[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.
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    \1\ The prepared statement of Ms. LaCanfora appears in the Appendix 
on page 54.
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    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.]


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