    [Senate Hearing 111-665]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 111-665

                        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

                                 SECOND SESSION

                                   __________

                                 JULY 15, 2010

                                   __________

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

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

            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           SCOTT P. BROWN, Massachusetts
    MARK L. PRYOR, Arkansas              JOHN McCAIN, Arizona
    MARY L. LANDRIEU, Louisiana          GEORGE V. VOINOVICH, Ohio
    CLAIRE McCASKILL, Missouri           JOHN ENSIGN, Nevada
    JON TESTER, Montana                  LINDSEY GRAHAM, South Carolina
    ROLAND W. BURRIS, Illinois
    EDWARD E. KAUFMAN, Delaware

                      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          SCOTT P. BROWN, Massachusetts
    ROLAND W. BURRIS, Illinois           LINDSEY GRAHAM, South Carolina
    EDWARD E. KAUFMAN, Delaware

                         Lisa M. Powell, Staff Director
                 Matthew J. Pippin, Deputy Legislative Director
                    Benjamin B. Rhodeside, Legislative Aide
                 Jennifer A. Hemingway, Minority Staff Director
                          Aaron H. Woolf, Chief Clerk
                                C O N T E N T S

                                     ------
    Opening statement:
                                                                       Page
        Senator Akaka................................................     1

                                   WITNESSES
                            Thursday, July 15, 2010

    Michael Barr, Assistant Secretary for Financial Institutions,
      U.S. Department of the Treasury................................     4
    Christine Griffin, Deputy Director, U.S. Office of Personnel
      Management.....................................................     6
    Brenda Dann-Messier, Assistant Secretary, Office of Vocational
      and Adult Education, U.S. Department of Education..............     8
    Sandra L. Thompson, Director, Division of Supervision and
      Consumer Protection, Federal Deposit Insurance Corporation.....    10
    Marianna LaCanfora, Assistant Deputy Commissioner, Retirement and
      Disability Policy, Social Security Administration..............    11
    Barbara Roper, Director of Investor Protection, Consumer
      Federation of America..........................................    21
    Lynne Egan, Deputy Securities Commissioner, Montana Office of
      State Auditor, on behalf of the North American Securities
      Administrators Association.....................................    23

                         Alphabetical List of Witnesses

    Barr, Michael:
        Testimony....................................................     4
        Prepared statement...........................................    29
    Dann-Messier, Brenda:
        Testimony....................................................     8
        Prepared statement...........................................    40
    Egan, Lynne:
        Testimony....................................................    23
        Prepared statement...........................................    69
    Griffin, Christine:
        Testimony....................................................     6
        Prepared statement...........................................    35
    LaCanfora, Marianna:
        Testimony....................................................    11
        Prepared statement...........................................    54
    Roper, Barbara:
        Testimony....................................................    21
        Prepared statement...........................................    60
    Thompson, Sandra L.:
        Testimony....................................................    10
        Prepared statement...........................................    44

                                    APPENDIX

    Background.......................................................    79
    Questions and responses for the Record:
        Mr. Barr.....................................................    83
        Ms. Griffin..................................................    86
        Ms. Dan-Messier..............................................    89
        Ms. Thompson.................................................    92
        Ms. LaConfora................................................    96
        Ms. Roper....................................................    99
        .............................................................

                        THE FEDERAL GOVERNMENT'S ROLE IN

                          EMPOWERING AMERICANS TO MAKE

                          INFORMED FINANCIAL DECISIONS

                                  ----------

                            THURSDAY, JULY 15, 2010

                                     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 2:48 p.m., in
    room SD-342, Dirksen Senate Office Building, Hon. Daniel K.
    Akaka, Chairman of the Subcommittee, presiding.
        Present: Senator Akaka.

                   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.
        I want to welcome our witnesses to today's hearing, the
    Federal Government's Role in Empowering Americans to Make
    Informed Financial Decisions.
        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 in an
    increasingly complex marketplace, or cope with difficult
    financial situations. It is essential that we continue to
    improve education, consumer protections, and economic
    empowerment activities for individuals and families through
    economic and financial literacy in order to build stronger
    families, businesses, and communities.
        Financial literacy is an issue that is even more important
    as working families struggle financially. It is when people
    lose jobs and wages fall, when housing values decline and
    adjustable-rate mortgages reset, when 401(k) values plummet,
    that the true cost of financial illiteracy among working
    families becomes apparent.
        My interest in financial literacy dates back to when my
    fourth grade teacher required me to have a piggy bank. We were
    made to understand how money that was saved a little at a time
    can grow into a large amount, enough to buy things that would
    have been impossible to obtain without savings. My piggy bank
    experience taught me important lessons about money management
    that have stayed with me throughout my life.
        The piggy bank lesson was even more meaningful because I
    grew up in an unbanked family. My parents kept their money in a
    box divided into different sections so that money could be
    separated for various purposes. Church donations were kept in
    one part. Money for clothes was kept in another. There was a
    portion of the box reserved for food expenses. When there was
    no longer any money in the food section, we didn't eat.
    Obviously, money in a box was not earning interest. It was not
    secure.
        I know personally the challenges that are presented to
    families unable to save or borrow when they need small loans to
    pay for unexpected expenses. Unexpected medical expenses or a
    car repair bill may require small loans to help working
    families overcome these obstacles.
        During my service in the Senate, I have focused on
    advancing a financial literacy agenda that includes education,
    consumer protection, and economic empowerment for working
    families through different venues and at different teachable
    moments in people's lives. I will summarize several of my
    financial literacy efforts that will provide some context for
    the first panel of witnesses.
        In 2003, along with Senator Sarbanes at that time and other
    colleagues, we created the Financial Literacy and Education
    Commission (FLEC). The Commission is tasked with developing and
    implementing a national strategy to improve the financial
    literacy of Americans. I included a mandate that the Office of
    Personnel Management (OPM) develop and implement a retirement
    financial literacy and education strategy for Federal employees
    in the Thrift Savings Plan Open Elections Act of 2004. My
    Excellence in Economic Education Act authorizes a range of
    activities, such as teacher training, research and evaluation,
    and school-based activities to further economic principles. I
    have obtained funding of approximately $1.5 million for the Act
    in each fiscal year since 2004 to fund these necessary
    activities.
        In the Dodd-Frank Conference Report, there are several
    education-related provisions. It will create an Office of
    Financial Education within the Consumer Financial Protection
    Bureau. The office will develop and implement initiatives to
    educate and empower consumers. A strategy to improve the
    financial literacy among consumers that includes measurable
    goals and benchmarks must be developed. The administrator of
    the Bureau will serve as vice chairman of the Financial
    Literacy and Education Commission to ensure meaningful
    participation in Federal financial literacy efforts.
        However, education is only one component of financial
    literacy. We must also 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. The new Consumer Financial
    Protection Bureau will be empowered to restrict predatory
    financial products and unfair business practices in order to
    prevent unscrupulous financial services providers from taking
    advantage of consumers.
        The Dodd-Frank bill also modifies the Electronic Fund
    Transfer Act to establish consumer protections for remittances.
    It will require that simple disclosures about the cost of
    sending remittances be provided to the consumer prior to and
    after the transaction. A complaint and error resolution process
    for remittance transactions will be established.
        The third vital component of financial literacy is economic
    empowerment. I am proud to have added Title 12, the Increasing
    Access to Mainstream Financial Institutions Act, to the Dodd-
    Frank bill. Mainstream financial institutions are a vital
    component to economic empowerment. Unbanked or underbanked
    families need access to credit unions and banks, and they need
    to be able to borrow on affordable terms. Banks and credit
    unions provide alternatives to high-cost and often predatory
    fringe financial service providers, such as check cashiers and
    payday lenders. Many of the unbanked and underbanked are low-
    income and moderate-income families that cannot afford to have
    their earnings diminished by reliance on these high-cost and
    often predatory financial services.
        Unbanked families are unable to save securely for education
    expenses, the downpayment on a first home, or other future
    financial needs. Underbanked consumers rely on non-traditional
    forms of credit that often have extraordinarily high interest
    rates. Regular checking accounts may be too expensive for some
    consumers unable to maintain minimum balances or afford monthly
    fees. Cultural differences or language barriers may also hinder
    the ability of consumers to access financial services. More
    must be done to promote product development outreach and
    financial education opportunities intended to empower
    consumers.
        Title 12 authorizes programs to assist low- and moderate-
    income individuals establish bank or credit union accounts and
    encourages greater use of mainstream financial services. It
    will also encourage the development of small, affordable loans
    as an alternative to more costly loans. Consumers who apply for
    these loans would be provided with financial literacy and
    educational opportunities.
        The second panel today will focus on issues relating to
    investor financial literacy. The Dodd-Frank bill contains
    several significant items of importance to investors. I added a
    financial literacy study that will be conducted by the
    Securities and Exchange Commission (SEC). The SEC will be
    required to develop an Investor Financial Literacy Strategy
    intended to bring about positive behavioral change among
    investors.
        I also worked to clarify authority for the SEC to
    effectively require disclosures prior to the sale of financial
    products and services. Working families depend on their mutual
    fund investments and other financial products to pay for their
    children's education, prepare for retirement, and attain other
    financial goals. This provision will ensure that working
    families have the relevant and useful information they need
    when they are making decisions that will determine their future
    financial condition.
        Today's hearing provides an opportunity to examine Federal
    financial literacy efforts and the Financial Literacy and
    Education Commission. I appreciate the appearance of our
    witnesses today. The Financial Literacy and Education
    Commission has made significant progress during the current
    Administration, and I am delighted with the progress being made
    by all of the agencies represented at the hearing today. I look
    forward to continuing to collaborate with them and with you on
    these issues of vital importance to working families.
        And now I welcome our first panel of witnesses to the
    Subcommittee: Michael Barr, Assistant Secretary for Financial
    Institutions at the U.S. Department of Treasury; Christine
    Griffin, Deputy Director at the U.S. Office of Personnel
    Management; Brenda Dann-Messier, Assistant Secretary for the
    Office of Vocational and Adult Education at the U.S. Department
    of Education; Sandra Thompson, Director of the Division of
    Supervision and Consumer Protection at the Federal Deposit
    Insurance Corporation; and Marianna LaCanfora, Assistant Deputy
    Commissioner for the Office of Retirement and Disability Policy
    at the U.S. Social Security Administration.
        As you know, it is the custom of this Subcommittee to swear
    in all witnesses. Will you please raise your right hand?
        Do you swear that the testimony you are about to give
    before this Subcommittee is the truth, the whole truth, and
    nothing but the truth, so help you, God?
        Mr. Barr. I do.
        Ms. Griffin. I do.
        Ms. Dann-Messier. I do.
        Ms. Thompson. I do.
        Ms. LaCanfora. 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 made part of the record, and I would like to
    remind you to please limit your oral remarks to 5 minutes.
        Assistant Secretary Barr, welcome and please proceed with
    your statement.

      TESTIMONY OF HON. MICHAEL BARR,\1\ ASSISTANT SECRETARY FOR
        FINANCIAL INSTITUTIONS, U.S. DEPARTMENT OF THE TREASURY

        Mr. Barr. Thank you very much, Mr. Chairman, for the
    opportunity to appear today before you on a topic of critical
    importance to the Administration, to the Department of the
    Treasury, and really to our whole Nation, that of empowering
    Americans to make informed financial decisions. We appreciate
    the Subcommittee's bipartisan focus on this topic, and I want
    to thank you in particular, Senator Akaka, for your leadership
    over so many decades on this critical issue.
    ---------------------------------------------------------------------------
        \1\ The prepared statement of Mr. Barr appears in the Appendix on
    page 29.
    ---------------------------------------------------------------------------
        I also want to thank the other members of this panel here
    today with me. Financial capability is an area in which we have
    all been working collaboratively and building upon each other's
    efforts, and the agencies represented here this morning are
    among the strongest partners in this effort.
        In the wake of the recent financial crisis, there has never
    been a more important time to get this right. We must improve
    our system to make it safer and more stable and improve the
    financial capability of individual Americans to build a country
    in which more families have the knowledge, skills, and
    financial access to make good financial choices and build
    stronger financial futures.
        We have historically just passed the most important
    financial reform since the Great Depression. Two weeks ago, a
    Conference Committee of the House and Senate produced a bill
    with strong protections for Main Street against financial folly
    or misconduct on Wall Street. And the bill strengthens
    protections for taxpayers, investors, and consumers. It helps
    community banks, credit unions, and small businesses. It ends
    ``too big to fail.'' It winds down the Troubled Asset Relief
    Program (TARP) and strengthens our financial system. And today,
    the Senate has followed the House and passed this historic
    reform.
        These changes are absolutely critical, but they are not
    enough. Personal responsibility and increased knowledge,
    skills, and access are essential to empowering Americans to
    make better financial decisions. And the Federal Government has
    an important role to play in ensuring that Americans have these
    tools.
        Let me just update you slightly on the work of FLEC and to
    report on the significant activities of the agencies who have
    worked together over this last year. In January, we were
    pleased to have the White House, represented by the Office of
    Public Engagement, formally join the Council, and their
    membership underscores the Administration's commitment to these
    issues.
        Last July, we brought all 20 member agencies together to
    identify key priorities. First, one of the most critical issues
    for our members was that a new national strategy was needed,
    and after a comprehensive and inclusive year-long process, we
    will be putting out a national strategy for public comment in
    the very near future.
        The second area of focus is outreach and communications,
    and in April, FLEC launched its redesigned mymoney.gov Web
    site. The new site is now available in English and in Spanish
    and has enhanced interactive features and utility to provide
    more resources to Americans seeking information that can inform
    their personal financial decisions.
        Third, the Core Competencies Working Group has worked
    closely with a group of experts in financial education,
    including researchers and practitioners, to identify core
    competencies that it will be putting out for public comment in
    the coming weeks, with the ultimate goal to put it out in a
    format that is easily accessible and remembered, analogous to
    the Food Pyramid.
        And finally, to encourage research and collaboration among
    agencies and other experts, Treasury is working closely with
    the FLEC to establish a research clearinghouse next year.
        In addition, we have been working on the National Financial
    Capability Challenge in partnership with the Department of
    Education to assist teachers in their financial education
    efforts and increase the focus on financial education in our
    high schools. We have worked through the Office of Financial
    Education to run pilot programs around the country,
    experimenting with what works and what doesn't work in local
    communities.
        And our most significant new proposed initiative is our
    Bank on USA program. The President has asked for a serious
    commitment of Federal dollars to help State and local
    governments, Community Development Financial Institutions
    (CDFIs), community banks do a better job reaching out to low-
    and moderate-income Americans and bringing them into the
    financial mainstream.
        Of course, the new bill that has just been passed by the
    Senate includes your Title 12, in which you showed such great
    leadership in providing a road map for increased access to
    financial services, to low-cost low-dollar loans, and other
    initiatives to provide low-income Americans with better
    opportunities to enter the financial mainstream, and we very
    much look forward to working with you to implement that
    program.
        Last, let me just mention that we have an opportunity
    through our electronic Treasury initiatives to make a big
    difference in the lives of low-income Americans through low-
    cost debit accounts that we will be working on in the coming
    weeks and months.
        Let me just sum up by saying that in the wake of the
    financial crisis, we have a real opportunity and an obligation
    to improve financial stability on both a national and
    individual level, and Treasury looks forward to working with
    you and with the Congress as a whole, with our sister agencies,
    and with the private sector to empower all Americans to make
    smarter financial choices.
        Thank you very much.
        Senator Akaka. Thank you very much, Assistant Secretary
    Barr, for your testimony.
        Now, Deputy Director Griffin, will you please proceed.

     TESTIMONY OF HON. CHRISTINE GRIFFIN,\1\ DEPUTY DIRECTOR, U.S.
                     OFFICE OF PERSONNEL MANAGEMENT

        Ms. Griffin. Thank you, Chairman Akaka, for the opportunity
    to testify today on the critical work that the Office of
    Personnel Management is doing to improve the financial literacy
    of Federal employees and to ensure that they are adequately
    prepared for retirement.
    ---------------------------------------------------------------------------
        \1\ The prepared statement of Ms. Griffin appears in the Appendix
    on page 35.
    ---------------------------------------------------------------------------
        OPM is committed to educating Federal employees about the
    need for retirement savings and providing information on how to
    plan for retirement. As part of that commitment, OPM was
    pleased to participate in Financial Literacy Day on Capitol
    Hill in April. OPM is proud of the active role it has taken as
    a member of the Financial Literacy and Education Commission. As
    Co-Chair of the National Financial Education Network, OPM seeks
    to facilitate and advance financial education at the State and
    local level. OPM is a member of the FLEC Core Competencies
    Working Group and is working to identify the core financial
    competencies all Americans should have.
        Due to the leadership of the Subcommittee, Congress has
    taken steps to improve financial literacy of Federal employees
    by passing the Thrift Savings Plan's Open Election Act of 2004,
    and in response, OPM developed a comprehensive retirement
    education strategy called Retirement Readiness NOW. The
    Retirement Readiness model considers retirement financial
    literacy and financial education as a career-long process and
    not just something that happens when you are near retirement.
        The model incorporates a broad range of information that
    helps employees make informed retirement planning decisions.
    OPM's Retirement Readiness NOW model takes a holistic approach
    to planning that doesn't just focus on getting employees ready
    for retirement, it also touches upon work-life balance, overall
    healthy living, and available Federal benefits.
        OPM has three key roles in retirement readiness: Catalyst,
    capacity, and coordination. OPM serves as the catalyst for
    retirement readiness programs by helping to focus attention on
    the issue, by speaking at conferences and doing the outreach
    that we do.
        OPM builds capacity by providing training and tools to
    agency benefit offices so that they can assist employees in
    understanding their benefits and identifying their financial
    education needs. In May, OPM conducted our fifth Benefits
    Officer Retirement Financial Education Symposium. OPM
    coordinates financial education by identifying resources and
    creating partnerships with agencies to leverage the use of
    these materials for employees.
        One of the best options available to Federal employees
    today to plan for retirement is through the Thrift Savings Plan
    (TSP). This is a critical component for Federal employees who
    are trying to plan responsibly for retirement. OPM recently
    released a study analyzing the participation rates in the TSP.
    While participation rates are generally high, or higher than
    the private sector, the data indicates that minorities lag
    behind in terms of participation, contributions, and overall
    TSP balances, while women lag behind in contributions and
    balances. Over time, we know the automatic enrollment
    provisions contained in the TSP Enhancement Act of 2009 should
    help reduce these discrepancies. However, OPM is taking action
    immediately to reduce the discrepancies.
        We are building strategic partnerships with groups
    representing diverse populations of Federal employees, such as
    the affinity groups and the unions. We are providing agencies
    and partners with financial education programs focused on
    helping employees understand the importance of savings through
    the TSP by conducting outreach to agencies to make them aware
    of the resources available to help promote TSP. OPM will
    evaluate our outreach programs to determine their
    effectiveness.
        Agencies also play a key role through their responsibility
    of identifying employee needs, providing training and
    information to employees, and providing feedback to OPM that
    enables us to continue to improve the agencies' retirement
    education capacity. However, OPM and agencies can't adequately
    improve employees' retirement readiness by ourselves. Employees
    must be willing to take advantage of the financial education
    opportunities presented to them and they must assume the
    responsibility for meeting their own retirement goals. We also
    have the responsibility of making it attractive for the
    employees to actually want to receive that education. We at OPM
    values the agencies and the Federal employees as our partner in
    this process.
        Thanks for allowing me to testify before the Subcommittee
    on this important issue and I will be glad to answer any
    questions. Thank you.
        Senator Akaka. Thank you very much, Deputy Director
    Griffin, for your statement.
        And now Assistant Secretary Dann-Messier, your statement.

    TESTIMONY OF HON. BRENDA DANN-MESSIER,\1\ ASSISTANT SECRETARY,
     OFFICE OF VOCATIONAL AND ADULT EDUCATION, U.S. DEPARTMENT OF
                               EDUCATION

        Ms. Dann-Messier. Good afternoon, Chairman Akaka, and thank
    you very much for the opportunity to appear before you today to
    discuss what the U.S. Department of Education is doing to help
    Americans improve their abilities in making informed financial
    decisions, and I also want to express my personal gratitude to
    you, Mr. Chairman, for your leadership on this very important
    issue.
    ---------------------------------------------------------------------------
        \1\ The prepared statement of Ms. Dann-Messier appears in the
    Appendix on page 40.
    ---------------------------------------------------------------------------
        In my remarks, I will talk about our current financial
    education efforts, including ways in which we are working with
    other agencies as part of the Financial Literacy and Education
    Commission. The three messages I hope to leave with you are:
    The Department of Education believes that improving financial
    literacy in this country is essential if we are to educate our
    way to a better economy and once again lead the world in the
    proportion of citizens with college degrees and certificates.
    We must provide financial literacy education for all segments
    of students, starting early and going through adulthood, if we
    are truly going to make a difference. And we have to focus on
    outcomes, not just activities, so we can be sure we are
    spending the taxpayers' dollars wisely and doing what works.
        Before I came to the Department, I witnessed a consistent
    lack of financial literacy among the students of Dorcas Place
    Adult and Family Learning Center that I led in Providence,
    Rhode Island. I know firsthand how pervasive and pressing this
    issue is, so I am pleased to be able to tell you what we are
    doing at the Department of Education to address it.
        I will start with what we are doing for post-secondary
    education students. All of our future competitions for the
    Talent Search, Upward Bound, Student Support Services programs,
    three of our Federal TRIO college and success programs, will
    reflect the new Higher Education Act (HEA) requirement to
    include financial and economic literacy activities. We are also
    encouraging State and local coordination across all TRIO
    programs, GEAR UP and the recently expanded College Access
    Challenge Grant program, in which financial and economic
    literacy activities are allowable, and we are examining how to
    better track whether and to what effect grantees under these
    programs use funds for this purpose.
        The Department's Federal Student Aid program educates
    students and families about the cost and benefits of post-
    secondary education and about Federal grants, loans, and work-
    study opportunities that could help students afford post-
    secondary education. We have begun to discuss ways to evaluate
    the effectiveness of these efforts and to pursue promising
    practices.
        An Institution for Education Sciences study from 2006 to
    2007 demonstrated that helping people complete the Free
    Application for Federal Student Aid (FAFSA) immediately after
    providing tax preparation assistance led to increased FAFSA
    submissions and college enrollment, while finding that only
    providing information on college costs and available financial
    aid to a control group had no effect.
        Finally, we require entrance and exit loan counseling for
    all Federal student loan borrowers and we are developing ways
    to learn more about the effectiveness of loan counseling
    through an experimental sites initiative at Federal Student Aid
    (FSA).
        We are also concerned about the lack of financial literacy
    among adult learners. Approximately 55 percent of American
    adults, over 120 million people, possess only basic or below-
    basic quantitative literacy skills. This makes them vulnerable
    to predatory lending practices or to making small mistakes that
    can have major consequences. The Department is investing $2.3
    million to increase the numeracy levels in adults through the
    Adult Numeracy Instruction Project.
        Now I would like to turn to financial literacy among
    elementary and secondary education students. The Excellence in
    Economic Education program, which received $1.4 million in
    fiscal year 2010, aims to strengthen teaching and learning in
    personal finance, economics, and entrepreneurship. Also, under
    the Civics Education program, the Department promotes economic
    literacy in the United States and abroad. For fiscal year 2011,
    we have proposed to enhance the States' and high-need school
    districts' ability to promote financial literacy by
    consolidating these programs, along with several others, into a
    new Effective Teaching and Learning for a Well-Rounded
    Education Program, which would provide $265 million to support
    innovative and promising practices on a range of subjects,
    including financial literacy.
        Also in fiscal year 2010, the Department will devote $1.7
    million for the Fund for the Improvement of Education funds to
    the Financial Education for College Access and Success Program
    for one or more States to develop, implement, and evaluate high
    school-level personal finance instructional materials and
    related teacher training for the purpose of increasing personal
    finance understanding, FAFSA completion, and college
    enrollment. This grant will be for a 4-year period to allow
    sufficient time to determine effectiveness.
        In addition, we are cooperating closely with our FLEC
    member agencies. We work closely with the Treasury Department,
    as you heard, to carry out the National Financial Capability
    Challenge. Over 1,500 teachers and 76,000 high school students
    participated. We are committed to working with the Treasury
    Department on this annual project to promote financial
    education in schools, and we would be very interested in
    working with you and your colleagues to increase participation
    in the challenge next year.
        We are planning a senior-level meeting with our colleagues
    in the Treasury Department, Federal Deposit Insurance
    Corporation (FDIC), and the National Credit Union
    Administration (NCUA) to discuss how the Department can support
    the Administration's economic inclusion strategy, and we are
    planning many back-to-school events with FDIC and NCUA to
    highlight schools that promote financial capability by linking
    with local banks and credit unions.
        Finally, FSA is consulting with FDIC on the redevelopment
    of their Money Smart for Young Adults Financial Education
    Modules to enhance the paying for college section to make sure
    that it is current and helpful as possible.
        Improving financial literacy for elementary, secondary,
    post-secondary, and adult students is critically important and
    it is an important part of the strategy for achieving the
    President's 2020 college completion goal, and it is essential
    for making the American dream a reality for people across the
    country. We are committed to working with you and your
    colleagues across the Administration on this issue.
        Thank you very much, Mr. Chairman.
        Senator Akaka. Thank you very much, Assistant Secretary
    Dann-Messier.
        And now I would call on Director Thompson for your
    statement. Please proceed.

    TESTIMONY OF HON. SANDRA L. THOMPSON,\1\ DIRECTOR, DIVISION OF
    SUPERVISION AND CONSUMER PROTECTION, FEDERAL DEPOSIT INSURANCE
                              CORPORATION

        Ms. Thompson. Good afternoon, Chairman Akaka. I appreciate
    the opportunity to testify about the FDIC's role in empowering
    Americans to make informed financial decisions.
    ---------------------------------------------------------------------------
        \1\ The prepared statement of Ms. Thompson appears in the Appendix
    on page 44.
    ---------------------------------------------------------------------------
        It is essential that people of all ages and all income
    levels and from all walks of life are able to make sound
    financial decisions. The recent financial crisis illustrated
    the broad economic harm that results when individuals spend
    beyond their means financed by debt that they cannot afford to
    repay. Access to a federally-insured bank account is a first
    step to consumers achieving financial security. Unfortunately,
    many consumers remain outside the financial mainstream.
        Last December, the FDIC released the findings of our
    National Survey of Unbanked and Underbanked Households. The
    survey estimated that about 8 percent of U.S. households are
    unbanked and about 18 percent are underbanked. Taken together,
    this accounts for about a quarter, or close to 30 million U.S.
    households. The survey findings also showed that Blacks and
    Hispanics were more likely to be underserved than the
    population as a whole. Clearly, much more needs to be done to
    ensure a fully inclusive banking system.
        At the FDIC, we believe financial education is critical.
    Our Money Smart program, which was launched almost 9 years ago,
    has reached almost 2.5 million people. We conducted a study to
    determine the program's effectiveness and it showed that
    financial literacy can positively influence how people manage
    their finances. The study also found that participants were
    more likely to open a bank account and save after they took the
    Money Smart course than before they took the course. The FDIC
    uses partnerships and collaborative relationships to promote
    Money Smart. Approximately 1,500 public, private, and nonprofit
    organizations help to deliver and support Money Smart through
    the FDIC's Money Smart Alliance.
        Another important part of our education efforts involves
    helping people with bank accounts understand how deposit
    insurance works. We have an interactive online tool called the
    Electronic Deposit Insurance Estimator, and inside we call it
    EDIE, and it helps bank customers determine if their bank
    accounts are fully insured.
        Now, we don't do this alone. The FDIC works on the
    government-wide Financial Literacy and Education Commission. We
    have been significantly involved in drafting the new national
    strategy to promote financial literacy and education. And we
    also chair the subcommittee that is developing the core
    financial competencies.
        The FDIC is also working to ensure that the underserved can
    access appropriate credit products from banks. In February
    2008, the FDIC launched a pilot program to determine the
    feasibility of banks offering small-dollar loans as an
    alternative to high-cost credit. We have just completed the
    pilot and it showed that banks can offer affordable small-
    dollar loans in a way that suits their business plans and is
    fair to consumers. Interestingly, the pilot suggests that there
    may be a correlation between financial education and improved
    loan performance.
        The FDIC believes that a solid financial education is
    essential for consumers. When people have information, they can
    make better decisions. A good financial education never stops.
    It is a long-term proposition. It is not a single class that
    takes place one time. It is learning that takes place over a
    lifetime so that good decisions can be made at the critical
    time in a person's life. A good financial education will result
    in better financial choices and serves to strengthen our
    economy in the long run.
        Thank you for having me, and we would be happy to answer
    any questions.
        Senator Akaka. Thank you very much, Director, for your
    statement. And now, Commissioner LaCanfora, please proceed with
    your statement.

         TESTIMONY OF MARIANNA LACANFORA,\1\ ASSISTANT DEPUTY
    COMMISSIONER, RETIREMENT AND DISABILITY POLICY, SOCIAL SECURITY
                             ADMINISTRATION

        Ms. LaCanfora. Mr. Chairman, thank you for the opportunity
    to discuss the Social Security Administration's (SSA) role in
    the Federal Government's financial literacy initiatives. I want
    to especially thank you, Senator Akaka, for taking the lead in
    promoting the importance of financial literacy. As my
    colleagues on the panel have noted, you have long been at the
    forefront of efforts to encourage saving and to ensure that
    people have the information they need to manage their personal
    finances.
    ---------------------------------------------------------------------------
        \1\ The prepared statement of Ms. LaCanfora appears in the Appendix
    on page 54.
    ---------------------------------------------------------------------------
        In 2009, we paid over $659 billion in Social Security
    benefits to more than 51 million retired or disabled workers,
    their families and survivors. Social Security benefits provide
    some financial protection for the retired, but the public must
    understand that these benefits were never intended to supply
    all of their retirement income.
        The Retirement Confidence Survey conducted by the Employee
    Benefit Research Institute indicates that less than half of
    American workers have estimated how much money they will need
    to live comfortably during retirement. Similarly, the survey
    indicated that only a fraction of Americans know at what age
    they are eligible to receive full Social Security retirement
    benefits. Workers who claim benefits at full retirement age
    will receive their full benefit amount, while the monthly
    benefits of those who claim early will be reduced.
        Understanding the implications of retirement age on
    benefits is an important part of retirement planning. Young and
    middle-age workers need to know just how important it is to
    have other sources of retirement income and to start planning
    for retirement early.
        As the agency responsible for delivering and managing the
    Social Security retirement program, we are uniquely positioned
    to help Americans better prepare for retirement and encourage
    them to save. In recognition of that role, we have established
    a special initiative to encourage saving. This initiative
    includes three elements: Our annual Social Security statement,
    the Retirement Estimator, and our research program.
        We mail more than 150 million Social Security statements
    each year to workers nationwide. Each statement contains
    personalized information about retirement, survivors and
    disability benefits, including an estimate of the person's
    future Social Security benefits based on his or her earnings.
    The statement serves as a useful planning tool.
        Our online Retirement Estimator is an interactive tool that
    uses a worker's earnings history to estimate what his or her
    retirement benefit would be under various scenarios. According
    to the 2009 American Customer Satisfaction Index, the
    Retirement Estimator received the highest customer rating of
    any Federal Government Web site. About three million people
    visited the site in 2009, and we expect that number to grow.
        Our research program is developing approaches to improve
    retirement planning based on an evaluation of what methods and
    tools are effective. Our work supports research by experts
    outside the agency, fosters collaboration with other Federal
    agencies, and develops and tests tools to improve retirement
    preparedness.
        Our largest research effort is the Financial Literacy
    Research Consortium. In October 2009, we initiated 26 research
    projects designed to improve program knowledge and encourage
    saving. We closely monitor the progress of each project and
    engage the expertise of a panel of scholars in the field of
    financial literacy to provide ongoing input. The results of our
    first-year projects will be reported at the Consortium's first
    annual conference in November of this year.
        We also actively participate in the government-wide
    Financial Literacy and Education Commission (FLEC). We assist
    the Department of the Treasury by chairing or co-chairing three
    of the four FLEC working groups, including the National
    Strategy, Research and Evaluation, and Communication and
    Outreach groups. We also collaborate with FLEC member
    organizations to share research findings and eliminate
    duplication of effort. To that end, we are assisting the
    Treasury Department in the creation of searchable databases of
    data sources and research findings. We are also working with
    the Treasury Department to develop common evaluation metrics,
    an important part of determining what works.
        We hope that our efforts will help people to plan
    effectively for a secure retirement. We look forward to
    continuing to work with the Treasury Department and other
    member agencies on the FLEC.
        I want to thank the Subcommittee for inviting me here today
    and we appreciate your continued support for the agency and for
    our mission. I would be happy to answer any questions.
        Senator Akaka. Thank you very much, Commissioner LaCanfora.
        Assistant Secretary Barr, we share a firm commitment to
    improving access to mainstream financial institutions for
    American families. I appreciate your collaborating with me on
    Title 12 of the regulatory reform bill. You have been extremely
    helpful. Thank you also for working with me on remittance
    consumer protections in the Dodd-Frank Conference Report.
        Many of my constituents send a portion of their hard-earned
    wages to relatives living abroad, especially to the Philippines
    in Hawaii's case. Unfortunately, in far too many cases, they do
    not know for sure how much money their loved ones will receive
    and they find it difficult to resolve problems when they arise.
    Could you please describe how my constituents will benefit from
    this legislation.
        Mr. Barr. I would be happy to, Mr. Chairman. As you
    indicated, we worked very closely with you and your terrific
    staff on the Dodd-Frank legislation. I think it will make a
    meaningful difference in the lives of families who are trying
    to send money abroad. It will primarily work in three key ways
    to help families in Hawaii and elsewhere in the United States.
        The first is, right now, it is very often quite difficult
    for someone trying to send money abroad to have certainty about
    the amount of money that their family in the receiving country
    will ultimately get. The disclosures have been not uniform and
    quite difficult to understand. The first step that the
    remittance provision takes is to say that there needs to be a
    clear and honest disclosure, really for the first time, about
    the actual amount of funds in the recipient's home country in
    local currency that will be received. I think that this will
    make an enormous difference, not only in helping individuals
    understand what they can expect their families to receive, but
    also in improving competition in the remittance sector to drive
    down prices and improve the situation for everyone on a level
    playing field.
        I think the second main way that the legislation will help
    people is, in the past, there has not been a consistent
    practice for resolving errors that happen in remittances and
    the legislation makes clear that remittances, remittance
    transfers, are subject now to the same kind of strong consumer
    protection rules that apply to, say, an ATM transaction or any
    other electronic transaction. So error resolution procedures
    will be very strong. It will be much easier for consumers to
    get redress if something goes wrong.
        And the third key area that the legislation promotes is
    better infrastructure, better work by the Federal Government,
    by the Treasury Department and by the Federal Reserve and other
    agencies, in helping to build the electronic systems that will
    lower costs and improve access for Americans trying to send
    funds abroad, all over the world.
        So I think that the legislation that you crafted will make
    an enormous difference in the lives of families.
        Senator Akaka. Thank you very much, Assistant Secretary
    Barr.
        Deputy Director Griffin, social networks are a great way to
    reach out to Federal employees, especially younger employees.
    In previous testimony, OPM stated it was planning to examine
    the role the new social networking media, such as Twitter, can
    play in reinforcing retirement readiness messages. Over the
    past year, has OPM taken steps to increase awareness of the
    need to plan for retirement through the use of social
    networking media?
        Ms. Griffin. Yes. As a matter of fact, we have. We used
    Facebook last year during the Open Season, in the fall, for the
    health benefits, flexible spending, the dental and the vision
    program. We are anxiously awaiting FedSpace to be launched by
    General Services Administration (GSA), and we anticipate that
    it will be another way of reaching the Federal employees. We
    are actually using Twitter. I can't say I know a lot about that
    myself. [Laughter.]
        But for those people that use Twitter, which I think they
    are all sitting up there---- [Laughter.]
        And other social media, we are going to use those as
    alternative ways of getting information to people. We certainly
    have a lot of experience reaching baby boomers through
    traditional means with benefits and retirement readiness
    information, but we are really experimenting with all the
    different aspects of social media to provide the information to
    a whole new set of people that won't really look at, or value
    some of the traditional ways that we have transmitted this
    information in the past.
        Senator Akaka. Thank you, Deputy Director Griffin.
        Assistant Secretary Dann-Messier, I appreciated the
    Administration's support of funding for the Excellence in
    Economic Education (EEE) program for fiscal year 2010. However,
    I am disappointed that separate funding was not included in the
    Department's request for fiscal year 2011. EEE's annual
    appropriation of $1.5 million has been a good use of funds
    because it leverages non-Federal funding and contributes to our
    economy's long-term health. I am proud of the innovative work
    that the Hawaii Council on Economic Education has done as just
    one of the many sub-grants made possible by the EEE's funding
    to the Council for Economic Education. Assistant Secretary
    Dann-Messier, how have the EEE resources been used?
        Ms. Dann-Messier. Mr. Chairman, it has been used for
    teacher training, development of instructional materials,
    development and dissemination of assessments, and serving the
    States, among other activities. And there is absolutely no
    question these activities have contributed to our shared goal
    of increasing financial literacy.
        I am looking at the way we are going about funding in the
    future for financial literacy as consolidating towards
    expansion because we are going to be putting 40 million
    additional dollars, which is a 17 percent increase, by making
    sure that we serve students across the spectrum, K through 12,
    career and technical education, and adult education. And as you
    know, we are proposing to consolidate programs into a handful
    of larger programs that will come up, as I mentioned before in
    my testimony, to the $265 million pool of funds called the
    Effective Teaching and Learning for a Well-Rounded Education,
    of which financial literacy would be a very large part, and
    that is a $40 million increase and a 17 percent increase in
    funds. So you need to know that we are deeply committed to
    increasing services and programs for financial education and
    financial literacy.
        Senator Akaka. Thank you very much, and I really appreciate
    it. I must tell you, it is moving and expanding and it looks
    good to me.
        Ms. Dann-Messier. I am glad to hear that, Mr. Chairman.
        Senator Akaka. Thank you very much for what you are doing.
        Ms. Dann-Messier. Thank you.
        Senator Akaka. Director Thompson, I am very interested in
    the results of the FDIC's small-dollar loan pilot program. This
    innovative pilot has resulted in a model or template of product
    elements that can produce a safe, affordable, and feasible
    small-dollar loan. In your testimony, you noted that this
    template can be copied easily as it is relatively simple and
    inexpensive to implement. My question to you is what must be
    done to increase the number of banks that offer affordable
    small-dollar loan products?
        Ms. Thompson. Thank you for asking the question. We started
    this pilot in February 2008 because we wanted to show that
    banks could offer alternatives to the high-cost financial
    products and services that were available for low- and middle-
    income persons. About 28 banks participated in the pilot. We
    started with 31 and there were some banks that went in and out
    of the pilot.
        The survey, completed over a couple of months ago,
    confirmed that banks can offer these products. And one of the
    things that we need to do is make sure that we highlight some
    of the results of the survey and prototypes. A diverse range of
    banks participated in the pilot--in terms of the asset size and
    the communities served. So the template can be adopted to work
    for different communities. For example, we had one bank that
    required financial education and we had another bank that
    didn't, and so taking this pilot and using it as just a model
    and modifying it to suit the particular needs of the community,
    I think, worked.
        The other thing that we could do as regulators is remove
    some of the perceived barriers that exist with regard to the
    bankers' perception of these small-dollar loans. We need to
    highlight that they can get Community Reinvestment Act (CRA)
    credit and we also need to highlight that, especially for loans
    that come with financial education, the default ratios are
    equal to that of traditional unsecured loans. There are a lot
    of things that we learned from the pilot that we could take as
    regulators and bankers and highlight to show the successes of
    the pilot program.
        One of the things that the bankers said that they learned
    was that they could take these small-dollar loans and develop
    long-term relationships and sell other products. Also, some of
    the small-dollar loans had their lines increased so they were
    higher-dollar amounts. A long-term beneficial relationship can
    be developed with these borrowers. But, I think we need to
    market the availability of this program and some of the
    benefits from both the regulatory side and the banking side.
        Senator Akaka. Thank you, Director Thompson.
        Commissioner LaCanfora, I would like to commend SSA for
    establishing a research program, the Financial Literacy
    Research Consortium (FLRC), as part of SSA's financial literacy
    initiatives. I am hopeful that this effort will result in
    innovative educational materials and programs to help more
    Americans achieve a secure retirement. Do you have any
    preliminary findings on this effort?
        Ms. LaCanfora. Thank you, Mr. Chairman. We are really
    pleased about the Financial Literacy Research Consortium, as
    well, and we share your hope that the findings from our current
    studies will not only help us inform our educational efforts
    with respect to Social Security, but will also be useful to our
    partner agencies in the FLEC as they develop their own
    materials with respect to educating people on financial issues.
        It is a little bit early in terms of findings because we
    just started our projects in September of last year, and we
    will have the final results of the first year projects in
    November. That said, I can tell you that we have been working
    through a preliminary survey using both telephone and Internet
    across 4,000 respondents to create some baseline knowledge. We
    want to identify the gaps in financial literacy, both as it
    relates to Social Security and otherwise; across age groups,
    and across ethnic groups, between genders. It is important for
    us to learn where the gaps are so we can customize materials to
    target different groups.
        In terms of initial findings, we conducted focus groups and
    in those focus groups we learned that many people respond to
    visual displays. One of the things they told us about Social
    Security benefits is that they would like to see us display
    retirement ages in order from age 62 right up until age 70 and
    the corresponding benefit amount that they would get if they
    elected to start receiving benefits at that age. That is not
    how we now present our benefit structure in the Social Security
    statement, but it is something we are going to test.
        There are various things that we are learning which we will
    then test on a subset of the survey population to see how
    people respond to the new ways of the new materials we put out,
    what they retain, what they find to be most useful, and then,
    ultimately, what impacts behavior most directly. Then we will
    take the results of that information and we will modify
    existing materials that Social Security uses. We will share
    those findings with our partners across agencies and develop
    new materials, as needed.
        Senator Akaka. Thank you so much, Commissioner LaCanfora.
        I have a question for Assistant Secretary Barr. Modifying
    disclosures for financial products has the potential to empower
    consumers and investors to make better informed decisions if
    they are provided with meaningful and relevant information. My
    Credit Card Minimum Payment Warning Act, which was enacted as
    part of the Credit Card Act, requires additional disclosures
    during the course of making minimum payments. I am also proud
    to have included an amendment in the Dodd-Frank bill to provide
    clarified SEC authority for pre-sale disclosures for financial
    services and products. What else can be done to make
    disclosures for financial products and services more meaningful
    for consumers and investors?
        Mr. Barr. Thank you, Mr. Chairman. I think the two examples
    you gave are really important examples of the way that the
    legislation that you worked on, I think, will make a big
    difference again to families. The ability to be able to see on
    your statement how much it would cost if you only made the
    minimum payments and how long it would take if you did so, as
    well as information about alternatives that cost less and reach
    the zero balance sooner, I think are already making a big
    difference in helping people take more control over their
    financial lives. It makes it easier for consumers to make
    decisions that are better for themselves and for their
    families.
        It is exactly the kind of disclosure that I think we want
    to see more of in the future, that is not simply adding more
    information to the consumer, but presenting it in a way that
    resonates with their lives and helps them make better choices.
    I think that kind of disclosure, not the dumping of more
    information but improving consumer understanding, is an
    absolutely critical path forward.
        As others on the panel have mentioned, one way we do better
    on that and that informed the provision that you were able to
    bring into law now, is consumer testing, paying attention to
    how consumers actually make financial decisions and then act or
    don't act on the information that they receive. And having that
    kind of sound empirical evidence, I think needs to be at the
    root of any decisions we make about disclosure, not based on
    some abstract model of how we all make decisions, but based on
    actual information of the kind the other panelists have
    mentioned.
        I think that will make an enormous difference in making
    progress in the future, and the new agency, the Consumer
    Financial Protection Bureau that the Dodd-Frank bill
    authorizes, will have full authority to improve disclosures
    across the consumer financial marketplace through consumer
    testing, through improvements, through merging of Real Estate
    Settlement Procedures Act (RESPA) and Truth in Lending Act
    (TILA) disclosures, for example, to come up with one simple
    mortgage disclosure form. These are all enormous improvements.
        And I think as you mentioned in the investor protection
    context, giving the SEC the tools it needs to improve investor
    education is absolutely critical, as well. The pre-sale
    disclosures are, again, an important example of how we need to
    provide individuals with information at the time that they need
    it and not when it is too late. I just think that is going to
    be really critical in the months and years ahead. So thank you
    again for your leadership on those initiative.
        Senator Akaka. Thank you for your response. I would like to
    ask you another question, Assistant Secretary Barr. The level
    of home ownership in Hawaii is one of the lowest in the Nation.
    Therefore, I am proud to have authorized and subsequently
    secured funding for a pre-home ownership and financial
    education demonstration project in Hawaii. Also, as you
    mentioned in your written testimony, CDFI funding was awarded
    early this year for other financial education and counseling
    pilot projects authorized by the Housing and Economic Recovery
    Act of 2008. What is being done to ensure meaningful evaluation
    of these demonstrations?
        Mr. Barr. Mr. Chairman, as you could tell from my earlier
    remark, I am a firm believer in really sound empirical research
    and evaluation as a basis of proceeding on counseling and
    financial education and programming more generally. So we have
    been taking a hard look at the pilots that have gone on before.
    We are in the middle of a serious evaluation of those pilots.
    We have plans for doing similar kinds of work on the pilots
    going forward, and I think the learning that we take from those
    experiences will help us shape better public policy more
    broadly. So the pilots, I think, do very good things on the
    ground in the communities that they serve and they also help
    the whole country do better at the work we are doing together.
        Senator Akaka. Assistant Secretary Barr, I want to thank
    you for announcing the passage of the bill. It is going to make
    a significant, positive difference for our country.
        I understand that there is business that you must attend to
    related to the Dodd-Frank bill passed today and I want to thank
    you for your efforts in helping us do that, as well. And so let
    me just say, you are dismissed.
        Mr. Barr. Thank you, Mr. Chairman, and thank you again for
    your leadership and friendship on all these issues. I look
    forward to much more work together.
        Senator Akaka. Well, thank you for being on the panel.
        Deputy Director Griffin, I continue to appreciate all of
    the work done by OPM to fulfill its mandate to better educate
    the Federal workforce. What is the status of the establishment
    of benchmarks and goals for OPM's financial literacy efforts.
        Ms. Griffin. Well, Senator, I think you know that last
    year, we mentioned that there were some measures that we were
    working on as part of our new strategic plan. We have shifted
    the focus slightly from measuring employees' benefits knowledge
    to really identifying the roles and responsibilities of the
    benefits offices. I think we are starting to realize that our
    best approach is to focus on delivering the best we can to the
    agencies because they are on the front lines delivering the
    education to new employees as well as existing employees. We
    are defining standards for the employee benefit offices and
    measuring the results and they will be published in the Benefit
    Scorecard.
        Additionally, the Retirement Readiness Index, which is
    based on scores on the Retirement Readiness Profile, will
    provide us with more information. We released a beta test
    version of the Retirement Readiness Profile last winter and we
    are currently incorporating the feedback that we are getting
    from the agencies who used the beta version and we will be
    releasing an updated Retirement Readiness Profile this fall.
        Senator Akaka. Thank you.
        Assistant Secretary Dann-Messier, the ability of students
    to finance and pay for their education is critical in order to
    support a skilled workforce and ensure national
    competitiveness. Adequate financial literacy for students and
    their families is an important component of aiding this effort.
    How does financial knowledge of students and their families
    influence the ability of students to complete their education?
        Ms. Dann-Messier. Mr. Chairman, it has a profound impact on
    whether even a student considers going into college and
    accessing college, never mind completing college. In my work in
    the community at Dorcas Place and as a member of the State
    Board of Governors for Higher Education, we repeatedly heard
    stories from students and families who thought they couldn't
    even apply to college because it was so expensive. And so this
    is why financial literacy and financial education is so very
    important, to make sure that our families know that there are
    resources available to assist them in paying for college and
    completing college.
        All folks are hearing in the press is how unaffordable
    college is, and so they assume if they are low-income that
    certainly speaks to them and their inability to go to college.
    And we incorporated in Dorcas Place in our family literacy
    program making sure that we embedded financial literacy within
    our program so that families understood and our students
    understood that there really were, in fact, opportunities for
    them to go to college.
        I also found in my experience that many low-income
    communities were adverse to taking out loans and they assume
    that if they had to go to college, they would have to take out
    a loan. And so that was part of our work in the community, and
    we used the mainstream financial institutions to come in and
    also help our students to understand what options were
    available to them.
        And then we are not surprised, but there was a recent
    report that showed that 64 percent of the students took out
    costly private loans and they had not yet even exhausted their
    eligibility for more flexible and affordable Federal loans. So
    we have to do a much better job of educating students and their
    families and our adult students, and that is part of our
    finance and financial literacy programs, that there are
    resources available and that they can, in fact, go to college
    and complete college. It has been a huge barrier.
        Senator Akaka. Thank you.
        Director Thompson, I commend FDIC for working last year
    with the U.S. Census Bureau's Current Population Survey to
    conduct a National Survey of Unbanked and Underbanked
    Households. This landmark survey provides a wealth of
    previously unavailable data on unbanked and underbanked
    households. I have shared the data with my colleagues as we
    have worked to advance Title 12. Please share with the
    Subcommittee how this data is being utilized.
        Ms. Thompson. Certainly. The survey uncovered that almost
    one in four households in the United States were either
    unbanked or underbanked. When we asked the unbanked households
    whether they had a bank account or have ever had a bank
    account, it was for the unbanked half and half. We also asked
    the underbanked whether they were using alternative financial
    services. Many of them said yes, which really equates to the
    people that can least afford paying a higher cost for financial
    products and services.
        What we are trying to do at the FDIC is come up with safe,
    affordable, and easy-to-understand products so that people can
    come into the banking system and feel comfortable using these
    products. Our Chairman, Sheila Bair, has established the
    Chairman's Advisory Committee on Economic Inclusion (ComE-IN).
    Members include academicians, regulators, banks, community
    groups, and consumer groups. They talk about ways to bring
    people into the banking system. Through the ComE-IN, we are
    developing a model template so that people can have access to a
    basic checking and savings account.
        Also, as I mentioned earlier, the FDIC's small-dollar loan
    program provides for institutions to provide access to
    affordable small-dollar credit.
        Additionally, the FDIC has established partnerships in
    about 14 communities around the country. We call those
    partnerships the Alliance for Economic Inclusion. These
    partnerships include regulators, banks, and community groups
    that go into the communities and try to bring households into
    the banking sector. We provide financial education through our
    Money Smart program, and encourage the banks to offer safe and
    affordable products.
        We are also working on several ``Bank-On'' initiatives
    through cities around the country and we are partnering with
    the National League of Cities to implement that strategy.
        The Money Smart Alliance has about 1,500 members around the
    Nation. Many of these members go out and teach and train people
    on banking, banking services, and financial literacy. We think
    that this work is very important.
        Senator Akaka. Thank you very much.
        Commissioner LaCanfora, I want to commend SSA for enhancing
    the 2009 Annual Social Security Statement to provide additional
    information relevant to beneficiaries. Will SSA be conducting
    an evaluation to measure the impact of these changes on
    influencing worker behavior?
        Ms. LaCanfora. As I mentioned in my testimony, the Social
    Security statement is part of the cornerstone of our outreach
    and educational efforts. We started sending it out in 1995 and
    we send out 150 million each year. So you don't just get a
    statement once in your lifetime; you get it every year. We are
    hoping that by sending it out on an annual basis that it will,
    in fact, help educate people and inspire them to plan for
    retirement.
        We are always looking for ways to improve the Social
    Security statement. We made a couple of changes last year, and
    there are probably even more ways to enhance the statement so
    that it resonates more with people across age groups, across
    ethic groups, and between genders.
        We have a couple of research projects that we think will
    help inform the statement and help us understand better how
    people best take in information, what works for them and what
    makes sense. So yes, we do intend and we have been all along
    looking at the statement and the effects of the changes that we
    make to the statement. We will make that information publicly
    available and be happy to share it with anyone.
        Senator Akaka. Thank you. I want to thank this panel for
    being here with us and updating us with your responses to our
    questions. We may have further questions for you that we will
    submit in writing. So again, thank you. This is a great day for
    the United States of America, and we need to take advantage of
    this opportunity and really move ahead to help the people of
    our country. Thank you very much.
        Mr. Barr. Thank you.
        Ms. Griffin. Thank you.
        Ms. Dann-Messier. Thank you.
        Ms. Thompson. Thank you.
        Ms. LaCanfora. Thank you.
        Senator Akaka. I want to welcome our second panel of
    witnesses, Barbara Roper, who is Director of Investor
    Protection at the Consumer Federation of America, and I also
    understand, Ms. Roper, that you have a son, Nick, who is here.
    Nick, would you raise your hand? Hi. Welcome, too. We also have
    Lynne Egan, Deputy Securities Commissioner for the Montana
    Office of State Auditor, and who is appearing on behalf of the
    North American Securities Administrators Association.
        As you know, it is the custom of this Subcommittee to swear
    in all witnesses. I would ask you to stand and raise your right
    hand.
        Do you swear that the testimony you are about to give the
    Subcommittee is the truth, the whole truth, and nothing but the
    truth, so help you, God?
        Ms. Roper. I do.
        Ms. Egan. I do.
        Senator Akaka. Thank you. Let it be noted in the record
    that the witnesses answered in the affirmative.
        I want you to know that your full statement will be made
    part of the record, and I would also like to remind you to
    limit your oral remarks to 5 minutes.
        Ms. Roper, will you please proceed with your statement.

    TESTIMONY OF BARBARA ROPER,\1\ DIRECTOR OF INVESTOR PROTECTION,
                     CONSUMER FEDERATION OF AMERICA

        Ms. Roper. Thank you. For more than three decades, Consumer
    Federation of America (CFA) has sought to promote effective
    financial education to increase financial literacy and improve
    financial decisionmaking. However, my own work at CFA has been
    primarily in the area of advocacy, working to promote policies
    that achieved the same goal, but through a different route. If
    financial literacy is aimed at educating consumers and
    investors to make sound financial decisions, my work as an
    investor advocate has tended to focus on ending the industry
    practices and market flaws that undermine that goal.
    ---------------------------------------------------------------------------
        \1\ The prepared statement of Ms. Roper appears in the Appendix on
    page 60.
    ---------------------------------------------------------------------------
        Too often, these two areas of activity have proceeded
    independently of each other without adequate consideration for
    how they naturally interact. I realize in saying that I am
    preaching to the choir because there is no Member of Congress
    who has done more to work on both sides of these two issues,
    the literacy and the consumer protection side, than you have,
    and we greatly appreciate that, Chairman Akaka.
        In my written testimony, I cover several lessons that we
    have learned about how these two features interact. In my oral
    statement, I would like to just cover a few of the key points.
        My first is that financial literacy needs to be treated not
    as an end in itself, but as a means to an end. In other words,
    our goal isn't or should not be simply to empower consumers to
    make informed financial decisions, but to empower them to make
    sound financial decisions. And thus in measuring the success of
    Federal financial literacy efforts, we should look not just at
    whether they provide consumers with the information they need,
    but with whether they result in substantial positive behavioral
    change, especially in areas that are crucial to consumers'
    financial well-being.
        In making that assessment, it is essential that we
    recognize that statistically significant change is not
    necessarily socially significant change. So if we increase
    socially desirable practice, such as creating an emergency fund
    from, say, 20 percent of the population to 25 percent, that
    would certainly be statistically significant, but it would not
    be adequate. For these kinds of financial behaviors that are
    crucial to consumer well-being, we need to aspire to spread
    that behavior to a large majority of the population.
        If behavior change is the goal, moreover, then more thought
    needs to be put into determining what messages are most likely
    to motivate consumers to change their behavior. In other words,
    financial education efforts need to focus not just on the
    information that consumers need, but on what one or two factors
    are most likely to motivate them to act. As the Federal
    Government develops and implements financial literacy programs,
    it needs to incorporate both front-end research designed to
    identify key motivators and back-end assessment to determine a
    program's impact on consumer behavior, and we greatly
    appreciate the fact that the investor literacy provision that
    you included in the financial reform bill provides just that
    kind of research.
        Financial education efforts will always be swimming against
    the current, however, if they are not supported by regulatory
    policies that support sound financial decisionmaking. Too
    often, our regulatory policies either do not support that end
    or actively undermine it. To achieve our goal in such cases, we
    need to think not just about how to educate consumers to make
    sound decisions in that sub-optimum financial world, but about
    what policy changes are necessary to make consumer education
    both possible and effective, and the following are among the
    obvious areas, I believe, where policies should be reexamined
    to ensure that they support the ability of financially literate
    consumers to make sound financial decisions.
        The first is disclosure. If we want consumers to make sound
    financial decisions, we need to ensure that they receive the
    necessary information in a form that is accessible and
    understandable at a time when it can be factored into their
    purchase decision. However, most financial disclosures fail at
    least one of these tests of effective disclosure. Often,
    consumers receive the relevant information, but obscured in
    massive fine print or conveyed in overly technical language
    that makes the information all but impenetrable, or delivered
    after the purchase, as is typical with mutual fund prospectus.
    Even point-of-sale disclosures may come too late if the
    purchase decision has already effectively been made.
        Thus, for financial literacy efforts to succeed, we need
    sweeping revisions to our financial disclosures across product
    and industry lines with an eye toward designing timely
    disclosures that not only provide the relevant information but
    do so in a way that is designed to motivate consumers and
    investors to act on that information.
        Complexity--it is unreasonable to expect financial
    education to equip consumers and investors to understand
    concepts that are too complex to be understood by anyone but a
    highly trained financial professional. In my written testimony,
    I illustrated this point with an excerpt from a prospectus for
    an equity indexed annuity, but I could just as easily have
    chosen the disclosures about a mutual fund's investment
    strategy or any of a number of other factors that we ask
    consumers to carefully assess when they are selecting products.
        Educating consumers that they need to assess factors that
    they cannot comprehend is a waste of time and energy. If we
    can't reasonably expect to educate consumers to understand some
    factor that we consider crucial to an informed purchase
    decision, we must adopt other regulatory policy options that
    ensure that the marketplace conditions support beneficial
    choices and limit the potential for harmful choices.
        So in conclusion, if our goal is to help consumers and
    investors make sound financial decisions, the first
    responsibility of the Federal Government is to ensure that the
    financial marketplace supports that goal. Are good choices
    available? Even where good choices are available, is the market
    overwhelmed by bad choices? Do the incentives in the system
    encourage the intermediaries that consumers and investors rely
    on to act for or against their customers' best interests? And
    are the disclosures consumers and investors rely on presented
    in a way and at a point in the process that encourages informed
    decisionmaking?
        Until you resolve those public policy questions, financial
    literacy efforts will be fighting a hopeless battle. Only when
    the regulatory policies themselves support sound financial
    decisionmaking can financial education be truly effective in
    promoting that goal.
        Senator Akaka. Thank you very much, Ms. Roper, for your
    statement.
        Now I will call on Ms. Egan to proceed with your statement.
    But before you do, I just want to let you know that Senator
    Tester would like to have been here personally to greet you
    today, but is not able to make it because of a schedule
    conflict. I wanted to tell you that he was thinking of you and
    wanted to be here. But as you know, the Senate has so many
    events scheduled, it is difficult to be every where you want.
    But he wanted to greet you here, so I will do that for him.
        Ms. Egan. Thank you.
        Senator Akaka. Will you please proceed with your statement.

      TESTIMONY OF LYNNE EGAN,\1\ DEPUTY SECURITIES COMMISSIONER,
        MONTANA OFFICE OF STATE AUDITOR, ON BEHALF OF THE NORTH
             AMERICAN SECURITIES ADMINISTRATORS ASSOCIATION

        Ms. Egan. Thank you, Chairman Akaka. I am honored to
    present the views of the State securities regulators on how to
    empower Americans to make informed financial decisions.
    ---------------------------------------------------------------------------
        \1\ The prepared statement of Ms. Egan appears in the Appendix on
    page 69.
    ---------------------------------------------------------------------------
        State securities regulators recognized long ago that
    education is a key weapon in the fight against investment
    fraud, and as a result, the North American Securities
    Administrators Association (NASAA) Investor Education Section
    was created in 1997 by our Board of Directors to help support
    our members. Most securities regulators have established
    investor education divisions within their agencies. The result
    is an effective network of dedicated professionals delivering
    financial education in person at the grassroots level. Last
    year, NASAA members reached over 250,000 consumers through more
    than 1,800 investor education presentations.
        NASAA actively participates with Financial Literacy
    Education Commission events that have brought individuals and
    organizations together to discuss ideas and outreach. In the
    past, the FLEC suffered from a small number of staff and
    limited funding that provided constraints to its effectiveness.
    While the FLEC has taken positive steps, the progress has been
    slow in integrating the Commission's national strategy for
    financial literacy.
        One challenge to be addressed is how to organize the
    existing financial literacy program of the FLEC's members and
    how best to reach a consensus on a harmonized message. Another
    challenge is disseminating the program's information to the
    public from a centralized location in Washington, DC. In this
    regard, NASAA's members should be utilized by the FLEC to
    mobilize their respective grassroots networks to reach more
    people.
        NASAA was pleased when the FLEC formed the National
    Financial Education Network to create an open dialogue and
    advance financial education at the State and local level.
    Ongoing activity has been limited and NASAA encourages the FLEC
    to move forward in establishing effective ways of connecting
    State and local parties, both electronically and through face-
    to-face meetings throughout the year.
        The President's Advisory Council on Financial Capability
    also offers an opportunity to coordinate the efforts of NASAA's
    grassroots network with the initiatives undertaken at the
    national level. We recommend a State securities regulator be
    appointed by President Obama to serve on the Council to utilize
    the resources and experience of State securities regulators to
    pursue new programs and partnerships.
        NASAA members provide unbiased, relevant, and timely
    information for anyone interested in the investment markets,
    which is critical in light of the notoriety of recent
    investment frauds. Our members also disseminate this
    information to the public at no cost through our vast network
    of Investment Education Coordinators across North America.
        One example of how FLEC could facilitate this outreach is
    to coordinate joint efforts with both the Treasury Department
    and State officials as participants. That way, we could
    leverage resources and members of the audience have a local
    point of contact for future questions and requests for
    information.
        To better frame the nature of our work, I would like to
    share highlights of our financial education initiatives. In
    Montana, a State vast in size and small in population, we have
    found the most effective way to reach our population is in
    face-to-face meetings. We have an investor education campaign
    entitled, ``Securities Fraud: How to Smell a Rat,'' that we
    take on the road each September and May, traveling thousands of
    miles to remote locations throughout the State. Events are held
    primarily at senior centers, include a meal, an hour
    presentation on securities fraud, and a wrap-up game of Smell a
    Rat Bingo that tests the seniors on the fraud presentation
    material. During this past year, our staff has driven nearly
    4,000 miles and has provided to thousands of Montana seniors
    the tools necessary to protect themselves from financial fraud.
        Additionally, NASAA has partnered with American Association
    of Retired Persons (AARP) to combat the rising investment fraud
    among seniors with the Free Lunch Monitor (FLM) program, which
    seeks to empower seniors to fight fraud. This national campaign
    is designed to monitor whether senior investors are being
    pressured into purchasing inappropriate or unsuitable
    investments, such as equity indexed annuities. The FLM program
    gives individuals an opportunity to fight back against
    unscrupulous promoters by reporting to their State securities
    authorities possibilities of questionable investment practices
    in their communities.
        In times of heightened deployment, U.S. service members
    have become targets of financial scams. My colleague in New
    Jersey created a fraud prevention guide tailored to the
    military called ``A Salute to Smart Investing.'' The guide acts
    as a resource for military members with information on safe
    investing, balancing risk and return, retirement planning, red
    flags for fraud, scams that target the military, and a list of
    State securities regulators nationwide. This guide has been
    distributed to more than 90,000 military members.
        Teaching youth the principles of sound investing and fraud
    prevention is the thrust of a NASAA-produced program targeted
    to high school students entitled, ``FSI: Fraud Scene
    Investigator.'' FSI is an interactive online investor education
    program that teaches and empowers students how to detect and
    stop investment fraud. The FSI program is designed to help
    students learn how to fight fraud firsthand by delving into
    newspaper stock tables, researching companies through online
    news, and deciphering the truth about an investment from
    fraudulent sales pitches. NASAA's grassroots network is working
    with educators to integrate the FSI program into schools across
    the Nation.
        In conclusion, State Securities Regulators have
    traditionally been and remain an extremely effective resource
    in the pursuit of greater financial literacy. We are the front
    lines of financial education initiatives in every State,
    translating Wall Street to Main Street for small investors
    throughout this country. NASAA and its members welcome the
    opportunity to work more closely with the FLEC and Subcommittee
    members in their ongoing efforts to improve the level of
    financial literacy throughout our Nation. Thank you.
        Senator Akaka. Thank you for your statement, Ms. Egan.
        I was greatly disappointed that a harmful provision was
    included in the Dodd-Frank Wall Street Reform and Consumer
    Protection Act Conference Report that will exempt equity index
    annuities from securities laws. Could you please describe why
    this will be harmful to investors? Ms. Roper.
        Ms. Roper. I will be happy to start. As you know, we share
    your concern and greatly appreciate the efforts that you made
    to prevent that from happening. When I talked earlier, I said
    you cannot educate consumers to understand things that are too
    complex. You also can't educate consumers to understand things
    that don't make any sense.
        And regulating products that are sold in competition with
    each other under different standards so that in some places
    they are protected, say, by a fiduciary duty for advice or by
    limits on excessive compensation as the securities law provide,
    in other cases they are not. You cannot educate consumers to
    protect themselves against the abuses that will inevitably
    result. And this is a case where we know that the marketing
    abuses are rampant.
        And so we have now adopted an approach that says, in an
    area of the market where we know consumers are vulnerable and
    market abuses are rampant, we are going to deny them the
    services of securities regulators to help police those abuses,
    the kind of disclosures they would get under securities laws
    protections, the securities fraud protections, the excessive
    compensation protections, for no good sense that I can see.
    And, in fact, our policies need to be going the opposite
    direction. We need to be looking to ensure that products and
    services that are offered in competition with each other to
    serve comparable functions need to be subject to comparable
    regulations. Otherwise, you will never be able to educate
    consumers to understand that.
        Senator Akaka. Commissioner Egan, would you like to
    comment?
        Ms. Egan. I would again like to thank you, Chairman Akaka,
    for your efforts in opposing that particular amendment. We as
    the securities regulators were greatly dismayed when we saw the
    opportunity to police that particular product leave our radar
    screens. In Montana alone, we have about 30 percent of our
    complaints, and we receive several hundred a year, come from
    senior citizens that have invested in equity indexed annuities.
    They are not given full disclosure. They do not understand the
    products. They are unsuitable products. And it will be more
    difficult now for us to protect these individuals because of
    the result, as a result of that amendment.
        We will do what we can to help them, but the products are
    high commission products. They are very complicated. They
    change constantly throughout the life of the product and they
    are oftentimes products that are flipped over and over again.
    But we will do what we can and we hope that possibly down the
    road we will see some changes. Thank you.
        Senator Akaka. Thank you. This, again, is to receive
    comments from both of you. Section 917 of the Financial Reform
    Conference Report requires a SEC study on the existing level of
    financial literacy among retail investors. It also mandates
    that the SEC develop a strategy to improve the financial
    literacy of investors. Could you both please share with the
    Subcommittee why you believe that this provision is important.
    Ms. Roper.
        Ms. Roper. Absolutely. This was a provision in the bill we
    strongly supported. We know from testing that has already been
    done, including testing that we, in CFA, have done on mutual
    fund investors and testing others have done that the level of
    financial literacy among investors doesn't begin to approach
    the level that you would need to make an informed financial, or
    an informed investment decision.
        So we know that there is a gap in understanding there and
    it is in an area where we have had financial education efforts
    for years. We did a project on mutual fund purchase practices
    where there is almost unanimous agreement on what appropriate
    purchase practices should look like. It has been the subject of
    education for years. And when you then test investor behavior,
    you find that their conduct doesn't remotely resemble what the
    experts agree they should be doing.
        So what we need to do is use this study. I think this study
    provides just a tremendous opportunity to understand what is
    working, where the areas are where investors are most
    vulnerable, what is likely to be most effective, and then to
    not just design investor education around that, which is
    absolutely essential, but to go back and look at the policies,
    as I say, about disclosure in particular to ensure that they
    actually support informed decisionmaking. I just think the
    study, properly conducted, provides a tremendous opportunity to
    fundamentally rethink the way we approach that whole issue.
        Senator Akaka. Thank you. Ms. Egan.
        Ms. Egan. Thank you, Mr. Chairman. I agree with Ms. Roper.
    I have always taken the position that it would be nice to
    regulate the investor because then we could test the investor
    and see what level of sophistication he or she may rise to, to
    make a determination of what investment products are suitable
    for that person.
        Unfortunately, that isn't the case, and I believe that
    investors many times will never reach a level of financial
    literacy that is requisite to certain investment products, and
    that is why the Fiduciary Duty Standard was so important. The
    disclosures investors receive are oftentimes written in
    language that is almost unintelligible to many people. That is
    why they are providing a professional to provide them with
    investment advice.
        So I don't think we can ever fully hope that investors will
    be completely financially literate. I think we have to write
    the disclosure in plain English. We need to be more clear in
    what we are talking about, require the industry to be more
    clear in what it is talking about or what it discloses to
    investors. And we need to impose a standard that the industry
    make these full disclosures. Thank you.
        Senator Akaka. Thank you. Ms. Roper, we share a commitment
    to establishing a meaningful fiduciary duty for brokers that
    provide personalized investment advice. What must be done to
    ensure that the authority provided to the SEC in the Wall
    Street Reform bill is implemented in a manner that will
    adequately protect investors?
        Ms. Roper. Well, you are absolutely right. It is actually
    an issue that I have been working on since I started at CFA in
    1986, so we didn't get there fast, but it looks like maybe we
    got there, which we greatly appreciate the support that you
    provided for getting that provision through into the final
    bill.
        As Ms. Egan says, you can't adequately educate investors to
    understand the complex issues that go into some of the
    decisions that they are required to make for a sound
    retirement. So how you regulate the intermediaries they rely on
    becomes absolutely essential.
        We now have authority for the SEC to adopt a standard for
    brokers when they give investment advice that would require
    them to act in their customers' best interest, just as other
    investment advisors, financial planners, are already required
    to do. The first step in getting that done is going to be to
    ensure that the study that the SEC conducts, which is on a very
    short time frame--6 months they have to do the study that lays
    the groundwork for this--is going to be to ensure that the
    study is unbiased. I am absolutely convinced that an unbiased
    study supports the imposition of a fiduciary duty on brokers.
    But this is a problem that is the result of poor policy
    decisions at the SEC over a number of decades, and so we need
    to ensure that the study looks strictly at the issue of what
    the standards should be rather than trying to make excuses for
    past decisions that helped create the current confusion.
        I am convinced that three of the Commissioners, Chairman
    Schapiro and two of the other Commissioners, have made public
    statements that they are supportive of imposing a fiduciary
    duty. They are committed to that. So the fact that the
    rulemaking authority is permissive rather than mandatory does
    not necessarily concern me. But there will be, I think, some
    need for the Senate, Members of Congress, to keep an eye on
    that process as it moves along to ensure, with all of the many
    responsibilities that the SEC now has before it to implement
    this new bill, that this one doesn't get lost in the process
    and that it proceeds in a way that really puts investors'
    interests first.
        Senator Akaka. Ms. Egan, what are your thoughts?
        Ms. Egan. I would mirror what Ms. Roper says. I was totally
    dumbfounded to think that anybody would even consider not
    putting the investor first. They should always come first in
    any financial decision. Objectiveness is key here. I think that
    those that are conducting the study need to step aside from the
    relationship and look strictly at the facts. It is the investor
    that is paying for the product and the investor's interests
    need to be placed first. Thank you.
        Senator Akaka. Well, thank you very much. I appreciate your
    responses. It is good to hear from people who deal with
    investors and consumers, so I thank you very much for your
    responses.
        I feel this has been a good hearing on the day that we
    passed the Dodd-Frank Wall Street Reform and Consumer
    Protection Act Conference Report. Without question, it will
    certainly help the people of this country.
        This hearing will be adjourned, but the hearing record will
    be open for one week for additional statements or questions
    other Members may have. Again, I want to thank our panelists
    for being here and for your responses, which will be helpful to
    this Subcommittee.
        The hearing is adjourned.
        [Whereupon, at 4:32 p.m., the Subcommittee was adjourned.]

                                A P P E N D I X

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