[Congressional Record (Bound Edition), Volume 152 (2006), Part 4]
[Senate]
[Pages 4277-4279]
[From the U.S. Government Publishing Office, www.gpo.gov]




                        FINANCIAL LITERACY MONTH

  Mr. SESSIONS. Mr. President, I ask unanimous consent that yesterday's 
action on S. Res. 410 be vitiated, that the resolution be agreed to, 
that the technical amendment to the preamble which is at the desk be 
agreed to, and that the preamble, as amended, be agreed to.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The resolution (S. Res. 410) was agreed to.
  The amendment (No. 3190) was agreed to, as follows:

       On page 2, the first Whereas clause, strike 
     ``$11,000,000,000'' and insert ``$11,000,000,000,000.''

  The preamble, as amended, was agreed to.
  The resolution, with its preamble, as amended, reads as follows:

                              S. Res. 410

       Whereas the personal savings rate of United States citizens 
     in 2005 was negative 0.5 percent, marking the first time that 
     the rate has been negative since the Great Depression year of 
     1933;
       Whereas in 2005, only 42 percent of workers or their 
     spouses calculated the amount that they needed to save for 
     retirement, down from 53 percent in 2000;
       Whereas the 2005 Retirement Confidence Survey found that a 
     majority of workers believe that they are behind schedule on 
     their retirement savings and that their debt is a problem;
       Whereas during the third quarter of 2005, the household 
     debt of United States citizens reached $11,000,000,000,000;
       Whereas during the third quarter of 2005, individuals 
     serviced their debt with a record 13.75 percent of after-tax 
     income;
       Whereas nearly 1,600,000 individuals filed for bankruptcy 
     in 2004;
       Whereas approximately 75,000,000 individuals remain credit-
     challenged and unbanked, or are not using insured, mainstream 
     financial institutions;
       Whereas expanding access to the mainstream financial system 
     will provide individuals with less expensive and more secure 
     options for managing their finances and building wealth;
       Whereas a greater understanding of and familiarity with 
     financial markets and institutions will lead to increased 
     economic activity and growth;
       Whereas financial literacy empowers individuals to make 
     wise financial decisions and reduces the confusion caused by 
     the increasingly complex economy of the United States;
       Whereas only 26 percent of individuals who were between the 
     ages of 13 and 21 reported that their parents actively taught 
     them how to manage money;
       Whereas the majority of college seniors have 4 or more 
     credit cards, and the average college senior carries a 
     balance of $3,000;
       Whereas 1 in every 10 college students has more than $7,000 
     of debt;
       Whereas many college students pay more in interest on their 
     credit cards than on their student loans;
       Whereas a 2004 Survey of States by the National Council on 
     Economic Education found that 49 States include the subject 
     of economics in their elementary and secondary education 
     standards, and 38 States include personal finance, up from 48 
     and 31 States, respectively, in 2002;
       Whereas a 2004 study by the JumpStart Coalition for 
     Personal Financial Literacy found that high school seniors 
     scored higher

[[Page 4278]]

     than their previous class on an exam about credit cards, 
     retirement funds, insurance, and other personal finance 
     basics for the first time since 1997;
       Whereas, in spite of the improvement in test scores, 65 
     percent of all participating students still failed the exam;
       Whereas individuals develop personal financial management 
     skills and lifelong habits during their childhood;
       Whereas personal financial education is essential to ensure 
     that individuals are prepared to manage money, credit, and 
     debt, and become responsible workers, heads of households, 
     investors, entrepreneurs, business leaders, and citizens;
       Whereas Congress found it important to coordinate Federal 
     financial literacy efforts and formulate a national strategy; 
     and
       Whereas, in light of that finding, Congress established the 
     Financial Literacy and Education Commission in 2003 and 
     designated the Office of Financial Education of the 
     Department of the Treasury to provide support for the 
     Commission: Now, therefore, be it
       Resolved, That the Senate--
       (1) designates April 2006 as ``Financial Literacy Month'' 
     to raise public awareness about--
       (A) the importance of financial education in the United 
     States; and
       (B) the serious consequences that may result from a lack of 
     understanding about personal finances; and
       (2) calls on the Federal Government, States, localities, 
     schools, nonprofit organizations, businesses, and the 
     citizens of the United States to observe the month with 
     appropriate programs and activities.

  Mr. AKAKA. Mr. President, I rise today, as in years past, to submit a 
resolution to designate April as Financial Literacy Month. I thank my 
cosponsors, Senators Sarbanes, Cochran, Lautenberg, Kohl, Stabenow, 
Talent, Lincoln, Crapo, Johnson, Dodd, Martinez, Durbin, Inouye, 
DeMint, Baucus, Feinstein, Coleman, and Allen. I am pleased to once 
again work with colleagues on both sides of the aisle to promote 
financial and economic literacy for people of all ages all across 
America. This resolution highlights the need to combat financial and 
economic illiteracy in our homes, schools, workplaces, and communities, 
and mobilize everyone to better educate themselves and others around 
them.
  In my State of Hawaii, State Representative K. Mark Takai in a 
previous year sponsored legislation establishing April as Financial 
Literacy for Youth Month, as I had in a previous Senate resolution, and 
this year introduced HB 1920 to redesignate the name of the month as 
Financial Literacy Month to broaden the month's focus to people of all 
ages. Testimony from State and local officials and community leaders 
supporting the legislation included a statement from Ms. Kristine 
Castagnaro, Executive Director of the Hawai'i Council on Economic 
Education, who said, ``residents of all ages deserve to possess the 
skills necessary to make wise choices for their lives and 
communities.'' Mr. Brent Dillabaugh, Public Policy Director of the 
Hawai'i Alliance for Community Based Economic Development, said, 
``Fostering basic financial and economic literacy is one of the most 
important aspects in achieving self sufficiency. As credit options 
become increasingly sophisticated and difficult to understand it is 
crucial that individuals have the capacity to make sound financial 
decisions.'' I support such State-level efforts in Hawaii and similar 
efforts across the country highlighting the need for us to focus on 
these important issues.
  Education in personal finance and economics means empowerment, 
because it can provide people with the tools they need for sound 
decisionmaking. Unfortunately, many individuals do not understand even 
the basics of our complex economic system. Although much continues to 
be done to provide more Americans with an education in personal finance 
and economics, a number of troubling indicators show that many people 
are ill-equipped to negotiate life's financial choices.
  For instance, scores went up for the first time on the Jump$tart 
Coalition's 2004 test of the financial literacy of high school seniors, 
but on average, students still failed the exam. States have responded 
so that now all recognize to some degree the need for economic or 
personal finance in their curriculum. However, according to the 
National Council on Economic Education, only 17 States require an 
economics course be offered in their high schools and only 15 require 
an economics course as a graduation requirement. Moreover, only 8 
States require a course be offered with content in personal finance and 
only 7 States require students to take such a course. This picture must 
improve, as barriers to credit continue to decrease, and credit card 
holders become younger and younger. According to a recent national poll 
by Junior Achievement, 5 percent of teenagers 13-14 years of age 
reported having credit cards, and this percentage doubles to 10 percent 
for those 17 years of age, and doubles again to nearly 20 percent for 
those 18 and older. Early use of credit should be accompanied by early 
education in money management and the basics of economics.
  On the other end of the spectrum, a tenth of our Nation's families 
are without an account at a mainstream financial institution. The most 
common reason people give for not having a checking account is that 
they do not write enough checks to make it worthwhile. Still, checking 
accounts are useful in a number of other ways and typically serve as 
the first formal relationship one will have with a mainstream financial 
institution. Opening an account at a mainstream financial institution 
is a critical step in the path to homeownership and entrepreneurship 
and allows individuals to benefit from the relatively low fees, savings 
instruments, and other wealth building opportunities offered by banks 
and credit unions.
  Increased financial and economic literacy can help people navigate 
around the countless pitfalls found in the marketplace. Consumers with 
a variety of credit histories can easily find credit in many different 
forms. Lenders' aggressive marketing campaigns encourage families to 
take on substantial debt for indulgences and luxuries, which can be 
harmful if the families are already saddled with debt and are not 
saving toward an education or retirement nest egg. Taking out these 
loans is irrational, but abusive marketing efforts have resulted in 
unprecedented levels of borrowing.
  Thus, although the availability of credit has grown dramatically, 
financial literacy has not yet increased adequately in response. 
Consequently, we are presented with a number of troubling statistics. 
Last year's personal savings rate was negative for the first time since 
1933, at the end of the Great Depression. A negative savings rate means 
that, on average, people are spending more money than they make. 
Moreover, the household debt service ratio, which gives a sense of the 
proportion of disposable income people are using to pay off their debt, 
increased to record levels in 2005. These findings suggest a serious 
problem exacerbated by the fact that most workers have not calculated 
how much they need to save for retirement, even if they believe they 
are behind schedule in their retirement savings.
  As policymakers, we need to focus on these issues year round. 
However, focusing on Financial Literacy Month in April means that we 
have a designated part of the year when we can reassess our efforts to 
highlight that worked and improve on those that have not. Once again, I 
thank my colleagues for their support of this resolution.
  Mr. KOHL. Mr. President, I rise today to join with my colleague, 
Senator Akaka, in support of his resolution designating April as 
Financial Literacy Month.
  Financial literacy is an imperative for all Americans. From creating 
a family budget, to managing credit, to saving for retirement--
Americans need to understand financial principles more than ever 
before. However, research shows that Americans lack a fundamental 
understanding of personal savings, financial planning, and budgeting. 
According to the Jump$tart Coalition for Personal Financial Literacy, 
over 60 percent of our high school students could not pass a quiz with 
basic questions on savings and budgeting. In addition, an AARP survey 
found that less than half of those over age 45 could identify and 
define basic financial terms such as ``diversification'' or ``compound 
interest.''

[[Page 4279]]

  Financial literacy is critical as more Americans take on more of the 
responsibility for managing their retirement savings. Pension plans are 
shifting from defined benefit plans, which guaranteed a certain benefit 
level for a lifetime, to defined contribution plans, which are based on 
the investment decisions of individual employees. Unfortunately, too 
many individuals do not have the tools to plan for retirement in a 
manner that will guarantee their long-term financial health. In fact, 
the Employee Benefit Research Institute found that only 60 percent of 
current workers are actively saving for their retirement, and only 42 
percent of workers and their significant others have calculated what 
their financial needs will be in retirement.
  The lack of financial literacy has serious ramifications, not only 
for individuals who fail to adequately budget and save, but for the 
national economy as well. The personal saving rate has recently turned 
negative, and personal saving is a component of national saving, which 
drives economic growth.
  These trends are certainly troubling. In recent years, the work of 
Senator Akaka and others have focused attention on the threat posed by 
our Nation's high financial illiteracy rate. For example, Senator 
Akaka's Excellence in Economic Education Act promotes financial 
literacy in primary and secondary schools. Many groups have developed 
innovative programs to reach children of all ages on this topic, and 
increased access to formal economics classes has helped acquaint 
students with the financial services marketplace. In addition, public-
private partnerships have helped adults increase their financial 
literacy and gain a better understanding of long-term financial 
planning tools.
  It is my hope that this resolution will take another step to help 
increase awareness about the need to improve our Nation's financial 
literacy, and I am pleased to support it.

                          ____________________