developed tools for 
investors to use in making financial decisions. We conduct 
public education events to reach out to investors. And a major 
segment of our Web site, nasd.com, is devoted to information 
that mainstream investors can use.
    For example, NASD Broker Check, which is also available--
the information also being available by toll free telephone 
number, provides disciplinary history and information on 
brokerage firms and brokers. Another online tool available to 
all investors is our mutual fund expense analyzer.
    Because the fees and expenses charged by mutual funds can 
make a big difference in the performance of an investment, we 
provide expense information on virtually every mutual fund, so 
that investors can analyze the impact of fees and expenses on 
fund performance by showing how those fees add up over time. 
Investors can research one fund at a time, or can compare the 
cost of as many as three funds at a time, to learn how expenses 
can cut into fund performance, particularly over the long term.
    Developing free investor tools such as these, and 
furthering investor education in all its forms are critical 
aspects of what we do, and we are quite proud to be doing them. 
But at the same time, we know that our education programs reach 
only a small percentage of the population that could benefit 
from them. That is why it is essential, as many of you have 
already said, that we and others in the investor education 
community, leverage resources and use all means of 
communication to reach the most people, and partner with others 
who share this mission.
    Madam Chairwoman, NASD is also building on Congress's work 
in the recently enacted pension bill. The unfortunate fact is 
that almost a third of recently hired employees who are 
eligible to participate in their company's defined contribution 
plan do not participate. And participation for employees 
earning less than $20,000 a year is even lower.
    Yet, a number of academic studies have found that changing 
the default options to require investors to opt out of, instead 
of opt into participation in 401(k) plans raises participation 
rates to more than 90 percent.
    To help solve this problem, NASD is working with AARP and 
the retirement security project to encourage employers to adopt 
automatic 401(k) enrollment as the default option for their 
plans.
    Taking partnership in a different direction, NASD recently 
created the NASD Investor Education Foundation to support 
innovative research and educational products that give 
investors the tools they need to better understand the markets 
and the basic principles of not only investing, but also 
saving.
    In its first 2 years of operation, the foundation awarded 
nearly $5 million in grants for educational programs and 
research projects targeting the underserved segments of the 
population. For example, through an NASD Foundation grant, Ohio 
State is developing guidelines for effective investor education 
programs targeted at traditionally underserved communities. And 
a grant to Kids Online, a nonprofit group in LA, is supporting 
the production of an interactive web-based financial literacy 
show to be broadcast in high schools around the country.
    The foundation has also launched an effort to educate 
military service persons about saving and investing, and to 
help them to avoid fraudulent and inappropriate products and 
sales pitches. I urge you to visit saveandinvest.org, our Web 
site devoted to helping members of the military make sound 
financial decisions, to learn more about this program.
    Madam Chairwoman, all Americans deserve the opportunity to 
create a secure financial future for themselves and their loved 
ones. NASD works every day to help more Americans take control 
of their financial decisionmaking. We applaud your effort to 
shed light on this issue, and thank you again for the 
opportunity to testify. I would be happy to answer any 
questions.
    [The prepared statement of Ms. Walter can be found on page 
151 of the appendix.]
    Mrs. Biggert. Thank you very much. Mr. Chernow, you are 
recognized for 5 minutes.

 STATEMENT OF DAVID S. CHERNOW, PRESIDENT AND CHIEF EXECUTIVE 
                     OFFICER, JA WORLDWIDE

    Mr. Chernow. Madam Chairwoman and members of the 
subcommittee, it is a true honor and privilege to be with you 
this morning as we meet together to discuss this very important 
topic.
    In my role as president and chief executive officer of 
Junior Achievement Worldwide, I represent over 2,600 
professional staff, over 240 local and national boards of 
directors who are comprised of over 8,000 members of the board, 
mostly from the private sector, and I work in over 100 
countries around the world in our shared goal of inspiring and 
preparing young people to succeed in a global economy.
    Here in the United States, nearly four million children go 
through Junior Achievement, annually participating in hands-on 
experiential learning programs that are delivered at over 
20,000 different schools by over 135,000 volunteers in nearly 
170,000 classrooms. Our programs span the wide spectrum of 
business, economics, and free enterprise education with a focus 
on what we believe are the three key elements of preparation of 
our young people's future success. Those are: work force 
readiness; entrepreneurship; and financial literacy.
    To put it as simply as I can, time is of the essence. We 
are experiencing an epidemic in this country. Financial 
illiteracy is threatening sustained economic growth and 
development of the populace. And what we have learned is that 
this problem cannot be solved alone. And that is why I want to 
share with you today a few words on the topic of collaboration 
and partnership in financial literacy education.
    One of Junior Achievement's core values is a belief in the 
power of partnership and collaboration. Junior Achievement is 
particularly dedicated to working with the private sector. Each 
and every one of Junior Achievement's programs, which is 
kindergarten through 12th grade, has been delivered to students 
in the United States since 1919, and requires the active 
involvement of trained business volunteers.
    This private sector commitment to financial literacy 
education is a key component of our success, and something we 
believe is absolutely essential in our efforts to improve 
financial literacy in this country. Private sector volunteers 
serve as meaningful, inspiring role models to our youth, as 
they share their personal and professional insights with 
students who sincerely wish to prepare for financial stability 
in their own lives.
    I also want to emphasize the value of partnership and 
collaboration among fellow nonprofit organizations. Rather than 
continuously reinventing the wheel in the financial literacy 
arena, it is much more efficient for nonprofit organizations to 
pool our limited resources to reach as many youth as we 
possibly can.
    This is something which Junior Achievement has been 
particularly committed to in recent years. Since 2004, for 
example, we have been pleased to join with the Jump$tart 
Coalition for personal financial literacy, and the National 
Council on Economic Education, in establishing the Partnership 
for Financial Education Policy. This partnership sponsors the 
annual--and very successful, I am glad to say--Financial 
Literacy Day on the Hill event, and arranges other activities 
in consultation with the Financial and Economic Literacy 
Caucus, led so passionately by Congresswoman Biggert and 
Congressman Hinojosa.
    Similarly, several months ago, we entered into a 
collaborative arrangement with America's credit unions, and the 
Credit Union National Association, to develop a new financial 
literacy and entrepreneurship education television series for 
children, aptly entitled, ``JA's BizKid$.'' This new program, 
to be aired on PBS stations nationwide next year, is being 
produced by the team who brought us, ``Disney's Bill Nye, the 
Science Guy.''
    By pooling resources and expertise, America's credit unions 
and JA Worldwide will be able to bring financial literacy 
education, hopefully, to literally millions of children in 
large and small communities across the country.
    Another collaboration worthy of mentioning is our brand new 
relationship with my co-leader, to my left, the National 
Endowment for Financial Education, or NEFE. Beginning next 
year, Junior Achievement business volunteers will take NEFE's 
award winning high school financial planning program into high 
school classrooms throughout the United States to extend the 
reach of this great curriculum to tens of thousands of new 
students each year.
    Although our focus is on collaboration among the private 
sector groups, I would like to briefly note our commitment to 
similar collaborations with government at the Federal and the 
State and the local levels. Like our involvement with the 
private sector, this coordination is perhaps most critical at 
the local level. While Junior Achievement's programs are being 
developed by worldwide headquarters, each of our local chapters 
work closely with State and local school officials to determine 
the most appropriate programs for the local market, and to 
integrate State education standards into our curricula.
    Of course, we are committed to partnering with policymakers 
at the Federal level. As noted, we work closely with the 
financial and economic literacy caucus here, in Congress. We 
are also involved with the Financial Literacy and Education 
Commission, and are working on specific initiatives with 
individual Federal agencies, such as the Small Business 
Administration. These collaborations are the types of 
partnerships we remain committed to in our shared quest of 
providing quality financial education to today's youth.
    We applaud the efforts of this committee to keep its eye on 
such a critical issue for our youth, and we thank you for 
allowing us to share our thoughts with you today. As I leave 
today, finally, I just wanted to point out that I hope everyone 
realizes that collaboration is the key to success in solving 
this critical problem. And our collective efforts, in words and 
in action, will provide the solution. Thank you.
    [The prepared statement of Mr. Chernow can be found on page 
80 of the appendix.]
    Mrs. Biggert. Thank you very much, Mr. Chernow.
    Mr. Beck, you are recognized for 5 minutes.

 STATEMENT OF TED BECK, PRESIDENT AND CEO, NATIONAL ENDOWMENT 
                    FOR FINANCIAL EDUCATION

    Mr. Beck. Thank you. Thank you, Madam Chairwoman, and the 
other members of the committee. We greatly appreciate the 
opportunity to be here today.
    My testimony will touch on three areas: first of all, 
NEFE's philosophy regarding financial literacy; I will also 
talk about the importance of partnership in our community and 
offer some comments on how the Federal Government can enhance 
and cooperate with our efforts to make them more effective.
    First of all, regarding philosophy, NEFE is an organization 
that is wholly focused on improving the financial wellbeing of 
all Americans, and we are specifically concerned by the 
situation faced by the various underserved communities. We 
agree that there is a greater need right now than there has 
ever been to build financial education literacy in the 
community.
    However, we are also convinced that the American public is 
up to this challenge if they are given the proper education, 
tools, and continual reinforcement and encouragement to do so.
    We believe very much in the power of the teachable moment, 
and that throughout one's economic life there are numerous 
opportunities where economic and financial education are 
needed, and that the nonprofit community, the government, and 
the private sector can step up and help individuals at these 
times.
    To do that, though, we must partner. NEFE partners in 
literally everything we do. At any given time, we will have 
over 50 partnerships in place. These range from research at 
universities, where we are studying behavior change, and how to 
get people more interested in looking after their financial 
wellbeing, to working with specific organizations, ranging from 
the American Red Cross, the National Multiple Sclerosis 
Society, and the American Indian College Fund, for issues 
specifically facing their constituents. We feel we need to work 
through such organizations to be most effective in dealing with 
the issues that their communities face.
    We have talked briefly about the NEFE High School Financial 
Planning Program, and I think it is a classic example. We have 
had very successful partnerships with the Cooperative Extensive 
Service and the Nation's credit unions for several years. The 
high school program goes back to 1984. During that time, we 
have had over 4\1/2\ million students attend the program.
    Last year alone, we had over 630,000 students in all 50 
States covering 7,500 classrooms take the course, and we feel 
it's a very effective program, and we are very excited about 
the announcement this week of the new alliance with Junior 
Achievement, that will allow us to extend this program even 
more broadly through the outstanding field network that Junior 
Achievement possesses.
    I think it's also important to point out that the program 
is provided free to all students in all schools throughout the 
country, as everything else we do at NEFE is free to anybody 
who uses our service.
    Some suggestions for the Federal Government as far as 
involvement in what we are doing include: First of all, the 
comment made earlier, lead by example. There are some very 
interesting and promising developments going on in various 
Federal agencies, and specifically in the military, that we 
think will be great best practices that the government can 
adapt to its own work force, and that the private community 
could then also adapt. And we strongly suggest you encourage 
and foster those programs.
    We also suggest that you sponsor a broad public awareness 
campaign. We currently sponsor a program called, ``Smart About 
Money.'' It's been in place since September of 2005. We spent 
$1.3 million on this effort, and it's a public awareness 
program to help people deal with key issues in their lives: 
things like save for a house; save for education; and stop 
living paycheck-to-paycheck. We think that Federal programs 
sponsoring a similar effort could have great reach, and really 
utilize those teachable moments we talked about a few minutes 
ago.
    We would also like to see you help create demand for 
existing programs. At the moment, our community is very 
fragmented, and we really haven't focused on key messages that 
need to be disseminated. Meetings like this meeting today can 
greatly enhance that effort.
    We also would love to see the sponsoring of a financial 
literacy corps, similar to the service corps of retired 
executives. There are many people in society who understand the 
basics, and one-on-one counseling from those individuals to the 
people who need it would be a very powerful and very cost-
effective tool to help the underserved communities we talked 
about.
    And then, finally, we suggest you look for partners who are 
very skilled at dealing with the issues of different groups 
ranging from K through 12, college, the workplace, those in 
special situations, and the military, where the partners 
understand how to maximize those teachable moments. Make sure 
those people start working together and cooperating with each 
other. Thank you for letting us be here today.
    [The prepared statement of Mr. Beck can be found on page 52 
of the appendix.]
    Mrs. Biggert. Thank you very much for all of your 
testimony. We will now turn to questions, and members will have 
5 minutes to ask their questions and get their responses. So, 
with that, would you like to start, Mr. Bachus?
    Chairman Bachus. I would very much appreciate that 
opportunity.
    Let me--and I heard in your testimony you gave some good 
advice, general advice, about--I know, Mr. Beck, you said, 
``Don't live from paycheck to paycheck.'' Earlier, Ms. Walter, 
you were talking about knowing who you are dealing with, which 
is so important. And I know college kids--I have five children, 
and they will come back with a credit card and I will, you 
know, say, ``How did you get this?'' ``It came in the mail.'' 
And they know nothing about the company.
    But what are the--I would say what are the most important 
messages that we can get to our young people, or anyone that 
lacks financial literacy? You know, the main themes that we 
should be emphasizing to consumers. Just--
    Ms. Walter. I would be happy to start. I think you have to 
start with the very basics. You have to tell people that they 
should never undertake to do something they don't understand, 
whether it is a credit card or a loan or buying into an 
investment. You really must ask questions, and you must 
understand what you are doing. You must look before you leap.
    I know all of these sound like platitudes, but they are 
very basic, sound investment advice. If it sounds too good to 
be true, it is too good to be true. And they should also learn 
to draw on the resources that actually are out there to help 
them, because there are a number of them.
    We, obviously, given our role, concentrate on investing. 
But we have a large number of sound resources, and draw on the 
resources of others, and partner with folks like the two 
gentlemen to my left, to provide sound, objective advice for 
people.
    So, they need to learn not to respond to pressure, and to 
feel very comfortable with what they are doing. And the first 
thing they need to do is to set aside money for future events. 
And that, perhaps, is the hardest lesson for young people to 
learn. They feel immortal, and it is hard for them to look 
ahead.
    Chairman Bachus. Thank you.
    Mr. Beck. Just a couple of quick things. First of all, 
understand wants versus needs. And--
    Chairman Bachus. What was that? I didn't--
    Mr. Beck. Understand wants versus needs in your personal 
spending patterns. Second, budget. I mean, it sounds very 
simple, but the idea of sitting down and figuring out what you 
are bringing in, and what that allows you to spend, and also 
what sort of incentive that creates for you to improve your 
financial situation, is a very key thing. Understanding the 
basics of your own personal budget is a very key thing.
    Another point is get involved with whatever savings 
opportunities are available to you. So, if you are working, 
start to get involved in whatever plans are available to you, 
either independently or through your company. Whatever it takes 
to get started, start. It doesn't matter how small it is. But 
once you get started, you start to see the benefits of it.
    And the other thing is to start as soon as possible. Don't 
assume that things are going to happen that are going to create 
a very safe haven for you. The sooner you start to develop a 
plan for yourself, the more likely you are to be financially 
stable in your future.
    Chairman Bachus. Mr. Chernow?
    Mr. Chernow. You know, just to reinforce two quick 
concepts, young people are never too young to learn the 
important aspects of financial literacy. And what I am sure you 
have learned, and us as youth organizations have learned very 
quickly, is that habits are very important to develop. At the 
early age of 11, 12, and 13, psychological experts will tell 
you that the ability to impact attitudes and behaviors are 
greatly enhanced at that age. So we need to get to them 
younger.
    And Mr. Beck just pointed out two quick things. Wants and 
needs is a very important concept to young people. But the 
other concept that I don't think they fully understand that 
needs to be reinforced, based on the information Congressman 
Hinojosa indicated, was that savings is critical to young 
people's future success. And we need to emphasize that, and 
tell them the beauty of savings. Educate them and inspire them 
about that.
    Chairman Bachus. And, you know, the whole media world--I 
guess you say Madison Avenue--says, ``You need this to be 
happy.'' And it's usually a product or a thing you have to 
purchase. And, you know, that is--and it creates the--the 
advertising world creates wants. And it is very important that 
there is a counter-message there that, you know, what you need 
to be happy is a little savings or a little cushion, not 
something you have to pay for down the road.
    But the counter-message is a strong message. So you are up 
against a lot of competition that is telling them just the 
opposite. So, thank you.
    Mrs. Biggert. Thank you, Mr. Bachus. The gentleman from 
Texas, Mr. Hinojosa, you are recognized for 5 minutes.
    Mr. Hinojosa. Thank you, Madam Chairwoman. I enjoyed 
listening to each one of your presentations. They are very 
interesting approaches to this project. I would ask each one of 
you to answer the first question that I have: What 
recommendations would you make to improve the National Strategy 
for Financial Literacy?
    And the second question to each one of you is: What would 
you recommend to streamline the Financial Literacy Education 
Commission? I will start with you, Ms. Walter.
    Ms. Walter. I believe, Mr. Hinojosa, that the most 
important thing that the government can do, either through the 
existing body or otherwise, is exactly what you are here doing 
today, to shed light on the issues that Americans face in 
saving and investing, to make sure that is given a prominent 
place among the public issues of the day, and to highlight the 
resources that are available.
    I believe that, in the private sector, we have made a 
number of first and second good steps in reaching collaborative 
efforts, and in learning not to compete, but to rely on each 
other and not reinvent the wheel, as was mentioned earlier, but 
to build on things. And the government can help us do that by 
directing people to us and allowing us to use those resources.
    So that, ultimately, is what I would recommend, because I 
do think there are a number of private sector resources that 
have been applied to very good use, mostly in the content area.
    And now, we need to concentrate in large part, as you have 
highlighted before, on the issue of distribution. How do we 
make sure, with respect to all of the groups who are out there 
in our population, particularly the underserved groups, how to 
reach them most effectively, with the messages--very clear, 
concise, and good messages--that have been developed?
    Mr. Hinojosa. Thank you.
    Mr. Chernow. Congressman, two quick comments. One is--I 
will throw out two words, awareness and action. You asked the 
question what recommendations would we do to improve the 
national strategy. I think there is, first, the issue of making 
sure that people understand in this country the important issue 
that is before us. I am not sure that we have as much 
awareness.
    We are lucky that some organizations go out and do large 
statements out there, and spend millions of dollars to get the 
message out. But as Chairman Bachus said earlier, you know, 
sometimes it's the wrong message. Savings is a great message, 
it's just not said enough.
    The second thing is, in terms of action, I think we need to 
showcase the great examples of success in this arena. And I 
would just re-emphasize that where we need probably the 
greatest help, is for us to go out and reach those children who 
need us the most in our area. We are not getting out to the 
rural communities. We are not getting the messages out, and we 
are not--we need the assistance of government, quite honestly, 
to help us get exposed to those young people who need us, so 
that we can have our effective programs be implemented.
    Mr. Hinojosa. I want to respond to one of the earlier 
comments that you made on wants versus needs, personal budget, 
and starting savings plans being so critical.
    On the last one, I want to say that my colleague, 
Congresswoman Biggert, and I serve on the Education Committee, 
on the Higher Education Committee, and we share a similar 
interest in trying to increase the number of students earning 
bachelor's, master's, and Ph.D.s in STEM careers. And we are 
envious of the Chinese in the success that they have had in 
science and technology and engineering.
    So, a group of us got on an airplane and went to China and 
went to visit seven universities, and asked them, ``How is it 
that you all are so successful?'' And among the discussions, 
one of the responses was that high school--I think education is 
free until about the eighth grade. Then, from the 9th to the 
12th, and higher education, they have to pay for it.
    So, they said that they have a one child policy per family, 
and so the parents, and then the four grandparents, all focus 
on that one child. And they save money, they said. They save 10 
percent of their income to pay for that latter part of the high 
school, and for the college education. And it was difficult for 
me to understand how they could make such small annual incomes 
and yet put away 10 percent.
    So, you are definitely hitting the points that those folks 
stressed, which was a combination of parental involvement, and 
then the savings. And so, I think that, somehow, we are going 
to have to find examples of those who have been able to do that 
so that others can say, ``If he could do it, I can do it.'' And 
they definitely are an example of success for the STEM careers, 
international decathlon of mathematics and science.
    And so, we need to take a look at that. My time has run 
out, but I want to stay and hope that there is a second round 
of questions. With that, I yield back.
    Mrs. Biggert. Thank you very much. I will recognize myself 
for 5 minutes. This is not the second round, Mr. Bachus.
    We have heard from various sources that it is difficult to 
track how much progress is being made in the financial literacy 
area. How are you able to evaluate the impact of your efforts--
your efforts, or other programs? We will start with Mr. Beck 
this time, and go the other way.
    Mr. Beck. Well, there are a couple of things we are doing. 
We are just finishing a grant project at the University of 
Georgia for a measurement tool that can be used in any 
financial literacy program.
    It tracks not only whether you learned something, but also 
behavior change. And that is a program that will be rolling out 
at the end of October. And as with everything else we do, that 
will be made available to anybody who wants to use it, and 
actually we have had several meetings with different government 
agencies who are very interested in it.
    With our high school program, when people finish the 
course, we ask them a question regarding how much they were 
aware of certain financial issues before they took the course, 
and how they have changed in their opinions. For example, in 
asking, do you understand the cost of buying on credit, 12 
percent said that prior to taking the course, they felt 
strongly about that, that they knew that. That went to 31 
percent afterwards.
    Now, the important thing is that as we go back 3 months 
later and ask them the same question--and at that point, 49 
percent felt strongly that they understand the cost of buying 
on credit. Comparing prices when I shop: 25 percent before, 33 
percent right after, jumping to 52 percent 3 months later.
    So what we are most interested in with anything we do is in 
trying to figure out not only did people acquire some knowledge 
during that event, but is it affecting them several months 
later, and is it creating behavior change? Because the real 
Holy Grail is behavior change, not just being able to pass a 
quiz.
    As we evaluate programs, that is the key thing for us.
    Mrs. Biggert. Thank you. Mr. Chernow?
    Mr. Chernow. Similarly to Mr. Beck, we actually have, over 
the last 10 years as an organization, have invested literally 
millions of dollars on evaluation. We do not believe, unless we 
are able to evaluate the efficacy and the impact of the 
programs, that we should be delivering those programs. So it's 
not just about reaching children, it's about having an impact.
    Our studies are pre and post. Those pre and post studies do 
indicate increases in learning. So we do have a pre-test and a 
post-test, and are able to determine if there are increases. 
And it is about increased learning. And as Mr. Beck said, what 
you are able to evaluate on a short-term basis--and, 
unfortunately, because we are not able to track the students 
from privacy issues, we are able to do initial studies--we are 
able to determine whether or not there has been an attitudinal 
change.
    You know, the hope will be that some day down the road we 
will be able to track their actual actions in regard to 
financial literacy. Are they getting credit cards? Are they 
doing a good job of getting loans for homes and businesses and 
paying them off? We don't have that information too short-term, 
but the truth is, we are evaluating the increases in learning 
and the impact on their attitudes. And through our testing, we 
are able to show marked increases in learning and 
understanding.
    Mrs. Biggert. Thank you. Ms. Walter?
    Ms. Walter. I would agree with everything that has been 
said already. And I also think that it is important for those 
of us who have grant-making programs to ensure that our 
grantees are undertaking things that can be evaluated and 
measured.
    So, we always require our grantees to have an evaluation 
plan. And where we conduct programs ourselves or with partners, 
as in our military effort, we seek to do that as well. We have 
brought in an outside consultant in order to assess whether 
what we are doing is moving the needle or not.
    Mrs. Biggert. Thank you. And with that, I would yield back, 
and yield 5 minutes to Mr. Baca from California.
    Mr. Baca. Thank you, Madam Chairwoman, and thank you very 
much for having what I believe is a very important hearing on 
improving financial literacy, especially among the elementary 
and secondary level, and also our post-secondary level. And I 
appreciate the panelists coming here.
    I was pleased to hear the gentleman, Mr. Chernow, talk 
about Junior Achievement. I am quite familiar with Junior 
Achievement, because I used to coordinate about seven or eight 
different schools on the Junior Achievement program. At that 
time, it was for GT; now it's Verizon. And I believe those 
programs were excellent, because not only did we have a 
production line and began to orientate the students about 
starting your own business, running your own business, and 
getting into the stock market, too, as well, so they actually 
learned a lot about finance and controlling their own.
    The problem was that we couldn't reach all of the kids. And 
that's the problem. I wish every student would have signed on 
to a Junior Achievement program. They would have had a better 
understanding of financial literacy.
    And I know that the message is so important, and I know 
that you talked about collaboration and partnerships. And we 
need to develop that, both for the private and the public 
sectors, in terms of our schools. And how do we reach our 
students, and what kind of an outreach do we do, to make sure 
that every student is aware?
    Because, ultimately, it affects their lives. It affects 
their lives in the TR rating that many of them don't even know, 
because most of them are being solicited to fill out an 
application for a credit card. They get that. Later on in life 
they try to buy a home, purchase something else. The TR rating 
is there because maybe they failed.
    Or, the attitude by many of these young kids, apparently 
they feel, ``Well, okay, I will apply for a credit card now, 
and I will just file bankruptcy. That's okay. You know, they 
won't do anything to me, I am only a teenager.'' So those 
attitudes are still there, but it is hurting them.
    And I know that we need to incorporate something with the 
public sector that needs to be done, whether it is done in 
developing master plans--because each site administrator 
develops a site plan, in terms of how they are going to 
implement their curriculum. What we need to do is to look at 
how we might coordinate something with site administrators in 
developing a master plan where financial literacy needs to be a 
part of the school system.
    And my question to you is how do we approach this, and how 
do we do this? Because when we look at the percentages, you 
know, 55 percent of college students acquire their first credit 
card during their first year in college, and 92 percent of 
college students acquire at least one credit card by the second 
year in college.
    And yet, only 26 percent of the people between the ages of 
13 to 29 reported that their parents actively taught them how 
to manage their money--which, a lot of us don't--so when you 
come from poor families, disadvantaged families, and others who 
live paycheck-to-paycheck, and don't know how to even manage 
their money, what can we do to create a continuum of financial 
literacy education in the K through 12 and beyond--which is one 
of my questions, and I sort of like set some ideas of what 
things that we may be doing, but we need to incorporate that.
    I feel it's so important that it needs to be incorporated, 
especially at the secondary level, as part of a curriculum that 
needs to be taught for our students. It just can't be by the 
private sector or the public sector, or volunteer programs like 
the Junior Achievement program, that are super programs, but we 
only reach a certain segment of the community, or the students, 
and we need to reach others.
    So, maybe any one of you that want to answer this? And I do 
appreciate what the others are doing too, as well, in trying to 
reach out.
    Ms. Walter. I think Mr. Beck will have a lot to say. I 
would like to lead off by saying that we--it is our opinion 
that one of the issues with respect to K through 12 financial 
education--which has really been a focal point of the tension 
in the financial literacy effort--one of the issues has come 
about, we think, because educators were not as much involved as 
perhaps they should have been, and therefore it made it 
difficult for it to be thoroughly integrated into the 
curriculum.
    So, one of the things that we have done is, last year, we 
gave a grant to the National Association of State Boards of 
Education, and they are going to convene a panel of State 
boards of education members. They are doing this now, and 
others to work with them, to examine current practices, and 
develop a set of recommendations that will be used to go 
forward to help truly integrate financial literacy into K 
through 12 educations.
    And there will be a report on that issued next month, and 
it will be distributed quite broadly. And we are hoping that, 
by bringing the educators themselves into the fold, it will 
help make efforts more available.
    I also think that here, as with respect to other areas--as 
we have done, for example, in our grant to First Nations with 
the Native American population, it is very important to reach 
out into the community to get people involved, who the people 
you are trying to reach trust. So we have trained--helped to 
train, through that grant, people in the Native American 
community.
    In our military education program, one of the things that 
we are doing is training military spouses, so they can provide 
no-charge services to other military families. And those types 
of efforts need to be strengthened.
    Mr. Beck. There are several things that we could talk about 
there. First of all, I very much agree that we fully need to 
understand the dynamics of each community. While educational 
content might be similar--a checking account is a checking 
account--the rules of the different communities appear to be 
somewhat different, and we need to take that into 
consideration.
    We did a think tank with the Latino immigrant community 
last year, and we really learned a great deal. We are also 
working with First Nations, the Native American group, trying 
to understand the issues that they face in trying to take 
financial literacy to their communities, so that we can then be 
responsive to them.
    The second issue is awareness. A lot of school districts 
are not aware of the programs that are available to them. We 
have a really high-class problem at NEFE, in that we give 
everything away. Anybody who wants it can have it for free, and 
we would love to have more people asking for it. And that's one 
of the reasons we are trying to expand our partnerships.
    Let me just give you a quick story. When I go to our 
teacher training programs around the country, I am always 
intrigued by who is in the room. There is not a natural home 
for a financial curriculum in a high school. Very few schools 
have it. I am pleased to say last year we had our first English 
and Physics teachers take our training course, so they could 
incorporate financial literacy into their specialty, because 
they think it is important for their students.
    So, trying to find a more natural home for financial 
education in the school system--starting earlier than high 
school, even--I think would be a great step forward.
    Mr. Baca. Mr. Beck, I indicated that it needs to start with 
the administrator that develops a master plan. And apparently 
they develop those master plans during the summer that they 
incorporate during the curriculum year. If it's not 
incorporated there, then it becomes very difficult for teachers 
and others to implement financial literacy programs and others. 
But that needs to be incorporated, and you're absolutely right, 
in terms of getting the message out.
    Mrs. Biggert. Thank you very much, Mr. Baca. With that, the 
Chair notes that some members may have additional questions for 
this panel, which they may wish to submit in writing.
    So, without objection, the hearing record will remain open 
for 30 days for members to submit written questions to the 
witnesses, and to place the responses in the record.
    And with that, thank you very much, panel, for being here. 
Your expert testimony is really appreciated. We will now call 
up the second panel.
    Mr. Hinojosa. Madam Chairwoman, I would like to, while the 
other panel comes up, ask that H.R. 973, recognizing October 2-
8, 2006, as Financial Planning Week, as well as letters of 
support, be inserted into the record.
    Mrs. Biggert. Without objection.
    Mr. Hinojosa. Thank you.
    Mrs. Biggert. Welcome to the second panel. Thank you for 
being here, and I will introduce the panel first. On my left is 
Ms. Julie Cripe, president and COO of Omnibank in Houston, 
Texas. And she is here on behalf of the American Bankers 
Association.
    Second is Mr. David G. Kittle, president/principal, 
Principle Wholesale Lending, Incorporated, from Louisville, 
Kentucky, on behalf of the Mortgage Bankers Association. 
Welcome.
    Next is Mr. Carl Sorgatz, CEO, Hawthorne Community Credit 
Union, again from my district in Napersville, Illinois, on 
behalf of the Credit Union National Association. Welcome.
    And then Mr. Donald D. Kittell--that's a very close name, 
sir, it's just spelled a little bit differently, I believe--
executive vice president, Securities Industry Association. 
Welcome.
    And Mr. Stephen Brobeck, executive director, Consumer 
Federation of America.
    And last, but not least, Mr. Frank Pollack, president/CEO 
of Pentagon Federal Credit Union, on behalf of the National 
Association of Federal Credit Unions.
    Again, as I stated to the first panel, you will be 
recognized for 5 minutes' testimony, your summary, and then 
after that we will have 5 minutes for questions from each 
member. So, Ms. Cripe, you are recognized for 5 minutes.

STATEMENT OF JULIE CRIPE, PRESIDENT AND COO, OMNIBANK (HOUSTON, 
         TX), ON BEHALF OF AMERICAN BANKERS ASSOCIATION

    Ms. Cripe. Chairman Biggert and members of the committee, 
my name is Julie Cripe. I am president of Omnibank in Houston, 
Texas, which is a $325 million community bank which has been in 
existence for 52 years. I am also chair of the American Bankers 
Association Education Foundation, and I am pleased to be here 
today to represent ABA.
    I want to thank Chairwoman Biggert for holding this hearing 
on the importance of financial education. I also want to thank 
Representatives Biggert, Green, Hinojosa, and Tiberi, and many 
others, for participating with bankers in the ABA Education 
Foundation's National Teach Children to Save Day last April. 
And I want to acknowledge Representative Lucas and others who 
plan to participate in ABA's national Get Smart About Credit 
Day this October. Your efforts show your dedication to this 
issue, and demonstrate how much we can accomplish by working 
together.
    The ABA recognizes that everybody has a vested interest in 
being as smart about their money as possible. But too many 
people fail to realize their dreams, and lose their hard-earned 
money because they lack basic money management skills. As 
bankers, we are well positioned to help stop the circle and 
cycle of financial illiteracy. Thousands of bankers nationwide 
are dedicating time and resources to developing financial 
education programs that are specifically tailored to meet the 
needs of their local communities. We are going into classrooms, 
churches, and community centers to help people learn about 
budgeting, saving for the future, and managing credit wisely.
    The ABA Education Foundation provides resources to help 
bankers teach financial literacy, including the new Get Smart 
About Credit e-learning program. The program is an online tool, 
interactive, that teaches teens and young adults how to obtain 
and manage credit, and is available both in English and 
Spanish. It is really designed to grab the attention of teens, 
and make financial education fun. Banks offer the program 
through their Web sites. And earlier this year, my bank became 
the first in the country to do so.
    The ABA also produced this tool box on financial education, 
provided free of charge to all our members. This tool box 
contains five books that guide banks on how to start or enhance 
a financial education program. It also contains case studies 
from banks that have created successful outreach programs--in 
other words, what works--and has information on how to partner 
with community-based groups.
    Bankers are not alone in their efforts to increase 
financial education outreach. All of the groups testifying 
today know each other well, and we all continue to look for 
ways that we can work together. Linking financial education 
efforts together will promote efficiency, and should be 
encouraged. But it is important to realize that financial 
education has developed in a fashion similar to our Nation's 
highways.
    Like individual roads that were built to meet the 
geographic needs of particular cities and towns, financial 
education programs are built to meet the unique needs of 
individuals and businesses in our communities.
    Attempting to organize and distribute the depth and breadth 
of material that each sector has created may not make the most 
sense. For example, 91 percent of the loans my bank makes are 
in low and moderate income areas. The financial education 
programs we employ are specifically designed to reach this 
audience. Others may want to tailor their programs to meet the 
particular needs of the communities they serve.
    We are building bridges to connect our separate efforts, 
and we should continue doing so. We should also continue 
developing financial education solutions that are designed to 
address our unique community needs. Just as there are benefits 
to having a choice of roads when traveling, there are benefits 
to having financial education options. I think we can all agree 
that choice in learning is a good thing.
    The Federal Government can help us by: number one, 
encouraging bank regulators to grant CRA credit for financial 
education programs; two, supporting minimum financial education 
requirements in schools; three, sponsoring public service 
announcements that teach basic money management; and four, 
providing financial support for existing programs with proven 
track records.
    I appreciate the opportunity to testify today. The ABA 
welcomes the opportunity to work with Congress, the banking 
agencies, and my fellow panelists, to expand the financial 
education opportunities in all the communities we serve.
    [The prepared statement of Ms. Cripe can be found on page 
83 of the appendix.]
    Mrs. Biggert. Thank you so much. Mr. Kittle, you are 
recognized for 5 minutes.

 STATEMENT OF DAVID G. KITTLE, PRESIDENT, PRINCIPLE WHOLESALE 
   LENDING, INC. (LOUISVILLE, KY), ON BEHALF OF THE MORTGAGE 
                      BANKERS ASSOCIATION

    Mr. Kittle. Thank you, Madam Chairwoman. We are in the 
middle of the highest homeownership rate in our country's 
history. Nearly 70 percent of Americans now own their own 
homes, and are building great wealth. The Federal Reserve said 
in 2004 that the median net worth for homeowners was $184,000. 
For renters, it was only $4,000. Homeowners have been 
successful in accumulating wealth, mainly by building up equity 
through their monthly mortgage payments and home price 
appreciation.
    We are committed to educating consumers about the 
importance of good credit, of working within a budget, and of 
better understanding the mortgage process and the range of loan 
products available. By understanding all of these elements, 
consumers are able to determine if homeownership is the right 
choice for them. And if it is, what type of financing is right 
for their personal financial situation.
    While we want to ensure that homebuyers have the 
educational tools they need, we also want to ensure that our 
industry has the tools necessary to inspire public confidence. 
That is why the Mortgage Bankers Association is so committed to 
providing educational opportunities to its members. The 
capstone to MBA's education program is the certified mortgage 
banker designation.
    I am proud to be a CMB, which was conferred upon me by MBA 
when I completed the demanding curriculum. I had to be in the 
industry for at least 3 years, go through a rigorous education 
program with both oral and written exams, and commit to my 
continuing education.
    One of the challenges we have in advancing financial 
literacy is to reach the people where they are. When people 
shop for homes and mortgages to finance them, they talk to 
mortgage bankers. Ensuring these professionals are well 
qualified and highly knowledgeable is one of the key ways we 
can further financial literacy.
    At the Mortgage Bankers Association, we are also active in 
reaching out to potential borrowers. Our home loan learning 
center Web site is a great step-by-step tool to help home 
buyers understand the home buying process. It also teaches 
people the importance of their credit status to their ability 
to qualify for a mortgage and achieve homeownership.
    We are also reaching out to homeowners, industry, and law 
enforcement, to stop mortgage fraud. Mortgage fraud against 
lenders is sometimes confused with, but differs from, predatory 
lending, which involves unscrupulous lending to an unknowing 
borrower. Mortgage fraud is a problem, not only because lenders 
and borrowers are hurt, but because people can lose their 
homes.
    MBA is also a supporter of Dollar Wise, the financial 
literacy campaign of the U.S. Conference of Mayors, whose goal 
is to develop local financial literacy strategies to reach 
people where they live. MBA recently held consumer information 
summits in Mississippi and Louisiana, in the wake of hurricanes 
Katrina and Rita. Later this year, we will host another in 
Philadelphia. These events are designed to provide attendees 
with the kinds of information that will be most useful to local 
leaders and their constituents.
    On November 1st, the National Home Equity Mortgage 
Association--or NHEMA--will formally conclude its merger into 
MBA. In 2001, NHEMA established an independent organization, 
the Borrow Smart Public Education Foundation, to facilitate 
community efforts to increase financial literacy. As the merger 
moves forward, MBA will integrate Borrow Smart into the overall 
financial literacy efforts.
    Financial literacy is described as the solution to many 
different challenges. It comes up in the context of predatory 
lending debate, discussions about whether borrowers are making 
the right decisions about their mortgages they take out, and 
other legislative and regulatory issues.
    The financial literacy of consumers is critical to a 
smoothly functioning, self-regulating market that, ultimately, 
will lessen mortgage delinquencies and foreclosures. Government 
has an important role to play in promoting financial literacy.
    Most importantly, government at all levels can help by 
urging that financial literacy be taught in our Nation's 
schools. While we understand the Federal Government does not 
generally determine curricula in this country, Congress should, 
itself, set the task of identifying ways to encourage States 
and local school boards to introduce or enhance curricula to 
teach financial literacy.
    Greater coordination of financial literacy efforts is also 
necessary. We, government and industry, are all making efforts. 
Too often, we only engage when people find themselves in 
significant financial trouble, and are avoiding calls from bill 
collectors.
    Mortgage bankers have a responsibility to their customers. 
The mortgage transaction is complex, and the product innovation 
over the last decade has left even the most educated customers 
with a need to learn more about an incredible array of options. 
But a well informed consumer can better navigate the complexity 
and shop for the best possible loan product.
    On behalf of our members, MBA appreciates the opportunity 
to participate in this important hearing. I look forward to 
your questions, and thank you for your time.
    [The prepared statement of Mr. Kittle can be found on page 
116 of the appendix.]
    Mrs. Biggert. Thank you very much, Mr. Kittle. Mr. Sorgatz, 
you are recognized for 5 minutes.

  STATEMENT OF CARL SORGATZ, CEO, HAWTHORNE COMMUNITY CREDIT 
  UNION (NAPERSVILLE, IL), ON BEHALF OF CREDIT UNION NATIONAL 
                          ASSOCIATION

    Mr. Sorgatz. Thank you, Madam Chairwoman, and members of 
the committee. I appreciate the opportunity to appear before 
the committee today on behalf of the Credit Union National 
Association, CUNA, to provide an outline of the programs and 
initiatives that CUNA and its member credit unions are involved 
in to promote financial education among youths and adults.
    CUNA is the Nation's largest credit union advocacy 
organization, representing approximately 90 percent of the 
Nation's 8,800 Federal and State credit unions, and their 87 
million members. I am Carl Sorgatz, and I serve as president 
and treasurer of Hawthorne Credit Union, headquartered in the 
Chicago suburb of Napersville, Illinois. I also serve as 
president of the Illinois Credit Union League.
    I would like to begin by commending my Congresswoman, Judy 
Biggert, for her strong commitment to the issue of financial 
literacy, and for her efforts as co-chair of the House 
Financial Literacy Caucus, to keep issues of financial literacy 
and education before the Congress.
    I was also delighted by the fact that Mrs. Biggert was able 
to take the time during this busy final week of Congress to 
participate in CUNA's first financial literacy summit. The 
summit was envisioned by CUNA chairman, Yuri Valdov, as an 
annual forum for credit union leaders from all parts of the 
country to share ideas and coordinate strategies on how best to 
address the distinct financial literacy needs of youth, working 
age families, and recent immigrants in underserved groups. The 
summit also featured the Treasury Department's national 
strategy on financial literacy.
    Hawthorne Credit Union was established during the Great 
Depression in 1935, and currently has over 15,000 members. That 
was a time when many financial institutions were going out of 
business, and those who were in business weren't interested in 
serving the working class people.
    In fact, there were fewer than six credit unions in 
Illinois when our founder, Senn Heath, and other Western 
Electric employees, began their planning. They were intrigued 
by the concept of people helping people. Since early in the 
21st century, Hawthorne Credit Union has centered our community 
involvement in enrichment strategy on financial literacy.
    Financial literacy fits well with our number one goal for 
our credit union, our members and their families, to become our 
members' trusted financial advisor. In pursuing our strategy to 
improve financial literacy, Hawthorne Credit Union began to 
work with a not-for-profit group in Napersville, Illinois, 
called Families Helping Families. This group assists 
individuals who are in great need of financial assistance and 
guidance in getting their lives back on track. The adopted 
families are often single mothers and their children, who have 
been victims of domestic violence and poverty.
    They asked us if we were interested in facilitating 
financial literacy classes for their participants. We were very 
interested, and began to develop a program that would care for 
the needs of these families. Our training manager connected 
with NEFE, a highly respected organization that CUNA has 
partnered with, to offer resources to credit unions in their 
communities.
    Hawthorne Credit Union created two classes that the 
participants are required to attend. In class one, it covers 
money management and the basics of maintaining a savings and 
checking account, and class two covers lending topics, credit 
reports, and bankruptcy.
    When the participants complete class two, many of them work 
with our lending manager and/or one of our loan officers 
regarding credit counseling. We review their credit report and 
determine a plan of action to help them repair damaged credit. 
In some cases, we are able to assist the participant through a 
loan product. We are often able to refinance a high interest 
automobile loan, issue a share-secured Visa credit card, or 
process a share-secured loan, in order to pay off some debt.
    Most of the participants are single parents. We supply the 
space, and Families Helping Families supplies the babysitters--
usually a few mentors and some high school-aged students. The 
children usually are in the age ranges of 1 to 13 years old.
    During the last class this past August, we provided a 
financial literacy session for the children, and provided games 
using play money. We gave each child $10 to start their 
savings. The parents opened minor savings accounts for the 
children, and we told them that if they saved $100 within that 
first year, we would give them another $10.
    Through these efforts supported by NEFE, Hawthorne Credit 
Union is able to assist those who are in need of not just 
financial aid, but who desperately need financial education. In 
this way, they can go from being homeless and struggling with 
day-to-day issues that most of us find as normal occurrences, 
to being self-sufficient, contributing members to our society 
who are able to support themselves and their families.
    Our commitment to provide financial literacy to our 
community is important to our charter, our strategic plan, and 
our center to our success. Becoming our members' trusted 
financial advisory often starts with helping individuals like 
these better understand their financial options.
    And in conclusion, CUNA and its member credit unions have 
long been a leading advocate and implementer of financial 
literacy programs for members of all ages. Among its 
initiatives, CUNA developed an Hispanic outreach program for 
credit unions to utilize. Through other programs, such as 
Jump$tart, NEFE, Thrive By Five, National Youth Involvement 
Board, and the National Youth Savings Challenge, which I have 
detailed in my written testimony, credit unions continue to 
make a difference in many lives through financial education and 
counseling, and to maintain the high standards of people 
helping people.
    Once again, thank you for having me here today, and I am 
happy to answer any questions you may have.
    [The prepared statement of Mr. Sorgatz can be found on page 
138 of the appendix.]
    Mrs. Biggert. Thank you very much. Mr. Kittell, you are 
recognized for 5 minutes.

   STATEMENT OF DONALD D. KITTELL, EXECUTIVE VICE PRESIDENT, 
                SECURITIES INDUSTRY ASSOCIATION

    Mr. Kittell. Thank you, Madam Chairwoman, and Congressman 
Hinojosa. I will speak on behalf of the securities industry, 
and specifically, the Securities Industry Association and the 
Bond Market Association, with whom we are merging later this 
year.
    Both associations have established foundations for investor 
education. They are targeted in two broad areas. The first is 
to students, primarily grades 4 through 12, and the other 
programs are for adults. The perspective is from an investor 
education beginning, but a lot of our content covers broad 
financial literacy issues of the kind that you have talked 
about this morning.
    The cornerstone of our student program is the Stock Market 
Game, a simulation in which teams of students in grades 4 
through 12 learn the fundamentals of investing through a hands-
on simulation of investing $100,000 over approximately a 10-
week period. We currently have 500,000 students every year 
participating in this game, along with 14,000 teachers. Since 
inception, we think we have reached over 10 million students 
over the last 10 years.
    The curriculum is correlated to national standards in 
mathematics, economics, business, and marketing, so it is not 
just a stock-picking game. The true value of the game is its 
ability to capture the interest of students through 
competitions and keeping score, and our experience is that 
teachers find that students become extremely motivated during 
this game.
    Our member firms are very active in supporting the game. At 
the risk of naming a few and leaving out some, I will mention 
Merrill Lynch, particularly, Wachovia Securities, Morgan 
Stanley, AG Edwards, PNC Financial Services, Charles Schwab, 
Cabrera Capital Markets, and American Century Brokerage. We 
also partner with other organizations in the industry, such as 
the Investment Company Institute, and the New York Stock 
Exchange.
    One of the aspects of the game is a Capitol Hill challenge. 
I am pleased to note that the team representing Speaker 
Hastert's district won the 2004 competition. Chairman Bachus's 
district was victorious in 2005, and Representative Bart Gordon 
took the honors this year. There were 10 members of the 
subcommittee sponsored teams in the competition this year, and 
an additional 7 members of the full committee have 
participated.
    We, 2 years ago, introduced a national and State essay-
writing contest in order to demonstrate--or to allow students 
to demonstrate--what they have learned from the game. This is 
the most important new growth area in our program.
    Turning to the adult game--or, excuse me, the adult 
education program--we have sponsored the Path to Investing Web 
site for a number of years. Based on market research we have 
done with investors who have told us the kinds of education 
they want--they want it customized, they want it totally 
objective, without a sales pitch, they want it entertaining, 
and they want it to be easy to understand. Path to Investing 
attempts to do that within the limits of a Web site. We have 
more than 1,500 pages of content, covering a wide range of the 
subjects that you have talked about today.
    As many of the other panelists have said today, we partner 
with many other organizations in the financial area. I would 
mention specifically the Alliance for Investor Education, which 
represents close to 20 private sector, as well as government, 
and organizations that are interested in investor education.
    We also partner with regulators, both at the Federal and 
State level, and I would like to particularly mention that the 
Treasurer of the United States, Anna Escobedo Cabral, spoke at 
our California stock market game event just this week, and her 
story, if you haven't heard it, was inspiring for everyone who 
heard her remarks.
    The Treasury also sponsored a financial literacy and 
education event at Treasury, and our 2006 essay winner was a 
participant in that event.
    The Bond Market Association also has a Web site entitled, 
``Tomorrow's Money,'' which addresses activities targeted at 
young people aged 18 to 34, Spanish-speaking Americans, people 
facing financial decisions of a specific kind, and so on. The 
Bond Market Association also works with the State treasurers in 
partnering with Web sites that offer education in each State. 
And they have also participated in a number of programs with 
the American Red Cross, United Services Group, and so on, 
helping families who are victims of 9/11, Katrina, and other 
disaster events.
    The securities industry, in sum, has a lot of resources and 
a lot of commitment to this subject, and we are looking forward 
to working with all of you to further your objectives. Thank 
you.
    [The prepared statement of Mr. Kittell can be found on page 
102 of the appendix.]
    Mrs. Biggert. Thank you very much. Mr. Brobeck, you are 
recognized for 5 minutes.

  STATEMENT OF STEPHEN BROBECK, EXECUTIVE DIRECTOR, CONSUMER 
                     FEDERATION OF AMERICA

    Mr. Brobeck. Thank you, Madam Chairwoman. We at the 
Consumer Federation of America greatly appreciate the 
opportunity to participate in this important hearing.
    For decades, CFA has undertaken numerous financial 
education initiatives to increase financial literacy. For 
example, for more than a decade, we led a government, business, 
nonprofit consumer literacy consortium to inform Americans how 
to purchase products intelligently. The group's brochure on 
``66 Ways to Save Money'' has, for years, been the most popular 
consumer publication distributed by the Federal Government for 
a fee.
    Yet, as we have undertaken these and many other 
initiatives, we have been mindful of the limits of financial 
education. Knowledge alone cannot ensure true financial 
literacy, which is reflected in sensible financial behaviors. 
Consumers must value this knowledge enough to learn and to 
practice it, and there must be accessible opportunities for 
utilizing these skills.
    For example, knowledge about retirement programs is 
virtually impossible to apply if one does not have available at 
work a contributory plan. But even when one is available, a 
significant minority of employees are not sufficiently 
motivated to participate.
    That is why, by allowing employers to automatically enroll 
employees in 401(k)s and other contributory programs, the 
pension legislation passed by Congress earlier this year 
represents a far more significant advance for employees and 
society as a whole, than any conceivable related financial 
education program.
    Furthermore, knowledge complements, but cannot substitute, 
for consumer protection. In the area of consumer credit, for 
example, these protections begin with disclosures required by 
law, such as truth in lending and truth in savings. But even 
these requirements are not sufficient to protect the millions 
of Americans who are baffled by the growing complexity of 
financial services products, and are vulnerable to aggressive 
deceptive sales practices.
    That is why the Department of Defense and many senators are 
supporting, as part of Defense reauthorization legislation, the 
inclusion of important consumer protections that include a 36 
percent cap on interest rates charged to military personnel
    Truly effective financial education that significantly 
increases financial literacy is linked to motivation and 
opportunities to produce desired behavioral changes, and has 
the opportunity of going to scale. That is, reaching tens of 
millions of Americans.
    One such program that has this potential--and my 
organization is involved in--is America Saves, which, in dozens 
of local and regional areas, often with the assistance of 
Cooperative Extension, has recruited about 1,000 public and 
private organizations, 200 of which are banks and credit 
unions, to undertake campaigns to enroll tens of thousands of 
non-saving individuals as Savers.
    These participants are required to make written commitments 
to implement a specific plan that they have developed to meet a 
savings goal. To date, nearly 60,000 Americans--about half of 
whom are African American or Hispanic American--have enrolled 
as Savers, and hundreds of thousands of others say, in our 
research, that they have benefitted from our programs.
    Just as importantly, the local campaigns have persuaded 
important local institutions, such as banks and credit unions 
and employers, to more effectively promote saving. For example, 
in several dozen areas where campaigns exist, most banks and 
credit unions have lowered opening and monthly savings minimums 
considerably, so that less affluent families who cannot afford 
a $300 or $400 opening balance on a savings account can afford 
to begin saving.
    Committee members may also be interested to learn that the 
Department of Defense has embraced its own Military Saves 
initiative, which is coordinated by a member of my staff.
    In closing, I would suggest one initiative that would not 
only help link diverse financial education programs, but also 
motivate, as well as inform consumers. That is a call to all 
consumers to estimate and then periodically monitor their net 
personal wealth. Awareness of net assets is an important 
motivator for better money management and debt management, as 
well as savings accumulation.
    People who know their net wealth are more likely to spend 
their money carefully, monitor their finances, live within 
their financial means, and patiently accumulate wealth through 
retirement savings, homeownership, and other savings 
strategies.
    In other words, if Americans were more aware of their net 
personal wealth, they would be far more receptive to effective 
financial education programs that help them monitor, conserve, 
and accumulate financial resources. My written testimony 
suggests how such an initiative might be developed as well as 
an appropriate role for the Federal Government.
    Again, thank you for the opportunity to testify.
    [The prepared statement of Mr. Brobeck can be found on page 
74 of the appendix.]
    Mrs. Biggert. Thank you very much. And Mr. Pollack, you are 
recognized for 5 minutes.

  STATEMENT OF FRANK POLLACK, PRESIDENT/CEO, PENTAGON FEDERAL 
  CREDIT UNION, ON BEHALF OF NATIONAL ASSOCIATION OF FEDERAL 
                         CREDIT UNIONS

    Mr. Pollack. Thank you. Good morning, Madam Chairwoman, 
Congressman Hinojosa, and members of the committee. I am Frank 
Pollack, president and CEO of the Pentagon Federal Credit 
Union, headquartered in Alexandria, Virginia.
    I am here today, on behalf of the National Association of 
Federal Credit Unions, to testify on the financial literacy 
efforts of our Nation's Federal credit unions.
    Pentagon Federal Credit Union is a not-for-profit financial 
cooperative governed by a volunteer board of directors, who are 
elected by our member owners. Our credit union was chartered in 
1935. We have 730,000 members, and just over $9 billion in 
assets.
    As Americans are faced with an ever-widening array of 
financial services, it is important that consumers are armed 
with a sound understanding of the basics of personal finance. 
Financially literate individuals are more likely to spend 
prudently, and put money in savings, retirement funds, and 
other wealth-building accounts. Conversely, the same 
individuals are less likely to rack up large, burdensome, and 
sometimes unaffordable, debt.
    NAFCU and our member Federal credit unions know that 
financial illiteracy is an issue that touches all Americans at 
every age and income level. Accordingly, NAFCU makes available 
to credit unions a financial education curriculum based on the 
Federal Deposit Insurance Corporation's Money Smart program.
    The curriculum, which NAFCU, in working with the FDIC, 
tailored to credit unions, is aimed at teaching individuals 
outside the financial mainstream how to manage their finances 
while also stressing the importance of long-term savings.
    Additionally, the credit union industry is a key partner in 
the fight against predatory lending. Credit unions are 
dedicated to helping their members avoid unscrupulous lenders 
by providing them with low cost loan alternatives, and offering 
financial education to assist members in developing sound debt 
management skills.
    Many credit unions have developed innovative financial 
literacy programs to educate their members. I would like to 
take this opportunity to tell you a little bit about our credit 
union's program.
    In 2001, we created the Pentagon Federal Credit Union 
Foundation, a nonprofit organization fully devoted to improving 
the financial literacy and wellbeing of the military members 
served by the credit union. The foundation sprung to life as a 
result of the numerous abusive predatory lenders that thrive on 
making high-cost loans to young, inexperienced military 
personnel.
    To combat predatory lending, our foundation created the 
asset recovery kit program, which provides small cash loans to 
our military members. In order to be approved for the loan, our 
members are required to undergo financial counseling by members 
of the National Federation of Consumer Credit Counseling. The 
council will help to renegotiate monthly bills, and teach the 
borrower how to maintain a budget. Members can receive as many 
as five loans over the course of a year. Neither the foundation 
nor the credit union earns a profit from the program. The sole 
purpose is to help our members get out of trouble, and develop 
solid budgeting skills.
    The program has been a runaway success. As of the end of 
August, PFCU had made 709 loans under this program. Our charge-
off rate is only 8 percent. That figure is phenomenal, 
considering that these are unsecured loans to people that have 
risky credit, and who have also maxed out on traditional credit 
facilities.
    Further, fewer than 5 percent of the people who have 
applied for loans have used all five renewals. I think this is 
strong evidence that the credit counseling services mandated by 
the program are paying off.
    Earlier this year, we entered into an agreement with Fort 
Bragg Federal Credit Union, which now offers the program, as 
well. We are also working to roll the program out at other 
Defense credit unions.
    Another major initiative about to be launched by the 
foundation is a program called Dream Makers. This program is 
aimed at helping military personnel and Department of Defense 
employees to achieve the American dream of homeownership. 
Members who are first time home buyers can receive grants of up 
to $5,000. These grants do not have to be repaid.
    It is our hope that, with these and other programs, we can 
help to foster financial literacy, personal wealth, and success 
for all of our members. These brave men and women are joining 
our armed forces and laying their lives on the line for us 
every day. We want to give them all that we can, in exchange 
for their service to our country.
    We hope that Congress, the NCUA, and Federal agencies will 
work with the credit union community to continue to foster an 
environment where such programs can exist. Many other credit 
unions are also stepping up to the challenge, and helping 
Americans of all ages to build a solid foundation of financial 
management skills. PFCU is just one example of the way in which 
the credit union industry has reached out to improve financial 
literacy.
    Because the credit union mission has always been to promote 
savings, credit union staff and volunteers were some of the 
first financial educators in America. In addition to being 
among the first to emphasize the importance of financial 
literacy, today's credit unions are also among the finest at 
providing sound, financial management advice to their members.
    NAFCU and the Federal credit union community stand ready to 
work with the House Financial Services Committee on this 
important issue. Thank you, and I would be happy to answer any 
questions you might have.
    [The prepared statement of Mr. Pollack can be found on page 
123 of the appendix.]
    Mrs. Biggert. Thank you very much. We will now proceed to 
the questioning, and I will yield myself 5 minutes.
    Ms. Cripe, I participated in your tenth annual National 
Teach Children to Save Day, and one of the things that I really 
like to do is to go into the schools and teach classes, or 
whatever I'm going to be doing, from--well, actually, from Head 
Start all the way through college.
    But I think in the elementary schools and the middle school 
is really fun. This happened to be the elementary school, where 
we were talking about saving and whether it is a want or a 
need, and the kids would hold up the cards if--they first made 
a list of all the different items, and you would say, ``Well, 
television, is that a want or a need?'' And of course, they did 
differ, and then we had to discuss it. But it was a great 
program, and I really liked it.
    And then, Mr. Kittell, I did participate in the stock 
program. I was very upset, because I am very competitive, that 
Speaker Hastert won in Illinois every year--he didn't win 
nationally all the time, but the first time. So my teams are 
going to do better next time. But that's also a very good 
program.
    I would--talking to the kids, I did mention to them--
because it is a short period of time, I think 6 weeks--that 
they should keep those papers and go back, you know, 10 years 
or 20 years later, and see how those stocks have held up to the 
picks. You know, they would have about six stocks. And it was 
kind of interesting what was bought. I remember one year it was 
Google. They did very well, the kids who bought Google at that 
time; it was a good pick.
    But I appreciate all of the--I feel like a kid when I go 
back into--so it's really--the programs are so much fun, and I 
think the kids really enjoy them. And I know Mr. Hinojosa 
participated in the bank one, too.
    So, my question is that we have been working to perhaps 
develop legislation that would establish a comprehensive 
director of financial literacy programs in the United States, 
and I know, Ms. Cripe, that you have one for the American 
Banking Association. And in your testimony, you said that--I 
was kind of surprised, because you said ``attempting to 
organize and distribute the depth and breadth of material that 
each sector has created would be a frustrating exercise that is 
likely to fall short in expectations.''
    Do you then think it's not a good idea to have a directory? 
Or it might be so voluminous because I know there are so many 
groups that have something and probably changed the focus, but 
we have so many groups and, you know, that people might be 
searching for something that they can use in their school, or 
their organizations, or such.
    Ms. Cripe. I think it's a great idea to have a 
collaborative effort, to have a directory. We have worked with 
Jump$tart, as many of my colleagues up here have done.
    What I hesitate about is to have a stop in the great 
programs that are going on to accumulate this information. As 
long as we keep going with all the great programs, and then add 
to the list I support it because, for example, what's in our 
quick reference guide, the national strategy from the Treasury, 
that list is incomplete. I notice that many of us here are not 
on it as resources. And so, just to add to that and continue 
the collaborative effort, I think, is a great way to go.
    Mrs. Biggert. Well, our emphasis on the--with the national 
strategy, and what we had asked, was to organize within the 
Federal agencies that were duplicative, or that they would work 
together.
    And actually, that happened in Katrina, where we actually 
asked them to call--the Secretary of the Treasury to call a 
meeting, and which we attended, and they sat down and really 
went over what each agency was doing in Katrina then. And so 
that they realized that some of them were doing the same 
things, so they did get together and sit together, then, and 
talk about it.
    Is there something--you know, we had originally proposed 
then having something with the private sector. But it's so 
immense, I think now, that is this something that needs to be 
done, or would the Federal Government stay out of it, as far as 
what you all think? We will start with Mr. Pollack. Do you--
    Mr. Pollack. Well, I don't think the Federal Government 
should stay out of it. I think the only way we are going to 
solve this is to put a lot of effort into this, because we need 
to change the education pattern in the United States. That is 
the only way we are going to teach people how to manage money 
properly. And that is a long-term effort.
    Unlike some of the issues we have, though, this doesn't 
require billions of dollars. It requires a lot of effort, and 
continuous effort.
    Mrs. Biggert. Mr. Brobeck?
    Mr. Brobeck. As are the kids in Lake Woebegon, all 
financial education programs are above average. But all of us 
in the area know that some of those programs are much better 
than others.
    So, while a directory that describes the programs is 
extremely useful, it would also be useful to aspire to 
including, at some point, an evaluation of the effectiveness of 
those programs.
    Mrs. Biggert. Mr. Kittell?
    Mr. Kittell. Yes. One of the things that we have had 
trouble with is that there are no generic solutions across 
school systems, across the States. It's very much a local 
solution, we find, in trying to work with teachers.
    So--and the investor education material that is available, 
it's a pretty chaotic area. I mean, there is an awful lot of 
stuff. But it's very difficult to sort out, you know, just what 
is really meaningful for a given purpose, and what isn't.
    So, I guess I would encourage certainly awareness of what 
is out there, and maybe a look at more generic solutions to 
what happens in our schools.
    Mrs. Biggert. Okay, thank you. Mr. Sorgatz?
    Mr. Sorgatz. I would go back to what the previous panel 
said about the awareness issue. I think it is very important 
for the government's participation to--through a public service 
address, to get the issue out there in front of the public.
    I think it's not just the youth issue of financial 
literacy. I also think it is the adult financial literacy 
problem that we have in the country today, and I think the 
awareness of where can people go for resources, and to, first, 
of all, make sure that everybody understands this is a key 
problem, and the cause/effect situations, and how it affects 
the economy, and how it affects people's daily lives.
    Also, Mr. Kittell's comment about the schools, in terms of 
having the variety of materials to choose from, I think one of 
the difficulties that we have had, in terms of being able to 
partner up with schools, is to be able to get into the right 
people, make those connections, and then work through the 
issues of whether or not it is going to be a curriculum item 
that is incorporated, or whether it's something that we can 
present, in conjunction and partnership with the teacher 
themselves.
    And we are trying to work that partnership out without 
stepping on toes. And yet, it seems to be a struggle as we go 
along. It is always more difficult for us to work out that 
partnership than it should be.
    Mrs. Biggert. Is the usual response to your request that 
they have just so much time for the academics, and they just 
can't fit it into the program?
    Mr. Sorgatz. Part of it has been that. Part of it is to 
where does it fit, as was talked about, again, in a previous 
panel. And it's the timing issue. I think if we could be given 
some information as to, you know, you want to partner up with 
us, here is the time frame to come in and set this up.
    As was mentioned again previously, the summer time is when 
some of those curricula are put together. But how to get in 
touch with some of these people has been very challenging, to 
say the least.
    Mrs. Biggert. Mr. Kittle?
    Mr. Kittle. Madam Chairwoman, I agree with two of the 
things that have been said here. Personally, I have been 
involved in my own children's schools with Junior Achievement. 
All of the people on both the panels today are here because 
they want to give back to their communities, and they are 
concerned about financial literacy.
    We, at the Mortgage Bankers Association, tend to deal with 
not in the school age, but obviously, when you're out 
purchasing your first home. So those people need to make sure 
that they are educated. We want to educate those home 
borrowers. Mortgage Bankers Association has spent over $2 
million in the last 2 years on our home loan learning center, 
to make sure that they are educated in the process that we deal 
with every day.
    The consumer needs to know that they need to shop for their 
mortgage loan, and not just take the first offer that comes 
along. And they also need to be educated to the fact that when 
they go to the loan closing, and something is not right, they 
have every right to get up and leave.
    Mrs. Biggert. Thank you. Ms. Cripe?
    Ms. Cripe. I think we all agree that awareness and getting 
to the most people is of key importance. The lesson that you 
participated in, as well as Congressman Hinojosa, Congressman 
Green, and Congressman Tiberi, are examples. We all agree that 
this is something that is necessary, and we managed to get into 
the schools.
    Noting those frustrations, I know that many bankers also 
use these same lessons by going to churches and community 
centers after school and on the weekends, in order to reach the 
most and highest proportion of consumers. So, we have found 
that to be a successful way.
    We have also designed our programs and our lesson plans to 
fit into a math curriculum, an English curriculum, or a social 
studies curriculum, so that we can go to the school and say, 
``This is where you can put it. This is where you can use the 
lesson.'' And we think that making it simple is a good way to 
do that.
    Mrs. Biggert. Thank you. I yield to Mr. Hinojosa.
    Mr. Hinojosa. Thank you, Madam Chairwoman. I think that the 
first panel and the second panel are equally good in the 
material that you all have presented. Very, very interesting, 
and certainly you have caught my interest.
    I don't think that in 5 minutes I could ask questions of 
each one of you, so let me see if I can focus on the last 
three, because you touched on something that is very important 
in my Congressional district, and that is that 80 percent of 
the 652,000 constituents I represent are Hispanic. I come from 
Mexican immigrant parents: 11 children; I am number 8.
    So, my father, as a first generation American--because he 
got his citizenship right after World War II--taught me 
something, and that is that we needed to learn how to save. And 
he, like me, because I was good at following instructions and 
math, and things like that, and so he showed me how he would 
put away 2 percent of every day's deposits. He had a little 
grocery store, and then started a meat processing company, and 
that was his practice.
    And so, I followed suit. I am second generation, and I was 
lucky to enough to make a more comfortable life for myself 
because I not only had the savings, but I invested it in the 
stock market.
    I particularly liked the fact that Donald Kittell and 
Stephen Brobeck spoke about what they are doing with the 
Hispanic community. The Hispanic community is a growing 
population that accounts for about $800 billion of buying power 
annually. So that certainly is a group to focus on if we are 
going to make a big difference.
    My question to you--each one of you, Mr. Kittell and Mr. 
Brobeck--are you working with any of the Hispanic organizations 
like NCLR, National Council of La Raza, or LULAC, or others who 
focus so much on trying to improve the quality of life in the 
Hispanic community? I will start with Don Kittell.
    Mr. Kittell. I can't speak of any direct partnership with 
the organizations you have mentioned, but our firms and our 
programs are very much targeted to the Hispanic community, as 
is the entire securities industry's diversity program, both in 
employing Hispanics and other minorities, as well as marketing 
to them.
    But in the stock market game program, our firms have been 
very interested in--particularly in underserved communities, 
particularly inner city. One of the firms I mentioned in my 
oral testimony, Martin Cabrera, was a gentleman who grew up in 
Chicago, inner city Hispanic, took the stock market game and, 
20 years later, has his own securities firm, and is a great 
supporter of our game.
    So, we are very focused on inner city. We are translating 
our material into Spanish. And it's a market that we are very 
interested in serving.
    Mr. Hinojosa. Thank you. Mr. Brobeck?
    Mr. Brobeck. One of the most important priorities of this 
expanding America Saves program is to reach out to Latino 
communities. And in order to do that, we have partnered with 
national nonprofits and corporations to develop a unique set of 
materials, such as this ``Build Wealth, Not Debt'' pamphlet in 
Spanish, and a Web site, and other related materials. But we 
have also gone outside of Washington to try to organize savings 
groups in primarily Latino communities.
    My colleague and associate director, Nancy Register, this 
very day is working with dozens of Latino groups in El Paso on 
El Paso Saves, on a whole array of initiatives. And a couple of 
weeks ago she was working on Miami Saves, which is led by 
Latino groups. So this is a very high priority at the Consumer 
Federation of America, and we look forward to working with you.
    Mr. Hinojosa. If you would draw an imaginary line from El 
Paso to San Antonio to Corpus Christi and down to the southern 
tip of Texas and Brownsfield, there are approximately 12 
million--maybe 14 million--people, of which 80 percent are 
Hispanic. And I would be happy--our staff would be happy--to 
assist you with the organizations that I believe would gladly 
collaborate to get your materials, both English and Spanish, 
and see how we can get it out into the communities, and get 
many more involved in the programs that you have.
    And the last question, to Mr. Pollack. I was very pleased 
to see that you are focusing on our soldiers, our veterans, 
because $5,000 help towards closing costs for a home could go a 
long way. We are trying to encourage them to look at the--not 
scholarships, but money that is available similar to our GI 
Bill, for them to attend and access higher education.
    So, if we could combine those for veterans and for our 
soldiers coming back from Iraq and Afghanistan, I think would 
do two things. One is educate them, and if part of that package 
included financial literacy education, I think they will 
leapfrog forward, in terms of increasing their income for the 
family, and their equity, so that that would help them a great 
deal. And I thank you for that kind of work.
    Mr. Pollack. Thank you so much. And we would be honored to 
work with you on that.
    Mr. Hinojosa. Thank you. I yield back, Madam Chairwoman.
    Mrs. Biggert. Thank you, Mr. Hinojosa. Just a couple of 
quick things. We are expecting a vote any minute now.
    In the FACT Act, Mr. Kittle, we had in there that everyone 
would receive a free consumer credit report. Does your 
organization do anything to help people to--how to use their 
credit report? Is this something, when you're doing a mortgage, 
that this helps?
    Mr. Kittle. My company specifically, or the mortgage 
banking--
    Mrs. Biggert. Well, I meant the mortgage--the association, 
not your--
    Mr. Kittle. The Mortgage Bankers Association, again, 
through our home loan learning center, yes ma'am, it does. And 
they can log on to that. It takes them through the entire 
process, from before you buy a house, the actual origination of 
the loan, the closing cost, and the closing. So, yes ma'am.
    Mrs. Biggert. So that has been helpful, for them to know 
how to deal with their credit score?
    Mr. Kittle. Yes, ma'am. We certainly feel that it has.
    Mrs. Biggert. Then, Mr. Sorgatz, you mentioned that many 
credit unions are working in the schools to teach the personal 
financial skills. What should--do you see tests that kids are 
improving when they leave high school, or they leave college, 
as far as the skills that they have developed? Is there any way 
that you can judge that?
    Mr. Sorgatz. Well, looking at the statistics that CUNA has 
put together, it certainly shows an improvement that occurs 
after there has been a financial literacy program that has been 
implemented. And most of the statistical information is 
included in my report, written report. But definitely.
    Mrs. Biggert. What about--we're always talking about, well, 
everybody should have a budget and start very young with kids. 
How important is that to all of you, either with your families 
or with your organizations, that--do you find that kids that 
know about budgeting, that they do better later? Anyone have 
any stories on that? Mr. Brobeck?
    Mr. Brobeck. Our belief is that the most important thing we 
can do in the area of financial education for kids K to six is 
to inculcate good financial habits. Knowledge is of limited use 
to them at that point.
    The two types of habits that are most helpful are how to 
live within a budget, as you mentioned, in terms of giving an 
allowance, perhaps, giving them work to do, paying them, and 
then requiring that they make certain expenditures, you know, 
within that budget.
    And then, secondly, promoting savings, providing perhaps 
financial incentives for them to save. And some kids--only a 
minority, unfortunately today--have opportunities to save at 
school. There are still a few banks and credit unions that work 
with schools to promote regular savings. And that is 
invaluable. If there is one thing that could be done for K to 
six to improve financial literacy, it would be to reinstitute 
bank/credit union savings programs nationwide.
    Mrs. Biggert. Isn't it true right now that our savings is 
-.02 percent, and that is the lowest it has been since the 
Great Depression? So there is a generation there that needs 
some help.
    Mr. Hinojosa, do you have any further--
    Mr. Hinojosa. Again, I want to compliment all the 
panelists, because I liked all the presentations. I am going to 
take the liberty of taking some of these sets of copies of each 
of your presentations and get them out to different parts of 
the country, where I think that they should duplicate them and 
get them out to organizations that would like to know what you 
all are doing.
    But in closing, I want to say that if we could get parents, 
particularly mothers, to hear the presentations, I believe that 
they could probably take their sons and daughters to the bank 
and open up their first account, their first savings account, 
and that might be the start of trying to change that -2 percent 
savings, and getting us at least a straight line, and then on 
up to saving as my father and mother taught me, and I have 
taught my children.
    They have not only a stock portfolio, but they have a 
savings account. And every--I think it's every 60 days, the 
part that they have saved for the bank account, for the savings 
account, we take them to go deposit it. And I am pleased to 
tell you that the oldest one, who is 12 years old, has had a 
portfolio, stock portfolio, for 10 years. And it surprised me 
with the stock market changes that improved here these last few 
weeks, she is at 180,000, and the 10-year-old has only had it 
for 3 years, and she is at 50,000.
    So, all of this to say that they have gotten comfortable 
about hearing reports from time to time at the table, about how 
their stock is doing, and how we look it up in the stock market 
in the NASDAQ section, and comfortable going to the bank. And 
again, one is 10 and the other one is 12. So, mothers, I 
believe, are the key that we can invest time and training, 
because they are going to see to it that their daughters and 
sons learn this art of saving.
    But the financial literacy portion that you all teach, oh, 
that is absolutely gold, as far as I am concerned. It is the 
best. So when I choose not to be in Congress and I step down, I 
think I am going to set up a center, a national center, that 
will coordinate all these things that all of you are doing so 
that we can get it out to both English speaking and non-English 
speaking people, so that we can improve this.
    I am delighted to work with my friend and the Chair, Judy 
Biggert, and together we are going to keep on doing great 
things. Thank you.
    Mrs. Biggert. Thank you. And don't everybody rush after the 
hearing for financial investment advice from Mr. Hinojosa.
    The Chair notes that some members may have additional 
questions for this panel, which they may wish to submit in 
writing. Without objection, the hearing record will remain open 
for 30 days for members to submit written questions to these 
witnesses, and to place their responses in the record, without 
objection.
    And let me just say that you all have been a great panel. 
It has really been very, very great to have the expert 
testimony. We will continue to work on this issue. This hearing 
is adjourned.
    [Whereupon, at 12:17 p.m., the hearing was adjourned.]


                            A P P E N D I X



                           September 28, 2006


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