[Senate Hearing 111-280]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 111-280
 
                    THE FEDERAL GOVERNMENT'S ROLE IN
                 EMPOWERING AMERICANS TO MAKE INFORMED
                          FINANCIAL DECISIONS

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



                                HEARING

                               before the

                  OVERSIGHT OF GOVERNMENT MANAGEMENT,
                     THE FEDERAL WORKFORCE, AND THE
                   DISTRICT OF COLUMBIA SUBCOMMITTEE

                                 of the

                              COMMITTEE ON
                         HOMELAND SECURITY AND
                          GOVERNMENTAL AFFAIRS
                          UNITED STATES SENATE


                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

                             APRIL 29, 2009

                               __________

       Available via http://www.gpoaccess.gov/congress/index.html

       Printed for the use of the Committee on Homeland Security
                        and Governmental Affairs


                  U.S. GOVERNMENT PRINTING OFFICE
51-021                    WASHINGTON : 2009
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20402-0001




        COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

               JOSEPH I. LIEBERMAN, Connecticut, Chairman
CARL LEVIN, Michigan                 SUSAN M. COLLINS, Maine
DANIEL K. AKAKA, Hawaii              TOM COBURN, Oklahoma
THOMAS R. CARPER, Delaware           JOHN McCAIN, Arizona
MARK L. PRYOR, Arkansas              GEORGE V. VOINOVICH, Ohio
MARY L. LANDRIEU, Louisiana          JOHN ENSIGN, Nevada
CLAIRE McCASKILL, Missouri           LINDSEY GRAHAM, South Carolina
JON TESTER, Montana
ROLAND W. BURRIS, Illinois
MICHAEL F. BENNET, Colorado

                  Michael L. Alexander, Staff Director
     Brandon L. Milhorn, Minority Staff Director and Chief Counsel
                  Trina Driessnack Tyrer, Chief Clerk


  OVERSIGHT OF GOVERNMENT MANAGEMENT, THE FEDERAL WORKFORCE, AND THE 
                   DISTRICT OF COLUMBIA SUBCOMMITTEE

                   DANIEL K. AKAKA, Hawaii, Chairman
CARL LEVIN, Michigan                 GEORGE V. VOINOVICH, Ohio
MARY L. LANDRIEU, Louisiana          LINDSEY GRAHAM, South Carolina
ROLAND W. BURRIS, Illinois
MICHAEL F. BENNET, Colorado

        Lisa M. Powell, Chief Counsel and Acting Staff Director
             Matthew J. Pippin, Deputy Legislative Director
             Jessica K. Nagasako, Professional Staff Member
             Jennifer A. Hemingway, Minority Staff Director
                   Benjamin B. Rhodeside, Chief Clerk


                            C O N T E N T S

                                 ------                                
Opening statements:
                                                                   Page
    Senator Akaka................................................     1
    Senator Burris...............................................    13

                               WITNESSES
                       Wednesday, April 29, 2009

Hon. John Berry, Director, U.S. Office of Personnel Management, 
  accompanied by Raymond J. Kirk, Manager, Benefits Officers 
  Training and Development Group, U.S. Office of Personnel 
  Management.....................................................     4
James H. Shelton, III, Assistant Deputy Secretary for Innovation 
  and Improvement, U.S. Department of Education..................     5
Arthur J. Myers, Principal Director and Acting Under Secretary of 
  Defense for Military Community and Family Policy, U.S. 
  Department of Defense..........................................     8
Sandra F. Braunstein, Director, Division of Consumer and 
  Community Affairs, Board of Governors of the Federal Reserve 
  System.........................................................    10
Richard J. Hillman, Managing Director, Financial Markets and 
  Community Investment, U.S. Government Accountability Office....    11
Robert F. Duvall, President and CEO, Council for Economic 
  Education......................................................    26
Dallas L. Salisbury, President and CEO, Employee Benefit Research 
  Institute, and Chairman, American Savings Education Council....    28

                     Alphabetical List of Witnesses

Berry, Hon. John:
    Testimony....................................................     4
    Prepared statement...........................................    33
Braunstein, Sandra F.:
    Testimony....................................................    10
    Prepared statement with an attachment........................    54
Duvall, Robert F.:...............................................
    Testimony....................................................    26
    Prepared statement...........................................    97
Hillman, Richard J.;
    Testimony....................................................    11
    Prepared statement...........................................    79
Myers, Arthur J.:
    Testimony....................................................     8
    Prepared statement...........................................    47
Salisbury, Dallas L.:
    Testimony....................................................    28
    Prepared statement with attachments..........................   102
Shelton, James H. III:
    Testimony....................................................     5
    Prepared statement...........................................    41

                                APPENDIX

Background.......................................................   147
North American Securities Administrators Association, prepared 
  statement......................................................   154
Question and Response for the Record from:
    Ms. Braunstein...............................................   160


                    THE FEDERAL GOVERNMENT'S ROLE IN



                      EMPOWERING AMERICANS TO MAKE



                      INFORMED FINANCIAL DECISIONS

                              ----------                              


                       WEDNESDAY, APRIL 29, 2009

                                 U.S. Senate,      
              Subcommittee on Oversight of Government      
                     Management, the Federal Workforce,    
                            and the District of Columbia,  
                      of the Committee on Homeland Security
                                        and Governmental Affairs,  
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 2:31 p.m., in 
room SD-342, Dirksen Senate Office Building, Hon. Daniel K. 
Akaka, Chairman of the Subcommittee, presiding.
    Present: Senators Akaka and Burris.

               OPENING STATEMENT OF SENATOR AKAKA

    Senator Akaka. I call this hearing of the Subcommittee on 
Oversight of Government Management, the Federal Workforce, and 
the District of Columbia to order. Aloha and welcome to our 
witnesses, and thank you so much for being here today.
    Financial literacy is an issue that must be addressed as we 
continue to grapple with severe economic challenges and global 
recession. The negative impacts of financial illiteracy are 
less obvious when the economy is booming, employment is 
plentiful, and wages rise. It is when recessions come, people 
lose jobs, and wages fall where the true costs of financial 
illiteracy among working families become apparent.
    My interest in financial literacy dates back to when I was 
in the fourth grade. My teacher at that time insisted that each 
child in the class bring a piggy bank to class. We were made to 
understand how money saved a little at a time can grow into a 
large amount and enough to buy things that would have been 
impossible to obtain without savings. And she used that to 
teach us English and arithmetic because she had us write a 
paper on how much money we had and what our intentions were if 
we had enough money to buy something. And so she used that 
piggy bank in that way, and my experience with the piggy bank 
taught me important lessons about money management that have 
stayed with me and helped me throughout my life.
    More people need to be taught these important lessons so 
that they are better able to manage their resources. Too many 
Americans lack basic financial literacy. Americans of all ages 
and backgrounds face increasingly complex financial decisions 
as members of the Nation's workforce and managers of their 
family's resources. Without a sufficient understanding of 
economics and personal finance, individuals cannot 
appropriately manage their finances, effectively evaluate 
credit opportunities, successfully invest for long-term 
financial goals, or cope with financial situations.
    One of the root causes of the current economic crisis was 
that people were steered into mortgage products with costs or 
risks that they could not afford. It is essential that we work 
toward improving education, consumer protections, and 
empowering individuals and families through economic and 
financial literacy in order to build stronger families, 
businesses, and communities.
    My legislation, the Excellence in Economic Education Act 
(EEE Act), was enacted as part of the No Child Left Behind Act. 
The EEE Act promotes economic and financial literacy among 
elementary and high school students. It is intended to fund a 
range of activities such as teacher training, research and 
evaluation, and school-based activities to further the 
understanding of economic principles. I have obtained funding 
of approximately $1.5 million for the EEE Act in each fiscal 
year since fiscal year 2004, and I will continue to work to 
fund this important program.
    Additionally, in 2003 I, along with several of my 
colleagues, created the Financial Literacy and Education 
Commission with the intention to improve the financial literacy 
knowledge of all Americans. Unfortunately, the previous 
Administration did not develop an effective national strategy 
on financial literacy. We must revise the strategy, establish 
goals and objectives, and aggressively work to meet those 
goals.
    In 2004, I worked to include in the Thrift Savings Plan 
Open Elections Act a mandate that the Office of Personnel 
Management (OPM) develop and implement a retirement financial 
literacy and education strategy for Federal employees. I have 
appreciated the efforts of OPM, and I look forward to the 
establishment of goals and benchmarks so that we can continue 
to better prepare our Federal workforce to retire on their own 
terms.
    However, education is only one component of financial 
literacy. We must ensure that consumers are adequately 
protected. Too many Americans are taken advantage of by 
unscrupulous lenders through refund anticipation loans, payday 
loans, and other predatory products. Additionally, members of 
our armed forces are often pressured into making inappropriate 
investment choices. We must restrict practices which are 
predatory and ensure that our regulators better represent the 
interests of consumers.
    The third vital component of financial literacy is economic 
empowerment. Millions of working families do not have a bank or 
credit union account. The unbanked rely on alternative 
financial service providers to obtain cash from checks, pay 
bills, and send remittances. Many of the unbanked are low- and 
moderate-income families that can ill afford to have their 
earnings diminished by relying on these high-cost financial 
services.
    In addition, the unbanked are unable to save securely to 
prepare for the loss of a job, a family illness, a downpayment 
on a first home, or education expenses. Providing access to a 
bank or credit union account can empower families with 
increased financial opportunities. We must do more to bank the 
unbanked.
    Today's hearing provides an opportunity to examine Federal 
financial literacy efforts and the Financial Literacy and 
Education Commission. We must continue to work together to 
encourage better economic and financial literacy, which in turn 
will result in stronger families and better functioning 
markets.
    I appreciate the appearance of the witnesses today and look 
forward to working with them and other members of the 
Administration on this issue of vital importance to working 
families. I welcome the following witnesses today to the 
Subcommittee:
    Hon. John Berry, Director of the Office of Personnel 
Management, who is accompanied by Raymond Kirk, the Manager of 
the Benefits Officers Training and Development Group at the 
Office of Personnel Management;
    James Shelton, Assistant Deputy Secretary of the Office of 
Innovation and Improvement of the Department of Education;
    Arthur Myers, Principal Director and Acting Under Secretary 
of Defense for Military Community and Family Policy at the 
Department of Defense;
    Sandra Braunstein, Director of the Division of Consumer and 
Community Affairs from the Board of Governors of the Federal 
Reserve System;
    And Richard Hillman, Managing Director of Financial Markets 
and Community investment from the Government Accountability 
Office.
    It is the custom of this Subcommittee to swear in all 
witnesses, and I would ask all of you to please stand and raise 
your right hand. Do you solemnly swear that the testimony you 
are about to give this Subcommittee is the truth, the whole 
truth, and nothing but the truth, so help you, God?
    Mr. Berry. I do.
    Mr. Kirk. I do.
    Mr. Shelton. I do.
    Mr. Myers. I do.
    Ms. Braunstein. I do.
    Mr. Hillman. I do.
    Senator Akaka. Thank you. Let it be noted for the record 
that the witnesses answered in the affirmative.
    Before we start, I want you to know that your full written 
statements will be part of the record. I would also like to 
remind you to keep your remarks brief, given the number of 
people testifying this afternoon.
    Again, welcome, and I would like to call on Director Berry 
to please proceed with your statement.

   TESTIMONY OF HON. JOHN BERRY,\1\ DIRECTOR, U.S. OFFICE OF 
PERSONNEL MANAGEMENT, ACCOMPANIED BY RAYMOND J. KIRK, MANAGER, 
 BENEFITS OFFICERS TRAINING AND DEVELOPMENT GROUP, U.S. OFFICE 
                    OF PERSONNEL MANAGEMENT

    Mr. Berry. Mr. Chairman, thank you very much for this 
incredible opportunity to be with you today and, most 
importantly, thank you for your leadership on this very 
important issue. For many years, you have been a voice in the 
wilderness on the topic of the importance of financial 
literacy, and thank goodness that you have because you have 
really advanced a wonderful cause that will benefit all 
Americans.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Berry appears in the Appendix on 
page 33.
---------------------------------------------------------------------------
    It is my pleasure to be here today with Ray Kirk, who is 
our leader on this effort, to give you a little bit of an 
update on what is underway at the Office of Personnel 
Management.
    OPM is committed to educating Federal employees about the 
need for retirement savings and investments and providing good 
information on how to plan for their retirement years. We are 
now doing that through a strategy and an educational model that 
we call Retirement Readiness NOW.
    Retirement Readiness NOW combines basic information about 
the benefits provided by the government, as an employer, and 
the broader financial education needs of our employees. Rather 
than being a ``near-retirement'' event, the Retirement 
Readiness NOW model considers retirement financial literacy and 
education as a career-long process.
    We have three key roles in Retirement Readiness NOW: 
Capacity, coordinating, and catalyst. Building capacity means 
providing training and tools to agency benefit officers so they 
can help their employees understand their benefits and identify 
their financial education needs.
    For example, one of the tools we recently developed in 
partnership with the American Savings Education Council of the 
Employee Benefits Research Institute is the Federal Ballpark 
Estimate--a savings goal worksheet. It is very easy to use. I 
actually went online with it yesterday with Mr. Kirk, entered 
my data, and found some very interesting information. I think I 
am going to have to work an extra 10 years, but it is a great 
feedback mechanism, and it is wonderful in terms of its ease of 
use. We want to help people identify and have a better 
understanding of their current savings pattern to show them how 
well they are doing in meeting their savings goal.
    We also need to have good evaluation measures. They are 
critical to make sure that our efforts are being effective. In 
addition, next month we will be conducting our fourth Benefits 
Officer Retirement Financial Education Symposium. This 
symposium will provide training for agency benefits officers on 
a wide variety of Administration topics, as well as updates on 
retirement readiness initiatives.
    Another key role of OPM is coordination of financial 
education resources. OPM's role is to identify those resources 
and create partnerships to leverage the use of those materials 
by our agencies for their employees.
    Finally, OPM serves as a catalyst for retirement readiness 
programs. OPM speakers participate in a variety of conferences 
involving Federal employees to spread the word on the need for 
retirement readiness and education programs. We have found that 
many agencies have taken this responsibility seriously. Let me 
just mention three quick examples.
    The Social Security Administration currently conducts 
seminars for new, mid-career, and pre-retirement employees 
covering the three dimensions of our Retirement Readiness NOW 
model. They also conduct monthly lunch and learn seminars 
called ``Wealth of Wisdom Wednesdays,'' which cover an array of 
financial education topics.
    In the Veterans Administration (VA), they have established 
a wonderful financial education intranet site for their 
employees. They periodically conduct agency-wide financial 
education programs that are broadcast to all VA locations, and 
they operate programs with a regional focus to address the 
local needs of employees. Employees also receive a letter from 
the VA Secretary that reminds them about the importance of 
financial education and outlines all of the programs the 
Department has, and having that senior leadership is really 
important.
    OPM conducts a speaker series on topics such as debt 
management, Thrift Savings Plan (TSP), college savings plans, 
and home mortgages, and our employees have access to a 
financial education page on the agency intranet.
    However, OPM and agencies cannot improve employees' 
retirement readiness without the direct involvement of the 
employees themselves. Employees must take advantage of 
opportunities provided, and they must assume the personal 
responsibility for taking steps to meet their own retirement 
goals.
    Mr. Kirk and I stand ready with the rest of the panel to 
answer any questions that you or the Subcommittee might have, 
Mr. Chairman. Thank you for this opportunity to be with you 
today.
    Senator Akaka. Thank you very much, Mr. Berry, for your 
testimony.
    And now I would like to call on Mr. Shelton for your 
testimony.

    TESTIMONY OF JAMES H. SHELTON, III,\1\ ASSISTANT DEPUTY 
 SECRETARY FOR INNOVATION AND IMPROVEMENT, U.S. DEPARTMENT OF 
                           EDUCATION

    Mr. Shelton. Good afternoon, Chairman Akaka. Thank you for 
the opportunity to come and talk to you today about the 
Department of Education's efforts in this area, especially 
during Financial Literacy Month. As you stated, the timing of 
this is actually prescient given the condition that we find 
ourselves in economically and the role that the lack of 
financial literacy played in getting us here.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Shelton appears in the Appendix 
on page 41.
---------------------------------------------------------------------------
    You are a leader in actually putting together a number of 
the programs--one of the most significant programs the 
Department has in the area of financial literacy, and so I want 
to talk to you about the status of that program. I also want to 
talk to you about our Financial Literacy and Education 
Commission, and then additionally I want to talk to you about 
the work that we do around higher education and the 
requirements that we have of our lenders to participate in 
supporting our students around financial literacy as they 
obtain grants, awards, and loans.
    The other thing I wanted to do is just tell you how deep 
the commitment runs to financial literacy inside the 
Department. I am not sure if you are aware that Secretary 
Duncan was actually instrumental in creating a school in 
Chicago called the Ariel Charter School, which actually has a 
unique model built around financial literacy. Literally in the 
first grade, each first grade class is given $20,000 of real 
money to invest. They continue to invest those dollars until 
they graduate from school. The $20,000, they then donate the 
principal back to the first grade class at that time, and they 
split the proceeds that they have earned over that period of 
time. There is a curriculum that goes along with it all the way 
through, both helping them understand all the basic tenets of 
financial literacy, but also helping them to be savvy investors 
to understand, given that they actually have a stake in the 
outcome, what savvy investment really looks like--what it looks 
like when it goes well and what it looks like when it goes 
badly. It is that kind of commitment that is shared by not only 
the Secretary but a number of folks inside the Department.
    Now let me tell you about the Excellence in Economic 
Education program. It is administered by my office, the Office 
of Innovation and Improvement. Over the 5-year life of the 
program, the Department has awarded almost $8.8 million in 
grants. In the program's first year, fiscal year 2004, we 
awarded a $1.48 million grant to the Council for Economic 
Education (CEE), formerly known as the National Council on 
Economic Education. In 2005, through a second competition, 
again, $1.47 million in the first year of a 5-year grant to the 
same organization. In fiscal year 2008, we provided the CEE 
with the third-year continuation award for approximately $1.44 
million. A new competition will be held in 2010.
    CEE has implemented a variety of initiatives designed to 
improve financial literacy in our schools. Its mission is to 
promote economic and financial literacy for all students in 
grades K through 12 through its network of State councils and 
university-based centers by training thousands of teachers who 
will reach millions of students. CEE's project activities are 
intended to help students develop the skills they need to 
become knowledgeable consumers, savers, investors, and 
effective participants in a global economy. And they 
complement, because of their sub-grant activities, the work of 
many others in the field who are trying to do similar work.
    Through the EEE program, CEE has awarded nearly $5.45 
million and made 495 sub-grants to State and local education 
agencies as well as State and local organizations that provide 
economic, personal finance, and entrepreneurial education 
programs.
    To ensure greater cost-effectiveness and corporate 
community involvement, sub-grantees are required by the EEE 
program statute to match their Federal funding dollar for 
dollar. These sub-grantees implement activities that include 
collaboratively establishing and conducting teacher training 
programs for teachers of grades K through 12; providing 
resources to school districts that desire to incorporate 
economics and personal finance in their curriculum; and also 
encouraging replication of best practices in promoting economic 
and financial literacy.
    We have been pleased with our partnership with CEE. We 
recently have implemented a new set of metrics for evaluating 
the effectiveness of the program. In collaboration with the 
Council, we determined that we needed to move the Government 
Performance and Results Act (GPRA) measures, the performance 
measures, because it was difficult to actually collect 
information on the first set of metrics. We now have moved to 
the second set of metrics, which I actually think will start to 
show results this year, and then we will be reporting on that 
as we move forward.
    Let me talk to you about the Financial Literacy and 
Education Commission now. In addition to administering the 
Excellence in Economic Education program, the Department of 
Education continues to work with the Financial Literacy and 
Education Commission in its efforts to improve financial 
literacy in our country. We will also collaborate with its 
member agencies of the Commission to bring together 
representatives from the State departments of education and 
local education agencies that are focused on this issue. The 
purpose of the meeting is to share available Federal resources 
on financial education as well as the work of the Council for 
Economic Education and the results from the Council's 
evaluation. By bringing together the various folks that are 
investing right now in financial literacy, of which there are 
many people doing it at the State and local level, we believe 
that in the future we will also be able to significantly 
increase the coherence of the program as well.
    We are also working to increase the financial knowledge of 
postsecondary students. As important as financial literacy is 
at all levels of education, once an individual has received a 
Federal student loan, the consequences of a lack of adequate 
financial knowledge become more significant both for the 
individual and for the Federal Government. Defaults have 
declined from 22.4 percent for borrowers entering repayment in 
1990 to 5.2 percent for borrowers entering repayment in 2006. 
There is no tight evidence that shows that increased financial 
literacy is driving that, but you would hope that those things 
are correlated.
    Financial literacy at the postsecondary level includes a 
number of things. Congress has expanded the types of services 
that must be offered through the Federal TRIO and GEAR UP 
programs. These things are focused on first generation college 
attendees and include education or counseling services designed 
to improve financial literacy and economic literacy of 
participants. Guarantee agencies and lenders are actually 
required to have a significant role in providing this financial 
literacy. However, because of the current market conditions, 
many of them are actually struggling to meet this condition of 
their involvement.
    So, in conclusion, the Administration continues to support 
the Excellent in Economic Education program. With continued 
funding, we will support and expand the programs for students 
and educators and also try and build upon the collaboration and 
coherence of the work that is done by many providers out in the 
field. We will also continue to support evaluation and use the 
outcomes measures to inform program direction. So as we get 
more evidence on which parts of the program are working best, 
you can expect to see it improve over time.
    In closing, let me once again thank you and the rest of the 
Subcommittee that would be here for inviting me to speak today. 
I hope this discussion has illustrated the activities of the 
Excellence in Economic Education program and our postsecondary 
efforts, which I think actually need to be linked, and we will 
continue to monitor the effectiveness of our grant and let you 
know how it is going in the future.
    Senator Akaka. Well, thank you very much, Mr. Shelton, for 
your detailed testimony. Mr. Myers.

TESTIMONY OF ARTHUR J. MYERS,\1\ PRINCIPAL DIRECTOR AND ACTING 
 UNDER SECRETARY OF DEFENSE FOR MILITARY COMMUNITY AND FAMILY 
               POLICY, U.S. DEPARTMENT OF DEFENSE

    Mr. Myers. Chairman Akaka, aloha.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Myers appears in the Appendix on 
page 47.
---------------------------------------------------------------------------
    Senator Akaka. Aloha.
    Mr. Myers. Thank you for the opportunity to appear before 
you to discuss the Department of Defense's efforts to further 
improve financial literacy among our service members and their 
families.
    On behalf of the Secretary of Defense and all the men and 
women who serve, I thank you for your strong support for our 
military community. You can be assured that our commitment to 
the quality of life in the military is stronger than ever. Our 
senior civilian and military leaders understand that the 
success of the military mission depends on the well-being of 
the service members and their families. There is no doubt that 
being financially ready directly impacts the well-being of our 
people and the retention and readiness of the force.
    The Department continues to work in partnership with other 
Federal and State agencies as well as nonprofit organizations, 
such as the Financial Industry Regulatory Authority (FINRA), 
the Consumer Federation of America, and InCharge Institute. 
Their awareness programs have been sensitive to military 
culture and have focused on the needs of the service members 
and their families. Partnerships have also been important in 
improving protection of service members and their families. 
Oversight of lending, investments, and insurance has been 
enhanced through partnerships with Federal and State 
regulators.
    I am proud to tell you some of our success stories. This 
last November, we began offering what we call ``financial 
roadshows.'' So far we have conducted 23 of them at various 
installations--in fact, including one aboard a ship--with 
resounding success. I have been able to observe several of our 
roadshow events and have been impressed by the enthusiasm and 
keen level of interest of all.
    For example, at Fort Belvoir, Virginia, earlier this year, 
roughly 400 service members and their family members attended a 
roadshow on a very early Saturday morning. Child care was 
provided and included a special savings program specifically 
for the children, as you know, financial readiness is a family 
affair.
    These workshops and presentations are tailored to the 
unique needs of the installation. So far, the five most 
requested themes for workshops have been: Financial planning; 
credit management, credit scores; budget, spending plan; 
strategies for home buying and protecting against foreclosures; 
and tips for saving and investing.
    I would also like to take this opportunity to highlight 
some additional facts: 528,737 tax returns have been prepared 
through our Department of Defense Military OneSource operation 
this season at no charge to service members. As alternatives to 
payday loans, service members and families have access to no-
interest loans through military aid societies, and Defense 
credit unions offer small low-interest loans on our 
installations worldwide. Military banks have followed Federal 
Deposit Insurance Corporation's (FDIC) lead, offering 
streamlined applications for small loans on our installation.
    Our Department of Defense schools stay on the cutting edge 
of education by offering courses in business and personal 
finance for students during their high school years from the 
9th to the 12th grade. Designed to make students aware of 
financial challenges confronting them in daily life, topics 
cover: How to make intelligent decisions in spending and 
saving; how to maintain good financial records; how to avoid 
financial disasters that result from unwise use of credit and 
credit cards; information about banking services, insurance 
choices, and investment choices, as well as how to prepare 
income tax returns. Who would not want their child to be able 
to prepare a personal budget before graduating high school?
    We recognize that good financial habits need to start even 
earlier, so beginning last year, we successfully launched the 
Military Youth Financial Campaign as part of Military Saves 
Week. This children and youth program focuses on developing the 
self-confidence and personal skills needed to manage money. The 
hands-on activities teach children and youth how to make 
lifetime habits of managing money to build wealth, increase 
savings, continue learning, and have fun. In 2008, we had well 
over 5,000 youth participants, and this year that number has 
already grown to more than 7,000, and we make sure each child 
feeds their piggy bank.
    Service members and their families have sacrificed much in 
support of this Nation. Therefore, we believe it is our duty to 
continue to provide our military members and their families 
with the tools they need to help them make key financial 
decisions.
    Thank you, sir, again for your strong support of the 
military members and their families. I will be happy to respond 
to any questions you may have. Thank you.
    Senator Akaka. Thank you very much, Mr. Myers. Ms. 
Braunstein, you may go ahead with your statement.

  TESTIMONY OF SANDRA F. BRAUNSTEIN,\1\ DIRECTOR, DIVISION OF 
   CONSUMER AND COMMUNITY AFFAIRS, BOARD OF GOVERNORS OF THE 
                     FEDERAL RESERVE SYSTEM

    Ms. Braunstein. Chairman Akaka and Senator Burris, I 
appreciate this opportunity to discuss what the Federal Reserve 
is doing to help Americans make informed financial decisions. 
This topic is particularly relevant in light of current 
economic conditions and the impact that those conditions are 
having on consumers' finances.
---------------------------------------------------------------------------
    \1\ The prepared statement of Ms. Braunstein with an attachment 
appears in the Appendix on page 54.
---------------------------------------------------------------------------
    The Federal Reserve has a long history of providing useful 
consumer information. We believe that a well-informed consumer 
is a major line of defense in consumer protection. Educated 
consumers can serve as their own advocates and better protect 
themselves from unnecessarily expensive and abusive financial 
products and practices. However, the Board also believes that 
financial education is not a panacea. An effective consumer 
protection program should include raising consumer awareness 
and providing accurate information, increasing transparency of 
products through effective consumer-tested disclosures, and, 
when necessary, promulgating regulations banning or restricting 
unfair and abusive products and practices.
    This spring, in response to the increasing number of 
foreclosure rescue scams identified by our nonprofit partners, 
the Board purchased 30-second advertisements in movie theaters. 
The advertisements, which played in 14 cities with high 
foreclosure rates, warned consumers about foreclosure scams and 
directed them to our website for tips on avoiding foreclosure 
scams and for other useful consumer information.
    The Board has also calculators for consumers to explore 
mortgage choices and mortgage refinancing. And 2 weeks ago, we 
launched English and Spanish versions of our credit card 
repayment calculator, which allows consumers to estimate how 
long it will take to pay off their credit card bills if they 
only make minimum payments.
    While we work diligently to enhance consumer awareness and 
provide financial tools and information, the Board is aware 
that some consumers would benefit from a more structured 
approach to education. For example, across the Federal Reserve 
System, we host teacher education workshops for kindergarten 
through grade 12 teachers. These workshops focus on activity-
based constructivist learning approaches in contrast to more 
traditional information transfer education models. Our goals 
are to incorporate more experiential learning and to foster the 
development of critical thinking and problem-solving skills.
    At the same time we work to make sure that quality 
financial information reaches consumers, the Federal Reserve 
System is evaluating the impacts of financial education. Board 
staff, working with the Department of Defense, Army Emergency 
Relief, and San Diego City College, conducted a longitudinal 
study involving two groups of soldiers--one receiving a 2-day 
financial education course as part of their individualized 
training, and a second comparison group that did not receive 
any financial education. Soldiers who took the financial 
education course, compared to those who did not, were more 
likely to engage in positive financial behaviors and were less 
likely to engage in negative behaviors.
    The Board has responsibilities with respect to writing 
rules for a number of important consumer financial disclosures. 
The Board has developed extensive new disclosures for a variety 
of financial products, most notably credit cards, and we are 
currently in the midst of a major overhaul of mortgage 
disclosures.
    To ensure that new disclosures are useful to consumers, we 
have increased our use of consumer testing. We are also 
learning from the field of behavioral economics as we continue 
to develop disclosures that consumers will pay attention to, 
comprehend, and use in their decision making.
    Our consumer testing efforts taught us that even the best 
disclosures do not offer the best protection to consumers in 
all cases. Some aspects of increasingly complex financial 
products simply cannot be understood or evaluated by consumers, 
no matter how clear the disclosure. In those cases, direct 
regulation, including the prohibition of unfair or deceptive 
practices, is necessary. The Board took this approach with 
separate rulemakings that govern high-cost mortgage loans and 
credit cards.
    In summary, we believe that a comprehensive approach best 
enables consumers to function effectively in the financial 
services marketplace. By enhancing consumer awareness, by 
providing reliable information to help consumers understand 
financial products and services, by requiring meaningful and 
consumer-tested credit disclosures, and by prohibiting unfair 
and deceptive financial products and practices, we can help 
consumers make informed decisions and protect them from abuse.
    Thank you very much.
    Senator Akaka. Thank you very much, Ms. Braunstein. Mr. 
Hillman, will you please proceed with your statement?

    TESTIMONY OF RICHARD J. HILLMAN,\1\ MANAGING DIRECTOR, 
  FINANCIAL MARKETS AND COMMUNITY INVESTMENT, U.S. GOVERNMENT 
                     ACCOUNTABILITY OFFICE

    Mr. Hillman. Thank you, Chairman Akaka and Senator Burris. 
I am happy to be here today to address the important topic of 
financial literacy.
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    \1\ The prepared statement of Mr. Hillman appears in the Appendix 
on page 79.
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    In 2006, Government Accountability Office (GAO) issued a 
report assessing the effectiveness of the Federal Financial 
Literacy and Education Commission, and our report included 
several recommendations. My prepared statement provides an 
update on the status of those recommendations, but this 
afternoon I would like to focus on two important 
recommendations--the first related to the National Strategy for 
Financial Literacy and the second related to fostering 
partnerships.
    In 2006, we reported that the Commission's National 
Strategy was a useful first step in focusing attention on 
financial literacy, but largely was descriptive rather than 
strategic. The strategy was comprehensive in many respects, but 
its recommendations were presented as ``calls to action'' that 
generally did not include a plan for implementation. We 
recommended that the Commission revise the strategy to include 
a concrete definition for ``financial literacy'' and 
``education,'' specific goals and performance measures, the 
actions needed to accomplish these goals, and a description of 
the resources required.
    The Commission has now provided definitions for ``financial 
literacy'' and ``financial education,'' but has not 
incorporated the other elements that we recommended. For the 
most part, the revisions to the strategy since 2006 have 
consisted of newly developed calls to action, but they have not 
represented a fundamental shift in approach that incorporates 
specific recommendations on roles, funding, and activities. As 
a result, we continue to believe that the National Strategy for 
Financial Literacy, while beneficial in some regards, still 
does not serve as a true functional strategy that is a plan of 
action intended to achieve specifically stated goals.
    Our 2006 report also recommended that the Commission 
consider additional ways of partnering with private 
organizations and with State and local governments. We believe 
that the Commission has made progress in this area. In response 
to GAO's report in April 2007, the Commission created the 
National Financial Education Network which helps facilitate 
financial education at the State and local level. Our review 
indicates that the network has been a useful initial action to 
foster communication and collaboration among Federal, State, 
and local entities that share the common goal of improving 
financial literacy. In particular, network representatives with 
whom we spoke felt that the network provided an opportunity for 
members to learn from other States and localities and what they 
were doing and sharing of best practices.
    The Commission also played a role in facilitating the 
creation of the President's Advisory Council on Financial 
Literacy and has provided administrative support to the 
council. This council was created by an Executive order in 
January 2008 and includes 16 prominent members who represent 
private corporations, nonprofit organizations, and academic 
institutions, amongst other entities. The council has a 2-year 
term that expires in January 2010. We believe that thus far the 
council's activities have been productive and beneficial, 
particularly in helping to focus high-level attention on 
financial literacy amongst leaders in the nongovernmental 
sector and in facilitating strategic alliances amongst Federal, 
private, and nonprofit enterprises.
    We recognize that the Financial Literacy and Education 
Commission faces some real challenges in achieving its mission. 
First, the Commission has limited resources. It has no 
independent budget, and it has had only limited funding 
directed to it. As a result, to carry out its activities, the 
Commission has largely relied on limited financial and in-kind 
resources contributed by its member agencies. The Treasury's 
Office of Financial Education provides the Commission with its 
primary administrative support, but this office is quite small, 
averaging about five staff to support its own and the 
Commission's activities.
    Further, the Commission's governance structure has both 
advantages and disadvantages. It consists of 20 Federal 
agencies who operate by consensus, but no independent budget 
and no legal authority to compel member agencies to take 
action. This has the benefit of bringing together a large 
number of players to achieve the common goal of improving 
Americans' financial literacy. At the same time, though, there 
are inherent challenges in coordinating the efforts of 20 
Federal agencies, each with its own set of interests, 
resources, and constituencies.
    Mr. Chairman, this concludes my prepared statement. I would 
be pleased to address any questions at the appropriate time.
    Senator Akaka. Thank you very much, Mr. Hillman.
    I want to thank you for your testimony, and I look forward 
to asking you questions. But before I begin with questions, I 
would like to call on Senator Burris for any opening statement 
he may have.

              OPENING STATEMENT OF SENATOR BURRIS

    Senator Burris. Thank you, Mr. Chairman and members of the 
panel. I would just like to welcome our witnesses today and 
thank them for taking the time to be here and tell us about the 
work their various agencies are doing to promote financial 
literacy and education throughout the country. That is kind of 
my strong suit. I have been in finance. I started out as a 
Federal employee, as a national bank examiner for the 
Comptroller of the Currency, so I have been through the 
financial part with the Federal Government and ended up in the 
banking business for many years before I became a public 
servant rather than a politician.
    I know that this issue is important to Senator Akaka, and I 
commend you on the timing of this hearing, Mr. Chairman, 
because it is the end of the Financial Literacy Month, so you 
timed that just right.
    I also understand that you held a hearing on this subject 2 
years ago, and we are here today to determine what steps have 
been made in the past 2 years to improve the work of the 
Financial Literacy and Education Commission to develop a 
retirement financial literacy and education strategy for the 
Federal Government. And just by way of another thought, I just 
hope that in some kind of way you were able to reach our school 
children with some of the literature and materials that you may 
be putting out so that they can get a feel for what that dime, 
dollar, and what money really means and what it is, because we 
know some of our--especially the ones in this college 
generation now who can get the credit cards and get them mailed 
to them, the parents do not know that they got the credit card, 
and they are out of money, and they do not know that credit 
cards means that eventually somebody will have to pay the bill. 
So I just hope that some of that was included in the 
Commission's work.
    That is my opening statement, Mr. Chairman, and I might 
have a question or two as we proceed. Thank you.
    Senator Akaka. Thank you very much, Senator Burris.
    Mr. Berry, it is good to have you here and to hear what OPM 
is doing in this area of financial literacy. It pleases me that 
OPM values the use of evaluation measures to determine the 
effectiveness of its financial literacy programs. How will OPM 
determine what goals and benchmarks are most appropriate? And 
when will these benchmarks be put in place?
    Mr. Berry. Mr. Chairman, thank you. As I understand it, our 
strategy basically requires each agency to develop their own 
plan and to report annually to OPM on their retirement 
readiness strategies. Mr. Kirk and his team go over each 
agency's annual report to make sure they include good metrics, 
they follow good accountability measures, and they provide us 
with the data we need to go forward with this program.
    Mr. Kirk, is there anything that you would like to add to 
this in terms of our measurement program for the Chairman, with 
the Chairman's indulgence?
    Senator Akaka. Yes. Mr. Kirk.
    Mr. Kirk. Thank you, Mr. Chairman. In addition to the 
individual agency assessments, OPM has two measures that we 
will be implementing this calendar year.
    One is a measure of employee knowledge of benefits. The 
Federal benefits program is an important foundation of the 
financial preparedness of our employees, and this fall we are 
going to be benchmarking a measure of employee knowledge of 
those benefits programs so we know where we should target 
additional education for employees so they can understand those 
benefits and maximize them.
    The second measure that we will be implementing this 
calendar year is a retirement readiness index. We will be 
having an online tool called ``Retirement Readiness Profile'' 
that allows individuals to get an assessment of where they are 
in the state of retirement readiness on the three dimensions 
that the Director mentioned. This profile will calculate an 
index score, which we will be able to then monitor on an 
aggregate basis.
    With this information we hope to be better able to assess 
the pulse of the Federal workforce to determine which areas 
employees are making improvements in retirement readiness, and 
which areas they may need more help. Then we can target 
additional development and training programs for employees in 
those areas.
    Senator Akaka. Thank you very much for that. I am glad to 
hear you say that in essence you are informing your people 
about what benefits there are available, and in many cases, the 
people in the Federal workforce do not know that there are 
benefits available to them. So this is very important, and I am 
extremely interested in your readiness program, in this case 
retirement readiness, to help people plan their golden years 
after their work here. So thank you for that.
    Mr. Shelton, I greatly appreciated your testimony today. At 
our hearings during the previous Administration, the Department 
of Education (DOE) witness would explain why funding for the 
EEE was eliminated in the President's budget. After years of 
continuing to keep it funded with the assistance of Senators 
Harkin, Specter, and others, I am hopeful that we will be able 
to increase the resources available for the EEE program.
    Mr. Shelton, while recognizing that there is a need for 
increased funding and resources for financial literacy efforts, 
can you point out specific areas where additional resources for 
sub-grant activities would have the most impact?
    Mr. Shelton. Mr. Chairman, I believe there are at least two 
areas that we would like to see some additional sub-grants take 
place. One is that what is apparent is that there is a 
significant level of activity around financial literacy and 
education in particular in the K-12 sector going on today. If 
you look through the collection of grants that have been made, 
sub-granted by the program, you see a number of very good 
examples. But what is clear is that we still are lacking the 
mechanisms for clear collaboration and actually steering the 
resources in a way that they are actually used, in a way that 
is efficient, and gets leverage off of everything that is 
happening in the field. So you see a lot of overlap and a lot 
of discontinuity in the field. Increasing resources directly to 
those coordinating networks would actually be significantly 
helpful both at the State level and the localities.
    The second thing is that there are certain organizations 
that seem to be emerging to the top in terms of their ability 
to have impact and their measuring actually of student 
effectiveness. I happen to know this by looking through the 
profile and my experience with grantees in particular. So by 
actually getting the grantees increased dollars that actually 
have metrics of success, I believe we will also start to see a 
greater impact with the students in the field, the students, 
and teachers that are being served directly by the programs.
    Senator Akaka. Thank you.
    Ms. Braunstein, I continue to be concerned that consumer 
access to mainstream financial institutions remains limited in 
underserved communities, especially as affordable credit is 
becoming increasingly difficult for consumers to obtain. 
Without access to mainstream financial institutions, working 
families miss out on opportunities for savings, borrowing, and 
low-cost remittances.
    What must be done to improve access to mainstream financial 
institutions in economically underserved communities?
    Ms. Braunstein. Chairman, we share your concern about the 
unbanked, and we have a number of programs going on around the 
country, especially through the reserve banks, where they are 
working specifically in their communities to try to bring the 
unbanked into the banking system.
    Attached to my testimony there is an appendix which lists a 
number of programs. You will see in that appendix there is a 
program called ``Bank On'' that is around the country, and it 
is ``Bank On Cleveland,'' or ``Bank On St. Louis,'' wherever it 
is located. And that program was established specifically to 
try to bring people into the banking mainstream, and the 
Federal Reserve is actively participating in a number of 
locations with that program, as well as we look for other means 
to do that as much as possible.
    Senator Akaka. Thank you.
    Mr. Myers, I am encouraged by Department of Defense's (DOD) 
success at promoting the message that obtaining financial 
counseling and assistance is a far better option than using 
predatory loans. However, a previous GAO report identified 
reluctance among some service members to reveal financial 
problems due to possible implications to their careers. We 
cannot allow this stigma to prevent service members with 
financial problems from seeking financial counseling.
    What must be done to remove any stigma that still deters 
personnel from seeking financial assistance? That is the 
question, but let me, before I ask you for your response, tell 
you that in Honolulu we did hold a session in the largest hall 
we had there for military personnel, and it was such a success. 
It was great to see young couples from all branches to be 
there, and it was so well done, as a matter of fact, the 
admiral made good remarks on that and told me this is something 
that maybe we should be doing annually. But it was good to see 
the young couples there and to see the smiles on their faces as 
they left the hall. And I think more sessions like that 
throughout the country would certainly help the military 
personnel.
    So what must be done to remove any stigma that still deters 
personnel from seeking financial assistance?
    Mr. Myers. I believe it is a three-prong attack: Education, 
opportunity, and leadership support. In the military now, when 
you are in basic training, you get financial management 
education. After you leave basic training, as part of your 
indoctrination, that continues. In all of our support centers 
and our bases, we have financial managers to assist.
    Opportunities--we started these roadshows, and we have done 
them at 23 installations, and what we actually do is ask the 
commander, ``What are the issues as far as financial management 
at your base?'' We plan to go to Nellis Air Force Base in a few 
months. Their issue is housing because they have been so hit by 
the housing prices. In fact, we think later on this year we are 
going to Hawaii to do a roadshow there. We will go to Alaska, 
and all 50 States. It is an ongoing thing, as long as we have 
the opportunities.
    Also, before our Guard and Reserve deploy, we send 
financial consultants to sit down with the member and their 
family to go over a financial plan. When they come back, we 
have financial consultants at the base. At Fort Drum, they came 
back in November. Our financial consultants were supposed to 
leave in January. They are doing such a great job--they are 
still there helping those soldiers.
    We also have financial roadshows at other bases. We had one 
at Fort Myer yesterday. Who opened it up? The commander of Fort 
Myer. We had one in the Pentagon last year. It lasted 4 days. 
We had 400 people every day. This year we had 1,000 every day. 
We extended it for 5 days. Talk about senior leadership. 
General Petraeus was there along with other senior leadership. 
Admiral Mullen, now the Chairman, directed every Navy member to 
have a financial plan.
    Our next goal is to have our people who join the service 
establish a financial plan up front. We will review it with 
them. We will review it when they rotate, get married, and have 
significant life changes.
    So I believe with everything we are doing, it is no longer 
a stigma. It is in vogue to get your finances in order, and we 
are starting with the children. We are doing it in our youth 
centers, in our DOD schools and with our military members.
    So we are not satisfied, we will never be satisfied. There 
is always something to do. But I think we have a great start.
    Senator Akaka. Thank you very much, Mr. Myers.
    Let me ask a question of Mr. Hillman before I call on 
Senator Burris for his questions.
    Mr. Hillman, thank you very much for the work that you and 
your colleagues have carried out at GAO to assess the work of 
the Commission. As you described in your testimony, the 
Commission could do more to incorporate GAO's recommendations 
and modify the national strategy to help ensure accountability. 
Could you give some examples of outcome measures that the 
Commission could utilize or describe how the Commission might 
determine such important benchmarks?
    Mr. Hillman. I would be happy to do that. We did find the 
national strategy to be a very comprehensive document to 
include a good amount of information on key issues associated 
with the importance of improving financial literacy. However, 
we had concerns that the strategy itself did not have desirable 
characteristics that we have seen in other national strategies. 
The question that you raise regarding the establishment of 
goals or performance measures is one of those such areas that 
we saw as a weakness in the national strategy.
    Examples of such goals that we would be hoping to see in 
such a strategy would be those that provide for outcomes as 
opposed to processes or those that provide for a change in 
consumer behavior. There are a number of measures that could be 
used to gauge the progress in improving financial literacy in 
America, such things as reducing the number of unbanked 
Americans and keeping track of those activities; perhaps 
increasing the number of people who begin saving for 
retirement; or even perhaps increasing the number of people 
checking their credit report to determine whether or not they 
achieve a high enough rating to obtain loans at reasonable 
rates.
    Measures such as these that change behavior in individuals 
could be a better indicator of the extent to which the many 
programs and initiatives that cut across the Federal Government 
are beginning to achieve their purposes.
    Senator Akaka. Well, thank you very much for your response.
    Senator Burris, your questions.
    Senator Burris. Thank you, Mr. Chairman.
    Mr. Shelton, please bring me up to date in terms of the 
educational literacy program. Did you send out materials or how 
did you communicate with the various school districts? Did you 
do it at the State level with the State Boards of Education or 
did you do it on the local level? What type of contact did you 
have, and how did it proceed?
    Mr. Shelton. Senator, the vast majority of the activity 
takes place through one of our grantees that I spoke about 
during my testimony that actually does outreach to States and 
local education agencies and makes sub-grants to a number of 
State and local agencies as well as nonprofit organizations 
that are involved in financial literacy. The grant making is 75 
percent of the total funding that is allocated to the EEE 
program each year, which is $1.4 to $1.45 million almost every 
year since its founding.
    Senator Burris. How far does that go?
    Mr. Shelton. It was originally founded in 2004--how far 
does the funding go?
    Senator Burris. Yes. Who are you reaching with--I do not 
think you could reach the Chicago school district with $1 
million, but who are you reaching? Are private contractors 
doing this?
    Mr. Shelton. The sub-grants that go to the agencies are 
complementary to--one, they are required to have matching 
funds. But, two, they are small grants that go into usually 
what would be a larger budget of each of these organizations 
complementing their work. My understanding, having recently 
started to review the program, is that the individual small 
grants are appreciated. In addition, the coordinating 
activities that the grantee provides are also considered to be 
valuable as well, bringing people together so that they can 
start to share information and leverage each other's work.
    It is a reasonable question, to say the least, as to 
whether or not there is sufficient funding.
    Senator Burris. I am pretty sure you could always say you 
could use some more, right, to reach more--because as Mr. Myers 
said, literacy not only with Federal employees but literacy in 
the Nation is going to start with our children. So we have 
really got to put that into our elementary school system. 
Wouldn't you agree, Mr. Shelton?
    Mr. Shelton. Senator, a number of States--actually, 28 
States actually have financial literacy built into their 
standards as it stands today. It stands to reason that there 
would be a number of States that actually should, especially 
given these conditions. Additionally, there are literally 
hundreds if not thousands of organizations that are involved in 
providing financial literacy to students in the K-12 space. 
Most of them have funding from a variety of sources.
    What we have not seen, actually, is the kind of 
coordination that would actually ensure that each student is 
getting the kind of financial literacy and training that they 
need. And, in fact, the programs that are delivering these 
services are actually doing the kind of evaluations to tell 
whether or not the students are actually benefiting from the 
work.
    So lots of activity, not clear, lots of impact, little 
funding coming from us, not clear, it takes a lot of additional 
funding to get the kind of collaboration and coherence, but 
definitely more than what we have today.
    Senator Burris. Very good.
    Ms. Braunstein, you made mention about credit cards. I want 
to know what happened to that study that you did to say that 
you have got to pay off more than the initial minimum payment. 
Is that what you testified to? Did I hear you say that you had 
some training by convincing them to pay off more than the 
initial downpayment and how long it will take them to pay it 
off?
    Ms. Braunstein. Yes, in the legislation that passed through 
Congress a couple years ago, there was a provision--it was 
bankruptcy legislation. There was a provision that required us 
to develop information that would help consumers understand 
that when they only made the minimum payments on their credit 
card bills that it might take them a very long time to pay off 
those bills. So we have developed online calculators that are 
available where people can enter in information from their 
credit card statements, their balance amount, their minimum 
payment amount, their interest rate, to see, if they only made 
that minimum payment, how long it would take them.
    It also allows them to look at other kinds of payment 
streams. So if they decided they wanted to pay double the 
minimum payment, what would that mean for them? Or if they 
decided on the other hand that they wanted to pay off that 
balance in a certain amount of time, how much would they have 
to pay per month?
    This information is also available by telephone--we have a 
toll-free number for consumers--as well as the website.
    Senator Burris. Was this just for Federal employees or was 
this for the benefit of----
    Ms. Braunstein. No, this is for the general public. It is 
up there now on the website. We launched it about 2 weeks ago.
    Senator Burris. Oh, because I am now just trying to think 
back when I was a civilian before I got here on January 15. I 
have heard some local promotions about paying off your credit 
cards or if you only pay the minimum payment, but I did not 
even know the Federal Government had any role in trying to 
educate the consumer. And I lived in a major metropolitan area, 
and none of this information--and I consider myself pretty 
astute in terms of finances, and I have no recollection of any 
of this information reaching the public. So how was this 
disseminated?
    Ms. Braunstein. Well, card companies will be required to 
put on the periodic statements that consumers receive, you will 
start seeing this.
    Senator Burris. They do not read their statements.
    Ms. Braunstein. It will be very prominent at the top of the 
statement. Next to the box where they have the minimum payment, 
there will be something there that tells them where to call or 
what the website address is for more information about what 
only paying the minimum payment would mean. That will be very 
prominent.
    Senator Burris. Have you ever taken a poll of how many 
people who have credit cards get their monthly statement and 
read anything on the statement other than what the balance is 
and they send in the minimum payment?
    Ms. Braunstein. No, but I think----
    Senator Burris. I bet 99 percent of the people who get that 
statement do not even know that is on there.
    Ms. Braunstein. I think people do look--even though they do 
not look at a lot of other information on their statement, I 
think the first thing they go to is what do I have to pay this 
month, and it is going to be right up there next to that 
minimum payment, and when is my due date, and that is where the 
information will be.
    Senator Burris. Have you done any type of polling or 
analysis on how many people actually read that?
    Ms. Braunstein. Well, as a matter of fact, we just 
redesigned credit card disclosures. We did a major project on 
that, utilizing consumer testing where we used focus groups of 
consumers to first find out what kinds of information is 
important to consumers about credit cards, not just on the 
periodic statements but also when they receive solicitations in 
the mail and in their account-opening disclosures. And as a 
result of that, we have redesigned disclosures, and then we did 
further testing with one-on-one interviews to make sure that 
consumers could understand the information that was there and 
that they were comprehending it correctly. And then we did a 
major quantitative testing of a large number of consumers to 
make sure that the disclosures we had redesigned would work.
    So, yes, we have tested that, and part of that testing was 
the statement about the minimum payment, and people did notice 
it and did understand it.
    Senator Burris. Well, do you think that the President's 
position on credit cards and the latest promotion will help the 
situation at all? He is going to take a move to try to deal 
with disclosures by our credit card companies and simple 
information that even a fifth grader can read and understand? 
Will that help?
    Ms. Braunstein. Yes, and we have tried to do that. We 
issued earlier this year or at the end of last year major 
sweeping regulations revamping the entire industry, both with 
disclosures as well as prohibiting unfair and deceptive 
practices that we identified. And we think that those rules, 
when they go into effect, will help tremendously.
    Senator Burris. Does the Federal Reserve still have those 
educational programs, where you can go to the Federal Reserve 
and learn about money? I recall in my district when I was there 
where you could actually go and see money and see it being 
burned, see it being-- the old bills being dealt with, and 
school kids used to go down--I think in Chicago, is that the 
Fifth Federal Reserve District?
    Ms. Braunstein. No, the seventh.
    Senator Burris. The seventh, right. That is right. Are 
those programs still going on?
    Ms. Braunstein. Yes, they are. And, in fact, many of them 
have been enhanced in recent years, and they are quite robust--
some of the reserve banks have quite robust programs, and they 
constantly bring classes of school children through.
    Senator Burris. Mr. Hillman, you noted that the President's 
Advisory Council has been successful in creating needed 
partnerships with the public and private sectors. This council 
has a 2-year term. Should it be extended or restaffed? Or have 
any plans been made for the future of this program?
    Mr. Hillman. As part of the work that we did for this 
hearing, we updated the status of our recommendations in our 
December 2006 report, so we have not had a comprehensive look 
at the accomplishments of the President's Advisory Council on 
Financial Literacy. We have, though, reviewed its annual report 
and found it to include a number of key accomplishments that 
were quite impressive. Overall, we felt that the first ever 
National Financial Literacy Challenge that it administered with 
the Department of Treasury was one key, significant 
accomplishment that the council has had.
    Our initial reviews showed that the council was an 
important first step in promoting financial literacy and it 
would be useful for it to be reinstituted.
    Senator Burris. Does anyone have overall jurisdiction to 
deal with--is a separate group dealing with Federal employees 
for financial literacy and another group dealing with the 
public? Or is it just based on your particular--like the 
Federal Reserve has public responsibility and the Department of 
Education has Federal responsibility and the department of 
personnel--Mr. Berry, you are primarily government centered and 
very little direct with the public. So do you have any public 
contacts or is yours only with Federal employees?
    Mr. Berry. Primarily Federal employees and retirees from 
OPM's perspective.
    Senator Burris. And now are they getting an education in 
what to do with their--the fact that they may start to work, is 
there any type of material that is given to a young Federal 
worker who comes in to convince them, if they are just out of 
college, and they are 24 or 25 years old, and they have really 
got all those loans, and they need every penny that they can 
make, because they are not making that much money, do you have 
any luck in trying to convince them that, ``hey, you ought to 
start thinking about retirement and putting a dollar away for 
the future?''
    Mr. Berry. Yes, sir. In fact, I can personally testify to 
my own experience. I started working on Capitol Hill as one of 
the people sitting behind you there when I was 25, and I was 
under what is called the Federal Employees' Retirement System 
(FERS). In my first briefing, the person at the House of 
Representatives--I was working on the House side--explained to 
me how important it was to invest, and specifically to take the 
full advantage of the government contribution. In other words, 
if you are not investing, you are really not maximizing the 
opportunity that is on the table. And, thankfully, I started 
investing when I was 25.
    Senator Burris. Oh, you did?
    Mr. Berry. Yes, sir.
    Senator Burris. Ninety-nine percent of them do not do it 
because they need the money, Mr. Berry.
    Mr. Berry. And I think there is always that tendency to 
think of retirement as a long way away.
    Senator Burris. Tell me about it.
    Mr. Berry. And I think it is our generation's 
responsibility to remind people it comes faster than you 
expect.
    Senator Burris. You better believe it does. [Laughter.]
    I wish there was some kind of way--because I have tried to 
do this. Well, I managed a law firm, and we hired young 
associates or support staff at the law firm, and naturally they 
are making a decent salary, but you cannot convince them to 
save a dime out of a dollar. That is what my dad taught me. I 
have never been rich, but my dad was just instrumental in if 
you make a dollar, you save a dime. And I have never forgotten 
that. And I tried to teach it to my kids. They did not follow 
it, though. [Laughter.]
    Yes, Ms. Braunstein?
    Ms. Braunstein. Senator, I just wanted to let you know that 
in addition to all the public programs that we do at the 
Federal Reserve, we actually have an extremely active internal 
workplace education program for Federal Reserve employees that 
includes information about retirement. We have an extremely 
high take-up rate on our thrift plan. And we have information 
on retirement as well as other facets of financial education, 
including homeownership and those responsibilities. We do 
programs quite consistently on that for our staff.
    Senator Burris. I wish that you would try to keep some type 
of data on that, some type of a record so we can see how 
successful it is, how many people are really doing it. And 
hopefully that data is compiled so you can look back in 20 
years and see whether that person really did that individually, 
like Mr. Berry said he was able to save. So, therefore, he can 
take one of these low-paying Federal jobs and live on his 
interest and income that he made from his wise investments. But 
I hope that there is some type of follow-up study that will be 
taking place.
    Mr. Chairman, I see I am over my time, but I appreciate it. 
I might have to slip out on you again to go to another hearing. 
But I really appreciate the opportunity, Mr. Chairman. Thank 
you very much. And thank you, panel. I really appreciate the 
opportunity.
    Senator Akaka. Thank you.
    Let me ask a second round of questions. Director Berry, 
what has been mentioned in questions asked seems to bear on 
retirement and preparation for retirement. In order to retire 
on one's own terms, an individual must manage their debt 
responsibility, choose a mortgage suitable to their financial 
situation, and invest appropriately by utilizing the TSP and 
other options.
    What must be done to ensure that Federal workers have the 
ability to make sound financial decisions in different 
situations that have long-term consequences so they can retire 
on their own terms?
    Mr. Berry. Senator, I think if there is a bright spot in 
the dark storm which we find ourselves in, it is that we have 
everyone's attention, and I think that is a wonderful 
opportunity for us. It is a chance to pass on that educational 
message that Senator Burris referenced concerning the 
importance of saving. That message is if you want that quality 
of life and you do not save, you will not have it.
    I think people have received a very big wake-up call. I 
think there was a perception, as you mentioned, Mr. Chairman, 
in your opening statement, that when times are good, people 
tend to ignore their 401(k) or their TSP plan. I do not think 
anyone is ignoring them anymore, and they are paying attention 
to just how careful they have got to be and how much ground 
they are going to have to catch up.
    In addition, Mr. Chairman, I think it is important to point 
out we do not consider preparing for retirement as just being 
financially ready. We look at being mentally and socially ready 
as well as focusing on overall health. There are steps you can 
take now that will dramatically improve your health and overall 
quality of life in retirement years. For example, building 
exercise into your regimen and paying attention to your diet 
can mean quality of life in your retirement years is going to 
be much better.
    Social preparation is also important. We ask people to 
actually think about how they want to live when they retire. 
For example, if they are gregarious, social, or networking 
people, where might they want to retire? Do they plan to retire 
in an area that, let us say, where the cost-of-living might be 
less, like Kansas? Or are they planning to be in the Manhattan 
area of New York where the cost-of-living is much higher? This 
scenario will require a dramatically different planning 
scenario.
    So we are trying to get people to think socially. Where 
does their family live? Where do their kids live? What type of 
lifestyle do they want to maintain in their retirement years? 
Because that will affect their financial decision making as 
well. And so we are trying to get our Federal employees to 
focus not just on the financial but on the health and 
sociability index, if you will, because they all really knit 
together very importantly, sir.
    Senator Akaka. Thank you.
    Mr. Shelton, I very much appreciate that President Obama 
includes financial literacy in his platform to help working 
families. As you mentioned, Secretary Duncan has also long been 
a supporter of these efforts as he was the founder of the Ariel 
Community Academy in Chicago that uses an innovative financial 
literacy curriculum.
    The leadership on financial literacy exhibited by the 
President, Secretary, and many others is all the more critical 
now because so many Americans are struggling financially. 
Public opinion polls show that citizens have become much more 
interested in economic issues over the past couple years. We 
have a tremendous opportunity to capitalize on this interest to 
foster and inform consumers, investors, and entrepreneurs to 
rebuild and strengthen our economy. The Department of Education 
and the Financial Literacy and Education Commission must work 
together to better educate, protect, and empower our citizens.
    Mr. Shelton, will the Department of Education provide high-
level involvement and support to the Commission?
    Mr. Shelton. Well, I will be participating myself, so 
hopefully that is high.
    Senator Akaka. Well, that is direct, yes. [Laughter.]
    I hope that continues and we begin to move on some of the 
recommendations of the GAO.
    Ms. Braunstein, I appreciate the Federal Reserve's work to 
examine the impact of financial education. I am particularly 
interested in results from the research conducted with the 
Department of Defense. What lessons can we learn from this 
research that can help improve the effectiveness of other 
financial literacy efforts?
    Ms. Braunstein. We are very pleased to have done this 
study, and we think that the results have been very 
interesting. One of the things, though, we needed to be a 
little careful with is that some of the lessons we have learned 
from this may not be able to be generalized to the overall 
population because this was a very unique sample of people. It 
was all soldiers, so it is hard to say whether some of this 
would apply to the general population.
    But we do think that, one, of course, more research is 
needed in this area. There is not enough research going on 
right now on effectiveness as opposed to people giving quizzes 
on what did you learn in the course. That is not really showing 
the impact or the effect. It is behavior change that is 
important. And that is one of the things that we looked at.
    One of the interesting results from this study is that we 
found that when we looked at the sample and, in particular, the 
ones who had financial education, some of the strongest results 
were from participants who had earlier experiences with 
financial education. Either they had a course in high school on 
it, or they had other kinds of personal experiences where they 
needed to use financial education. And we think that is 
something that also needs to be looked at further because it 
mitigates for having earlier interventions, which we do believe 
in.
    And the other thing is that the financial education that 
they got in this particular study was 16 hours of education on 
the weekends, and one of the things that we also think needs 
further study is whether or not that was the right 
intervention, if other interventions would work better or worse 
or, as well. And so that is another area where we are looking 
to hopefully see more research.
    Senator Akaka. Mr. Myers, the Talent-Nelson amendment 
enacted in 2007 limits the terms of consumer credit extended to 
military families. The statute prohibits lenders from charging 
interest rates in excess of 36 percent to all military 
families. What is your evaluation of the impact of this 
legislation? And what impact has it had on our military 
families?
    Mr. Myers. Well, first of all, I think the impact has been 
extremely positive, and as a result, through education, through 
our aid societies now providing interest-free loans, our 
military personnel are more educated on where they can get 
help.
    Another thing that we did as far as education, we have, as 
I told you, military roadshows, and we have financial 
consultants there where you can talk one on one and so forth. 
But there are some people that just do not want to do that. So 
we also started another program, and I gave your staff some 
information on it. It is a Military OneSource operation. It is 
a toll-free number where military personnel call this number. 
On there we have help for all sorts of things, including 
financial management. You have a financial management problem, 
we will hook you up with a financial counselor, one of our 
financial counselors. They will explain over the phone with you 
what the issue is, how to solve it, and if you want to meet 
with them one on one, it works out.
    So what we have found out as we talked with State and 
Federal regulators, is that the lenders are complying with the 
amendment because they cannot make money with the rules of the 
36 percent cap. So it has been very positive.
    In fact, some of the payday lenders thought that the 
military would rebel against it because it was a way to get 
money. We did not hear anything. In fact, I think a lot of 
families thought that was a great thing. We opened up the 
avenues for them to get the money and educated them how to 
manage it. So thank you.
    Senator Akaka. Thank you very much for your response.
    Mr. Hillman, you have identified that limited resources 
present a challenge for Financial Literacy and Education 
Commission (FLEC). What resources need to be provided to the 
Commission so that it can adequately fulfill its mandates?
    Mr. Hillman. We found as a result of our review, Mr. 
Chairman, that the governance structure has significant 
advantages and disadvantages. While the structure presents 
certain challenges, it has the benefit of bringing together 20 
departments and agencies on cross-cutting issues and 
encouraging building a consensus on financial literacy issues. 
Options, though, to improve the Commission and its funding 
levels could perhaps come from the Congress itself in requiring 
the Commission and providing it with its own legal and funding 
authority, perhaps requiring that it set priorities in the 
financial literacy area or requiring that the Commission set 
specific goals and funding levels for improving financial 
literacy.
    Each of these changes would have their own set of 
advantages and disadvantages. However, absent congressional 
attention, at GAO we believe the Commission itself has the 
ability to implement many of those measures on their own.
    Senator Akaka. Thank you for that recommendation.
    Mr. Shelton, the Native Financial Education Coalition has 
identified the need for increased financial literacy in native 
communities to help ensure financial security and self-
sufficiency. The coalition has indicated that the EEE is a 
promising program that has helped further education in native 
communities.
    How has EEE benefited Native American, Native Hawaiian, and 
Alaska Native communities?
    Mr. Shelton. Chairman, at least two sub-grantees--the 
Alaska Council on Economic Education and the Hawaiian Council 
on Economic Education--have benefited directly from sub-grants. 
They currently provide teacher training and classroom 
resources, and they focus on these unique populations. For 
2010, the notice by the applicants will also include criteria 
to ensure that the needs of traditionally underrepresented 
groups are addressed.
    Senator Akaka. Thank you very much.
    Mr. Hillman, you indicate in your written statement that in 
late 2008, the Treasury Department signed a volunteer service 
agreement with a doctoral student to determine the availability 
and duplication of program resources provided by commission 
agencies. Is this a common practice found in Federal 
commissions? And what are the risks of using volunteers for 
evaluation of Federal efforts?
    Mr. Hillman. The Treasury Department used a doctoral 
student to provide an assessment of the extent to which there 
was duplication or overlap in existing programs largely because 
it lacked the funding to provide for an independent 
professional assessment. We have not yet seen the results of 
this evaluation and hope to see it later in May.
    There are a number of trade-offs associated with a 
volunteer student assessment as opposed to a professional 
assessment. We are hopeful that the assessment that is provided 
goes a long way to provided information useful for determining 
the extent to which there is duplication and overlap.
    We are disappointed, however, that such an assessment that 
is being contemplated by the Treasury currently does not 
include any evaluation of the impact of the programs that the 
20 departments and agencies have ongoing, and that is what we 
are really hoping to see, is a results orientation and 
assessment of the impact of the efforts that are taking place 
as opposed to a description of what has been happening.
    Senator Akaka. Thank you very much, Mr. Hillman. I want to 
thank this panel for testifying. I sense an enthusiasm in this 
area of financial literacy and the importance it has for the 
Federal workforce. And I want to thank you so much for your 
efforts and your responses to our questions. What you have done 
is you have helped this Subcommittee look forward. Should there 
be further legislation that would help the cause, we certainly 
want to consider that as well. And you have helped us to 
determine that.
    Again, I want to say thank you to all of you for being here 
today and for your testimony.
    At this time I want to welcome the second panel of 
witnesses.
    Welcome to our second panel: Robert Duvall, President and 
CEO of the Council for Economic Education; and Dallas 
Salisbury, President and CEO of the Employee Benefit Research 
Institute. It is, again, the custom of this Subcommittee to 
swear in our witnesses, and I would ask both of you to please 
stand and raise your right hand.
    Do you swear that the testimony you are about to give this 
Subcommittee is the truth, the whole truth, and nothing but the 
truth, so help you, God?
    Mr. Duvall. I do.
    Mr. Salisbury. I do.
    Senator Akaka. Thank you very much. Let the record note 
that our witnesses responded in the affirmative.
    Before we start, I want you to know that your full written 
statement will be made part of the record.
    Mr. Duvall, will you please proceed with your statement?

 TESTIMONY OF ROBERT F. DUVALL,\1\ PRESIDENT AND CEO, COUNCIL 
                     FOR ECONOMIC EDUCATION

    Mr. Duvall. Yes, sir. Thank you, Chairman Akaka, for an 
opportunity to be a part of this very important and timely 
discussion. You were good enough to invite me 2 years ago to 
also give testimony. I think we are making some progress on 
this important issue. I know that I am 2 years older and closer 
to retirement and feel a little poorer than I did 2 years ago. 
But I think that feeling underscores the importance of 
continuing to press on the front of improving financial 
education and financial literacy in this country.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Duvall appears in the Appendix on 
page 97.
---------------------------------------------------------------------------
    It is especially fitting for the Subcommittee to hold this 
hearing during Financial Literacy Month. As a member of the 
President's Advisory Council on Financial Literacy and as the 
President and Chief Executive of the Council for Economic 
Education, and even more, as a parent, as an educator, and as a 
citizen, I commend you for focusing on this issue, this 
literacy. There are few matters which more directly address the 
traditional American virtues and values of self-reliance, 
individual responsibility, and good citizenship.
    The Council for Economic Education is a founding, and 
active, member of the Jump$tart Coalition for advocacy for 
financial literacy, and we are a principal participant and 
partner in Financial Literacy Day on Capitol Hill tomorrow, 
April 30. We are particularly grateful to you, Senator, for 
being the initiator of Financial Literacy Day on the Hill, 
which has grown tremendously in significance over the past 7 
years, as awareness of the importance of the issue has grown.
    For 60 years, as an independent, not-for-profit 
organization, the Council for Economic Education, formerly the 
National Council, the NCEE, has been a leader in transforming 
economic and financial education by developing standards-
setting and measurably effective programs nationwide and, in 
recent years, internationally as well--programs which promote 
the teaching of the very real connections between economic and 
financial literacy and the free flow of ideas, capital, and 
innovation that will keep this Nation competitive in the global 
economy.
    We are philosophically committed to a robust and vibrant 
economic marketplace, and our unit of change is the K-12 
teacher, who has the potential, over the course of a career, to 
touch the lives of thousands of students.
    But what are educators actually teaching and how are they 
teaching it? Are they preparing students adequately for the 
economy of the future? It is often said that today's education 
curriculum is rooted in yesterday's economy, and that a rapidly 
changing and technologically driven marketplace requires new 
educational approaches. The skill set that today's young people 
will need to possess in order to succeed as adults is likely to 
be different than that of a generation ago, and this skill set 
must enable students to think economically and 
entrepreneurially, in response to the opportunities and threats 
they will encounter as adults. The degree to which they will 
succeed in this endeavor will shape not only their futures and 
their fortunes, but the level of competitiveness and dynamism 
of the American economy.
    There has never been, I believe, a better ``teachable 
moment'' than the current economic and financial crisis to spur 
awareness and support for economic and financial education and 
improving it. But real improvements in the quality and 
effectiveness of teaching and increases in the level of 
economic and financial literacy will take time, political will, 
and resources.
    What can be done? The Federal Government is playing a 
critical role in providing resources for these efforts 
particularly through the Excellence in Economic Education (EEE) 
Act, which came about through legislation which you authored, 
Senator, as you assembled a bipartisan group to support this 
effort to get into the grass roots and improve financial 
literacy.
    It ought to be more fully funded, however, and I hope 
renewed as we go forward. Why? Because it works.
    It works because it is a grass-roots program, and fosters 
local, hands-on initiatives. It works because it is focused on 
what needs to be done to make a difference in and through 
education: Teacher training, development of materials, active 
learning for K-12 students, and research into what works, and 
why. And it is a proven way to make a thousand flowers bloom 
through the ``multiplier effect'' of disseminating best 
practices.
    Well-prepared teachers instill in children a sense that 
they are themselves future stakeholders and decision makers and 
movers in the American economy. And through the EEE Act, over 
the past 5 years, 48 States, and the District of Columbia have 
been served by the EEE sub-grants in project years 2004 to 
2008. Four hundred and ninety-five sub-grants were awarded in 
that time frame, and over $5.5 million has been awarded to 
grass-roots organizations nationwide. In addition, over 1,500 
copies of the 2000 survey of the States have been distributed 
to individuals and agencies interested in improving economic 
and financial literacy in their own communities. And, finally, 
we have been able through the EEE to distribute Virtual 
Economics, a tremendous tool for teachers where they can find 
the standards and requirements of their States, and lesson 
plans. This tool, this instrument, Virtual Economics, has now 
been made available in every school district in the United 
States, and that is thanks to the EEE.
    So, in conclusion, what can Congress do? I think they can 
continue, as I hope, to support this kind of initiative which 
makes a real difference where it counts. We are encouraged by 
the Congress' increased focus on economic and financial 
education issues over the last several years. One year ago at 
this time, I was called to give testimony to the House 
Financial Services Committee. At the end of that testimony, 
Committee Chairman Barney Frank leaned over the podium and 
asked the panel to say what they would recommend that the 
Federal Government do about the subprime mortgage lending 
crisis--the tip of the iceberg that was then being seen. I 
responded that I did not know but that I did believe 
passionately that the Federal Government ought to invest in a 
nationwide professional development program for teachers in the 
Nation's schools to improve economic and financial education.
    The EEE is such an investment, but the investment, while 
measurably good and effective, is still too small. The economic 
turmoil and financial crisis we are experiencing can be a 
teachable moment, but only if we make it so. Consequently, I 
would urge that we maintain and, indeed, increase funding for 
the EEE as well as reauthorize this needed program as part of 
the Elementary and Secondary Education Act.
    Thank you again for inviting me to testify today, and I 
will be happy to answer any questions.
    Senator Akaka. Thank you very much, Mr. Duvall. Now we will 
hear from Dallas Salisbury.

    TESTIMONY OF DALLAS L. SALISBURY,\1\ PRESIDENT AND CEO, 
  EMPLOYEE BENEFIT RESEARCH INSTITUTE, AND CHAIRMAN, AMERICAN 
                   SAVINGS EDUCATION COUNCIL

    Mr. Salisbury. Mr. Chairman, thank you. It is a pleasure to 
be here. It is the Employee Benefit Research Institute (EBRI) 
that I have had the pleasure of being with since its founding 
in 1978. EBRI has worked on financial education since that 
time, including work with the full Committee of which this is a 
Subcommittee, and conducting a number of forums and hearings in 
the early 1980s that led to the creation of the TSP, and work 
with OPM on the implementation of that program and with the TSP 
in developing the early financial education related to Federal 
employees.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Salisbury with attachments 
appears in the Appendix on page 102.
---------------------------------------------------------------------------
    In 1995, we were approached by the Treasury Secretary and 
the Labor Secretary concerning what became an effort by 30 
Federal agencies and 250 private-sector for-profit and 
nonprofit organizations, in July 1995, under the title ``Save: 
Your Retirement Clock Is Ticking.'' And that program led in the 
Clinton Administration to the creation of initiatives by then-
Treasury Secretary Robert Rubin and ultimately chaired and run 
by Deputy Secretary, then Treasury Secretary Lawrence Summers. 
These initiatives incorporated actions leading to congressional 
enactment of the SAVER Act and led to three White House and 
congressional summits on retirement savings.
    We have attempted through the American Savings Education 
Council (ASEC) since 1975 to keep those public and private 
coalitions going as well as to encourage the broadest range of 
Federal agencies to coordinate and accentuate their activities. 
We have backed that up with research, just recently having 
released the 19th Annual Retirement Confidence Survey, which 
attempts to keep an ongoing measure of financial preparation 
and financial preparedness, including how people are doing in 
those realms.
    We have also done Youth and Money surveys, and Parents, 
Youth, and Money surveys through ASEC as well as a recent 
survey looking at Gen X's and Gen Y's financial literacy, all 
of which underlines the exceeding importance of education 
beginning at the K-12 level, and in the long term, the 
importance of educating parents.
    You pointed out what your father taught you. Luckily, my 
father taught me the same thing. And what we found from the 
Parents, Youth, and Money survey and the Youth and Money survey 
is that kids primarily get their financial education by 
watching their parents in action. And when you listen to their 
findings on what that means, it is truly scary.
    The ASEC effort with the government Interagency Group, 
which began in 1996, has served a purpose similar to the one 
that was created by your Financial Literacy Education 
Commission, but generally at the career service level as 
opposed to the political level. And in the most recent case, as 
well as in prior Administration changes, it has served as a 
useful link over the course of those changes to keep agencies 
communicating during transitions. We are pleased to continue 
those activities.
    We are also pleased to work and to donate the time to the 
Office of Personnel Management and to the TSP, which for many 
years have used what was our Ballpark Estimate worksheet and 
now is the Federal version of that worksheet.
    Our Choose to Save program was initiated by means of 
national media and public service announcements. Through that 
program, we are pleased to provide the MyMoney.gov promotional 
public service announcement that has been distributed to 
stations around the United States and to work with the Office 
of Personnel Management and the Defense Department, which show 
the Choose to Save public education segments in public service 
announcements across the globe.
    You asked specifically, in addition, for comment on the 
Financial Literacy and Education Commission (FLEC) and the 
reports that it has issued and the activities it has 
undertaken. I have put in my full statement a number of 
specific suggestions and recommendations, but my first 
suggestion would be clarity on what FLEC is primarily intended 
to do relative to the Federal agencies. Is it primarily to 
coordinate and leverage activity or to develop programs and to 
attempt to implement them?
    As the GAO report indicates, there are strengths and 
weaknesses, and I would just emphasize that FLEC has had, I 
would argue, in their report some confusion between these 
efforts. The statutory language makes it appropriate for them 
to coordinate; it really does not make it possible for them to 
direct. And that you may or may not wish to do, but it is an 
uncertainty point.
    In conclusion, I want to underline the importance of your 
activities, the activities of this Subcommittee, the 
legislation that you have enacted, and the concept of 
coordination. But I will note in closing that I testified at 
the same hearing as Mr. Duvall, and another final question was 
asked by the Chairman at that time: If there is only one thing 
that people at this Subcommittee would recommend, would it or 
might it be that we mandate the teaching of financial literacy 
in K-12? Mandate rather than have it be voluntary. And every 
witness at the panel said that if one thing could be done that 
would serve to increase financial literacy and to increase the 
value of every dollar spent most, every witness said that would 
be the one thing.
    In our survey on Youth and Money, we have found--and 
surveys and annual work by Mr. Duvall's organization document--
that over 78 percent of high school students in this country 
have financial education courses available to them, but most 
require the individual to choose to take them. Our survey 
indicates that 8.1 percent choose to take them out of the 78 
percent who could. That, in one fell swoop, it is not the 
absence of opportunity. It is the absence of taking it up. If I 
might suggest, in all due respect, it is characteristic of 
children not to take your good advice in spite of the fact that 
you and I took the good advice of our fathers. Every now and 
then one must force people to learn, and the easiest time to do 
that is when they are young and impressionable and in school.
    I did enjoy the last panel, and made note of the power of 
the military to require individuals to do these things, to 
learn, and to be tested. Most employers, including myself as an 
employer, do not have that luxury. And so the one area where 
Congress might act, and the Secretary of Education might act, 
and the President might act would be to assure that in K-12 
people at least get the basics.
    Thank you, sir.
    Senator Akaka. Thank you very much, Mr. Salisbury.
    Mr. Duvall, I understand that for 60 years, the Council for 
Economic Education (CEE) has been working on efforts to improve 
economic and financial literacy in our schools. I want to take 
this opportunity to extend my personal thanks for your hard 
work and dedication to this issue which is so personally 
important to me.
    What do you believe are the greatest challenges in ensuring 
that all young people have the information they need to make 
sound financial decisions?
    Mr. Duvall. Well, I would agree, Senator, very much with my 
colleague Mr. Salisbury's closing statement that we need to 
mandate that there be this experience with the basics of 
applied and practical economics and personal financial decision 
making skills for all students while they are in school.
    What does work now about financial literacy? We know it is 
not something we are born with. It is learned behavior. And the 
best place to learn it is while we are in school through well-
prepared teachers, and that includes parents as teachers, as 
has been said.
    But I think it is very important, with any kind of 
discussion about a mandate for it being offered and taken in 
the schools, that there be a deliberate program to prepare 
teachers, because certainly one of the major challenges in 
going forward is that many school teachers have not themselves 
had basic economics or personal finance in their own 
preparation for being teachers. Most of our work in the council 
is concerned with teaching the teachers who are already in the 
field. But that needs to be improved, and I think also a 
strategy ought to be developed to get it into the schools of 
education for teachers before they become teachers.
    Senator Akaka. Mr. Duvall, the Commission, in its National 
Strategy Report, listed a number of populations that need to be 
focused on, such as the unbanked, multicultural and 
multilingual populations, and students from grades K-12. What 
could the Commission do to reach these populations?
    Mr. Duvall. I am not certain, sir, what the Commission 
itself could do. Perhaps continue to serve in the advocacy role 
for this being done. But I think it is most effectively done by 
organizations like my own that are doing it. That is why we 
have felt so empowered through being chosen by the U.S. 
Department of Education to administer the Excellence in 
Economic Education Act. This has enabled us to reach toward 
underserved communities and populations that we were not able 
to get to before by making these sub-grants to grass-roots 
organizations that are trying to do something innovative to 
improve economic and financial literacy and where this 
comparatively small amount of help can make a great deal of 
difference.
    I think the Commission should and could continue at least 
to serve in that push role, but the delivery, I think, is going 
to depend on people in the field who are already out there and 
can do more.
    Senator Akaka. Mr. Salisbury, GAO indicated that the 
Financial Literacy and Education Commission could increase its 
effectiveness and success by improving its internal 
coordination between member agencies. In your testimony, 
America Saves Week is described as a program that joins 
together employers, financial institutions, government 
organizations, nonprofit networks, and other organizations to 
accomplish the week's goals.
    What are the coordination tools and strategies that have 
allowed the America Saves Week to be successful?
    Mr. Salisbury. Well, Senator, a major part of America Saves 
Week is Military Saves, which was promoted around the Nation 
and the world. Involved in America Saves Week were numerous 
Federal agencies and programs and the Office of Personnel 
Management. Integrally involved are the offices of the 
Agriculture Department and the Extension Service in communities 
all over the United States.
    America Saves Week has, during the last 2 years, been 
jointly coordinated by the American Savings Education Council 
and the Consumer Federation of America, using all of the public 
and private partners within the ASEC Partnership, which does 
include the offices of the Treasury Department. The staff of 
FLEC has been involved in these activities. It is essentially 
focusing on getting that very broad net and all of these 
organizations working together.
    ASEC itself has focused just for that reason on not 
creating and doing programs of its own, but largely attempting 
simply to focus on helping with the broadest range of 
organizations, bringing them together and helping to leverage 
everything that all of those other organizations are doing.
    If I were to take the options in the GAO report, and even 
what I stressed, my humble opinion would be that FLEC itself 
would be most effective if it essentially focused on, I would 
say, literally no public profile. Instead of its meetings being 
big media events with cabinet secretaries giving speeches, I 
suggest a working committee, with individuals at the levels of 
those at this panel and the earlier panel, meeting far more 
frequently and essentially assuring at the political level a 
commonality of purpose and direction and then driving that down 
through their agencies into their budgets and in work with 
Capitol Hill. I also suggest this effort be almost purposefully 
internal as opposed to having what has been a more external 
focus and presence. And, again, I say that in hindsight, 
because I probably would not have told you that if I had been 
asked before you enacted it. But in terms of what I think has 
allowed ASEC to be successful and then watching what FLEC has 
and has not done, that would be my suggestion to you, vis-a-vis 
the GAO report, as to how it could most effectively drive 
governmental action. And in that sense, it would be in no way 
viewed by anyone as competitive. It would be a cooperative, 
coordinating force aiming at getting the most out of each of 
the agencies.
    Senator Akaka. Well, I really appreciate your responses. I 
would like to thank both of you for being here today. You have 
helped us to further understand the challenges that continue to 
face the Financial Literacy and Education Commission. You have 
also shared with us some examples of financial literacy 
programs that help people.
    It is important that we continue to educate, protect, and 
empower consumers. I plan to work closely with all of you to 
improve Federal financial literacy efforts. I think we have set 
some things in motion. The month of April, of course, is 
Financial Literacy Month, and I appreciate your continuing 
efforts to improve financial literacy.
    Again, I look forward to continuing to work with you. We 
have received many good recommendations that we can work on to 
further the cause.
    This hearing record will be open for one week for 
additional statements or questions other Members may have, and, 
again, thank you so much for your engagement here.
    This hearing is adjourned.
    [Whereupon, at 4:27 p.m., the Subcommittee was adjourned.]
                            A P P E N D I X

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