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IMPROVING FINANCIAL LITERACY: WORKING

TOGETHER TO DEVELOP PRIVATE SECTOR

COORDINATION AND SOLUTIONS

HEARING

BEFORE THE

SUBCOMMITTEE ON 

FINANCIAL INSTITUTIONS AND CONSUMER CREDIT

OF THE

COMMITTEE ON FINANCIAL SERVICES

U.S. HOUSE OF REPRESENTATIVES

ONE HUNDRED NINTH CONGRESS

SECOND SESSION

SEPTEMBER 28, 2006

Printed for the use of the Committee on Financial Services

Serial No. 109–124

(

(II)

HOUSE COMMITTEE ON FINANCIAL SERVICES 

MICHAEL G. OXLEY, Ohio, Chairman

JAMES A. LEACH, Iowa 

RICHARD H. BAKER, Louisiana 

DEBORAH PRYCE, Ohio 

SPENCER BACHUS, Alabama 

MICHAEL N. CASTLE, Delaware 

EDWARD R. ROYCE, California 

FRANK D. LUCAS, Oklahoma 

ROBERT W. NEY, Ohio 

SUE W. KELLY, New York, Vice Chair 

RON PAUL, Texas 

PAUL E. GILLMOR, Ohio 

JIM RYUN, Kansas 

STEVEN C. LATOURETTE, Ohio 

DONALD A. MANZULLO, Illinois 

WALTER B. JONES, JR., North Carolina 

JUDY BIGGERT, Illinois 

CHRISTOPHER SHAYS, Connecticut 

VITO FOSSELLA, New York 

GARY G. MILLER, California 

PATRICK J. TIBERI, Ohio 

MARK R. KENNEDY, Minnesota 

TOM FEENEY, Florida 

JEB HENSARLING, Texas 

SCOTT GARRETT, New Jersey 

GINNY BROWN-WAITE, Florida 

J. GRESHAM BARRETT, South Carolina 

KATHERINE HARRIS, Florida 

RICK RENZI, Arizona 

JIM GERLACH, Pennsylvania 

STEVAN PEARCE, New Mexico 

RANDY NEUGEBAUER, Texas 

TOM PRICE, Georgia 

MICHAEL G. FITZPATRICK, Pennsylvania 

GEOFF DAVIS, Kentucky 

PATRICK T. MCHENRY, North Carolina 

CAMPBELL, JOHN, California 

BARNEY FRANK, Massachusetts 

PAUL E. KANJORSKI, Pennsylvania 

MAXINE WATERS, California 

CAROLYN B. MALONEY, New York 

LUIS V. GUTIERREZ, Illinois 

NYDIA M. VELA ́ ZQUEZ, New York 

MELVIN L. WATT, North Carolina 

GARY L. ACKERMAN, New York 

DARLENE HOOLEY, Oregon 

JULIA CARSON, Indiana 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

BARBARA LEE, California 

DENNIS MOORE, Kansas 

MICHAEL E. CAPUANO, Massachusetts 

HAROLD E. FORD, JR., Tennessee 

RUBE ́ N HINOJOSA, Texas 

JOSEPH CROWLEY, New York 

WM. LACY CLAY, Missouri 

STEVE ISRAEL, New York 

CAROLYN MCCARTHY, New York 

JOE BACA, California 

JIM MATHESON, Utah 

STEPHEN F. LYNCH, Massachusetts 

BRAD MILLER, North Carolina 

DAVID SCOTT, Georgia 

ARTUR DAVIS, Alabama 

AL GREEN, Texas 

EMANUEL CLEAVER, Missouri 

MELISSA L. BEAN, Illinois 

DEBBIE WASSERMAN SCHULTZ, Florida 

GWEN MOORE, Wisconsin, 

BERNARD SANDERS, Vermont

Robert U. Foster, III, Staff Director 

(III)

SUBCOMMITTEE ON FINANCIAL INSTITUTIONS AND CONSUMER CREDIT

SPENCER BACHUS, Alabama, Chairman

WALTER B. JONES, JR., North Carolina, 

Vice Chairman 

RICHARD H. BAKER, Louisiana 

MICHAEL N. CASTLE, Delaware 

EDWARD R. ROYCE, California 

FRANK D. LUCAS, Oklahoma 

SUE W. KELLY, New York 

RON PAUL, Texas 

PAUL E. GILLMOR, Ohio 

JIM RYUN, Kansas 

STEVEN C. LATOURETTE, Ohio 

JUDY BIGGERT, Illinois 

VITO FOSSELLA, New York 

GARY G. MILLER, California 

PATRICK J. TIBERI, Ohio 

TOM FEENEY, Florida 

JEB HENSARLING, Texas 

SCOTT GARRETT, New Jersey 

GINNY BROWN-WAITE, Florida 

J. GRESHAM BARRETT, South Carolina 

RICK RENZI, Arizona 

STEVAN PEARCE, New Mexico 

RANDY NEUGEBAUER, Texas 

TOM PRICE, Georgia 

PATRICK T. MCHENRY, North Carolina 

MICHAEL G. OXLEY, Ohio 

BERNARD SANDERS, Vermont 

CAROLYN B. MALONEY, New York 

MELVIN L. WATT, North Carolina 

GARY L. ACKERMAN, New York 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

LUIS V. GUTIERREZ, Illinois 

DENNIS MOORE, Kansas 

PAUL E. KANJORSKI, Pennsylvania 

MAXINE WATERS, California 

DARLENE HOOLEY, Oregon 

JULIA CARSON, Indiana 

HAROLD E. FORD, JR., Tennessee 

RUBE ́ N HINOJOSA, Texas 

JOSEPH CROWLEY, New York 

STEVE ISRAEL, New York 

CAROLYN MCCARTHY, New York 

JOE BACA, California 

AL GREEN, Texas 

GWEN MOORE, Wisconsin 

WM. LACY CLAY, Missouri 

JIM MATHESON, Utah 

BARNEY FRANK, Massachusetts 

(V)

C O N T E N T S 

Page 

Hearing held on: 

September 28, 2006 .......................................................................................... 1

Appendix: 

September 28, 2006 .......................................................................................... 41

WITNESSES 

THURSDAY, SEPTEMBER 28, 2006

Beck, Ted, President and CEO, National Endowment for Financial Education 13

Brobeck, Stephen, Executive Director, Consumer Federation of America .......... 29

Chernow, David S., President and Chief Executive Officer, JA Worldwide ....... 11

Cripe, Julie, President and COO, Omnibank (Houston, TX), on behalf of 

American Bankers Association ........................................................................... 22

Kittell, Donald D., Executive Vice President, Securities Industry Association .. 28

Kittle, David G., President, Principle Wholesale Lending, Inc. (Louisville, 

KY), on behalf of the Mortgage Bankers Association ........................................ 24

Pollack, Frank, President/CEO, Pentagon Federal Credit Union, on behalf 

of National Association of Federal Credit Unions ............................................. 31

Sorgatz, Carl, CEO, Hawthorne Community Credit Union (Napersville, IL), 

on behalf of Credit Union National Association ................................................ 26

Walter, Elisse B., Senior Executive Vice President, Regulatory Policy and 

Programs, NASD .................................................................................................. 9

APPENDIX 

Prepared statements: 

Bachus, Hon. Spencer ...................................................................................... 42

Hinojosa, Hon. Ruben ....................................................................................... 45

Waters, Hon. Maxine ........................................................................................ 48

Beck, Ted ........................................................................................................... 52

Brobeck, Stephen .............................................................................................. 74

Chernow, David S. ............................................................................................ 80

Cripe, Julie ........................................................................................................ 83

Kittell, Donald D. ............................................................................................. 102

Kittle, David G. ................................................................................................. 116

Pollack, Frank ................................................................................................... 123

Sorgatz, Carl ..................................................................................................... 138

Walter, Elisse B. ............................................................................................... 151

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

Bachus, Hon. Spencer: 

Statement of America’s Community Bankers ................................................ 160

Statement of the North American Securities Administrators Association, 

Inc. ................................................................................................................. 164

Hinojosa, Hon. Ruben: 

Text of H. Res. 973 ........................................................................................... 168

Letter from the Financial Services Roundtable ............................................. 171

Letter from the U.S. Hispanic Chamber of Commerce ................................. 173

Letter from Kirk W. Francis, on behalf of the Financial Planning Association ................................................................................................................. 174

Letter from the Financial Planning Association ............................................ 175

Dear Colleague Letter regarding co-sponsoring H. Res. 973 ........................ 176

(1)

IMPROVING FINANCIAL LITERACY: WORKING 

TOGETHER TO DEVELOP PRIVATE SECTOR 

COORDINATION AND SOLUTIONS 

Thursday, September 28, 2006

U.S. HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON FINANCIAL INSTITUTIONS

AND CONSUMER CREDIT, 

COMMITTEE ON FINANCIAL SERVICES, 

Washington, D.C. 

The subcommittee met, pursuant to notice, at 10:01 a.m., in the 

Rayburn House Office Building, Hon. Spencer Bachus [chairman of 

the subcommittee] presiding. 

Present: Representatives Bachus, Biggert, Sanders, Maloney, 

Moore, Carson, Hinojosa, and Baca. 

Mrs. BIGGERT. [presiding] This hearing of the Subcommittee on 

Financial Institutions and Consumer Credit will come to order. 

Without objection, all members’ opening statements will be made 

a part of the record. 

The chairman, Mr. Bachus, is here, but we traded places for the 

moment. I will recognize myself for 5 minutes. 

I would like to thank Chairman Oxley and Chairman Bachus for 

agreeing to hold this hearing, and for their leadership on an issue 

that is near and dear to all of our hearts, financial literacy and economic education. I would also like to thank our witnesses, who represent some of the most active groups and effective programs in the 

country. 

I know many of you and your programs, and I know your insight 

will be invaluable to the committee. One particular witness today 

also happens to be a constituent from my district in Napersville, 

Illinois: Carl Sorgatz, who is here representing CUNA. Thanks to 

all of you for joining us. 

One of the first things that I did when I was elected to Congress 

back in 1998 was to go down to the Federal building in Chicago to 

observe the proceedings of the bankruptcy court. And I was struck 

by how many people who had gotten themselves into trouble, and 

they might never have, had they had had just one parent, a counselor, a teacher, or a friend, who taught them the basics of money 

and credit. 

In part, that is why we are here today, to make sure that we are 

effective in reaching those Americans who need us, whether they 

are school children, young adults, working families, or senior citizens. The witnesses here today demonstrate that there is no lack 

of interest in doing just that. 

2

When my friend and colleague, Ruben Hinojosa, and I founded 

the Congressional Caucus on Financial Literacy, we quickly 

learned how interested our colleagues are. Seventy-nine members 

of the House have now joined the caucus. And we literally began 

to hear from hundreds of private and public sector groups, not to 

mention government agencies with programs designed to serve the 

needs of these specific groups of Americans. 

But with so many organizations mobilized, so many unmet 

needs, and so many people asking what they can do to help, we urgently need to develop ways to coordinate our efforts, eliminate duplication programs, and keep pace with new demands. 

On the Federal level, we created, under the FACT Act in 2003, 

the Financial Literacy and Education Commission, FLEC, housed 

at the Department of Treasury. Its mission was threefold: coordinate Federal efforts; create a hotline and Web site; and develop a 

national strategy to promote financial literacy among all Americans. 

In April, the commission released its report, aptly titled, ‘‘Taking 

Ownership of the Future.’’ That’s a good first step, but we need 

your help and your advice, as we move forward. I think my colleagues here would agree that this committee is 100 percent committed, in a non-partisan way, to doing whatever we can to meet 

the challenge. In virtually every bill that crosses our desks, we are 

conscious of the need to educate and inform and elevate the level 

of financial literacy in this country. 

So, I look forward to hearing your views on a number of questions. First is, what works and what doesn’t work? Where are the 

gaps? How could we tap into the private and nonprofit and local 

government efforts, and bring them into the Federal fold? Would 

a universal clearinghouse be helpful? What roadblocks are you facing? How can we answer those who want to join the effort when 

they ask us how they can help? 

All of you have great stories and insights. We have a lot to cover 

in a short time. So, unfortunately, it is not possible to include every 

contributing organization in this hearing today, and I cannot mention all of them. But I did want to thank the American Institute 

of Certified Professional Accountants for their report, ‘‘360 Degrees 

of Financial Literacy,’’ and for their national effort to improve the 

financial understanding of Americans. The AICPA is yet another 

national organization doing an outstanding job in improving financial literacy. 

So, thank you all again, and I will recognize the ranking member, Mr. Sanders, for an opening statement. 

Mr. SANDERS. Thank you, Madam Chairwoman, and thank you, 

Mr. Bachus, for holding this important hearing. Clearly, the lack 

of financial literacy in this country is negatively impacting the economic wellbeing of millions of Americans. 

The truth is that 25 years ago, all that was needed to become 

financially literate in this country was a basic understanding of 

how to balance a checkbook and how to manage a savings account. 

Unfortunately, that is not the case today. 

Each and every year, consumers are being bombarded with over 

six billion—and I have one of them here—credit card proposals—

six billion solicitations in mail. Many of these solicitations are 

3

highly deceptive and misleading. In addition, a significant number 

of consumers who receive financing from payday lenders are unaware that the interest rates on their loans can total as high as 

700 percent. 

And anyone who has ever borrowed money to purchase a home 

realizes how complicated the mortgage lending process can be, for 

even the most astute consumer. Unfortunately, it seems that one 

has to have a law degree these days in order to understand all of 

the hidden transfer costs, the excessive late fees, and exploding interest rates that are being charged by not only predatory lenders, 

but also some of the most ‘‘reputable banks’’ in America. 

It shouldn’t come as a surprise, therefore, that consumers aged 

45 and older often lack the knowledge of basic financial and investment terms, according to a national survey conducted by AARP. 

Our young adults are in a similar situation; in a survey by the 

Jump$tart Coalition, high school seniors correctly answered an average of only 52 percent of questions on basic personal finances. 

Meanwhile, a number of trends in recent years have underscored 

the importance of financial literacy in everyday life. Since the second quarter of 2005, the personal savings rate has reached a level 

of roughly –1 percent—something that hasn’t happened since the 

Great Depression. A record breaking two million Americans filed 

for bankruptcy last year. In fact, bankruptcy rates have more than 

quadrupled over the last 20 years, etc., etc. 

Mr. Chairman—or Madam Chairwoman—clearly, we must do 

more to increase financial education in this country. But I would 

emphasize that while financial education is important, it is only 

part of what we have to do. I am growing increasingly concerned 

that some in the financial services industry are using the lack of 

financial literacy in this country as a way to receive a get-out-ofjail free card, if you like, for some of their blatantly deceptive and 

misleading tactics. 

In other words, financial literacy, yes. But we must also, through 

this Congress, stop the deceptive advertising that is permeating 

American society. For example, in my view, the credit card industry, payday lenders, and others should not be allowed to charge 

outrageous interest rates and sky-high fees. And that’s why I have 

introduced legislation called the Loan Shark Prevention Act. 

Now, let me conclude, and tell you why we need to go beyond financial literacy. Right here, I have a proposal from American Express, which a staff member of mine recently received. And there 

it is, right in there, it says, ‘‘Zero introductory APR. Pay no interest 

on new purchases for the first 12 months.’’ There is a little footnote 

there, go to footnote four, ‘‘See enclosed terms and conditions for 

details.’’ 

Well, you go, here is one of these long, single-spaced, tiny-worded 

documents, and there it says, ‘‘The terms of your account, including 

APRs, are subject to change. The APRs for this offer are not guaranteed. APRs may change to higher APRs; fixed APRs may change 

to variable, or variable APRs may changed to fixed; we may change 

the terms, including APRs, at any time for any reason.’’ 

We may change it for any time and any reason, but they just told 

us in big print that you get zero interest? Now, you tell me what 

that is. I regard it as fraud. And we can have—and there are some 

4

six billion of these things that are sent out to American consumers 

all over America. I used to think I got all of them, but apparently 

some of you are getting them, as well. 

So, Madam Chairwoman, financial literacy is extremely important. But this Congress has to finally stand up to the credit card 

industry, it has to stand up to the banks, and it has to stand up 

to the people who are ripping off American consumers in a very deceptive and dishonest way. Thank you, Madam Chairwoman. 

Mrs. BIGGERT. The gentleman yields back, and now I am happy 

to recognize the chairman of the subcommittee, Mr. Bachus. 

Chairman BACHUS. [presiding] Thank you. Today’s hearing was 

requested by Mrs. Biggert. And that’s appropriate, because Mrs. 

Biggert has really been the leader on our committee in stressing 

the need for financial literacy. 

As all of our panel knows, it is increasingly important for people 

to have a working knowledge of credit cards, of mortgage products, 

and even of investment plans. And this committee has—and Mr. 

Sanders mentioned—seen a lot of evidence. And when we go out in 

our community and talk to our constituents, we hear many heartbreaking stories about people who lacked financial literacy and 

really, not only the problems it creates, but in some cases the devastation that it creates. 

We have, as a committee, I think—one of our more substantial 

steps was recognizing the important role of financial literacy by including a financial literacy component in the legislation we call the 

FACT Act, the Fair and Accurate Credit Transaction Act. Title five 

of the FACT Act established the Financial Literacy and Education 

Commission, with the purpose of improving financial literacy and 

education. 

The FACT Act also mandated the GAO report on recommendations for improving financial literacy among consumers, and the 

GAO will be releasing their recommendations some time later this 

year. I look forward to hearing their insight, and also to Mrs. 

Biggert—or maybe Mr. Sanders, or someone else chairing a hearing 

concerning that, either this year or next. 

Mrs. Biggert and Mr. Hinojosa, who is here with us today, has 

joined us. There are 80 members—I’m a member—of the Financial 

Literacy Caucus. We are united in the goal of encouraging the private sector, and also the Federal Government and State governments, to take a role in promoting financial literacy, and in also 

making suggestions and giving us advice. 

And that is really what this hearing is about this morning. It’s 

about both the private sector, private organizations—your organizations—as well as the Federal Government, and what role you are 

playing back in communities all over America, to ensure that people have the knowledge and the information to take full advantage 

of our credit markets and the financial products which are offered 

to all Americans. 

Let me close by simply saying again that I want to commend 

Mrs. Biggert. Each year in April she sponsors a resolution with Mr. 

Hinojosa—I know for the past 3 years—stressing financial literacy, 

reminding all of us that it is something that is an ongoing mission. 

And I believe that Mrs. Biggert and Mr. Hinojosa, and the work 

that they have done, has had an enormous impact on educating 

5

Members of Congress, their staffs, and even the American public 

about the importance of understanding financial transactions. 

And I commend the organizations today. Many of the organizations that are here at this first panel testifying have created 

unique ways of educating consumers on financial opportunities. I 

admire your efforts, I commend you, and I look forward to your testimony. I yield back the balance of my time. 

Mrs. BIGGERT. Thank you, Mr. Bachus. That resolution is always 

a tough battle on the Floor. Last year it passed by 423 to 1, and 

I am still after that 1 to vote for it. 

I would like to recognize the gentlelady from New York. 

Mrs. MALONEY. Thank you, Madam Chairwoman, and I thank all 

of the panelists for being here. I would like very much to be associated with the comments of my colleague, Mr. Sanders, on truth in 

advertising, and the comments of my colleague, Mr. Bachus, on the 

FACT Act, and the important GAO report that will be coming out. 

As a former teacher and a member of the Financial Literacy Caucus, I strongly support the subject of our hearing today. We know 

from scientific evidence, that financial literacy prevents abuse and 

enables individuals to better achieve their financial goals. 

For example, one effort that I observed almost 5 years ago, 

Freddie Mac conducted one of the first studies in this area, looking 

at some 40,000 mortgages, to see whether pre-purchased financial 

education reduced the 90-day delinquency rates. Borrowers receiving personalized financial education in preparation for a home purchase had a 34 percent lower delinquency rate: a remarkable statistic. 

Since then, other studies, including studies by the National Endowment for Financial Education have confirmed what common 

sense tells all of us: individuals who improve their financial literacy are better able to achieve their financial objectives, whether 

it is getting out of debt, purchasing a home, sending a child to college, or saving for retirement. 

As these studies show, while the benefits of financial literacy 

apply to all sectors of our society, those most vulnerable stand to 

benefit the most. The La Raza study, for example, confirms that 

minorities and those in lower income brackets are least financially 

knowledge, and that as a result, they often end up incurring significant unnecessary costs when they cash a check, get a loan, or 

otherwise use financial services. 

Financial literacy gives all Americans necessary tools to achieve 

their financial objectives. And I thank the gentlelady for her leadership, and my colleague, Mr. Hinojosa, for his. Thank you. 

Mrs. BIGGERT. Thank you very much. And I would like to recognize Mr. Hinojosa, from Texas, for his opening statement. 

Mr. HINOJOSA. Thank you very much. It is indeed a pleasure for 

me, as the co-chair of the Financial and Economic Literacy Caucus, 

to work with my good friend and colleague, Judy Biggert. 

I want to express my sincere appreciation for you holding this extremely important hearing today. I also want to take this opportunity to thank you again for holding a hearing at my request on 

banking the unbanked and financial literacy in general in 2003. 

That particular hearing was very informative, enlightening, and 

comprehensive. I am glad that you have called yet another hearing 

6

on financial literacy, at the request of Congresswoman Biggert. 

These hearings inherently incorporate an assessment of ways to 

bank the unbanked. 

I believe that all of us here today share a common purpose: improving financial literacy for all Americans. It is a very daunting 

task, especially in light of the tremendous number of financial literacy programs, and the many comments, advice, and recommendations that we receive from off-the-Hill on the methodology to use, 

the exposure to give, and the oversight needed to coordinate and 

collaborate with these programs. 

The programs run the gamut from some preschool financial literacy programs such as the Money Mammals, programs geared toward K–12 students, college students, young adults, a few for those 

in mid-life, and several geared for those planning for their retirement, or already retired. 

There are too many programs to discuss and consider in one 

hearing. Madam Chairwoman, despite daily challenges of balancing 

work, family, and personal matters, it is important, now more than 

ever, that all Americans take time to increase their financial 

knowledge and plan for a secure future. 

Like most people, we all have hopes and dreams and life goals 

for ourselves and our families. These might include buying a home 

or a business, saving for college education for our children, taking 

a dream vacation, reducing taxes, or retiring comfortably. Too 

many Americans lack basic financial literacy to accomplish many 

of these goals. 

Last year, in 2005, one bankruptcy petition was filed for every 

60 households, which was a 23 percent increase from the previous 

year. According to the Federal Reserve, revolving debt for American consumers totaled $805 billion in March of this year. Worse 

yet, the United States personal savings rate, based on the percentage of personal disposable income devoted to savings, was –.5 percent at one time last year—I repeat, the savings rate reached an 

all-time low of –.5 percent last year. 

And at the end of 2005, the savings rate increased to a dismal 

–2 percent. I think we all agree that a negative personal savings 

rate is unacceptable, and actions must be taken to remedy the 

problem. We must continue to work with our colleagues here on the 

Hill, work with the relevant Federal agencies, work with various 

associations, nonprofits and community-based groups, and yes, especially with the private sector. We must work with all of them if 

we are to obtain our goal of improving financial literacy rates 

across the United States. 

There is one area in particular that I have to address in my remarks this morning, and that is that we still need to find additional ways and means to bank the unbanked, and that is a tough 

order. Such action will help them, help their families, help the financial institutions with which they bank, and ultimately, help 

their communities, their counties, their States, and overall, our 

U.S. economy. 

Several of you who will testify today have done an admirable job 

of trying to find ways to bring Hispanics, African Americans, Native Americans, and Pan Asians into the banking system. I applaud 

you and your efforts in this area. It is essential that we work toVerDate 0ct 09 2002 16:16 Apr 17, 2007 Jkt 031553 PO 00000 Frm 00012 Fmt 6633 Sfmt 6633 K:\DOCS\31553.TXT HFIN PsN: TERRIE
7

wards improving education, consumer protection, empowering individuals and families through economic and financial literacy in 

order to build stronger families, businesses, and communities. 

Having read his testimony, I must say that Mr. Beck, representing the National Endowment for Financial Education, has 

presented the most comprehensive plan for government involvement in the financial literacy cause. I agree with him, that the government can and should do the following: Lead by example and coordinate and communicate a unified message. 

We should sponsor a broad-based public awareness campaign 

comprised of a very ambitious, mass-market multi-media effort in 

support of a national financial literacy initiative on the scale of the 

current truth campaign, developed through the public education 

fund to discourage smoking among young people. 

I also like his idea of creating a literacy corps, because one-onone financial counseling provides the greatest potential to affect 

positive change in the management of one’s finances. 

Madam Chairwoman, 1–800 numbers and Web sites are fine. But 

one-on-one counseling does a much better job. It does the trick. 

This type of counseling was needed when Katrina hit the coast and 

thousands of people needed one-on-one financial counseling to put 

their lives back together. The government failed miserably in that 

arena. 

I am pleased to learn that the National Endowment for Financial 

Education has, for years, worked with the American Red Cross on 

pioneering financial education for consumers related to disaster 

preparedness and disaster recovery. I must note that the material 

was created in cooperation with the AICPA Foundation, and it’s 

available to all consumers through the American Red Cross in 

print, as well as online. 

Hopefully, the two groups also provide one-on-one financial counseling to victims of natural disasters such as that provided comprehensively by Operation Hope. It is my personal goal to succeed 

in ultimately integrating the term financial literacy into the everyday vocabulary. 

As I close, I want to say that I could go on and on for the remainder of the day, discussing all that needs to be done to improve financial literacy, which is exactly the problem. The Financial Literacy Education Commission published and released its national 

strategy for financial literacy. It was a good first step, but it is not 

the ultimate solution to all the financial literacy problems. 

Hence, the need for this and future hearings, and finding ways 

for the government and private sector to coordinate and collaborate 

on improving financial literacy. 

Madam Chairwoman, I want to thank you, your entire staff, as 

well as Chairman Bachus’s leadership, and his staff: Danielle 

English, Dina Ellis and Emily Pfeiffer, and Jaime Lizarraga, with 

Congressman Frank—for all their contributions, not only to this 

hearing, but especially all of our efforts, as a group, towards this 

very worthwhile cause. We make a good team. 

And with that, I yield back the remainder of my time. 

Mrs. BIGGERT. Thank you very much, Mr. Hinojosa, and thank 

you for all that you have done for the cause, and it has been a real 

pleasure to work with you on this issue, and we will continue to 

8

make more headway as a team. Thank you so much for being here. 

I would just recognize Mr. Bachus for a procedural matter. 

Chairman BACHUS. Thank you. I would like to, without objection, 

introduce the written testimony of two organizations. One is the 

American Community Bankers, which is not on our second panel, 

but they agreed to submit their testimony in writing because of 

time restraints. And I thank them, and they have played a very important role. 

The other one is the written statement of the North American 

Securities Administrators Association. This is actually the oldest 

international organization devoted to investor protection. The incoming president is Mr. Joe Borg, who is the Alabama securities 

commissioner in Alabama. But the reason that they are not testifying is not—they played a great role, but we limited our testimony 

at today’s hearing to the private sector. 

After the GAO report gets in, we will have an additional hearing. 

And at that time, I fully expect their association and other government or associations made up of government witnesses to testify. 

So, without objection, I would like to introduce that. 

Mrs. BIGGERT. Without objection. 

Chairman BACHUS. Thank you. I would also like to join with 

what Mr. Hinojosa said, and thank your staff Emily, Danielle 

English, and Dina Ellis, and—but your staff is very prominent in 

organizing this hearing. Thank you. 

Mrs. BIGGERT. Thank you very much, Mr. Chairman. And I now 

recognize the gentlelady from Indiana, Ms. Carson, for an opening 

statement. Three minutes. 

Ms. CARSON. Thank you very much, Madam Chairwoman, and to 

all other people on the committee at this point—the ranking member. 

All of us on this committee understand how important financial 

literacy is to the American people. The savings rate for America is 

in the red. Wages are decreasing. As prices are increasing, personal 

bankruptcies have increased over the last decade, because of the 

growth of the credit card industry. Pension plans are being replaced with voluntary contribution retirement funds and financial 

products are becoming more and more complicated. 

Three years ago, I convened a financial literacy workshop for the 

Congressional Black Caucus. My guest was the Honorable Alan 

Greenspan, who did a tremendous job in articulating the need for 

financial literacy. We also had other experts there, following Mr. 

Greenspan, who enhanced the need for people to understand financial literacy. 

We have a pocket of students now who just reach out in their 

mailbox and get credit cards, and they don’t worry about how they 

are going to pay for them, they just worry about how they are 

going to use them. And then, the credit card industry is left holding 

the bag if the parents don’t—what it is. 

I believe that financial literacy courses should be mandatory for 

education, whether it be at the elementary level, the high school 

level, or the college level. People should teach students financial literacy. I am appalled at the way our young people spend their 

money: $200 tennis shoes, as opposed to going to a discount house 

9

and getting the same pair of tennis shoes. They just see what they 

want. 

I am concerned about these promises on rebates, where this industry promises you a rebate on something you purchased, and the 

rebate never comes in the mailbox. 

But I believe that, with us working together, that we will be able 

to resolve things. 

Finally, let me say that in Indiana, I created a consumer hotline 

where, before people sign their names the first time on mortgages, 

they call the consumer hotline to discern whether or not it would 

be the right thing to do, in terms of signing whatever contract was 

put before them. The number is 1–888–722–WAIT. That is to wait 

before you sign your name. And it has been extremely successful, 

where the consumers around the State call up and ask questions 

about these promises to pay that have been placed before them. 

So, I think with the collaboration of all of us, that we will be able 

to address and redress some of the problems that occur in the consumer market, unnecessarily. So I appreciate very much all of you 

being here. 

And I am going to have to leave, because I have an Amtrak 

meeting at the same time, but thank you. 

Mrs. BIGGERT. Well, thank you for being here. And I will now introduce the first panel of witnesses. On my left, Ms. Elisse B. Walter, senior executive vice president, regulatory policy and programs, 

NASD. Welcome. 

Next, we have Mr. David Chernow, president and chief officer of 

Worldwide Junior Achievement. Welcome. 

And Mr. Ed Beck, president and CEO of National Endowment for 

Financial Education—NEFE, I believe it is pronounced. Welcome. 

Without objection, your written statements will be made a part 

of the record, and you will each be recognized for a 5-minute summary of your testimony. We will start with Ms. Walter. You are 

recognized for 5 minutes. 

STATEMENT OF ELISSE B. WALTER, SENIOR EXECUTIVE VICE 

PRESIDENT, REGULATORY POLICY AND PROGRAMS, NASD 

Ms. WALTER. Thank you. Madam Chairwoman, Ranking Member 

Sanders, and members of the committee, good morning. Thank you 

for inviting me to testify about NASD’s efforts to educate investors. 

And thank you, too, for your support of the recently passed Military Personnel Financial Services Protection Act. A provision in 

this important legislation will enable NASD to make information 

about brokers available to investors in an easier-to-use format, via 

the Internet. We appreciate your leadership on this important legislation. 

Madam Chairwoman, NASD is the private sector securities regulator for the U.S. securities industry. By law, broker dealers must 

belong to NASD if they do business with the public. We write and 

enforce the rules governing them, and our mission is to ensure the 

protection of investors, and the integrity of the markets. 

NASD firmly believes that educating investors is the first line of 

defense in protecting them from harm. The more knowledgeable an 

investor is, the more she is able to make sound decisions and avoid 

costly mistakes. 

10

To determine how to reach investors better, NASD conducted a 

survey to assess where most people are when it comes to knowledge about investing. And we found an overwhelming number of investors realized they need to be better informed, and we have responded with a variety of resources. 

We have issued educational materials to alert investors to potential problems, and we provide plain English explanations of products and processes. We have developed tools for investors to use in 

making financial decisions. We conduct public education events to 

reach out to investors. And a major segment of our Web site, 

nasd.com, is devoted to information that mainstream investors can 

use. 

For example, NASD Broker Check, which is also available—the 

information also being available by toll free telephone number, provides disciplinary history and information on brokerage firms and 

brokers. Another online tool available to all investors is our mutual 

fund expense analyzer. 

Because the fees and expenses charged by mutual funds can 

make a big difference in the performance of an investment, we provide expense information on virtually every mutual fund, so that 

investors can analyze the impact of fees and expenses on fund performance by showing how those fees add up over time. Investors 

can research one fund at a time, or can compare the cost of as 

many as three funds at a time, to learn how expenses can cut into 

fund performance, particularly over the long term. 

Developing free investor tools such as these, and furthering investor education in all its forms are critical aspects of what we do, 

and we are quite proud to be doing them. But at the same time, 

we know that our education programs reach only a small percentage of the population that could benefit from them. That is why it 

is essential, as many of you have already said, that we and others 

in the investor education community, leverage resources and use 

all means of communication to reach the most people, and partner 

with others who share this mission. 

Madam Chairwoman, NASD is also building on Congress’s work 

in the recently enacted pension bill. The unfortunate fact is that 

almost a third of recently hired employees who are eligible to participate in their company’s defined contribution plan do not participate. And participation for employees earning less than $20,000 a 

year is even lower. 

Yet, a number of academic studies have found that changing the 

default options to require investors to opt out of, instead of opt into 

participation in 401(k) plans raises participation rates to more than 

90 percent. 

To help solve this problem, NASD is working with AARP and the 

retirement security project to encourage employers to adopt automatic 401(k) enrollment as the default option for their plans. 

Taking partnership in a different direction, NASD recently created the NASD Investor Education Foundation to support innovative research and educational products that give investors the tools 

they need to better understand the markets and the basic principles of not only investing, but also saving. 

In its first 2 years of operation, the foundation awarded nearly 

$5 million in grants for educational programs and research projects 

11

targeting the underserved segments of the population. For example, through an NASD Foundation grant, Ohio State is developing 

guidelines for effective investor education programs targeted at traditionally underserved communities. And a grant to Kids Online, a 

nonprofit group in LA, is supporting the production of an interactive web-based financial literacy show to be broadcast in high 

schools around the country. 

The foundation has also launched an effort to educate military 

service persons about saving and investing, and to help them to 

avoid fraudulent and inappropriate products and sales pitches. I 

urge you to visit saveandinvest.org, our Web site devoted to helping 

members of the military make sound financial decisions, to learn 

more about this program. 

Madam Chairwoman, all Americans deserve the opportunity to 

create a secure financial future for themselves and their loved 

ones. NASD works every day to help more Americans take control 

of their financial decisionmaking. We applaud your effort to shed 

light on this issue, and thank you again for the opportunity to testify. I would be happy to answer any questions. 

[The prepared statement of Ms. Walter can be found on page 151 

of the appendix.] 

Mrs. BIGGERT. Thank you very much. Mr. Chernow, you are recognized for 5 minutes. 

STATEMENT OF DAVID S. CHERNOW, PRESIDENT AND CHIEF 

EXECUTIVE OFFICER, JA WORLDWIDE 

Mr. CHERNOW. Madam Chairwoman and members of the subcommittee, it is a true honor and privilege to be with you this 

morning as we meet together to discuss this very important topic. 

In my role as president and chief executive officer of Junior 

Achievement Worldwide, I represent over 2,600 professional staff, 

over 240 local and national boards of directors who are comprised 

of over 8,000 members of the board, mostly from the private sector, 

and I work in over 100 countries around the world in our shared 

goal of inspiring and preparing young people to succeed in a global 

economy. 

Here in the United States, nearly four million children go 

through Junior Achievement, annually participating in hands-on 

experiential learning programs that are delivered at over 20,000 

different schools by over 135,000 volunteers in nearly 170,000 

classrooms. Our programs span the wide spectrum of business, economics, and free enterprise education with a focus on what we believe are the three key elements of preparation of our young people’s future success. Those are: work force readiness; entrepreneurship; and financial literacy. 

To put it as simply as I can, time is of the essence. We are experiencing an epidemic in this country. Financial illiteracy is threatening sustained economic growth and development of the populace. 

And what we have learned is that this problem cannot be solved 

alone. And that is why I want to share with you today a few words 

on the topic of collaboration and partnership in financial literacy 

education. 

One of Junior Achievement’s core values is a belief in the power 

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12

larly dedicated to working with the private sector. Each and every 

one of Junior Achievement’s programs, which is kindergarten 

through 12th grade, has been delivered to students in the United 

States since 1919, and requires the active involvement of trained 

business volunteers. 

This private sector commitment to financial literacy education is 

a key component of our success, and something we believe is absolutely essential in our efforts to improve financial literacy in this 

country. Private sector volunteers serve as meaningful, inspiring 

role models to our youth, as they share their personal and professional insights with students who sincerely wish to prepare for financial stability in their own lives. 

I also want to emphasize the value of partnership and collaboration among fellow nonprofit organizations. Rather than continuously reinventing the wheel in the financial literacy arena, it is 

much more efficient for nonprofit organizations to pool our limited 

resources to reach as many youth as we possibly can. 

This is something which Junior Achievement has been particularly committed to in recent years. Since 2004, for example, we 

have been pleased to join with the Jump$tart Coalition for personal 

financial literacy, and the National Council on Economic Education, in establishing the Partnership for Financial Education Policy. This partnership sponsors the annual—and very successful, I 

am glad to say—Financial Literacy Day on the Hill event, and arranges other activities in consultation with the Financial and Economic Literacy Caucus, led so passionately by Congresswoman 

Biggert and Congressman Hinojosa. 

Similarly, several months ago, we entered into a collaborative arrangement with America’s credit unions, and the Credit Union National Association, to develop a new financial literacy and entrepreneurship education television series for children, aptly entitled, 

‘‘JA’s BizKid$.’’ This new program, to be aired on PBS stations nationwide next year, is being produced by the team who brought us, 

‘‘Disney’s Bill Nye, the Science Guy.’’ 

By pooling resources and expertise, America’s credit unions and 

JA Worldwide will be able to bring financial literacy education, 

hopefully, to literally millions of children in large and small communities across the country. 

Another collaboration worthy of mentioning is our brand new relationship with my co-leader, to my left, the National Endowment 

for Financial Education, or NEFE. Beginning next year, Junior 

Achievement business volunteers will take NEFE’s award winning 

high school financial planning program into high school classrooms 

throughout the United States to extend the reach of this great curriculum to tens of thousands of new students each year. 

Although our focus is on collaboration among the private sector 

groups, I would like to briefly note our commitment to similar collaborations with government at the Federal and the State and the 

local levels. Like our involvement with the private sector, this coordination is perhaps most critical at the local level. While Junior 

Achievement’s programs are being developed by worldwide headquarters, each of our local chapters work closely with State and 

local school officials to determine the most appropriate programs 

13

for the local market, and to integrate State education standards 

into our curricula. 

Of course, we are committed to partnering with policymakers at 

the Federal level. As noted, we work closely with the financial and 

economic literacy caucus here, in Congress. We are also involved 

with the Financial Literacy and Education Commission, and are 

working on specific initiatives with individual Federal agencies, 

such as the Small Business Administration. These collaborations 

are the types of partnerships we remain committed to in our 

shared quest of providing quality financial education to today’s 

youth. 

We applaud the efforts of this committee to keep its eye on such 

a critical issue for our youth, and we thank you for allowing us to 

share our thoughts with you today. As I leave today, finally, I just 

wanted to point out that I hope everyone realizes that collaboration 

is the key to success in solving this critical problem. And our collective efforts, in words and in action, will provide the solution. Thank 

you. 

[The prepared statement of Mr. Chernow can be found on page 

80 of the appendix.] 

Mrs. BIGGERT. Thank you very much, Mr. Chernow. 

Mr. Beck, you are recognized for 5 minutes. 

STATEMENT OF TED BECK, PRESIDENT AND CEO, NATIONAL 

ENDOWMENT FOR FINANCIAL EDUCATION 

Mr. BECK. Thank you. Thank you, Madam Chairwoman, and the 

other members of the committee. We greatly appreciate the opportunity to be here today. 

My testimony will touch on three areas: first of all, NEFE’s philosophy regarding financial literacy; I will also talk about the importance of partnership in our community and offer some comments on how the Federal Government can enhance and cooperate 

with our efforts to make them more effective. 

First of all, regarding philosophy, NEFE is an organization that 

is wholly focused on improving the financial wellbeing of all Americans, and we are specifically concerned by the situation faced by 

the various underserved communities. We agree that there is a 

greater need right now than there has ever been to build financial 

education literacy in the community. 

However, we are also convinced that the American public is up 

to this challenge if they are given the proper education, tools, and 

continual reinforcement and encouragement to do so. 

We believe very much in the power of the teachable moment, and 

that throughout one’s economic life there are numerous opportunities where economic and financial education are needed, and that 

the nonprofit community, the government, and the private sector 

can step up and help individuals at these times. 

To do that, though, we must partner. NEFE partners in literally 

everything we do. At any given time, we will have over 50 partnerships in place. These range from research at universities, where we 

are studying behavior change, and how to get people more interested in looking after their financial wellbeing, to working with 

specific organizations, ranging from the American Red Cross, the 

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14

lege Fund, for issues specifically facing their constituents. We feel 

we need to work through such organizations to be most effective in 

dealing with the issues that their communities face. 

We have talked briefly about the NEFE High School Financial 

Planning Program, and I think it is a classic example. We have had 

very successful partnerships with the Cooperative Extensive Service and the Nation’s credit unions for several years. The high 

school program goes back to 1984. During that time, we have had 

over 41⁄2 million students attend the program. 

Last year alone, we had over 630,000 students in all 50 States 

covering 7,500 classrooms take the course, and we feel it’s a very 

effective program, and we are very excited about the announcement 

this week of the new alliance with Junior Achievement, that will 

allow us to extend this program even more broadly through the 

outstanding field network that Junior Achievement possesses. 

I think it’s also important to point out that the program is provided free to all students in all schools throughout the country, as 

everything else we do at NEFE is free to anybody who uses our 

service. 

Some suggestions for the Federal Government as far as involvement in what we are doing include: First of all, the comment made 

earlier, lead by example. There are some very interesting and 

promising developments going on in various Federal agencies, and 

specifically in the military, that we think will be great best practices that the government can adapt to its own work force, and that 

the private community could then also adapt. And we strongly suggest you encourage and foster those programs. 

We also suggest that you sponsor a broad public awareness campaign. We currently sponsor a program called, ‘‘Smart About 

Money.’’ It’s been in place since September of 2005. We spent $1.3 

million on this effort, and it’s a public awareness program to help 

people deal with key issues in their lives: things like save for a 

house; save for education; and stop living paycheck-to-paycheck. 

We think that Federal programs sponsoring a similar effort could 

have great reach, and really utilize those teachable moments we 

talked about a few minutes ago. 

We would also like to see you help create demand for existing 

programs. At the moment, our community is very fragmented, and 

we really haven’t focused on key messages that need to be disseminated. Meetings like this meeting today can greatly enhance that 

effort. 

We also would love to see the sponsoring of a financial literacy 

corps, similar to the service corps of retired executives. There are 

many people in society who understand the basics, and one-on-one 

counseling from those individuals to the people who need it would 

be a very powerful and very cost-effective tool to help the underserved communities we talked about. 

And then, finally, we suggest you look for partners who are very 

skilled at dealing with the issues of different groups ranging from 

K through 12, college, the workplace, those in special situations, 

and the military, where the partners understand how to maximize 

those teachable moments. Make sure those people start working together and cooperating with each other. Thank you for letting us 

be here today. 

15

[The prepared statement of Mr. Beck can be found on page 52 

of the appendix.] 

Mrs. BIGGERT. Thank you very much for all of your testimony. 

We will now turn to questions, and members will have 5 minutes 

to ask their questions and get their responses. So, with that, would 

you like to start, Mr. Bachus? 

Chairman BACHUS. I would very much appreciate that opportunity. 

Let me—and I heard in your testimony you gave some good advice, general advice, about—I know, Mr. Beck, you said, ‘‘Don’t live 

from paycheck to paycheck.’’ Earlier, Ms. Walter, you were talking 

about knowing who you are dealing with, which is so important. 

And I know college kids—I have five children, and they will come 

back with a credit card and I will, you know, say, ‘‘How did you 

get this?’’ ‘‘It came in the mail.’’ And they know nothing about the 

company. 

But what are the—I would say what are the most important 

messages that we can get to our young people, or anyone that lacks 

financial literacy? You know, the main themes that we should be 

emphasizing to consumers. Just— 

Ms. WALTER. I would be happy to start. I think you have to start 

with the very basics. You have to tell people that they should never 

undertake to do something they don’t understand, whether it is a 

credit card or a loan or buying into an investment. You really must 

ask questions, and you must understand what you are doing. You 

must look before you leap. 

I know all of these sound like platitudes, but they are very basic, 

sound investment advice. If it sounds too good to be true, it is too 

good to be true. And they should also learn to draw on the resources that actually are out there to help them, because there are 

a number of them. 

We, obviously, given our role, concentrate on investing. But we 

have a large number of sound resources, and draw on the resources 

of others, and partner with folks like the two gentlemen to my left, 

to provide sound, objective advice for people. 

So, they need to learn not to respond to pressure, and to feel very 

comfortable with what they are doing. And the first thing they 

need to do is to set aside money for future events. And that, perhaps, is the hardest lesson for young people to learn. They feel immortal, and it is hard for them to look ahead. 

Chairman BACHUS. Thank you. 

Mr. BECK. Just a couple of quick things. First of all, understand 

wants versus needs. And— 

Chairman BACHUS. What was that? I didn’t— 

Mr. BECK. Understand wants versus needs in your personal 

spending patterns. Second, budget. I mean, it sounds very simple, 

but the idea of sitting down and figuring out what you are bringing 

in, and what that allows you to spend, and also what sort of incentive that creates for you to improve your financial situation, is a 

very key thing. Understanding the basics of your own personal 

budget is a very key thing. 

Another point is get involved with whatever savings opportunities are available to you. So, if you are working, start to get involved in whatever plans are available to you, either independently 

16

or through your company. Whatever it takes to get started, start. 

It doesn’t matter how small it is. But once you get started, you 

start to see the benefits of it. 

And the other thing is to start as soon as possible. Don’t assume 

that things are going to happen that are going to create a very safe 

haven for you. The sooner you start to develop a plan for yourself, 

the more likely you are to be financially stable in your future. 

Chairman BACHUS. Mr. Chernow? 

Mr. CHERNOW. You know, just to reinforce two quick concepts, 

young people are never too young to learn the important aspects 

of financial literacy. And what I am sure you have learned, and us 

as youth organizations have learned very quickly, is that habits are 

very important to develop. At the early age of 11, 12, and 13, psychological experts will tell you that the ability to impact attitudes 

and behaviors are greatly enhanced at that age. So we need to get 

to them younger. 

And Mr. Beck just pointed out two quick things. Wants and 

needs is a very important concept to young people. But the other 

concept that I don’t think they fully understand that needs to be 

reinforced, based on the information Congressman Hinojosa indicated, was that savings is critical to young people’s future success. 

And we need to emphasize that, and tell them the beauty of savings. Educate them and inspire them about that. 

Chairman BACHUS. And, you know, the whole media world—I 

guess you say Madison Avenue—says, ‘‘You need this to be happy.’’ 

And it’s usually a product or a thing you have to purchase. And, 

you know, that is—and it creates the—the advertising world creates wants. And it is very important that there is a counter-message there that, you know, what you need to be happy is a little 

savings or a little cushion, not something you have to pay for down 

the road. 

But the counter-message is a strong message. So you are up 

against a lot of competition that is telling them just the opposite. 

So, thank you. 

Mrs. BIGGERT. Thank you, Mr. Bachus. The gentleman from 

Texas, Mr. Hinojosa, you are recognized for 5 minutes. 

Mr. HINOJOSA. Thank you, Madam Chairwoman. I enjoyed listening to each one of your presentations. They are very interesting approaches to this project. I would ask each one of you to answer the 

first question that I have: What recommendations would you make 

to improve the National Strategy for Financial Literacy? 

And the second question to each one of you is: What would you 

recommend to streamline the Financial Literacy Education Commission? I will start with you, Ms. Walter. 

Ms. WALTER. I believe, Mr. Hinojosa, that the most important 

thing that the government can do, either through the existing body 

or otherwise, is exactly what you are here doing today, to shed 

light on the issues that Americans face in saving and investing, to 

make sure that is given a prominent place among the public issues 

of the day, and to highlight the resources that are available. 

I believe that, in the private sector, we have made a number of 

first and second good steps in reaching collaborative efforts, and in 

learning not to compete, but to rely on each other and not reinvent 

the wheel, as was mentioned earlier, but to build on things. And 

17

the government can help us do that by directing people to us and 

allowing us to use those resources. 

So that, ultimately, is what I would recommend, because I do 

think there are a number of private sector resources that have 

been applied to very good use, mostly in the content area. 

And now, we need to concentrate in large part, as you have highlighted before, on the issue of distribution. How do we make sure, 

with respect to all of the groups who are out there in our population, particularly the underserved groups, how to reach them 

most effectively, with the messages—very clear, concise, and good 

messages—that have been developed? 

Mr. HINOJOSA. Thank you. 

Mr. CHERNOW. Congressman, two quick comments. One is—I will 

throw out two words, awareness and action. You asked the question what recommendations would we do to improve the national 

strategy. I think there is, first, the issue of making sure that people understand in this country the important issue that is before 

us. I am not sure that we have as much awareness. 

We are lucky that some organizations go out and do large statements out there, and spend millions of dollars to get the message 

out. But as Chairman Bachus said earlier, you know, sometimes 

it’s the wrong message. Savings is a great message, it’s just not 

said enough. 

The second thing is, in terms of action, I think we need to showcase the great examples of success in this arena. And I would just 

re-emphasize that where we need probably the greatest help, is for 

us to go out and reach those children who need us the most in our 

area. We are not getting out to the rural communities. We are not 

getting the messages out, and we are not—we need the assistance 

of government, quite honestly, to help us get exposed to those 

young people who need us, so that we can have our effective programs be implemented. 

Mr. HINOJOSA. I want to respond to one of the earlier comments 

that you made on wants versus needs, personal budget, and starting savings plans being so critical. 

On the last one, I want to say that my colleague, Congresswoman Biggert, and I serve on the Education Committee, on the 

Higher Education Committee, and we share a similar interest in 

trying to increase the number of students earning bachelor’s, master’s, and Ph.D.s in STEM careers. And we are envious of the Chinese in the success that they have had in science and technology 

and engineering. 

So, a group of us got on an airplane and went to China and went 

to visit seven universities, and asked them, ‘‘How is it that you all 

are so successful?’’ And among the discussions, one of the responses 

was that high school—I think education is free until about the 

eighth grade. Then, from the 9th to the 12th, and higher education, 

they have to pay for it. 

So, they said that they have a one child policy per family, and 

so the parents, and then the four grandparents, all focus on that 

one child. And they save money, they said. They save 10 percent 

of their income to pay for that latter part of the high school, and 

for the college education. And it was difficult for me to understand 

18

how they could make such small annual incomes and yet put away 

10 percent. 

So, you are definitely hitting the points that those folks stressed, 

which was a combination of parental involvement, and then the 

savings. And so, I think that, somehow, we are going to have to 

find examples of those who have been able to do that so that others 

can say, ‘‘If he could do it, I can do it.’’ And they definitely are an 

example of success for the STEM careers, international decathlon 

of mathematics and science. 

And so, we need to take a look at that. My time has run out, but 

I want to stay and hope that there is a second round of questions. 

With that, I yield back. 

Mrs. BIGGERT. Thank you very much. I will recognize myself for 

5 minutes. This is not the second round, Mr. Bachus. 

We have heard from various sources that it is difficult to track 

how much progress is being made in the financial literacy area. 

How are you able to evaluate the impact of your efforts—your efforts, or other programs? We will start with Mr. Beck this time, 

and go the other way. 

Mr. BECK. Well, there are a couple of things we are doing. We 

are just finishing a grant project at the University of Georgia for 

a measurement tool that can be used in any financial literacy program. 

It tracks not only whether you learned something, but also behavior change. And that is a program that will be rolling out at the 

end of October. And as with everything else we do, that will be 

made available to anybody who wants to use it, and actually we 

have had several meetings with different government agencies who 

are very interested in it. 

With our high school program, when people finish the course, we 

ask them a question regarding how much they were aware of certain financial issues before they took the course, and how they 

have changed in their opinions. For example, in asking, do you understand the cost of buying on credit, 12 percent said that prior to 

taking the course, they felt strongly about that, that they knew 

that. That went to 31 percent afterwards. 

Now, the important thing is that as we go back 3 months later 

and ask them the same question—and at that point, 49 percent felt 

strongly that they understand the cost of buying on credit. Comparing prices when I shop: 25 percent before, 33 percent right after, 

jumping to 52 percent 3 months later. 

So what we are most interested in with anything we do is in trying to figure out not only did people acquire some knowledge during that event, but is it affecting them several months later, and 

is it creating behavior change? Because the real Holy Grail is behavior change, not just being able to pass a quiz. 

As we evaluate programs, that is the key thing for us. 

Mrs. BIGGERT. Thank you. Mr. Chernow? 

Mr. CHERNOW. Similarly to Mr. Beck, we actually have, over the 

last 10 years as an organization, have invested literally millions of 

dollars on evaluation. We do not believe, unless we are able to 

evaluate the efficacy and the impact of the programs, that we 

should be delivering those programs. So it’s not just about reaching 

children, it’s about having an impact. 

19

Our studies are pre and post. Those pre and post studies do indicate increases in learning. So we do have a pre-test and a post-test, 

and are able to determine if there are increases. And it is about 

increased learning. And as Mr. Beck said, what you are able to 

evaluate on a short-term basis—and, unfortunately, because we are 

not able to track the students from privacy issues, we are able to 

do initial studies—we are able to determine whether or not there 

has been an attitudinal change. 

You know, the hope will be that some day down the road we will 

be able to track their actual actions in regard to financial literacy. 

Are they getting credit cards? Are they doing a good job of getting 

loans for homes and businesses and paying them off? We don’t 

have that information too short-term, but the truth is, we are evaluating the increases in learning and the impact on their attitudes. 

And through our testing, we are able to show marked increases in 

learning and understanding. 

Mrs. BIGGERT. Thank you. Ms. Walter? 

Ms. WALTER. I would agree with everything that has been said 

already. And I also think that it is important for those of us who 

have grant-making programs to ensure that our grantees are undertaking things that can be evaluated and measured. 

So, we always require our grantees to have an evaluation plan. 

And where we conduct programs ourselves or with partners, as in 

our military effort, we seek to do that as well. We have brought in 

an outside consultant in order to assess whether what we are doing 

is moving the needle or not. 

Mrs. BIGGERT. Thank you. And with that, I would yield back, and 

yield 5 minutes to Mr. Baca from California. 

Mr. BACA. Thank you, Madam Chairwoman, and thank you very 

much for having what I believe is a very important hearing on improving financial literacy, especially among the elementary and 

secondary level, and also our post-secondary level. And I appreciate 

the panelists coming here. 

I was pleased to hear the gentleman, Mr. Chernow, talk about 

Junior Achievement. I am quite familiar with Junior Achievement, 

because I used to coordinate about seven or eight different schools 

on the Junior Achievement program. At that time, it was for GT; 

now it’s Verizon. And I believe those programs were excellent, because not only did we have a production line and began to orientate 

the students about starting your own business, running your own 

business, and getting into the stock market, too, as well, so they 

actually learned a lot about finance and controlling their own. 

The problem was that we couldn’t reach all of the kids. And 

that’s the problem. I wish every student would have signed on to 

a Junior Achievement program. They would have had a better understanding of financial literacy. 

And I know that the message is so important, and I know that 

you talked about collaboration and partnerships. And we need to 

develop that, both for the private and the public sectors, in terms 

of our schools. And how do we reach our students, and what kind 

of an outreach do we do, to make sure that every student is aware? 

Because, ultimately, it affects their lives. It affects their lives in 

the TR rating that many of them don’t even know, because most 

of them are being solicited to fill out an application for a credit 

20

card. They get that. Later on in life they try to buy a home, purchase something else. The TR rating is there because maybe they 

failed. 

Or, the attitude by many of these young kids, apparently they 

feel, ‘‘Well, okay, I will apply for a credit card now, and I will just 

file bankruptcy. That’s okay. You know, they won’t do anything to 

me, I am only a teenager.’’ So those attitudes are still there, but 

it is hurting them. 

And I know that we need to incorporate something with the public sector that needs to be done, whether it is done in developing 

master plans—because each site administrator develops a site plan, 

in terms of how they are going to implement their curriculum. 

What we need to do is to look at how we might coordinate something with site administrators in developing a master plan where 

financial literacy needs to be a part of the school system. 

And my question to you is how do we approach this, and how do 

we do this? Because when we look at the percentages, you know, 

55 percent of college students acquire their first credit card during 

their first year in college, and 92 percent of college students acquire at least one credit card by the second year in college. 

And yet, only 26 percent of the people between the ages of 13 to 

29 reported that their parents actively taught them how to manage 

their money—which, a lot of us don’t—so when you come from poor 

families, disadvantaged families, and others who live paycheck-topaycheck, and don’t know how to even manage their money, what 

can we do to create a continuum of financial literacy education in 

the K through 12 and beyond—which is one of my questions, and 

I sort of like set some ideas of what things that we may be doing, 

but we need to incorporate that. 

I feel it’s so important that it needs to be incorporated, especially 

at the secondary level, as part of a curriculum that needs to be 

taught for our students. It just can’t be by the private sector or the 

public sector, or volunteer programs like the Junior Achievement 

program, that are super programs, but we only reach a certain segment of the community, or the students, and we need to reach others. 

So, maybe any one of you that want to answer this? And I do appreciate what the others are doing too, as well, in trying to reach 

out. 

Ms. WALTER. I think Mr. Beck will have a lot to say. I would like 

to lead off by saying that we—it is our opinion that one of the 

issues with respect to K through 12 financial education—which has 

really been a focal point of the tension in the financial literacy effort—one of the issues has come about, we think, because educators 

were not as much involved as perhaps they should have been, and 

therefore it made it difficult for it to be thoroughly integrated into 

the curriculum. 

So, one of the things that we have done is, last year, we gave 

a grant to the National Association of State Boards of Education, 

and they are going to convene a panel of State boards of education 

members. They are doing this now, and others to work with them, 

to examine current practices, and develop a set of recommendations 

that will be used to go forward to help truly integrate financial literacy into K through 12 educations. 

21

And there will be a report on that issued next month, and it will 

be distributed quite broadly. And we are hoping that, by bringing 

the educators themselves into the fold, it will help make efforts 

more available. 

I also think that here, as with respect to other areas—as we have 

done, for example, in our grant to First Nations with the Native 

American population, it is very important to reach out into the 

community to get people involved, who the people you are trying 

to reach trust. So we have trained—helped to train, through that 

grant, people in the Native American community. 

In our military education program, one of the things that we are 

doing is training military spouses, so they can provide no-charge 

services to other military families. And those types of efforts need 

to be strengthened. 

Mr. BECK. There are several things that we could talk about 

there. First of all, I very much agree that we fully need to understand the dynamics of each community. While educational content 

might be similar—a checking account is a checking account—the 

rules of the different communities appear to be somewhat different, 

and we need to take that into consideration. 

We did a think tank with the Latino immigrant community last 

year, and we really learned a great deal. We are also working with 

First Nations, the Native American group, trying to understand the 

issues that they face in trying to take financial literacy to their 

communities, so that we can then be responsive to them. 

The second issue is awareness. A lot of school districts are not 

aware of the programs that are available to them. We have a really 

high-class problem at NEFE, in that we give everything away. Anybody who wants it can have it for free, and we would love to have 

more people asking for it. And that’s one of the reasons we are trying to expand our partnerships. 

Let me just give you a quick story. When I go to our teacher 

training programs around the country, I am always intrigued by 

who is in the room. There is not a natural home for a financial curriculum in a high school. Very few schools have it. I am pleased 

to say last year we had our first English and Physics teachers take 

our training course, so they could incorporate financial literacy into 

their specialty, because they think it is important for their students. 

So, trying to find a more natural home for financial education in 

the school system—starting earlier than high school, even—I think 

would be a great step forward. 

Mr. BACA. Mr. Beck, I indicated that it needs to start with the 

administrator that develops a master plan. And apparently they 

develop those master plans during the summer that they incorporate during the curriculum year. If it’s not incorporated there, 

then it becomes very difficult for teachers and others to implement 

financial literacy programs and others. But that needs to be incorporated, and you’re absolutely right, in terms of getting the message out. 

Mrs. BIGGERT. Thank you very much, Mr. Baca. With that, the 

Chair notes that some members may have additional questions for 

this panel, which they may wish to submit in writing. 

22

So, without objection, the hearing record will remain open for 30 

days for members to submit written questions to the witnesses, and 

to place the responses in the record. 

And with that, thank you very much, panel, for being here. Your 

expert testimony is really appreciated. We will now call up the second panel. 

Mr. HINOJOSA. Madam Chairwoman, I would like to, while the 

other panel comes up, ask that H.R. 973, recognizing October 2–

8, 2006, as Financial Planning Week, as well as letters of support, 

be inserted into the record. 

Mrs. BIGGERT. Without objection. 

Mr. HINOJOSA. Thank you. 

Mrs. BIGGERT. Welcome to the second panel. Thank you for being 

here, and I will introduce the panel first. On my left is Ms. Julie 

Cripe, president and COO of Omnibank in Houston, Texas. And 

she is here on behalf of the American Bankers Association. 

Second is Mr. David G. Kittle, president/principal, Principle 

Wholesale Lending, Incorporated, from Louisville, Kentucky, on behalf of the Mortgage Bankers Association. Welcome. 

Next is Mr. Carl Sorgatz, CEO, Hawthorne Community Credit 

Union, again from my district in Napersville, Illinois, on behalf of 

the Credit Union National Association. Welcome. 

And then Mr. Donald D. Kittell—that’s a very close name, sir, 

it’s just spelled a little bit differently, I believe—executive vice 

president, Securities Industry Association. Welcome. 

And Mr. Stephen Brobeck, executive director, Consumer Federation of America. 

And last, but not least, Mr. Frank Pollack, president/CEO of Pentagon Federal Credit Union, on behalf of the National Association 

of Federal Credit Unions. 

Again, as I stated to the first panel, you will be recognized for 

5 minutes’ testimony, your summary, and then after that we will 

have 5 minutes for questions from each member. So, Ms. Cripe, you 

are recognized for 5 minutes. 

STATEMENT OF JULIE CRIPE, PRESIDENT AND COO, 

OMNIBANK (HOUSTON, TX), ON BEHALF OF AMERICAN 

BANKERS ASSOCIATION 

Ms. CRIPE. Chairman Biggert and members of the committee, my 

name is Julie Cripe. I am president of Omnibank in Houston, 

Texas, which is a $325 million community bank which has been in 

existence for 52 years. I am also chair of the American Bankers Association Education Foundation, and I am pleased to be here today 

to represent ABA. 

I want to thank Chairwoman Biggert for holding this hearing on 

the importance of financial education. I also want to thank Representatives Biggert, Green, Hinojosa, and Tiberi, and many others, for participating with bankers in the ABA Education Foundation’s National Teach Children to Save Day last April. And I want 

to acknowledge Representative Lucas and others who plan to participate in ABA’s national Get Smart About Credit Day this October. Your efforts show your dedication to this issue, and demonstrate how much we can accomplish by working together. 

23

The ABA recognizes that everybody has a vested interest in 

being as smart about their money as possible. But too many people 

fail to realize their dreams, and lose their hard-earned money because they lack basic money management skills. As bankers, we 

are well positioned to help stop the circle and cycle of financial illiteracy. Thousands of bankers nationwide are dedicating time and 

resources to developing financial education programs that are specifically tailored to meet the needs of their local communities. We 

are going into classrooms, churches, and community centers to help 

people learn about budgeting, saving for the future, and managing 

credit wisely. 

The ABA Education Foundation provides resources to help bankers teach financial literacy, including the new Get Smart About 

Credit e-learning program. The program is an online tool, interactive, that teaches teens and young adults how to obtain and manage credit, and is available both in English and Spanish. It is really 

designed to grab the attention of teens, and make financial education fun. Banks offer the program through their Web sites. And 

earlier this year, my bank became the first in the country to do so. 

The ABA also produced this tool box on financial education, provided free of charge to all our members. This tool box contains five 

books that guide banks on how to start or enhance a financial education program. It also contains case studies from banks that have 

created successful outreach programs—in other words, what 

works—and has information on how to partner with communitybased groups. 

Bankers are not alone in their efforts to increase financial education outreach. All of the groups testifying today know each other 

well, and we all continue to look for ways that we can work together. Linking financial education efforts together will promote efficiency, and should be encouraged. But it is important to realize 

that financial education has developed in a fashion similar to our 

Nation’s highways. 

Like individual roads that were built to meet the geographic 

needs of particular cities and towns, financial education programs 

are built to meet the unique needs of individuals and businesses 

in our communities. 

Attempting to organize and distribute the depth and breadth of 

material that each sector has created may not make the most 

sense. For example, 91 percent of the loans my bank makes are in 

low and moderate income areas. The financial education programs 

we employ are specifically designed to reach this audience. Others 

may want to tailor their programs to meet the particular needs of 

the communities they serve. 

We are building bridges to connect our separate efforts, and we 

should continue doing so. We should also continue developing financial education solutions that are designed to address our unique 

community needs. Just as there are benefits to having a choice of 

roads when traveling, there are benefits to having financial education options. I think we can all agree that choice in learning is 

a good thing. 

The Federal Government can help us by: number one, encouraging bank regulators to grant CRA credit for financial education 

programs; two, supporting minimum financial education requireVerDate 0ct 09 2002 16:16 Apr 17, 2007 Jkt 031553 PO 00000 Frm 00029 Fmt 6633 Sfmt 6633 K:\DOCS\31553.TXT HFIN PsN: TERRIE
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ments in schools; three, sponsoring public service announcements 

that teach basic money management; and four, providing financial 

support for existing programs with proven track records. 

I appreciate the opportunity to testify today. The ABA welcomes 

the opportunity to work with Congress, the banking agencies, and 

my fellow panelists, to expand the financial education opportunities 

in all the communities we serve. 

[The prepared statement of Ms. Cripe can be found on page 83 

of the appendix.] 

Mrs. BIGGERT. Thank you so much. Mr. Kittle, you are recognized for 5 minutes. 

STATEMENT OF DAVID G. KITTLE, PRESIDENT, PRINCIPLE 

WHOLESALE LENDING, INC. (LOUISVILLE, KY), ON BEHALF 

OF THE MORTGAGE BANKERS ASSOCIATION 

Mr. KITTLE. Thank you, Madam Chairwoman. We are in the middle of the highest homeownership rate in our country’s history. 

Nearly 70 percent of Americans now own their own homes, and are 

building great wealth. The Federal Reserve said in 2004 that the 

median net worth for homeowners was $184,000. For renters, it 

was only $4,000. Homeowners have been successful in accumulating wealth, mainly by building up equity through their monthly 

mortgage payments and home price appreciation. 

We are committed to educating consumers about the importance 

of good credit, of working within a budget, and of better understanding the mortgage process and the range of loan products 

available. By understanding all of these elements, consumers are 

able to determine if homeownership is the right choice for them. 

And if it is, what type of financing is right for their personal financial situation. 

While we want to ensure that homebuyers have the educational 

tools they need, we also want to ensure that our industry has the 

tools necessary to inspire public confidence. That is why the Mortgage Bankers Association is so committed to providing educational 

opportunities to its members. The capstone to MBA’s education 

program is the certified mortgage banker designation. 

I am proud to be a CMB, which was conferred upon me by MBA 

when I completed the demanding curriculum. I had to be in the industry for at least 3 years, go through a rigorous education program with both oral and written exams, and commit to my continuing education. 

One of the challenges we have in advancing financial literacy is 

to reach the people where they are. When people shop for homes 

and mortgages to finance them, they talk to mortgage bankers. Ensuring these professionals are well qualified and highly knowledgeable is one of the key ways we can further financial literacy. 

At the Mortgage Bankers Association, we are also active in 

reaching out to potential borrowers. Our home loan learning center 

Web site is a great step-by-step tool to help home buyers understand the home buying process. It also teaches people the importance of their credit status to their ability to qualify for a mortgage 

and achieve homeownership. 

We are also reaching out to homeowners, industry, and law enforcement, to stop mortgage fraud. Mortgage fraud against lenders 

25

is sometimes confused with, but differs from, predatory lending, 

which involves unscrupulous lending to an unknowing borrower. 

Mortgage fraud is a problem, not only because lenders and borrowers are hurt, but because people can lose their homes. 

MBA is also a supporter of Dollar Wise, the financial literacy 

campaign of the U.S. Conference of Mayors, whose goal is to develop local financial literacy strategies to reach people where they 

live. MBA recently held consumer information summits in Mississippi and Louisiana, in the wake of hurricanes Katrina and Rita. 

Later this year, we will host another in Philadelphia. These events 

are designed to provide attendees with the kinds of information 

that will be most useful to local leaders and their constituents. 

On November 1st, the National Home Equity Mortgage Association—or NHEMA—will formally conclude its merger into MBA. In 

2001, NHEMA established an independent organization, the Borrow Smart Public Education Foundation, to facilitate community 

efforts to increase financial literacy. As the merger moves forward, 

MBA will integrate Borrow Smart into the overall financial literacy 

efforts. 

Financial literacy is described as the solution to many different 

challenges. It comes up in the context of predatory lending debate, 

discussions about whether borrowers are making the right decisions about their mortgages they take out, and other legislative 

and regulatory issues. 

The financial literacy of consumers is critical to a smoothly functioning, self-regulating market that, ultimately, will lessen mortgage delinquencies and foreclosures. Government has an important 

role to play in promoting financial literacy. 

Most importantly, government at all levels can help by urging 

that financial literacy be taught in our Nation’s schools. While we 

understand the Federal Government does not generally determine 

curricula in this country, Congress should, itself, set the task of 

identifying ways to encourage States and local school boards to introduce or enhance curricula to teach financial literacy. 

Greater coordination of financial literacy efforts is also necessary. 

We, government and industry, are all making efforts. Too often, we 

only engage when people find themselves in significant financial 

trouble, and are avoiding calls from bill collectors. 

Mortgage bankers have a responsibility to their customers. The 

mortgage transaction is complex, and the product innovation over 

the last decade has left even the most educated customers with a 

need to learn more about an incredible array of options. But a well 

informed consumer can better navigate the complexity and shop for 

the best possible loan product. 

On behalf of our members, MBA appreciates the opportunity to 

participate in this important hearing. I look forward to your questions, and thank you for your time. 

[The prepared statement of Mr. Kittle can be found on page 116 

of the appendix.] 

Mrs. BIGGERT. Thank you very much, Mr. Kittle. Mr. Sorgatz, 

you are recognized for 5 minutes. 

26

STATEMENT OF CARL SORGATZ, CEO, HAWTHORNE COMMUNITY CREDIT UNION (NAPERSVILLE, IL), ON BEHALF OF 

CREDIT UNION NATIONAL ASSOCIATION 

Mr. SORGATZ. Thank you, Madam Chairwoman, and members of 

the committee. I appreciate the opportunity to appear before the 

committee today on behalf of the Credit Union National Association, CUNA, to provide an outline of the programs and initiatives 

that CUNA and its member credit unions are involved in to promote financial education among youths and adults. 

CUNA is the Nation’s largest credit union advocacy organization, 

representing approximately 90 percent of the Nation’s 8,800 Federal and State credit unions, and their 87 million members. I am 

Carl Sorgatz, and I serve as president and treasurer of Hawthorne 

Credit Union, headquartered in the Chicago suburb of Napersville, 

Illinois. I also serve as president of the Illinois Credit Union 

League. 

I would like to begin by commending my Congresswoman, Judy 

Biggert, for her strong commitment to the issue of financial literacy, and for her efforts as co-chair of the House Financial Literacy Caucus, to keep issues of financial literacy and education before the Congress. 

I was also delighted by the fact that Mrs. Biggert was able to 

take the time during this busy final week of Congress to participate in CUNA’s first financial literacy summit. The summit was 

envisioned by CUNA chairman, Yuri Valdov, as an annual forum 

for credit union leaders from all parts of the country to share ideas 

and coordinate strategies on how best to address the distinct financial literacy needs of youth, working age families, and recent immigrants in underserved groups. The summit also featured the Treasury Department’s national strategy on financial literacy. 

Hawthorne Credit Union was established during the Great Depression in 1935, and currently has over 15,000 members. That 

was a time when many financial institutions were going out of 

business, and those who were in business weren’t interested in 

serving the working class people. 

In fact, there were fewer than six credit unions in Illinois when 

our founder, Senn Heath, and other Western Electric employees, 

began their planning. They were intrigued by the concept of people 

helping people. Since early in the 21st century, Hawthorne Credit 

Union has centered our community involvement in enrichment 

strategy on financial literacy. 

Financial literacy fits well with our number one goal for our 

credit union, our members and their families, to become our members’ trusted financial advisor. In pursuing our strategy to improve 

financial literacy, Hawthorne Credit Union began to work with a 

not-for-profit group in Napersville, Illinois, called Families Helping 

Families. This group assists individuals who are in great need of 

financial assistance and guidance in getting their lives back on 

track. The adopted families are often single mothers and their children, who have been victims of domestic violence and poverty. 

They asked us if we were interested in facilitating financial literacy classes for their participants. We were very interested, and 

began to develop a program that would care for the needs of these 

families. Our training manager connected with NEFE, a highly reVerDate 0ct 09 2002 16:16 Apr 17, 2007 Jkt 031553 PO 00000 Frm 00032 Fmt 6633 Sfmt 6633 K:\DOCS\31553.TXT HFIN PsN: TERRIE
27

spected organization that CUNA has partnered with, to offer resources to credit unions in their communities. 

Hawthorne Credit Union created two classes that the participants are required to attend. In class one, it covers money management and the basics of maintaining a savings and checking account, and class two covers lending topics, credit reports, and bankruptcy. 

When the participants complete class two, many of them work 

with our lending manager and/or one of our loan officers regarding 

credit counseling. We review their credit report and determine a 

plan of action to help them repair damaged credit. In some cases, 

we are able to assist the participant through a loan product. We 

are often able to refinance a high interest automobile loan, issue 

a share-secured Visa credit card, or process a share-secured loan, 

in order to pay off some debt. 

Most of the participants are single parents. We supply the space, 

and Families Helping Families supplies the babysitters—usually a 

few mentors and some high school-aged students. The children usually are in the age ranges of 1 to 13 years old. 

During the last class this past August, we provided a financial 

literacy session for the children, and provided games using play 

money. We gave each child $10 to start their savings. The parents 

opened minor savings accounts for the children, and we told them 

that if they saved $100 within that first year, we would give them 

another $10. 

Through these efforts supported by NEFE, Hawthorne Credit 

Union is able to assist those who are in need of not just financial 

aid, but who desperately need financial education. In this way, 

they can go from being homeless and struggling with day-to-day 

issues that most of us find as normal occurrences, to being self-sufficient, contributing members to our society who are able to support 

themselves and their families. 

Our commitment to provide financial literacy to our community 

is important to our charter, our strategic plan, and our center to 

our success. Becoming our members’ trusted financial advisory 

often starts with helping individuals like these better understand 

their financial options. 

And in conclusion, CUNA and its member credit unions have 

long been a leading advocate and implementer of financial literacy 

programs for members of all ages. Among its initiatives, CUNA developed an Hispanic outreach program for credit unions to utilize. 

Through other programs, such as Jump$tart, NEFE, Thrive By 

Five, National Youth Involvement Board, and the National Youth 

Savings Challenge, which I have detailed in my written testimony, 

credit unions continue to make a difference in many lives through 

financial education and counseling, and to maintain the high 

standards of people helping people. 

Once again, thank you for having me here today, and I am happy 

to answer any questions you may have. 

[The prepared statement of Mr. Sorgatz can be found on page 

138 of the appendix.] 

Mrs. BIGGERT. Thank you very much. Mr. Kittell, you are recognized for 5 minutes. 

28

STATEMENT OF DONALD D. KITTELL, EXECUTIVE VICE 

PRESIDENT, SECURITIES INDUSTRY ASSOCIATION 

Mr. KITTELL. Thank you, Madam Chairwoman, and Congressman Hinojosa. I will speak on behalf of the securities industry, and 

specifically, the Securities Industry Association and the Bond Market Association, with whom we are merging later this year. 

Both associations have established foundations for investor education. They are targeted in two broad areas. The first is to students, primarily grades 4 through 12, and the other programs are 

for adults. The perspective is from an investor education beginning, 

but a lot of our content covers broad financial literacy issues of the 

kind that you have talked about this morning. 

The cornerstone of our student program is the Stock Market 

Game, a simulation in which teams of students in grades 4 through 

12 learn the fundamentals of investing through a hands-on simulation of investing $100,000 over approximately a 10-week period. We 

currently have 500,000 students every year participating in this 

game, along with 14,000 teachers. Since inception, we think we 

have reached over 10 million students over the last 10 years. 

The curriculum is correlated to national standards in mathematics, economics, business, and marketing, so it is not just a 

stock-picking game. The true value of the game is its ability to capture the interest of students through competitions and keeping 

score, and our experience is that teachers find that students become extremely motivated during this game. 

Our member firms are very active in supporting the game. At the 

risk of naming a few and leaving out some, I will mention Merrill 

Lynch, particularly, Wachovia Securities, Morgan Stanley, AG Edwards, PNC Financial Services, Charles Schwab, Cabrera Capital 

Markets, and American Century Brokerage. We also partner with 

other organizations in the industry, such as the Investment Company Institute, and the New York Stock Exchange. 

One of the aspects of the game is a Capitol Hill challenge. I am 

pleased to note that the team representing Speaker Hastert’s district won the 2004 competition. Chairman Bachus’s district was victorious in 2005, and Representative Bart Gordon took the honors 

this year. There were 10 members of the subcommittee sponsored 

teams in the competition this year, and an additional 7 members 

of the full committee have participated. 

We, 2 years ago, introduced a national and State essay-writing 

contest in order to demonstrate—or to allow students to demonstrate—what they have learned from the game. This is the most 

important new growth area in our program. 

Turning to the adult game—or, excuse me, the adult education 

program—we have sponsored the Path to Investing Web site for a 

number of years. Based on market research we have done with investors who have told us the kinds of education they want—they 

want it customized, they want it totally objective, without a sales 

pitch, they want it entertaining, and they want it to be easy to understand. Path to Investing attempts to do that within the limits 

of a Web site. We have more than 1,500 pages of content, covering 

a wide range of the subjects that you have talked about today. 

As many of the other panelists have said today, we partner with 

many other organizations in the financial area. I would mention 

29

specifically the Alliance for Investor Education, which represents 

close to 20 private sector, as well as government, and organizations 

that are interested in investor education. 

We also partner with regulators, both at the Federal and State 

level, and I would like to particularly mention that the Treasurer 

of the United States, Anna Escobedo Cabral, spoke at our California stock market game event just this week, and her story, if 

you haven’t heard it, was inspiring for everyone who heard her remarks. 

The Treasury also sponsored a financial literacy and education 

event at Treasury, and our 2006 essay winner was a participant in 

that event. 

The Bond Market Association also has a Web site entitled, ‘‘Tomorrow’s Money,’’ which addresses activities targeted at young people aged 18 to 34, Spanish-speaking Americans, people facing financial decisions of a specific kind, and so on. The Bond Market 

Association also works with the State treasurers in partnering with 

Web sites that offer education in each State. And they have also 

participated in a number of programs with the American Red 

Cross, United Services Group, and so on, helping families who are 

victims of 9/11, Katrina, and other disaster events. 

The securities industry, in sum, has a lot of resources and a lot 

of commitment to this subject, and we are looking forward to working with all of you to further your objectives. Thank you. 

[The prepared statement of Mr. Kittell can be found on page 102 

of the appendix.] 

Mrs. BIGGERT. Thank you very much. Mr. Brobeck, you are recognized for 5 minutes. 

STATEMENT OF STEPHEN BROBECK, EXECUTIVE DIRECTOR, 

CONSUMER FEDERATION OF AMERICA 

Mr. BROBECK. Thank you, Madam Chairwoman. We at the Consumer Federation of America greatly appreciate the opportunity to 

participate in this important hearing. 

For decades, CFA has undertaken numerous financial education 

initiatives to increase financial literacy. For example, for more than 

a decade, we led a government, business, nonprofit consumer literacy consortium to inform Americans how to purchase products intelligently. The group’s brochure on ‘‘66 Ways to Save Money’’ has, 

for years, been the most popular consumer publication distributed 

by the Federal Government for a fee. 

Yet, as we have undertaken these and many other initiatives, we 

have been mindful of the limits of financial education. Knowledge 

alone cannot ensure true financial literacy, which is reflected in 

sensible financial behaviors. Consumers must value this knowledge 

enough to learn and to practice it, and there must be accessible opportunities for utilizing these skills. 

For example, knowledge about retirement programs is virtually 

impossible to apply if one does not have available at work a contributory plan. But even when one is available, a significant minority of employees are not sufficiently motivated to participate. 

That is why, by allowing employers to automatically enroll employees in 401(k)s and other contributory programs, the pension 

legislation passed by Congress earlier this year represents a far 

30

more significant advance for employees and society as a whole, 

than any conceivable related financial education program. 

Furthermore, knowledge complements, but cannot substitute, for 

consumer protection. In the area of consumer credit, for example, 

these protections begin with disclosures required by law, such as 

truth in lending and truth in savings. But even these requirements 

are not sufficient to protect the millions of Americans who are baffled by the growing complexity of financial services products, and 

are vulnerable to aggressive deceptive sales practices. 

That is why the Department of Defense and many senators are 

supporting, as part of Defense reauthorization legislation, the inclusion of important consumer protections that include a 36 percent 

cap on interest rates charged to military personnel 

Truly effective financial education that significantly increases financial literacy is linked to motivation and opportunities to 

produce desired behavioral changes, and has the opportunity of 

going to scale. That is, reaching tens of millions of Americans. 

One such program that has this potential—and my organization 

is involved in—is America Saves, which, in dozens of local and regional areas, often with the assistance of Cooperative Extension, 

has recruited about 1,000 public and private organizations, 200 of 

which are banks and credit unions, to undertake campaigns to enroll tens of thousands of non-saving individuals as Savers. 

These participants are required to make written commitments to 

implement a specific plan that they have developed to meet a savings goal. To date, nearly 60,000 Americans—about half of whom 

are African American or Hispanic American—have enrolled as Savers, and hundreds of thousands of others say, in our research, that 

they have benefitted from our programs. 

Just as importantly, the local campaigns have persuaded important local institutions, such as banks and credit unions and employers, to more effectively promote saving. For example, in several 

dozen areas where campaigns exist, most banks and credit unions 

have lowered opening and monthly savings minimums considerably, so that less affluent families who cannot afford a $300 or 

$400 opening balance on a savings account can afford to begin saving. 

Committee members may also be interested to learn that the Department of Defense has embraced its own Military Saves initiative, which is coordinated by a member of my staff. 

In closing, I would suggest one initiative that would not only 

help link diverse financial education programs, but also motivate, 

as well as inform consumers. That is a call to all consumers to estimate and then periodically monitor their net personal wealth. 

Awareness of net assets is an important motivator for better money 

management and debt management, as well as savings accumulation. 

People who know their net wealth are more likely to spend their 

money carefully, monitor their finances, live within their financial 

means, and patiently accumulate wealth through retirement savings, homeownership, and other savings strategies. 

In other words, if Americans were more aware of their net personal wealth, they would be far more receptive to effective financial 

education programs that help them monitor, conserve, and accumuVerDate 0ct 09 2002 16:16 Apr 17, 2007 Jkt 031553 PO 00000 Frm 00036 Fmt 6633 Sfmt 6633 K:\DOCS\31553.TXT HFIN PsN: TERRIE
31

late financial resources. My written testimony suggests how such 

an initiative might be developed as well as an appropriate role for 

the Federal Government. 

Again, thank you for the opportunity to testify. 

[The prepared statement of Mr. Brobeck can be found on page 74 

of the appendix.] 

Mrs. BIGGERT. Thank you very much. And Mr. Pollack, you are 

recognized for 5 minutes. 

STATEMENT OF FRANK POLLACK, PRESIDENT/CEO, PENTAGON FEDERAL CREDIT UNION, ON BEHALF OF NATIONAL 

ASSOCIATION OF FEDERAL CREDIT UNIONS 

Mr. POLLACK. Thank you. Good morning, Madam Chairwoman, 

Congressman Hinojosa, and members of the committee. I am Frank 

Pollack, president and CEO of the Pentagon Federal Credit Union, 

headquartered in Alexandria, Virginia. 

I am here today, on behalf of the National Association of Federal 

Credit Unions, to testify on the financial literacy efforts of our Nation’s Federal credit unions. 

Pentagon Federal Credit Union is a not-for-profit financial cooperative governed by a volunteer board of directors, who are elected 

by our member owners. Our credit union was chartered in 1935. 

We have 730,000 members, and just over $9 billion in assets. 

As Americans are faced with an ever-widening array of financial 

services, it is important that consumers are armed with a sound 

understanding of the basics of personal finance. Financially literate 

individuals are more likely to spend prudently, and put money in 

savings, retirement funds, and other wealth-building accounts. 

Conversely, the same individuals are less likely to rack up large, 

burdensome, and sometimes unaffordable, debt. 

NAFCU and our member Federal credit unions know that financial illiteracy is an issue that touches all Americans at every age 

and income level. Accordingly, NAFCU makes available to credit 

unions a financial education curriculum based on the Federal Deposit Insurance Corporation’s Money Smart program. 

The curriculum, which NAFCU, in working with the FDIC, tailored to credit unions, is aimed at teaching individuals outside the 

financial mainstream how to manage their finances while also 

stressing the importance of long-term savings. 

Additionally, the credit union industry is a key partner in the 

fight against predatory lending. Credit unions are dedicated to 

helping their members avoid unscrupulous lenders by providing 

them with low cost loan alternatives, and offering financial education to assist members in developing sound debt management 

skills. 

Many credit unions have developed innovative financial literacy 

programs to educate their members. I would like to take this opportunity to tell you a little bit about our credit union’s program. 

In 2001, we created the Pentagon Federal Credit Union Foundation, a nonprofit organization fully devoted to improving the financial literacy and wellbeing of the military members served by the 

credit union. The foundation sprung to life as a result of the numerous abusive predatory lenders that thrive on making high-cost 

loans to young, inexperienced military personnel. 

32

To combat predatory lending, our foundation created the asset 

recovery kit program, which provides small cash loans to our military members. In order to be approved for the loan, our members 

are required to undergo financial counseling by members of the National Federation of Consumer Credit Counseling. The council will 

help to renegotiate monthly bills, and teach the borrower how to 

maintain a budget. Members can receive as many as five loans over 

the course of a year. Neither the foundation nor the credit union 

earns a profit from the program. The sole purpose is to help our 

members get out of trouble, and develop solid budgeting skills. 

The program has been a runaway success. As of the end of August, PFCU had made 709 loans under this program. Our chargeoff rate is only 8 percent. That figure is phenomenal, considering 

that these are unsecured loans to people that have risky credit, and 

who have also maxed out on traditional credit facilities. 

Further, fewer than 5 percent of the people who have applied for 

loans have used all five renewals. I think this is strong evidence 

that the credit counseling services mandated by the program are 

paying off. 

Earlier this year, we entered into an agreement with Fort Bragg 

Federal Credit Union, which now offers the program, as well. We 

are also working to roll the program out at other Defense credit 

unions. 

Another major initiative about to be launched by the foundation 

is a program called Dream Makers. This program is aimed at helping military personnel and Department of Defense employees to 

achieve the American dream of homeownership. Members who are 

first time home buyers can receive grants of up to $5,000. These 

grants do not have to be repaid. 

It is our hope that, with these and other programs, we can help 

to foster financial literacy, personal wealth, and success for all of 

our members. These brave men and women are joining our armed 

forces and laying their lives on the line for us every day. We want 

to give them all that we can, in exchange for their service to our 

country. 

We hope that Congress, the NCUA, and Federal agencies will 

work with the credit union community to continue to foster an environment where such programs can exist. Many other credit 

unions are also stepping up to the challenge, and helping Americans of all ages to build a solid foundation of financial management 

skills. PFCU is just one example of the way in which the credit 

union industry has reached out to improve financial literacy. 

Because the credit union mission has always been to promote 

savings, credit union staff and volunteers were some of the first financial educators in America. In addition to being among the first 

to emphasize the importance of financial literacy, today’s credit 

unions are also among the finest at providing sound, financial management advice to their members. 

NAFCU and the Federal credit union community stand ready to 

work with the House Financial Services Committee on this important issue. Thank you, and I would be happy to answer any questions you might have. 

[The prepared statement of Mr. Pollack can be found on page 123 

of the appendix.] 

33

Mrs. BIGGERT. Thank you very much. We will now proceed to the 

questioning, and I will yield myself 5 minutes. 

Ms. Cripe, I participated in your tenth annual National Teach 

Children to Save Day, and one of the things that I really like to 

do is to go into the schools and teach classes, or whatever I’m going 

to be doing, from—well, actually, from Head Start all the way 

through college. 

But I think in the elementary schools and the middle school is 

really fun. This happened to be the elementary school, where we 

were talking about saving and whether it is a want or a need, and 

the kids would hold up the cards if—they first made a list of all 

the different items, and you would say, ‘‘Well, television, is that a 

want or a need?’’ And of course, they did differ, and then we had 

to discuss it. But it was a great program, and I really liked it. 

And then, Mr. Kittell, I did participate in the stock program. I 

was very upset, because I am very competitive, that Speaker 

Hastert won in Illinois every year—he didn’t win nationally all the 

time, but the first time. So my teams are going to do better next 

time. But that’s also a very good program. 

I would—talking to the kids, I did mention to them—because it 

is a short period of time, I think 6 weeks—that they should keep 

those papers and go back, you know, 10 years or 20 years later, 

and see how those stocks have held up to the picks. You know, they 

would have about six stocks. And it was kind of interesting what 

was bought. I remember one year it was Google. They did very 

well, the kids who bought Google at that time; it was a good pick. 

But I appreciate all of the—I feel like a kid when I go back 

into—so it’s really—the programs are so much fun, and I think the 

kids really enjoy them. And I know Mr. Hinojosa participated in 

the bank one, too. 

So, my question is that we have been working to perhaps develop 

legislation that would establish a comprehensive director of financial literacy programs in the United States, and I know, Ms. Cripe, 

that you have one for the American Banking Association. And in 

your testimony, you said that—I was kind of surprised, because 

you said ‘‘attempting to organize and distribute the depth and 

breadth of material that each sector has created would be a frustrating exercise that is likely to fall short in expectations.’’ 

Do you then think it’s not a good idea to have a directory? Or 

it might be so voluminous because I know there are so many 

groups that have something and probably changed the focus, but 

we have so many groups and, you know, that people might be 

searching for something that they can use in their school, or their 

organizations, or such. 

Ms. CRIPE. I think it’s a great idea to have a collaborative effort, 

to have a directory. We have worked with Jump$tart, as many of 

my colleagues up here have done. 

What I hesitate about is to have a stop in the great programs 

that are going on to accumulate this information. As long as we 

keep going with all the great programs, and then add to the list 

I support it because, for example, what’s in our quick reference 

guide, the national strategy from the Treasury, that list is incomplete. I notice that many of us here are not on it as resources. And 

34

so, just to add to that and continue the collaborative effort, I think, 

is a great way to go. 

Mrs. BIGGERT. Well, our emphasis on the—with the national 

strategy, and what we had asked, was to organize within the Federal agencies that were duplicative, or that they would work together. 

And actually, that happened in Katrina, where we actually asked 

them to call—the Secretary of the Treasury to call a meeting, and 

which we attended, and they sat down and really went over what 

each agency was doing in Katrina then. And so that they realized 

that some of them were doing the same things, so they did get together and sit together, then, and talk about it. 

Is there something—you know, we had originally proposed then 

having something with the private sector. But it’s so immense, I 

think now, that is this something that needs to be done, or would 

the Federal Government stay out of it, as far as what you all 

think? We will start with Mr. Pollack. Do you— 

Mr. POLLACK. Well, I don’t think the Federal Government should 

stay out of it. I think the only way we are going to solve this is 

to put a lot of effort into this, because we need to change the education pattern in the United States. That is the only way we are 

going to teach people how to manage money properly. And that is 

a long-term effort. 

Unlike some of the issues we have, though, this doesn’t require 

billions of dollars. It requires a lot of effort, and continuous effort. 

Mrs. BIGGERT. Mr. Brobeck? 

Mr. BROBECK. As are the kids in Lake Woebegon, all financial 

education programs are above average. But all of us in the area 

know that some of those programs are much better than others. 

So, while a directory that describes the programs is extremely 

useful, it would also be useful to aspire to including, at some point, 

an evaluation of the effectiveness of those programs. 

Mrs. BIGGERT. Mr. Kittell? 

Mr. KITTELL. Yes. One of the things that we have had trouble 

with is that there are no generic solutions across school systems, 

across the States. It’s very much a local solution, we find, in trying 

to work with teachers. 

So—and the investor education material that is available, it’s a 

pretty chaotic area. I mean, there is an awful lot of stuff. But it’s 

very difficult to sort out, you know, just what is really meaningful 

for a given purpose, and what isn’t. 

So, I guess I would encourage certainly awareness of what is out 

there, and maybe a look at more generic solutions to what happens 

in our schools. 

Mrs. BIGGERT. Okay, thank you. Mr. Sorgatz? 

Mr. SORGATZ. I would go back to what the previous panel said 

about the awareness issue. I think it is very important for the government’s participation to—through a public service address, to get 

the issue out there in front of the public. 

I think it’s not just the youth issue of financial literacy. I also 

think it is the adult financial literacy problem that we have in the 

country today, and I think the awareness of where can people go 

for resources, and to, first, of all, make sure that everybody underVerDate 0ct 09 2002 16:16 Apr 17, 2007 Jkt 031553 PO 00000 Frm 00040 Fmt 6633 Sfmt 6633 K:\DOCS\31553.TXT HFIN PsN: TERRIE
35

stands this is a key problem, and the cause/effect situations, and 

how it affects the economy, and how it affects people’s daily lives. 

Also, Mr. Kittell’s comment about the schools, in terms of having 

the variety of materials to choose from, I think one of the difficulties that we have had, in terms of being able to partner up with 

schools, is to be able to get into the right people, make those connections, and then work through the issues of whether or not it is 

going to be a curriculum item that is incorporated, or whether it’s 

something that we can present, in conjunction and partnership 

with the teacher themselves. 

And we are trying to work that partnership out without stepping 

on toes. And yet, it seems to be a struggle as we go along. It is always more difficult for us to work out that partnership than it 

should be. 

Mrs. BIGGERT. Is the usual response to your request that they 

have just so much time for the academics, and they just can’t fit 

it into the program? 

Mr. SORGATZ. Part of it has been that. Part of it is to where does 

it fit, as was talked about, again, in a previous panel. And it’s the 

timing issue. I think if we could be given some information as to, 

you know, you want to partner up with us, here is the time frame 

to come in and set this up. 

As was mentioned again previously, the summer time is when 

some of those curricula are put together. But how to get in touch 

with some of these people has been very challenging, to say the 

least. 

Mrs. BIGGERT. Mr. Kittle? 

Mr. KITTLE. Madam Chairwoman, I agree with two of the things 

that have been said here. Personally, I have been involved in my 

own children’s schools with Junior Achievement. All of the people 

on both the panels today are here because they want to give back 

to their communities, and they are concerned about financial literacy. 

We, at the Mortgage Bankers Association, tend to deal with not 

in the school age, but obviously, when you’re out purchasing your 

first home. So those people need to make sure that they are educated. We want to educate those home borrowers. Mortgage Bankers Association has spent over $2 million in the last 2 years on our 

home loan learning center, to make sure that they are educated in 

the process that we deal with every day. 

The consumer needs to know that they need to shop for their 

mortgage loan, and not just take the first offer that comes along. 

And they also need to be educated to the fact that when they go 

to the loan closing, and something is not right, they have every 

right to get up and leave. 

Mrs. BIGGERT. Thank you. Ms. Cripe? 

Ms. CRIPE. I think we all agree that awareness and getting to 

the most people is of key importance. The lesson that you participated in, as well as Congressman Hinojosa, Congressman Green, 

and Congressman Tiberi, are examples. We all agree that this is 

something that is necessary, and we managed to get into the 

schools. 

Noting those frustrations, I know that many bankers also use 

these same lessons by going to churches and community centers 

36

after school and on the weekends, in order to reach the most and 

highest proportion of consumers. So, we have found that to be a 

successful way. 

We have also designed our programs and our lesson plans to fit 

into a math curriculum, an English curriculum, or a social studies 

curriculum, so that we can go to the school and say, ‘‘This is where 

you can put it. This is where you can use the lesson.’’ And we think 

that making it simple is a good way to do that. 

Mrs. BIGGERT. Thank you. I yield to Mr. Hinojosa. 

Mr. HINOJOSA. Thank you, Madam Chairwoman. I think that the 

first panel and the second panel are equally good in the material 

that you all have presented. Very, very interesting, and certainly 

you have caught my interest. 

I don’t think that in 5 minutes I could ask questions of each one 

of you, so let me see if I can focus on the last three, because you 

touched on something that is very important in my Congressional 

district, and that is that 80 percent of the 652,000 constituents I 

represent are Hispanic. I come from Mexican immigrant parents: 

11 children; I am number 8. 

So, my father, as a first generation American—because he got his 

citizenship right after World War II—taught me something, and 

that is that we needed to learn how to save. And he, like me, because I was good at following instructions and math, and things 

like that, and so he showed me how he would put away 2 percent 

of every day’s deposits. He had a little grocery store, and then 

started a meat processing company, and that was his practice. 

And so, I followed suit. I am second generation, and I was lucky 

to enough to make a more comfortable life for myself because I not 

only had the savings, but I invested it in the stock market. 

I particularly liked the fact that Donald Kittell and Stephen 

Brobeck spoke about what they are doing with the Hispanic community. The Hispanic community is a growing population that accounts for about $800 billion of buying power annually. So that certainly is a group to focus on if we are going to make a big difference. 

My question to you—each one of you, Mr. Kittell and Mr. 

Brobeck—are you working with any of the Hispanic organizations 

like NCLR, National Council of La Raza, or LULAC, or others who 

focus so much on trying to improve the quality of life in the Hispanic community? I will start with Don Kittell. 

Mr. KITTELL. I can’t speak of any direct partnership with the organizations you have mentioned, but our firms and our programs 

are very much targeted to the Hispanic community, as is the entire 

securities industry’s diversity program, both in employing Hispanics and other minorities, as well as marketing to them. 

But in the stock market game program, our firms have been very 

interested in—particularly in underserved communities, particularly inner city. One of the firms I mentioned in my oral testimony, 

Martin Cabrera, was a gentleman who grew up in Chicago, inner 

city Hispanic, took the stock market game and, 20 years later, has 

his own securities firm, and is a great supporter of our game. 

So, we are very focused on inner city. We are translating our material into Spanish. And it’s a market that we are very interested 

in serving. 

37

Mr. HINOJOSA. Thank you. Mr. Brobeck? 

Mr. BROBECK. One of the most important priorities of this expanding America Saves program is to reach out to Latino communities. And in order to do that, we have partnered with national 

nonprofits and corporations to develop a unique set of materials, 

such as this ‘‘Build Wealth, Not Debt’’ pamphlet in Spanish, and 

a Web site, and other related materials. But we have also gone outside of Washington to try to organize savings groups in primarily 

Latino communities. 

My colleague and associate director, Nancy Register, this very 

day is working with dozens of Latino groups in El Paso on El Paso 

Saves, on a whole array of initiatives. And a couple of weeks ago 

she was working on Miami Saves, which is led by Latino groups. 

So this is a very high priority at the Consumer Federation of America, and we look forward to working with you. 

Mr. HINOJOSA. If you would draw an imaginary line from El Paso 

to San Antonio to Corpus Christi and down to the southern tip of 

Texas and Brownsfield, there are approximately 12 million—maybe 

14 million—people, of which 80 percent are Hispanic. And I would 

be happy—our staff would be happy—to assist you with the organizations that I believe would gladly collaborate to get your materials, both English and Spanish, and see how we can get it out into 

the communities, and get many more involved in the programs that 

you have. 

And the last question, to Mr. Pollack. I was very pleased to see 

that you are focusing on our soldiers, our veterans, because $5,000 

help towards closing costs for a home could go a long way. We are 

trying to encourage them to look at the—not scholarships, but 

money that is available similar to our GI Bill, for them to attend 

and access higher education. 

So, if we could combine those for veterans and for our soldiers 

coming back from Iraq and Afghanistan, I think would do two 

things. One is educate them, and if part of that package included 

financial literacy education, I think they will leapfrog forward, in 

terms of increasing their income for the family, and their equity, 

so that that would help them a great deal. And I thank you for that 

kind of work. 

Mr. POLLACK. Thank you so much. And we would be honored to 

work with you on that. 

Mr. HINOJOSA. Thank you. I yield back, Madam Chairwoman. 

Mrs. BIGGERT. Thank you, Mr. Hinojosa. Just a couple of quick 

things. We are expecting a vote any minute now. 

In the FACT Act, Mr. Kittle, we had in there that everyone 

would receive a free consumer credit report. Does your organization 

do anything to help people to—how to use their credit report? Is 

this something, when you’re doing a mortgage, that this helps? 

Mr. KITTLE. My company specifically, or the mortgage banking— 

Mrs. BIGGERT. Well, I meant the mortgage—the association, not 

your— 

Mr. KITTLE. The Mortgage Bankers Association, again, through 

our home loan learning center, yes ma’am, it does. And they can 

log on to that. It takes them through the entire process, from before you buy a house, the actual origination of the loan, the closing 

cost, and the closing. So, yes ma’am. 

38

Mrs. BIGGERT. So that has been helpful, for them to know how 

to deal with their credit score? 

Mr. KITTLE. Yes, ma’am. We certainly feel that it has. 

Mrs. BIGGERT. Then, Mr. Sorgatz, you mentioned that many 

credit unions are working in the schools to teach the personal financial skills. What should—do you see tests that kids are improving when they leave high school, or they leave college, as far as the 

skills that they have developed? Is there any way that you can 

judge that? 

Mr. SORGATZ. Well, looking at the statistics that CUNA has put 

together, it certainly shows an improvement that occurs after there 

has been a financial literacy program that has been implemented. 

And most of the statistical information is included in my report, 

written report. But definitely. 

Mrs. BIGGERT. What about—we’re always talking about, well, everybody should have a budget and start very young with kids. How 

important is that to all of you, either with your families or with 

your organizations, that—do you find that kids that know about 

budgeting, that they do better later? Anyone have any stories on 

that? Mr. Brobeck? 

Mr. BROBECK. Our belief is that the most important thing we can 

do in the area of financial education for kids K to six is to inculcate 

good financial habits. Knowledge is of limited use to them at that 

point. 

The two types of habits that are most helpful are how to live 

within a budget, as you mentioned, in terms of giving an allowance, 

perhaps, giving them work to do, paying them, and then requiring 

that they make certain expenditures, you know, within that budget. 

And then, secondly, promoting savings, providing perhaps financial incentives for them to save. And some kids—only a minority, 

unfortunately today—have opportunities to save at school. There 

are still a few banks and credit unions that work with schools to 

promote regular savings. And that is invaluable. If there is one 

thing that could be done for K to six to improve financial literacy, 

it would be to reinstitute bank/credit union savings programs nationwide. 

Mrs. BIGGERT. Isn’t it true right now that our savings is –.02 

percent, and that is the lowest it has been since the Great Depression? So there is a generation there that needs some help. 

Mr. Hinojosa, do you have any further— 

Mr. HINOJOSA. Again, I want to compliment all the panelists, because I liked all the presentations. I am going to take the liberty 

of taking some of these sets of copies of each of your presentations 

and get them out to different parts of the country, where I think 

that they should duplicate them and get them out to organizations 

that would like to know what you all are doing. 

But in closing, I want to say that if we could get parents, particularly mothers, to hear the presentations, I believe that they 

could probably take their sons and daughters to the bank and open 

up their first account, their first savings account, and that might 

be the start of trying to change that –2 percent savings, and getting us at least a straight line, and then on up to saving as my father and mother taught me, and I have taught my children. 

39

They have not only a stock portfolio, but they have a savings account. And every—I think it’s every 60 days, the part that they 

have saved for the bank account, for the savings account, we take 

them to go deposit it. And I am pleased to tell you that the oldest 

one, who is 12 years old, has had a portfolio, stock portfolio, for 10 

years. And it surprised me with the stock market changes that improved here these last few weeks, she is at 180,000, and the 10-

year-old has only had it for 3 years, and she is at 50,000. 

So, all of this to say that they have gotten comfortable about 

hearing reports from time to time at the table, about how their 

stock is doing, and how we look it up in the stock market in the 

NASDAQ section, and comfortable going to the bank. And again, 

one is 10 and the other one is 12. So, mothers, I believe, are the 

key that we can invest time and training, because they are going 

to see to it that their daughters and sons learn this art of saving. 

But the financial literacy portion that you all teach, oh, that is 

absolutely gold, as far as I am concerned. It is the best. So when 

I choose not to be in Congress and I step down, I think I am going 

to set up a center, a national center, that will coordinate all these 

things that all of you are doing so that we can get it out to both 

English speaking and non-English speaking people, so that we can 

improve this. 

I am delighted to work with my friend and the Chair, Judy 

Biggert, and together we are going to keep on doing great things. 

Thank you. 

Mrs. BIGGERT. Thank you. And don’t everybody rush after the 

hearing for financial investment advice from Mr. Hinojosa. 

The Chair notes that some members may have additional questions for this panel, which they may wish to submit in writing. 

Without objection, the hearing record will remain open for 30 days 

for members to submit written questions to these witnesses, and to 

place their responses in the record, without objection. 

And let me just say that you all have been a great panel. It has 

really been very, very great to have the expert testimony. We will 

continue to work on this issue. This hearing is adjourned. 

[Whereupon, at 12:17 p.m., the hearing was adjourned.] 

(41)

A P P E N D I X

September 28, 2006

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