[Senate Hearing 112-119]
[From the U.S. Government Publishing Office]






                                                        S. Hrg. 112-119

  FINANCIAL LITERACY: 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 TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                             APRIL 12, 2011

                               __________

         Available via the World Wide Web: http://www.fdsys.gov

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









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        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          RON JOHNSON, Wisconsin
CLAIRE McCASKILL, Missouri           JOHN ENSIGN, Nevada
JON TESTER, Montana                  ROB PORTMAN, Ohio
MARK BEGICH, Alaska                  RAND PAUL, Kentucky

                  Michael L. Alexander, Staff Director
               Nicholas A. Rossi, Minority Staff Director
                  Trina Driessnack Tyrer, Chief Clerk
            Joyce Ward, Publications Clerk and GPO Detailee


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

                   DANIEL K. AKAKA, Hawaii, Chairman
CARL LEVIN, Michigan                 RON JOHNSON, Wisconsin
MARY L. LANDRIEU, Louisiana          TOM COBURN, Oklahoma
MARK BEGICH, Alaska                  JOHN ENSIGN, Nevada

                Lisa M. Powell, Majority Staff Director
            Benjamin B. Rhodeside, Professional Staff Member
               Alan Elias, Legislatve Assistant Minority
                      Aaron H. Woolf, Chief Clerk












                            C O N T E N T S

                                 ------                                
Opening statement:
                                                                   Page
    Senator Akaka................................................     1
    Senator Johnson..............................................     3
    Senator Coburn...............................................     3

                               WITNESSES
                        Tuesday, April 12, 2011

Hon. Gene L. Dodaro, Comptroller General of the United States, 
  U.S. Government Accountability Office; accompanied by Alicia 
  Puente Cackley, U.S. Government Accountability Office; Barbara 
  D. Bovbjerg, U.S. Government Accountability Office; and Susan 
  Offutt, U.S. Government Accountability Office..................     5
Brenda Dann-Messier, Assistant Secretary, Office of Vocational 
  and Adult Education, U.S. Department of Education..............    16
Lori J. Schock, Director, Office of Investor Education and 
  Advocacy, U.S. Securities and Exchange Commission..............    18
Joshua Wright, Acting Director, Office of Financial Education and 
  Financial Access, U.S. Department of the Treasury..............    20
Hollister K. Petraeus, Director, Office of Servicemember Affairs, 
  Consumer Financial Protection Bureau...........................    23

                     Alphabetical List of Witnesses

Dann-Messier, Brenda:
    Testimony....................................................    16
    Prepared statement...........................................    50
Dodaro, Hon. Gene L.:
    Testimony....................................................     5
    Prepared statement...........................................    35
Petraeus, Hollister K.:
    Testimony....................................................    23
    Prepared statement...........................................    69
Schock, Lori J.:
    Testimony....................................................    18
    Prepared statement...........................................    55
Wright, Joshua:
    Testimony....................................................    20
    Prepared statement...........................................    63

                                APPENDIX

Background.......................................................    74
Statement of Ben Bernanke........................................    79
Questions and responses submitted for the record from:
    Mr. Dodaro...................................................    95
    Ms. Dann-Messier.............................................    98
    Ms. Schock...................................................   102
    Mr. Wright...................................................   104
    Mrs. Petraeus................................................   110
Safe Report submitted by Mr. Wright..............................   114

 
                     FINANCIAL LITERACY: EMPOWERING
             AMERICANS TO MAKE INFORMED FINANCIAL DECISIONS

                              ----------                              


                         TUESDAY APRIL 12, 2011

                                 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 2:33 p.m., in 
room 628, Dirksen Senate Office Building, Hon. Daniel K. Akaka, 
Chairman of the Subcommittee, presiding.
    Present: Senators Akaka, Johnson, and Coburn.

               OPENING STATEMENT OF SENATOR AKAKA

    Senator Akaka. I call this hearing of the Subcommittee on 
Oversight of Government Management, the Federal Workforce, and 
the District of Columbia to order.
    Aloha and good afternoon, everyone. I want to welcome our 
witnesses to today's hearing, ``Financial Literacy: Empowering 
Americans to Make Informed Financial Decisions.'' Thank you for 
being here.
    This April is Financial Literacy Month, our opportunity to 
showcase the importance of financial literacy in America. My 
first lessons in financial literacy date back to my childhood. 
My fourth grade teacher required us to have a piggy bank to 
teach us about money management. We learned that money saved a 
little at a time can grow into a large amount, enough to buy 
things that would have been impossible without savings. My 
piggy bank taught me important lessons about money management 
that I never forgot.
    Growing up, my family did not have a bank account where we 
could save money securely and earn interest. I grew up in a 
large family and you could say we were poor. We budgeted by 
putting our money in a box that was divided into sections. If 
the food compartment was empty, we did not eat, even if there 
was money in the clothing compartment.
    I know personally the challenges that families face when 
they are unable to save or to borrow money for unexpected 
expenses. My parents made difficult choices to provide better 
opportunities for their children. I understand now how much 
worse off we would have been if my parents had not worked so 
hard to understand difficult financial decisions and to make 
careful choices, or if they had fallen prey to the types of 
predatory practices we have seen flourish in recent years.
    All of this led to a better life for me and gave me an 
appreciation for the importance of financial literacy. Too many 
Americans do not have the financial knowledge they need to 
effectively manage their finances, use credit, and plan for 
retirement. Improving our Nation's level of financial literacy 
has been a top priority for me during my time in the Senate. I 
have worked to educate, protect, and empower Americans through 
financial literacy.
    Through financial education, we can provide individuals 
with the knowledge and skills they need to make better 
financial choices. Through consumer protection, we can 
safeguard individuals against harmful practices and bad 
information that lead to poor financial choices. Accomplishing 
these two goals will result in economic empowerment for all 
Americans.
    Just 10 years ago, Congress made its first serious 
commitment to financial literacy when we enacted my Excellence 
in Economic Education Act as part of the No Child Left Behind 
Act. My bill authorized a range of activities to promote 
economic and financial literacy in our schools. Then in 2003, 
we created the Financial Literacy and Education Commission 
(FLEC). The Commission is tasked with coordinating and 
improving the effectiveness and efficiency of Federal financial 
literacy efforts.
    I am proud of my efforts with the help of many of my 
colleagues to educate, protect, and empower Americans. For 
example, credit card statements are now required to contain 
information about the costs of making minimum payments. More 
meaningful information will be available for consumers 
purchasing investment products or sending remittances to family 
members abroad. The Department of the Treasury is implementing 
provisions I authored to provide financial education to 
prospective homeowners and financial access to the unbanked and 
underbanked. Still, there is more work to be done.
    The Federal Reserve estimates that household debt in 
America totals $13.4 trillion. Most Americans do not have a 
budget and do not save for retirement, and many are unable to 
pay their bills on time. We are still in the midst of record 
rates of mortgage defaults and home foreclosures. One in three 
homeowners say their mortgages are not what they expected.
    It is when people lose jobs and wages fall, when home 
values decline and foreclosures rise, and when retirement 
account values plummet, that the true costs of financial 
illiteracy becomes apparent. Financial literacy is more 
important than ever, and the Federal Government has a vital 
role in promoting financial literacy throughout the country.
    Today, we will examine that role as well as the progress of 
Federal financial literacy initiatives and the Financial 
Literacy and Education Commission. I look forward to hearing 
from our witnesses today and I look forward to hearing from our 
other witnesses, as well.
    Senator Johnson, your opening remarks.

              OPENING STATEMENT OF SENATOR JOHNSON

    Senator Johnson. Thank you, Mr. Chairman. Aloha.
    Senator Akaka. Aloha.
    Senator Johnson. Mr. Dodaro, it is nice to see you again 
here.
    I would like to thank the Chairman, first of all, for 
holding this hearing. Financial literacy is pretty dear to my 
heart. The last 10 years in Oshkosh, most of my volunteer 
efforts were really centered around education, and the last 2 
years in particular, I was the Business Co-Chair of our 
Partners in Education Council of the Oshkosh Chamber. This was 
a group of individuals, educators from high school, 
administrators and teachers, as well as the University of 
Wisconsin-Oshkosh, Fox Valley Technical College, the private 
schools, as well as the Catholic school system, and a number of 
business leaders from the community.
    And as we discussed the problems with education, certainly 
the business leaders' input always was what we were seeing in 
terms of recent graduates coming to our workplace, and it was 
amazing. The consensus view from all the business leaders was 
that recent graduates were coming to our workplace totally 
unprepared for not only work not understanding the importance 
of attendance, appearance, work ethic, attitude--but tragically 
coming to the workplace in way too much debt. And that is not 
only just high school graduates, that is also kids who have 
just graduated from college who had gotten in way over their 
head in debt with college loans.
    So I do believe that financial literacy is an incredibly 
important topic for our Nation. It really challenges our 
success as we move forward. But I guess what I would like to 
get out of this hearing is certainly what we were doing is we 
were addressing it at the local level, which I think, in 
general, is where this is going to have to be addressed, with 
each individual student. And so I guess the questions I will be 
having is what is the Federal role? How effective are we at 
performing that role? How cost efficient are we?
    That is really kind of what I am looking to get out of this 
hearing, so thank you, Mr. Chairman.
    Senator Akaka. Thank you very much, Senator Johnson. 
Senator Coburn, your opening.

              OPENING STATEMENT OF SENATOR COBURN

    Senator Coburn. First of all, Mr. Chairman, I love you 
tremendously. I think you are a sweetheart of a person. I have 
a completely different thought on this.
    I would go back to what you said. Who taught Chairman Akaka 
his financial literacy? His teacher. We have to fix the real 
problem. It means what we are doing is not teaching the 
teachers, and therefore it is not taught. The problem is our 
educators today are not taught financial literacy and not 
taught to teach financial literacy.
    I have heard you tell about your stories and your family at 
our prayer breakfast on Wednesday. It is always wonderful to 
hear what you learned from your family. I am not going to be 
able to stay for the whole hearing, but Mr. Dodaro is going to 
talk about some things that came about out of his report. What 
we know is that we have 20 different agencies in the Federal 
Government. We know that we have 56 separate financial literacy 
programs and we in Congress have not done oversight on any of 
them.
    So I have some questions. No. 1 is do we have the moral 
authority to teach financial literacy from the Federal 
Government when we have a $14.2 trillion debt, when we run 
deficits of $1.2 to $1.6 trillion a year. It takes a lot of 
arrogance on our part to think that we can teach young people 
when we are managing a Government that has that kind of 
imbalance. I think we lack the moral authority.
    I think we also lack the constitutional authority. If you 
look at education since 1978, we have spent $2 trillion on 
education. You cannot find one metric that is better since we 
have been involved in it. Again, Thomas Jefferson said, if you 
want the Federal Government involved in education, you have to 
change the Constitution. We did not do that. We just ignored 
it.
    What we do not lack is the goal that we would assume that 
we can teach somebody financial literacy. So I am very 
concerned about where we are going. This is an area where I 
think we ought to have oversight. I think we ought to have 
consolidation of programs. If, in fact, it is a legitimate role 
for the Federal Government, we ought to be consolidating and 
doing oversight to make sure that we get good value of the 
programs that we run. There is nothing wrong with our Federal 
employees in trying to do this, there is a problem with 
Congress in terms of oversight.
    So the fact that you are having this hearing today, I 
congratulate you. I think it is important that we do it so we 
can find out about the 20 different agencies and the 56 
different programs. Thank you.
    Senator Akaka. Thank you Senator Coburn.
    I welcome our first panel of witnesses to the Subcommittee, 
the Honorable Gene Dodaro, Comptroller General of the United 
States and head of the U.S. Government Accountability Office 
(GAO).
    It is the custom of this Subcommittee to swear in all 
witnesses. Please stand and raise your right hand.
    Do you swear that the testimony you are about to give this 
Subcommittee is the truth, the whole truth, and nothing but the 
truth, so help you, God?
    Mr. Dodaro. I do.
    Senator Akaka. Thank you. Let it be noted in the record 
that the witness answered in the affirmative.
    Before we start, I want you to know that your full written 
statement will be part of the record and I would like to remind 
you to please limit your oral remarks to 5 minutes. Mr. Dodaro, 
please proceed with your statement.

STATEMENT OF HON. GENE L. DODARO,\1\ COMPTROLLER GENERAL OF THE 
     UNITED STATES, U.S. GOVERNMENT ACCOUNTABILITY OFFICE; 
ACCOMPANIED BY ALICIA PUENTE CACKLEY, BARBARA D. BOVBJERG, AND 
                          SUSAN OFFUTT

    Mr. Dodaro. Thank you very much, Mr. Chairman. Good 
afternoon to you, Ranking Member Senator Johnson, and Senator 
Coburn. It is nice to see all of you this afternoon.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Dodaro appears in the appendix on 
page 35.
---------------------------------------------------------------------------
    I am particularly pleased to be here on Financial Literacy 
month to talk about this topic which is important to the well-
being of our citizens and the economic health of our country. 
Senator Akaka, I would like to recognize your leadership on the 
many initiatives that you taken over the years on this topic.
    GAO's involvement has been, at the request of Congress, 
looking at a lot of these individual agency efforts on specific 
areas such as the student loan programs, disclosures in banking 
and investment products, products that are trying to be sold to 
members of our military, also in retirement and savings areas. 
So we have done a lot of work looking at individual areas.
    More broadly across the Government, as Senator Coburn 
mentioned, we have observed that there are 20 agencies engaged 
in this activity and there are over 56 different programs or 
activities that are underway, which raises questions about 
fragmentation and potential duplication. It places a premium on 
the need for Federal agencies, to the extent they are going to 
be involved in these activities, to coordinate their activities 
effectively.
    Consequently, we have also looked at the activities of the 
Financial Literacy and Education Commission since it was formed 
in statute back in 2003. 2006 was the first year that they had 
created a national strategy. We thought it was a useful first 
step, but that it was more descriptive of what was going on 
rather than strategic. Recently this year, they have issued the 
second version of their national strategy, which has more clear 
goals and objectives stated in it but does not yet have 
performance measures, what resources are required, or clear 
roles and responsibilities enumerated for the agencies. Senator 
Johnson and Senator Coburn, both of those areas go to the heart 
of your issue. We do not really know right now what the total 
investment is in these programs and what the clear roles and 
responsibilities should be.
    Now, the implementation plan that the Financial Literacy 
and Education Commission is going to create, I think, could be 
a platform for oversight activities of this Congress. It is due 
to be issued before the end of this fiscal year.
    Also, there is a new development with the creation of the 
Bureau for Consumer Financial Protection that was created under 
the Wall Street Reform Act. That new Bureau is to be up and 
running by July of this year and it is charged with developing 
a strategy on financial counseling activities, credit 
counseling for consumers as well as savings and borrowing 
areas. So its charter somewhat is similar to what the charter 
is for the Commission and that underscores the need for 
additional coordination and communication across the executive 
branch and with this new Bureau going forward.
    Clearly, this effort requires a partnership, whatever 
Congress determines to be the Federal role. There are partners 
at the local level in academia at the nonprofit organizations, 
and a lot of people interact with the public in this, and it 
really will require, I believe, a true partnership over a 
period of time.
    There is also a dearth of knowledge about what works and 
what does not work in financial literacy education. One of the 
mandates we have under the Wall Street Reform Act is to 
evaluate the effectiveness of Federal literacy education 
efforts that have taken place so far. We are in the process of 
completing that work. We will have a report out this summer. 
But it really does not look like there is a lot of empirical 
information on what works in terms of not only educating and 
increasing knowledge, but how you effect a change in behavior 
on the part of the individuals provided that education.
    So it is very important to continue to focus on these 
activities. I think congressional oversight is warranted, and 
could be a constructive force in making sure whatever is done 
is done effectively and efficiently.
    I can assure you GAO will remain committed to this area. It 
is one of my top priorities that I would like to focus on 
throughout my tenure at the GAO because I believe it is 
important. But we really have to figure out how best to tackle 
this subject and do it in a cost effective manner.
    So I thank you, Mr. Chairman. I would be happy to answer 
your questions. I have with me today some of our experts in 
financial markets and retirement and education areas that will 
help me answer questions, and I may call upon them, if it is OK 
with you, to answer some questions. Alicia Puente Cackley, 
Barbara D. Bovbjerg, and Susan Offutt, our Chief Economist.
    So thank you very much. I would be happy to answer 
questions.
    Senator Akaka. Thank you very much, Mr. Dodaro, and I want 
to tell you that they are welcome to join you to answer 
questions.
    Mr. Dodaro, I want to commend and thank you for making 
promoting greater financial literacy in the United States a top 
priority. I share your belief that this issue is important 
enough to warrant the focus of the Comptroller General. My 
question to you is, how do you believe you can best leverage 
your position to accomplish this critical and challenging goal?
    Mr. Dodaro. There are really three elements to it, Mr. 
Chairman. First, we have a strong foundation of knowledge in 
responding to congressional requests and looking at how Federal 
law as enacted has been implemented in these areas to try to 
provide financial literacy education and interact with the 
public on important Government programs that it offers and 
provide the protection. So to the extent to which Congress has 
already determined that certain activities will be done by the 
Federal agencies, we have evaluated how they are operating, and 
so we start off with a strong base of knowledge, institutional 
knowledge in GAO.
    Second, we have the resources and the support to effectuate 
and bring together multiple parties. So we have the convening 
power. The Comptroller General forums is one that we have used 
historically throughout GAO. It was used by my predecessors, 
Dave Walker, Chuck Bowsher, to bring people together from 
different elements of society to talk through issues so we can 
identify what kind of gaps exist, what challenges are there, 
and what the proper role should be for GAO and for the Federal 
Government in that matter and advise the Congress on what 
others think about it.
    For example, I plan to convene a forum this fall to bring 
together people from Federal, State, and local levels, 
nonprofit, private sector, and academia, to talk about this 
subject and to get collective judgments and experiences of 
those people. Also, the unique position that I am in is that I 
have a 15-year tenure. So you have a long period of time to 
focus on the subject, and this subject will take time. To the 
extent to which the Federal Government wants to achieve 
objectives in this area, it will take time, and I believe that 
enables me to work across Congresses, across administrations, 
and be able to be a source of institutional knowledge and also 
one that can continue to track progress and what is working and 
what is not.
    Senator Akaka. Thank you, Mr. Dodaro.
    As you noted in your testimony, providing Americans with 
the information they need to make responsible financial 
decisions is key to their well-being and the economic health of 
our Nation. What unique capabilities does the Federal 
Government contribute to financial literacy efforts?
    Mr. Dodaro. Well, there are two things. First, I would say, 
there is a lot of expertise in departments and agencies on 
specific issues, whether it is investor information, 
retirement, pension information, or student loan programs. So 
there is a reservoir of knowledge. But also, importantly, the 
Federal Government is a source of unbiased objective 
information. There is no financial interest on the part of the 
Government in providing this information and it can make 
information available to people through its normal exchanges of 
dealing with the Federal Government.
    Now, I would say to Senator Coburn's point, I think the 
Federal Government could do a much better job being a role 
model in this area and exhibiting behavior on the part of its 
financial practices itself. But I do think the Federal 
Government has both the ability to tap into resources that are 
there and to provide objective information.
    Senator Akaka. Mr. Dodaro, I am concerned that GAO's recent 
report noting possible fragmentation of Federal financial 
literacy efforts has been inaccurately characterized as 
evidence of duplication. Would you please clarify GAO's 
findings and explain why enhanced coordination may be 
beneficial in the area of financial literacy.
    Mr. Dodaro. Yes. Back in 2006, when we commented on the 
national strategy, one of the recommendations we made to the 
Financial Literacy and Education Commission was that it have an 
outside objective look at the extent of potential overlap and 
duplication in its activity. So we were concerned back then. 
They have had a couple of studies since then. Both studies have 
concluded there is little evidence of exact duplication of same 
services to the same beneficiaries, but clearly there is 
fragmentation in these areas in that you have multiple agencies 
acting in the same area of national interest.
    And so, our concern is that fragmentation left without 
proper oversight can lead to duplication down the road. I think 
in this particular area, the fragmentation and potential 
duplication is heightened a bit by the creation of this new 
Bureau of Consumer Financial Protection at the Federal Reserve, 
so I think congressional oversight would be warranted in this 
area.
    So there really is not evidence to date. We are concerned 
about it. That is why we put it in the report that we gave to 
the Congress. And clearly, fragmentation is really only 
controlled through effective communication and coordination. If 
that does not happen, then these things can easily lead to 
inefficiencies in how we use our resources.
    Senator Akaka. Well, we will have a second round of 
questions. I will now pass it on to Senator Johnson for his 
questions.
    Senator Johnson. Thank you, Mr. Chairman.
    You mentioned there are 20 agencies involved in this. In 
terms of how this is organized, is there a lead agency? Is 
there a pecking order here?
    Mr. Dodaro. Yes. There is an Office of Financial Education 
within the Treasury Department that coordinates the work for 
the Financial Literacy and Education Commission. So they are 
sort of the coordinating entity, by statute, I believe.
    Senator Johnson. You say you really do not know how much is 
spent in total. I mean, can you hazard a guess? Are we talking 
millions, hundred millions, billions? I mean, do you have any 
clue at all?
    Mr. Dodaro. Let me just check. Yes. There is really not a 
way to determine it because there are not budget items for this 
subject clearly marked. So we really cannot--I cannot give you 
a guess at this point, even an educated guess.
    Senator Johnson. Is there any line item within a particular 
agency that would give you some sort of feel of, well, the 
Treasury is spending--they have an office that spends $20 
million on it, or----
    Mr. Dodaro. Yes. Well, I think there are a few people in 
the Treasury Department, and one of the things that we have 
recommended is their implementation plan is going to be issued 
by the end of this fiscal year, that it include resource 
estimates in the plan. We are saying is you ought to be clearer 
about the roles and responsibilities and the resources that are 
needed. I take it from our team we have tried to determine the 
amount of resources, but we have not yet been able to do so.
    Senator Johnson. Just in kind of getting ready for this 
hearing, I think one of the things that jumps off the page at 
me is the Financial Literacy and Education Commission was first 
formed in 2003, is that----
    Mr. Dodaro. The law was passed in 2003, right.
    Senator Johnson. Can you point to some accomplishments 
since 2003 of them creating strategies and then doing another 
strategy and then doing a report, or----
    Mr. Dodaro. Yes. Well, they have created a website. They 
have it established, it is mymoney.gov. It has resources that 
are connected and have links on it there. They have improved 
the coordination and communication among themselves within the 
Federal agencies. But they would be in a better position to 
give you more specifics. Those are the things that we have 
noted over time.
    Senator Johnson. Financial literacy can be a relatively 
broad topic----
    Mr. Dodaro. Right.
    Senator Johnson [continuing]. And cover all types of 
things. Is there any kind of priority in terms of what we are 
trying to teach, I mean, what the Federal Government is 
concentrating on here?
    Mr. Dodaro. Yes. One of the things in their new strategy 
that they just put out this year were developing some core 
competencies, and those competencies would deal with issues in 
terms of what they think the average citizen should know, 
savings, borrowing, credit, those sorts of things. They are due 
to be able to develop that coming forward and then we will be 
able to review that and be able to see whether or not that 
makes sense as the right approach to do.
    So far, they have focused a lot on awareness and raising 
education and providing resources to people to be able to use 
available resources to help inform them. But one of the things 
that we have noted is there really are not any performance 
measures in their plan, and that is what we are hoping to see 
in the implementation plan. If you do not have clear roles and 
responsibilities, if you do not know how much resources that 
you are using and you do not know how you are going to measure 
your performance going forward, you are really not going to be 
in a good position to demonstrate achievement or answer the 
questions you are asking about what progress have they made 
over a period of time.
    Senator Johnson. I mean, if they have not even in 7 years 
defined what it is they are going to teach--or am I 
misinterpreting that? When you started talking about they are 
trying to define the core competencies, I mean, that is 7 years 
just trying to lay out that, and, we really ought to teach kids 
about running up credit card debt or getting in too deep in 
terms of student loans or how do you educate the public in 
terms of mortgage literacy. Are we really, after 7 years, just 
laying out what those core competencies are? Is that as far as 
we have gotten?
    Mr. Dodaro. Well, as I mentioned, they have established 
websites, have links, have created some partnerships and 
activities and getting other people involved, and so I think 
they are trying to go about this in a more systematic manner. 
Quite frankly, I think this was an important initiative, but I 
think the last recession has really underscored how important 
it is and that has spurred people to become a little bit more 
active in this area. Most of these programs we are talking 
about have only been created in the last decade, and we are 
going to be pursuing the individual cost of these programs in 
our future work.
    Senator Johnson. When you have 20 different agencies 
involved, again, you are spanning--can you just name the top 
five or six agencies that really have accomplished objectives 
here or actually have some sort of focused effort?
    Mr. Dodaro. Well, I can name some of the ones that are 
involved. I am not sure I can name the ones that have the 
greatest accomplishments. But the Treasury Department is 
involved. The Department of Defense (DOD) is involved in 
providing information to military servicemembers, and for 
there, we have made a number of recommendations that they have 
implemented. So I think there has been some progress in that 
area, as well. The Department of Health and Human Services 
(HHS) has a number of programs that are dealing with both 
health issues as well as aging.
    If I might, I might ask Alicia to come to the table and 
help give more specifics, Senator.
    Senator Johnson. That would be great. Thanks.
    Ms. Cackley. So the question being which agencies have the 
largest proportion of programs. I think some of the major ones 
would be the Department of Housing and Urban Development (HUD), 
and the Education Department (DOE), the Federal Trade 
Commission (FTC), the Securities and Exchange Commission (SEC). 
Those are some of the programs that we have identified.
    Senator Johnson. Can you just give me an example of--a 
program that has worked, in terms of what it is we are trying 
to educate and how we go about implementing that. How do we 
push this back down to the level of people actually learning.
    Ms. Cackley. I can give you examples of programs. We have 
not done the work to say which ones are working that we have 
identified best practices yet. There are certainly programs 
that we are looking at. There is a Homebuyers' Counseling Grant 
Program that we are mandated to look at that is run out of the 
Office of the Treasury, actually, but it is for individuals who 
are planning on buying a home, that they get counseling 
beforehand about financial literacy issues, about how to save 
for a downpayment, about just how to go about doing the 
purchase of a home.
    Senator Johnson. Thank you. Well, I guess I have run out of 
time. Thanks.
    Mr. Dodaro. Senators, one program at the Federal Deposit 
Insurance Corporation (FDIC) called Money Smart, we would be 
happy to provide some information for the record on that one. I 
think that one has a pretty good reputation and has a good 
evaluation component built into it. Excuse me, Senator.
    Senator Akaka. Thank you very much. Senator Coburn.
    Senator Coburn. Mr. Dodaro, can you imagine anybody sitting 
at home--they are obviously not seeing this. This does not rank 
high on C-SPAN's coverage. But this is the classic case of why 
this country is in trouble. In 2003, we passed a law. I 
question whether or not we had the authority to do that under 
the Constitution, but let us say we did. In 2006, you make 
major recommendations. Whether or not they have been followed 
or not, you have not reported on. In 2011, a full 8 years after 
the bill is passed, we now start with core competencies, which 
is the very thing we should have started with in 2003. I am not 
trying to Monday morning quarterback this, but can you think of 
a worse way to set things up than what we have done? Can you 
ask any American who would think that the Federal Government 
ought to have 56 different programs for financial literacy? 
Even if we were running our budget well, and even if we do have 
the constitutional authority, 56? What is our goal? Our goal is 
to be financially incompetent if that is the way we are going 
to run the Federal Government.
    I have a great relationship with your team and this is a 
classic example of a well-meaning intent by the Senator from 
Hawaii to accomplish a purpose. However, we have zero metrics 
that we know of. Your report could give us zero metrics on any 
of them. That does not mean they are not out there, but right 
now, this Congress, 8 years after this has happened, we have 
zero metrics. And what do we do? We duplicate your Commission 
with the Consumer Product Safety Board with another set of 
rules, exactly the opposite of what we should have done. What 
we should have done is consolidate them all in one and say, 
what is our goal? How are we going to measure it? Who are we 
going to put in charge of it. Instead, we have financial 
literacy programs at 20 different Federal agencies. That is 
insanity.
    This is a classic case of what not to do. It does not mean 
people are not trying to do the right thing. It means we have 
not done the oversight to see what should happen.
    I will go back to the original thought. Our failure is in 
the Department of Education, because financial literacy is not 
hard. You can learn it in the sixth grade. Chairman Akaka 
learned it in the third grade. But the fact is, we are not 
teaching the teachers. Because we are failing at one program, 
now we have 56 programs to try to make up for it.
    You can tell I am intense on this issue, not because of 
this one program, but I can show you 100 other programs with 
great intentions, great compassion for people in this country 
that are failing just like this is. The fact that we do not 
have metrics and we do not know what it costs, the fact that we 
cannot even tell what it costs is another big problem, that you 
could not find out what it has cost.
    By the way, the reference for all this came out of the work 
that the GAO did in terms of the last debt limit extension to 
where we were trying to find duplication in the Federal 
Government. GAO has looked at about, I guess, a third of the 
Federal Government. But to me, it is very frustrating that we 
are where we are. The lesson we should learn from this report 
is, let us not go there again.
    And I tell you, what you are setting up in terms of the 
consumer, do not make the mistakes. There should not be one 
thing that does not have a metric on it. There should not be 
anything outside of core competencies, and if they are 
effective over here, then let us eliminate the rest of it, but 
let us do not have dual paths. Nobody can tell me with 56 
different programs that we are efficient utilizing Federal 
employees in doing that when we could have three or four and 
accomplish the same thing.
    So end of my statement. No question. I apologize for 
ranting.
    Senator Akaka. Thank you very much, Senator Coburn.
    Mr. Dodaro, as you noted in your testimony, evaluating 
financial literacy programs is challenging. However, you note 
that the FDIC's Money Smart program does have a strong 
evaluation component. GAO is in the process of reviewing 
existing studies of the effectiveness of financial literacy. My 
question is, do the methods used to evaluate the Money Smart 
program show promise as a model that could be adjusted for 
other agency programs?
    Mr. Dodaro. There are two components of the Money Smart 
evaluation program that I think are really important and could 
be helpful going forward. One is they are attempting to measure 
not only what information is passed to the people who use the 
program, participate in the program, but also whether it is 
changing their behavior, which is a real important outcome of 
this, not to just in terms of provide the education, but hope 
it achieves an objective of having them make sounder decisions.
    And then, second, it has a longitudinal component, so it is 
trying to measure the performance over time, which I think is 
another important measure. So, yes, there are important lessons 
that could be learned out of that program. What we are finding 
overall, though, is there is very little empirical research on 
the effectiveness of financial literacy efforts and even fewer 
studies that are actually measuring the behavior as the Money 
Smart program is trying to do. So we are analyzing those 
studies now and we will be providing our report to the Congress 
this summer.
    Senator Akaka. You say you are analyzing these studies now. 
Is there a timeframe for releasing the results of this report?
    Mr. Dodaro. Yes. We have to report by the anniversary date 
of the Dodd-Frank Act, which will be by July, and so we will be 
reporting by then.
    Senator Akaka. Mr. Dodaro, I am pleased that the 2011 
National Strategy for Financial Literacy developed by FLEC 
incorporates many of the GAO's recommendations. I am looking 
forward to reviewing FLEC's forthcoming plan to implement the 
national strategy. Based on the best practices GAO has 
observed, what elements must an effective implementation plan 
contain?
    Mr. Dodaro. There needs to be clear goals and objectives in 
the plan, a statement of what issues are trying to be addressed 
or the problem that it is trying to be solved or help improve 
the situation. There need to be clear resource measures as to 
what level of investment is going to be made in the program. 
There need to be measures of progress and metrics of success.
    We think the current plan that was produced this year has 
clear goals and objectives in it, but it lacks the performance 
measures, resources to be invested, and clear roles and 
responsibilities of the departments and agencies. So we are 
hoping that the implementation plan that the Commission is 
scheduled to release by the end of this calendar year contains 
those elements. I think that would be very important and it 
would provide a good benchmark, as well, as the new Bureau is 
stood up over at the Federal Reserve.
    Senator Akaka. Mr. Dodaro, as you know, I have long 
championed efforts, such as the GPRA Modernization Act, aimed 
at enhancing collaboration and coordination across the Federal 
Government. In 2003, as you mentioned, we created the Financial 
Literacy and Education Commission to enable this coordination 
among the key agencies working to improve financial literacy. 
How can the FLEC buildupon the progress its members have 
already made?
    Mr. Dodaro. Well, I think two things are important. One is 
this implementation plan. It has to be clear of what is 
expected to be achieved and over what period with what level of 
investment. They can also begin to do more evaluations of the 
programs of success to find out what works and what does not 
and how to buildupon the successful elements of what they are 
achieving. And third, they need to really coordinate closely 
with this new Bureau so that the resources that are spent by 
the Federal Government are spent as most effectively and 
efficiently as possible.
    Senator Akaka. Mr. Dodaro, the GAO has found Americans with 
limited English proficiency face significant barriers to 
financial literacy. This places them at greater risk for 
predatory practices and poor financial decisions. In your view, 
how would increasing financial literacy among those with 
limited English proficiency benefit individual consumers and 
the economy as a whole?
    Mr. Dodaro. Yes. Well, to the extent to which everyone 
would benefit from financial literacy, they would benefit, as 
well, in terms of increasing their self-sufficiency and being 
able to guard against practices that are really trying to be 
deceptive, if you will.
    Many of the people with limited English proficiency also 
would benefit from making sure that they are using our 
financial system so they are getting the benefit of those 
systems rather than payday lenders or using money orders or 
other more costly methods of basically conducting their 
financial business. It is estimated that one in four households 
does not have a checking or a savings account and thus they 
turn to these other measures. And so the extent to which people 
can be educated that there are better ways to be able to do it 
and more cost-effective ways for them, I think everybody would 
benefit.
    Senator Akaka. Thank you very much for your responses. 
Senator Johnson.
    Senator Johnson. Thank you again, Mr. Chairman.
    Mr. Dodaro, you talked about studies being conducted. Who 
is conducting those studies?
    Mr. Dodaro. One was done by the Research and Development 
(RAND) analysis. Let me let--Alicia can give you more 
specifics.
    Ms. Cackley. There were two studies that were done. The 
first was done by a post-doctoral student who was contracted to 
do the analysis. We looked at that work and suggested that 
there could be a more objective analysis done, and then the 
RAND study was done as a result.
    Mr. Dodaro. Were you talking, Senator, about the studies 
that were done more broadly evaluating financial literacy 
efforts----
    Senator Johnson. Yes. I am trying to determine----
    Mr. Dodaro [continuing]. Those studies?
    Senator Johnson [continuing]. First of all, who is 
conducting the studies----
    Mr. Dodaro. Right.
    Senator Johnson [continuing]. What are they studying.
    Mr. Dodaro. Right.
    Senator Johnson. Specifically, what are they looking at?
    Mr. Dodaro. Right. He is talking about the 200 studies we 
are currently looking at.
    Ms. Cackley. The 200 studies of----
    Mr. Dodaro. The financial literacy efforts, our current 
mandate.
    Ms. Cackley. Our current mandate looks at what--we started 
with a broad set of studies. I was looking puzzled because we 
got from 200 down to a smaller number when we established the 
criteria of whether they were good empirical studies, so it is 
a smaller number now. But GAO did an analysis of the 
literature, so we went out and looked across the academic 
literature and found which were the most robust studies of 
financial literacy that were within the last--how many years--
10 years, I believe.
    Senator Johnson. So again, these are academic studies, not 
really commissioned by the GAO, but you are just searching the 
academic literature in terms of people conducting studies on 
financial literacy.
    Ms. Cackley. Right. Conducting studies on the effectiveness 
of financial literacy programs, yes.
    Senator Johnson. OK. Which programs? What were they 
studying, or just they were studying everything?
    Ms. Cackley. I think there is a variety of different 
outcome measures or specifics. It is not as if everybody looked 
at exactly the same thing. So there is a range of populations 
that were studied. There is a range of outcome measures, 
whether or not the studies looked at, I think as we said 
before, just an increase in knowledge or a change in behavior. 
There is quite a difference.
    Senator Johnson. Again, I am sorry. I am confused. Mr. 
Dodaro, you were talking about you are mandated by the Dodd-
Frank bill to complete the study by the anniversary date of the 
Dodd-Frank----
    Mr. Dodaro. Right.
    Senator Johnson. What study?
    Mr. Dodaro. Right.
    Senator Johnson. I mean, are you studying the studies?
    Mr. Dodaro. Basically, we are studying what is known about 
the effectiveness of various financial literacy efforts, and so 
we are doing a synthesis of the studies. We are not trying to 
go out and do a--we do not have time to be able to do a de novo 
study of this. So, yes, we are looking at all the studies that 
were done. We do this routinely in certain different areas, and 
then we determine which of the studies have enough good 
methodologies to be able to be relied on and then we will sort 
of summarize that for the Congress. I would be happy to give 
you a list of the studies that we are working on, what was 
studied and what was done, but this is in process and we should 
have the final results out. So, yes, we are analyzing studies 
done by others.
    Senator Johnson. And not necessarily targeting Government 
programs. So the study you are doing really may have nothing to 
do whatsoever with these 20 agencies or these 56 different 
programs. I mean, you are just kind of picking whatever is out 
there in the academic literature.
    Mr. Dodaro. Well, it will cover whatever is done by the 
agencies plus what would be done by others. So it will cover 
everything that has been done. We are not excluding any studies 
that might have been done by Federal departments or agencies or 
focused on their programs, but it is broad-based.
    Senator Johnson. So have there been studies, then, that 
have been done by the Government agencies on their educational 
programs, their financial literacy programs? I mean, those 
things actually do exist?
    Ms. Cackley. Different agencies have done--have a different 
level of analysis of that, the effectiveness of their programs. 
So one example is the Department of Labor (DOL), which has done 
focus groups to determine the effectiveness of their different 
forms of outreach and understanding of the content of the 
material that they provide. So that is one example. But each 
agency--because each agency has a different program, may target 
a different population, they may have a different evaluation 
method. That is part of the fragmentation that we have 
identified.
    Senator Johnson. So let us just say the Department of Labor 
study, as one example. Who is the Department of Labor targeting 
for financial literacy education?
    Mr. Dodaro. Yes. Let me--Barbara Bovbjerg handles our work 
in that area. Let me have her come up, Senator.
    Senator Johnson. Great. Thanks.
    Ms. Bovbjerg. Hi, Senator Johnson. I am Barbara Bovbjerg. I 
am Managing Director of Education, Workforce, and Income 
Security at GAO. We have looked at the Department of Labor's 
outreach for a number of years, ever since Congress passed the 
SAVER Act back in the 1990's, because they have been tasked 
with working with other Federal agencies and trying to reach 
out to American workers on how to save for retirement and how 
to understand some of the various retirement investment 
instruments that are out there. At our recommendation, they did 
try to look at how effective this outreach was, and I know that 
they have been running focus groups, I thought fairly 
regularly, although I have not seen any results from them 
really recently.
    But it is just an example of there are different ways that 
different agencies attempt to address this. I guess I also 
wanted to say that I think that different agencies have a 
different idea of what they are trying to do with regard to 
financial literacy. The Department of Labor is not trying to 
teach young people how to calculate rates of return or 
percentages. They are dealing with working adults and trying to 
explain to them what the different options are for them for 
retirement saving and how important it might be to pursue some 
of those options. So it can be different in the different 
agencies' approaches.
    Senator Johnson. OK. Thank you. I am running out of time 
and I am just trying to get up to speed on this.
    Senator Akaka. Thank you. If you have another question, you 
may proceed.
    Well, I want to thank you very much, Comptroller General 
Dodaro, for being here, and also thank you, Alicia and Barbara, 
for joining him. I want to tell you that we appreciate your 
testimony and your answers here. They have been valuable for 
us. We continue to look at what is happening so that we can 
improve the system and that is out intent. If we can work on 
this together and improve the system, it will certainly serve 
our country well.
    So I look forward to working with you and this Committee 
does, and hopefully, we can have better methods of oversight 
and measuring what we are doing and also the resources that we 
need, as well. Thank you very much for your testimony today. 
Thank you.
    Mr. Dodaro. Thank you very much, Mr. Chairman. I will say 
that we will provide your staffs information on the methodology 
we are using for this study of financial literacy efforts and 
be happy to have any input that either you, Senator Akaka, or 
Senator Johnson have to help us make sure that we do the best 
job that we can in doing this review.
    Senator Akaka. You can tell that Senator Johnson and I as 
partners in this Subcommittee are very anxious and excited 
about moving this along. So we look forward to working with 
you. Thank you.
    I would ask our second panel of witnesses to come forward, 
please.
    I welcome our second panel of witnesses to the 
Subcommittee: The Honorable Brenda Dann-Messier, Assistant 
Secretary for the Office of Vocational and Adult Education at 
the U.S. Department of Education; Lori Schock, Director for the 
Office of Investor Education and Advocacy (OIEA) at the U.S. 
Securities and Exchange Commission; Joshua Wright, Acting 
Director for the Office of Financial Education and Financial 
Access at the U.S. Department of the Treasury; and Holly 
Petraeus, Director of the Office of Servicemember Affairs of 
the Consumer Financial Protection Bureau (CFPB) at the U.S. 
Department of Treasury.
    It is the custom of the Subcommittee to swear in all 
witnesses, so will you please stand and raise your right hand.
    Do you solemnly 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. Dann-Messier. I do.
    Ms. Schock. I do.
    Mr. Wright. I do.
    Mrs. Petraeus. 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 to note 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 Dann-Messier, will you please proceed.

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

    Ms. Dann-Messier. Thank you very much. Good afternoon, 
Chairman Akaka and Ranking Member Johnson. Thank you for the 
opportunity to appear before you today to discuss what the 
United States Department of Education is doing to help 
Americans improve their ability to make informed financial 
decisions.
---------------------------------------------------------------------------
    \1\ The prepared statement of Ms. Dann-Messier appears in the 
appendix on page 50.
---------------------------------------------------------------------------
    The Department of Education remains committed to doing its 
part in its own programs and in coordination with others to 
help elementary, secondary, post-secondary, and adult students 
develop the knowledge and skills needed to make sound financial 
decisions for themselves, their families, and their 
communities.
    As you know, President Obama has set an ambitious goal. By 
2020, America will once again have the highest proportion of 
college graduates in the world. He has called this our No. 1 
economic issue of our time, declaring the countries that out-
educate us today will out-compete us tomorrow. So when we think 
about the role of the United States Department of Education in 
empowering Americans to make informed financial decisions, 
helping students and families navigate the decision to invest 
in higher education is front and center for us.
    As Secretary Duncan has said, we think financial education 
should happen at least as early as kindergarten and continue 
throughout a student's time in school. With that in mind, I am 
pleased to provide a review of our financial education efforts.
    Our Office of Innovation and Improvement (OII) continues to 
administer the Excellence in Economic Education Program, which 
supports national, State, and local efforts to improve student 
performance in economics, personal finance, and 
entrepreneurship. In 2010, the Council awarded subgrants to 94 
projects spanning 41 States for activities such as conducting 
teacher training and program evaluation. One example, Mr. 
Chairman, is the work of the Junior Achievement in Honolulu, 
Hawaii, connecting schools with local businesses to help 
teachers improve students' understanding of economics and 
personal finance. Another example is the Lakeland College 
Center for Economic Education in Plymouth, Wisconsin. They have 
established an economics and financial education curriculum at 
a Milwaukee public charter school that enrolls more than 600 
students from preschool through grade eight.
    In July, I discussed the Department's doubling of its 
commitment to financial literacy in Fiscal Year (FY) 2010 by 
reprogramming $1.7 million from the Data Quality Initiative to 
create the new Financial Education for College Access and 
Success Program. This grant was made to the Tennessee 
Department of Education to develop, implement, and evaluate the 
effectiveness of personal finance, instructional materials, and 
corresponding teacher training materials.
    Our proposal to reauthorize the Elementary and Secondary 
Education Act of 1965 includes $246 million for effective 
teaching and learning for a well-rounded education. This 
broader program would replace several often narrowly focused 
programs with a single authority supporting efforts to 
strengthen instruction and improve student achievement across 
multiple subject areas, including economics and financial 
literacy. The funds would be awarded competitively to States, 
high-need local education agencies, and other entities. This 
amount is $20.1 million, or a 9-percent increase over levels of 
the 2010 appropriations for the programs consolidated under 
this broader framework. We see this program as a cornerstone of 
our focused and flexible approach for Federal K through 12 
funding.
    Our TRIO programs are also geared toward helping 
individuals from disadvantaged backgrounds to enter college and 
post-secondary education. This year's applicants for Talent 
Search, one of the TRIO programs, were required in their 
projects to provide connections to services designed to improve 
financial and economic literacy.
    Also, our National Center for Education and Statistics 
(NCES) is developing tools to help students and families 
identify the actual costs of higher education as they plan for 
college costs. Later this year, pursuant to the Higher 
Education Act (HEA), NCES will unveil a new College 
Affordability and Transparency Center to provide information on 
post-secondary institutions, public tuition, and net prices, 
ranked from high to low, indicating which institutions' prices 
are climbing fastest.
    The efforts undertaken by our Office of Federal Student Aid 
(FSA) represents our largest and most focused investment at 
helping families to pay for post-secondary education. We 
estimate we provide over $155 billion this year in grants, 
loans, and work-study, but we still have a lot of work to do to 
help ensure all of our students see higher education as a 
realistic goal, as something they can afford to do, even if 
their parents never went to college. Students can see how much 
Federal student aid they receive by completing our Free 
Application For Student Aid (FAFSA), and we have worked hard to 
make this process easier for students. We have eliminated over 
20 questions, removed two-thirds of the screened applicants, 
and they now automatically can import their tax information 
from the Internal Revenue Service (IRS).
    Finally, I would like to highlight the financial literacy 
initiative we are working on with other Federal agencies. Last 
year, the Department had ongoing conversations with the Federal 
Deposit Insurance Corporation (FDIC) and the National Credit 
Union Administration (NCUA) to discuss the ways that we can 
work together on our shared literacy goals, and I am pleased to 
report that in November 2010, Secretary Duncan signed a new 
interagency agreement with these two agencies and we are off to 
a strong start. We look forward to our continued work with 
these agencies on empowering Americans to make informed 
financial decisions and to identify additional ways to work 
with our colleagues throughout the Federal Government.
    Thank you, Mr. Chairman, thank you, Ranking Member, for 
your leadership on this important issue and I am happy to 
answer any questions.
    Senator Akaka. Thank you for your testimony. Director 
Schock, please proceed.

 STATEMENT OF LORI J. SCHOCK,\1\ DIRECTOR, OFFICE OF INVESTOR 
EDUCATION AND ADVOCACY, U.S. SECURITIES AND EXCHANGE COMMISSION

    Ms. Schock. Thank you, Chairman Akaka and Ranking Member 
Johnson. My name is Lori Schock and I am the Director of the 
Office of Investor Education and Advocacy (OIEA) of the United 
States Securities and Exchange Commission. Thank you for the 
opportunity to testify today about the SEC's efforts to improve 
the financial literacy of individual investors throughout the 
United States.
---------------------------------------------------------------------------
    \1\ The prepared statement of Ms. Schock appears in the appendix on 
page 55.
---------------------------------------------------------------------------
    Our office administers the SEC's nationwide investor 
education program. OIEA provides a variety of services and 
tools to address the problems and questions that individual 
investors may face. We conduct educational outreach, assist 
with investor complaints and questions, and facilitate 
individual investors in bringing their perspectives to the 
Commission and its staff. Today, I would like to describe for 
you briefly some of the specific programs that we use to 
support our mission to educate U.S. investors.
    In October 2009, the SEC launched investor.gov, its first 
ever website focused exclusively on the retail investor and 
investor education. Earlier this month, we relaunched 
investor.gov with a new design and additional information in an 
even more user friendly format. Investor.gov also offers tools 
and materials targeted to investors who may face particular 
investment needs, such as members of the military, teachers, 
and retirees.
    For those investors who prefer to have print publications, 
we continue to offer these materials, as well. Some of our 
brochures are targeted to specific audiences, such as senior 
guides. Some are more topical, like our guide on stopping 
affinity fraud, while others are product specific, such as our 
brochure on variable annuities. All of our print publications 
are available in both English and Spanish. Our materials are 
also available free of charge and are not copyrighted so that 
the widest possible dissemination is encouraged.
    Another way the SEC reaches out to individual investors is 
through investor alerts and bulletins. In the past year, we 
published alerts and bulletins on a variety of subjects, 
including stock trading basics, margin rules, pre-IPO investor 
fraud, and investment scams related to BP payouts. We issued a 
number of joint alerts, including one on target date funds with 
the Department of Labor and another on leveraged ETFs with the 
Financial Industry Regulatory Authority (FINRA).
    The SEC also partners with other Government agencies, 
localities, and private sector financial education groups to 
reach investors. Two recent examples of our partnerships 
include the Outsmarting Investment Fraud Program, where we 
continue to work with the FINRA Foundation, AARP, and State 
securities regulators on a campaign designed to reduce 
investment fraud among older Americans. With our partners, we 
regularly participate in events to teach seniors how to 
identify common persuasion techniques used by con artists and 
how to protect themselves from investment fraud.
    The second program is the SEC Graduate Program, where we 
work with the NYSE Euronext on professional development 
programs designed to help educators teach students about the 
financial marketplace and its importance in their lives and the 
global economy. Last July, more than 30 educators from across 
the country attended the inaugural SEC Graduate Program, a 4-
day workshop that focused on the securities market, investor 
protection, and the Federal Government's oversight role.
    In addition to our participation in various programs, the 
SEC through my office responds to tens of thousands of 
complaints and questions from individual investors every year. 
Our efforts to facilitate informal resolutions of complaints 
often succeed. In appropriate cases, OIEA refers complaints to 
other offices or divisions within the SEC, including the 
Division of Enforcement, or to State or other Federal 
regulators.
    Investor testing is another important component of our 
program. We are currently conducting investor testing to 
examine the effectiveness of certain SEC mandated disclosure 
documents in communicating useful information to individual 
investors. The study will also serve as a predicate for a 
significant portion of a separate study regarding the financial 
literacy among investors as mandated by Section 917 of the 
Dodd-Frank Act. That provision calls for the SEC to identify 
the existing level of financial literacy among retail 
investors, methods to improve the timing, content, and format 
of disclosures, and the most effective existing private and 
public efforts to educate investors. Section 917 requires us to 
deliver a final report to Congress in July 2012. Because the 
report requires us to focus on the financial literacy of 
investors as opposed to financial literacy more generally, we 
believe the study has the potential to arm us with a great deal 
of valuable data about individual investors in the United 
States.
    As the Committee recognizes, improving financial literacy 
is an important goal that can empower individual investors to 
participate in the financial markets and to secure their 
financial futures. Thank you for the opportunity to appear here 
today. I would be pleased to answer any questions you may have.
    Senator Akaka. Thank you very much, Ms. Schock.
    Director Wright, will you please proceed.

   STATEMENT OF JOSHUA WRIGHT,\1\ ACTING DIRECTOR, OFFICE OF 
 FINANCIAL EDUCATION AND FINANCIAL ACCESS, U.S. DEPARTMENT OF 
                          THE TREASURY

    Mr. Wright. Chairman Akaka and Ranking Member Johnson, 
thank you for the opportunity to appear before you today on a 
topic of critical importance to the Administration, the 
Department of Treasury, and our Nation, empowering Americans to 
make better informed financial decisions. I want to especially 
thank you, Chairman Akaka. You have been a tremendous champion 
for financial empowerment of all Americans.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Wright appears in the appendix on 
page 63.
---------------------------------------------------------------------------
    All Americans, regardless of income and level of 
educational attainment, must have appropriate consumer 
financial protections, be equipped with financial knowledge and 
skills, and have financial access to make informed decisions in 
an increasingly complex financial marketplace. The future 
financial prosperity of our citizens and Nation depend in part 
on the ability of Americans to make these informed financial 
decisions.
    My testimony will include an update on the activities of 
the Financial Literacy and Education Commission, the 
President's Advisory Council on Financial Capability (PACFC), 
and Treasury's own Financial Education and Access Initiatives. 
All these efforts aim to improve the financial literacy and 
financial access and promote the economic stability of all 
Americans.
    Treasury is honored to serve as the lead agency for the 
Commission and to report on the Commission's activities. I want 
to thank the members of the Commission that are here today for 
all of their continued efforts. The Department of Education, 
the Securities and Exchange Commission, as well as the 
implementation team for the Consumer Financial Protection 
Bureau have all been great partners. The Commission has been 
leveraging our unique resources in working together to better 
equip Americans with the necessary financial knowledge and 
skills.
    Recently, the Strategy for Assuring Financial Empowerment 
Report (SAFE), which is a summary of the Commission's 
activities, was submitted to the Senate Banking, Housing, and 
Urban Affairs Committee and the House Financial Services 
Committee to inform members and the public of the Commission's 
activities. My testimony includes several highlights from the 
report. I respectfully request that the SAFE Report be included 
in today's hearing record.\1\
    The Fair and Accurate Credit Transactions Act (FACT Act) 
requires the Commission to develop a national strategy to 
coordinate Federal efforts and promote basic financial literacy 
and education among all Americans. In July 2009, the Commission 
convened a special meeting to review its approach to carrying 
out its purpose and rule. Subsequently, Commission members set 
up a working group to craft a new national strategy, which is 
titled Promoting Financial Success in the United States: A 
National Strategy for Financial Literacy 2011. The Commission 
undertook a comprehensive and inclusive process in creating 
this new strategy.
---------------------------------------------------------------------------
    \1\ The Report submitted by Mr. Wright appears in the appendix on 
page 114.
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    The new national strategy provides a road map for 
organizations providing financial education and provides goals 
to help guide America toward financial well-being. Treasury, in 
conjunction with the Commission members, is developing the 
implementation plan for the new national strategy. This 
includes Treasury engaging with Commission members to develop 
implementation plans specific to the constituents they serve.
    The new national strategy and its implementation plan will 
address many of the comments about financial literacy from the 
Government Accountability Office report, Opportunity to Reduce 
Potential Duplication in Government Programs, Save Tax Dollars, 
and Enhance Revenue. This was published in March 2011. But let 
me take this opportunity to comment further on the report.
    Educating Americans to be more financially literate is a 
difficult challenge and requires the attention of many 
agencies. The Federal entities engaged in financial literacy 
often have different missions, constituencies, and expertise 
which can and should be leveraged to deliver optimal financial 
literacy education and access. Just a few examples of the 
Federal entities that have financial education programs provide 
a window into understanding the need for this varied yet 
integrated approach. An example of these essential efforts 
include investor education provided by the SEC, promoting 
financial literacy among students provided by the Department of 
Education, housing counseling provided by HUD, military 
personnel educational initiatives provided by the Department of 
Defense to ensure financial readiness of our troops.
    In addition, the new Consumer Financial Protection Bureau 
will have a special focus on educating consumers and will 
assume the Vice Chairmanship of the Commission. Treasury will 
continue to work with the CFPB to clearly delineate the roles 
of both entities. Bringing these various approaches together to 
complement rather than duplicate efforts is a key role of the 
Commission, and we believe taken seriously by all member 
agencies.
    On January 29, 2010, the President signed an Executive 
Order which created the President's Advisory Council on 
Financial Capability. The Council is tasked with recommending 
methods to coordinate and maximize the effectiveness of 
existing private and public sector efforts and identify new 
approaches to increasing financial capability through financial 
education and financial access. Treasury is coordinating 
efforts between the Council and the Commission.
    I will now briefly discuss the highlights of the Treasury's 
specific financial education and access efforts. In conjunction 
with the Community Development Financial Institutions (CDFI) 
Fund, the Treasury has been implementing the Financial 
Education and Counseling (FEC) Pilot Program to provide 
competitive grants to promote financial education and 
counseling to prospective home buyers. The effort is aimed to 
ensure that working families have the financial knowledge 
required to effectively prepare for and evaluate housing 
choices. The CDFI Fund made a second round of awards in this 
program in October.
    Treasury's Electronic Payment Initiative continues with the 
expansion of disbursement of Federal electronic payments 
through a GoDirect and Direct Express debit card MasterCard 
program. When fully implemented, these initiatives would save 
the Federal Government over $500 million in 5 years and provide 
basic financial access to many benefit recipients. Individuals 
receiving Federal benefit payments who do not have an account 
at a financial institution or who prefer to receive their 
payments on a prepaid debit card can receive a Direct Express 
card. This card is a safe, convenient, and consumer-friendly 
way for benefit recipients to receive payments and safely 
manage their benefits.
    Treasury is also currently conducting a Tax Time Account 
Pilot. This pilot has the potential to improve tax 
administration and provide basic financial access. The pilot 
has the potential to streamline the tax administration process, 
save the Government money, and deliver tax refunds in a faster, 
more efficient manner.
    Chairman Akaka, your work in authorizing Title 12 of Dodd-
Frank will provide opportunities for increased financial access 
for the unbanked and underbanked. Our most significant proposed 
initiative utilizing the authority provided in Title 12 is Bank 
On USA. The program is designed to bolster local and private 
sector initiatives to ensure low-and moderate-income 
individuals have access to safe financial services and products 
as well as financial education.
    The Office of Financial Education and Financial Access, in 
conjunction with the CDFI Fund, is working with financial 
institutions, community-based organizations, community 
development and financial institutions, credit unions, 
financial education providers, and local government officials 
to ensure that Title 12 is quickly implemented once funding 
becomes available. These programs will include financial 
access, financial education, as well as efforts to spur new 
products and services that will better meet the needs of the 
unbanked and underbanked.
    We are developing the necessary infrastructure to support 
community-based efforts intended to increase financial access. 
Although we have begun these initial steps, appropriated 
resources are necessary to fully implement all the proposed 
activities that are envisioned to utilize the authority in 
Title 12.
    American families are focused on building more secure 
financial futures for themselves and they desire a fair, stable 
financial system as well as the skills and access needed to 
navigate a complex financial marketplace. Treasury looks 
forward to working with this Committee and others to improve 
the financial capability of all Americans.
    Thank you again, Mr. Chairman and Ranking Member Johnson, 
for the opportunity to appear before you today.
    Senator Akaka. Thank you very much, Director Wright.
    Now, we will hear from Director Petraeus. Please proceed.

  STATEMENT OF HOLLISTER K. PETRAEUS,\1\ DIRECTOR, OFFICE OF 
  SERVICEMEMBER AFFAIRS, CONSUMER FINANCIAL PROTECTION BUREAU

    Mrs. Petraeus. Chairman Akaka, Ranking Member Johnson, 
thank you for the opportunity to speak with the Subcommittee 
today about the importance of financial education for 
servicemembers and their families.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mrs. Petraeus appears in the appendix 
on page 69.
---------------------------------------------------------------------------
    I come from a military family. I am an Army daughter, 
sister, wife, and mother. I have seen the problems that can 
arise from too much month and not enough money, and I have also 
seen the devastating impact financial scams and predatory 
lending can have on servicemembers and their families. 
Unfortunately, too many troops still learn about wise spending 
through hard experience and years of paying off expensive debt 
rather than through an effective financial education class.
    As a Senior Family Readiness Group Advisor at Fort 
Campbell, Kentucky, during the first year of the Iraq War, I 
saw the unforeseen financial problems that came with 
deployment. In 2004, I became the Director of BBB Military 
Line, providing consumer education for military families, a 
position that I held for 6 years. While with the BBB, I guided 
development of 6 adult financial workshops and wrote a monthly 
military consumer newsletter to over 3,000 subscribers.
    This January, I was asked to join the Consumer Financial 
Protection Bureau and set up the Office of Servicemember 
Affairs. My office is assigned the responsibility to, quote, 
``educate and empower servicemembers and their families to make 
better informed decisions regarding consumer financial products 
and services.'' I consider this a high priority. In my years 
working with servicemembers and their families, I have seen 
them victimized by scams that might have been avoided if they 
knew the red flags of a bad deal. Many of them are in over 
their heads with expensive car financing and other costly 
loans, and the military has not been immune to the housing 
crisis, either. Many servicemembers who thought home ownership 
would be a good thing are now locked into mortgages in some of 
the worst-hit States, where houses have declined significantly 
in value.
    The financial well-being of our military personnel is not 
just an issue of dollars and cents. Financial problems can be a 
dangerous distraction for our troops and are the No. 1 cause of 
lost security clearances. Personal financial readiness equates 
to mission readiness, and a vital component of personal 
financial readiness is a sound financial education.
    Since I became the Director of the Office of Servicemember 
Affairs, I have been reaching out to the military to get input 
on how to make financial education work best for them. In late 
January, Professor Warren and I had two roundtable discussions 
at Joint Base San Antonio, Texas, and there are more trips to 
military bases planned in the next month.
    In San Antonio, the military financial counselors told us 
they were concerned about military debt, telling us that the 
average trainee arrives at their base already over $10,000 in 
debt. They spoke of the need for followup financial education 
after basic training. The military personnel and spouses we 
spoke with at the second roundtable felt strongly about the 
need for continuing financial education throughout a career, 
both for their own personal education and to help them be 
better leaders. The entire group thought that financial 
training should be mandatory.
    I agree with them that continuing financial education must 
have a central role in protecting the financial future of 
military families. I have already met with the Deputy Assistant 
Secretary of Defense for Military Community and Family Policy, 
who oversees financial literacy programs within the Department 
of Defense. I will work with the Pentagon, Veterans Service 
Organizations, and industry to identify and field the most 
effective financial education.
    No amount of prosecutors can stop every scammer or 
predatory lender, so we must provide the right tools to 
servicemembers so they recognize the red flags and make sound 
financial choices.
    I am committed to ensuring that we not reinvent the wheel 
and duplicate what has already been created. We will work to 
identify what techniques and materials work best and then apply 
them. We need to capitalize on the teachable moments, which may 
vary at different times in a military career. What is pertinent 
to a new soldier shopping for his first car may not be relevant 
to a 20-year lifer contemplating buying a house. We will work 
on engaging our students and developing metrics to engage the 
effectiveness of what we have taught, and we will keep tweaking 
it until we get it right.
    In conclusion, the Office of Servicemember Affairs is 
already working hard to ensure that servicemembers and their 
families, who devote their lives to protecting our Nation, will 
have a strong advocate to help protect them from financial 
threats. We will work with the military, the public sector, and 
the business community toward the goal of every military family 
being a financially-educated family that is armed with the 
knowledge of how to avoid scams and poor financial decisions 
and willing and able to invest toward long-term financial 
goals.
    Thank you for the opportunity to testify before the 
Committee today and I welcome any questions that you may have 
for me.
    Senator Akaka. Thank you very much, Director Petraeus.
    This question is for all of the witnesses. A recent GAO 
report found that Federal financial literacy activities may be 
fragmented and recommended greater coordination of efforts. I 
would like to invite each of you to comment on this finding.
    Mr. Wright. Thank you for the question, Senator Akaka. It 
is pretty clear that financial literacy and education is 
conducted in a number of agencies across the Federal 
Government. The report that we commissioned by RAND actually 
found that there is very little duplication across those 
efforts, but they do happen in lots of different places. And as 
I said in my testimony, we actually feel that we are leveraging 
the unique expertise and functions and outreach to constituents 
that these different agencies have, and so it makes sense that 
the Department of Education would be trying to educate 
students, that the Department of Defense would be focused on 
military readiness, that the FDIC would be providing the Money 
Smart curriculum that can be used by educators across the 
country, and that the SEC, for example, is focused on investor 
education.
    As a Commission, we need to continue to have our efforts 
focused on making sure there is not duplication in that. We 
need to leverage things like the mymoney.gov website to provide 
a sole location for people as an entry point to find out 
information, unbiased information that the Federal Government 
provides around curriculum and as we learn in the future what 
works and what does not.
    We are still making efforts to try and really determine 
what works in terms of outcomes. It is easier to measure what 
the inputs are. It is much harder to measure what the outcomes 
are, particularly when you are talking about behavior change. 
And so the Financial Literacy and Education Commission actually 
has two very interesting subcommittees connected to this. One 
is that we now have a Research and Evaluation Subcommittee that 
is focused on talking about the research efforts that we are 
funding across the Federal Government and really trying to 
focus those efforts in on figuring out what truly does work, 
what is absolutely best, and then the other is a Financial 
Access Subcommittee which is focused on thinking about how the 
different agencies and touchpoints they have can help the 
unbanked and underbanked. Thank you.
    Senator Akaka. Thank you.
    Ms. Schock. Well, why don't I segue into what the SEC does. 
We are very unique in the fact that we are the only Federal 
agency that is charged with and focuses on investor education, 
and we think that because of the expertise that we have at the 
Commission--the people who wrote the rules work at the SEC, it 
is a very complex area--and so in order to distill these 
complex financial products and concepts into something that is 
meaningful for individual investors, that the SEC is best 
positioned for investor education.
    We do work through FLEC and we work with Federal agencies 
where we intersect. I talked about the joint alert that we did 
with the Department of Labor. They have oversight over 401(k) 
plans, but one of the products that was in there were these 
target date funds that we have jurisdiction over. So we worked 
together to put out this joint investor bulletin to talk about 
target date funds and what we saw that was happening with them.
    As far as working together with FLEC, we are on the 
Subcommittee for Research and Evaluation because we, too, 
believe that we need to have meaningful metrics in place to 
show that our messages do have consequences and behavior 
change--positive behavior change is taking part as a part of 
those messages.
    Ms. Dann-Messier. Mr. Chairman, at the Department of 
Education, we really agree that we need to do a better job of 
coordinating our efforts and really target our resources and do 
fewer things better, and that is why we are proposing to 
consolidate the seven narrow programs, including some of our 
financial literacy efforts, into a much larger program. But we 
will keep a focus on economic and financial literacy, but we 
really think that it is just good Government policy, to do a 
better job of coordinating our resources.
    Senator Akaka. Thank you very much, Assistant Secretary 
Dann-Messier. Mrs. Petraeus.
    Mrs. Petraeus. Mr. Chairman, I do agree certainly that 
coordination and consultation is very important. I will 
reiterate that the Director of the Consumer Financial 
Protection Bureau will be the Vice Chairman of the FLEC, so our 
intent is to work very closely with them to be sure that we 
coordinate our efforts and that we consult with them.
    From my office specifically, we are authorized to enter 
into agreements with the Department of Defense to be sure that 
we are working in tandem and that we are coordinating what we 
do, and I have already--I mentioned that I had spoken with the 
Deputy Assistant Secretary of Defense for Military Community 
and Family Policy, but I have also spoken with his counterpart 
with Wounded Warrior Care and Transition Policy so we can also 
coordinate with that office for the needs of transitioning 
servicemembers.
    Senator Akaka. This question is for Assistant Secretary 
Dann-Messier. I have worked on the Excellence in Economic 
Education Program (EEE), which funds financial education 
projects in classrooms. The Hawaii Council on Economic 
Education is one of many subgrant recipients who have done 
great work with these funds. Additionally, the Native Financial 
Education Coalition has indicated that EEE can help meet the 
need for increased financial literacy in Native communities. 
For example, a EEE subgrant enabled a study that examined the 
financial literacy of Native American high school students in 
Montana, New Mexico, and South Dakota. Would you please discuss 
how EEE funding has benefited Native communities and how it can 
help reduce the disparity in Native and non-Native financial 
literacy.
    Ms. Dann-Messier. Certainly, Mr. Chairman. I am happy to do 
that. I just also wanted to remind you that I was formerly the 
President of a nonprofit adult and family learning center in 
Providence, Rhode Island, and we served the underserved and 
low-income communities, and I know from my own professional and 
personal experience the importance of financial literacy. So 
the initiative certainly from the Excellence in Economic 
Education Program and its work with Native communities has been 
very, very, very important to make sure that they have all the 
financial literacy information that they need to fully 
participate in our society.
    We think those efforts need to continue and we need to 
focus on reaching all of the underserved populations across our 
country so that they are not harmed by predatory practices and 
really can save enough money for themselves and their families, 
whether it is to buy a home or to go on to college. So we very 
much support those efforts and plan to continue those efforts 
and really understand the importance of embedding financial 
literacy in all of our educational programs so that everybody 
has that knowledge and information. Thank you.
    Senator Akaka. Thank you very much for your response. 
Senator Johnson.
    Senator Johnson. Thanks, Mr. Chairman.
    I would like to thank all of you for your efforts here 
again. This is important. In particular, Mrs. Petraeus, I would 
really like to thank you for the sacrifice you and your family 
and your husband have made to this Nation. I had the real 
privilege of meeting your husband on a trip to Afghanistan, so 
it is nice to meet you here.
    Just a quick question to all of you. I will throw it out 
there. As I was questioning Mr. Dodaro, were you wanting to 
answer any of those questions at all? I will first make that 
offer. [No response.]
    OK, not a problem. Certainly, I was trying to get to the 
bottom of what does this cost. I am hoping maybe within your 
agencies you have some sort of feel, so I will just kind of go 
down the line. Can you tell me approximately what, for example, 
the Department of Education is spending on its financial 
literacy efforts?
    Ms. Dann-Messier. Well, I can point to two initiatives. We 
are spending $1.7 million on a new initiative. We are giving 
funds to the State of Tennessee to develop teacher preparation 
programs and teacher materials for students. We also are 
spending $1.4 million on the Excellence in Economic Education, 
so that is $3.1 million. I am sure there is additional funding, 
but I do not have the exact figure. I am happy to get it back 
to you, Senator Johnson, but those are the two examples I can 
give you.
    Senator Johnson. So are you kind of thinking it is maybe in 
the millions? Tens of millions? I mean, is it a relatively 
small amount in the Department of Education, or----
    Ms. Dann-Messier. I would rather get back to you with that 
figure so I do not mislead you. Thank you.
    Senator Johnson. OK. Ms. Schock.
    Ms. Schock. If we include staffing costs as well as program 
costs for all of our programs--that includes handling investor 
complaints and questions, educational outreach, and then having 
input into policy matters at the SEC--we are under $10 million 
a year.
    Senator Johnson. OK.
    Mr. Wright. In the Office of Financial Education and 
Financial Access, in 2010, we spent $2.1 million. The Financial 
Education Counseling Pilot Program was a $4.3 million grant 
program. But it is also hard to tell some of the numbers 
because you take things like our Direct Express program and 
electronic Treasury efforts and that has a financial education 
component and actually over 5 years will save the Government 
$500 million. So there are different numbers and it depends on 
how much you want to be focused specifically on education 
within a program versus the other components of the program.
    Senator Johnson. OK.
    Mrs. Petraeus. Since we are a new agency, I obviously have 
no figures for you. We are just standing up and we are in the 
process of building our budget, so I have no figures at this 
time.
    Senator Johnson. OK. Mrs. Petraeus, I would kind of like to 
use you to get into some other issues, just in terms of you 
standing up this program. I particularly appreciate the fact 
that you said you do not want to reinvent the wheel here. So as 
you are trying to determine, first of all, what needs to be 
taught, I mean, have you already gone down the list within the 
military in terms of these are the core competencies, these are 
the subject areas that need to be taught to our troops?
    Mrs. Petraeus. No, we are not at that point yet. Right now, 
again, we are an agency in the process of being created. What I 
am doing right now is really listening and talking to the 
military very informally and hearing often from the mouths of 
servicemembers themselves and their spouses what they think is 
important.
    Senator Johnson. Do you have an idea of where you are going 
to go to access curriculum that is already developed or the 
best practice teaching methods for some of these things?
    Mrs. Petraeus. I would say that we are in the process of 
hiring staff, and one person within my office will be someone 
to look at those programs more closely to see exactly what are 
the ones that we think that will work the best with the 
military. So right now, we are not, again, at that point where 
we have a road map, if you will, of where we are going to go.
    Senator Johnson. OK. Mr. Wright, you mentioned mymoney.gov. 
Is that the kind of a go-to site that could provide Mrs. 
Petraeus with that kind of information?
    Mr. Wright. That site has many links to the various 
Government programs, including the military's current website 
about providing financial education to the troops. We are in 
regular conversation with the Consumer Financial Protection 
Bureau implementation team about as they are standing up the 
agency and figuring out what direction they want to go in and 
how they are going to do that, we are in constant conversation 
to make sure there is not duplication.
    So my money does provide an opportunity for a starting 
point and there are curriculum out there. I think there still 
will be efforts within each part of the CFPB to figure out, do 
those existing curriculums really meet their constituents' 
needs.
    Senator Johnson. Is that a kind of goal of the overall FLEC 
in terms of developing a centralized clearinghouse for these 
best practice teaching methods?
    Mr. Wright. Yes. There is actually--part of mymoney's 
future upgrades is a research clearinghouse which would 
actually be, as this research comes online about what is being, 
what works most effectively at changing behaviors, the mymoney 
will have a clearinghouse that provides a central location for 
people, both educators and individuals as well as researchers, 
to go and see what research is out there and what actually 
works.
    Senator Johnson. OK. So that is research--would that be the 
same thing, though, as a clearinghouse for best practice? I 
mean, this is how you teach taking out a mortgage in an 
efficient manner----
    Mr. Wright. Well, best practice, I think, needs to be 
connected to research, right, because you do not want to--you 
are not just testing whether the person gets the answer right 
about how to do that. You actually want to see, do they carry 
out the behavior change. So those two are linked and best 
practice--figuring out what best practice is should be driven 
by quality evaluation and research.
    I would kind of like to ask, do you actually reach the 
targeted audience? I mean, on the one hand, in terms of 
education, it is pretty obvious. You teach in the schools. In 
the military, you taught to the troops. The SEC has websites in 
terms of investors being able to go to. But when you start 
talking about things like teaching financial literacy to 
general consumers, to people that are shopping for a mortgage, 
I mean, is that not far more difficult to try and target and 
get information to those folks? I mean, what is the strategy 
behind that?
    Ms. Schock. We have adopted the strategy of going where the 
investors are already gathered. So instead of holding town hall 
meetings where we are picking up the cost and expense of trying 
to drive people to a meeting, we go to other conferences and 
events where we know that investors will be there who would be 
receptive to our message.
    Mr. Wright. We generally have a philosophy of trying to be 
relevant, timely, and actually connected to the product or 
decision that needs to be made. I think the Financial Education 
Counseling Pilot is a good example of this, trying to really 
work with prospective home buyers to educate them about the 
home purchase decision so that they make the--they improve 
their credit scores, they start budgeting, but also is focused 
on making that home purchase decision and figuring out if 
purchasing a home is the right thing for them. Sometimes it is 
the right thing, sometimes it is not. So relevant, timely, and 
connected to product and decision.
    Senator Johnson. OK. Well, again, thank you all for coming 
here.
    Senator Akaka, I am going to have to go to another 
appointment. Thank you very much for holding this hearing. This 
is, again, a very important subject, so aloha.
    Senator Akaka. Thank you so much for being a part of this 
hearing, Senator Johnson.
    Director Schock, I worked to include a provision in the 
Dodd-Frank Act that requires the SEC to conduct a study of 
financial literacy among retail investors and to work with FLEC 
to increase investor financial literacy. How has the study 
progressed thus far, and what steps must be taken to implement 
a strategy that brings about positive changes in investor 
behavior?
    Ms. Schock. We are very excited about the investor literacy 
study under Section 917 of the Dodd-Frank Act. We think that it 
will provide valuable data to the SEC as well as to our 
colleagues at the FLEC to help bring about more informed 
investment decisions.
    At this point in time, we have a plan in place. That 
project plan is ready to go. We also hope to publish 
information in the Federal Register for public comment 
regarding the best public and private efforts to educate 
investors. And then, also, we have been sort of doing a study 
of studies that have been done in the past.
    But I will be honest with you, Senator. It is a matter of 
funding at this point in time. We sort of are ready for gold 
level, silver level, or bronze level implementation of our 
project plan, and so if we have full funding for our study the 
way we would like to have it done, I think we would have a very 
robust study to submit to Congress in July 2012. Should the 
funding levels fall or if we do not have any additional money 
from our 2010 levels, that will impact the depth that we are 
able to do and we may end up doing a study of studies.
    Senator Akaka. Thank you.
    Director Wright, Title 12 of the Dodd-Frank Act was based 
on my Improving Access to Mainstream Financial Institutions 
Act. Title 12 authorizes initiatives to improve financial 
access and empower the unbanked and underbanked. Will you 
please discuss the status of implementing Title 12. What 
challenges must be overcome to expand financial access for the 
underbanked?
    Mr. Wright. Thank you for that question, Senator Akaka. We 
are right now in the process of planning out the Bank On USA 
Program, which is our signature program under Title 12 that 
uses those authorities. The President has money in the 2011 
budget as well as the 2012 budget for Bank On USA, and right 
now, we are currently setting up the infrastructure to move 
forward with that program, but we will not be able to fully 
implement it until we have appropriations.
    So currently, we are working on making sure that we have in 
place the robust data gathering tools that we can use and work 
with banks figuring out ways to make sure that communities have 
the right tools to assess how they should best undertake the 
Bank On Program, as well as creating websites where 
participants in the Bank On USA Program can share information 
and knowledge about best practices. But really, to move forward 
with both Bank On USA and any efforts around small dollar loan 
alternatives for predatory small dollar loans, we really need 
appropriations.
    Senator Akaka. My next question is for Director Petraeus. 
Individuals' financial literacy needs change continuously 
throughout the stages of their lives. How must financial 
education and advice change based on where servicemembers are 
in their careers?
    Mrs. Petraeus. Well, I think you are absolutely right. 
There are different teachable moments at different times. I 
think it is important that you do reach military personnel at 
the very beginning of their service. Sometimes the message can 
be as simple as, I always joke and say, that good-looking girl 
in the kiosk at the mall is not there to be your girlfriend. 
She is there to sell you something very expensive. Or, do not 
ask what my monthly payment is. Ask what is the total cost I am 
paying for this computer that I am buying, or this hot new car 
that I am buying. Later in a career, it may be a decision about 
buying a home or even a decision about whether or not to 
transition out of the military, and then there are going to be 
other things that need to be taught.
    We have heard from servicemembers themselves that just 
having it in basic training is not enough. Basic trainees are 
usually tired, stressed, not really focusing on what they are 
hearing. You need to have something in there, but then you need 
to continue it, at the basic non-commissioned officer course, 
the advanced non-commissioned officer course, some of the more 
senior schools. And a good way to reach people is to tell them, 
we need you to know this so you can teach your soldiers this, 
as well. Then they are very much more open to hearing that.
    So I think there are different approaches, different 
teachable moments, and we need to be sure we are teaching the 
right thing to the right group at the right time.
    Senator Akaka. I worked to establish the Office of 
Financial Education within the Consumer Financial Protection 
Bureau. The CFPB should have a consumer education focus. Please 
explain the relationship between FLEC, the CFPB, and Office of 
Financial Education. What role will the CFPB and OFE have in 
FLEC?
    Mr. Wright. So the Treasury Department will continue to be 
the chair of FLEC, and it is very intentional, as you know, in 
the legislation that the CFPB becomes the Vice Chair. And so we 
will continue to work very closely together to make sure that 
our efforts are coordinated and not duplicated between our 
offices as well as with the other FLEC members.
    The Treasury will continue to remain focused on 
coordinating the FLEC overall, taking advantage of its unique 
position to test out innovative products that connect education 
and access together, and the CFPB, as you said, will have a 
focus on really educating consumers, and it is still being 
determined, the best way to do that, as they stand up the 
office.
    Mrs. Petraeus. I will just add that we brought on 
yesterday, we now have an Associate Director for Education and 
Engagement, and her name is Gail Hillebrand. She has a long 
experience with Consumers Union, very experienced in consumer 
issues. Again, she just started yesterday or she might be 
sitting here talking to you instead of me.
    Senator Akaka. Assistant Secretary Dann-Messier, an 
increasingly common product on college campuses is the student 
loan debit or credit card. These loan cards may have high or 
hidden fees that harm student borrowers. How can we ensure that 
students fully understand the risks of these products?
    Ms. Dann-Messier. Mr. Chairman, it is really what we have 
been talking about all afternoon, and it is making sure that 
all our students have all the financial literacy information 
that they need in order to make wise and informed decisions. 
And so that is part of the--it should be part of their 
discussion with the financial aid officers and with all of the 
counseling staff at the universities and colleges as they are 
entering into the institution as part of the admissions 
process, that they are informed about what resources are 
available, what resources are there to assist them, and that we 
direct them to the resources that they can take full advantage 
of that will not take advantage of them. So it is really a part 
of the financial literacy and counseling that we think needs to 
be part of the admissions process into higher education.
    Senator Akaka. Director Schock, in order to bring about a 
positive change in investor behavior, we must provide investors 
with the tools and information they need to make informed 
decisions. My provision in the Dodd-Frank Act authorizes the 
Commission to require specific disclosures about investment 
products be made at the point of sale. What must be done to 
ensure that these disclosures are meaningful and effective?
    Ms. Schock. We fully agree with you that these disclosures 
need to be made in the best interest of investors, and the best 
interest is at the time before they actually make the purchase. 
The disclosure needs to be clear, simple, and meaningful at or 
before the time of the purchase by the individual investor.
    Unfortunately, Dodd-Frank sort of derailed that initiative 
at the SEC. We have not abandoned it, but we just have some 
other work that we need to get done on some set time lines. But 
we are still actively pursuing the point of sale disclosure 
because we do think that it is a meaningful product of what we 
need and that investors need.
    Senator Akaka. Mr. Wright, with Hawaii's high cost of 
living, home ownership is a challenge for many families. In 
order to educate prospective home owners and promote 
responsible home ownership, I authorized and secured funding 
for the Financial Education and Counseling Pilot Program. How 
will you measure and evaluate the success of these 
demonstrations in providing a strong model for home ownership 
education, and counseling?
    Mr. Wright. Yes, in Hawaii, we have provided a grant to the 
Council for Native Hawaiian Advancement, and we have worked 
with the CDFI fund to make sure that there are very clear 
outcome measures, so looking at things like changes in people's 
savings rates or their increase in credit scores and how that 
then helps them to make the decision around home purchase. Now, 
that is a 3-year grant, so we will be tracking that over time 
and actually working with GAO on that project to make sure that 
the evaluation is thorough and we understand the outcomes.
    Senator Akaka. Thank you. Director Petraeus, today's 
operational tempo means that servicemembers are gone for 
extended periods of time. Many spouses must assume full 
responsibility for managing the family's budget. What more must 
be done to ensure that spouses are prepared for this important 
task?
    Mrs. Petraeus. I think that is a very valid concern and a 
very good question. Many of the spouses are young and they may 
not have learned financial literacy at home, so it is important 
to reach out to them. I think the difficulty is, unlike the 
military member, you cannot order the spouse to come to class, 
but I think there are some things you can do.
    There is a great deal of success now reaching the spouses 
online. A lot of units have what is called a Virtual Family 
Readiness Group (FRG) when a unit deploys that is online and 
families use it because they are interested in getting the 
information about what the unit is doing overseas. In fact, as 
a military mother, I will tell you that I used the Virtual FRG 
for my son's unit while he was deployed to Afghanistan. And I 
think there is a possibility, maybe, to tie some financial 
education into that venue, where you might be able to reach the 
spouses who are not apt to come onto base and participate in 
activities, but truly need that assistance and that education 
on good, smart financial management, or at the very least, 
where to go for help.
    Senator Akaka. Mr. Wright, I authored the Taxpayer Abuse 
Prevention Act to increase safeguards against harmful refund 
anticipation loans. I am pleased that the IRS has eliminated 
the debt indicator and that regulators have acted against 
unsafe and unsound refund anticipation loan practices. I 
believe we must build on this progress and continue to empower 
taxpayers. How is Treasury working to improve financial access 
for low-and moderate-income taxpayers?
    Mr. Wright. We have a number of efforts. One is related to 
research, so we just released recently a report done by the 
Urban Institute in conjunction with the IRS that looks at the 
use of refund anticipation loans across a number of factors. As 
we look to provide alternatives to people to refund 
anticipation loans, we want to make sure that we do that in a 
way that does not harm them as refund anticipation loans are 
removed from the market. So that report and research is the 
first step.
    In addition, I think the IRS's effort to get rid of the 
debt indicator was a big step, and their ongoing efforts to 
license and require examination for preparers is also going to 
be very helpful in making sure that we have qualified 
preparers.
    In addition, Treasury has to provide, over time, choices 
for people at tax time. There are a couple examples of this 
already. One is the opportunity to put your tax refund into a 
savings bond to actually save at tax time. This is the second 
year that has been in effect and already the numbers show that 
people using that functionality is growing.
    And then, second, we are piloting a tax time account. We 
mailed out offers to 800,000 individuals across the country. 
People are enrolling in using that account and we will learn 
from that pilot to figure out the best way to provide an 
account in the future, integrate it into the tax return 
process. And that pilot and the study that will go along with 
that will be one of the factors to determine how best to do 
that and the timing under which to do it.
    And then the last thing is that we need to continue to make 
improvements to speed up the process for people to get their 
refunds. So the faster someone can get their refund, the less 
likely they are to need a refund anticipation loan and the less 
value a refund anticipation loan will have. I will say that we 
are optimistic that we will see the number of refund 
anticipation loans fall drastically because of some of the 
efforts that you mentioned around the debt indicator as well as 
the steps by the regulators.
    Senator Akaka. I want to thank all of our witnesses for 
being here today. Your testimony and your responses have been 
very valuable. I look forward to continuing to work with all of 
you as we seek to empower Americans to make informed financial 
decisions.
    The hearing record will be open for 1 week for additional 
statements or questions other members may have.
    I look forward to our continuing to make progress in 
financial literacy and that we will continue to celebrate this 
month of financial literacy. Thank you very much for your 
participation.
    The hearing is adjourned.
    [Whereupon, at 4:25 p.m., the Subcommittee was adjourned.]



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