[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]
FINANCIAL LITERACY AND EDUCATION:
THE EFFECTIVENESS OF GOVERNMENTAL
AND PRIVATE SECTOR INITIATIVES
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON FINANCIAL SERVICES
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED TENTH CONGRESS
SECOND SESSION
----------
APRIL 15, 2008
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Printed for the use of the Committee on Financial Services
Serial No. 110-105
U.S. GOVERNMENT PRINTING OFFICE
42-717 PDF WASHINGTON DC: 2008
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HOUSE COMMITTEE ON FINANCIAL SERVICES
BARNEY FRANK, Massachusetts, Chairman
PAUL E. KANJORSKI, Pennsylvania SPENCER BACHUS, Alabama
MAXINE WATERS, California DEBORAH PRYCE, Ohio
CAROLYN B. MALONEY, New York MICHAEL N. CASTLE, Delaware
LUIS V. GUTIERREZ, Illinois PETER T. KING, New York
NYDIA M. VELAZQUEZ, New York EDWARD R. ROYCE, California
MELVIN L. WATT, North Carolina FRANK D. LUCAS, Oklahoma
GARY L. ACKERMAN, New York RON PAUL, Texas
BRAD SHERMAN, California STEVEN C. LaTOURETTE, Ohio
GREGORY W. MEEKS, New York DONALD A. MANZULLO, Illinois
DENNIS MOORE, Kansas WALTER B. JONES, Jr., North
MICHAEL E. CAPUANO, Massachusetts Carolina
RUBEN HINOJOSA, Texas JUDY BIGGERT, Illinois
WM. LACY CLAY, Missouri CHRISTOPHER SHAYS, Connecticut
CAROLYN McCARTHY, New York GARY G. MILLER, California
JOE BACA, California SHELLEY MOORE CAPITO, West
STEPHEN F. LYNCH, Massachusetts Virginia
BRAD MILLER, North Carolina TOM FEENEY, Florida
DAVID SCOTT, Georgia JEB HENSARLING, Texas
AL GREEN, Texas SCOTT GARRETT, New Jersey
EMANUEL CLEAVER, Missouri GINNY BROWN-WAITE, Florida
MELISSA L. BEAN, Illinois J. GRESHAM BARRETT, South Carolina
GWEN MOORE, Wisconsin, JIM GERLACH, Pennsylvania
LINCOLN DAVIS, Tennessee STEVAN PEARCE, New Mexico
PAUL W. HODES, New Hampshire RANDY NEUGEBAUER, Texas
KEITH ELLISON, Minnesota TOM PRICE, Georgia
RON KLEIN, Florida GEOFF DAVIS, Kentucky
TIM MAHONEY, Florida PATRICK T. McHENRY, North Carolina
CHARLES WILSON, Ohio JOHN CAMPBELL, California
ED PERLMUTTER, Colorado ADAM PUTNAM, Florida
CHRISTOPHER S. MURPHY, Connecticut MICHELE BACHMANN, Minnesota
JOE DONNELLY, Indiana PETER J. ROSKAM, Illinois
BILL FOSTER, Illinois KENNY MARCHANT, Texas
ANDRE CARSON, Indiana THADDEUS G. McCOTTER, Michigan
JACKIE SPEIER, California KEVIN McCARTHY, California
DON CAZAYOUX, Louisiana DEAN HELLER, Nevada
TRAVIS CHILDERS, Mississippi
Jeanne M. Roslanowick, Staff Director and Chief Counsel
C O N T E N T S
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Page
Hearing held on:
April 15, 2008............................................... 1
Appendix:
April 15, 2008............................................... 61
WITNESSES
Tuesday, April 15, 2008
Bowdler, Janis, Associate Director, Wealth-Building Policy
Project, National Council of La Raza (NCLR).................... 43
Braunstein, Sandra F., Director, Division of Consumer and
Community Affairs, Board of Governors of the Federal Reserve
System......................................................... 16
Brobeck, Stephen, Executive Director, Consumer Federation of
America........................................................ 42
Cabral, Hon. Anna Escobedo, Treasurer of the United States, U.S.
Department of the Treasury..................................... 8
Docking, Jill, President and Founder, Financial Fitness
Foundation..................................................... 40
Duvall, Dr. Robert, President and Chief Executive Officer,
National Council on Economic Education......................... 38
Frankfort, Phyllis, President and Chief Executive Officer,
Working in Support of Education (W!SE)......................... 45
Johnson, Hon. JoAnn, Chairman, National Credit Union
Administration (NCUA).......................................... 11
Martin, Hon. Dean, Treasurer, State of Arizona................... 13
McConnell, Cassandra, Director, Consumer and Community Affairs,
Office of Thrift Supervision (OTS)............................. 19
Mooney, Robert W., Deputy Director, Division of Supervision and
Consumer Protection, Federal Deposit Insurance Corporation
(FDIC)......................................................... 18
Morial, Marc H., President and Chief Executive Officer, National
Urban League................................................... 39
Salisbury, Dallas L., Chairman, American Savings Education
Council; and President and CEO, the Employee Benefit Research
Institute...................................................... 46
Wides, Barry R., Deputy Comptroller for Community Affairs, Office
of the Comptroller of the Currency (OCC)....................... 20
APPENDIX
Prepared statements:
Brown-Waite, Hon. Ginny...................................... 62
Carson, Hon. Andre........................................... 63
Donnelly, Hon. Joe........................................... 64
Hinojosa, Hon. Ruben......................................... 65
Bowdler, Janis............................................... 67
Braunstein, Sandra F......................................... 73
Brobeck, Stephen............................................. 85
Cabral, Hon. Anna Escobedo................................... 93
Docking, Jill................................................ 101
Duvall, Robert............................................... 103
Frankfort, Phyllis........................................... 110
Johnson, Hon. JoAnn.......................................... 115
Martin, Hon. Dean............................................ 134
McConnell, Cassandra......................................... 143
Mooney, Robert W............................................. 171
Morial, Marc H............................................... 189
Salisbury, Dallas L.......................................... 201
Wides, Barry R............................................... 206
Additional Material Submitted for the Record
Frank, Hon. Barney:
Statement of the American Institute of Certified Public
Accountants and 360 Degrees of Financial Literacy.......... 219
Statement of Mellody Hobson, President, Ariel Capital
Management, LLC, and Chairman, Ariel Mutual Funds Board of
Trustees................................................... 233
``The Ariel-Schwab Black Paper: A Decade of Research on
African-American Wealth Building and Retirement Planning,
October 2007''............................................. 236
Statement of the Credit Union National Association (CUNA).... 260
Statement of the Financial Industry Regulatory Authority..... 265
Letter from the National Association of Realtors............. 269
National Council on Economic Education, ``Survey of the
States: Economic and Personal Finance Education in Our
Nation's Schools in 2007, A Report Card''.................. 271
Hinojosa, Hon. Ruben:
Statement of Marcia Z. Sullivan, on behalf of the Consumer
Bankers Association........................................ 283
Statement of Consumer Action................................. 288
Press release from the Employee Benefit Research Institute
(EBRI)..................................................... 294
FDIC Press Releases.......................................... 296
Letter to Chairman Barney Frank and Ranking Member Spencer
Bachus from the National Association of Federal Credit
Unions (NAFCU)............................................. 298
Comments from the Networks Financial Institute (NFI)......... 301
GAO Report, ``Financial Literacy and Education Commission:
Further Progress Needed to Ensure an Effective National
Strategy,'' dated December 2006............................ 304
Statement of Arthur R. Connelly, on behalf of the American
Bankers Association........................................ 358
H. Res. 1079................................................. 392
Statement of the American Financial Service Association
Education Foundation....................................... 397
Statement of the North American Securities Administrators
Association................................................ 402
Letter from the National Youth Involvement Board............. 406
Statement of Richard Woods, Senior Vice President, Corporate
Affairs, Capital One....................................... 407
``Financial Literacy and Education Commission, SAFE Report:
Strategy for Assuring Financial Empowerment''.............. 410
Press release from Charles Schwab Corporation................ 430
Maloney, Hon. Carloyn:
Responses to questions submitted to Hon. Anna Escobedo Cabral 440
Responses to questions submitted to Phyllis Frankfort........ 443
FINANCIAL LITERACY AND EDUCATION:
THE EFFECTIVENESS OF GOVERNMENTAL
AND PRIVATE SECTOR INITIATIVES
----------
Tuesday, April 15, 2008
U.S. House of Representatives,
Committee on Financial Services,
Washington, D.C.
The committee met, pursuant to notice, at 10:02 a.m., in
room 2128, Rayburn House Office Building, Hon. Barney Frank
[chairman of the committee] presiding.
Members present: Representatives Frank, Waters, Maloney,
Velazquez, Watt, Sherman, Meeks, Moore, Hinojosa, Clay, Baca,
Miller of North Carolina, Scott, Green, Cleaver, Klein, Foster;
Castle, Manzullo, Biggert, Capito, Feeney, Hensarling, Garrett,
and Heller.
The Chairman. The hearing will come to order. This is one
of those hearings that is more important than it is sexy.
Financial literacy has been a cause that has been championed by
many on this committee for some time.
The gentlewoman from Illinois, Mrs. Biggert, has long been
an advocate of it, as well as our colleague from Texas, Mr.
Hinojosa, who will be joining us also. It was hard to get
traction for public attention for a while, but we are now in a
financial downturn in our economy in which a lack of financial
literacy is a contributing factor. And so we hope now to use
the attention we have gotten to engage people in this effort.
I want to say as part of this that obviously there have
been some criticisms made of some of our financial
institutions. One of the best things that can be done both for
the economy and from the standpoint of alleviating the economic
difficulties of people in the lower economic sectors is to help
them become customers of banks and credit unions. One of the
things that we should be clear about is that people who stay
outside the banking system pay a much higher set of transaction
fees for some basic things than most of us in this room do.
Check cashing fees, payday loans, high charges for the
transmission of funds to relatives in another country--all of
those are higher for people on the whole outside the banking
system or the credit union system than they would be if they
were in there.
So, helping people understand the importance to them--take
some of those seats there. You don't need to stand. There are
some seats over there. If there are empty seats, you can sit in
them. There are some seats over there, too.
Helping people understand the importance to them of taking
advantage of that set of financial institutions, and educating
them onto some basics as to what they should and shouldn't do,
these are very important things. So we are glad to have this
hearing to focus attention on it. And if there are ideas about
how we can further financial literacy, you have people very
ready to act on it.
As I said--we are joined now by the gentleman from Texas--
the gentleman from Texas and the gentlewoman from Illinois have
been leaders in this effort, and I think it is now clear to the
whole country how important that effort is. So, we welcome the
witnesses. And the gentlewoman from Illinois is now recognized.
Mrs. Biggert. Thank you, Mr. Chairman, and thank you for
holding this hearing today on such an appropriate day--tax
day--and during an appropriate month--April--which has for
several years been recognized as National Financial Literacy
Month.
As the co-founder and co-chair of the House Financial and
Economic Literacy Caucus with Congressman Hinojosa, I was very
pleased when, in January, President Bush launched the
President's Advisory Council on Financial Literacy. About 5
years ago, in 2003, I actually introduced a bill, the SENTS
Act, that is S-E-N-T-S Act, that would have established a
commission like this one with a mission of coordinating both
the private and the public sectors' financial literacy efforts.
Unfortunately, the Senate would only agree to half of that
idea, so thus was born the public sector Financial Literacy and
Economic Commission, or FLEC.
But we have frankly wanted a commission that would bring
together the best of both worlds, both the private and public
sectors, to attack this problem. It turns out that what was
true in 2003 is still true today. Teaching financial literacy
requires cooperation between government and industry. The
government can't, and frankly shouldn't be, solving this
problem on their own. And make no mistake, we have a problem.
The savings rate is still hovering around zero; 10 million
Americans are unbanked; and there were 2.2 million foreclosure
filings in 2007. The front page of newspapers across the
country proclaim that millions of Americans are losing their
homes because they were not ready to be homeowners.
Some of our financial challenges are a result of the
slowing economy, but many of them are the direct result of
families who don't have the knowledge and the tools they need
to hold a mortgage or manage credit risk and savings. I think a
good place to start would be what I call emergency response
scenarios, or teachable moments. After the 2005 Gulf Coast
hurricanes, I called on then-Treasury Secretary Snow to convene
an emergency meeting of the FLEC to coordinate the financial
recovery efforts of 20 Federal agencies. And when the mortgage
crisis hit, many private sector organizations coordinated with
the Treasury to set up the HOPE NOW initiative to help troubled
homeowners keep their homes.
These are commendable efforts, but I would argue that they
could be implemented more often and with greater speed and
greater effectiveness with a permanent public-private
partnership as was envisioned in the 2003 legislation. Such an
entity could quickly deploy financial literacy initiatives to
help Americans make educated decisions about their finances.
A longer-term goal that we need is that we need this
public-private group to help direct the development of new,
more effective methods of teaching sound money management
skills to all age groups, from toddlers to seniors. And we need
to encourage more States to integrate personal financial
education into their K through 12 curriculum guidelines. With
the right education, today's children will become tomorrow's
smart investors, entrepreneurs, and business leaders.
We also need to give Americans access to the tools they
need to save and invest money. At the start of the 110th
Congress, I introduced a bill called the 401 Kids Family
Savings Act of 2007. This bill would allow parents and family
members to set aside money in a child's account that will
accumulate interest tax-free and can be used for college
tuition, a first home, or even retirement if they keep it going
that long.
But this is only one idea. Once again this year, many ideas
will be on display at the Financial and Economic Literacy
Caucuses' Annual Financial Literacy Day Fair this April 28th.
It's a great way to see what the various groups are doing, and
I encourage everyone to attend. Americans are a diverse group
and we all share some very basic financial needs. We need to be
prepared for tuition costs, a mortgage, health care, and
retirement. We need a financial cushion against unexpected
challenges like the death of a family member, and we need the
capital necessary for new entrepreneurs to launch the start-ups
and open the small businesses that drive this economy. Every
American should have the opportunity and the know-how to
fulfill each of these goals.
How can we better coordinate the public and private sector
efforts? How can we help Americans to become more financially
savvy? What works and what doesn't work? How do we reach
Americans during those teachable moments following natural
disasters, the classroom, at the workplace, or on tax day? Who
should coordinate these efforts? How can we simplify, rebrand,
and entice Americans to use existing private and tax-free
Federal savings vehicles to invest and save for their future?
These are all questions that I am confident that our witnesses
today will address.
What we really need are good, affordable ideas, and those
rarely come from Congress. I hope that today's witnesses can
shed some light on the subject and point us in the right
direction. We need to get this right.
Again, thank you for holding this hearing, and I yield
back.
The Chairman. Next, another leader in this effort to
promote financial literacy, the gentleman from Texas, Mr.
Hinojosa, at whose request this hearing has been held.
Mr. Hinojosa. Thank you, Chairman Frank, and Ranking Member
Bachus. I want to express my sincere appreciation for you
holding this important and very timely hearing today on
financial literacy.
This committee has held two or three hearings on financial
literacy in the past, and I look forward to working with the
chairman on additional hearings on financial literacy either
later this year or sometime in the 111th Congress.
Throughout my political career, I have been dedicated to
moving my constituents away from payday lenders, predatory
lenders, and check cashers and into such mainstream financial
entities as banks, credit unions, and other financial
institutions. It is my hope that by moving them into the
financial mainstream, my constituents and others in the United
States will be able to open checking and savings accounts,
establish credit, and eventually realize the American Dream of
homeownership.
One of the ways I work towards this goal is through
financial literacy and encouraging a collaboration of the
private and public sectors. Over the past 6 years, I have
worked very closely with my good friend and colleague,
Congresswoman Judy Biggert, to shed light on the need for
improved financial literacy rates in the whole United States.
In 2005, Congresswoman Biggert and I co-founded and currently
co-chair the Financial and Economic Literacy Caucus. At
present, we're proud that there are 79 Members of Congress who
have joined and participate actively in this caucus.
Establishing good spending and savings habits early on is
crucial, which is why we need to work more closely with the
Department of Education, with the Federal Government, and with
States and localities to supply our students with teachers who
can teach not only theoretical economics but also pragmatic
financial literacy, such as how and why to open a checking
account and/or a savings account, and how to pay bills on time,
obtain a free copy of their credit report, and establish good
financial planning habits.
We also need a streamlined way to provide financial
literacy education to adults. Chairman Frank, our government
should lead by example. It should coordinate and communicate a
unified message on financial literacy and help us establish a
national strategy which, according to the GAO, the Financial
Literacy Education Commission has failed to do.
We should authorize and appropriate such funds as necessary
to create a broad-based public awareness campaign. FLEC has
failed to produce a multi-media campaign as required in Title 5
of the FACT Act, despite having had 4 years to do so. I am
proud that Texas is one of the few States that requires some
form of financial literacy for graduation from high school as
well as permits its residents to impose credit freezes.
Mr. Chairman, I look forward to hearing from our witnesses
here today and hope to coordinate and collaborate with them on
financial literacy events and ideas in the future. At this
point, I ask unanimous consent to enter into today's record the
following documents which have been turned in by people who
could not come and testify. They include--and I will read them
all: A copy of Jump$tart's joint press release with Chairman
Bernanke; a copy of Charles Schwab's Parents and Money Survey;
the Executive Summary of the Employee Benefit Institute
Retirement Confidence Survey; the testimony of the American
Financial Service Association Education Foundation; the
statement of Richard Woods of Capital One; the statement of
Consumer Action; the comments from the Networks Financial
Institute; the statement of the North American Securities
Administrators Association; the statement of the Consumer
Bankers Association; the statement of the National Association
of Federal Credit Unions; the testimony of the American
Institute of CPAs; the 2007 National Council of Economic
Education Survey; the comments from the National Youth
Involvement Board; the press releases from the FDIC; the GAO
report on Financial Literacy and Education Committee; and
finally, H. Res 1079, a resolution recognizing the goals and
ideals of Financial Literacy Month.
And with that, Mr. Chairman, I yield back.
The Chairman. The gentleman from Texas.
Mr. Hinojosa. Do I have unanimous consent to enter--
The Chairman. Yes. Without objection, those items will be
inserted into the record.
Mr. Hinojosa. Thank you.
Mr. Hensarling. Thank you, Mr. Chairman. And let me thank
you for calling this hearing. I think it is a very, very
important hearing that we are having today. And as we have
spent a lot of time dealing with the subprime mortgage
meltdown, I think we have all concluded there are a number of
causes underlying the economic challenges our Nation faces, but
at least one of the causes was that there were hundreds of
thousands of people who entered into financial transactions
that fundamentally they did not understand.
Now in the time that I have served on this committee, all
too often I feel that a number of my colleagues, when faced
with such a situation, conclude that when there are economic
transactions that they view as unwise for a consumer, or
perhaps too complicated for a consumer to understand, that it
is incumbent upon us to outlaw them. Now I hold personal
freedom in higher esteem. I do not believe the answer is to
take away the freedom and the economic freedoms of our fellow
citizens but instead to help inform and educate them as to the
nature of the transactions into which they enter.
And so I have always been a huge advocate, and I thank the
gentleman from Texas and the gentlelady from Illinois for their
leadership on this issue, and I think that we need to search in
this committee for different ways that we can be more effective
in helping educate the American populace on the nature of the
economic transactions into which they enter. We need effective
disclosure, not necessarily voluminous disclosure, and we need
to educate and inform, not to take away their personal freedom.
So, I look forward to hearing from the witnesses, and I
would note also that sometimes there are limited opportunities
to truly work on a bipartisan basis in the committee, and I
certainly believe and hope that this is one of those
opportunities, and I hope it is an opportunity that we seize.
Mr. Chairman, I yield back the balance of my time.
The Chairman. The gentleman from Missouri.
Mr. Cleaver. Mr. Chairman, I have a very short statement.
I'm more interested in the responses from the panel. When you
look at the fact that only 32 percent of parents have regular
discussions about financial matters with their children, it
suggests that we have a major problem. And added to the fact
that the most--the wealthiest one percent of the U.S.
population holds more wealth than the bottom 90 percent
combined, and so the one percent probably would represent also
the children who are aware of and involved with financial
matters as children, and it ends up creating havoc in the
homes.
I had a young man who graduated from college and wanted to
go into the rap world, which is fine. I'm not a rap person, but
he wanted to go into the rap world. He went out and borrowed
money from the Jo-Jo Finance Company and never even paid any
attention to the fact that he was paying 21 percent interest,
because he had no awareness of those kinds of matters.
In my real life, I am a United Methodist pastor. Most
people believe that the majority of divorces in the United
States are caused by infidelity, but they are very, very wrong.
The overwhelming majority of divorces are caused by financial
issues, 57 percent. And it is usually the people in the lower
economic realm because they have no knowledge about financial
matters. I am hoping that as we become ``dialogical'' today
that some of you will have some offerings that would allow this
committee to perhaps move in the direction of long-overdue
financial literacy.
Thank you, Mr. Chairman.
The Chairman. The gentleman from New Jersey.
Mr. Garrett. I thank the chairman. I thank the members of
the panel as well for being here. If there is ever a time for
the need for more financial literacy, it is today. I would like
to commend the action of a whole host of organizations that are
really trying to come to the point to address this. Back in my
home district, you have local credit unions and what have you.
They're out there doing the work of small bankers, and others
in the banking institutions are trying to lend their hand as
well. And one new one I just found out about 2 weeks ago, even
collection agencies, who may be on the other side are actually
opening up their offices and servicers as well to try to
educate consumers in the future how they cannot get into that
situation next time around.
The flip side of all that, however, is we have to make sure
that the Federal Government doesn't send any miscues to
lenders--or to borrowers--in the future. Just three quick
points. One, maybe we did that, maybe the Federal Government
did that when we encouraged people to get engaged, involved
with no downpayment homes--no downpayment loans on homes, when
they really weren't in a situation to properly buy that house.
Secondly, maybe we sent a miscue just earlier this year
when we passed a stimulus package sending money back to people,
$600, $1,000, what have you, and said go out and spend the
money instead of paying off some of your debt or investing it.
And thirdly, we might right now be sending a miscue to
borrowers as far as their financial literacy with regard to
other stimulus packages or bailout proposals which are
basically saying to the people, if you were involved in risky
behavior in the past, we might actually be rewarding that
behavior by ``bailing you out,'' versus the guy on the other
side of the street who was more risk-adverse and knew--had a
little bit more information as far as financial literacy, did
not engage in that, and we're really not going to be doing
anything for you. We're just going to let you go your own way.
So I think the Federal Government has some responsibility
in all this as far as the miscues, and I would be curious to
hear your comments on all of those points. Thank you so much
for coming to this hearing today.
The Chairman. The gentleman from New York.
Mr. Meeks. Thank you, Mr. Chairman. Thank you for holding
today's hearing on financial literacy and education, the
effectiveness of government and private sector initiatives. I
also want to thank my good friend, Ruben Hinojosa, for having
this month dedicated as Financial Literacy Month. I think it's
something that is bringing the awareness to all Americans and I
thank Ruben for his vision to make sure that we bring and make
financial literacy something that all are looking at.
You know, when we look at since, you know, here we are in
April 2008, we are in some of the most dramatic and challenging
economic conditions than we have been in the last 35 years. We
have an ever-growing number of economists who are saying and
now fear that not only is our economy in the middle of a
recession, but that recovery may be much longer than we expect.
We don't know where the bottom is.
You look at the toxic combination of tight credit, falling
home prices, mounting losses for banks, high commodity prices--
oil recently hit an all-time high of $111.76--and a plunging
consumer confidence level that has cut into consumer spending,
has sent our Nation into a financial freefall, and we don't
even know where the bottom is yet.
One of the things we do know that got us here is that there
have been individuals who signed documents and really didn't
understand what they were signing. They looked at products and
made decisions without really understanding why they are doing
it. If in fact they were financially literate, if they
understood the document, then they could understand the
different products that were out there, and we may have been
able to avert some of the problems that we currently face.
The key is educating individuals. The key is trying to
reach particularly young and old now, but I always have been
trying to focus recently on a lot of the young in schools whose
parents, as Mr. Cleaver indicated, you know, they may not have
been financially literate themselves, coming from a different
time. But they need their children at least to be able to
understand and can help them.
And so financial literacy is making sure, to me, for
example, should be required in every school now. It should be
just like mathematics and anything else. It should be a
required course. Because I don't see how you can continue in
the 21st Century without being financially literate. It's like
not being able to read. People can take advantage of you when
you don't understand. They can't take advantage of you when you
do.
And so I am--and I think that it's therefore important for
us, those of us who are Members of Congress, those of us who
are in the private sector, those of us who are in the not-for-
profit sector, to figure out how we can all work collectively
together so that we can provide that kind of service, that kind
of literacy, especially to our public schools, so that we can
begin to educate our young people and they become financially
literate. It is critical that we collaborate in this manner.
So, Mr. Chairman, I thank you for this hearing. I look
forward to hearing what the witnesses have to say and how they
think that we should tackle this issue and how we can make sure
that every child--whether they are rich or poor, black, brown,
red, or yellow--has an opportunity to understand and become
financially literate so they will not fall victim to some of
the individuals that they have been utilized or predatory
lenders have taken advantage of them, and we can possibly avoid
the kind of financial disaster this country is currently facing
today.
Thank you, Mr. Chairman, and I yield back.
The Chairman. Final statement, the gentleman from Texas,
Mr. Green.
Mr. Green. Thank you, Mr. Chairman. I especially thank you
and Ranking Member Bachus. I think that this is a most
necessary hearing. And I say so because not only must we
concern ourselves with persons being able to understand that
which is codified, but it's also equally as important that
persons understand the process.
I would like to just share this brief vignette to better
explain. I happen to myself have purchased a home or two in my
lifetime, and I did not know about the yield spread premium.
Had I known about the yield spread premium, I suspect that I
would have shopped around. But I went to the very first person
who agreed to give me a loan at a certain interest rate, and I
took it, because it seemed like a good deal and because it
seemed like this person was on my side.
I think that understanding the process, understanding that
you need to get more than one opinion about your
creditworthiness, is exceedingly important. And I think that
financial literacy will not only help persons to understand
that which they can read and comprehend, but also understand
that this process entails more than visiting with one person
who may give you one opinion about your creditworthiness.
I am honored to be here today. I regret that I will have to
leave because of pressing business elsewhere. But I assure you,
I will be chronicling what is happening, and I thank you, Mr.
Chairman. I yield back the balance of my time.
The Chairman. Before proceeding with the panel, I want to
ask unanimous consent to include in the record: Ariel Capital
Management, the Ariel Schwab Blackpaper Decade of Research on
African-American Wealth Building and Retirement Planning; a
statement from the Credit Union National Association; a
statement from the National Association of Federal Unions; a
statement from the Financial Industry Regulatory Authority; and
a statement from the National Association of Realtors.
Without objection, they will all be included in the record.
We will now begin the testimony with the Treasurer of the
United States, representing the Department of the Treasury,
Anna Escobedo Cabral. Treasurer Cabral.
STATEMENT OF THE HONORABLE ANNA ESCOBEDO CABRAL, TREASURER OF
THE UNITED STATES, U.S. DEPARTMENT OF THE TREASURY
Ms. Cabral. Good morning. Thank you, Chairman Frank. I
appreciate the opportunity to be here before you today. I thank
all the members of the committee who have joined us for this
important hearing. I especially want to thank Congresswoman
Biggert and Congressman Hinojosa for their work in creating the
Economic Literacy Council or Caucus. It has, I think, been
particularly important, and also for the work that you do in
terms of organizing the fair every year, and for supporting
Financial Literacy Month in April. Thank you to the House for
also passing the resolution that did that very thing this
April.
The attention, of course, to financial literacy is very
timely. Today, there are many Americans who are struggling. We
have young adults who are struggling with debt, families who
are struggling to understand the terms of their mortgages, and
older Americans struggling with retirement issues. These are
complex problems, and there are no simple solutions. Financial
literacy will not cure all the problems that plague us, but a
healthy dose may well be the preventive medicine that we need
or that our Nation needs at this time.
During my term in office as Treasurer, I have had the
privilege of traveling across the country from the Bay Area to
New York City, from El Paso to the far corners of Maine and all
the cities and towns in between, spreading financial literacy
and the message of its importance to community leaders, and
State and local leaders, because of course, there is really no
message perhaps that is more important to me as the daughter of
farmworkers who struggled very hard to make a living and who
lived in communities where being unbanked was very commonplace
and where financial education often did not exist, it is a very
personal issue for me.
It is also, I have found, and I am very proud to say, an
important issue for both the President and Secretary Paulson.
They are equally committed to financial literacy. And what I
would like to do is to spend a few minutes talking about the
three ways in which the Department itself is addressing
financial literacy. I would like to begin by describing some of
the work, or at least acknowledging the work of the bureaus and
offices that work in the Department of the Treasury, many of
whom are actively engaged in a series of very specific
programs, some of which we will hear from other witnesses about
today.
But most of the work at the Treasury Department is actually
conducted in the area of financial literacy by the Office of
Financial Education. It was established in 2002, and it has
undertaken a tremendous outreach effort as a result. The staff
has traveled to 47 States plus the District of Columbia and
Puerto Rico. It has held 369 financial education sessions,
reaching more than 30,000 people. The office produces and
designates guidelines for quality financial education. It
provides technical assistance to local programs. It forms
partnerships with groups nationwide to connect them with
resources, and it coordinates the activities across the Federal
Government known of course as the Financial Literacy and
Education Commission.
The Commission is a very important way in which we do our
work, the second topic for my comments this morning. An
abundance of our efforts are through this Financial Literacy
and Education Commission. This 20-agency entity, established by
the Fair and Accurate Credit Transaction Act of 2003, gave the
Commission and Treasury four mandates: A Web site; a hotline; a
multimedia campaign; and a national strategy. I am pleased to
provide some progress on where we are in each of those.
To begin, concerning the Web site, in October 2004, the
Commission did launch mymoney.gov, a Web site designed to be a
one-stop shop for Federal financial education information. The
Web site is available in both English and Spanish, and the Web
site topics include paying for education, saving and investing,
homeownership, privacy and frauds and scams, or how to avoid
them.
Most recently the Commission added a link explaining the
economic stimulus payments, and on the front page we have
features about how to avoid foreclosure rescue scams. The site
has 402 links and has had more than two million hits over the
course of its lifetime.
The toll-free hotline was established in October of 2004.
It is 1-888-MyMoney, and it is operated by the General Services
Administration. It is also available in both English and
Spanish, and it enables callers to order free MyMoney tool
kits, which contain various documents available through the
Federal Government in a collection that is free of charge.
Since its launch in October 2004, the MyMoney hotline has
received more than 20,200 calls.
As regards the multimedia campaign, we are currently
working with the Ad Council on the production of a campaign
that will address the topic of credit literacy, emphasizing the
impact of one's credit score. The project has progressed
through the research, focus group, and creative stages and is
now in production. We should see this campaign launched this
summer, and it will feature television spots, radio spots, and
a new Web site.
The national strategy is the fourth topic I would like to
report on. The FACT Act also required the Commission to develop
a national strategy for financial literacy. In April of 2006,
the Commission released, ``Taking Ownership of the Future: The
National Strategy for Financial Literacy.'' The Strategy is a
comprehensive blueprint for improving financial literacy in
America. Approximately 7,600 copies of the Strategy have been
distributed, and the Strategy has had 102,200--or 860
downloads. So there is a significant amount of interest on the
part of the Nation, and particularly the individuals working to
lead programs dealing with financial literacy.
The Strategy actually developed so that at the end of each
chapter, there are numbered Calls to Action assigned to the
Federal Government or to the private sector or to individuals.
Since the launch of the Strategy 2 years ago, the Commission
has been hard at work implementing those Calls to Action, which
allow us to measure performance on many initiatives that would
not be possible without the cooperation of all 20 member
agencies. The progress on the Strategy's many Calls to Action
can be found in my written testimony, which I hope will be
included in the record, but are quite detailed.
In addition, in December of 2006, the Government
Accountability Office reported on the Commission's activities
and made several recommendations. The Commission welcomed the
insights of GAO on how we could better accomplish our important
mission on behalf of the American people. The Commission
incorporated many of the GAO recommendations into its 2007
revisions to the Strategy, including definitions of financial
education and financial literacy, the planning to conduct
usability testing and to measure customer satisfaction with
MyMoney.gov, and an independent review of the Federal financial
education programs and resources, with the first series of
assessments to be completed in 2009.
In addition, the GAO recommended the Commission work
closely with the private entities and State and local
governments to improve financial literacy. In response,
Treasury and the Office of Personnel Management co-hosted the
Commission's inaugural meeting of the National Financial
Education Network of Federal, State, and Local Governments at
the Department of the Treasury. We continue to work to respond
to the GAO recommendations.
A third way that the Department has been working to improve
financial literacy is to support the Financial Literacy
Education Council created recently, the President's Advisory
Council, by Executive Order on January 22, 2008. The Council,
which was created to help America remain competitive and to
assist the American people in understanding and addressing
financial matters is comprised mostly of financial education
leaders from the private sector and the nonprofit sectors, with
one State government representative. We believe this advisory
group, led by Chairman Charles Schwab, and Vice Chairman John
Hope Bryant, will help increase the level of our Nation's
resources dedicated to financial literacy.
In conclusion, I hope this discussion has been useful in
terms of an overview of the work of the Department of the
Treasury. As Americans, we share the desire to provide for our
families, to achieve financial security, and to have a
comfortable retirement. Being financially literate makes those
goals more attainable. The Department of the Treasury,
Secretary Paulson, and the President are dedicated to
increasing financial literacy among the American people so that
they may lead better, more prosperous lives. Through our
continued outreach and education effort, as well as through the
ongoing work of both the Financial Literacy and Education
Commission and the President's new Advisory Council on
Financial Literacy, Treasury can help more Americans become
financially literate.
I look forward to the questions that follow the panelists'
testimony. Thank you.
[The prepared statement of Treasurer Cabral can be found on
page 93 of the appendix.]
The Chairman. Next, JoAnn Johnson, Chairman of the National
Credit Union Administration. Ms. Johnson.
STATEMENT OF THE HONORABLE JOANN JOHNSON, CHAIRMAN, NATIONAL
CREDIT UNION ADMINISTRATION (NCUA)
Ms. Johnson. Thank you, Chairman Frank, for this
opportunity to testify regarding the effectiveness of the
public and private sector financial literacy efforts. I would
like to commend the committee first of all for raising the
awareness of this important topic, and I would especially like
to acknowledge Congresswoman Biggert and Congressman Hinojosa's
efforts for continuing to be champions of this cause.
Financial literacy is an important facet of outreach
efforts of both NCUA and the credit union industry. My
testimony today will outline those efforts, plus NCUA's
involvement on the Financial Literacy and Education Commission,
with specific detail about my role as chairman of the
MyMoney.gov Web site subcommittee.
NCUA has a long history of providing financial education
programs for use by credit unions and their members. From the
1960's, when NCUA's predecessor regulator, the Bureau of
Federal Credit Unions, provided low-income credit unions with a
consumer education program called Project Moneywise, to the
present, where NCUA training workshops routinely put financial
literacy front and center in over 20 sessions annually.
NCUA has placed a high priority on the value of basic,
practical consumer financial education. Over the last decade,
NCUA's Office of Small Credit Union Initiatives has provided
financial literacy training to almost 2,000 credit union staff
and volunteers attending these workshops. Other NCUA workshops
have focused on topical financial education, such as
homeownership education and retirement saving, VITA tax
preparation, and the financial needs of military communities.
Additionally, NCUA promotes financial literacy through the
Financial Literacy Library located on our Web site. This
consumer clearinghouse of information runs the gamut of
personal finance topics from ID theft prevention to prudent use
of credit cards to deposit insurance. Other governmental and
private sector resources, such as FDIC's Consumer News and
Jump$tart are also linked.
NCUA is also using our congressionally appropriated
revolving loan fund to provide financial assistance to low-
income credit unions as they promote financial education. Since
2005, NCUA has awarded just over $500,000 in grants to credit
unions specifically for financial education programs.
Promotion of partnerships among credit unions and between
credit unions and community and governmental organizations has
also been a hallmark of NCUA's efforts. Again, communication
and dissemination of information about opportunities have been
the key to success. One high profile effort in which I have
been personally engaged is Biz Kid$, a PBS series devoted
exclusively to teaching young people about financial literacy.
The credit union industry has underwritten this program, which
is currently on air in 47 States.
I was pleased to do a promotional video stressing the
fundamental importance of financial education efforts directed
at our Nation's youth. I am confident that these types of
initiatives will pay big dividends in the form of financially
literate young adults entering the marketplace. We can't
continue to afford the alternative.
Credit unions themselves are doing a good job of promoting
financial education to their members. A 2006 NCUA survey of
credit union activities showed that 60 percent offer financial
counseling that specifically incorporates financial education.
Forty-two percent have dedicated financial literacy programs
for their members.
My written statement details some of the best practices
that we observe in the industry. Many have found the best
teaching moment is at the point of delivery of services while
applying for that first credit card, that car loan, or making
the decision to purchase a home.
I am also pleased to serve as chair of the MyMoney.gov Web
site subcommittee, which is part of FLEC. This interactive Web
site serves as a clearinghouse of information about Federal,
State, and local financial education programs, grants, and
materials, online calculators, and even a MyMoney 20 quiz
designed to test a consumer's basic knowledge of finances.
It's important to note that this site, which contains over
400 links, doesn't allow any commercial content and is strictly
for the benefit of consumers who want to increase their
financial literacy. MyMoney.gov has received 2.3 million hits
to its English and Spanish language sites since 2004 and has
aided in the distribution of over 1.5 million publications to
consumers. We are constantly engaged in enhancements to the
site and its content, evidenced by the recent addition of a
link to the HOPE NOW hotline to help consumers better respond
to the housing crisis.
I have testified to this committee before on the importance
of financial literacy, and the central role that I believe it
can and will play in the lives of consumers. Both President
Bush and Congress have taken tangible steps to place financial
education at the forefront of efforts to protect and empower
consumers, and NCUA is working to do its part to make sure that
credit unions are fully involved.
The advertising slogan, ``An educated consumer is our best
customer,'' is particularly apt for today's discussion.
Americans need to be more aware of how their money works. And
while financial literacy is not a panacea or a substitute for
strong consumer protection, NCUA will continue advocacy of
basic financial literacy as a way to help consumers help
themselves.
Thank you very much.
[The prepared statement of Chairman Johnson can be found on
page 115 of the appendix.]
The Chairman. Next, we will hear from Dean Martin, the
treasurer of the State of Arizona.
Mr. Martin.
STATEMENT OF THE HONORABLE DEAN MARTIN, TREASURER, STATE OF
ARIZONA
Mr. Martin. Thank you, Chairman Frank, Ranking Member
Bachus, and members of the committee. I'm honored to appear
before you today as State Treasurer of Arizona to discuss the
importance of financial education and building a successful
partnership between public and private sectors in advancing
this cause.
First, a little bit about my experience and background. I
am a small business owner. I previously served as a State
senator and was chairman of the Finance Committee, a senior
member of Appropriations, and vice chairman of Judiciary. I was
a founding board member for the Arizona chapter of the
Jump$tart Coalition, a national financial literacy
organization. I have volunteered my time to teach financial
education classes in my community.
I appear here today as an elected official, the State
Treasurer of Arizona. However, as a citizen and a taxpayer, I
have serious concerns regarding the state of financial literacy
in America.
The lack of financial literacy is a problem that spans
every age group and every demographic. Our Nation is only as
prosperous as our citizens. Our government relies on the
solvency and prosperity of our taxpayers so that they can pay
them. So it's fitting that we come before you today, April
15th, tax day.
As the son of a math teacher and as a small business owner,
I learned the value of a dollar and how to manage it at a very
early age. Unfortunately, not every American has the same
opportunity. The current level of financial literacy in the
United States is woeful. Why is an issue of education important
to the Committee on Financial Services? Because it's
fundamental to the very survival of the financial services
industry.
The current housing crisis and credit crunch has hit
Arizona very hard. In 2005 and 2006, more than one-third of all
mortgages that were issued were high rate or subprime loans. We
are feeling the impact of this now as foreclosures continue to
mount and tax revenues are plummeting. The slowdown is likely
to continue for a while, as only half of the high-rate ARMs
have reset, and the last will not begin to reset their rates
until the first quarter of 2009.
Our own State legislature and governor have failed to fix
the largest budget shortfall in Arizona history, and the
largest in the Nation by a percentage over 16 percent. As of
today, we are a matter of days away from having spent all the
money in the general fund from revenues we expect to receive
this year. The State of Arizona may not be able to make its May
15th payment to schools without some sort of action soon.
Clearly, the need for financial literacy is heightened by
this crisis.
This morning, I want to provide you with a specific example
of a need that is repeated again and again in many sectors, but
in this case, it has global implications. In the Valley of the
Sun, we are honored to have America's premier F-16 fighter
training base, Luke Air Force Base. Airmen and women and their
flight crews must be certified at Luke before they can be
deployed to active duty.
The base commander was concerned about the retention of new
airmen. He was losing enlistees to high debt. Either they could
not afford to continue in the service, or in some cases, their
high debts made them a security risk. For many of these
enlistees, it was the first time they had ever been away from
home, and they were receiving the biggest paycheck of their
young lives. The temptation to rush out and buy a new sports
car was very great. Many of these young enlistees wind up
overextending themselves and getting upside down in their
loans.
So should these airmen be prohibited from driving or owning
sports cars? Sports cars are not inherently evil. They are
simply products. The solution is not to ban the sports cars,
because if it wasn't those cars, it would be motorcycles,
stereo systems, or something else. The world is full of people
who will gladly separate you from your money if you give them
the chance.
Rather than trying to manage the personal finances of every
airman on his base through regulation, the base commander chose
to treat the disease of financial literacy, not just the
symptoms. He approached the local credit union on base, Credit
Union West, for help. Highly specialized classes were developed
specifically for the base to teach them how to manage their own
personal finances. Just as you would not hand a new enlistee an
M-4 rifle without training, the commander at Luke Air Force
Base did not want to give one of his airmen a paycheck without
training. Financial education had become a force readiness
issue.
The solution is for the consumer to be armed with
information and financial education. As members of this
committee, you are in many ways faced with the same dilemma the
base commander was. Do you regulate and outlaw certain
financial instruments or consumer products? Do you bar certain
classes of people from mortgages or credit cards because they
might misuse them? Do you outlaw certain types of investments
because some investors are overleveraged themselves, which will
ultimately limit the options of consumers? Or do you choose the
more difficult, but ultimately more rewarding, path of
emphasizing education before regulation?
I think we know the answer by having this committee here
today. The financial literacy industry--excuse me--the
financial industry is willing to step forward and help with
this cause. It's in their own best interest, in fact. They
don't want to see their customers go bankrupt because they are
the ones who don't get paid. Nearly every bank, credit union,
and financial institution, as we've heard here today, has some
sort of financial education program. Their goal is simple. They
want their customers to be able to pay back their loans.
The financial industry should be an ally in our cause. This
year, Arizona hosted one of the most exciting Super Bowls in
recent memory. As the excitement began to build in the
community, we decided to creatively promote financial education
by tying curriculum to the game. In this example, we at the
Treasurer's Office successfully struck a public-private
partnership that didn't cost Arizona taxpayers a dime with Visa
and the NFL to produce the ``Financial Football'' game. This
game poses a number of questions in an entertaining and
exciting way so they learn financial literacy without realizing
that they're being taught, and incorporates lessons taught
through Visa's Practical Money Skills for Life program, a free,
award-winning, teacher-tested and approved money management
program. And as I am the son of a math teacher, with a sister
who is a kindergarten teacher, they both said this was a great
program and they really enjoyed playing it themselves.
They also offer a cell phone download, which is a
particularly effective way to reach the demographic of high
school and college students and young adults, many of whom use
their cell phones as their only form of communication.
The Chairman. Mr. Martin, we will need you to wrap this up
soon, please.
Mr. Martin. Mr. Chairman, members, whenever there exists a
disparity or inequity in understanding, there will be abuse. Do
we blame the sports car and outlaw sports cars? Do we blame
lenders and outlaw loans? This would mean leaving sports cars
only to the rich and powerful; not a very American concept. Our
Nation has always been successful because of capitalism, the
freedom for people to take risks and be rewarded when they pay
off, but also be responsible for their consequences. My fear is
that during this crisis, Congress might try to regulate risk
out of the system and limit financial services and instruments
to the lowest common denominator of financial literacy. This
approach would be quick to grab headlines, but would harm our
global competitiveness as a nation.
There are times when certain financial instruments make
sense. Complex and exotic financial tools have their place. We
should not dumb down our financial system. We should elevate
the literacy of our citizens to match. Rather than regulating
to the lowest common denominator, we should work to elevate the
financial understanding of the public. In this way, Congress
can help level the playing field by helping consumers recognize
if the financial deal sounds too good to be true, it probably
is.
One of my greatest concerns for our Nation is the same one
Thomas Jefferson had over 200 years ago. The accumulation of
debt by our citizen's Federal and State governments--
The Chairman. Finish the sentence, please.
Mr. Martin. --puts our Nation at risk for being held as
essentially slaves to foreign banks. We should not let that
happen. We should not let our kids, our young adults, even our
families put themselves in hock and their future in hock for a
new sports car or iPod.
Thank you.
[The prepared statement of Mr. Martin can be found on page
134 of the appendix.]
The Chairman. Next, Ms. Sandra Braunstein, the Director of
the Division of Consumer and Community Affairs at the Federal
Reserve System.
STATEMENT OF SANDRA F. BRAUNSTEIN, DIRECTOR, DIVISION OF
CONSUMER AND COMMUNITY AFFAIRS, BOARD OF GOVERNORS OF THE
FEDERAL RESERVE SYSTEM
Ms. Braunstein. Thank you. Good morning, Chairman Frank,
and members of the committee. I appreciate the opportunity to
discuss the importance of financial education. Current market
conditions underscore how important well-informed, financially
savvy consumers are for the financial wellbeing of individual
households and the overall economy.
Today's financial services industry is extremely diverse
and complex. Consumers can choose among a wide variety of
services, products, and providers when conducting financial
transactions that were once primarily offered through
depository institutions. Both advances in technology and new
market players have dramatically changed how financial services
are marketed, underwritten, and delivered.
Increased diversity in credit products has also brought
increased responsibilities and risks to consumers, which makes
it critical that consumers are well informed about their
personal financial circumstances and the range of available
products.
The level of competition and complexity in today's consumer
financial marketplace highlights the need for effective
financial education to help consumers evaluate and choose
products that advance their financial wellbeing, not impede it.
Designing and delivering effective financial education
presents numerous challenges. Among the most significant is
that financial counseling and education is very resource- and
time-intensive because of the individual nature of personal
finances and differing knowledge base of consumers. There is a
very broad range of potential audiences, and their educational
and informational needs vary greatly, a challenge that is
compounded by the rapid development of products targeted to
specific market segments.
Financial education efforts may also be constrained by gaps
in math and reading literacy, which impede the comprehension of
fundamental financial concepts.
Another challenge to delivering financial education is
identifying the venue and delivery channels that facilitate
consumers' participation in a program, as the demands of work
and home often leave little time for training programs.
Language and cultural differences can also present challenges
in reaching consumers who can benefit from financial education,
particularly immigrant communities.
Ideally, financial counseling would be available to
consumers near the time at which they are making an important
financial decision, such as whether to buy a home. Accordingly,
an important aspect of consumer education involves the
provision of useful and comprehensive financial product
disclosures.
Over the last several years, the Board has engaged in
extensive consumer testing of disclosures for privacy notices,
credit cards, and mortgages in conjunction with our rule
writing efforts for these products. The information we have
gained from these sessions has helped us to better understand
how consumers shop for financial products and services and what
information they need to make decisions.
The Federal Reserve has a long-standing commitment to
providing information and education to help consumers make
informed financial decisions. Financial educational products
and programs are offered by the Board in each of the 12
regional Federal Reserve banks. We provide a wide range of
consumer education publications that offer consumers accurate
and objective information about consumer financial products as
well as their rights under consumer protection laws and
regulations.
We also commit resources to providing leadership and
technical assistance to national and local financial education
initiatives. Given the scarce resources available to conduct
financial education, it is important to ensure that available
resources are being used effectively. Accordingly, the Federal
Reserve is committed to conducting and promoting research on
the efficacy of financial education programs to help inform
policy and program design.
The Federal Reserve will continue to maintain its
commitment to financial education. Financial education is
essential to helping consumers make well-informed and
beneficial decisions that enhance their financial positions and
enhance efficiencies in the consumer financial marketplace.
At the same time, it is important to recognize that
financial education is not a panacea. There remains a need for
effective regulation and enforcement that is responsive to
market evolutions to ensure that consumers are protected
against abusive and fraudulent practices by unscrupulous
players.
Thank you again for the opportunity to appear today, and I
will be happy to answer any questions that the committee may
have.
[The prepared statement of Ms. Braunstein can be found on
page 73 of the appendix.]
The Chairman. Next, we have Robert Mooney, Deputy Director
for Consumer Protection and Community Affairs at the FDIC.
STATEMENT OF ROBERT W. MOONEY, DEPUTY DIRECTOR, DIVISION OF
SUPERVISION AND CONSUMER PROTECTION, FEDERAL DEPOSIT INSURANCE
CORPORATION (FDIC)
Mr. Mooney. Chairman Frank, Congresswoman Biggert, and
members of the committee, thank you for the opportunity to
testify on behalf of the FDIC.
Financial education is an essential tool for financial
survival. Now more than ever, consumers need to know their
rights and their options. The subprime mortgage crisis is a
good example; informed borrowers might have fared better. At
the same time, financial literacy alone is not the answer, and
by no means should the lack of it be used to excuse
irresponsible lending practices by lenders.
In 2001, the FDIC launched ``Money Smart,'' an adult
financial education program. Just yesterday, Chairman Bair
announced that more than one million consumers have
participated in an FDIC ``Money Smart'' program. This exceeds
our goal, but we expect to reach many more. ``Money Smart'' is
free, is not copyrighted, and is available in seven languages,
in large print, and in Braille.
``Money Smart'' is up-to-date. Last year, we updated
information on how to evaluate and compare mortgage products,
especially subprime. And, yesterday, Chairman Bair also
announced the release of the new ``Money Smart for Young
Adults.'' This curriculum is tailored to high school and
college level students ages 12 to 20. It is aligned with
educational standards for all 50 States and the District of
Columbia.
Financial education works when participants practice what
they have learned. Last year, we completed a major, multi-year
study on the effectiveness of ``Money Smart.'' The goal was to
measure, over time: first, whether trainees' knowledge
improved; second, whether they intended to use the information;
and, third, whether, months after the training, financial
behaviors actually improved. This Gallup survey found that the
training participants were more likely to open savings and
checking accounts, save money, use a budget, and develop
financial confidence.
Hopefully, these results will motivate banks to offer more
financial education, along with affordable financial and
banking services. The FDIC creates opportunities for banks to
do both. We have undertaken two major initiatives: the launch
of the Alliance for Economic Inclusion in 10 communities across
the country; and two major surveys to gather extensive data
about the unbanked. The Alliance for Economic Inclusion is a
network of broad-based coalitions of banks, community groups,
and others, including agencies at this table, working across
the country to expand access to basic financial services and
financial education.
More than 700 banks and organizations have joined these
coalitions nationwide. In less than one year, 28,000 bank
accounts were opened; 29,000 consumers received financial
education; 41 banks offer affordable, small dollar loan
programs; and 21 banks now offer remittance services. With
regard to the surveys, in keeping with the Federal Deposit
Insurance Reform Conforming Amendments Act of 2005, we have
initiated biennial surveys of FDIC-insured institutions on
their efforts to serve the unbanked. We also plan a household
population survey on the subject with the U.S. Census.
To conclude, consumers who know the right questions to ask
will have the confidence to challenge products and practices
too good to be true. The FDIC's 2007 Gallup survey shows
programs like ``Money Smart'' can change the financial lives of
consumers for the better. This concludes my testimony and I
look forward to your questions.
[The prepared statement of Mr. Mooney can be found on page
171 of the appendix.]
The Chairman. Thank you.
Next, Cassandra McConnell, the Director of Consumer and
Community Affairs in the Office of Thrift Supervision.
STATEMENT OF CASSANDRA McCONNELL, DIRECTOR, CONSUMER AND
COMMUNITY AFFAIRS, OFFICE OF THRIFT SUPERVISION (OTS)
Ms. McConnell. Good morning, Chairman Frank, and members of
the committee. Thank you for the opportunity to testify during
financial literacy month on the views of the Office of Thrift
Supervision about the importance of financial literacy.
Nothing can confirm the continuing and urgent need of
financial literacy more strongly than the housing market
turmoil currently facing this Nation and the role played by
consumers in buying homes they cannot afford under terms they
all too often did not understand. Although there is no
substitute for prudent underwriting, enforcement of consumer
protection laws, and effective disclosures, financial literacy
is critical to a financial marketplace where consumers make
informed decisions about their financial futures.
Financial education about important issues such as home
mortgages, family budgets, checking accounts, credit cards, and
the value of savings should start in our schools, so the young
adults entering the workforce and perhaps looking forward to
the purchase of their first home will have the knowledge they
need to make sound, financial decisions.
Evidence just last week from the Jump$tart Coalition about
following financial literacy scores by high school seniors
shows that far more needs to be done to achieve this goal. As
we know, the price of failure is the unwelcome prospect of
significant harm to this country's economic wellbeing. The OTS
strongly supports the work of the Financial Literacy and
Education Commission, and think the strategies outlined by the
Government Accountability Office to expand the work deserves
continued focus.
The OTS also recommends a study to explore ways to bring
the most successful financial education programs to scale for a
national impact on as many Americans as possible. At OTS, we
have been expanding our financial literacy initiatives both on
our own and in concert with other Federal banking agencies.
We resumed publication last year of our community affairs
newsletter, ``The Community Liaison,'' which covers consumer
issues like how to avoid mortgage foreclosure prevention scams
and how to take advantage of programs to help borrowers make
their mortgage payments.
The OTS is upgrading its electronic dissemination of
consumer-related information through a redesigned, public Web
site scheduled to launch this summer. The information for
consumers will be featured prominently on the home page and
offerings for consumers will be expanded and key information
will be easier to find.
The OTS also continues to encourage regulated institutions
to develop cross-sector partnerships with community groups and
consumer organizations to foster financial literacy. The OTS,
like other banking agencies, provides favorable consideration
under the Community Reinvestment Act for financial literacy
programs such as credit counseling to low- and moderate-income
families.
We have also joined the other Federal banking agencies in
producing important publications for consumers; for example,
the agencies issued consumer illustrations for non-traditional
mortgages in May of 2007, and are currently finalizing
illustrations to help consumers understand adjustable rate
mortgages and similar products.
The OTS supports efforts to improve disclosures for
consumers and appreciates the key role that private sector
organizations play in offering financial literacy programs.
Thank you again, Mr. Chairman, and I look forward to
answering your questions.
[The prepared statement of Ms. McConnell can be found on
page 143 of the appendix.]
The Chairman. Finally, we have Barry Wides, the Deputy
Controller for Community Affairs at the Office of the
Comptroller of the Currency.
STATEMENT OF BARRY WIDES, DEPUTY COMPTROLLER FOR COMMUNITY
AFFAIRS, OFFICE OF THE COMPTROLLER OF THE CURRENCY (OCC)
Mr. Wides. Chairman Frank, Congresswoman Biggert, and
members of the committee, I appreciate the opportunity to
testify today about the OCC's role in financial literacy and
education efforts.
My testimony discusses the many roles the OCC plays in
promoting financial literacy. Financial literacy is a key
component of ensuring fair and equal access to credit and
banking services. Comptroller of the Currency John Dugan
stressed the need to help National Bank customers become more
engaged in sound, financial decisionmaking, since taking
office.
The OCC has done much in recent years to share financial
knowledge and best practices, leverage resources, and build
financial literacy partnerships. We concentrate our literacy
activities in three main areas: building public awareness;
encouraging the financial literacy efforts of national banks;
and guiding Federal regulations and policies.
Our public awareness efforts take several forms.
Comptroller Dugan has taken the lead in highlighting this issue
in speeches and keynote remarks during his visits around the
country. OCC has mounted an extensive public service message
campaign to local news media in English and Spanish, and we
produce a range of consumer advisories that are easily
accessible on the OCC's expanded consumer protection Web page.
Last summer, the OCC launched, ``HelpWithMyBank.gov,'' a
unique Web site that answers more than 250 common questions
drawn from the actual experience of OCC's customer specialists.
HelpWithMyBank.gov links Web visitors to other resources and
allows customers to file complaints about national banks or
request additional information online.
The OCC's Community Affairs Department, which I direct,
focuses on helping national banks become leaders in providing
retail services to underserved communities and individuals. In
addition to our headquarters staff, our community affairs
officer teams around the country work with bank examiners in
helping national banks to improve their financial literacy and
outreach delivery programs. As a resource for our banks, we
maintain an extensive library of financial literacy information
on the OCC's Web site, and recent OCC publications target the
needs of native Americans, small businesses, and the unbanked.
The OCC also serves on the board of NeighborWorks America and
participates on the Financial Literacy and Education
Commission.
We work regularly with these and other national and
regional partners, many of whom are with us at today's hearing,
to support financial literacy and education programs and to
find the most effective methods for their delivery. These
experiences give us valuable insight into the importance of
financial literacy on good financial decisionmaking. Moreover,
this knowledge helps us as Federal regulators in implementing
the Community Reinvestment Act, which provides incentives for
banks to undertake financial literacy activities.
The OCC is currently working with the other Federal banking
agencies to develop a narrowly defined change to the CRA
regulations that would provide CRA credit for communities that
are declining because of unprecedented levels of foreclosures
and related economic factors. This has raised a related thought
for consideration by the regulatory agencies; whether positive
CRA consideration should also attach to financial literacy and
education activities that benefit these same middle-income
impacted areas and facilitate the short-term recovery.
Given the rising need for financial counselors to assist
borrowers who are having difficulty meeting their mortgage
payments, additional CRA incentives may be helpful to encourage
additional bank partnerships with nonprofit housing counseling
organizations.
Given the financial literacy challenges presented today,
the time is right to bolster financial literacy for students,
for working people, and for those facing retirement. We look
forward to working with the other agencies on the Financial
Literacy and Education Commission, the President's Council on
Financial Literacy, the Financial Literacy and Economic Caucus
here in this Congress, and your committee, to promote financial
literacy and address the financial needs of all Americans. I
appreciate the committee's time and look forward to answering
your questions.
[The prepared statement of Mr. Wides can be found on page
206 of the appendix.]
The Chairman. At the outset, I want to thank Ms.
Braunstein, in particular, for stressing that this is not a
replacement for sensible regulation. I think we all agree with
that.
Mr. Wides, I just have one question: Obviously, CRA is one
of the ways in which we can do this, and I guess one of the
questions is for the smaller banks that don't now have the
service requirement. Does it make some sense to single this
out, though, to make sure that banks would get CRA credit for
this, even though they wouldn't generally be in the service
category?
Mr. Wides. Small community banks can get positive CRA
consideration for financial literacy.
The Chairman. Can or cannot?
Mr. Wides. ``Can,'' on top of the requirements under the
small bank test under CRA.
The Chairman. All right. But then there is an issue, and it
may be somewhat an inter-bank regulatory issue. It has been
suggested to me by people who know that some OCC examiners have
said that banks should not get CRA credit for using the FDIC
``Money Smart'' materials because the banks neither prepared
nor paid for those materials.
Do you know if there is any validity to that? Maybe the
FDIC knows? Is there a question about whether or not banks that
use ``Money Smart'' are fully given CRA credit by the OCC?
I was given a suggestion that there is some resistance on
the part of some examiners.
Mr. Wides. I am not aware of any OCC resistance in that
regard. Banks can get CRA credit for their activities that
benefit low- and moderate-income individuals and communities.
The Chairman. So I can take it that you said there may have
been a problem in the past, where there has been some question
about whether using the ``Money Smart'' would allow you to get
CRA credit, but you make sure that is not a problem anymore?
Mr. Wides. No. That shouldn't be a problem if it is done in
conjunction with the low- and moderate-income benefit test
under the CRA rules.
The Chairman. All right. I appreciate that and I would
think that it is one of the things that could easily be cleared
up.
The gentlewoman from Illinois?
Mrs. Biggert. Thank you, Mr. Chairman. I wanted to
congratulate Mr. Martin for using football as a teachable
moment to reach young people; and, I have to say that I have
used www.practicalmoneyskills.com, and I actually have done
that in a couple schools with Rex Grossman, who at the time was
the most popular quarterback of the Bears, and done a
competition between a couple of schools using that tool, and
the kids just loved it. Of course, they loved Rex Grossman, so
we had to let him win of course, but it was a really good
opportunity.
Let me just ask a general question. Should we in Congress
restructure FLEC to include the private sector? Or, do you
think that the Treasury and all of the agencies are doing
enough that we don't need to include them. I will start with
the Treasurer, please.
Ms. Cabral. Well, I think you hit on an important point.
Something that I have learned in the 18 years that I have been
in Washington is that anything that involves or allows or
builds on collaboration, I think, is much more successful. So
to the extent that today we at least have a Financial Literacy
Council that can work with the FLEC, we have a liaison between
the two organizations.
I think we are in a stronger position to really improve
government, nonprofit, private sector, as well as State and
local government's efforts in terms of really putting forth
solid, financial education and initiatives, and helping reach
people at those teachable moments that you have described. I
think that there are certain things we can do to improve the
efficiency and effectiveness of the FLEC, but I think that the
Council is going to go a long way in terms of just being able
to liaise between the two entities and provide a constant
dialogue between those various working parts so that we are
much more effective in the future.
Mrs. Biggert. Chairman Johnson?
Ms. Johnson. Collaboration is certainly an advantage and
getting the ideas from both the public and private sector
together to compare notes and to move forward, I think, is very
beneficial. Cutler Dawson, who serves on the President's
Advisory Council on Financial Literacy, is the liaison to FLEC
and he is the CEO of Navy Federal Credit Union. And so we have
this tie-in of getting the best of both worlds in that regard.
We have encouraged credit unions to seek out the public
sector as well, and in their partnerships and we as an agency
have used some of those things and put the links on our Web
site for some of the materials that we have. We look forward to
continuing to do so.
Mrs. Biggert. Okay. Thank you.
Treasurer Martin, if you could just give a really brief
answer, because I have another, really what I think is an
important question, that I need to get to in time.
Mr. Martin. Thank you.
I agree completely. Adding a public-private partnership
component would be very useful in the State of Arizona. We have
no budget for financial education, so we could only do what we
did with the private sector assisting. I would also recommend
having a State connection as well, maybe State treasurer, State
comptroller, State auditor as well.
Mrs. Biggert. Thank you.
Ms. Braunstein?
Ms. Braunstein. Yes. We always encourage public/private
partnerships and think that is very important; and, there are a
number of ways to do that.
One of the things, just to keep in mind if you move in that
direction, is that the larger that FLEC gets, the more
challenging it is to coordinate among the participants. I mean,
as it is, there are 20 agencies on there and sometimes I think
that has been a challenge to coordinate among the 20 agencies.
When you start adding other people, it becomes more
challenging. There may be other ways to cooperate other than
adding more and more people to the commission itself.
Mrs. Biggert. My time is getting short. I'm going to ask
the other question, and that is, we see FLEC and all the ideas
and programs within the Federal agencies, but also the private
groups. Do you think we should test FLEC in putting together a
national comprehensive director of all of the programs, because
there are so many out there, and how to get everybody to know
what they are.
Mr. Mooney?
Mr. Mooney. Well, I think the ``My Money'' Web site does a
good job of providing that kind of information, but I would
support your suggestion here. Anything we can do to make
financial literacy more available would be a good idea.
Mrs. Biggert. Ms. McConnell?
Ms. McConnell. I think that there are three important
components to promoting financial education: the public; the
private; and the consumer; and, so any efforts that we can do
to coordinate those three to get information out using those,
the public, the private, and the consumer, can be advantaged to
promote financial education.
Mrs. Biggert. Thank you.
Mr. Wides?
Mr. Wides. I think a comprehensive directory would be a
good initiative. I would be a bit concerned about the notion of
a Federal endorsement of local initiatives and the notion of
how to establish which of those are legitimate and good
initiatives versus ones that are not. But, I think, as a
general objective, it's a laudable objective to pursue.
Mrs. Biggert. Okay, thank you.
The Chairman. Ms. Waters?
Ms. Waters. Thank you very much, Mr. Chairman, for holding
this hearing.
Financial literacy--we have been thinking a lot about what
has happened that has caused the subprime crisis that we are in
and we are discovering, or maybe some of us already knew, that
many of the foreclosures that we are experiencing are
foreclosures where our citizens did not understand what they
were signing. They didn't understand the contract that they
signed and they got involved with these adjustable rate
mortgages that they didn't know were going to reset. They
didn't really understand what they were getting involved in,
and so I'm wondering what can really be done with financial
literacy in general and mortgages in particular.
Is there anyone on the panel who has been involved with
helping to start bank accounts for seniors, for example, and
then following through with the seniors on an ongoing basis
about how they add to those accounts; teaching them how
interest accrues on those accounts? Do you know of any
organizations that has done that kind of thing?
Ms. Johnson. Congresswoman, I know that there are a number
of credit unions that have set up age-specific classes all the
way from the young to include the seniors.
Ms. Waters. No, specifically bank accounts or credit
accounts, credit union accounts; because I have a feeling that
it is one thing to teach people in a vacuum, but it is another
thing to teach people who are dealing with real live issues,
money, banking accounts, how to write a check, that kind of
thing. Is anybody doing that?
Mr. Mooney. The FDIC's Alliance for Economic Inclusion, now
in 10 cities nationwide, does bring banks and nonprofits
together to actually open accounts.
Ms. Waters. What about high school seniors?
Mr. Mooney. We just released our ``Money Smart for Young
Adults'' program. High schools around the country were looking
for a free financial education program that teachers could use.
It is geared for high school and college students, and anyone
else between the ages of 12 to 20.
Ms. Waters. Okay. I would like to see exactly what is being
done. I am only interested in programs where students actually
open up checking accounts or bank accounts. I am not interested
in the literature kind of in a vacuum.
The other thing is, do you know of any programs that have
set up second opinions on mortgages? For example, a homeowner
buying a house may be involved in some kind of counseling
program, but before they sign off, they have an opportunity to
get a second opinion from qualified folks who could review the
mortgage document. Is anybody doing that?
Mr. Mooney. I don't know of anybody, offhand. We could look
into it and get back to you.
Ms. Waters. Well, the reason I ask these questions is
because I have always had the feeling that it is very difficult
to counsel and teach in a vacuum and that things don't really
happen that way. That the real interaction that takes place is
that which actually not only informs but equips our citizens to
be able to manage money, to have the mortgage accounts, etc.
And so as I look at what we are doing here to try and help
with these foreclosures, I am interested in the kind of
programs that will actually not just teach people in a vacuum,
but be involved at the point that people are getting into these
contracts.
Yes, ma'am?
Ms. Johnson. Yes, Congresswoman, we do have a number of
credit unions that have actually set up student branches in the
schools where the students are actually the tellers and I have
visited both the local elementary school, which is close to our
agency, and then Woodbridge High School in Virginia. And I have
watched the students actually run the operation; of course,
with guidance from credit union personnel who are with them.
There are incentives for the students to open accounts, and
then at least one day a week, sometimes more, there is a
certain time set aside within the school day that the students
come and make their deposits and get started on a savings
program.
Ms. Waters. All right. I would like to ask one more
question before my time is up, and that is this: As we think
about working with our homeowners who are about to experience
foreclosure or have experienced foreclosure, what do you think
about credit unions and community banks having a separate
operation to do workouts and modifications interacting with the
servicers who had the responsibility for the foreclosures.
Don't you think that credit union personnel and our
community bankers are better able to negotiate with these loan
servicers than anybody else?
Mr. Mooney. Yes. Congresswoman, the FDIC is about to
sponsor several one-day forums where we are bringing community
bankers and credit unions together with servicers and
counselors. We will provide them with information and work with
them to see how servicers might possibly step in and refinance
some of these mortgages.
We will be doing one in Los Angeles, one in Nevada, and
probably one in Ohio.
Ms. Waters. Not just for refinancing, but there should be a
revenue stream for them doing this work. Small banks need that.
I would like to see you on that and see what you are doing.
Mr. Mooney. Yes.
Ms. Waters. Thank you.
The Chairman. Ms. Braunstein.
Ms. Braunstein. I just wanted to say that we have been
working through the reserve banks on a number of these issues.
The Federal Reserve Bank of Boston has coordinated a number of
banks up there that are working on loan modifications and they
are mostly small community banks.
We also, on your other question, we have initiatives going
on in the reserve banks on the ground getting people accounts.
There is an initiative in Atlanta, for instance, called ``Get
Checking,'' where they actually try to take people who are
unbanked and start relationships with financial institutions
for them.
The Chairman. Thank you.
The gentlewoman from West Virginia.
Mrs. Capito. Thank you, Mr. Chairman.
I would like to thank the panel. I have a couple of
questions really for whomever wants to jump in. In part of the
briefing materials that we were provided, really a stark
statistic is that the U.S. savings rate has hovered at or below
one percent of disposable income; whereas, just in the 1980's
and 1990's, it was between 7 and 8 percent.
You know, trying to tie this to financial literacy, is
there a tie between financial literacy and the willingness or
the ability to save? And what are we doing to try to boost the
savings rate?
Mr. Mooney. Congresswoman, when we conducted an
effectiveness survey of the ``Money Smart'' program, we found
that when individuals went through the course, 7 out of 10
saved more, and 43 percent who didn't have a savings or
checking account opened one. It is very clear that type of
financial education can work. We have also coupled that with
financial inclusion activities such as our Alliance for
Economic Inclusion.
Banks can and do offer financial education as a means to
encourage those who have been underserved to open savings and
checking accounts.
Mr. Martin. As experienced in the classroom, what I found
is that today we have the availability in ease of credit to an
extent you haven't had to the degree 20 years ago, and so what
has happened is 20 years ago, if you were worried about having
a flat tire or your refrigerator dying, you needed to have a
savings account to cover that. People just say, I'll throw it
on my credit card and worry about it later, and so a lot of
that has to do with just the easy access to credit, which is in
itself not necessarily a bad thing. It is when you only have
that as your backstop and you have nothing else.
Ms. Cabral. Just to mention a couple of programs that I
think have been particularly successful, and one of them is, of
course, the American Savings Education Council, launched with
Treasury in April of 2007 a PSA campaign that was basically
about choosing the same; and, I think that is critically
important.
The American Banker's Association hosts a series of
workshops across the country with young children; because, I
think the point is that we have to start younger. We certainly
have to do a good job of educating and providing financial
literacy and education tailored to every segment of society,
because it is just as important to the elderly individual as it
is to a young individual taking their job for the first time.
But teaching children to save is particularly important,
and so I think that has been a wonderful campaign that has made
a difference, and I think everyone on this panel probably has
participated in that campaign.
Mrs. Capito. Well, I know in my State of West Virginia, we
have a bank at school program. I think it's aimed at between
fourth and fifth grade and I think it's been very successful.
The other question I had requiring free credit reporting,
access to free credit reports, has this been embraced? I mean,
is it shown that now that you have this available, how many
more people are actually getting their credit reports? Is it
making people more aware? Is it leading to more financial
literacy?
What are the results of this free credit reporting
requirement? Anybody? Yes?
Mr. Martin. In my experience it has been great. It is
probably the best thing that has come from Congress in this
area that has actually been useful in the classroom. Just
getting individuals to understand the real responsibility with
credit and the implications of their own actions and the fact
that waiting 30 days, because, you know, I just didn't feel
like making my credit card payment, has long-term ramifications
as to whether or not you can qualify for a house.
Because what it has allowed us to do is make it personal as
opposed to abstractly talking, we can say this is how this
works, and you can pull up your own credit report and see how
this applies. It really makes the teaching very personal and
constructive right to their own situation.
Mrs. Capito. Thank you.
Oh, yes ma'am?
Ms. Cabral. Well, just the last. The other thing that we
were tasked with, FLEC itself, was to create a multi-media
campaign. And the campaign, the emphasis of the campaign that
we have been working on is about credit and managing credit
wisely. That should be released and launched this August, as
well. And, hopefully, it will contain television, radio, and
various types of ads to reach people in as many ways as
possible.
Mrs. Capito. All right. Thank you. I yield back.
Ms. Waters. [presiding] Thank you very much. Mr. Mel Watt,
for 5 minutes.
Mr. Watt. Madam Chairwoman, I think I will yield my time to
Mr. Hinojosa who is the primary sponsor of this initiative and
just express my support for financial literacy and thank the
panel for being here.
Ms. Waters. Thank you very much.
Mr. Hinojosa.
Mr. Hinojosa. Thank you, Congresswoman Waters. I appreciate
that very much. I believe that the first question that I wish
to ask would be directed to the Honorable Anna Escobedo Cabral,
as well as to the Honorable JoAnn Johnson, and to Robert Mooney
from the FDIC.
The FACT Act required that FLEC establish a Web site,
establish a 1-800 number, and provide information in both
English and Spanish, which I requested with the help of
Chairman Frank. FLEC was also tasked with developing a multi-
media financial literacy campaign. Yet, I find that FLEC has
had 4 years to develop this campaign but has not done so.
Why has it taken FLEC so long to produce a public service,
multi-media campaign as authorized in the law, and why did FLEC
inform my staff that they did not need the $2 million for a
financial literacy campaign, as authorized in the FACT Act? I
think that the information that I get from my staff is that it
cost half-a-million dollars just to print the National Strategy
on Financial Literacy and the remaining cash on hand is to be
used for the campaign.
So please tell me why--because I am upset that it has taken
so long--that we find ourselves in the crisis that we are in.
Treasurer Cabral?
Ms. Cabral. Yes, Congressman Hinojosa, thank you.
We have worked hard to make sure that the multi-media
campaign is one that will be very effective and it has taken
longer than we had hoped. We have gone through the research
stages, several focus groups, and now we are in production. We
do expect it to be available this August to be launched and we
do think that it will be something you will be proud of when it
is launched.
We were able to set aside $750,000 to dedicate to this
project from funding that we already had on-hand, and that is
what we have been using to move it forward. We do believe that
it will make a tremendous difference in terms of reaching
individuals and helping them to understand the importance of
managing credit well. And we hope that you will have a chance
to look at it soon.
If you'd like, we would be happy to bring some of the
developed materials by for your staff and yourself to look
through for your comments.
Mr. Hinojosa. JoAnn?
Ms. Johnson. Thank you.
I'll limit my comments more to the ``MyMoney.gov'' Web
site, because that is the subcommittee that I was appointed to
about a year-and-a-half ago, so that is a little bit more in my
area. I am not quite as familiar with the appropriations or the
funding area. It has been a lot of hard work.
I think for me, personally, the most difficult thing is
getting people together. We meet quarterly for our FLEC
committee as a whole; and, then, in the off-time, we meet by
conference call primarily, but bringing ideas to the table,
sorting through them, determining which ones we continue to
pursue, I would admit it's just like the rest of government, I
guess. It takes longer than what anyone anticipates or hopes
for a project to be completed.
I am pleased with the quality of the Web site and how we
have monitored it and tried to come up with something that we
can validate the information. I know one of the big questions
was, where do we draw the line; what information comes on; how
can we check it out; how do we validate; and so making those
decisions, is it government only? Do you allow the private
sector? Do you allow those who are companies for-profit?
Because we have to determine that the information is accurate.
So there was certainly more involved on the surface, but I
think we do have a good project. For me, the most disappointing
thing is that a public service announcement is not enough for
people to even become aware of the Web site in order to use it.
You don't have to reinvent the wheel. There are good
materials there. We just need to get them in the hands of the
user, and that's the most difficult thing. That's why I think
it takes all of us working together to actually deliver it and
get where the rubber meets the road.
Mr. Hinojosa. Mr. Mooney.
Mr. Mooney. Congressman, I defer to the Treasurer and her
remarks concerning the media campaign. I will add to Chairman
Johnson's remarks that the ``MyMoney'' Web site is really quite
good. We chair, the FDIC chairs, the hotline subcommittee and
several agencies are including information that is sent out to
consumers who call for it.
It is difficult, as Ms. Braunstein said, to organize 20
different Federal agencies. Nevertheless, anything can be
improved, any additional resources, I think, could be welcome,
and perhaps we could coordinate something that would be more in
line with what you would expect.
Mr. Hinojosa. Well, I am very disappointed, because I come
from the world of business. And every time we had a marketing
plan, we expected to have returns and to monitor the results of
the marketing plan. And after 4 years, the results are
horrible. We are in a crisis.
We believe that we are in a recession, even though some
people would debate that statement. I believe, Mr. Mooney, that
your group through the FDIC were working on that survey that
you talked about with the students. When will you release the
results of that national survey of banks' efforts to serve the
unbanked adults?
Mr. Mooney. Actually, we just mailed the survey out to
banks yesterday. We will be reporting on a biennial basis to
this committee, as well as to the Senate Banking Committee,
under the Federal Deposit Insurance Reform and Conforming
Amendments Act of 2005.
We would be delighted as we get results to share those with
your staff. We think through this survey, we will find a great
deal of information about what banks are doing, as well as
through our household survey with the U.S. Census, and find out
why individuals either are or are not working with banks. We
hope to get a great deal of detailed information on that. We
would expect by the end of the year or after the first of the
year we will have analyzed the results of the first survey.
Mr. Hinojosa. If you say that you have just mailed it to
the banks, what is a preview of that survey with regard to the
many people who are limited English-speaking adults and in many
cases don't trust banks because of experiences that they had in
their motherlands?
What is being done to address that concern?
Mr. Mooney. Well, at the FDIC, we formed Alliances for
Economic Inclusion in 10 cities. We have one in South Texas, a
very successful, active one. Banks, nonprofits, and others have
come together to address issues such as that. They are coming
up with new products and new marketing materials in a way that
can reach individuals who do not have English as a first
language.
Our financial education program, ``Money Smart,'' is
available in seven different languages, including Braille. The
group in Texas, largely thanks to your leadership, Congressman,
regarding financial literacy, has been quite successful in
reaching into the Latino community there, and in finding ways
that new citizens and others might feel more comfortable
working with banks.
Mr. Hinojosa. I thank those of you who have helped us take
financial literacy programs to the elementary schools and to
the high schools. We have taken them to the community college
at South Texas Community College and the last one was at the
University of Texas, Pan American, which was very successful.
But still, as a former businessman, I am very discouraged that
the results that we have to show when we see the economy going
into the tank, the results are just absolutely horrible.
To the Treasurer, you spoke about the difficulty in working
with such a large group, and Congresswoman Biggert and I talked
about the need for the public and private sectors to work
together: Do you all think that this group is just too big and
unmanageable? Should it be made smaller so that it can move
faster and get things done as we had expected when we passed
this law?
Ms. Cabral. Well, I think that all the voices on the FLEC
commission are important and I think that some of the
difficulty, perhaps, is just knowing how to get started. I was
not part of the Administration when FLEC was created, but I
think they have done a phenomenal job of really just beginning
the conversation and setting out for themselves a shared set of
goals and some plans of action.
I think we have moved far enough along that you now can
bring, I think, FLEC and the council that was recently created
by the President, the Financial Literacy Council, together to
really help one another. I think it was Ms. Braunstein who
suggested that it might be too difficult to enlarge FLEC to
then add additional outside entities, that is the private
sector, State, and local government.
But it is important to have that conversation among all of
those players for us to be successful, so I think to the extent
that we can liaise between the two organizations and continue
the dialogue, I think we are all going to be much better off.
Mr. Hinojosa. Please do not misunderstand me.
I don't want to expand it. I want it to move. I want it to
be an expedited effort for the implementation, because as we
say, we are right on the brink of falling into the canyon, and,
if you all don't find a way and recommend to Congress to
expedite this, I think we are in for a deep recession if we
don't find a way to correct this.
I yield back.
Ms. Waters. Thank you very much.
Mr. Clay, for 5 minutes.
Mr. Clay. Thank you, Madam Chairwoman, especially for
holding this hearing today. And this question is for anyone on
the panel who would like to address it.
We all know that one of the contributing factors of the
housing foreclosure crisis that we are currently in is
inadequate financial literacy. We have had many programs
created in the past few years to address this issue and have
had some positive results, but not nearly the impact that was
needed.
We also know that housing and credit cards are not the only
areas that need to be addressed today. How early do we need to
start these financial literacy programs to get ahead of this
lurking monster called debt?
We see kids in high school with credit card debt and know
that we have to start before that. What are the earliest ages
that we can start teaching our children in schools and other
formal settings about financial literacy, and at what ages does
your research show that they are capable of understanding and
retaining this knowledge? Anybody can take a stab at it.
Yes, Ms. Johnson?
Ms. Johnson. Sir, I have participated in financial reading
classes at the 2nd and 3rd grade level that have gotten these
kids started towards a savings account, especially when the
credit union follows through then and has a student branch
within the school.
So the second and third grade level is certainly not too
early to begin, and I agree with you that the sooner we get to
them, the better.
Mr. Mooney. Congressman, I would add, yesterday I was at
the Hope Charter School and we talked a little bit about
financial education with a classroom of 8- and 9-year-old
students. They understood the importance of savings. Many of
them had savings accounts and they were telling us why they had
savings accounts. One wanted to go to college, one wanted to
buy a BMW, one wanted to buy a laptop computer. But, the point
is, they were saving for that, so it was very encouraging.
We also think junior high, high school, is a perfect
opportunity to do that. That's why we just released the ``Money
Smart for Young Adults'' program.
Mr. Clay. Thank you for that.
Anyone else?
Yes, sir, Mr. Martin.
Mr. Martin. Thank you, Congressman.
I think at any age you integrate it with the existing
curriculum. I have been in kindergarten classes where they were
teaching them how to count using money, fake bills, and the
concept of how much money do I have left, and how do I know
after I bought something what's left. And she was teaching them
how to count by also teaching them the value of money at the
same time.
I don't think you can start too early, but you can't ever
finish. It doesn't end when they graduate from high school or
college. They're going to need it again, because this is
something that if you don't use it on a regular basis, you lose
it. And, frankly, not that many people buy houses every day,
and so they need refresher courses.
Mr. Clay. So we need to get them into the habit at an early
age, and the earlier the better.
Mr. Martin. Yes.
Mr. Clay. Let me ask the entire panel again: The retirement
of baby boomers is beginning to happen and many of them are
inadequately prepared to financially handle retirement. Over
the next few years, millions will retire and many of them have
no idea of their total financial needs.
How do we address this literacy shortage in the short term?
In your experiences, are the adult literacy programs reaching
those who are near retirement? Are they responding and seeking
literacy about their immediate future? Are the numbers of
programs that we have enough to reach the number of people who
need this knowledge?
Yes, ma'am?
Ms. Braunstein. I know that we are always very concerned
about that at the Federal Reserve, and one of the things that
we do is offer a number of programs in the workplace to our
employees on a number of specific issues, one of them being
retirement.
And one of the challenges with financial education,
especially with adults, is that people are very busy and it's
hard to get people to find the free time to attend classes,
which is why if you can capture them in places like the
workplace where they are, you have a much better chance of
reaching them with information on this.
Mr. Clay. Yes, sir?
Mr. Mooney. Yesterday, we, the FDIC, signed a ``Money
Smart'' partnership agreement with USOPM. They have 1,800
benefit specialists who service two million Federal employees
worldwide. We will be training those counselors in how to train
using financial education and work better to utilize their
benefits including retirement benefits.
Mr. Clay. Thank you, Madam Chairwoman. Thank you for your
indulgence.
Ms. Waters. You are certainly welcome.
Mr. Cleaver, for 5 minutes.
Mr. Cleaver. Thank you, Madam Chairwoman. Thank you, Mr.
Hinojosa.
Our children's generation will be remembered by historians
as the most indebted generation in the history of our planet,
and they have been trained poorly because their parents and
grandparents created a crisis by dealing with brokers they did
not know, buying homes they could not afford, and signing
contracts they did not understand.
And so I applaud all of the efforts that are underway for
financial literacy, but my concern is that no football coach
would wait until the National Anthem to develop the game plan.
No person would wait until a tooth is rotting before they
visited a dentist. No nation would enter a war without first
counting the troops. Well, that's a bad example.
[Laughter]
Mr. Cleaver. No long distance driver would wait until the
middle of the trip to map out the route, and so what we are
doing, even though I congratulate you and think it is good, is
that we are waiting until the horse is out of the barn to do
this.
What I am wondering about is whether or not those of you
here would support something that's a lot more specific, and by
that I mean if we entered into a tri-party agreement, the GSEs,
the financial services industry, and the Federal Government,
and we picked 110 districts around the country, 2 in each of
the States and the territories, and we create a pot of money
for a 4-year program in each of those schools as a pilot with a
goal of moving toward establishing a curriculum in high schools
for all high schools around the country on financial literacy,
where people can't even write a check.
And so I think when we just say, well, you know, we have
all these programs and we want you to take advantage of them,
that may be good, and it's the best thing that we can do at
this time. But I believe we ought to build it into the very
fabric of education in this country so that everyone gets that
exposure.
What's wrong with that? Or your signals are that you all
support it and I hope the press gets it down? Is everybody
supportive of what I just said?
Ms. Johnson. Sir?
Mr. Cleaver. Ms. Johnson.
Ms. Johnson. I think having financial education in the
schools is certainly a great goal. I think there are eight
States that now have some sort of curriculum, but we need to go
beyond that. I know the institutions, the banks and the credit
unions that are in those eight States, also see the need to
reach beyond the school system we have at all age levels. So
getting the school age is certainly a good thing, but we don't
want to drop the other programs that are beyond that.
Mr. Cleaver. Yes, I am not suggesting that we drop that. I
hate Shakespeare. I hated it when I was in high school, but I
can quote some Shakespeare just from being in the classroom. I
didn't like Miss Holland who taught us and forced us to read
that stuff, but I can quote Shakespeare sitting here right now,
just because I was in the classroom. I'm not saying we
eliminate all of that. I'm saying that we build it into the
system that educates our children. We are doing a shotgun
approach; some will be exposed and some won't.
Why not make it a part of the curriculum in schools all
around this country and its territories? We have a crisis. It's
not going to get better.
Mr. Mooney. Congressman, some school systems have, and we
have found that teachers on their own have downloaded financial
education programs, and worked them into their classes. So
there's obviously a demand for this.
Mr. Cleaver. Ye, and I am happy. Thank you. Sometimes I am
inarticulate.
What's wrong with trying to have that as a part of the
curriculum in all of the school systems in the United States?
Mr. Martin. I think that's a great idea. I think it needs
to be integrated. The biggest problem I found, and we are
actually having a conference in Arizona, the local coalition,
half the course of the conference, is teaching personal finance
to teachers.
They never got this when they were going to school, and so
they don't feel comfortable teaching it yet. And so I don't
think you could make this as successful unless you also gave
additional training to the teachers to make sure they
understood the subject too, because they don't feel confident
in many cases about that.
Ms. Cabral. Congressman, to that end, I think FLEC and
certainly the Department of the Treasury have been working hard
to make sure we identify resources that make that possible for
teachers in school districts that are interested. So not only
are there curriculum that are readily available, but I think
Mr. Martin's point is a really important one.
You have to make sure the teacher is in a position to also
teach these topics, and many times, they are uncomfortable. So
we have identified, for example, the nominal programs that
exist currently in some States where they teach teachers over
the course of the summer and prepare them so that they could
administrate these classes as the fall semester arises. So a
lot of the work is going on now and I think it will continue to
move forward.
Ms. Waters. Your time has expired.
Ms. Maloney, for 5 minutes.
Mrs. Maloney. I thank the gentlewoman for yielding, and I
applaud my colleagues for their interest in supporting
financial literacy. I, for one, join my colleague in calling
for having it be part of the national curriculum that we have
in our schools and with the increased complexity and the number
of financial products, the need to save as a country, we need
greater financial literacy.
I would first like to ask the Treasury Department, the
Honorable Anna Escobedo Cabral, about--and I really first want
to congratulate all of you for your efforts to increase
financial literacy, and I know Treasury has some new programs.
In January, I sent Treasury a letter about a constituent,
the W!SE program, Working in Support of Education. W!SE has
developed a curriculum and test that has a strong track record
of success, and my concern with Treasury's new proposal is that
it's just a test, as I understand it, without the backup
curriculum, and would ultimately possibly undermine the efforts
of programs like W!SE that have a strong curriculum. What are
you doing to ensure that financial education programs like W!SE
continue and are not undermined by a test-only approach?
Ms. Cabral. Thank you, Congresswoman. W!SE is actually a
phenomenally successful program, one that I certainly admire
and respect personally. I have had the privilege of attending
some of their certificate programs in New York City and I
really do value their input. I think they are an incredibly
important partner in this process.
What has occurred is that Treasury, at the request of the
President, came up with a series of ideas that were submitted
to and approved by the President's Advisory Council on
Financial Literacy, one of them being this concept or model of
making a test available that would determine what you need to
know to graduate from high school and demonstrate that you
truly are financially literate.
And the model is really something along the lines of what
we've seen was very successful in the area of physical fitness,
creating some sort of Presidential award, some recognition so
that individuals who tested and demonstrated their capacity and
their ability to really know the subject matter would be
recognized for those efforts, to try and encourage more
teachers across the school districts in the United States to
make curriculum available and then to test and recognize
excellence.
W!SE is one of those programs that offers a particularly
important component to that, and that is that they do have
curriculum that makes a world of difference. There are a number
of partners who have come together to give some advice to the
Treasury Department about what would best serve or how we might
best understand what a financially literate individual would
have to prove. And that is in fact what we have done.
We hired four economists who were outside of the government
to come up with a test that we could use for this model. We
have tested the test itself. We piloted the test, and it seems
to be moving in the right direction. We hope to be able to
launch this initiative in the next couple of weeks, and we hope
that W!SE will continue to work with us to be a partner in
terms of being able to administer curriculum that is critical
to preparing students to pass those tests.
Mrs. Maloney. I know that a number of financial
institutions--I received a letter from Chase Manhattan, J.P.
Morgan, Citibank, others--have financial literacy courses. They
go into the schools. I know that Mrs. Siebert has come up with
a curriculum that is in the New York City school system, yet
we're seeing that it's not working. And I just want to cite
that just last week the Jump$tart coalition released the
findings of its most recent survey of high school students for
the first time, and for the first time, college students and
high school seniors today have less financial literacy than
their counterparts 2 years ago.
So all of this effort appears not to be working. The mean
scores for the 2008 high school senior class was 48 percent,
lower than for their 2006 peers, who answered 52 percent of the
questions correctly. And scores for college students are higher
at 62 percent, but still, 62 percent for financial literacy for
college students is very, very low.
Some have argued that if we had better literacy, possibly
we would not have had this financial crisis that we are
confronting with the subprime if there was a greater
understanding of the products that people were buying into. I
would just like to ask all the panelists and just go right down
the line, do you think that financial literacy should be
required curriculum in our high schools now?
Ms. Cabral. I think that there are a number of States who
have made a commitment to it, and it is a State-by-State
decision at this point, and I respect the right of States to
determine what their curriculum will look like.
I think it's incredibly important for us to make sure that
we start teaching children about financial literacy from the
time that they enter kindergarten all the way through high
school. And the goal of the test that I just described a few
minutes ago is really to add to a curriculum that teachers
would offer and then also guarantee that students had actually
learned and that the behaviors had changed.
Ms. Johnson. I would echo what the Treasurer has just said.
And certainly those students who received the financial
education classes and the exposure at an early age seem to do
better. We need to change the mindset, particularly of these
high school students and those heading off to college and the
use of the credit card. No one would have thought 20 years ago
about going to the bank to borrow money to get a Starbuck's
coffee. That is the ease of the credit card and the dangers
therein today, so I think the earlier the better.
Mr. Martin. I also agree. I think it should be integrated,
though, in the curriculum. Having a single, stand-alone class
is not the same as having this integrated as part--we still
need to learn how to count and do math and do history. It
should be incorporated all the way throughout.
I think you have a lot greater retention when people
understand, because finance and economics has a lot of social
implications as well. And I think if you tie those two
together, you will have a lot greater retention by the students
than you would with just one stand-alone class that they may or
may not remember later in life.
Ms. Braunstein. I agree that I think it would be a very
worthwhile endeavor, and I also agree with Mr. Martin's remarks
that I think that we find with students, as we do with
children, as with adults, that they learn more if it's somehow
put in context that they can understand. So if there's a way to
tie it to other kinds of lessons or find teachable moments for
kids, it would be much more effective.
Mr. Mooney. Congresswoman, we have talked with teachers who
on their own have tried to provide financial education, and
they have gone to our Web site. They don't have the resources
to even download the free program, so they have asked us to
mail it to them. Chairman Bair has long been an advocate of
incorporating financial education into schools, and we think it
would be an excellent idea to work toward that end.
Ms. McConnell. I think there are benefits to incorporating
financial education into the schools, and I also think that we
could yield additional benefits by finding ways to bring to
scale the best practice programs so that we can have more
benefits on a wider scale instead of school by school.
Mr. Wides. We would agree with the Treasurer's remarks as
well that integrating it into the curriculum is very important,
but I also would point out there are a number of initiatives
where financial institutions are working to bring hands-on
exercises into the schools. At the Financial Literacy and
Education Commission, we heard about the investment challenge,
which brings in learning about the stock market. We talked
earlier today about banks actually opening up branches in
schools that are run by the students themselves. And I think we
would also want to augment any activities like that with work
to build this into the curriculum.
Mrs. Maloney. Thank you.
Ms. Waters. Thank you very much. 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 90 days for members to
submit written questions to these witnesses and to place their
responses in the record.
This panel is dismissed, and thank you very much for being
here today.
I would like to call up our second panel. Members of the
second panel, please quickly take your seats at the table. We
have a certain time that we have to be out of this room. Would
you please clear both aisles and take your conversations
outside of the room and let's get our panelists seated at the
table.
Thank you very much. I'm going to start by asking
Congresswoman Maloney to please introduce one of our panelists
from her area.
Mrs. Maloney. I thank you, Madam Chairwoman, and I
congratulate all of the panelists, and I have the great honor
of having two panelists from the district that I represent,
which is very interested in financial literacy.
I would like to welcome Robert Duvall, president and CEO of
the National Council on Economic Education, and also Phyllis
Frankfort, whose program I have worked with over the years. She
is the CEO and president of Working in Support of Education, or
W!SE. W!SE is a nonprofit located in my district that has
developed and operated a financial literacy certification
program, and they started their program in New York City, but
it has now expanded to 18 States for the 2008 academic year. I
want to thank her for her work in this area, and Mr. Duvall,
and for the honor of representing you. Thank you for being here
today.
Ms. Waters. Thank you very much. Mr. Moore, I understand
you have someone you would like to introduce today?
Mr. Moore. I do. Thank you, Madam Chairwoman. Jill Docking,
a friend of mine, is by profession a stockbroker from Wichita,
Kansas. She co-founded, or excuse me, she's a member of the
Kansas Board of Regents appointed by Governor Sebelius in 2007,
and most importantly this morning for the purposes of this
hearing, she co-founded the Financial Fitness Foundation, a
not-for-profit organization dedicated to teaching youth to make
responsible financial choices for their future.
So, I appreciate her being here and I thank you for the
opportunity to introduced my friend.
Ms. Waters. Thank you very much. I will now introduce the
other members of the panel: Mr. Marc Morial, president and
chief executive officer of the National Urban League, and
former mayor of the City of New Orleans; Mr. Stephen Brobeck,
executive director, Consumer Federation of America; Ms. Janis
Bowdler, associate director for wealth building policy project
for the National Council of La Raza; and Mr. Dallas Salisbury,
president, American Savings Education Council, and chief
executive officer, the Employee Benefit Research Institute.
Thank you all for being here. Without objection, your
written statements will be made a part of the record. You will
each be recognized for a 5-minute summary of your testimony. I
will start then with Mr. Robert Duvall.
STATEMENT OF ROBERT DUVALL, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, NATIONAL COUNCIL ON ECONOMIC EDUCATION
Mr. Duvall. Thank you, Congresswoman Waters, for this
opportunity. It is really good to be here and to be working
with one of my heroes, Congressman Hinojosa, who has been a
great champion of this cause, and my own Representative,
Congresswoman Maloney, who introduced me. Thank you very much.
Thank you for inviting me to testify on the timely,
critical, and vital issue of the Federal Government's role in
empowering all Americans to make informed financial decisions.
I think it's especially fitting, as has been observed, for this
committee to be holding this hearing during Financial Literacy
Month. And as a member of the newly formed President's Advisory
Council on Financial Literacy, and as a parent, an educator,
and as a concerned citizen, I commend you for focusing on this
very important issue. There are few matters which more directly
address the traditional American values and virtues of self-
reliance, individual responsibility, and good citizenship than
the issue we are talking about today.
My organization, the National Council on Economic Education
(NCEE), is a champion of financial literacy and a leader in the
field. Our focus is on professional development for teachers.
And I want to second several comments that have been made,
particularly by Congressman Cleaver, in regard to the
importance of getting this literacy into the core curriculum in
the schools. We so often are spending our time and our
resources on remedial action, as in some ways we're trying to
do now with the situation, Congressman Hinojosa, that you
pointed out for this country. But we can prevent some of that
need for remedial action if we educate our young people more
consistently and clearly and fully in the skills that they need
to make good decisions.
We at the National Council on Economic Education believe
that all of our young people need to know and deserve to know
about the economic system they will be working in and
contributing to and benefitting from and ultimately inheriting.
Since our founding 60 years ago, we have learned that the
basics of financial literacy taught early, often, and well are
a key to our Nation's continued success and to being
competitive in the global economy.
Our charge is to ensure that all of our young people are
empowered with an economic way of thinking that will help them
make good decisions about managing their resources as members
of families and communities, in the workforce, and as citizens.
Too often, we think that economics is what they do at MIT,
not what you do when you're making day-to-day decisions about
the management of resources in your life, and the need for
educating all of our young people early is great. The NCEE is
committed to contributing to solutions for this problem today
and for the day after tomorrow. We are differentiated by our
mission. We believe that financial literacy best comes through
effective economic education, that this education ought to be a
part of the core learning experience that our young people get
while they are in elementary and high school.
What do we know? We know that financial decisionmaking
skills are learned behavior. You're not born with it. And we
know that it's best learned while you are in school, before you
get into the school of hard knocks. And it's best learned
through well-prepared teachers, including parents as teachers,
but the school system offers us a structural arrangement for
conveying this kind of learning experience and making it stick.
Financial circumstances in the lives of all of us keep
changing. The basic principles of economics--cost benefit,
opportunity costs, supply and demand--do not. We want to teach
all of our young people a skill set that includes these tools
to get into their heads and hands the ability to frame
decisions that they have to make about financial services,
about buying their first home, about managing credit and debt,
about using financial institutions, to be able to make
decisions about these things in a framework that has prepared
them well to do it.
[The prepared statement of Dr. Duvall can be found on page
103 of the appendix.]
Ms. Waters. Thank you very much.
Mr. Mark Morial.
STATEMENT OF MARC H. MORIAL, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, NATIONAL URBAN LEAGUE
Mr. Morial. First of all, good afternoon. Congresswoman
Waters, thank you very much, and I want to thank the members of
the committee for holding this hearing and for this very
special opportunity to summarize my written testimony this
afternoon.
First, on behalf of the National Urban League, I want to
share with you some startling but compelling information about
African Americans and the American economic system. According
to this year's State of Black America Report, the standing of
African Americans economically is but 57 percent that of white
Americans. Further, African Americans hold 5 times more
installment debt on average than do white Americans. And
African-American net worth averages about $11,800 versus
$118,000 for white Americans. This set of economic disparities
is exacerbated and has been exacerbated by the subprime
meltdown that has shattered and shocked this Nation.
Indeed, I also want to share with you that the National
Urban League has been involved in financial education and
financial literacy now for almost 40 years. And it is an
essential component of our economic empowerment agenda, that is
an agenda to close the economic gaps that exist in this Nation.
Last year, we served some 25,000 people from coast to coast
with financial literacy and financial education training. We do
this work in 75 of our affiliate cities, 75 of the 100
affiliate cities in our network. Indeed, these financial
literacy and financial education services include workshops,
one-on-one counseling, case management, and a sophisticated
asset-based approach to financial education, the idea that
financial education should not only provide people with tools
but with the objective of learning how to save, how to invest,
and how to purchase homes. Of the 75 affiliates, 66 of them do
homeownership education and counseling and that includes,
Congresswoman Waters, homeownership education on the front
side, to assist people before they even sign a mortgage and
purchase a home, and post-purchase counseling, which involves
assisting people who may get behind, may get into default with
negotiating with the mortgage holder in an effort to try to
protect or save that asset.
Today, I want to offer, one, some thoughts about the
advantage of the National Urban League in providing these
services. One, we are a trusted ally in the community. There is
no mistake that the National Urban League is not a debt
collector, not the bank, not seeking to foreclose on people's
homes but there to assist them. Number two, because of our
trust people tend to come to us for assistance and help earlier
rather than later.
Here are some recommendations, and I agree with what Mr.
Duvall has said and with what many of the earlier panelists
said. First, I believe that Congress should lead the effort to
dramatically expand financial education in this Nation, with
both public and private resources with a focus on asset
building, that is to help people save, invest, and buy homes.
The question then is how do you examine, how do you evaluate,
how do you measure the success of financial education? We
should keep our focus on the bottom line and that bottom line
is whether people's net worth expands and increases over time.
Number two, as has already been said, we should focus on
financial education for young people, for kids in schools, for
preteens and for teens, ruling people in effective financial
decisionmaking is very important in a context in an America
today where the range of services, the range of options, the
complexity of options, from the choices for cellphones, for
investments, and for retirement accounts is far more complex
than it was a generation ago.
And, finally, pertinent to the subprime crisis,
homeownership counseling should be dramatically expanded, and I
applaud the committee, your leadership, Congresswoman Waters,
and yours, Congressman Watt, in pushing the Congress to do
this. With this important caveat, those dollars must be
geographically focused on those areas in those communities that
have greatest need.
Number two, the expansion of investment in homeownership
counseling and financial education should not be a license for
the creation of fly-by-night homeownership counseling agencies
that sprout up because they see an opportunity. Indeed, fly-by-
night mortgage brokers have been in fact one of the causes of
the subprime meltdown.
So, finally, I just want to thank you all for considering
this as well as for the opportunity to testify today.
[The prepared statement of Mr. Morial can be found on page
189 of the appendix.]
Ms. Waters. Thank you, sir.
Ms. Jill Docking?
STATEMENT OF JILL DOCKING, PRESIDENT AND FOUNDER, FINANCIAL
FITNESS FOUNDATION
Ms. Docking. May I assume everybody has my testimony, and I
may summarize it?
Ms. Waters. Yes, you may certainly assume that.
Ms. Docking. This has all been quite interesting to me. I
have been working on this issue for 10 years now, and by the
way, I'm encouraged to hear everybody here is interested, and I
thank all of you for clearly staying through either your lunch
hour or nap hour or whatever this is for everybody, you all
have really hung in there.
Financial Fitness Foundation was a not-for-profit formed
about 10 years ago in the State of Kansas in an effort to
promote financial literacy. We started off by doing very
interactive, high-energy seminars for young people in high
schools, and we really could gin those kids up. They were
fabulous, they were expensive to do, everybody was very
engaged, especially kids from large urban districts. The board
then concluded while that really caused a lot of excitement
amongst the kids, it was not very efficient at spreading our
message extensively. So as a little guerrilla group, as I call
our little foundation, just a bunch of private citizens wanting
to get this done in the State of Kansas. With the help of our
executive director Carol Rupe, we launched an effort to change
the law in the State of Kansas and we did so. Now it is
mandatory in our K through 12th curriculum that we have
financial literacy standards integrated into our standard
curriculum of math, social studies, and language arts. So it is
all the way through our curriculum.
We now are trying to evaluate how well we are doing and how
effective that has been and our conclusion is that it is
spotty, that a lot of teachers do not really feel comfortable
about teaching it and so they are therefore either not teaching
it or not doing a very extensive job at doing so. So when I was
asked to do this presentation, I differ from everybody here, I
don't run an organization. I am a businesswoman, I really care
about this, and I agree it has to be part of the system in
either a very incentive-based way or mandatory. In a sense, you
have to set a FLIC under FLEC. We did that in Kansas. We tried
to get all of the wonderful people doing everything to get a
little bit more focused and a little bit more directive.
I have written on my testimony three thoughts on
incentives--or two thoughts on incentives and one on mandates.
How can the Federal Government help to fuel interest in the
subject? I think our government must own it. If we go State-by-
State or city-by-city, we will not get the required results.
There is no lack of material in this area of study. The
scarcity is in the incentives or mandates available to drive
the issue.
Some thoughts on incentives would be the following:
Government should help underwrite the training of K through 12
teachers in the subject matters with funds for continuing
education at the post-secondary level. Two, we need to scale up
personal finance in all post-secondary general education
courses. A course platform that is Web-based, taught by well-
trained faculty, would do the job but it requires resources.
The third would be a mandate, a mandate much like Congressman
Cleaver was talking about except I think it is not a mandate
unless you have a proficiency exam. As a member of the Kansas
Board of Regents, I will tell you they would have a heart
attack listening to me talking about a mandate or proficiency
exam in post-secondary, but as a business person, I believe
that is some of what works. So a test of proficiency could be
mandated by the Federal Government and funding provided for
this test either at the end of high school or before entry into
post-secondary school. In the event that the student fails,
there should be funding remediation.
I have listened to everybody here today. There is a lot of
really good stuff going on, so I would not be particularly
discouraged. I know you are frustrated because it is
government. I am actually encouraged as a private citizen
because I do not think I had any idea there was this much going
on but there is no coordination and so either the private and
public sector have to come together in some coordinated way or
we somehow have to get this mass with a single source of energy
to get some things done.
The subprime issue is a short-term issue, this is a long-
term issue we need to be very patient about and move the system
in order to protect the next generation. I might add that I
think entitlement reform has a lot to do with this. You ought
to care about your kids taking care of themselves or Social
Security and Medicare are going to be very problematic to that
generation.
Thank you.
[The prepared statement of Ms. Docking can be found on page
101 of the appendix.]
Ms. Waters. Thank you very much.
Mr. Stephen Brobeck?
STATEMENT OF STEPHEN BROBECK, EXECUTIVE DIRECTOR, CONSUMER
FEDERATION OF AMERICA
Mr. Brobeck. Thank you, Madam Chairwoman. The Consumer
Federation appreciates the chance to participate in this
hearing. This is the fourth opportunity we have had in the past
2 years to testify before Congress on financial literacy
issues. In the first section of our written testimony, we
summarize the key points of our first testimonies. In the third
section, we urge Congress to consider the improvement of
financial product disclosures as an important strategy for
improving consumer financial literacy and decisionmaking. But
it is the second section of the testimony that I will now focus
on.
Judging from many indicators, including the lack of
commitment by most schools, the minimal resources provided by
government and the fact that most Americans have a limited
understanding of the financial services marketplace, financial
education has been paid lip service but not real attention by
most of our society. And we believe that even the expansion of
effective individual programs, such as those sponsored by the
organizations represented on this panel, including my own,
would not alter this unfortunate reality.
So, how can we get society's attention and persuade it to
make a greater commitment to improving financial literacy? One
approach, and it was suggested by a couple of earlier speakers,
is for all organizations committed to this improved literacy to
join forces to try to persuade millions of Americans to
periodically assess and improve their financial condition and
to make available tools for doing so. That opportunity now
exists, we believe, through America Saves Week, which this past
February brought together over 80 major national organizations
listed in an appendix to my written testimony, including more
than a dozen Federal agencies and also hundreds of State and
local groups, to urge individuals to evaluate and improve their
spending, borrowing, and savings habits.
Frankly, America Saves Week 2008 was a mile wide, and with
a few notable exceptions, only inches deep. But next year and
beyond, those coordinating the week, including fellow panelist
Dallas Salisbury, believe that we can add considerable depth as
well as great breadth to this initiative. We will do so with
assistance from an America Saves Week Web site, which contains
specific advice about how different organizations can
participate in an array of savings tools for individuals and
families. These include video PSAs, the Savings Knowledge Test,
a personal assessment of one's savings progress, a personal
wealth estimator, a personal ball park estimate of one's
retirement savings adequacy, and an opportunity to develop a
specific plan for achieving a desired savings goal.
While coordinated by ASEC and America Saves, America Saves
Week is a brand and a program that we would like other
organizations to appropriate as their own. This past year, for
example, the Armed Services embraced Military Saves Week. The
North American Securities Administrators Association developed
a theme of America Saves through investor protection. The
National Foundation for Credit Counseling emphasized the theme
of America Saves through debt reduction, and all these
organizations crafted their own messages and publicized them.
Let me conclude by saying that America Saves Week provides
many opportunities for leadership by Members of Congress,
especially in their districts. Simply urging local
organizations to participate in the week would be very helpful,
but even more valuable would be inviting some of these
organizations to a meeting to discuss planning local
coordinated America Saves Week activities and both ASEC and
America Saves are prepared to support and help staff in any
such efforts.
Thank you again for this opportunity to testify.
[The prepared statement of Mr. Brobeck can be found on page
85 of the appendix.]
Ms. Waters. Thank you very much.
Ms. Janis Bowdler?
STATEMENT OF JANIS BOWDLER, ASSOCIATE DIRECTOR, WEALTH-BUILDING
POLICY PROJECT, NATIONAL COUNCIL OF LA RAZA (NCLR)
Ms. Bowdler. Good afternoon, and thank you. I am the
associate director for the Wealth-Building Policy Project at
NCLR and in this role I oversee our research and analysis on
the ability of Latinos to obtain financial security. I would
like to extend the greetings and regrets of our president and
CEO, Janet Murigua, who was not able to be here at today's
hearing. But on her behalf, I want to thank the chairman and
other committee members for the invitation, and I would also
like to thank Congressman Hinojosa for your overall leadership
especially in this area of financial literacy.
The concept of financial literacy is one that is very
important to the Latino and immigrant community, yet despite
many great intentions, the financial education market is
flooded with materials that do not work for Latino families.
This is not to say, however, that there is a great need for
more and better financial knowledge. In fact, low-income
consumers need the same kind of advice and financial planning
that families with means pay for; they simply cannot afford it.
Today, I will briefly discuss research and analysis done by
NCLR in this area. I will also discuss promising community-
based strategies to improve financial decisionmaking, and I
will conclude with a set of recommendations.
I will start by sharing some of our research. We recently
released a report that examined financial education programs
targeting Hispanic consumers. We found that most of the
materials out there are just too broad. They do not effectively
change consumer behavior, decisionmaking, or help families
attain assets. This is troubling because we know that owning
assets is the best way to help low-income families become
financially secure. Thus, financial education programs should,
in one way or another, connect families to wealth building
opportunities. This is the only way that we are going to close
the race ethnic wealth gap that my colleague from the Urban
League mentioned.
As a sponsor of housing counseling, we also know that one-
on-one sessions are meaningful, effective tools for building
both financial knowledge and sustainable wealth. Through our
network, we work with more than 30,000 families every year. We
understand what it takes to help marginalized communities build
financial security through asset ownership. Every day, our
counselors meet new families that need deeper services than
they can currently provide. In fact, about 80 percent of
families who seek advice through NHN are not ready to purchase
a home in the near future. Our counselors develop work plans
for these families, some of which extend up to 2 years, but
what these clients really need is good quality financial
planning. In fact, the high turnout rates at free tax
preparation clinics and IDA programs shows that low-income
families are interested in this kind of service but the
financial planning market is driven by the amount of wealth a
client already has. Planners that rely on commissions or fees
do not have an incentive to serve low-income families.
So NCLR has identified three road blocks to extending
quality financial services to the families that need it. First,
which I have already alluded to, is that there are few
affordable certified financial counselors available. The going
rate of $200 an hour is prohibitive for a family of modest
means.
Second, there is little incentive for low-income families
to spend hard-earned money on a planner. Upper-income families
who itemize their income taxes can deduct the expense of their
financial planner. This stands in stark contrast to the
situation from modest income families who have no such
incentive.
And, third, Congress is not investing in this area. In
2004, Congress provided more than $350 billion in tax benefits
to upper-income workers to save and invest their money. No
comparable investment in savings incentives has been made for
low- and moderate-income workers.
Plus, low-income communities are prime targets for
financial predators. Hispanics are more than twice as likely as
whites to become victims of fraud, and we know that these
scammers often pose as ``certified'' counselors or consultants
in order to push their predatory product. We must establish a
network of reliable, independent financial counselors who can
provide financial planning services, budget and savings advice,
basic banking skills, and a safe alternative to the scammers.
Let me close with just a couple of recommendations. We need
a refundable Federal income tax that will create an incentive
for low-income families to see a financial planner. We need an
infrastructure of community-based financial counselors modeled
on the successful housing counseling program, and we need
Congress to explore this theme of financial scams through
hearings and reports. Policymakers can take meaningful steps to
increase asset ownership among Latinos, and we believe that
financial counseling is the lynch pin in this strategy.
Thank you, and I would be happy to answer any questions.
[The prepared statement of Ms. Bowdler can be found on page
67 of the appendix.]
Ms. Waters. Thank you.
Next, we will hear from Ms. Phyllis Frankfort.
STATEMENT OF PHYLLIS FRANKFORT, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, WORKING IN SUPPORT OF EDUCATION (W!SE)
Ms. Frankfort. Chairwoman Waters and members of the
committee, as president of W!SE, and chair of the New York
Financial Literacy Coalition, I thank you for giving me this
opportunity to share my thoughts regarding financial literacy
and education for young people. America desperately needs
financial education. We cannot correct the past. We can,
however, strive to do better by preparing today's youth to be
responsible and financially savvy adults.
We still lack of cohesive national policy on financial
literacy that is widely known and an educational commitment.
Very few States require or recommend the teaching of finance
and the requirements are inconsistent in depth and breadth of
content. There is also a lack of funding. I am encouraged by
the interest W!SE has received from Representatives Ackerman,
Serrano, Velazquez, and particularly my Congresswoman, Carolyn
Maloney.
On a national level, the introduction of H.R. 4335 and S.
2671 offer hope for a critically needed, overarching national
framework. While I am pleased that the Administration, too,
recognizes the need, I am concerned that a recent initiative by
the Treasury Department reflects the shortcomings of No Child
Left Behind: testing without regard to teaching or learning.
Five years ago, W!SE created the Financial Literacy
Certification Program to help high school students become
financially literate before they graduate. At the time, 18- to
25-year-olds comprised the fastest growing group filing
personal bankruptcy and more young people were dropping out of
college because of personal debt than academic failure.
W!SE invites high schools to teach a course or unit on
personal finance and then assesses the student's acquired
knowledge. We provide curriculum, pre-tests, online practice
test questions, and our standardized certification test,
available in English and Spanish and validated by industry
professionals. Students who pass are certified financially
literate and schools, teachers, and students are eligible for
awards based on test results. The word is out; this program is
now in 21 States. It has reached 65,000 students and it has
grown by 1,500 percent since 2003. We have an average 74
percent of students passing the certification test and the rate
is improving to 82 percent in fall of 2007. Before instruction,
pre-test passing is 49 percent. After instruction, results have
consistently shown a statistically significant improvement of
24 percent or more. Most important, student behavior in
managing their own money changes for the better. Clearly, our
program and tests work, all tied to curriculum and instruction.
We have empowered teachers. It helps teachers to measure
whether or not they were effective and it asks students to
demonstrate knowledge.
In contrast, Treasury has spearheaded a high school
challenge which simply replicates W!SE's concept of a testing
and recognition initiative. It is not tied to instruction and
it will take precious, limited class time to a little effect.
They say it is intended to spark interest when the priority
needs to be on getting the job done. The challenge is not only
a missed opportunity for innovation in financial education but
also a waste of taxpayer dollars.
I am not being self-serving or proprietary. I have conveyed
my concerns to Treasury officials. I have offered our
assessment tool tied to instruction as a more effective way
forward. After all, this same Treasury awarded W!SE its Sherman
Award for Excellence in Financial Education just 4 months prior
to their decision to develop their own test. And the Department
had solicited and received our copyrighted materials. They
rejected our offer and have gone forward with their own test
not tied to instruction.
In terms of nourishing the minds of our youth, we feel the
challenge is a plate of syrup without the pancakes. This is
truly unfortunate. What is needed is a realistic, executable
approach to financial education. More States need to mandate
financial education in high schools, funds to facilitate
implementation of these mandates and programs that work are
needed, a strong focus on building teacher capacity, efforts to
leverage best practices in instructional methods and, of course
as mentioned before, coordination. We also need funds to study
the long-term effects of financial education. We have young
people who graduated 5 years ago, are they still financially
well?
Ms. Waters. Thank you very much. Your time has expired.
Ms. Frankfort. And we recommend the swift passage of bills
pending before you and that our experience and model of
certification aligned to instruction be embraced. Thank you.
[The prepared statement of Ms. Frankfort can be found on
page 110 of the appendix.]
Ms. Waters. Mr. Salisbury.
STATEMENT OF DALLAS SALISBURY, CHAIRMAN, AMERICAN SAVINGS
EDUCATION COUNCIL; AND PRESIDENT AND CEO, EMPLOYEE BENEFIT
RESEARCH INSTITUTE
Mr. Salisbury. Congresswoman Waters, I want to thank you
for chairing this hearing along with Chairman Frank, and I also
want to commend and thank Congresswoman Biggert and Congressman
Hinojosa for their outstanding work over the years and
encouragement in these areas.
Let me start where Ms. Frankfort just ended. Some years
back, the American Savings Education Council undertook a Youth
and Money Survey and a Parent's Youth and Money Survey. In both
of those what we found is that over 75 percent of high school
students in America actually have a financial education course
available to them in school as an elective, but less than 7
percent take that course. It is given very low priority.
I was recently home--to age myself--for my 40th high school
reunion in Everett, Washington. The person from whom I took a
financial education course in high school was there to visit
with some of us, along with the individual currently teaching
that course. When I was in high school, seven students were in
the class, then an elective. In this year's last class, 17
students out of a high school population of 900 students chose
to sign up for the elective. In many cases, as other speakers
have noted, this is very frequently not an issue about an
absence of material, about an absence of opportunity, or about
an absence of curriculum; the issue is an absence of will and
it is an absence of priority.
The last panel was intriguing in terms of the heavy-duty
fudge factor that marked responses to your direct questioning
concerning whether such education should be a requirement in
school. Others at this table have said it should be. As one who
took it and benefitted from it, I have urged many of my nieces
and nephews to sign up, and have been told other things were
more important. I would simply, on a personal level, suggest
that in the absence of a mandate, it is very unlikely that
students will choose to take the courses even if they become
universally available. So I encourage you to become more
directive, so to speak.
Secondly, I would note vis-a-vis the content issue, I have
had the privilege the last 4 years of serving on the FENRA
Investor Education Foundation Board. We have found it
excruciatingly difficult, frankly, to give away money in a way
that we felt would make a difference. Why? Because there is an
extraordinary number of people and organizations that want
money to create yet more content but do not want funding for
delivery, funding for training, and funding to deliver real
results, and we have been trying to get it to that point. So I
encourage you as well, per the comments to FLEC and others, to
consider the issue of getting people to be willing to use the
existing resources effectively.
For example, the American Savings Education Council,
created in 1995, working with the Federal Government and now
with over 200 private partners, has created 86 public service
announcements under its Choose to Save Program. These are high-
quality announcements. They received the 2007 National Emmy
Award for Savings. We have offered those PSAs free of charge to
anyone in the Nation who wishes to take them, add their
branding to the end, delete ours, and to use them for public
education. Military Saves has used them. America Saves has done
that. The U.S. military uses them internationally. It was noted
by the U.S. Treasurer that FLEC chose to take one PSA and use
it but, Congressman, per your point, they were offered 86 of
them that could have been at the cost of about $400 per PSA and
turned into promotions for money.gov. Instead, we have to
create something new out of whole cloth and 4 years have been
lost, compared with what could have been.
I do not say that to whine; I say that to suggest there is
much that could be accomplished if everyone simply became a
little competitive, a little less brand-oriented, and a little
more oriented toward actually making something happen.
And I conclude with the comments and endorsement of what
Mr. Brobeck was saying. We worked with his organization,
America Saves, to create a new Web site, non-branded,
Americasavesweek.org, and to urge all organizations to use that
as a rallying point for all of their own programs in order to
attempt to take this more broadly to communities across the
Nation, with the message of a very regular checkup. And I would
again urge individuals and organizations to do that. I invite
every single Member of Congress to promote Americasavesweek.org
to their constituency. There is nothing commercial on it.
Congresswoman Biggert and others have done this. Congressman
Hinojosa has done this, and we would welcome that type of
support from all.
And, finally, I would simply underline to this committee
the tremendous importance of what you are doing and also the
tremendous importance of something that was downplayed a little
bit by the first panel: The extraordinary importance of
effective consumer protection and very, very powerful
regulation. The subprime crisis has made the necessity for this
absolutely important.
Thank you.
[The prepared statement of Mr. Salisbury can be found on
page 201 of the appendix.]
Ms. Waters. Thank you very much. I will now recognize
myself for 5 minutes for questions. First, to you, Mr.
Salisbury, what was the name of the class that you took when
you were taking this literacy training?
Mr. Salisbury. Business education.
Ms. Waters. Business education. What is the name of the
class today?
Mr. Salisbury. Business education.
Ms. Waters. Do you think people are just not interested
enough and that the class is attractive enough to interest
students but somehow students do not get it?
Mr. Salisbury. Based on the size of the enrollment on a
consistent basis, I suggested to the school that, after so many
years of getting such low enrollment, they might want to get a
marketing approach and re-name the course something that would
get people more aggressively interested in it, something like,
``How to assure that you will be able to buy your iPod, your
BMW, and afford college.''
Ms. Waters. That will do it, how to make money, how to get
the things you want. That is what I was wondering, whether or
not the title of the class was sexy enough.
Let me turn to Mr. Marc Morial. We are concerned about
literacy and not just focused on the subprime crisis, however,
it is a crisis and we have to pay attention to it and try and
figure out what to do to help owners save some of these homes.
One of the things that we have documented is that minority
neighborhoods were targeted. For both you, Mr. Morial and Ms.
Bowdler, the Council of La Raza, are you seeing this in the
community that you serve? Do you have an extraordinary number
of foreclosures? And, if so, what are you doing about it? What
service do you offer, first Mr. Morial?
Mr. Morial. Thank you for the question. We see, and the
evidence is incontrovertible, that there are a high number of
foreclosures in urban and African-American communities. It
stems from the fact that about 50 percent of African Americans
who purchased homes in 2005 and 2006 did so with subprime
mortgages; that is 50 percent compared to about 13 percent in
the overall population.
Second, we have, and the evidence again is
incontrovertible, that many African Americans who could have
qualified for a normal customary fixed 30 year conventional
mortgage, could have qualified, in fact were directed, steered,
pushed, and targeted in a reverse redlining process into these
high interest, subprime mortgages.
What we have done in 2007 is we issued in February of 2007
a Homebuyer Bill of Rights that outlined a number of
recommendations, key are the expansion of homeownership
counseling, and we did about 4,000 cases like that in 2007.
Secondly, urging this Congress to pass a national anti-
predatory lending law to put some future controls on the
excesses and practices that led to this meltdown, as well as a
number of other things. So to answer your question, yes, it has
disproportionately affected African Americans in urban
communities. Yes, we have done a number of things, but we need
to be able to expand dramatically our homeownership counseling
to try to help more people who are in default, who are at risk
of losing their homes to re-negotiate their mortgages and in
order to protect their homes.
Ms. Waters. Ms. Bowdler, what are you doing, what is La
Raza doing?
Ms. Bowdler. I would just echo the comments of Marc, I
think that is exactly right, our communities were clearly
targeted. We have been up here several times talking about
that. We now have a massive counseling effort underway. Our
counselors went from a call a couple of times a week to dozens
upon dozens a day, and they are working at 150 percent to keep
up with that but there are simply not enough counselors out
there on the ground to do this work. They cannot keep up with
it. We need more resources but we also need lenders to come to
the table and servicers to come to the table and do the kind of
loan modifications that we need to make these loans affordable
for these families. Counselors play a really important role for
the most vulnerable families out there. They are not going to
get to see every family that needs this kind of help, so we
need servicer and lender accountability as well.
Ms. Waters. Thank you very much. Ms. Docking, I think you
talked about K through 12 curriculum that has been advanced by
your program, Financial Fitness Foundation?
Ms. Docking. Not advanced--it is a law, it was changed as
part of a Senate bill. We advanced it in terms of just
organizing all the players. By the way, an outstanding
bipartisan effort. I am really proud of everybody in Kansas for
getting that done.
Ms. Waters. I am a little bit curious about what you do
with kindergartners and first graders in teaching financial
literacy, and I am wondering, is the piggy bank obsolete?
Ms. Docking. No, actually, you would be surprised how much
kids like the concept of money because it makes concrete math
and fun math. The piggy bank is not obsolete. May I defer to
Carol Rupe who actually runs our program to answer the
specifics of your question on the curriculum? She is right
there.
Ms. Waters. No, I do not think so. What we will do is we
will ask you to submit that for the record.
Ms. Docking. Alright.
Ms. Waters. We will get that information from you. We are
going to continue with our panelists today because we have to
be out in a certain length of time, so let me just move on.
Ms. Docking. Alright, thank you.
Ms. Waters. Thank you very much. I am going to yield to
Mrs. Biggert for 5 minutes.
Mrs. Biggert. Thank you, Madam Chairwoman, and thank you
all for being here. I am sorry that I missed some of the
testimony, but I will review it. And, Mr. Duvall, it is great
to see you, you have done so much for financial literacy and
have been so active in this. I really appreciate all that you
have done. I would like to ask you, looking at the education,
and we have been since 2003 working on this, and I am really
kind of discouraged in the fact that we are still moving
forward but there is not any great movement for how we are
going to address financial literacy for kids or seniors or
those in between, and we are seeing the mortgage crisis and
people getting into things that they did not understand. So you
are advocating having this financial literacy in the curriculum
in schools, is that correct?
Mr. Duvall. Absolutely, that is the heart of our mission as
you know, Congresswoman Biggert.
Mrs. Biggert. Right.
Mr. Duvall. And we do keep chipping away at it. I have not
gotten discouraged yet. You are seeing more States that are
including economics and personal finance in their requirements.
Mrs. Biggert. That is what I wanted to ask you, about how
many States now have really mandated that for curriculum?
Mr. Duvall. All of the States now include economics, basic
applied economics in their standards for the schools.
Mrs. Biggert. But do the children have to take the course?
Mr. Duvall. No, a smaller number are required to take a
course and only about half the States include personal finance
in their State standards and a smaller number make it a
requirement for graduation.
Mrs. Biggert. Is there anything--we do not want to be the
national school board, and I think we have gotten into a lot of
things through No Child Left Behind and things that maybe we
should have left some of this to the States, so I am cautious
about what we do but how can we show the States and the
educators that this is really an important issue that they
should be teaching? And you have developed materials, it is
right there for them.
Mr. Duvall. I think what is required to change the
situation is to have standards-based materials and then to do
the teacher training that enables the teachers to use those
materials effectively and then to do testing and assessment and
evaluation.
Mrs. Biggert. Do you think that No Child Left Behind is
getting in the way?
Mr. Duvall. Well, it has had what the economists call the
unintended consequence of crowding other subjects besides
reading literacy and math literacy to the side. Efforts have
been made, and you have been a champion of some of those like
the Excellence in Economic Education Act, to restore an
emphasis on economics and personal finance to the core
curriculum. I think that is the way to go for the future to
make a difference is in the re-authorization debate for No
Child Left Behind, to make sure that economic and financial
literacy are not crowded out.
Mrs. Biggert. Thank you. And then, Mr. Salisbury, you talk
about the messages that individuals receive each day to spend
and if need be to borrow, and I suppose we go back to a
generation that is not as visible any more but the ones that
went through the Great Depression. I can remember my husband
telling a story about the fact that he and his mother were
taking the street car, and he had his money and he lost a penny
and so they could not take the street car because that penny
was part of the fare and how those messages--and now we want to
even do away with penny because it is superfluous right now. It
does not add up to anything, I guess is what they are saying,
but what can we do for this message for saving? We have minus
one percent saving in this country, how are we going to
encourage people to save?
Mr. Salisbury. Well, I lost my father last summer just
short of 94. When I went to work at age 13, he said, ``Now, you
save 15 percent of everything you earn and you do that from now
until you quit working and you will be fine.'' That kind of a
message at home is something that is irreplaceable. But as a
practical matter, even as the last panel kept emphasizing as
they are financial industry regulators, we need to consider
what various financial firms do in this area. That is, take any
of those firms and look at what they are spending on financial
education, and then look at what they spend every week on
advertising encouraging people to borrow and spend, and the
amount they spend simply to send me the flow of applications
for credit cards that I do not want each and every month. So I
think part of this is recognizing that, if we want a focus on
savings education and financial literacy, frankly it is going
to happen only if it is mandated. It is only going to happen,
with a Federal Government that is frankly de-regulation
oriented, if there are mandates for consumer protection
legislation and if that effort is intense.
And as a practical matter, a focus on basic financial
education, public service announcements, etc., needs to be
required, not merely encouraged. On the front page of the
Business Section of The Washington Post this morning, it noted,
``Will we keep the consumer spending? They are 70 percent of
the economy.'' If we cannot keep them spending, good gosh, we
will not have growth, every emphasis is on getting people to
borrow and spend, even with the stimulus package--spend your
tax refund, certainly do not put it in an IRA or save it.
So I think it is cultural, it is cultural from the
government on down. As my father, were he still here today
would and did tell me throughout my life, ``They will tell you
to spend it, you cannot spend it until you already have it in
the bank. They want to sell, that is how they make their money.
Recognize it is a self-interested message and look out for
yourself first.''
Mrs. Biggert. Thank you.
Mr. Hinojosa. [presiding] The gentlewoman's time has
expired. We need to continue to expand our discussion but we
must move on. I am delighted to have been given the opportunity
to continue the chairman's work here. I would like to call on
the gentlewoman from New York, Carolyn Maloney, for 5 minutes.
Mrs. Maloney. I thank the gentleman for yielding and for
his deep concern about financial literacy and all of his hard
work, along with Ranking Member Biggert.
I would like to ask Mr. Duvall, your organization's
Economic and Personal Finance Education Report Card on the
Nation's Schools found that only seven States require a
personal finance course as a prerequisite for graduation. NCEE
found that only nine States actually test the students
knowledge of personal finance. What specific initiatives are
your members working on to increase these numbers?
Mr. Duvall. We work on that issue by both advocacy and by
service and delivery. In the advocacy area, our State
organizations, our affiliates in all of the States, try to push
this cause with the State legislatures and with the
decisionmakers for education within the states.
Mrs. Maloney. Are you active in every State, is your
organization active in every State?
Mr. Duvall. Yes, we have a council in every State, some are
stronger than others but evidence of the difference that can be
made was given by my colleague in regard to the State of Kansas
where they have put through legislation that calls for personal
finance being taught and delivered in the schools in the State.
And then in terms of service and delivery, we do the
massive teacher training effort in every State through our 200
university-based centers. We get to the teachers because they
come to the university centers for continuing education credit.
So we are working with K to 12 teachers, 150,000 last year. And
in turn that has a multiplier effect because those teachers
teach several generations of students.
In improving the situation and the national map, I think
both of those things are required, advocacy and service,
working through the school systems and with the teachers and
the school boards and the decisionmakers to really get it into
the schools. One of the challenges is shelf space and the
competing claims for attention within the curriculum. So our
strategy on that is to work by infusion to get basic personal
finance and basic applied economics into the math curriculum,
into the social studies generally, into history, and in science
as well.
Mrs. Maloney. I would like to really ask a question to any
panelists if they would like to respond. I am a former teacher,
and I watch education in my district, I watch it with my
children, I watch it very carefully, and I have noticed, I
believe, and this is my interpretation, I want to make it
clear, it is my own interpretation and not a statistic, that
there is almost an attitude against financial literacy in the
schools. And I cite one school, and my daughter was in this
school actually, and I thought the teacher was great, she was
teaching financial literacy, she divided the kids up into
teams, they were buying stocks, they were investing, they were
studying finance. It was a tremendously exciting interactive
financial learning and one of the parents complained, and they
had it removed from the curriculum. I thought it was
outrageous. But there seems to be an attitude of fighting it.
I am a product of the public school system and in the
public school system when I was growing up, we got a little
bank card and we were encouraged to save, and we got our
allowance and we all saved and some people have criticized that
this ``helps the financial system'' and it has been taken out
of the school curriculum. And to me finance, as all of you have
said, are part of our lives, it is part of our next
generation's lives. It should be required curriculum. Why are
we having so much trouble getting this as part of the
curriculum and in many cases removing it. They have removed the
curriculum that I had as a child. And I just want to open it up
for comments because it seems to be an attitude or something.
And actually the financial curriculum that is taught in my
district, in many cases it is done as an extracurricular
activity, and I have been invited in for a day where they
``teach finance'' today. It is not an integrated part of the
curriculum and there seems to be, and maybe it is my own
interpretation, but they do not even have the little bank cards
anymore that we had in school and this is how you save and this
is how you bank and this is how you use the financial system.
So I would like to open it up for any comments? And my time has
expired, I thank the gentleman.
Mr. Morial. I want to offer an observation and again, this
is a personal observation, I think number one, the foundation
of this Nation's political system is democracy. And it used to
be that we focused and it was required in schools that children
learn civics, the Declaration of Independence, the basis of the
Constitution, the three branches of government. The foundation
of our economic system is the free enterprise system, which is
based on individual and collective choices. Each system is
based on and presumes that citizens have basic knowledge and
information that empowers them to make personal choices. We
have forgotten and walked away from an understanding that this
basic information and preparation is needed and necessary for
people to be able to navigate.
My second point is this, I had an opportunity to teach a
financial education class to high schoolers in Chicago about 2
years ago. I started the class by raising up my cellphone and
asking each high schooler who had a cellphone to raise it up.
Then we went around the room and asked each of them, how much
are you paying for your cellphone? It ranged from $13 a month
to $160 a month. And the students were shocked that they did
not even know, and they felt very cheated that some students
had $13 a month cellphones and some had $170 a month cellphones
because they were falling prey to marketing and aggressive
appeals without even being empowered to ask questions, to
examine choices. The point is that the financial system that
our children live in and we live in today is different than 30
years ago when only wealthy people had credit cards, when there
was one kind of phone bill, one kind of mortgage, and one kind
of way you could purchase a car. There were no leases, open-
end, closed-end, none of the choices that are available. So it
has been positive that there are choices but it also means that
there is potential for abuse. So I think that it requires a
fundamental understanding and a shift in our thinking that
training and preparing young people to make these intelligent
choices is going to improve our system.
And that is an observation of what in fact--I think
sometimes we are stuck in the past in thinking and not
understanding how sophisticated things have gotten. I think
that we do not understand that the fundamental is that an
educated society about its government and about its economic
system is necessary for the overall health, quality, and
performance of our Nation. That is why, for us, when we look at
the disparities that exist in income net worth and jobs, we
recognize that a component of it is to inform and empower
people with knowledge and information. That is not all it
requires but it is fundamental.
Mr. Hinojosa. Thank you, Mr. Morial. The gentlelady's time
has expired. I am going to take the opportunity to ask a few
questions. I am going to start with Ms. Jill Docking and say
that I have enjoyed listening to everyone who has made their
presentations on both panels. I am a little bit happier with
the second panel than the first, so I will probably show you
that by the line of questioning that I am going to use.
It was exciting to hear what has been done in Kansas, and I
commend you for the spirit and the optimism that you have shown
in your presentation. Listening to everyone, I have come to the
conclusion that possibly the reason that Mr. Salisbury gave
that very few students signed up for the elective of business
education is because of the answer that my youngest of four
daughters, oftentimes says, ``Dad, it is because it is
boring.'' When I say something about what is going on in school
and possibly the lack of interest, and that is one of the
common responses of a 12-year-old. I have four daughters and
the youngest one is highly spirited and oftentimes answers
exactly how she feels.
Possibly, Mr. Salisbury, we need to talk about how to take
the boredom out of this subject. And I am going to ask Ms.
Docking if maybe you could answer that question: How can we
make this more exciting like music, like theater, like the
things that our kids like?
Ms. Docking. Yes, Congressman. I would refer you to the
front page of the Wall Street Journal today that has an article
on how they have made accounting fun. It is a little easier to
make financial stuff fun than accounting, and there are all
sorts of programs that are now being used interactively on
cellphones to teach kids in a much more interesting way how to
do this. On our seminars, we specifically, we zeroed in on that
question because we had kids in our audience who were going to
Harvard, and we had kids who might be going to jail, and I am
not kidding because we had full senior classes in large urban
areas, and we had to keep everybody interested.
If I were queen and I were doing this FLEC thing, I would
hire a company, and I think Apia is one of the private
companies, I know there are many that do that interactive, Web-
based teaching. That is how this generation appears to learn,
and I know people who are doing programming with W!SE, you
probably sort of figured that out, haven't you, how to get them
to do it? So I would use we have a lot of very creative private
companies, but is not this FLEC just government-oriented, are
you allowed to use the partnership with private companies to
get that done?
Mr. Hinojosa. Congress can modify FLEC and amend the FACT
Act. If it is not working, we are responsible for making
changes so that it does work, so Congress is pretty powerful.
Ms. Docking. Yes, that answers the question. By the way, as
Congressman Cleaver has come in, Financial Fitness Foundation
has looked intensively at--now that we have gotten it into the
school system, I would love to get it in the churches in Kansas
because there is a lot of curriculum teaching faith-based
financial planning in urban areas inside churches. I know a lot
of teaching goes on, and I can get it from the kid to the mom
and dad to the grandparents, so I think we need to think a
little bit outside of the box. I do not know if Congress can
think that way, but we have been trying to think that way.
Mr. Hinojosa. Thank you. I like your response. I want to
ask some other questions. Yes, Ms. Frankfort?
Ms. Frankfort. I just would like--
Mr. Hinojosa. I cannot hear you.
Ms. Frankfort. I am sorry. I would like to add to what Ms.
Docking said by suggesting that we talk to and have a
conversation with the hundreds of teachers who are very
successful in teaching personal finance. We have a system
whereby we honor teachers who have 90 percent or more passing.
And in most of our schools, we are reaching all the seniors in
a high school, and so we have students who are special
education, we have students who are very bright, students in
difficult economic situations, but they are consistently very
successful. So I think that there should be some kind of
follow-up or discussion with them that might inform and help
answer that question.
Mr. Hinojosa. Thank you for adding your thoughts on that. I
want to forewarn you that Chairman Frank is going to be coming
in a few minutes and taking over the Chair's responsibilities
here, and he let me know earlier that he wants to have some
follow-up, in other words, what is next, be thinking about
answers to his questions because we think that we have heard
some very valuable information here from all of the panelists
but now what we need to know are what are the next two or three
steps we need to take to be able to turn this around and make
it work because we are in a crisis?
And, finally, I want to conclude my questioning by saying
to Ms. Bowdler thank you for coming in place of Ms. Janet
Murigua. I think those of you who addressed the limited
English-proficient population and those who are so challenged
because of low-income families, as you did Mr. Morial, I think
that it is like teachers who are asked to go to neighborhood
schools where 80 and 90 percent of the children qualify for the
free lunch program because in those schools, they oftentimes
are the ones who are scoring the lowest on standardized tests,
not because they are not smart, it is because our programs just
are not designed to really help the children who remind me the
theory of a great pair of educators known as the Cardinas and
Cardinas' ``Theory of Incompatibility,'' and I said, ``What in
the world is that?'' They said, ``That is where you try to take
a square peg and put it into a round hole,'' and that I think
is happening in our public schools and certainly is a serious
problem. I am not going to ask any more questions because there
are some of my colleagues who would love to have time to ask
their questions, so now I would like to recognize the gentleman
from New York, Congressman Greg Meeks.
Mr. Meeks. Thank you, Mr. Chairman. Let me ask this
question because I am concerned, in my community and all across
America, we had a program in the Congressional Black Caucus
called WOW, With Ownership Wealth. We just a very short period
of time we were telling everybody to buy a home. Why? Because
our home is an appreciating asset and we were urging folks to
buy homes and take advantage of these products, etc., and I
don't know whether or not we were doing the proper kind of
counseling or training even while were doing that, just urging
folks to buy a home and they were doing it, and now we have
this terrible crisis. Let me ask Mr. Morial first with the
Urban League, I know that you are in Nashville and you are
doing a lot counseling in different places, could you tell me
the difference between what you provide to communities as the
counseling is concerned what NeighborWorks does and whether or
not your services are the same or not, can you give me an idea
on that?
Mr. Morial. Thank you, Congressman Meeks, and I appreciate
your question and certainly your leadership and advocacy. There
is a great deal of compatibility with what others may do and
what we may do with this distinction. We not only help people
with homeownership education and counseling, we provide job
training, job placement, and a broad array of services through
our affiliates from coast to coast. So if a person is behind on
a mortgage, for example, and one of the challenges is that they
may have lost their job, then our approach would be not only to
assist them in re-negotiating with the mortgage holder but to
assist them with job placement. So it is a case management
approach that the Urban League has employed now for its almost
100 years of existence.
Secondly and very importantly, our affiliate offices are
located in the communities that we serve. By and large, we are
located in the neighborhood, near to the constituency that we
serve, not an access by going downtown or going across town but
in the communities that we serve. And we think that the
proximity of financial education, homeownership education and
homeownership counseling services to neighborhoods is a very
important part of the delivery system. If we are going to
expand the availability of financial education and
homeownership counseling, it has to be provided through
multiple sites and multiple locations. Schools, yes; faith-
based, yes; community-based, yes, and we are a community-based
organization that does that.
Ms. Bowdler. Thank you for your question, and I want to
respond to one of the comments that you made in your opening
about what were counselors out there doing? We told them to go
out and buy homes and now where are they at? The role of a
housing counselor has always been and continues to be an
independent advocate for that family. And what counselors do is
they take a family in, they make a financial assessment, and
they put them on a track. Their goal is to put that family in a
situation where they are getting a home for long-term
sustainability. So from our perspective, the question is not
just should a family buy a home, it is when should they buy a
home and when are they ready, which is why you see families
that have gone through counseling programs like NCLR or Urban
League perform much better. And we are talking about low-income
borrowers who got prime products, who were the prime targets
for all of the subprime mess that are now performing very well.
It is that kind of success that we would advocate that you need
to replicate in the area of financial counseling.
The fact of the matter is that affluent families, whether
or not you went to a class in high school, need this kind of
service; they need financial advice. They go out and purchase
it, they pay somebody to tell them what to do with their money.
Low-income folks who have even less resources and less means
have even more of a need to know exactly what to do with each
one of their hard-earned precious dollars. And so we would
advocate for a similar kind of independent financial counselor
that could provide free or low-cost advice to families as they
are about to make major purchases, not just homes but credit
cards, open your bank accounts or get your tax credit back.
Mr. Meek. That is exactly right because sometimes when
folks go through counseling, you do not get into the larger
credit issue to understanding. That is one of the questions I
wanted to ask you and maybe Mr. Morial and the others, when you
counsel individuals do you go into the other credit aspects
because a lot of people do not understand credit and look into
further their financial needs, etc., is that part and parcel of
the model that you use when you counsel with them because I
know when I have had individuals come into my office and had
some counseling, they did not go into it at all. And I was just
wondering whether your two organizations would do something of
that nature?
Mr. Morial. If I can, I think, as I shared earlier, because
we take a holistic approach, the way we would approach it is to
provide and sort of deal with all of the family or all of the
client's issues, challenges, and problems. If you do financial
education/homeownership counseling in the correct way, then it
is holistic. It is not just narrowly tailored, and that is why
providing the service through a trusted community-based
organization like the National Urban League and its affiliates,
like the National Council of La Raza and its affiliates or
faith-based is much different than if it is provided by a
mortgage broker, a mortgage company, a financial services
company, a real estate concern whose only emphasis is to try to
get a person into a home now versus helping the person prepare
themselves financially for asset building and certainly
ultimately to get into a home at the right time and on the
right terms and under the right circumstances so that they can
sustain that asset.
Mr. Hinojosa. The gentleman's time has expired, and I have
been told that another committee is coming in at 1:30. Being
that the chairman has not returned, I am going to ask the
question that he said he would be asking you, and that is, what
are the next steps? I apologize, Mr. Cleaver, that I am not
going to give you the 5 minutes that you are entitled to, but I
guarantee you that you are going to like the answers that you
are going to hear because being that I have to be out of here,
I am going to give each one of you 1 minute, and only 1 minute,
to answer the question, what are the next steps that we should
take to turn this thing around and say as a result of panel one
and panel two, we have found the answers to turn this around
and make it better. So I will start with you, Mr. Salisbury.
You have 1 minute.
Mr. Salisbury. Number one, Congress recognizing, in spite
of State education requirements, that the No Child Left Behind
program should include a mandate that some type of financial
literacy education be a part of every curriculum in the United
States. Secondly, I think that--
Mr. Hinojosa. Do not give me two, just give me that one.
Thank you. Ms. Frankfort?
Ms. Frankfort. And, secondly, the legislation that creates
this mandate should also include funding to support the rapid
expansion of that which works because there are initiatives
that are very effective, whether it is the counseling or a
program in a high school but resources are required to make
that happen.
Ms. Bowdler. Yes, I would say that we need to expand the
incentives that we offer to affluent and upper-income families
to save and get financial advice to low-income families. There
is no reason why low-income families should somehow be held to
a higher standard of financial literacy, to sort of inherently
know how to invest their money and so they need those same
incentives.
Mr. Hinojosa. Thank you. Mr. Brobeck?
Mr. Brobeck. All or most of us, I think, need to join
together behind a very high impact initiative, and I cannot
think of a more effective initiative than all of us encouraging
all Americans annually to assess our financial condition and
take any remedial steps, and to provide the tools and
encouragement to Americans to perform that assessment.
Mr. Hinojosa. Thank you.
Ms. Docking. If I only had one extra dollar, I would spend
it on getting teachers in the K through 12 curriculum, as well
as post-secondary, educated on personal finance with continuing
education.
Mr. Hinojosa. Thank you.
Mr. Morial. For this committee and this Congress to lead a
broad, national partnership between the public, private, and
not-for-profit sectors to develop a womb-to-tomb system of
financial education, which has as its goal helping all
Americans increase their net worth and build assets and close
the wealth gap.
Mr. Hinojosa. Thank you. Mr. Duvall?
Mr. Duvall. Legislation that makes it a mandate that
personal finance, financial decisionmaking skills will be
taught in the Nation's schools, K to 12, and then a massive
program for teacher training and professional development for
teachers so they can do that.
Mr. Hinojosa. Thank you. We did it in record time, and so I
am going to do exactly what I said earlier, Congress is
powerful and can do whatever they want, I am going to recognize
Congressman Cleaver so that he can have his 5 minutes.
[Laughter]
Mr. Cleaver. Thank you, Mr. Hinojosa. Frankly, the panel
has already responded to the questions that I had planned to
ask. And, like you, Mr. Chairman, I appreciate this panel,
appreciate the fact that the others came, appreciate the
testimony from this panel. One out of four Americans tragically
and painfully are unable to lay out for themselves or anyone
else how they are going to manage their money and most of them
according to polls, a Nielsen poll, they cannot even tell you
whether or not they will have extra money at the end of the
month. And so I appreciate your presence here today and the
information has been valuable. Thank you.
Mr. Hinojosa. Thank you. 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. With that, I declare that this hearing
is adjourned, and we thank you.
[Whereupon, at 1:30 p.m., the hearing was adjourned.]
A P P E N D I X
April 15, 2008
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