[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]



 
                  EMPOWERING CONSUMERS: CAN FINANCIAL
                       LITERACY EDUCATION PREVENT
                       ANOTHER FINANCIAL CRISIS?

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

                             FIELD HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                      OVERSIGHT AND INVESTIGATIONS

                                 OF THE

                    COMMITTEE ON FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             SECOND SESSION

                               __________

                            AUGUST 24, 2010

                               __________

       Printed for the use of the Committee on Financial Services

                           Serial No. 111-152



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                 HOUSE COMMITTEE ON FINANCIAL SERVICES

                 BARNEY FRANK, Massachusetts, Chairman

PAUL E. KANJORSKI, Pennsylvania      SPENCER BACHUS, Alabama
MAXINE WATERS, California            MICHAEL N. CASTLE, Delaware
CAROLYN B. MALONEY, New York         PETER T. KING, New York
LUIS V. GUTIERREZ, Illinois          EDWARD R. ROYCE, California
NYDIA M. VELAZQUEZ, New York         FRANK D. LUCAS, Oklahoma
MELVIN L. WATT, North Carolina       RON PAUL, Texas
GARY L. ACKERMAN, New York           DONALD A. MANZULLO, Illinois
BRAD SHERMAN, California             WALTER B. JONES, Jr., North 
GREGORY W. MEEKS, New York               Carolina
DENNIS MOORE, Kansas                 JUDY BIGGERT, Illinois
MICHAEL E. CAPUANO, Massachusetts    GARY G. MILLER, California
RUBEN HINOJOSA, Texas                SHELLEY MOORE CAPITO, West 
WM. LACY CLAY, Missouri                  Virginia
CAROLYN McCARTHY, New York           JEB HENSARLING, Texas
JOE BACA, California                 SCOTT GARRETT, New Jersey
STEPHEN F. LYNCH, Massachusetts      J. GRESHAM BARRETT, South Carolina
BRAD MILLER, North Carolina          JIM GERLACH, Pennsylvania
DAVID SCOTT, Georgia                 RANDY NEUGEBAUER, Texas
AL GREEN, Texas                      TOM PRICE, Georgia
EMANUEL CLEAVER, Missouri            PATRICK T. McHENRY, North Carolina
MELISSA L. BEAN, Illinois            JOHN CAMPBELL, California
GWEN MOORE, Wisconsin                ADAM PUTNAM, Florida
PAUL W. HODES, New Hampshire         MICHELE BACHMANN, Minnesota
KEITH ELLISON, Minnesota             KENNY MARCHANT, Texas
RON KLEIN, Florida                   THADDEUS G. McCOTTER, Michigan
CHARLES WILSON, Ohio                 KEVIN McCARTHY, California
ED PERLMUTTER, Colorado              BILL POSEY, Florida
JOE DONNELLY, Indiana                LYNN JENKINS, Kansas
BILL FOSTER, Illinois                CHRISTOPHER LEE, New York
ANDRE CARSON, Indiana                ERIK PAULSEN, Minnesota
JACKIE SPEIER, California            LEONARD LANCE, New Jersey
TRAVIS CHILDERS, Mississippi
WALT MINNICK, Idaho
JOHN ADLER, New Jersey
MARY JO KILROY, Ohio
STEVE DRIEHAUS, Ohio
SUZANNE KOSMAS, Florida
ALAN GRAYSON, Florida
JIM HIMES, Connecticut
GARY PETERS, Michigan
DAN MAFFEI, New York

        Jeanne M. Roslanowick, Staff Director and Chief Counsel
              Subcommittee on Oversight and Investigations

                     DENNIS MOORE, Kansas, Chairman

STEPHEN F. LYNCH, Massachusetts      JUDY BIGGERT, Illinois
RON KLEIN, Florida                   PATRICK T. McHENRY, North Carolina
JACKIE SPEIER, California            RON PAUL, Texas
GWEN MOORE, Wisconsin                MICHELE BACHMANN, Minnesota
JOHN ADLER, New Jersey               CHRISTOPHER LEE, New York
MARY JO KILROY, Ohio                 ERIK PAULSEN, Minnesota
STEVE DRIEHAUS, Ohio
ALAN GRAYSON, Florida


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on:
    August 24, 2010..............................................     1
Appendix:
    August 24, 2010..............................................    37

                               WITNESSES
                        Tuesday, August 24, 2010

Glendening, Hon. Kevin, Deputy Commissioner, Consumer and 
  Mortgage Lending Division, Office of the State Bank 
  Commissioner, State of Kansas..................................    12
McKinney, Hon. Dennis, Treasurer, State of Kansas................     4
Mitchell, Shawn P., President and Chief Executive Officer, 
  Community Bankers Association of Kansas........................    27
Petty, Taylor, Master's in accounting student, University of 
  Kansas.........................................................    21
Praeger, Hon. Sandy, Commissioner of Insurance, State of Kansas..     6
Smith, Hon. John P., Administrator, Kansas Department of Credit 
  Unions.........................................................     8
Tuttle, Kathryn Nemeth, Vice Provost for Student Success, 
  University of Kansas...........................................    23
Voyles, Gayle, Director, University of Missouri-Kansas City 
  Center for Economic Education..................................    25
Wilson, Hon. Marc S., Securities Commissioner, State of Kansas...    10
Wolgamott, Chris, Community Development Liaison, Meritrust Credit 
  Union..........................................................    29

                                APPENDIX

Prepared statements:
    Moore, Hon. Dennis...........................................    38
    Hinojosa, Hon. Ruben.........................................    39
    Glendening, Hon. Kevin.......................................    41
    McKinney, Hon. Dennis........................................    46
    Mitchell, Shawn P............................................    51
    Petty, Taylor................................................    56
    Praeger, Hon. Sandy..........................................    61
    Smith, Hon. John P...........................................    65
    Tuttle, Kathryn Nemeth.......................................    73
    Voyles, Gayle,...............................................    77
    Wilson, Hon. Marc S..........................................    81
    Wolgamott, Chris.............................................    92

              Additional Material Submitted for the Record

Moore, Hon. Dennis:
    Written statement of the Financial Education and Counseling 
      Alliance...................................................    95
    Letter from the National Association of Federal Credit Unions 
      (NAFCU)....................................................   102
    Written statement of Dennis M. Dice, CEO, NavPoint Institute 
      for Financial Literacy.....................................   103


                  EMPOWERING CONSUMERS: CAN FINANCIAL
                       LITERACY EDUCATION PREVENT
                       ANOTHER FINANCIAL CRISIS?

                              ----------                              


                        Tuesday, August 24, 2010

             U.S. House of Representatives,
                          Subcommittee on Oversight
                                and Investigations,
                           Committee on Financial Services,
                                                   Washington, D.C.
    The subcommittee met, pursuant to notice, at 10:05 a.m., in 
the Simons Media Room, The Robert J. Dole Institute of 
Politics, University of Kansas, 2350 Petefish Drive, Lawrence, 
Kansas, Hon. Dennis Moore [chairman of the subcommittee] 
presiding.
    Members present: Representatives Moore and Jenkins.
    Chairman Moore of Kansas. Good morning. This field hearing 
of the Subcommittee on Oversight and Investigations of the 
House Financial Services Committee will come to order. Our 
hearing today is entitled, ``Empowering Consumers: Can 
Financial Literacy Education Prevent another Financial 
Crisis?'' Inspired from the April 6, 2009, Time magazine cover, 
``The End of Excess: Why this Crisis is Good for America,'' 
this is the third and final hearing in a series where we look 
at key issues that may not be receiving enough attention 
following the recent financial crisis so we can learn more and 
work towards a stronger and more stable financial system.
    Before we begin with the formal proceedings, I want to take 
a moment of personal privilege to first thank Dole Institute 
Director Bill Lacy and the staff here for hosting today's field 
hearing, as well as my alma mater, the University of Kansas 
Chancellor, Chancellor Bernadette Gray-Little, and all the 
students, faculty, and staff who make this one of the finest 
places for higher education in the country.
    I also want to thank the other member, Representative Lynn 
Jenkins from the 2nd District of Kansas, who has taken time to 
be here today. I really appreciate that.
    This is our second hearing. As some of you know, we had one 
yesterday.
    We will begin this hearing with members' opening 
statements, up to 10 minutes per side. Then, we will hear 
testimony from our witnesses. For each witness panel, members 
will each have up to 5 minutes to question our witnesses. The 
Chair advises our witnesses to please keep your opening 
statements to 5 minutes to keep things moving so we can get to 
member questions.
    Without objection, members' opening statements will be made 
a part of the record and I now recognize myself for 5 minutes 
for an opening statement.
    Our economy continues to slowly recover following the worst 
financial crisis we have seen in generations. Everyone knows, 
whether you are a Democrat or a Republican, that lax oversight 
and poor regulation of our financial system for too many years 
sowed the seeds of a near collapse of our entire economy, the 
worst of its kind since the Great Depression.
    And who paid the price for these mistakes? Unfortunately, 
it was not those ``too-big-to-fail'' firms on Wall Street, but 
rather our constituents and businesses here in Kansas and 
across the country. American households lost about $14 trillion 
in net worth over the course of 2 years--$14 trillion. 
Retirement accounts saw an over 20 percent decline in value, 
forcing many Americans to delay their retirement. Millions of 
Americans lost their homes through foreclosure. Bernie Madoff's 
Ponzi scheme defrauded $65 billion from investors.
    Given the economic damage we did suffer, it is not 
surprising that many Americans have lost their faith in our 
financial system. This is why I was proud to work with my 
colleagues on the House Financial Services Committee and in 
Congress in drafting the Dodd-Frank Wall Street Reform and 
Consumer Protection Act that the President recently signed into 
law.
    A key lesson that we have learned from the financial crisis 
is that we need to do a better job across sectors--local, 
State, and Federal Governments, private industry, nonprofits--
to utilize scarce resources to better promote financial 
literacy education.
    That is why I am glad the Dodd-Frank Act includes some 
less-noticed provisions that will aid in this effort. A key 
provision creates an Office of Financial Education--imagine 
that, an Office of Financial Education--within the newly 
created Bureau of Consumer Financial Protection. This office 
will be responsible for ``developing and implementing 
initiatives intended to educate and empower consumers to make 
better informed financial decisions.'' The new law also 
establishes in the Department of Housing and Urban Development 
an Office of Housing Counseling, which will conduct activities 
relating to homeownership and rental housing counseling.
    Additionally, the Financial Literacy and Education 
Commission recently announced the launch of its redesigned 
financial literacy education Web site, which can be found at 
www.mymoney.gov. The new Web site provides new calculators and 
checklists to assist individuals and families with savings and 
various life events with financial implications.
    There are other examples of what is happening to promote 
financial literacy on the Federal level, but today we will hear 
from State regulators here in Kansas and efforts they are 
taking to promote financial literacy. We will also hear from 
representatives in the education and local financial community 
to learn what projects work best to strengthen financial 
literacy. I look forward to hearing from our witnesses on this 
very, very important issue.
    Will better financial literacy, on its own, prevent the 
next financial crisis? Maybe not, but I know if we do not do a 
better job of promoting financial education, we only increase 
the likelihood of another crisis. I hope that with today's 
hearing, we can begin to explore ways in which the Federal 
Government can be a better partner with State and local 
governments, and others, to provide the education and resources 
everyone needs to make better financial decisions.
    I now recognize for up to 10 minutes Representative Lynn 
Jenkins, a member of the House Financial Services Committee; 
and thank you for being here with us today, Lynn.
    Ms. Jenkins. Thank you, Chairman Moore, and thank you for 
holding this hearing on a very important topic. I, too, would 
like to thank KU and our panelists and the individuals who have 
taken the time to come out this morning.
    And I would like to welcome everybody to the 2nd District, 
even if it is by just about 100 yards.
    [laughter]
    Ms. Jenkins. Financial literacy is such an important issue 
and I am proud of these elected officials and the industry 
professionals represented here today for their good work in 
partnering with one another in an effort to better educate 
Kansans on their financial health.
    As a certified public accountant, a former lawmaker, and a 
former State Treasurer, I understand firsthand the significance 
of financial literacy. It is an issue that is near and dear to 
my heart and one that I continue to have a personal passion 
for. CPAs have a long history of helping people take control of 
their financial future, and it was during my tenure on the 
Board of Directors of the Kansas Society of CPAs that I 
received my initial introduction to the critical importance of 
educating the public on fiscal issues through programs like one 
called ``360 Degrees of Financial Literacy'' and the ``Feed the 
Pig'' initiative which was originated by CPAs across the 
Nation. We created programs in which individuals might increase 
their financial literacy.
    My interest was further peaked when I was elected to the 
legislature where Jill Dawkin and a group of folks brought the 
issue of financial literacy to our attention in our education 
committee. Their good work raised awareness among individuals 
in the State House on the importance of education and financial 
skills. And finally, during my time in the State Treasurer's 
office and as president of the National Association of State 
Treasurers, we had the privilege of learning even more about 
the needs of cradle-to-grave financial education and that 
approach.
    It was such a thrill to see organizations like the Kansas 
Credit Unions step up to the plate in a big way to help us 
create programs that addressed the needs of Kansans. And upon 
my election to Congress, I immediately joined the Financial and 
Economic Literacy Caucus, whose goal is to promote financial 
education. And I co-sponsored legislation promoting Financial 
Literacy Month.
    I look forward to learning of additional ways that the 
Federal Government can encourage this panel working together 
with us to continue the good work that has been started. And I 
believe we must continue to promote strong financial literacy 
programs that are aimed at educating individuals and helping 
them take control of their financial destiny.
    I look forward to hearing from today's witnesses on 
successful programs that they have used to promote financial 
literacy and other ideas our witnesses might have for tying 
together the patchwork of programs at the local, State, and 
Federal level to ensure Americans are receiving the information 
that they need.
    With that, I thank you, Mr. Chairman, and I yield back the 
balance of my time.
    Chairman Moore of Kansas. Thank you to my colleague.
    And I am now pleased to introduce our first panel of 
witnesses: Dennis McKinney, Treasurer, State of Kansas; Sandy 
Praeger, Commissioner, Kansas Insurance Department; John P. 
Smith, Administrator, Kansas Department of Credit Unions; Marc 
Wilson, Securities Commissioner, State of Kansas; and Kevin 
Glendening, Deputy Commissioner, Consumer and Mortgage Lending 
Division, Office of the State Bank Commissioner, State of 
Kansas.
    Without objection, your written statements will be made a 
part of the record.
    Treasurer McKinney, you are now recognized for up to 5 
minutes to provide a brief summary of your written statement.

STATEMENT OF THE HONORABLE DENNIS McKINNEY, TREASURER, STATE OF 
                             KANSAS

    Mr. McKinney. Thank you, Mr. Chairman. I know to a great 
extent, I am preaching to the choir here, because some of these 
programs in our office were started by my predecessor, then-
State Treasurer Lynn Jenkins.
    As State Treasurer, I believe financial literacy is a 
national priority. And as a result, my office provides a 
variety of financial literacy programs to Kansans of all ages. 
Among other initiatives, we offer an in-school savings program 
and financial management workshops for grade school and middle 
school aged students. We also host financial seminars and 
online resources for adults. These programs are a great 
resource to Kansas teachers, students, and families. Our goal 
is to help hard-working Kansans save, invest, and grow to 
create more opportunities to improve families and communities 
across Kansas. I might add that in doing this, we try to 
partner as often as we can with other organizations such as in-
State agencies, as often as we can, to get connections within 
the communities. Our largest partner has been the Kansas Credit 
Unions.
    The Save@School program provides the early education that 
is critical in shaping young minds in financial management. 
With the leadership of educators and the cooperation of local 
financial institutions, this program is reaching thousands of 
students across Kansas. The curriculum for the Save@School 
program is designed to make students aware of the benefits of 
saving, encourage good habits relating to saving and spending, 
and carry over to the student's family as a way to make 
positive changes in their own financial lives.
    The Save@School program joins the State Treasurer's office, 
local financial institutions, and schools with the common goal 
of teaching children so that they become educated consumers who 
will make responsible financial decisions in the future. 
Participants open savings accounts and make deposits to their 
accounts on scheduled savings days at their school. The 
students learn the importance of savings through hands-on 
experience and classroom exercises with the guidance of an 
employee of the financial institution and the curriculum 
provided by the State Treasurer's Office. This curriculum 
aligns with current Kansas State mathematics standards.
    The Treasurer's LIFE reading list provides lessons on cost-
benefit analysis, barter and exchange, having a job, having and 
earning money, and saving techniques for kids from preschool 
through high school. This list is designed to get kids to begin 
thinking about and engaging in dialogue on some basic financial 
concepts.
    As State Treasurer and as a parent myself, I recommend that 
parents talk to their children about finances early and often. 
Reading these books to kids is a great way to communicate the 
message of financial responsibility and get those conversations 
started. I appreciate the important role that parents and 
caregivers play in shaping our children's future. I would just 
quickly add that some of us like Congresswoman Jenkins and 
myself had the advantage of 4-H experience, which many of our 
students do not have today.
    Another initiative at the Treasurer's office for parents 
and children is the Kansas Investments Developing Scholars 
programs. This is a unique opportunity for Kansas families who 
want to begin planning for their child's education beyond high 
school but may need some assistance to make the goal of saving 
a reality.
    The K.I.D.S. matching grant program will match the first 
$600 that participants contribute to a Learning Quest 529 
Education Savings Program account each year that they are 
eligible. K.I.D.S. was developed for families with incomes less 
than 200 percent of the Federal poverty level. To be eligible, 
participants must be Kansas residents. Whether it is community 
college, technical schools or university, the challenge of 
paying for a child's education will only increase in the 
future.
    We reach the middle school students through a one-day 
workshop called Money$mart Financial Management. This event was 
created specifically for Kansas middle school students. 
Money$mart is designed to offer middle school students training 
in sound personal financial philosophies.
    The ABCs of Credit Card Finance is a program aimed at 
educating high school seniors and young adults entering 
college. It was created by the Center for Student Credit Card 
Education and instructs students how to wisely choose and 
responsibly use a credit card.
    The Treasurer's office provides seminars specifically for 
women and for seniors. In 2009, we were a strong partner on the 
Women & Money Coalition and we sponsored an 8-week series for 
90 women to gain control over their finances. This was hosted 
at Washburn University in Topeka.
    Partnering with a number of organizations, we have offered 
financial literacy programs in Topeka starting with State 
employees as a pilot project. Based on the success of these 
pilot sessions, we have decided to expand these opportunities 
to other people in Kansas.
    You asked the question, what kinds of programs have worked 
well in promoting greater financial literacy? The best programs 
are the ones that can entertain the participants as well as 
educate them. Students of all ages consider finances a boring 
topic. But money is fun to talk about. Once the word finance or 
budget is mentioned, eyes start glazing over. So our folks work 
hard to try engage the students and make the topic fun and then 
it is easier for the learning to take place.
    That is one of the goals in the Money$mart Program where we 
also engage college age students in helping with the program 
because college age students quite often find it easier to get 
the interest and attention of middle school students and talk 
to them about what they need to do to prepare for college as 
well as prepare for better financial management.
    You also posed the question, how can we coordinate efforts 
at the local, State, and national levels? The Jump$tart 
Coalition is a big step in the right direction. The national 
Jump$tart encourages public and private entities to come 
together with the purpose of promoting and teaching financial 
education. Their primary audience is children, pre-kindergarten 
through college age youth. In Kansas, the Jump$tart Coalition 
for Personal Financial Literacy has taken that a step further 
to include Kansans of all ages (pre-kindergarten through senior 
citizens). The Coalition efforts encourage partners to work 
together, combining resources and creating win-wins for the 
citizens of our State. I would also add the Kansas State 
Department of Education has been a great partner and is 
expanding their efforts and we are working with them to be sure 
that we are coordinated to provide all the resources our office 
has to offer as they seek to increase financial literacy 
through our public schools in Kansas.
    Thank you.
    [The prepared statement of Mr. McKinney can be found on 
page 46 of the appendix.]
    Chairman Moore of Kansas. Thank you, sir.
    Next, the Chair will recognize Commissioner Praeger for up 
to 5 minutes.

   STATEMENT OF THE HONORABLE SANDY PRAEGER, COMMISSIONER OF 
                   INSURANCE, STATE OF KANSAS

    Ms. Praeger. Thank you, Mr. Chairman, and members of the 
House Financial Services Oversight and Investigations 
Subcommittee, and especially Congresswoman Jenkins, 
distinguished guests and audience members, and my fellow panel 
members. I am Sandy Praeger, the Insurance Commissioner for the 
State of Kansas, and I have served in that capacity since being 
elected in 2002. I am pleased to testify before the committee 
on empowering consumers with financial literacy education in 
order to prevent another financial crisis, and especially on 
the necessity of including insurance information for consumers 
in any such initiative.
    The Kansas Insurance Department's mission is threefold: to 
regulate insurance companies; to educate consumers about 
insurance issues; and to advocate for consumers when needed. So 
it is the educational aspect of our mission that I am here to 
promote and talk about today.
    The need for financial education, especially among youth, 
is always important. However, the earliest segments of those 
activities often focus on saving and spending wisely, both 
parts of financial freedom.
    These are tangible financial ideas. They teach a child to 
save his or her money early, and then the money will be 
available for them when he or she needs it. By teaching them to 
shop wisely and compare quality, price, and the need for those 
particular items, when you do that, the money-saving cycle is 
repeated and extended.
    It has long been my belief that any educational component 
of financial literacy has to contain a segment on insurance. 
The idea of spending money to avert risk is a more abstract 
concept and sometimes harder to convey. It is hard for young 
people to understand that you spend money buying insurance 
without receiving any kind of immediate gratification for your 
expenditure. Probably the best example is when they want to own 
a car and then have to understand that buying the car is just 
the first price, it is also the gasoline, the maintenance and 
the insurance. So that is a little tougher concept to get 
across. The need for immediacy in our youth carries over into 
adulthood, with unfortunate consequences when it comes to 
understanding insurance.
    Surveys from our National Association of Insurance 
Commissioners, the NAIC, have shown that 60 percent of adults 
cannot answer even basic questions about insurance correctly.
    Add to that the ever-increasing bombardment of financial 
offers to the general public and it is no wonder that money 
management skills, especially when it comes to insurance 
topics, are misunderstood and misused.
    The NAIC, which I am a member of, has responded to the need 
for increased consumer insurance awareness through its Insure U 
program. Insure U is an online educational curriculum 
customized for consumers in eight different life stages 
beginning with young adults with young families, progressing to 
mature families and empty nesters on into grandparents as 
parents, military--a whole variety of questions and answers 
that relate to those different life stages.
    At InsureU.org, the program includes a basic introduction 
to the four major types of insurance--auto, home, health, and 
life--as they pertain to people at different ages and in these 
different life situations. Consumers can test their knowledge 
about insurance by taking an online quiz. Since its inception 
in 2006, Insure U has achieved national media and Web site 
attention and is promoted heavily by State insurance 
departments.
    Our own Kansas Insurance Department, as part of our 
continuing consumer education priority, has made its insurance 
experts available throughout the State through speaker 
presentations and exhibits. We have been to more than half of 
the State's counties in just the last 2 years, making 
presentations on insurance issues to a variety of audiences. 
Annually, our State fair booth in Hutchinson gives our 
department instant access to fairgoers and Kansans from across 
the State.
    Our Assistant Commissioner, Bob Tomlinson, who is a former 
teacher, has made understanding insurance for young people a 
personal project. He has developed many presentations for high 
school youth on insurance, and has spoken to dozens of high 
school classes.
    And finally, our Government and Public Affairs Division 
with the department is responsible for producing and 
maintaining more than 30 publications and brochures on all 
aspects of consumer insurance information. We even make an 
educational coloring book available that explains basic 
insurance concepts to kids.
    The Kansas Insurance Department and the NAIC are working to 
help Kansas consumers of all ages become literate in insurance 
matters. But, there is still more work to be done. If we can 
collaborate with other agencies--and we have done that--and 
organizations in getting the word out, then we are certainly 
open to doing even more.
    Successful financial literacy education needs to be 
available through designated lifelong learning environments. 
Emphasis on basics in the elementary school classroom, followed 
by advanced high school curriculum and continuing refresher 
courses in adult life would be ideal. Increased public/private 
partnerships should be emphasized. There are many insurance 
education foundations in the United States, but they need more 
of a coordinated effort to be really successful.
    So thank you, Congressman Moore and Congresswoman Jenkins, 
for the opportunity to be part of this subcommittee hearing. 
Please call on me or our department and staff any time to 
assist you in promoting financial literacy.
    [The prepared statement of Commissioner Praeger can be 
found on page 61 of the appendix.]
    Chairman Moore of Kansas. Thank you, Commissioner Praeger.
    Mr. Smith, Administrator Smith, you are recognized for 5 
minutes, sir.

STATEMENT OF THE HONORABLE JOHN P. SMITH, ADMINISTRATOR, KANSAS 
                  DEPARTMENT OF CREDIT UNIONS

    Mr. Smith. Chairman Moore and Representative Jenkins, I am 
John P. Smith, the Administrator for the Kansas Department of 
Credit Unions. I appreciate the opportunity today to appear 
before the subcommittee. My credit union background includes 21 
years as a volunteer credit union board member prior to 
appointments as a credit union regulator; first, in 1993, by 
Governor Joan Finney, as Administrator of the Department of 
Credit Unions and then in 1999, I was appointed by Governor Mel 
Carnahan as Director of the Missouri Division of Credit Unions. 
I returned to Kansas in 2006 to accept the appointment as 
Administrator again from Governor Sebelius.
    The Kansas Department of Credit Unions is the State credit 
union financial regulatory agency authorized by the Kansas 
legislature to provide for management, control, regulation, and 
general supervision of State-chartered Kansas credit unions.
    The department is fully funded as a fee fund agency, 
operating solely on the revenue produced through fees collected 
from State-chartered credit unions examined and returned by the 
agency.
    The department supervises and examines 82 natural person 
credit unions and one corporate credit union. As of March 31st 
of this year, total assets in Kansas chartered credit unions 
were about $3.9 billion. Total credit union membership is 
538,983 or roughly 21 to 22 percent of Kansas' population 
belongs to a credit union. The largest Kansas chartered credit 
union has $659 million in asset; the smallest has $160,000. The 
5 largest credit unions make up about 44 percent of the total 
assets while the 10 largest make up 64 percent of the assets.
    I quote these statistics to point out that most of our 
credit unions are small in assets and, therefore, they have to 
follow generally the same regulations that the larger credit 
unions do.
    I should also mention that Kansas has 21 federally-
chartered credit unions regulated and examined by the National 
Credit Union Administration, or NCUA.
    Share deposits in Kansas credit unions are federally 
insured up to $250,000 per account through the National Credit 
Union Share Insurance Fund, which is an arm of the NCUA.
    In addition to examinations, the statutes and regulations 
provide for the department to grant new charters, merge and 
liquidate credit unions when necessary, and handle consumer 
complaints.
    Most importantly, credit unions are member-owned 
cooperatives. Their boards and committees are non-paid 
volunteer members.
    As a regulatory agency, the department has no mandate by 
law to provide financial literacy education, nor have we been 
asked to do so. However, we do recognize the importance of 
financial literacy in a variety of ways. The consumer resources 
section of our Web site has links to the consumer protection 
laws and a brief description of each law. As these are listed 
in my written testimony, I will not take the time to go through 
them, but they are there for the use of consumers.
    I want to next turn to financial literacy. In preparation 
for the testimony today, since we do not have a mandate, I did 
contact some of our credit unions and asked them what they are 
doing as far as financial literacy and I included a synopsis of 
what was reported to me from a sampling of our credit unions in 
our written testimony. Many of them are involved with the 
programs by the State Treasurer's office that began when 
Representative Jenkins was State Treasurer and continue on 
under the current State Treasurer. Several credit unions as 
well as the Kansas Credit Union Association are involved in 
those programs. The Jump$tart Coalition is another program and 
as far as the department, I attend meetings and am involved 
with the Jump$tart Coalition.
    I want to turn now to promotion of financial literacy 
outside of schools. Credit unions with close ties to companies 
that are experiencing effects of the economic conditions often 
provide financial counseling to their members. A recent example 
of this is the sponsor company of Cessna Credit Union recently 
reduced its workforce by over 55 percent. Cessna Credit Union 
made a concerted effort to buffer the impact of job loss by 
deferring payments, restructuring loans, offering a safe place 
to deposit severance or early retirement funds, and offering 
financial education and counseling programs.
    We have observed similar efforts in other credit unions. 
Two years ago, I recall a cement plant closing in southeast 
Kansas. The credit union is still functioning today because 
they took the appropriate steps so that they could continue, 
even with the loss of their members' high paying jobs, at least 
for that community. We encourage credit unions to become 
proactive if an economic downturn may affect their members' 
financial ability to handle their financial obligations.
    Encouraging financial literacy in this group goes beyond 
schools--again, as I stated earlier, as we have no mandate 
under the law to promote or provide financial literacy 
education, I do support a role for the department in that.
    The financial literacy of credit union members enhances the 
department's position as a safety and soundness regulator. 
Fewer delinquent loans and bankruptcies improve the financial 
performance of a credit union, which influences the ability of 
that credit union to loan money at a competitive rate and pay 
improved dividends. So it is a win-win solution; if you have 
financial literacy, you should have a good credit union member.
    I want to conclude with a few suggestions. To be 
financially literate is a life-long venture. New financial 
products such as individual retirement accounts or IRAs, debit 
cards, different types of home mortgages and home equity 
loans--these new products continue to be developed. While 
financial literacy education is part of the K through 12 
educational system, in my opinion, more could be done to 
promote life-long financial literacy, to keep informed about 
new products and how to budget for their proper use. With the 
current focus on the recent financial crisis, public 
policymakers have an opportunity to support and encourage 
financial institutions to provide financial education regarding 
consumer safeguards such as overdraft protection for their 
members/customers and the general public. While another crisis 
may not be prevented, the general public will be better 
prepared.
    As a caveat, Federal agencies should not preempt State 
consumer protection laws that offer greater protection than 
Federal laws.
    In adopting Federal regulations implementing the Dodd-Frank 
Wall Street Reform and Consumer Protection Act, Federal 
agencies must not overregulate and must allow the marketplace 
to function. Additional regulations are a difficult burden to 
our smaller asset size credit unions. As I pointed out, we have 
a number in our State.
    I thank you for allowing me to present the testimony today 
on this important topic.
    [The prepared statement of Mr. Smith can be found on page 
65 of the appendix.]
    Chairman Moore of Kansas. Thank you very much, Mr. Smith.
    Commissioner Wilson, you are recognized, sir, for 5 
minutes.

     STATEMENT OF THE HONORABLE MARC S. WILSON, SECURITIES 
                 COMMISSIONER, STATE OF KANSAS

    Mr. Wilson. Thank you, Mr. Chairman, Congresswoman Jenkins, 
distinguished panelists, and especially I would like to thank 
the University of Kansas for hosting us today. It is fantastic 
to be back on the campus of my undergraduate alma mater.
    As Kansas Securities Commissioner, I am responsible for 
protecting and informing Kansas investors, promoting integrity 
and full disclosure in the marketing of financial services, and 
fostering capital formation. As you may know, in 1911 Kansas 
became the first State to regulate securities, predating the 
Federal securities acts by over 20 years and forming the basis 
for the system of registration and disclosure that we have 
today. Like the SEC, the Office of the Kansas Securities 
Commissioner, or KSC, examines both investment advisers and 
broker-dealers located in Kansas. Unlike the SEC, KSC also has 
trained and duly sworn law enforcement officers who investigate 
allegations of illegal and unregistered activities. 
Additionally, in cooperation with district and county 
attorneys, KSC prosecutes its own cases. We are not reliant 
upon local, State, or Federal prosecutors to take and try these 
cases. Consequently, securities fraud receives the specialized 
attention it deserves from law enforcement in Kansas.
    As I mentioned, one of the goals of our office, statutorily 
mandated, is to educate Kansas consumers. And that is what I am 
going to focus on today.
    We have found that because of our mission of fraud 
prevention, one of the target groups for education are senior 
citizens and those nearing retirement. They are often the 
target of people who are attempting to defraud them of their 
nest eggs that they are building for retirement. This 
population also has very specific investment needs as far as 
the reduction of risk in their portfolio. Therefore, we do many 
outreach activities to senior citizens throughout the State. 
Our staff goes to senior meetings, our staff will visit Rotary 
Clubs, student groups and just about anybody else who invites 
us to come and give a presentation.
    But I think one of the things that we do that is especially 
relevant to the hearing today is our outreach to younger people 
through the Kansas Council for Economic Education. We have an 
investor education fund. The Kansas legislature set up this 
fund in the early part of the decade. And those companies and 
individuals who pay fines for breaking the law or violating 
acceptable business practices, those funds go into the fund, 
which we then can turn around and use for investor education. 
Some of it funds the travel and expenses for our own staff when 
they do outreach, but we also provide grants to organizations. 
Some of them have been mentioned by other panelists.
    The largest grant that we give is the Kansas Council for 
Economic Education to fund a game called the Stock Market Game. 
This game targets students in grades 3 through 12 and what it 
does--and it is certainly more complicated for the older 
students who can understand better, but what it does is it 
allows students to manage a hypothetical portfolio of $100,000 
in an actual stock market situation. And far from the kids eyes 
glazing over, I hear reports back of kids who are cutting class 
so they can go make trades. So I think this particular program 
is very special in that regard. Once kids do it, they very much 
want to participate and their interest really is peaked in what 
happens with financial services.
    And really, despite our mandate of fraud prevention and 
despite our targeting of an older population, despite the need 
to do that outreach, the integration of financial literacy in 
the school curriculum from an early age gives consumers a 
foundation from which they can update their knowledge 
throughout their lifetime as their financial needs change. I 
think targeting those young people is a very important thing 
and I know that Mr. Glendening is probably going to address 
this as well, because they are even larger financial supporters 
of the Kansas Council for Economic Education.
    Our funds--we increased our donation and support of the 
Stock Market Game so that every Kansas student who wants to 
participate can do so regardless of their financial situation. 
And when we did that, the participating teams rose from 443 to 
over 1,300 and that includes 701 teams that came from teachers 
who were new to the program. So what I am hoping to do is work 
with the Kansas Council for Economic Education and get the word 
out to teachers that there is this curriculum that is 
available, not just the Stock Market Game, but many others that 
are free, they are ready-made, they take very little 
preparation time, and they fit very well with the mandates for 
consumer education and mathematics that Kansas schools must 
comply with.
    I see that I am running out of time, I will leave certain 
matters to my written testimony. I do agree with you, Mr. 
Chairman, and some of the other panelists that there is no 
guarantee that financial literacy by itself will prevent 
another financial crisis. But it would certainly make a 
financial crisis less likely.
    Financial literacy is the key to creating or recreating, as 
the case may be, an American economy that is not driven by 
consumption, but instead balances consumption with savings and 
investment. Were Americans as prodigious savers as they are 
consumers, the United States would have an alternative path out 
of the recession, the same path that throughout its history, 
the United States rode to greatness. That approach is to make 
capital available to the private sector, not by purchasing 
unneeded or unnecessary goods, but instead by placing excess 
cash into bank deposits, commodities, equities and government 
and corporate bonds, as did our forefathers.
    Transforming consumers into investors through financial 
literacy is a goal that is greater than preventing hardship or 
fraud. It is also the path toward turning our Nation from the 
world's largest debtor into once again the world's largest 
creditor nation.
    Thank you for the opportunity to be here today.
    [The prepared statement of Mr. Wilson can be found on page 
81 of the appendix.]
    Chairman Moore of Kansas. Thank you.
    The Chair will next recognize Deputy Commissioner 
Glendening. You are recognized, sir, for 5 minutes.

      STATEMENT OF THE HONORABLE KEVIN GLENDENING, DEPUTY 
COMMISSIONER, CONSUMER AND MORTGAGE LENDING DIVISION, OFFICE OF 
          THE STATE BANK COMMISSIONER, STATE OF KANSAS

    Mr. Glendening. Thank you, and good morning, Mr. Chairman, 
and Representative Jenkins. I am Kevin Glendening, Deputy Bank 
Commissioner and Administrator of the Kansas Uniform Consumer 
Credit Code.
    In my position, I have the primary responsibility for 
supervision, regulation, and enforcement of Kansas Consumer 
credit and mortgage lending laws. In that capacity, I have 
witnessed the often devastating consequences the absence of 
financial literacy can have on consumers. These consequences, 
including unmanageable debt levels, poor credit, repossessions, 
and foreclosures can have severe effects on both the 
individual's personal and family life. These outcomes are 
sometimes a result of illegal or deceptive actions on the part 
of an unscrupulous lender or broker, but are frequently simply 
the result of a lack of understanding of basic financial, 
credit, and borrowing issues.
    Aware of the relationship between informed consumers and 
lowering the incidence of predatory or deceptive lending 
practices, in 1999, my office was successful in adding 
provisions to the Kansas Uniform Consumer Credit Code which 
allowed us to fund financial literacy programs by utilizing 
monies received through fines levied against lenders who engage 
in illegal activities. The advantage of this approach was to 
avoid reliance on tax dollars and place that responsibility 
more centrally on that small percentage of lenders who engage 
in deceptive and illegal activities.
    Once a potential source of funding for these programs was 
in place, our attention turned to what types of financial 
literacy programs were out there. At that point, several issues 
became clear to us. Among them, there was a significant amount 
of financial literacy materials available although with varying 
degrees of quality and accuracy. Second, one of the primary 
challenges with any financial literacy programs or material is 
getting someone to use it in a meaningful way. Third, the 
method by which financial literacy is both effectively 
presented and delivered depends greatly on the target audience. 
Lastly, the realization that, at least in my case, I am 
primarily a regulator, not an educator, and that partnering 
with groups who have expertise in working with the target 
audiences you wish reach can be an effective way to leverage 
available resources.
    Our financial literacy initiatives generally fall into two 
groups, those targeted toward school age children and those 
geared toward the needs of adults. Two of our most successful 
programs directed at school age children involve partnerships 
with nonprofit organizations. As Commissioner Wilson mentioned, 
the Kansas Council on Economic Education is one of those 
groups. It has as its mission the enhancement of curriculum for 
school teachers to facilitate economic and personal finance 
education. My office has been the primary sponsor of the KCEE 
for several years, including the development and distribution 
of a computer-based financial literacy curriculum called 
``Financial Foundations.'' This interactive courseware is 
designed to help kindergarten through 8th grade teachers and 
students understand personal finance issues and is made 
available free of charge to all elementary and middle schools 
in Kansas. Last year, nearly 7,000 students participated in the 
online program in 246 schools, representing 92 school districts 
in Kansas.
    More recently, our office has partnered with a nonprofit 
organization known as Communities in Schools of Wichita and 
Sedgwick County. This organization attempts to bring 
businesses, schools, and community groups together to assist in 
meeting student and family needs. Our office sponsors one 
component of their work known as ``Reality University,'' a 
financial literacy exercise that provides a hands-on learning 
experience for students to help prepare them for life after 
high school and the responsibilities of adult life. Students 
plan their budget, pay bills, and apply decision-making and 
problem-solving skills within a level of income based on a 
predetermined level of education. The goal is to develop the 
skills needed to make good decisions in practical, real-life 
situations involving the use of money and show how life choices 
can affect financial well-being. This past year, over 5,000 
students in middle and high schools participated in Reality 
University in 17 schools in the Wichita/Sedgwick County area. 
We hope to expand this financial literacy program across the 
State in the future.
    To the extent possible, we have made an effort to take 
financial literacy information to the consumer rather than 
making the consumer seek us out. This may take the form of 
presentations in the workplace, on college campuses or 
participation in financial fairs or other community meetings 
and neighborhood events. This is I believe a critically 
important aspect of a successful adult financial literacy 
program. Unlike school-based programs, where you generally have 
a captive audience, financial literacy programs geared toward 
adults can be considerably more challenging.
    Many of the problems and behaviors that can contribute to 
an individual's financial distress are the same issues that can 
make delivering financial literacy information to adults 
difficult. Participating in events that also provide other 
information of interest to adult audiences, for instance home 
purchase or tenant/landlord issues, parenting and child care 
issues, or specific community interest areas can create a value 
added element and attract more interest. In 2009, more than 
11,000 individuals attended one of our sponsored adult 
programs.
    While our own financial literacy initiatives have had a 
measure of success, it is difficult to quantify the extent to 
which these and other programs may ultimately contribute to the 
stability of our financial future. This, however, should not 
deter additional efforts at both the State and Federal level to 
invest in greater financial literacy efforts. The benefit of 
these programs, particularly those aimed at children, will not 
be fully apparent until those children enter adulthood and 
become the primary users of financial products and services. 
The recent financial crisis has generated more interest and 
awareness of financial literacy issues; however, it is 
important to remember this must be an ongoing long-term 
educational goal. Ultimately, encouraging more aware and better 
informed consumers is at least part of the solution to ensuring 
the financial crisis is not repeated.
    Again, thank you for the opportunity to appear before the 
committee today and I would be happy to answer any questions.
    [The prepared statement of Deputy Commissioner Glendening 
can be found on page 41 of the appendix.]
    Chairman Moore of Kansas. Thank you to our witnesses for 
your testimony. I will now recognize myself for 5 minutes for 
questions.
    The FDIC conducted a nationwide survey last year, and that 
study showed that roughly 8 percent of U.S. households, 
approximately 9 million, are unbanked, meaning those households 
do not have a checking or savings account. And roughly 18 
percent of U.S. households, roughly 21 million, are 
underbanked, meaning those households have a checking or 
savings account but rely on alternative financial services.
    Treasurer McKinney, is that something we should be 
concerned about? And if so, what can be done about it?
    Mr. McKinney. Thank you, Mr. Chairman. We agree that is a 
major problem and there are several organizations in different 
communities that are working with families to help them become 
banked and have and understand banking services and utilize 
banking services on a regular basis. But we agree that is a 
problem and there are a number of groups, particularly in the 
urban areas in Kansas, that are working on that issue.
    Chairman Moore of Kansas. Thank you, sir.
    Administrator Smith or Deputy Commissioner Glendening, any 
comments?
    Mr. Smith. I agree that this is a problem and I think those 
numbers are accurate. Again, as Commissioner McKinney pointed 
out, there are a number of organizations working with those, as 
well as I think individual credit unions are working in their 
communities to try to provide services to non-banked 
individuals.
    Mr. Glendening. Mr. Chairman, my only comment would be that 
we have interviewed fairly extensively individuals who 
frequently utilize small loan products, payday loans, title 
loans, those type products, and one of the key factors that we 
hear over and over again is that rapid accessibility to the 
credit, which to me, that is one of the major stumbling blocks 
for the more traditional methods, the bank model so to speak, 
of obtaining credit, is the time involved to fill out the 
applications and do the underwriting. That is not to say there 
should not be underwriting, there certainly should be, but what 
attracts consumers to that type of product is that rapid 
ability to get cash quickly.
    Mr. McKinney. If I might add, Mr. Chairman, the BEST 
Coalition in Wichita is working extensively on this as well as 
the Kansas Partnership--
    Chairman Moore of Kansas. Excuse me, the what coalition?
    Mr. McKinney. BEST Coalition, ``B-E-S-T,'' Building 
Economic Stability Together, is working on collaborative 
relationships in that regard as well as Kansas Partners for 
Asset Development is active. And that one is also supported 
extensively by the Kansas Action for Children.
    Chairman Moore of Kansas. Thank you, sir.
    The FDIC conducted a nationwide survey last year and that 
study--I'm sorry, excuse me. I'll ask this question of the 
whole panel, starting with Treasurer McKinney. Is there good 
coordination between various State offices here in Kansas, and 
how would you describe the level of coordination or cooperation 
with your counterparts at the Federal level? Also, what 
suggestions should Congress consider in supporting efforts to 
better coordinate and cooperate so we do not have redundant 
efforts and maximize limited resources in promoting financial 
literacy?
    Mr. McKinney. I would say we have had excellent cooperation 
among State agencies, the ones here, with the Attorney 
General's office. Just recently, in a meeting with senior 
citizens, we were distributing some of the publications from 
Commissioner Praeger's office, and the Kansas State Department 
of Education has also taken steps in this direction as well. 
And we have had extensive cooperation with the Commissioner's 
office.
    Chairman Moore of Kansas. Any other comments from 
panelists?
    Ms. Praeger. I would just agree with Treasurer McKinney. We 
do try to coordinate our efforts and then our National 
Association, that is the main function of the National 
Association of Insurance Commissioners, is to coordinate among 
the States and with other entities at the Federal level. We 
have lots of opportunities after 2008 to collaborate with the 
whole AIG and financial meltdown, which required everybody 
coming together and talking about ways to avoid that going 
forward. And I think obviously those discussions continue.
    Chairman Moore of Kansas. Mr. Smith?
    Mr. Smith. I would agree. We meet, we share information. 
Also as far as our Federal insurer, the NCUA, we meet 
periodically. We have good communications with them, we may not 
always agree on regulations and we feel sometimes they need to 
have a better overreach, but we do have good communications and 
cooperation.
    Mr. Wilson. With all my vast experience of 2\1/2\ months on 
the job, I would agree also.
    [laughter]
    Chairman Moore of Kansas. How long on the job?
    Mr. Wilson. Two and a half months, sir.
    I think that we must cooperate. Some of us have better 
access to expertise or personnel or financial resources than 
others, but working together, there is no reason why we cannot 
reach every Kansan we need to. We just need to take some time 
and make a point of it.
    Mr. Glendening. I concur with that, Mr. Chairman.
    Chairman Moore of Kansas. And my final question for this 
panel, this question is for Commissioners Praeger and Wilson: I 
think most people think about financial literacy in terms of 
checking and savings accounts, but it would seem to me that 
learning about investments for purposes of saving for college 
or retirement as well as learning about car or life insurance 
is just as important. Commissioner Praeger, I will start with 
you, do insurance issues get left out of this conversation too 
much and how do we make sure financial literacy efforts cover 
insurance issues? And Commissioner Wilson, next to you, the 
same question with respect to securities, how do we ensure 
securities are covered in financial literacy?
    Commissioner Praeger?
    Ms. Praeger.  I do think that has been the reason we have 
really tried to step up our efforts on education on insurance 
issues, because I do think too often insurance does get left 
out of the equation. Insurance is a product you buy to ensure 
that when you have any sort of financial stress in your family, 
you are able to use the insurance and pick up and move on, 
whether it be a house fire or a car accident, or an unexpected 
illness. So it definitely--I think it is cornerstone to 
financial security for families and it should be incorporated. 
We do work closely with our counterparts, the other financial 
services areas in Kansas, to ensure that we have appropriate 
regulation so that things do not fall through the cracks, but 
yes, I think insurance, as I said, is the cornerstone of 
financial security.
    Mr. Wilson. I would agree with those statements because 
before one starts investing in securities or amassing a 
retirement nest egg, if you have a car or a spouse or children, 
insurance has to be the first thing you think about. Knowing 
what level and what type of insurance you need is a very 
fundamental financial issue that people should understand. 
Hopefully once you have crossed that threshold and one begins 
earning enough money to think about putting some away for a 
rainy day, retirement or funding education, hopefully programs 
like the Stock Market Game will at least provide young people 
with basic information about what an equity is, what risks are 
involved with investing in those particular types of 
investments, and what others are out there that they can put 
their money into that is not only tax advantaged but also 
reduces their investment risk.
    Chairman Moore of Kansas. Thank you to our panelists. My 
time has expired and I will now recognize Representative 
Jenkins for 5 minutes for questions.
    Ms. Jenkins. Thank you, Mr. Chairman.
    I think we can all agree here that we have some work to do 
in this area and I am very impressed by the good work that you 
all are doing to improve the situation. But I would be 
interested to hear what each of you might believe is the most 
significant impediment to improving America's financial 
literacy and maybe why. And if you believe there is a way that 
Congress or those of us at the Federal level can help to 
overcome that impediment.
    Mr. McKinney. I will start, I guess. We have found--it is 
our belief that as schools had to move more to focusing on what 
they had to do to meet testing standards, then financial 
education was somewhat dropped from curriculums. That is being 
reversed now, we believe. We have new interest in that at the 
Kansas State Department of Education, because we believe that 
financial literacy can be incorporated with lessons on math 
that are designed to meet the standards. If you are studying 
math, you can obviously incorporate--this particular type of 
math problem can be built around a financial literacy education 
problem. And that is where we are receiving more cooperation 
from the Department of Education. So we think that barrier is 
being overcome.
    And then at the Federal level, which goes back to the 
question that Congressman Moore asked, what would we like 
Federal agencies to do; number one, we would like the Federal 
Reserve Bank to continue their efforts with their Money$mart 
week, which works in the greater Kansas City area, maybe expand 
that to more areas in the 10th District. I think in fact they 
are having a meeting on that today, which we have personnel 
attending that meeting.
    And the second thing I would like to see is the new office 
of Financial Education that was created by the Dodd-Frank bill, 
we would like for them to come out and talk to us first before 
they start anything to see how we build a cooperative 
relationship instead of respond to what they start, because 
like I said, we already have, I think, excellent cooperation at 
the State level among various State agencies; if they would 
come out and see how can they plug into this effort and build 
on it instead of coming out with an initiative that we would 
then have to respond to and work around.
    Ms. Praeger. I think even some of our Federal regulatory 
entities oftentimes overlook insurance as well and I know the 
Treasury several years ago had a financial literacy forum in 
Washington and we had to, through our national association, 
remind them that perhaps it would be important to have a 
component in that day-long seminar on insurance, which they 
did. And since then, they have included insurance. So I think 
even some of our Federal agencies sort of forget insurance and 
part of that I think is because insurance has been, as you all 
know, traditionally regulated at the State level. But the Dodd-
Frank bill does include a provision for a Federal insurance 
office, the FIO. And I think it will be interesting to see how 
we can use that office in a way that can help coordinate 
activities between the Federal entities and State entities. I 
still am a passionate believer that Federal insurance 
regulation should be avoided and that it should remain at the 
State level, because insurance is a product that we all buy to 
use in the future, as has been pointed out, and the services 
that our department provides in terms of assisting consumers is 
just invaluable. We are a small State, and we answer 20,000 to 
25,000 calls a year. I cannot imagine what a congressional 
office would have to do to expand if we were not there to 
answer those consumer questions.
    So I think working more collaboratively, and I think the 
FIO, this newly created office, gives us the opportunity to 
build on what we do best, which is be there for the consumers 
and advocate for consumers, and educate. But also create a 
greater awareness in Washington, in our Nation's Capitol, of 
the important role insurance plays in the whole financial 
services area.
    Mr. Smith. I think the new office not only should listen 
but perhaps they should fund too, maybe at the State level. 
Kansas is a strong State-chartered State as far as credit 
unions and banks too. It is obvious that Kansans have selected 
the State charter and I think they believe that our examiners, 
our departments are the ones who know the economy, know the 
situations and the services are better delivered at the local 
and State level rather than the Federal level.
    Mr. Wilson. Send money.
    [laughter]
    Chairman Moore of Kansas. Pardon me?
    Mr. Wilson. I see in the Dodd-Frank bill that there were 
funds made available, grant funds made available for States 
that have adopted certain securities policies and certain 
insurance policies and I know that my staff has had staff level 
conversations with Commissioner Praeger's office about seeking 
those funds. So we greatly appreciated that. I think the 
provision of funds, even in small amounts, can go a long way 
toward alleviating this problem.
    Mr. Glendening. I think obviously the coordination of the 
State and Federal efforts is critical. The CFPB, the Consumer 
Financial Protection Board's education component, I would think 
a mandate to at least engage the State regulators through their 
associations, for instance NACCA, National Association of 
Consumer Credit Administrators, which I am a board member of, 
it would be I think worthwhile to take the financial literacy 
programs that the States have developed, oftentimes fine-tuned, 
and incorporate that perhaps on the larger scale rather than 
building a new bicycle. I think that would be a far more 
effective way to go about it.
    Ms. Jenkins. Thank you. Does that mean I am yielding back 
zero time or do I have time?
    Chairman Moore of Kansas. Go ahead.
    Ms. Jenkins. Maybe just one more then. I agree with our 
Treasurer that schools are a great place to start to address 
this issue, but so many times our teachers are feeling 
overwhelmed that we are just throwing one more thing on them to 
teach within the same amount of hours every day. And so that's, 
I think, the need for all of the different programs outside of 
a regular school day that you all do. But I am concerned that 
perhaps the people who need the information most might not be 
accessing many of the programs. And I wondered if just finally 
you might have any thoughts about how to get to those kids who 
cannot go to a Money$mart camp or a senior who does not go to 
Rotary Club, or how we can better get the information to 
perhaps those people who need it most.
    Ms. Praeger. In the education area, I know Emporia State 
has a financial literacy education component where they train 
teachers. And I think one of the goals there is to incorporate, 
so that you are not having a separate section on financial 
literacy or how to manage your money. But you can incorporate 
those skills and those lessons into probably just about every 
aspect of education. So I think finding more creative ways to 
build it into the curriculum rather than having it be separate 
or where it is more difficult. So that would be one approach 
from an education standpoint, just to find ways to build it 
into existing curriculum.
    Mr. Wilson. I agree with that and none of us obviously have 
any authority over curriculum in Kansas. However, I can tell 
you that just looking at what our increased support for the 
Stock Market Game did, when you go from 443 teams to 1,304, 
that is between 3,000 and 5,000 students who participated, 
extra students who participated in that activity. And reaching 
the teacher certainly had a much greater impact than if we 
would send personnel out on a road trip to various parts of the 
State to try to reach young people individually. There just are 
not those sorts of groups out there who have the impact that 
the schools can have.
    Regarding outreach to seniors, that is something where we 
can simply learn working through area agencies on aging and 
various other groups who have contact with seniors around the 
State. They are a lot easier to reach with specific useful 
information.
    Ms. Jenkins. That Stock Market Game is a perfect example. I 
had to limit little Hayden Ross Jenkins' 6th grade computer 
time when he was back at that stage because he was so obsessed 
with his portfolio, and he was doing far better than his 
parents at the time.
    Chairman Moore of Kansas. You should have listened to him.
    Ms. Jenkins. I should have listened to him. It was just 
such a fabulous experience, but I am afraid that only some of 
the special education students were able to be exposed to that 
and it just would have been nice for the entire population 
there at Jay Shideler Elementary, to have had that experience 
and to peak their curiosity. So we will just continue to work 
on that.
    I will yield back, Mr. Chairman.
    Mr. McKinney. Mr. Chairman, there are two programs in 
greater Kansas City--Bank on America Saves program and as I 
mentioned the Kansas Partnership for Asset Development that are 
targeting exactly the populations that you mentioned need to be 
addressed, particularly to help move those families and 
children from being unbanked into a banking environment and 
learn those basic concepts.
    Ms. Praeger. Can I just give you a quick example of the 
kinds of things that can be built into the curriculum?
    Chairman Moore of Kansas. Absolutely.
    Ms. Praeger. Taking the Stock Market Game approach, instead 
of actually doing investing which I think in the younger grades 
they probably do not, but you can build teams within the math 
program and pair up a really strong math student with one who 
is not as strong and work on averages. And so the average in a 
sense becomes their market value. And it is team building, it 
helps both of them, you learn more when you teach than I think 
kids realize. But there is an example of using the concepts, 
some financial literacy concepts, but just using them within 
the existing math curriculum.
    Chairman Moore of Kansas.  I thank our panel of witnesses 
here who testified and I really truly believe that this is a 
very, very important topic that we need to continue talking 
about in the future because I think there is a lot of lack of 
understanding of our financial system out in the country at 
large and I think it would be a great gift to future 
generations in this country if we educate our children and 
grandchildren about this and people have a better understanding 
overall of how this system works. Because there is just a lot 
of just lack of understanding and I just do not think we can 
underestimate--I think all of us understand how important that 
is and I think we owe that to future generations of our 
country.
    So I want to thank our panelists for being here today and 
you are excused at this time.
    I will invite the second panel, if you will come up, we are 
going to take about a 3-minute break while we change panelists 
here. But thank you all.
    [recess]
    Chairman Moore of Kansas. If I could ask the people in the 
room, please, to take your seats. We are going to start the 
second portion of our hearing this morning. I appreciate the 
people who have come to hear the witnesses' testimony, and I 
appreciate especially our witnesses who are here today, our 
second panel of witnesses, to testify.
    I am pleased at this time to introduce our second witness 
panel: Taylor Petty, Master's in Accounting Student at the 
University of Kansas, welcome; Kathryn Nemeth Tuttle, Assistant 
Vice Provost for Student Success, University of Kansas; Gayle 
Voyles, Director, University of Missouri-Kansas City Center for 
Economic Education; Shawn Mitchell, President and CEO, 
Community Bankers Association of Kansas; and Chris Wolgamott, 
Community Development Liaison, Meritrust Credit Union.
    Without objection, the written testimony of each of the 
witnesses will be made a part of the record, and you will each 
have up to 5 minutes to summarize your written statements.
    Mr. Petty, sir, you are recognized for up to 5 minutes for 
your statement.

  STATEMENT OF TAYLOR PETTY, MASTER'S IN ACCOUNTING STUDENT, 
                      UNIVERSITY OF KANSAS

    Mr. Petty. Thank you, Chairman Moore, and Representative 
Jenkins. I appreciate the opportunity to testify today about 
how the University of Kansas partnered with the Wichita School 
District in providing financial literacy education.
    I want to begin by saying that it is hard to care about 
something that you do not understand. We found this to be the 
opinion of many high school students. National assessments show 
that high school students, American high school students, are 
only scoring at less than half correctly on assessments of 
their understanding of basic financial topics.
    We have already seen the consequences of that lack of 
understanding. The credit crisis and mortgage meltdown are 
largely because many American consumers do not understand their 
financial decisions.
    Evidence shows that we are failing our youth. Eighteen to 
25 year olds are the fastest growing age group of bankruptcy 
filers. One in five bankruptcy filers are college students. So 
we see that particularly in this age group of young Americans, 
making not only necessarily core bad financial decisions, but 
also not really understanding financial basics.
    With this background, we partnered with the Wichita School 
District to develop a financial literacy curriculum that was 
going to be implemented in all of the high schools, eventually 
in all the high schools in the State of Kansas.
    The State of Kansas authorized in a bill the addition of 
questions involving financial literacy on State assessments. In 
order to meet these assessments, the Wichita School District 
partnered with the University of Kansas to develop this 
financial literacy curriculum.
    We were responsible for authoring financial literacy 
curriculum on five topics: budgets and savings; identity theft; 
credit; home mortgages; and taxes. It was interesting that 
these five topics were actually ones excluded from the 
financial literacy curriculum because they did not feel like 
they had adequate material to cover these topics.
    So we began by examining existing financial literacy 
curriculums to see what was being taught in these areas. And we 
found that for a large part, financial literacy curriculum is 
not designed to appeal to high school students. I know that we 
have already had testimony to this, but what we found was that 
there is not really an appeal to high school students because 
the curriculum are not designed around situations and decisions 
that high school students will face.
    What we found was that education made practical motivates 
students. And so in developing our curriculum, we really looked 
at these five areas and ways in which we can appeal to their 
interests. In some of the areas, for instance in the area of 
credit, we looked at a credit card application. And we 
literally walked the students through a credit card application 
so that they could look and see the interest rate that they are 
going to be charged and other factors that they need to 
consider. We also have them decide what they want to learn 
about. So in the area of credit, they can choose whether they 
are going to examine things such as saving for a car or saving 
for college, depending on what really is of interest to them at 
that time.
    Another important area that we focused on was home 
mortgages. Obviously, the home mortgage crisis that we have 
seen was precipitated in large part by consumers not 
understanding financial information. And so in this area, we do 
not start with the idea that everyone is going to own a home 
because the simple reality is not everyone will own a home.
    So we provide them with access to tools such as calculators 
where they can look at making the decision to rent versus buy 
and also understanding basic terms that come with home 
mortgage.
    Another area that we considered in the curriculum is that 
much existing curriculum tends to only emphasize learning 
definitions and this simply is not adequate to train students 
in making real decisions that they will be faced with in just a 
few years. So our curriculum emphasizes practical applications 
in real-life decisions that they will make. So in many ways, 
they are not just learning that the definition of interest is 
something--a charge for lending money, but they are learning to 
apply an interest rate to decisions such as owning a home and 
the interest rate that they will be charged on their home 
mortgage.
    We consulted with the Wichita School District for this 
curriculum, and in developing it, we realized that not all 
teachers in the State of Kansas are proficient in these topics. 
And so in our curriculum, we included not only teaching notes 
that provide the teachers with references to materials from 
financial publications such as the Wall Street Journal, but 
also just access to resources from the Federal Government and 
also from State agencies that provide information on financial 
literacy.
    In partnering with the Wichita School District, we really 
became aware of the fact that teaching financial literacy is 
difficult because it does not appeal to students and also that 
there really is a lack of financial literacy within the 
schools. That includes teaching faculty as well. So in 
providing this curriculum, it was important not just to provide 
handouts for the students, but also to provide information so 
that the teachers themselves can become informed about these 
topics.
    I want to thank the two co-authors in the graduate program 
who helped me author it--Rebecca Feickert and Kristen Hageman, 
both of them helped in authoring it and I also want to thank 
the Wichita School District as well as the Office of Dennis 
McKinney for partnering with us on our project.
    Five minutes is a short period of time to cover a 
curriculum that we developed that covers 9 weeks of schooling, 
but what we really hope is that this curriculum will start--
    Chairman Moore of Kansas. We do not have 9 weeks.
    [laughter]
    Mr. Petty. We really hope that we can start, not only in 
the State of Kansas, but also use this curriculum to really 
spur other programs throughout the United States.
    [The prepared statement of Mr. Petty can be found on page 
56 of the appendix.]
    Chairman Moore of Kansas. Thank you very much for your 
testimony.
    Ms. Tuttle, you are recognized for 5 minutes.

 STATEMENT OF KATHRYN NEMETH TUTTLE, VICE PROVOST FOR STUDENT 
                 SUCCESS, UNIVERSITY OF KANSAS

    Ms. Tuttle. Thank you. Chairman Moore and Representative 
Jenkins, I appreciate this opportunity to testify today about a 
new financial literacy program for KU students at the 
University of Kansas.
    Financial literacy for college students is a significant 
concern across the country. Not only does it affect students' 
financial lives, but it also affects their ability to persist 
and graduate, another nationwide issue.
    KU students returning to campus this week were greeted with 
a new way to improve their financial literacy and their ability 
to graduate, when Student Money Management Services opened its 
doors in the Kansas Union. It is dedicated to improving KU 
students' financial situations by empowering them to analyze 
their finances, develop a budget, manage funds, make sound 
decisions, and commit to controlling their financial lives at 
KU and into the future.
    The need for this service is clear and convincing. We are 
in the midst of a financial crisis. The average debt for KU 
graduating seniors is $22,478, and this is an increase of 
$4,200 in just 6 years. So we have an increasing loan 
indebtedness for our graduates. Interestingly, we have evidence 
of both KU students' lack of financial knowledge and their 
understanding that this education is important. The evidence is 
from research from the KU Financial Task Force where they found 
the average literacy score in a study of KU students was 3.26 
on a scale of 1 to 6, probably about a C+, where 1 indicated no 
understanding and 6 indicated complete understanding. However, 
82 percent of these students said that it is important to learn 
about money management and credit and debt management and 84 
percent said they want to learn about saving and investing.
    Leticia Gradington, a KU alumna with extensive experience 
in financial planning and with teaching college students, has 
been hired as our new program coordinator. And right now, we 
are in the process of hiring several peer educators. These will 
be very well trained KU students who will do one-on-one work 
with students, give class presentations, and do outreach to 
student groups and organizations. As has been mentioned in some 
of the comments about having students teach students, I think 
this peer educator part could be one of the most important 
parts of our program. Information will also be provided through 
publications, Web sites, and other electronic communication 
methods.
    The staff will provide the information to students, as 
mentioned, on personal finances, developing budgets, tracking 
expenses, understanding credit cards and loan indebtedness, and 
planning for life after graduation. We are also very fortunate 
at KU that we can refer them to very specific offices to help 
with those things, such as Financial Aid and Scholarships, we 
have Legal Services for Students that can deal with issues like 
landlord/tenant, Bursar's Office for payments and the School of 
Business Personal Finance 101 course that I will tell you a 
little bit more about in a minute.
    This program is important to us too because it is 
collaborative, we are working with the Office of the Vice 
Provost for Student Success, the School of Business, Student 
Senate which is our student governance entity and they played a 
leadership role in this in the past and a new initiatives 
program fund. We also have an advisory board that will have 
campus members in terms of faculty, staff and students, as well 
as community members to help guide us in our future 
development.
    Student response has already been enthusiastic. We had a 
job fair last week and hundreds of students stopped by our 
table to find out more about our center.
    Let me mention just a couple of other things that are 
available to KU students along this line. We have an excellent 
financial literacy guide that is on our Financial Aid and 
Scholarships Web site which provides information on a wide 
range of these topics. Cash Course is a free, online personal 
finance course developed by the National Endowment for 
Financial Education, which includes budgeting and financial 
planning and debit and credit cards and economic survival tips. 
It is quite good. And we have a new program this fall that we 
are very excited about. It is called Financial Aid TV for the 
U2 generation. It is short online videos on a variety of topics 
including money basics, saving and borrowing money, credit 
cards, and credit scoring. Also, all the range of financial aid 
information. And that is on our Financial Aid and Scholarships 
Web site.
    Interestingly, in the task force that we did, students 
indicated that their preferred way to get information was via 
the Web site. So I think for today's college students, we need 
to think about other electronic media such as social media. 
Facebook should be considered for utilization to connect with 
students on this important issue.
    I want to talk for a moment about the School of Business 
Finance 101 class, a three credit semester long course open to 
all KU students. It provides some of the more in-depth 
information that has been discussed already today. For example, 
mortgages, renting and leasing, savings, investments, and 
insurance. About 140 students take that course every semester, 
and I really think this in-depth education is almost a 
necessity for getting to that next level of financial literacy. 
We are going to be choosing from the students who got A's in 
this course for our peer educators.
    Barriers to greater financial literacy--many have been 
discussed today. I do think coordination between the K-12 
efforts and higher education is crucial and we have already had 
discussion about how KU is doing that today. Efforts should be 
made with faculty members on the college level to integrate 
financial literacy more in their courses. Special attention 
should be paid to better help low-income and first generation 
college students in this area. And I think another point could 
be when students are employed in campus jobs but also in their 
first professional employment. This is when questions about 
insurance, withholding--we could do much more with employers 
perhaps in educating students and young adults at that point.
    Mr. Chairman, I appreciate this opportunity to provide 
information on the efforts made by the University of Kansas to 
improve the financial literacy of our students. Improving the 
education, the financial education, of our citizens is a vital 
issue for the University of Kansas, our State, and our Nation. 
Thank you.
    [The prepared statement of Ms. Tuttle can be found on page 
73 of the appendix.]
    Chairman Moore of Kansas. Thank you.
    Ms. Voyles, you are recognized for 5 minutes.

  STATEMENT OF GAYLE VOYLES, DIRECTOR, UNIVERSITY OF MISSOURI-
           KANSAS CITY CENTER FOR ECONOMIC EDUCATION

    Ms. Voyles. I also would like to thank Chairman Moore and 
Representative Jenkins for the opportunity to testify today. 
The views I am expressing are my own personal beliefs and they 
are not the views of the University of Missouri at Kansas City.
    I would like to talk to you a little bit about the Council 
for Economic Education Web site which points out that in coming 
years, young people will face unprecedented economic 
opportunities and challenges. They also ask whether young 
people will be ready to meet the economic opportunities and 
challenges head on. And then they answer it and say yes, 
provided they understand the economic way of thinking.
    I know there has been a lot of discussion about the 
division between economics and personal finance, how do they 
all fit together. In the State of Missouri, we have been very 
active in the Missouri Council on Economic Education in trying 
to promote a K-12 spiraling curriculum that would integrate 
economics and personal finance across the curriculum. However, 
what really transpired was a half credit personal finance 
course that is State-mandated for every student before they 
graduate from high school.
    The Missouri Council led the movement to try and at least 
make sure that students, before they graduate, will have some 
economic and personal finance experience. But we decided that 
was not really enough. To have a class with a half credit 
course for so many things that everyone has talked about today 
is really hard. And then when you look at--we heard so many 
people say the teachers do not always feel comfortable. Who is 
going to teach the course? How do we make sure that it is a 
quality course and that our students are really learning?
    I personally have been an elementary and high school 
teacher for 7 years as well as teaching at the college level 
for the past 15 years. My experience has taught me that it is 
much easier to teach and influence student behavior at a 
younger age in developing this economic way of thinking. When 
students are not introduced to economics and personal finance 
concepts prior to entering high school, the broad range of 
knowledge and skills that the students bring to class make it 
very difficult for a high school teacher to know where to 
start.
    I had written in my testimony that the Stock Market Game 
and the Personal Finance Challenge that the Missouri Council on 
Economic Education runs helps motivate students to actually 
take an interest and get involved. I think we have heard a lot 
of testimony today on how important it is to get the students 
actively engaged. There are three national studies out that 
prove that the Stock Market Game does increase academic 
achievement in math, economics, and financial skills.
    What I wanted to share is what was said by the teachers in 
Missouri who have been teaching personal finance courses for 3 
years. I have two master personal finance educators from the 
Blue Springs School District, Mike Hagerty and Kevin Clevenger, 
who highlighted for me the importance of personal finance 
education. They start by saying, ``Can the Missouri required 
Personal Finance Course prevent another financial crisis? In 
our opinion; no. However, if one is asking whether the personal 
finance course can make a substantial difference for the future 
of citizens in our State and our country; absolutely yes.''
    There is not a day that goes by that we do not have a 
parent or an adult tell us that they only wished they had taken 
a course like Personal Finance when they were in school.
    Our youth are starting to get it, they are asking the right 
questions and seeking answers to the economy's current issues. 
We feel strongly that the classroom forum and in particular 
Personal Finance class will continue to allow students to seek 
out the answers.
    I also wanted to quickly share some of the data that came 
from the Missouri Department of Elementary and Secondary Ed. 
Because we do have this required course, there has been a State 
test, but the problem is that not every district has to 
register their students and have them take the course, because 
if they have a standalone personal finance class, it is up to 
the district to decide how they decide mastery level. However, 
the students in the State who have embedded the personal 
finance competencies into another course are required to take 
the test. So the data that is in my written testimony and a 
little of it that I will share with you in my remaining minute 
shows that only 23 districts' students who were enrolled last 
year's second semester course participated in the State level 
personal finance pre- and post-tests.
    The overall gains between the pre- and post-tests were 
reflected for the following areas of personal finance from 
highest gains to lowest: spending and credit, approximately a 
16 percent gain; money management, a 15.3 percent gain; saving 
and investing, a 14.19 percent gain; and income, an 11.99 
percent gain.
    So we know that we are making a difference.
    Now, if you look at how many students overall have taken 
the pre- and post-test in the 3 years, Missouri has had 15,094 
students. How did they do? How many are an A? Eight percent. 
B's, 17 percent. C's, 20 percent. D's, 18 percent. F's, 36 
percent.
    The rest of my written testimony really attests to the fact 
that I believe in K-12 spiraling curriculum and I do believe 
that these are habits and skills that are developed young, 
practiced throughout life that will really have the highest 
chance of helping us have stronger communities in our nation.
    I did mention children's literature, which someone else 
mentioned, is a great way to start young children. They really 
make the connection. KU's Center for Economic Education hosts a 
Web site that provides over 600 annotated book suggestions for 
teaching economic concepts.
    The School of Economics in Missouri is a community 
involvement Economic Education and provides K-5 economic and 
personal finance simulations. Over 11,000 students visit that 
school per year on one-day simulations.
    There are all kinds of financial literacy programs.
    One other one I wanted to mention, ``Yes You Can'' 
Financial Education from American Century Investments, provides 
a wealth of resources.
    I also am aware that Representative Cleaver introduced a 
bill referred to as the ``Financial Literacy for Youth Act of 
2009'' and I have read the bill and I am very much in support 
of it.
    Thank you very much.
    [The prepared statement of Ms. Voyles can be found on page 
77 of the appendix.]
    Chairman Moore of Kansas. Thank you, Ms. Voyles.
    Mr. Mitchell, you are recognized for up to 5 minutes.

 STATEMENT OF SHAWN P. MITCHELL, PRESIDENT AND CHIEF EXECUTIVE 
        OFFICER, COMMUNITY BANKERS ASSOCIATION OF KANSAS

    Mr. Mitchell. Thank you, Chairman Moore and Representative 
Jenkins. I am Shawn Mitchell, President and CEO of the 
Community Bankers Association of Kansas. CBA represents 
currently 298 banking locations through Kansas. We are also the 
Kansas State affiliate of the Independent Community Bankers of 
America. IBCB represents 5,000 community banks across the 
country and has an ongoing commitment to promoting financial 
literacy throughout the nation. I speak on behalf of both 
associations.
    I have personally been a community banker in Kansas for the 
last 15 years. I currently serve as the CEO for CBA, which I 
have been for the last 20 months. Previously, I was president 
and CEO of the Farmers & Merchants State Bank in Wakefield.
    Managing money wisely and making effective financial 
decisions is critical to excelling in life and enjoying a 
secure financial future. Unfortunately, too many Americans lack 
the skills and knowledge to make those appropriate financial 
decisions. Our Nation's mounting consumer debt, falling savings 
rates, skyrocketing personal bankruptcies, and the 
proliferation of high-cost non-bank fringe providers point to a 
need for better financial education.
    Community banks engage in a wide range of financial 
educational efforts, many in conjunction with local schools and 
civic groups. Whether showing students how to manage credit 
responsibly, helping a family understand the home buying 
process or teaching foreign-born residents the benefits of 
having a checking account, financial literacy programs build a 
strong future for all.
    I did bring a few examples of some different initiatives by 
Kansas banks. One example is the First National Bank of 
Frankfort. They have purchased textbooks for the consumer 
family science teacher for use in that classroom. This specific 
textbook leads students through a lesson in which they write 
checks and balance their own checkbooks. The checks are used 
then in the community for real life items such as gas, 
groceries, etc. The students are able to know their balances 
and track their expenses as part of the class.
    Another example is the First Option Bank in Osawatomie and 
Paola. They supply check balancing kits for business classes 
where they learn how to also balance checkbooks, how to 
interpret and reconcile monthly bank statements as well as 
information about debit cards, ATMs, credit cards, and online 
banking. During Community Bank Week, which is held every April, 
First Option Bank is present in five area schools touching over 
1,100 students with information and encouragement to begin 
saving during Community Bank Week that is done all over the 
entire State by the community banking institutions.
    What are some of the barriers to greater financial 
literacy? Financial literacy is a complex issue with many 
variables. We are constantly bombarded with the message that we 
deserve--no, that we are entitled to that new car, new house, 
new clothing, newest electronic gadget, etc. What we do not 
hear is that those things have to be paid for from what we 
earn.
    We have a responsibility to teach prudent money management 
skills to our children so that they will create good financial 
habits and carry them into their adult life. We see too many 
examples of good people who have made themselves victims of 
poor financial management simply because they do not understand 
what they can truly afford.
    One banker observed that our children are extremely 
technologically literate, but they are very financially 
illiterate when it comes to dealing with real world financial 
concepts. Due to the structure of current curriculums, which 
are geared for preparing students for college and passing 
assessment tests, our educational system has neglected to teach 
our young people real life skills. The importance of these life 
skills classes is being overlooked and undervalued. We are 
sending our children out into the world with a PC and the 
latest checkbook software and assuming that they are smart 
enough to become financially literate on their own.
    There are actually two key initiatives that I believe need 
to be considered--financial literacy and appropriate government 
regulation of the financial sector. Banks have seen a massive 
wave of regulatory restructuring and increased government 
intervention. An unfortunate side effect of the massive 
regulatory push is that financial products are becoming more 
difficult to understand, even by the savviest of consumers. 
What was once a 1-page loan contract is now a 25-page document 
full of government-required disclosures. Instead of reading--
    Chairman Moore of Kansas. Of course, people read that, do 
they not?
    Mr. Mitchell. Oh, absolutely.
    [laughter]
    Mr. Mitchell. Instead of reading the entire document, 
consumers look at the payments and where do I sign. Does this 
help? Or do we just make it easier for the unscrupulous non-
bank firms to victimize our consumers? Increasing regulatory 
burdens on community banks is not a substitute for an educated 
consumer. Overregulation hurts banks and consumers alike.
    In conclusion, American consumers were abused by many of 
the non-bank financial firms of Wall Street as well as 
unscrupulous mortgage brokers pushing the ``American dream'' 
without consideration for the consumer's actual welfare. We 
will recover from this crisis, and community banks will 
continue to serve a vital role in their respective communities. 
Increasing financial literacy protects consumers, fosters 
financial stability and benefits individuals, communities, and 
our Nation as a whole.
    Thank you.
    [The prepared statement of Mr. Mitchell can be found on 
page 51 of the appendix.]
    Chairman Moore of Kansas. Mr. Wolgamott?

 STATEMENT OF CHRIS WOLGAMOTT, COMMUNITY DEVELOPMENT LIAISON, 
                     MERITRUST CREDIT UNION

    Mr. Wolgamott. Good morning, and thank you, Chairman Moore 
and Representative Jenkins.
    I am Chris Wolgamott, Community Development Liaison at 
Meritrust Credit Union. For the past 5 years, I have been 
working as the financial literacy provider for our credit 
union. It just goes to show how our credit union values 
financial literacy, that they have hired a full-time individual 
to do nothing but financial literacy. I am the only financial 
literacy representative who is hired full time to do my job in 
the State of Kansas for credit unions, so I consider it an 
honor to talk to you today.
    Financial literacy encompasses a broad range of topics and 
spans a lifetime of learning. Learning how to save, share, 
spend, invest, and protect money have become key components to 
financial literacy curricula around the Nation and around the 
State of Kansas.
    In 2003, the Wall Street Journal reported that 70 percent 
of Americans lived paycheck-to-paycheck and also the Harris 
Interactive Study in 2009 for financial literacy reported that 
about 50 percent of Americans do not live on a budget and 20 
percent of Americans regularly pay bills late and receive late 
payment fees due to that.
    The credit union movement is founded on the principle of 
people helping people. From July 1, 2009, to June 30, 2010, 
credit union employees and volunteers around the Nation 
conducted more than 13,500 presentations reaching over 413,000 
young individuals as reported by the National Youth Involvement 
Board, which is a support organization for credit unions 
nationwide, to provide financial literacy.
    Credit unions in Kansas are also extremely involved in 
financial literacy across the State. This year, just in the 
State of Kansas, over 6,000 students were reached by credit 
union staff members and volunteers, including myself. Meritrust 
Credit Union is also very involved. I have been able, with the 
support of my credit union, to reach over 2,200 students in the 
State of Kansas, spanning from Dodge City out to Atchison, 
Kansas, using a variety of curriculum, both provided by the 
State Treasurer's Office as well as what we have written on our 
own.
    I want to quickly highlight three different curriculums 
that are very important that I deem very educational for 
students. One of them you have already heard talked about, so I 
will refrain from comment on that. First of all, the Money$mart 
Financial Camp provided by the State Treasurer's Office was 
originally started with a partnership by former Treasurer Lynn 
Jenkins and is now endorsed by Dennis McKinney and the KCUA 
Credit Union Association here in the State of Kansas. We have 
reached over 600 students in the State with this curriculum, 
teaching over 7 camps in the past 2 years. We have 3 more camps 
scheduled for the next 3 months, September, October, and 
November, that will reach a potential of 200 more students. By 
the end of this school year, we are hoping to have reached 
about 1,000 students in the State of Kansas over the past 2 
years.
    Chairman Moore of Kansas. How old are these students?
    Mr. Wolgamott. They are geared toward middle school 
students, so 6th to 8th grade students.
    Communities in Schools was talked about earlier, the 
Reality U that they run in the high schools in the Wichita 
area. Students are given an income based on their GPA. So if 
they have a high GPA, they usually receive a higher income; if 
they have a low GPA, they receive a lower income. If they 
wanted to be an athlete, a professional athlete and they have a 
lower GPA, they are a high school PE coach or maybe a middle 
school PE coach. So the income they receive is structured very 
closely to the grades that they earn, and that is a really 
great teaching point to bring their grades up.
    Many, many organizations in the Wichita area sponsor and 
support the Communities in Schools effort with the Reality U. I 
have been invited with Reality U to go into the schools, in a 
couple of the schools, while they are not in Reality U, I have 
gone into the classrooms and taught a budgeting exercise to 
kind of broaden the scope of what they are able to teach.
    As I mentioned, Meritrust Credit Union is very involved in 
our community. We have partnered with organizations such as 
Youth Entrepreneurs of Kansas, Gear-Up, Upward Bound, 
Americorps, various Wichita State University classes, classes 
at Butler County Community College, VanGo which is an 
organization here in Lawrence, TRIO, ComCare and we partnered 
with the Kansas State Attorney General's Office for National 
Consumer Protection Week.
    Some struggles that we have with financial literacy, first 
of all, it is a struggle to provide financial literacy to 
adults. Most adults see financial literacy as a very positive 
thing; yet, in the 2009 Harris Interactive Financial Literacy 
Survey, 41 percent of adults gave themselves a C, D or F letter 
grade when it came to financial literacy, but only 12 percent 
say they are likely to seek financial help from a financial 
professional, which means they are going to other places or 
they are not going to seek help for financial literacy at all.
    Another weakness I see is the ability to reach students in 
the classroom. Teachers are placed under tremendous pressure to 
fulfill the requirements asked of them within a school year. 
Because of this strain, it is difficult for some schools to 
invite guests to come into their classrooms because of the 
constraints that they have. They feel like they need to get 
everything in that they can get in and so it is hard for them 
to invite outsiders to come into their classroom.
    To conclude, the need for financial literacy is large, not 
just for adults, but those soon to be adults. Current 
statistics point to an increased personal debt and continued 
``spend first and ask questions later'' mentality. A consistent 
focus on programs involving policymakers, educators, and 
financial institutions will strengthen what is currently being 
provided by financial institutions and social organizations.
    Thank you for your time.
    [The prepared statement of Mr. Wolgamott can be found on 
page 92 of the appendix.]
    Chairman Moore of Kansas. Thank you. I now recognize 
myself, and I am going to ask--I guess make a statement and ask 
a general question to all the panelists here, because I think 
this is a very, very important topic that we are discussing 
today.
    Number one, and some of the panelists have already spoken 
to some of these questions, but I am just going to throw these 
out for general discussion by the whole panel if we can for 
just a couple of minutes. And then we will let Representative 
Jenkins talk and ask questions.
    When, ideally, should we start and how young should we 
start to educate students about financial literacy? How young 
can that start? And number two, how do we reach out to the 
adult population? And again, some of you have spoken to this 
already, but I would like to hear more general discussion. How 
do we reach out to the adult population, how do we teach 
financial literacy and personal finance to adults and Members 
of Congress even? I am being a little facetious but I am being 
very serious too because there seems to be, by virtue of some 
of the statements made by some of my fellow Members of 
Congress, a lack of understanding about some of this. I tell 
people all the time, our Nation needs to start living within a 
budget like most American families do. Not all American 
families by any means, but most American families. Those are 
the observations I guess I would make.
    How young can we start teaching students? I have heard 
some--the last witness here spoke about some very young 
students. Do the rest of you agree with that? And how do we get 
this ingrained in our public education system so when they 
start in elementary school and it goes clear up through college 
and again, how do we reach the adult population.
    Any of you, please?
    Mr. Wolgamott. If you do not mind me going first?
    Chairman Moore of Kansas. Sure.
    Mr. Wolgamott. I have two suggestions to reach adults. The 
first one is we partner with organizations that adults are 
already part of. Instead of the adults coming to us, we go to 
them, where they are.
    Secondly, we started the Dave Ramsey Financial Peace 
University program in our credit union. Just because we work at 
a credit union does not mean we are any better with money than 
anybody else out there. So we had 19 employees and their 
spouses come in and we paid for them, as an employee benefit, 
to receive that financial literacy. Because of that, we were 
able to, as a group, pay off $40,000 in debt and save $12,000 
in an emergency fund, just in the 13 weeks of the program. We 
are going to be starting that for a new round of students who 
are employees at our credit union.
    So I think you have to go where the adults are; you cannot 
rely on them to come to you necessarily in order to receive 
that.
    As far as how young to start, we are starting to teach our 
two year old about money, about putting money into a piggy bank 
at home, giving an offering at church. There are some very 
basic things you can do starting very young. Money and finance 
is very much habit forming and if you do not start those 
financial habits early in life, then you are continually trying 
to break them throughout the course of life.
    Chairman Moore of Kansas. What a radical notion that is.
    [laughter]
    Chairman Moore of Kansas. Mr. Mitchell?
    Mr. Mitchell. I agree. I come from the unique perspective 
of being a community banker. I have had to educate adults on 
loan products and all that. It is amazing what people do not 
know about basic finance, and it goes all the way. My wife is a 
literacy coach which is a reading literacy. But I have also 
looked at that and the age of kids that she can touch, and she 
teaches teachers to teach literacy. It is amazing how young 
they can start learning these things. And I agree, the sooner 
we start this, it becomes part of who they are, they learn it 
and then it is not a big deal as they grow older. We teach them 
young and just make it simple, make it fun. Those kids will in 
turn also teach their parents. You bring the parents in there 
and make them responsible for it. It is going to take years, 
but I think that is a good way to get started and then 
eventually we will work ourselves out of this situation.
    Chairman Moore of Kansas. Ms. Voyles?
    Ms. Voyles. I totally agree with everything the gentlemen 
have said. I have just one grandchild story to tell you exactly 
how young they can learn.
    My youngest grandson, when he was a year and a half old, 
hated to be away from his father, he was very connected to him. 
So when I would take care of him, he wanted to know where dad 
was. And I would say, he'll be back soon, he'll be back, he 
would say daddy's working. And I would say why does he work. 
And he will say make the money.
    [laughter]
    Ms. Voyles. Why does daddy need to make the money and he 
would say to buy diapers, food, and toys. When I took him to 
the beach for the first time, he was only two, and later he was 
looking at pictures and he said, I want to go back to the 
beach. And I said, that was a wonderful trip, we will go back 
but we cannot go soon because it takes a lot of money for all 
of us to fly and spend a whole week. So he went on playing and 
then he came over and he said, grandma, work more.
    [laughter]
    Ms. Voyles. So two year olds definitely get it.
    I wanted to add to that that one of my big concerns has 
been--and I know it is hard to address this, but we know with 
more emphasis on communication arts, math, and science that in 
many of our schools across the Nation, K-5 social studies 
education has been diminished. And the amount of time the 
teachers are allowed to teach social studies concepts. And 
economics and personal finance used to fall within that realm. 
So I think this balance of what I heard people talk about, life 
skills and where we all belong, what our students need, I have 
been very, very concerned about this and would like some 
attention paid to how do we get balance back.
    Chairman Moore of Kansas. My time has expired, but can I 
have just a minute, if any other panelists have anything to 
add?
    Ms. Tuttle. It has already been mentioned in terms of 
working with adults and seeing the parent/child relationship as 
something that is viable. At colleges and universities around 
the country, we are dealing much more with parents, parents of 
college age students and so as we think about developing our 
financial literacy program for college students, we would like 
to incorporate communication with their parents as well, 
because some of them have not learned at that stage either. I 
do think for any level of education, especially K-12, trying to 
have things be as experiential as possible and I think some of 
the examples given, it should not be dry, lecture-type 
information, it needs to be something that they can experience 
and integrate in their lives. And the college time is when our 
students really are experiencing that.
    Chairman Moore of Kansas. Mr. Petty, any comments?
    Mr. Petty. I just have one brief comment. I feel like 
necessity is the best motivator and I feel that incorporating a 
curriculum at the high school level, especially for seniors, as 
the State of Kansas has done, they are uniquely poised to make 
significant financial decisions. So I think that there needs to 
be very direct curriculum that they receive right before they 
make those significant financial decisions.
    Chairman Moore of Kansas. Representative Jenkins?
    Ms. Jenkins. I have thoroughly enjoyed the discussion here 
today and I know we are short on time, but I thank you all and 
your comment about Members of Congress benefitting from some 
financial literacy made me smile because I remember a former 
Speaker of the House, whom I will not embarrass, was speaking 
here in Kansas several years ago, and he was an educator by 
profession, and he said the only thing more difficult than 
teaching junior high school students about money was teaching 
Members of Congress about the whole issue of the economy.
    [laughter]
    Ms. Jenkins. I had to smile because I thought how 
appropriate that is.
    I just have one thing. I was interested, Ms. Tuttle, in 
your presentation, that was very interesting and maybe because 
I am a mom who just sent my freshman baby daughter off to 
college, but I was curious, I do not recall hearing this, are 
you doing this all with your own resources? I know there are so 
many in the private sector, so many that rely on good financial 
decisions for the bottom line, are you engaging any corporate 
participation?
    Ms. Tuttle. That is definitely part of our plan. Since we 
are just opening our doors, we had to be creative about our 
funding for the first year, actually looking for internal 
sources at KU for that. But we definitely plan on partnering. I 
have taken some notes today noticing the kinds of opportunities 
there are in the State and I think it would obviously be the 
way to go, because I think there are some ways that it could be 
done in a very objective way, unbiased way, to get that help. 
There are also some of those national resources in terms of 
foundations, like Cash Course and others, so I think there is 
some opportunity here to partner and expand what we are able to 
do.
    We did this summer visit, an excellent program that has 
been started at K State called Power Cat Financial Counseling, 
and they have been going on for about a year and they are also 
very connected with the academic units, both the Personal 
Finance Department and the School of Business. So I see us also 
partnering with academic units and some of the Federal grant 
money and corporate money that we may have access to as well. 
But I think it is something we definitely will use in the 
future.
    Ms. Jenkins. I know resources are tight and it seems like 
there are some in the communities willing to step up in a good 
way. I know the Treasurer's Office has done so much in this 
area, it seems like people knock down their door, they want to 
help, it is just finding those to partner with. So I would love 
to see that.
    And then maybe just a final thought as far as measuring 
outcomes in this whole area of financial literacy. I am not 
sure I want to go to my grave before I see the results of all 
of the efforts that has been put into this. But maybe that is 
what we will have to do, is just let a generation pass. I don't 
watch a lot of TV, but there is a ridiculous jingle that sticks 
in my head from the little bit of TV that I do watch, related 
to I think a requirement that credit reports be made available. 
Do you know what I am talking about? There's this ridiculous 
little jingle about freecreditreport.com. I will not sing it to 
you.
    Chairman Moore of Kansas. Please don't.
    [laughter]
    Ms. Jenkins. But do we know if things like that are 
beneficial to getting our message out and should we do more of 
that? Do any of you have any thoughts or data on measuring 
outcomes or ideas on how we might, other than just waiting a 
generation to see if our bankruptcy rates go down and then I 
will yield back, Mr. Chairman.
    Ms. Tuttle. I am aware of some research that has been done 
for college students' financial literacy, actually a doctoral 
research study is starting to be done, I just saw a report 
about that. I know there are some real assessments going on, 
and it is in fact showing impact. I mean it was somewhat 
modest, it did not change behaviors I think as much as they had 
wanted, but it did change students' knowledge and awareness, it 
did change their decisionmaking about personal finance, but 
maybe less so about taking out loans. So there actually is 
starting to be, at least on the college level, some real 
assessment going on about the impact of that. And I think a lot 
of that has to be looked at in terms of eventually does it 
actually change behavior. And that will be the harder piece to 
really get at or see, whether loan indebtedness starts to go 
down or some of those kinds of issues. On K-12, I would leave 
that to my colleagues, I am not sure.
    Mr. Wolgamott. I think it is very difficult to see outcomes 
because it is hard to follow the student from when we teach a 
Money$mart curriculum or go into the classroom one time and 
teach. We do not have access to them 3 or 4 years later. And 
that is something that we are starting to look at with the 
Money$mart curriculum and other things that we do, is there a 
way that we can track the student if we partner with a specific 
school, 5 or 6 years down the road, maybe give them another 
evaluation to see have they retained any of the things that 
they have been taught.
    And I think also when we here in the State of Kansas start 
to add a really strong financial literacy curriculum to the 
core curriculum that they teach, then I think that will help, I 
think repetition is the huge thing there. It is very hard in my 
job to get repetition with the students, but if that is brought 
up in the schools, then I think that will help a great deal.
    I hope we do not just have to wait and see for a 
generation, that kind of scares me a little bit, but I think 
the repetition is helpful.
    Ms. Jenkins. Thank you, Mr. Chairman.
    Chairman Moore of Kansas. Thank you.
    I ask unanimous consent that the following documents be 
entered into the record for our hearing today: First, a 
statement from our colleague on the House Financial Services 
Committees, Representative Ruben Hinojosa, who co-chaired the 
House Financial and Economic Literacy Caucus with our 
subcommittee's ranking member Judy Biggert; second, a statement 
from the Financial Education and Counseling Alliance; and 
third, a letter from the National Association of Credit Unions.
    Without objection, these documents will be made a part of 
the record.
    I want to thank our first and second panel of witnesses for 
their appearances and their testimony. I know Ms. Jenkins and I 
will take back what we learned from today's hearing to the 
District of Columbia and share it with our colleagues. I also 
want to thank the Dole Institute and KU for being such 
excellent hosts for us today.
    I note that either of us, Ms. Jenkins or myself, may have 
additional questions for our witnesses, which we can submit in 
writing and without objection, the hearing record will remain 
open for 30 days for members to submit written questions to 
these witnesses and place the responses in the record.
    I just want to say in closing, I think this discussion 
today about financial literacy and understanding our financial 
systems in our country is probably one of the most important 
discussions we can have and I sometimes, my wife says, have an 
inappropriate sense of humor, but I think there needs to be a 
lot of education across the whole spectrum, I am talking about 
from children and start teaching our children very, very early 
about how this works and continue that through high school and 
college and then try to reach the adult population and Congress 
as well, because we all need to understand this and the 
consequences of not following good financial practices in our 
country, because there can be disastrous results if we do not.
    I thank all of you and especially my colleague for being 
here today. Thanks to all of you and we are going to adjourn 
this hearing.
    [Whereupon, at 12:04 p.m., the hearing was adjourned.]


                            A P P E N D I X



                            August 24, 2010


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