FINANCIAL LITERACY AND EDUCATION: 

THE EFFECTIVENESS OF GOVERNMENTAL 

AND PRIVATE SECTOR INITIATIVES 

HEARING 

BEFORE THE

COMMITTEE ON FINANCIAL SERVICES 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED TENTH CONGRESS 

SECOND SESSION 

APRIL 15, 2008 

Printed for the use of the Committee on Financial Services 

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FINANCIAL LITERACY AND EDUCATION: THE EFFECTIVENESS 

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FINANCIAL LITERACY AND EDUCATION: 

THE EFFECTIVENESS OF GOVERNMENTAL 

AND PRIVATE SECTOR INITIATIVES 

HEARING 

BEFORE THE

COMMITTEE ON FINANCIAL SERVICES 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED TENTH CONGRESS 

SECOND SESSION 

APRIL 15, 2008 

Printed for the use of the Committee on Financial Services 

Serial No. 110–105 

( 

(II) 

HOUSE COMMITTEE ON FINANCIAL SERVICES 

BARNEY FRANK, Massachusetts, Chairman 

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 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

DENNIS MOORE, Kansas 

MICHAEL E. CAPUANO, Massachusetts 

RUBE ́ N HINOJOSA, Texas 

WM. LACY CLAY, Missouri 

CAROLYN MCCARTHY, New York 

JOE BACA, California 

STEPHEN F. LYNCH, Massachusetts 

BRAD MILLER, North Carolina 

DAVID SCOTT, Georgia 

AL GREEN, Texas 

EMANUEL CLEAVER, Missouri 

MELISSA L. BEAN, Illinois 

GWEN MOORE, Wisconsin, 

LINCOLN DAVIS, Tennessee 

PAUL W. HODES, New Hampshire 

KEITH ELLISON, Minnesota 

RON KLEIN, Florida 

TIM MAHONEY, Florida 

CHARLES WILSON, Ohio 

ED PERLMUTTER, Colorado 

CHRISTOPHER S. MURPHY, Connecticut 

JOE DONNELLY, Indiana 

BILL FOSTER, Illinois 

ANDRE CARSON, Indiana 

JACKIE SPEIER, California 

DON CAZAYOUX, Louisiana 

TRAVIS CHILDERS, Mississippi 

SPENCER BACHUS, Alabama 

DEBORAH PRYCE, Ohio 

MICHAEL N. CASTLE, Delaware 

PETER T. KING, New York 

EDWARD R. ROYCE, California 

FRANK D. LUCAS, Oklahoma 

RON PAUL, Texas 

STEVEN C. LATOURETTE, Ohio 

DONALD A. MANZULLO, Illinois 

WALTER B. JONES, JR., North Carolina 

JUDY BIGGERT, Illinois 

CHRISTOPHER SHAYS, Connecticut 

GARY G. MILLER, California 

SHELLEY MOORE CAPITO, West Virginia 

TOM FEENEY, Florida 

JEB HENSARLING, Texas 

SCOTT GARRETT, New Jersey 

GINNY BROWN-WAITE, Florida 

J. GRESHAM BARRETT, South Carolina 

JIM GERLACH, Pennsylvania 

STEVAN PEARCE, New Mexico 

RANDY NEUGEBAUER, Texas 

TOM PRICE, Georgia 

GEOFF DAVIS, Kentucky 

PATRICK T. MCHENRY, North Carolina 

JOHN CAMPBELL, California 

ADAM PUTNAM, Florida 

MICHELE BACHMANN, Minnesota 

PETER J. ROSKAM, Illinois 

KENNY MARCHANT, Texas 

THADDEUS G. McCOTTER, Michigan 

KEVIN McCARTHY, California 

DEAN HELLER, Nevada 

JEANNE M. ROSLANOWICK, Staff Director and Chief Counsel 

(III) 

C O N T E N T S 

Page 

Hearing held on: 

April 15, 2008 ................................................................................................... 1 

Appendix: 

April 15, 2008 ................................................................................................... 61 

WITNESSES 

TUESDAY, APRIL 15, 2008 

Bowdler, Janis, Associate Director, Wealth-Building Policy Project, National 

Council of La Raza (NCLR) ................................................................................. 43 

Braunstein, Sandra F., Director, Division of Consumer and Community Affairs, Board of Governors of the Federal Reserve System ................................ 16 

Brobeck, Stephen, Executive Director, Consumer Federation of America .......... 42 

Cabral, Hon. Anna Escobedo, Treasurer of the United States, U.S. Department of the Treasury ........................................................................................... 8 

Docking, Jill, President and Founder, Financial Fitness Foundation ................. 40 

Duvall, Dr. Robert, President and Chief Executive Officer, National Council 

on Economic Education ........................................................................................ 38 

Frankfort, Phyllis, President and Chief Executive Officer, Working in Support 

of Education (W!SE) ............................................................................................. 45 

Johnson, Hon. JoAnn, Chairman, National Credit Union Administration 

(NCUA) ................................................................................................................. 11 

Martin, Hon. Dean, Treasurer, State of Arizona .................................................. 13 

McConnell, Cassandra, Director, Consumer and Community Affairs, Office 

of Thrift Supervision (OTS) ................................................................................. 19 

Mooney, Robert W., Deputy Director, Division of Supervision and Consumer 

Protection, Federal Deposit Insurance Corporation (FDIC) ............................. 18 

Morial, Marc H., President and Chief Executive Officer, National Urban 

League ................................................................................................................... 39 

Salisbury, Dallas L., Chairman, American Savings Education Council; and 

President and CEO, the Employee Benefit Research Institute ........................ 46 

Wides, Barry R., Deputy Comptroller for Community Affairs, Office of the 

Comptroller of the Currency (OCC) .................................................................... 20 

APPENDIX 

Prepared statements: 

Brown-Waite, Hon. Ginny ................................................................................ 62 

Carson, Hon. Andre .......................................................................................... 63 

Donnelly, Hon. Joe ........................................................................................... 64 

Hinojosa, Hon. Ruben ....................................................................................... 65 

Bowdler, Janis .................................................................................................. 67 

Braunstein, Sandra F. ...................................................................................... 73 

Brobeck, Stephen .............................................................................................. 85 

Cabral, Hon. Anna Escobedo ........................................................................... 93 

Docking, Jill ...................................................................................................... 101 

Duvall, Robert ................................................................................................... 103 

Frankfort, Phyllis ............................................................................................. 110 

Johnson, Hon. JoAnn ....................................................................................... 115 

Martin, Hon. Dean ........................................................................................... 134 

McConnell, Cassandra ..................................................................................... 143 

Mooney, Robert W. ........................................................................................... 171 

Morial, Marc H. ................................................................................................ 189 

Salisbury, Dallas L. .......................................................................................... 201 

Page

IV 

Prepared statements—Continued 

Wides, Barry R. ................................................................................................ 206 

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

Frank, Hon. Barney: 

Statement of the American Institute of Certified Public Accountants and 

360 Degrees of Financial Literacy ............................................................... 219 

Statement of Mellody Hobson, President, Ariel Capital Management, 

LLC, and Chairman, Ariel Mutual Funds Board of Trustees ................... 233 

‘‘The Ariel-Schwab Black Paper: A Decade of Research on African-American Wealth Building and Retirement Planning, October 2007’’ .............. 236 

Statement of the Credit Union National Association (CUNA) ..................... 260 

Statement of the Financial Industry Regulatory Authority ......................... 265 

Letter from the National Association of Realtors .......................................... 269 

National Council on Economic Education, ‘‘Survey of the States: Economic 

and Personal Finance Education in Our Nation’s Schools in 2007, A 

Report Card’’ .................................................................................................. 271 

Hinojosa, Hon. Ruben: 

Statement of Marcia Z. Sullivan, on behalf of the Consumer Bankers 

Association ..................................................................................................... 283 

Statement of Consumer Action ........................................................................ 288 

Press release from the Employee Benefit Research Institute (EBRI) .......... 294 

FDIC Press Releases ........................................................................................ 296 

Letter to Chairman Barney Frank and Ranking Member Spencer Bachus 

from the National Association of Federal Credit Unions (NAFCU) ......... 298 

Comments from the Networks Financial Institute (NFI) ............................. 301 

GAO Report, ‘‘Financial Literacy and Education Commission: Further 

Progress Needed to Ensure an Effective National Strategy,’’ dated December 2006 ................................................................................................... 304 

Statement of Arthur R. Connelly, on behalf of the American Bankers 

Association ..................................................................................................... 358 

H. Res. 1079 ...................................................................................................... 392 

Statement of the American Financial Service Association Education 

Foundation ..................................................................................................... 397 

Statement of the North American Securities Administrators Association .. 402 

Letter from the National Youth Involvement Board ..................................... 406 

Statement of Richard Woods, Senior Vice President, Corporate Affairs, 

Capital One ................................................................................................... 407 

‘‘Financial Literacy and Education Commission, SAFE Report: Strategy 

for Assuring Financial Empowerment’’ ....................................................... 410 

Press release from Charles Schwab Corporation ........................................... 430 

Maloney, Hon. Carloyn: 

Responses to questions submitted to Hon. Anna Escobedo Cabral .............. 440 

Responses to questions submitted to Phyllis Frankfort ................................ 443 

(1) 

FINANCIAL LITERACY AND EDUCATION: 

THE EFFECTIVENESS OF GOVERNMENTAL 

AND PRIVATE SECTOR INITIATIVES 

Tuesday, April 15, 2008 

U.S. HOUSE OF REPRESENTATIVES, 

COMMITTEE ON FINANCIAL SERVICES, 

Washington, D.C. 

The committee met, pursuant to notice, at 10:02 a.m., in room 

2128, Rayburn House Office Building, Hon. Barney Frank [chairman of the committee] presiding. 

Members present: Representatives Frank, Waters, Maloney, 

Velazquez, Watt, Sherman, Meeks, Moore, Hinojosa, Clay, Baca, 

Miller of North Carolina, Scott, Green, Cleaver, Klein, Foster; Castle, Manzullo, Biggert, Capito, Feeney, Hensarling, Garrett, and 

Heller. 

The CHAIRMAN. The hearing will come to order. This is one of 

those hearings that is more important than it is sexy. Financial literacy has been a cause that has been championed by many on this 

committee for some time. 

The gentlewoman from Illinois, Mrs. Biggert, has long been an 

advocate of it, as well as our colleague from Texas, Mr. Hinojosa, 

who will be joining us also. It was hard to get traction for public 

attention for a while, but we are now in a financial downturn in 

our economy in which a lack of financial literacy is a contributing 

factor. And so we hope now to use the attention we have gotten to 

engage people in this effort. 

I want to say as part of this that obviously there have been some 

criticisms made of some of our financial institutions. One of the 

best things that can be done both for the economy and from the 

standpoint of alleviating the economic difficulties of people in the 

lower economic sectors is to help them become customers of banks 

and credit unions. One of the things that we should be clear about 

is that people who stay outside the banking system pay a much 

higher set of transaction fees for some basic things than most of 

us in this room do. Check cashing fees, payday loans, high charges 

for the transmission of funds to relatives in another country—all 

of those are higher for people on the whole outside the banking system or the credit union system than they would be if they were in 

there. 

So, helping people understand the importance to them—take 

some of those seats there. You don’t need to stand. There are some 

seats over there. If there are empty seats, you can sit in them. 

There are some seats over there, too. 

2 

Helping people understand the importance to them of taking advantage of that set of financial institutions, and educating them 

onto some basics as to what they should and shouldn’t do, these are 

very important things. So we are glad to have this hearing to focus 

attention on it. And if there are ideas about how we can further 

financial literacy, you have people very ready to act on it. 

As I said—we are joined now by the gentleman from Texas—the 

gentleman from Texas and the gentlewoman from Illinois have 

been leaders in this effort, and I think it is now clear to the whole 

country how important that effort is. So, we welcome the witnesses. 

And the gentlewoman from Illinois is now recognized. 

Mrs. BIGGERT. Thank you, Mr. Chairman, and thank you for 

holding this hearing today on such an appropriate day—tax day— 

and during an appropriate month—April—which has for several 

years been recognized as National Financial Literacy Month. 

As the co-founder and co-chair of the House Financial and Economic Literacy Caucus with Congressman Hinojosa, I was very 

pleased when, in January, President Bush launched the President’s 

Advisory Council on Financial Literacy. About 5 years ago, in 2003, 

I actually introduced a bill, the SENTS Act, that is S–E–N–T–S 

Act, that would have established a commission like this one with 

a mission of coordinating both the private and the public sectors’ 

financial literacy efforts. Unfortunately, the Senate would only 

agree to half of that idea, so thus was born the public sector Financial Literacy and Economic Commission, or FLEC. 

But we have frankly wanted a commission that would bring together the best of both worlds, both the private and public sectors, 

to attack this problem. It turns out that what was true in 2003 is 

still true today. Teaching financial literacy requires cooperation between government and industry. The government can’t, and frankly shouldn’t be, solving this problem on their own. And make no 

mistake, we have a problem. The savings rate is still hovering 

around zero; 10 million Americans are unbanked; and there were 

2.2 million foreclosure filings in 2007. The front page of newspapers across the country proclaim that millions of Americans are 

losing their homes because they were not ready to be homeowners. 

Some of our financial challenges are a result of the slowing economy, but many of them are the direct result of families who don’t 

have the knowledge and the tools they need to hold a mortgage or 

manage credit risk and savings. I think a good place to start would 

be what I call emergency response scenarios, or teachable moments. After the 2005 Gulf Coast hurricanes, I called on thenTreasury Secretary Snow to convene an emergency meeting of the 

FLEC to coordinate the financial recovery efforts of 20 Federal 

agencies. And when the mortgage crisis hit, many private sector organizations coordinated with the Treasury to set up the HOPE 

NOW initiative to help troubled homeowners keep their homes. 

These are commendable efforts, but I would argue that they 

could be implemented more often and with greater speed and 

greater effectiveness with a permanent public-private partnership 

as was envisioned in the 2003 legislation. Such an entity could 

quickly deploy financial literacy initiatives to help Americans make 

educated decisions about their finances. 

3 

A longer-term goal that we need is that we need this public-private group to help direct the development of new, more effective 

methods of teaching sound money management skills to all age 

groups, from toddlers to seniors. And we need to encourage more 

States to integrate personal financial education into their K 

through 12 curriculum guidelines. With the right education, today’s 

children will become tomorrow’s smart investors, entrepreneurs, 

and business leaders. 

We also need to give Americans access to the tools they need to 

save and invest money. At the start of the 110th Congress, I introduced a bill called the 401 Kids Family Savings Act of 2007. This 

bill would allow parents and family members to set aside money 

in a child’s account that will accumulate interest tax-free and can 

be used for college tuition, a first home, or even retirement if they 

keep it going that long. 

But this is only one idea. Once again this year, many ideas will 

be on display at the Financial and Economic Literacy Caucuses’ 

Annual Financial Literacy Day Fair this April 28th. It’s a great 

way to see what the various groups are doing, and I encourage everyone to attend. Americans are a diverse group and we all share 

some very basic financial needs. We need to be prepared for tuition 

costs, a mortgage, health care, and retirement. We need a financial 

cushion against unexpected challenges like the death of a family 

member, and we need the capital necessary for new entrepreneurs 

to launch the start-ups and open the small businesses that drive 

this economy. Every American should have the opportunity and the 

know-how to fulfill each of these goals. 

How can we better coordinate the public and private sector efforts? How can we help Americans to become more financially 

savvy? What works and what doesn’t work? How do we reach 

Americans during those teachable moments following natural disasters, the classroom, at the workplace, or on tax day? Who should 

coordinate these efforts? How can we simplify, rebrand, and entice 

Americans to use existing private and tax-free Federal savings vehicles to invest and save for their future? These are all questions 

that I am confident that our witnesses today will address. 

What we really need are good, affordable ideas, and those rarely 

come from Congress. I hope that today’s witnesses can shed some 

light on the subject and point us in the right direction. We need 

to get this right. 

Again, thank you for holding this hearing, and I yield back. 

The CHAIRMAN. Next, another leader in this effort to promote financial literacy, the gentleman from Texas, Mr. Hinojosa, at whose 

request this hearing has been held. 

Mr. HINOJOSA. Thank you, Chairman Frank, and Ranking Member Bachus. I want to express my sincere appreciation for you holding this important and very timely hearing today on financial literacy. 

This committee has held two or three hearings on financial literacy in the past, and I look forward to working with the chairman 

on additional hearings on financial literacy either later this year or 

sometime in the 111th Congress. 

Throughout my political career, I have been dedicated to moving 

my constituents away from payday lenders, predatory lenders, and 

4 

check cashers and into such mainstream financial entities as 

banks, credit unions, and other financial institutions. It is my hope 

that by moving them into the financial mainstream, my constituents and others in the United States will be able to open checking 

and savings accounts, establish credit, and eventually realize the 

American Dream of homeownership. 

One of the ways I work towards this goal is through financial literacy and encouraging a collaboration of the private and public sectors. Over the past 6 years, I have worked very closely with my 

good friend and colleague, Congresswoman Judy Biggert, to shed 

light on the need for improved financial literacy rates in the whole 

United States. In 2005, Congresswoman Biggert and I co-founded 

and currently co-chair the Financial and Economic Literacy Caucus. At present, we’re proud that there are 79 Members of Congress 

who have joined and participate actively in this caucus. 

Establishing good spending and savings habits early on is crucial, which is why we need to work more closely with the Department of Education, with the Federal Government, and with States 

and localities to supply our students with teachers who can teach 

not only theoretical economics but also pragmatic financial literacy, 

such as how and why to open a checking account and/or a savings 

account, and how to pay bills on time, obtain a free copy of their 

credit report, and establish good financial planning habits. 

We also need a streamlined way to provide financial literacy education to adults. Chairman Frank, our government should lead by 

example. It should coordinate and communicate a unified message 

on financial literacy and help us establish a national strategy 

which, according to the GAO, the Financial Literacy Education 

Commission has failed to do. 

We should authorize and appropriate such funds as necessary to 

create a broad-based public awareness campaign. FLEC has failed 

to produce a multi-media campaign as required in Title 5 of the 

FACT Act, despite having had 4 years to do so. I am proud that 

Texas is one of the few States that requires some form of financial 

literacy for graduation from high school as well as permits its residents to impose credit freezes. 

Mr. Chairman, I look forward to hearing from our witnesses here 

today and hope to coordinate and collaborate with them on financial literacy events and ideas in the future. At this point, I ask 

unanimous consent to enter into today’s record the following documents which have been turned in by people who could not come 

and testify. They include—and I will read them all: A copy of 

Jump$tart’s joint press release with Chairman Bernanke; a copy of 

Charles Schwab’s Parents and Money Survey; the Executive Summary of the Employee Benefit Institute Retirement Confidence Survey; the testimony of the American Financial Service Association 

Education Foundation; the statement of Richard Woods of Capital 

One; the statement of Consumer Action; the comments from the 

Networks Financial Institute; the statement of the North American 

Securities Administrators Association; the statement of the Consumer Bankers Association; the statement of the National Association of Federal Credit Unions; the testimony of the American Institute of CPAs; the 2007 National Council of Economic Education 

Survey; the comments from the National Youth Involvement Board; 

5 

the press releases from the FDIC; the GAO report on Financial Literacy and Education Committee; and finally, H. Res 1079, a resolution recognizing the goals and ideals of Financial Literacy Month. 

And with that, Mr. Chairman, I yield back. 

The CHAIRMAN. The gentleman from Texas. 

Mr. HINOJOSA. Do I have unanimous consent to enter— 

The CHAIRMAN. Yes. Without objection, those items will be inserted into the record. 

Mr. HINOJOSA. Thank you. 

Mr. HENSARLING. Thank you, Mr. Chairman. And let me thank 

you for calling this hearing. I think it is a very, very important 

hearing that we are having today. And as we have spent a lot of 

time dealing with the subprime mortgage meltdown, I think we 

have all concluded there are a number of causes underlying the 

economic challenges our Nation faces, but at least one of the causes 

was that there were hundreds of thousands of people who entered 

into financial transactions that fundamentally they did not understand. 

Now in the time that I have served on this committee, all too 

often I feel that a number of my colleagues, when faced with such 

a situation, conclude that when there are economic transactions 

that they view as unwise for a consumer, or perhaps too complicated for a consumer to understand, that it is incumbent upon 

us to outlaw them. Now I hold personal freedom in higher esteem. 

I do not believe the answer is to take away the freedom and the 

economic freedoms of our fellow citizens but instead to help inform 

and educate them as to the nature of the transactions into which 

they enter. 

And so I have always been a huge advocate, and I thank the gentleman from Texas and the gentlelady from Illinois for their leadership on this issue, and I think that we need to search in this committee for different ways that we can be more effective in helping 

educate the American populace on the nature of the economic 

transactions into which they enter. We need effective disclosure, 

not necessarily voluminous disclosure, and we need to educate and 

inform, not to take away their personal freedom. 

So, I look forward to hearing from the witnesses, and I would 

note also that sometimes there are limited opportunities to truly 

work on a bipartisan basis in the committee, and I certainly believe 

and hope that this is one of those opportunities, and I hope it is 

an opportunity that we seize. 

Mr. Chairman, I yield back the balance of my time. 

The CHAIRMAN. The gentleman from Missouri. 

Mr. CLEAVER. Mr. Chairman, I have a very short statement. I’m 

more interested in the responses from the panel. When you look at 

the fact that only 32 percent of parents have regular discussions 

about financial matters with their children, it suggests that we 

have a major problem. And added to the fact that the most—the 

wealthiest one percent of the U.S. population holds more wealth 

than the bottom 90 percent combined, and so the one percent probably would represent also the children who are aware of and involved with financial matters as children, and it ends up creating 

havoc in the homes. 

6 

I had a young man who graduated from college and wanted to 

go into the rap world, which is fine. I’m not a rap person, but he 

wanted to go into the rap world. He went out and borrowed money 

from the Jo-Jo Finance Company and never even paid any attention to the fact that he was paying 21 percent interest, because he 

had no awareness of those kinds of matters. 

In my real life, I am a United Methodist pastor. Most people believe that the majority of divorces in the United States are caused 

by infidelity, but they are very, very wrong. The overwhelming majority of divorces are caused by financial issues, 57 percent. And it 

is usually the people in the lower economic realm because they 

have no knowledge about financial matters. I am hoping that as we 

become ‘‘dialogical’’ today that some of you will have some offerings 

that would allow this committee to perhaps move in the direction 

of long-overdue financial literacy. 

Thank you, Mr. Chairman. 

The CHAIRMAN. The gentleman from New Jersey. 

Mr. GARRETT. I thank the chairman. I thank the members of the 

panel as well for being here. If there is ever a time for the need 

for more financial literacy, it is today. I would like to commend the 

action of a whole host of organizations that are really trying to 

come to the point to address this. Back in my home district, you 

have local credit unions and what have you. They’re out there 

doing the work of small bankers, and others in the banking institutions are trying to lend their hand as well. And one new one I just 

found out about 2 weeks ago, even collection agencies, who may be 

on the other side are actually opening up their offices and servicers 

as well to try to educate consumers in the future how they cannot 

get into that situation next time around. 

The flip side of all that, however, is we have to make sure that 

the Federal Government doesn’t send any miscues to lenders—or to 

borrowers—in the future. Just three quick points. One, maybe we 

did that, maybe the Federal Government did that when we encouraged people to get engaged, involved with no downpayment 

homes—no downpayment loans on homes, when they really weren’t 

in a situation to properly buy that house. 

Secondly, maybe we sent a miscue just earlier this year when we 

passed a stimulus package sending money back to people, $600, 

$1,000, what have you, and said go out and spend the money instead of paying off some of your debt or investing it. 

And thirdly, we might right now be sending a miscue to borrowers as far as their financial literacy with regard to other stimulus packages or bailout proposals which are basically saying to 

the people, if you were involved in risky behavior in the past, we 

might actually be rewarding that behavior by ‘‘bailing you out,’’ 

versus the guy on the other side of the street who was more riskadverse and knew—had a little bit more information as far as financial literacy, did not engage in that, and we’re really not going 

to be doing anything for you. We’re just going to let you go your 

own way. 

So I think the Federal Government has some responsibility in all 

this as far as the miscues, and I would be curious to hear your 

comments on all of those points. Thank you so much for coming to 

this hearing today. 

7 

The CHAIRMAN. The gentleman from New York. 

Mr. MEEKS. Thank you, Mr. Chairman. Thank you for holding today’s hearing on financial literacy and education, the effectiveness 

of government and private sector initiatives. I also want to thank 

my good friend, Ruben Hinojosa, for having this month dedicated 

as Financial Literacy Month. I think it’s something that is bringing 

the awareness to all Americans and I thank Ruben for his vision 

to make sure that we bring and make financial literacy something 

that all are looking at. 

You know, when we look at since, you know, here we are in April 

2008, we are in some of the most dramatic and challenging economic conditions than we have been in the last 35 years. We have 

an ever-growing number of economists who are saying and now 

fear that not only is our economy in the middle of a recession, but 

that recovery may be much longer than we expect. We don’t know 

where the bottom is. 

You look at the toxic combination of tight credit, falling home 

prices, mounting losses for banks, high commodity prices—oil recently hit an all-time high of $111.76—and a plunging consumer 

confidence level that has cut into consumer spending, has sent our 

Nation into a financial freefall, and we don’t even know where the 

bottom is yet. 

One of the things we do know that got us here is that there have 

been individuals who signed documents and really didn’t understand what they were signing. They looked at products and made 

decisions without really understanding why they are doing it. If in 

fact they were financially literate, if they understood the document, 

then they could understand the different products that were out 

there, and we may have been able to avert some of the problems 

that we currently face. 

The key is educating individuals. The key is trying to reach particularly young and old now, but I always have been trying to focus 

recently on a lot of the young in schools whose parents, as Mr. 

Cleaver indicated, you know, they may not have been financially 

literate themselves, coming from a different time. But they need 

their children at least to be able to understand and can help them. 

And so financial literacy is making sure, to me, for example, 

should be required in every school now. It should be just like mathematics and anything else. It should be a required course. Because 

I don’t see how you can continue in the 21st Century without being 

financially literate. It’s like not being able to read. People can take 

advantage of you when you don’t understand. They can’t take advantage of you when you do. 

And so I am—and I think that it’s therefore important for us, 

those of us who are Members of Congress, those of us who are in 

the private sector, those of us who are in the not-for-profit sector, 

to figure out how we can all work collectively together so that we 

can provide that kind of service, that kind of literacy, especially to 

our public schools, so that we can begin to educate our young people and they become financially literate. It is critical that we collaborate in this manner. 

So, Mr. Chairman, I thank you for this hearing. I look forward 

to hearing what the witnesses have to say and how they think that 

we should tackle this issue and how we can make sure that every 

8 

child—whether they are rich or poor, black, brown, red, or yellow— 

has an opportunity to understand and become financially literate 

so they will not fall victim to some of the individuals that they 

have been utilized or predatory lenders have taken advantage of 

them, and we can possibly avoid the kind of financial disaster this 

country is currently facing today. 

Thank you, Mr. Chairman, and I yield back. 

The CHAIRMAN. Final statement, the gentleman from Texas, Mr. 

Green. 

Mr. GREEN. Thank you, Mr. Chairman. I especially thank you 

and Ranking Member Bachus. I think that this is a most necessary 

hearing. And I say so because not only must we concern ourselves 

with persons being able to understand that which is codified, but 

it’s also equally as important that persons understand the process. 

I would like to just share this brief vignette to better explain. I 

happen to myself have purchased a home or two in my lifetime, 

and I did not know about the yield spread premium. Had I known 

about the yield spread premium, I suspect that I would have 

shopped around. But I went to the very first person who agreed to 

give me a loan at a certain interest rate, and I took it, because it 

seemed like a good deal and because it seemed like this person was 

on my side. 

I think that understanding the process, understanding that you 

need to get more than one opinion about your creditworthiness, is 

exceedingly important. And I think that financial literacy will not 

only help persons to understand that which they can read and comprehend, but also understand that this process entails more than 

visiting with one person who may give you one opinion about your 

creditworthiness. 

I am honored to be here today. I regret that I will have to leave 

because of pressing business elsewhere. But I assure you, I will be 

chronicling what is happening, and I thank you, Mr. Chairman. I 

yield back the balance of my time. 

The CHAIRMAN. Before proceeding with the panel, I want to ask 

unanimous consent to include in the record: Ariel Capital Management, the Ariel Schwab Blackpaper Decade of Research on AfricanAmerican Wealth Building and Retirement Planning; a statement 

from the Credit Union National Association; a statement from the 

National Association of Federal Unions; a statement from the Financial Industry Regulatory Authority; and a statement from the 

National Association of Realtors. 

Without objection, they will all be included in the record. 

We will now begin the testimony with the Treasurer of the 

United States, representing the Department of the Treasury, Anna 

Escobedo Cabral. Treasurer Cabral. 

STATEMENT OF THE HONORABLE ANNA ESCOBEDO CABRAL, 

TREASURER OF THE UNITED STATES, U.S. DEPARTMENT OF 

THE TREASURY 

Ms. CABRAL. Good morning. Thank you, Chairman Frank. I appreciate the opportunity to be here before you today. I thank all the 

members of the committee who have joined us for this important 

hearing. I especially want to thank Congresswoman Biggert and 

Congressman Hinojosa for their work in creating the Economic LitVerDate Aug 31 2005 11:34 Jul 09, 2008 Jkt 042717 PO 00000 Frm 00014 Fmt 6633 Sfmt 6633 K:\DOCS\42717.TXT TERRIE
9 

eracy Council or Caucus. It has, I think, been particularly important, and also for the work that you do in terms of organizing the 

fair every year, and for supporting Financial Literacy Month in 

April. Thank you to the House for also passing the resolution that 

did that very thing this April. 

The attention, of course, to financial literacy is very timely. 

Today, there are many Americans who are struggling. We have 

young adults who are struggling with debt, families who are struggling to understand the terms of their mortgages, and older Americans struggling with retirement issues. These are complex problems, and there are no simple solutions. Financial literacy will not 

cure all the problems that plague us, but a healthy dose may well 

be the preventive medicine that we need or that our Nation needs 

at this time. 

During my term in office as Treasurer, I have had the privilege 

of traveling across the country from the Bay Area to New York 

City, from El Paso to the far corners of Maine and all the cities and 

towns in between, spreading financial literacy and the message of 

its importance to community leaders, and State and local leaders, 

because of course, there is really no message perhaps that is more 

important to me as the daughter of farmworkers who struggled 

very hard to make a living and who lived in communities where 

being unbanked was very commonplace and where financial education often did not exist, it is a very personal issue for me. 

It is also, I have found, and I am very proud to say, an important 

issue for both the President and Secretary Paulson. They are 

equally committed to financial literacy. And what I would like to 

do is to spend a few minutes talking about the three ways in which 

the Department itself is addressing financial literacy. I would like 

to begin by describing some of the work, or at least acknowledging 

the work of the bureaus and offices that work in the Department 

of the Treasury, many of whom are actively engaged in a series of 

very specific programs, some of which we will hear from other witnesses about today. 

But most of the work at the Treasury Department is actually 

conducted in the area of financial literacy by the Office of Financial 

Education. It was established in 2002, and it has undertaken a tremendous outreach effort as a result. The staff has traveled to 47 

States plus the District of Columbia and Puerto Rico. It has held 

369 financial education sessions, reaching more than 30,000 people. 

The office produces and designates guidelines for quality financial 

education. It provides technical assistance to local programs. It 

forms partnerships with groups nationwide to connect them with 

resources, and it coordinates the activities across the Federal Government known of course as the Financial Literacy and Education 

Commission. 

The Commission is a very important way in which we do our 

work, the second topic for my comments this morning. An abundance of our efforts are through this Financial Literacy and Education Commission. This 20-agency entity, established by the Fair 

and Accurate Credit Transaction Act of 2003, gave the Commission 

and Treasury four mandates: A Web site; a hotline; a multimedia 

campaign; and a national strategy. I am pleased to provide some 

progress on where we are in each of those. 

10 

To begin, concerning the Web site, in October 2004, the Commission did launch mymoney.gov, a Web site designed to be a one-stop 

shop for Federal financial education information. The Web site is 

available in both English and Spanish, and the Web site topics include paying for education, saving and investing, homeownership, 

privacy and frauds and scams, or how to avoid them. 

Most recently the Commission added a link explaining the economic stimulus payments, and on the front page we have features 

about how to avoid foreclosure rescue scams. The site has 402 links 

and has had more than two million hits over the course of its lifetime. 

The toll-free hotline was established in October of 2004. It is 1– 

888–MyMoney, and it is operated by the General Services Administration. It is also available in both English and Spanish, and it enables callers to order free MyMoney tool kits, which contain various 

documents available through the Federal Government in a collection that is free of charge. Since its launch in October 2004, the 

MyMoney hotline has received more than 20,200 calls. 

As regards the multimedia campaign, we are currently working 

with the Ad Council on the production of a campaign that will address the topic of credit literacy, emphasizing the impact of one’s 

credit score. The project has progressed through the research, focus 

group, and creative stages and is now in production. We should see 

this campaign launched this summer, and it will feature television 

spots, radio spots, and a new Web site. 

The national strategy is the fourth topic I would like to report 

on. The FACT Act also required the Commission to develop a national strategy for financial literacy. In April of 2006, the Commission released, ‘‘Taking Ownership of the Future: The National 

Strategy for Financial Literacy.’’ The Strategy is a comprehensive 

blueprint for improving financial literacy in America. Approximately 7,600 copies of the Strategy have been distributed, and the 

Strategy has had 102,200—or 860 downloads. So there is a significant amount of interest on the part of the Nation, and particularly 

the individuals working to lead programs dealing with financial literacy. 

The Strategy actually developed so that at the end of each chapter, there are numbered Calls to Action assigned to the Federal 

Government or to the private sector or to individuals. Since the 

launch of the Strategy 2 years ago, the Commission has been hard 

at work implementing those Calls to Action, which allow us to 

measure performance on many initiatives that would not be possible without the cooperation of all 20 member agencies. The 

progress on the Strategy’s many Calls to Action can be found in my 

written testimony, which I hope will be included in the record, but 

are quite detailed. 

In addition, in December of 2006, the Government Accountability 

Office reported on the Commission’s activities and made several 

recommendations. The Commission welcomed the insights of GAO 

on how we could better accomplish our important mission on behalf 

of the American people. The Commission incorporated many of the 

GAO recommendations into its 2007 revisions to the Strategy, including definitions of financial education and financial literacy, the 

planning to conduct usability testing and to measure customer satVerDate Aug 31 2005 11:34 Jul 09, 2008 Jkt 042717 PO 00000 Frm 00016 Fmt 6633 Sfmt 6633 K:\DOCS\42717.TXT TERRIE
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isfaction with MyMoney.gov, and an independent review of the 

Federal financial education programs and resources, with the first 

series of assessments to be completed in 2009. 

In addition, the GAO recommended the Commission work closely 

with the private entities and State and local governments to improve financial literacy. In response, Treasury and the Office of 

Personnel Management co-hosted the Commission’s inaugural 

meeting of the National Financial Education Network of Federal, 

State, and Local Governments at the Department of the Treasury. 

We continue to work to respond to the GAO recommendations. 

A third way that the Department has been working to improve 

financial literacy is to support the Financial Literacy Education 

Council created recently, the President’s Advisory Council, by Executive Order on January 22, 2008. The Council, which was created 

to help America remain competitive and to assist the American 

people in understanding and addressing financial matters is comprised mostly of financial education leaders from the private sector 

and the nonprofit sectors, with one State government representative. We believe this advisory group, led by Chairman Charles 

Schwab, and Vice Chairman John Hope Bryant, will help increase 

the level of our Nation’s resources dedicated to financial literacy. 

In conclusion, I hope this discussion has been useful in terms of 

an overview of the work of the Department of the Treasury. As 

Americans, we share the desire to provide for our families, to 

achieve financial security, and to have a comfortable retirement. 

Being financially literate makes those goals more attainable. The 

Department of the Treasury, Secretary Paulson, and the President 

are dedicated to increasing financial literacy among the American 

people so that they may lead better, more prosperous lives. 

Through our continued outreach and education effort, as well as 

through the ongoing work of both the Financial Literacy and Education Commission and the President’s new Advisory Council on Financial Literacy, Treasury can help more Americans become financially literate. 

I look forward to the questions that follow the panelists’ testimony. Thank you. 

[The prepared statement of Treasurer Cabral can be found on 

page 93 of the appendix.] 

The CHAIRMAN. Next, JoAnn Johnson, Chairman of the National 

Credit Union Administration. Ms. Johnson. 

STATEMENT OF THE HONORABLE JOANN JOHNSON, CHAIRMAN, NATIONAL CREDIT UNION ADMINISTRATION (NCUA) 

Ms. JOHNSON. Thank you, Chairman Frank, for this opportunity 

to testify regarding the effectiveness of the public and private sector financial literacy efforts. I would like to commend the committee first of all for raising the awareness of this important topic, 

and I would especially like to acknowledge Congresswoman Biggert 

and Congressman Hinojosa’s efforts for continuing to be champions 

of this cause. 

Financial literacy is an important facet of outreach efforts of both 

NCUA and the credit union industry. My testimony today will outline those efforts, plus NCUA’s involvement on the Financial LitVerDate Aug 31 2005 11:34 Jul 09, 2008 Jkt 042717 PO 00000 Frm 00017 Fmt 6633 Sfmt 6633 K:\DOCS\42717.TXT TERRIE
12 

eracy and Education Commission, with specific detail about my role 

as chairman of the MyMoney.gov Web site subcommittee. 

NCUA has a long history of providing financial education programs for use by credit unions and their members. From the 

1960’s, when NCUA’s predecessor regulator, the Bureau of Federal 

Credit Unions, provided low-income credit unions with a consumer 

education program called Project Moneywise, to the present, where 

NCUA training workshops routinely put financial literacy front and 

center in over 20 sessions annually. 

NCUA has placed a high priority on the value of basic, practical 

consumer financial education. Over the last decade, NCUA’s Office 

of Small Credit Union Initiatives has provided financial literacy 

training to almost 2,000 credit union staff and volunteers attending 

these workshops. Other NCUA workshops have focused on topical 

financial education, such as homeownership education and retirement saving, VITA tax preparation, and the financial needs of military communities. 

Additionally, NCUA promotes financial literacy through the Financial Literacy Library located on our Web site. This consumer 

clearinghouse of information runs the gamut of personal finance 

topics from ID theft prevention to prudent use of credit cards to deposit insurance. Other governmental and private sector resources, 

such as FDIC’s Consumer News and Jump$tart are also linked. 

NCUA is also using our congressionally appropriated revolving 

loan fund to provide financial assistance to low-income credit 

unions as they promote financial education. Since 2005, NCUA has 

awarded just over $500,000 in grants to credit unions specifically 

for financial education programs. 

Promotion of partnerships among credit unions and between 

credit unions and community and governmental organizations has 

also been a hallmark of NCUA’s efforts. Again, communication and 

dissemination of information about opportunities have been the key 

to success. One high profile effort in which I have been personally 

engaged is Biz Kid$, a PBS series devoted exclusively to teaching 

young people about financial literacy. The credit union industry 

has underwritten this program, which is currently on air in 47 

States. 

I was pleased to do a promotional video stressing the fundamental importance of financial education efforts directed at our Nation’s youth. I am confident that these types of initiatives will pay 

big dividends in the form of financially literate young adults entering the marketplace. We can’t continue to afford the alternative. 

Credit unions themselves are doing a good job of promoting financial education to their members. A 2006 NCUA survey of credit 

union activities showed that 60 percent offer financial counseling 

that specifically incorporates financial education. Forty-two percent 

have dedicated financial literacy programs for their members. 

My written statement details some of the best practices that we 

observe in the industry. Many have found the best teaching moment is at the point of delivery of services while applying for that 

first credit card, that car loan, or making the decision to purchase 

a home. 

I am also pleased to serve as chair of the MyMoney.gov Web site 

subcommittee, which is part of FLEC. This interactive Web site 

13 

serves as a clearinghouse of information about Federal, State, and 

local financial education programs, grants, and materials, online 

calculators, and even a MyMoney 20 quiz designed to test a consumer’s basic knowledge of finances. 

It’s important to note that this site, which contains over 400 

links, doesn’t allow any commercial content and is strictly for the 

benefit of consumers who want to increase their financial literacy. 

MyMoney.gov has received 2.3 million hits to its English and Spanish language sites since 2004 and has aided in the distribution of 

over 1.5 million publications to consumers. We are constantly engaged in enhancements to the site and its content, evidenced by the 

recent addition of a link to the HOPE NOW hotline to help consumers better respond to the housing crisis. 

I have testified to this committee before on the importance of financial literacy, and the central role that I believe it can and will 

play in the lives of consumers. Both President Bush and Congress 

have taken tangible steps to place financial education at the forefront of efforts to protect and empower consumers, and NCUA is 

working to do its part to make sure that credit unions are fully involved. 

The advertising slogan, ‘‘An educated consumer is our best customer,’’ is particularly apt for today’s discussion. Americans need 

to be more aware of how their money works. And while financial 

literacy is not a panacea or a substitute for strong consumer protection, NCUA will continue advocacy of basic financial literacy as 

a way to help consumers help themselves. 

Thank you very much. 

[The prepared statement of Chairman Johnson can be found on 

page 115 of the appendix.] 

The CHAIRMAN. Next, we will hear from Dean Martin, the treasurer of the State of Arizona. 

Mr. Martin. 

STATEMENT OF THE HONORABLE DEAN MARTIN, TREASURER, 

STATE OF ARIZONA 

Mr. MARTIN. Thank you, Chairman Frank, Ranking Member 

Bachus, and members of the committee. I’m honored to appear before you today as State Treasurer of Arizona to discuss the importance of financial education and building a successful partnership 

between public and private sectors in advancing this cause. 

First, a little bit about my experience and background. I am a 

small business owner. I previously served as a State senator and 

was chairman of the Finance Committee, a senior member of Appropriations, and vice chairman of Judiciary. I was a founding 

board member for the Arizona chapter of the Jump$tart Coalition, 

a national financial literacy organization. I have volunteered my 

time to teach financial education classes in my community. 

I appear here today as an elected official, the State Treasurer of 

Arizona. However, as a citizen and a taxpayer, I have serious concerns regarding the state of financial literacy in America. 

The lack of financial literacy is a problem that spans every age 

group and every demographic. Our Nation is only as prosperous as 

our citizens. Our government relies on the solvency and prosperity 

14 

of our taxpayers so that they can pay them. So it’s fitting that we 

come before you today, April 15th, tax day. 

As the son of a math teacher and as a small business owner, I 

learned the value of a dollar and how to manage it at a very early 

age. Unfortunately, not every American has the same opportunity. 

The current level of financial literacy in the United States is woeful. Why is an issue of education important to the Committee on 

Financial Services? Because it’s fundamental to the very survival 

of the financial services industry. 

The current housing crisis and credit crunch has hit Arizona very 

hard. In 2005 and 2006, more than one-third of all mortgages that 

were issued were high rate or subprime loans. We are feeling the 

impact of this now as foreclosures continue to mount and tax revenues are plummeting. The slowdown is likely to continue for a 

while, as only half of the high-rate ARMs have reset, and the last 

will not begin to reset their rates until the first quarter of 2009. 

Our own State legislature and governor have failed to fix the 

largest budget shortfall in Arizona history, and the largest in the 

Nation by a percentage over 16 percent. As of today, we are a matter of days away from having spent all the money in the general 

fund from revenues we expect to receive this year. The State of Arizona may not be able to make its May 15th payment to schools 

without some sort of action soon. 

Clearly, the need for financial literacy is heightened by this crisis. 

This morning, I want to provide you with a specific example of 

a need that is repeated again and again in many sectors, but in 

this case, it has global implications. In the Valley of the Sun, we 

are honored to have America’s premier F–16 fighter training base, 

Luke Air Force Base. Airmen and women and their flight crews 

must be certified at Luke before they can be deployed to active 

duty. 

The base commander was concerned about the retention of new 

airmen. He was losing enlistees to high debt. Either they could not 

afford to continue in the service, or in some cases, their high debts 

made them a security risk. For many of these enlistees, it was the 

first time they had ever been away from home, and they were receiving the biggest paycheck of their young lives. The temptation 

to rush out and buy a new sports car was very great. Many of these 

young enlistees wind up overextending themselves and getting upside down in their loans. 

So should these airmen be prohibited from driving or owning 

sports cars? Sports cars are not inherently evil. They are simply 

products. The solution is not to ban the sports cars, because if it 

wasn’t those cars, it would be motorcycles, stereo systems, or something else. The world is full of people who will gladly separate you 

from your money if you give them the chance. 

Rather than trying to manage the personal finances of every airman on his base through regulation, the base commander chose to 

treat the disease of financial literacy, not just the symptoms. He 

approached the local credit union on base, Credit Union West, for 

help. Highly specialized classes were developed specifically for the 

base to teach them how to manage their own personal finances. 

Just as you would not hand a new enlistee an M–4 rifle without 

15 

training, the commander at Luke Air Force Base did not want to 

give one of his airmen a paycheck without training. Financial education had become a force readiness issue. 

The solution is for the consumer to be armed with information 

and financial education. As members of this committee, you are in 

many ways faced with the same dilemma the base commander was. 

Do you regulate and outlaw certain financial instruments or consumer products? Do you bar certain classes of people from mortgages or credit cards because they might misuse them? Do you outlaw certain types of investments because some investors are overleveraged themselves, which will ultimately limit the options of 

consumers? Or do you choose the more difficult, but ultimately 

more rewarding, path of emphasizing education before regulation? 

I think we know the answer by having this committee here 

today. The financial literacy industry—excuse me—the financial industry is willing to step forward and help with this cause. It’s in 

their own best interest, in fact. They don’t want to see their customers go bankrupt because they are the ones who don’t get paid. 

Nearly every bank, credit union, and financial institution, as we’ve 

heard here today, has some sort of financial education program. 

Their goal is simple. They want their customers to be able to pay 

back their loans. 

The financial industry should be an ally in our cause. This year, 

Arizona hosted one of the most exciting Super Bowls in recent 

memory. As the excitement began to build in the community, we 

decided to creatively promote financial education by tying curriculum to the game. In this example, we at the Treasurer’s Office 

successfully struck a public-private partnership that didn’t cost Arizona taxpayers a dime with Visa and the NFL to produce the ‘‘Financial Football’’ game. This game poses a number of questions in 

an entertaining and exciting way so they learn financial literacy 

without realizing that they’re being taught, and incorporates lessons taught through Visa’s Practical Money Skills for Life program, 

a free, award-winning, teacher-tested and approved money management program. And as I am the son of a math teacher, with a 

sister who is a kindergarten teacher, they both said this was a 

great program and they really enjoyed playing it themselves. 

They also offer a cell phone download, which is a particularly effective way to reach the demographic of high school and college students and young adults, many of whom use their cell phones as 

their only form of communication. 

The CHAIRMAN. Mr. Martin, we will need you to wrap this up 

soon, please. 

Mr. MARTIN. Mr. Chairman, members, whenever there exists a 

disparity or inequity in understanding, there will be abuse. Do we 

blame the sports car and outlaw sports cars? Do we blame lenders 

and outlaw loans? This would mean leaving sports cars only to the 

rich and powerful; not a very American concept. Our Nation has always been successful because of capitalism, the freedom for people 

to take risks and be rewarded when they pay off, but also be responsible for their consequences. My fear is that during this crisis, 

Congress might try to regulate risk out of the system and limit financial services and instruments to the lowest common denomiVerDate Aug 31 2005 11:34 Jul 09, 2008 Jkt 042717 PO 00000 Frm 00021 Fmt 6633 Sfmt 6633 K:\DOCS\42717.TXT TERRIE
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nator of financial literacy. This approach would be quick to grab 

headlines, but would harm our global competitiveness as a nation. 

There are times when certain financial instruments make sense. 

Complex and exotic financial tools have their place. We should not 

dumb down our financial system. We should elevate the literacy of 

our citizens to match. Rather than regulating to the lowest common 

denominator, we should work to elevate the financial understanding of the public. In this way, Congress can help level the 

playing field by helping consumers recognize if the financial deal 

sounds too good to be true, it probably is. 

One of my greatest concerns for our Nation is the same one 

Thomas Jefferson had over 200 years ago. The accumulation of 

debt by our citizen’s Federal and State governments— 

The CHAIRMAN. Finish the sentence, please. 

Mr. MARTIN. —puts our Nation at risk for being held as essentially slaves to foreign banks. We should not let that happen. We 

should not let our kids, our young adults, even our families put 

themselves in hock and their future in hock for a new sports car 

or iPod. 

Thank you. 

[The prepared statement of Mr. Martin can be found on page 134 

of the appendix.] 

The CHAIRMAN. Next, Ms. Sandra Braunstein, the Director of the 

Division of Consumer and Community Affairs at the Federal Reserve System. 

STATEMENT OF SANDRA F. BRAUNSTEIN, DIRECTOR, DIVISION OF CONSUMER AND COMMUNITY AFFAIRS, BOARD OF 

GOVERNORS OF THE FEDERAL RESERVE SYSTEM 

Ms. BRAUNSTEIN. Thank you. Good morning, Chairman Frank, 

and members of the committee. I appreciate the opportunity to discuss the importance of financial education. Current market conditions underscore how important well-informed, financially savvy 

consumers are for the financial wellbeing of individual households 

and the overall economy. 

Today’s financial services industry is extremely diverse and complex. Consumers can choose among a wide variety of services, products, and providers when conducting financial transactions that 

were once primarily offered through depository institutions. Both 

advances in technology and new market players have dramatically 

changed how financial services are marketed, underwritten, and 

delivered. 

Increased diversity in credit products has also brought increased 

responsibilities and risks to consumers, which makes it critical that 

consumers are well informed about their personal financial circumstances and the range of available products. 

The level of competition and complexity in today’s consumer financial marketplace highlights the need for effective financial education to help consumers evaluate and choose products that advance their financial wellbeing, not impede it. 

Designing and delivering effective financial education presents 

numerous challenges. Among the most significant is that financial 

counseling and education is very resource- and time-intensive because of the individual nature of personal finances and differing 

17 

knowledge base of consumers. There is a very broad range of potential audiences, and their educational and informational needs vary 

greatly, a challenge that is compounded by the rapid development 

of products targeted to specific market segments. 

Financial education efforts may also be constrained by gaps in 

math and reading literacy, which impede the comprehension of fundamental financial concepts. 

Another challenge to delivering financial education is identifying 

the venue and delivery channels that facilitate consumers’ participation in a program, as the demands of work and home often leave 

little time for training programs. Language and cultural differences 

can also present challenges in reaching consumers who can benefit 

from financial education, particularly immigrant communities. 

Ideally, financial counseling would be available to consumers 

near the time at which they are making an important financial decision, such as whether to buy a home. Accordingly, an important 

aspect of consumer education involves the provision of useful and 

comprehensive financial product disclosures. 

Over the last several years, the Board has engaged in extensive 

consumer testing of disclosures for privacy notices, credit cards, 

and mortgages in conjunction with our rule writing efforts for these 

products. The information we have gained from these sessions has 

helped us to better understand how consumers shop for financial 

products and services and what information they need to make decisions. 

The Federal Reserve has a long-standing commitment to providing information and education to help consumers make informed 

financial decisions. Financial educational products and programs 

are offered by the Board in each of the 12 regional Federal Reserve 

banks. We provide a wide range of consumer education publications 

that offer consumers accurate and objective information about consumer financial products as well as their rights under consumer 

protection laws and regulations. 

We also commit resources to providing leadership and technical 

assistance to national and local financial education initiatives. 

Given the scarce resources available to conduct financial education, 

it is important to ensure that available resources are being used effectively. Accordingly, the Federal Reserve is committed to conducting and promoting research on the efficacy of financial education programs to help inform policy and program design. 

The Federal Reserve will continue to maintain its commitment to 

financial education. Financial education is essential to helping consumers make well-informed and beneficial decisions that enhance 

their financial positions and enhance efficiencies in the consumer 

financial marketplace. 

At the same time, it is important to recognize that financial education is not a panacea. There remains a need for effective regulation and enforcement that is responsive to market evolutions to ensure that consumers are protected against abusive and fraudulent 

practices by unscrupulous players. 

Thank you again for the opportunity to appear today, and I will 

be happy to answer any questions that the committee may have. 

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

73 of the appendix.] 

18 

The CHAIRMAN. Next, we have Robert Mooney, Deputy Director 

for Consumer Protection and Community Affairs at the FDIC. 

STATEMENT OF ROBERT W. MOONEY, DEPUTY DIRECTOR, DIVISION OF SUPERVISION AND CONSUMER PROTECTION, 

FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC) 

Mr. MOONEY. Chairman Frank, Congresswoman Biggert, and 

members of the committee, thank you for the opportunity to testify 

on behalf of the FDIC. 

Financial education is an essential tool for financial survival. 

Now more than ever, consumers need to know their rights and 

their options. The subprime mortgage crisis is a good example; informed borrowers might have fared better. At the same time, financial literacy alone is not the answer, and by no means should the 

lack of it be used to excuse irresponsible lending practices by lenders. 

In 2001, the FDIC launched ‘‘Money Smart,’’ an adult financial 

education program. Just yesterday, Chairman Bair announced that 

more than one million consumers have participated in an FDIC 

‘‘Money Smart’’ program. This exceeds our goal, but we expect to 

reach many more. ‘‘Money Smart’’ is free, is not copyrighted, and 

is available in seven languages, in large print, and in Braille. 

‘‘Money Smart’’ is up-to-date. Last year, we updated information 

on how to evaluate and compare mortgage products, especially 

subprime. And, yesterday, Chairman Bair also announced the release of the new ‘‘Money Smart for Young Adults.’’ This curriculum 

is tailored to high school and college level students ages 12 to 20. 

It is aligned with educational standards for all 50 States and the 

District of Columbia. 

Financial education works when participants practice what they 

have learned. Last year, we completed a major, multi-year study on 

the effectiveness of ‘‘Money Smart.’’ The goal was to measure, over 

time: first, whether trainees’ knowledge improved; second, whether 

they intended to use the information; and, third, whether, months 

after the training, financial behaviors actually improved. This Gallup survey found that the training participants were more likely to 

open savings and checking accounts, save money, use a budget, and 

develop financial confidence. 

Hopefully, these results will motivate banks to offer more financial education, along with affordable financial and banking services. The FDIC creates opportunities for banks to do both. We have 

undertaken two major initiatives: the launch of the Alliance for 

Economic Inclusion in 10 communities across the country; and two 

major surveys to gather extensive data about the unbanked. The 

Alliance for Economic Inclusion is a network of broad-based coalitions of banks, community groups, and others, including agencies 

at this table, working across the country to expand access to basic 

financial services and financial education. 

More than 700 banks and organizations have joined these coalitions nationwide. In less than one year, 28,000 bank accounts were 

opened; 29,000 consumers received financial education; 41 banks 

offer affordable, small dollar loan programs; and 21 banks now 

offer remittance services. With regard to the surveys, in keeping 

with the Federal Deposit Insurance Reform Conforming AmendVerDate Aug 31 2005 11:34 Jul 09, 2008 Jkt 042717 PO 00000 Frm 00024 Fmt 6633 Sfmt 6633 K:\DOCS\42717.TXT TERRIE
19 

ments Act of 2005, we have initiated biennial surveys of FDIC-insured institutions on their efforts to serve the unbanked. We also 

plan a household population survey on the subject with the U.S. 

Census. 

To conclude, consumers who know the right questions to ask will 

have the confidence to challenge products and practices too good to 

be true. The FDIC’s 2007 Gallup survey shows programs like 

‘‘Money Smart’’ can change the financial lives of consumers for the 

better. This concludes my testimony and I look forward to your 

questions. 

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

171 of the appendix.] 

The CHAIRMAN. Thank you. 

Next, Cassandra McConnell, the Director of Consumer and Community Affairs in the Office of Thrift Supervision. 

STATEMENT OF CASSANDRA McCONNELL, DIRECTOR, CONSUMER AND COMMUNITY AFFAIRS, OFFICE OF THRIFT SUPERVISION (OTS) 

Ms. MCCONNELL. Good morning, Chairman Frank, and members 

of the committee. Thank you for the opportunity to testify during 

financial literacy month on the views of the Office of Thrift Supervision about the importance of financial literacy. 

Nothing can confirm the continuing and urgent need of financial 

literacy more strongly than the housing market turmoil currently 

facing this Nation and the role played by consumers in buying 

homes they cannot afford under terms they all too often did not understand. Although there is no substitute for prudent underwriting, 

enforcement of consumer protection laws, and effective disclosures, 

financial literacy is critical to a financial marketplace where consumers make informed decisions about their financial futures. 

Financial education about important issues such as home mortgages, family budgets, checking accounts, credit cards, and the 

value of savings should start in our schools, so the young adults 

entering the workforce and perhaps looking forward to the purchase of their first home will have the knowledge they need to 

make sound, financial decisions. 

Evidence just last week from the Jump$tart Coalition about following financial literacy scores by high school seniors shows that 

far more needs to be done to achieve this goal. As we know, the 

price of failure is the unwelcome prospect of significant harm to 

this country’s economic wellbeing. The OTS strongly supports the 

work of the Financial Literacy and Education Commission, and 

think the strategies outlined by the Government Accountability Office to expand the work deserves continued focus. 

The OTS also recommends a study to explore ways to bring the 

most successful financial education programs to scale for a national 

impact on as many Americans as possible. At OTS, we have been 

expanding our financial literacy initiatives both on our own and in 

concert with other Federal banking agencies. 

We resumed publication last year of our community affairs newsletter, ‘‘The Community Liaison,’’ which covers consumer issues 

like how to avoid mortgage foreclosure prevention scams and how 

20 

to take advantage of programs to help borrowers make their mortgage payments. 

The OTS is upgrading its electronic dissemination of consumerrelated information through a redesigned, public Web site scheduled to launch this summer. The information for consumers will be 

featured prominently on the home page and offerings for consumers will be expanded and key information will be easier to find. 

The OTS also continues to encourage regulated institutions to develop cross-sector partnerships with community groups and consumer organizations to foster financial literacy. The OTS, like other 

banking agencies, provides favorable consideration under the Community Reinvestment Act for financial literacy programs such as 

credit counseling to low- and moderate-income families. 

We have also joined the other Federal banking agencies in producing important publications for consumers; for example, the 

agencies issued consumer illustrations for non-traditional mortgages in May of 2007, and are currently finalizing illustrations to 

help consumers understand adjustable rate mortgages and similar 

products. 

The OTS supports efforts to improve disclosures for consumers 

and appreciates the key role that private sector organizations play 

in offering financial literacy programs. 

Thank you again, Mr. Chairman, and I look forward to answering your questions. 

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

143 of the appendix.] 

The CHAIRMAN. Finally, we have Barry Wides, the Deputy Controller for Community Affairs at the Office of the Comptroller of 

the Currency. 

STATEMENT OF BARRY WIDES, DEPUTY COMPTROLLER FOR 

COMMUNITY AFFAIRS, OFFICE OF THE COMPTROLLER OF 

THE CURRENCY (OCC) 

Mr. WIDES. Chairman Frank, Congresswoman Biggert, and members of the committee, I appreciate the opportunity to testify today 

about the OCC’s role in financial literacy and education efforts. 

My testimony discusses the many roles the OCC plays in promoting financial literacy. Financial literacy is a key component of 

ensuring fair and equal access to credit and banking services. 

Comptroller of the Currency John Dugan stressed the need to help 

National Bank customers become more engaged in sound, financial 

decisionmaking, since taking office. 

The OCC has done much in recent years to share financial 

knowledge and best practices, leverage resources, and build financial literacy partnerships. We concentrate our literacy activities in 

three main areas: building public awareness; encouraging the financial literacy efforts of national banks; and guiding Federal regulations and policies. 

Our public awareness efforts take several forms. Comptroller 

Dugan has taken the lead in highlighting this issue in speeches 

and keynote remarks during his visits around the country. OCC 

has mounted an extensive public service message campaign to local 

news media in English and Spanish, and we produce a range of 

21 

consumer advisories that are easily accessible on the OCC’s expanded consumer protection Web page. 

Last summer, the OCC launched, ‘‘HelpWithMyBank.gov,’’ a 

unique Web site that answers more than 250 common questions 

drawn from the actual experience of OCC’s customer specialists. 

HelpWithMyBank.gov links Web visitors to other resources and allows customers to file complaints about national banks or request 

additional information online. 

The OCC’s Community Affairs Department, which I direct, focuses on helping national banks become leaders in providing retail 

services to underserved communities and individuals. In addition 

to our headquarters staff, our community affairs officer teams 

around the country work with bank examiners in helping national 

banks to improve their financial literacy and outreach delivery programs. As a resource for our banks, we maintain an extensive library of financial literacy information on the OCC’s Web site, and 

recent OCC publications target the needs of native Americans, 

small businesses, and the unbanked. The OCC also serves on the 

board of NeighborWorks America and participates on the Financial 

Literacy and Education Commission. 

We work regularly with these and other national and regional 

partners, many of whom are with us at today’s hearing, to support 

financial literacy and education programs and to find the most effective methods for their delivery. These experiences give us valuable insight into the importance of financial literacy on good financial decisionmaking. Moreover, this knowledge helps us as Federal 

regulators in implementing the Community Reinvestment Act, 

which provides incentives for banks to undertake financial literacy 

activities. 

The OCC is currently working with the other Federal banking 

agencies to develop a narrowly defined change to the CRA regulations that would provide CRA credit for communities that are declining because of unprecedented levels of foreclosures and related 

economic factors. This has raised a related thought for consideration by the regulatory agencies; whether positive CRA consideration should also attach to financial literacy and education activities that benefit these same middle-income impacted areas and facilitate the short-term recovery. 

Given the rising need for financial counselors to assist borrowers 

who are having difficulty meeting their mortgage payments, additional CRA incentives may be helpful to encourage additional bank 

partnerships with nonprofit housing counseling organizations. 

Given the financial literacy challenges presented today, the time 

is right to bolster financial literacy for students, for working people, and for those facing retirement. We look forward to working 

with the other agencies on the Financial Literacy and Education 

Commission, the President’s Council on Financial Literacy, the Financial Literacy and Economic Caucus here in this Congress, and 

your committee, to promote financial literacy and address the financial needs of all Americans. I appreciate the committee’s time 

and look forward to answering your questions. 

[The prepared statement of Mr. Wides can be found on page 206 

of the appendix.] 

22 

The CHAIRMAN. At the outset, I want to thank Ms. Braunstein, 

in particular, for stressing that this is not a replacement for sensible regulation. I think we all agree with that. 

Mr. Wides, I just have one question: Obviously, CRA is one of the 

ways in which we can do this, and I guess one of the questions is 

for the smaller banks that don’t now have the service requirement. 

Does it make some sense to single this out, though, to make sure 

that banks would get CRA credit for this, even though they 

wouldn’t generally be in the service category? 

Mr. WIDES. Small community banks can get positive CRA consideration for financial literacy. 

The CHAIRMAN. Can or cannot? 

Mr. WIDES. ‘‘Can,’’ on top of the requirements under the small 

bank test under CRA. 

The CHAIRMAN. All right. But then there is an issue, and it may 

be somewhat an inter-bank regulatory issue. It has been suggested 

to me by people who know that some OCC examiners have said 

that banks should not get CRA credit for using the FDIC ‘‘Money 

Smart’’ materials because the banks neither prepared nor paid for 

those materials. 

Do you know if there is any validity to that? Maybe the FDIC 

knows? Is there a question about whether or not banks that use 

‘‘Money Smart’’ are fully given CRA credit by the OCC? 

I was given a suggestion that there is some resistance on the 

part of some examiners. 

Mr. WIDES. I am not aware of any OCC resistance in that regard. 

Banks can get CRA credit for their activities that benefit low- and 

moderate-income individuals and communities. 

The CHAIRMAN. So I can take it that you said there may have 

been a problem in the past, where there has been some question 

about whether using the ‘‘Money Smart’’ would allow you to get 

CRA credit, but you make sure that is not a problem anymore? 

Mr. WIDES. No. That shouldn’t be a problem if it is done in conjunction with the low- and moderate-income benefit test under the 

CRA rules. 

The CHAIRMAN. All right. I appreciate that and I would think 

that it is one of the things that could easily be cleared up. 

The gentlewoman from Illinois? 

Mrs. BIGGERT. Thank you, Mr. Chairman. I wanted to congratulate Mr. Martin for using football as a teachable moment to reach 

young people; and, I have to say that I have used 

www.practicalmoneyskills.com, and I actually have done that in a 

couple schools with Rex Grossman, who at the time was the most 

popular quarterback of the Bears, and done a competition between 

a couple of schools using that tool, and the kids just loved it. Of 

course, they loved Rex Grossman, so we had to let him win of 

course, but it was a really good opportunity. 

Let me just ask a general question. Should we in Congress restructure FLEC to include the private sector? Or, do you think that 

the Treasury and all of the agencies are doing enough that we don’t 

need to include them. I will start with the Treasurer, please. 

Ms. CABRAL. Well, I think you hit on an important point. Something that I have learned in the 18 years that I have been in Washington is that anything that involves or allows or builds on collaboVerDate Aug 31 2005 11:34 Jul 09, 2008 Jkt 042717 PO 00000 Frm 00028 Fmt 6633 Sfmt 6633 K:\DOCS\42717.TXT TERRIE
23 

ration, I think, is much more successful. So to the extent that today 

we at least have a Financial Literacy Council that can work with 

the FLEC, we have a liaison between the two organizations. 

I think we are in a stronger position to really improve government, nonprofit, private sector, as well as State and local government’s efforts in terms of really putting forth solid, financial education and initiatives, and helping reach people at those teachable 

moments that you have described. I think that there are certain 

things we can do to improve the efficiency and effectiveness of the 

FLEC, but I think that the Council is going to go a long way in 

terms of just being able to liaise between the two entities and provide a constant dialogue between those various working parts so 

that we are much more effective in the future. 

Mrs. BIGGERT. Chairman Johnson? 

Ms. JOHNSON. Collaboration is certainly an advantage and getting the ideas from both the public and private sector together to 

compare notes and to move forward, I think, is very beneficial. Cutler Dawson, who serves on the President’s Advisory Council on Financial Literacy, is the liaison to FLEC and he is the CEO of Navy 

Federal Credit Union. And so we have this tie-in of getting the best 

of both worlds in that regard. 

We have encouraged credit unions to seek out the public sector 

as well, and in their partnerships and we as an agency have used 

some of those things and put the links on our Web site for some 

of the materials that we have. We look forward to continuing to do 

so. 

Mrs. BIGGERT. Okay. Thank you. 

Treasurer Martin, if you could just give a really brief answer, because I have another, really what I think is an important question, 

that I need to get to in time. 

Mr. MARTIN. Thank you. 

I agree completely. Adding a public-private partnership component would be very useful in the State of Arizona. We have no 

budget for financial education, so we could only do what we did 

with the private sector assisting. I would also recommend having 

a State connection as well, maybe State treasurer, State comptroller, State auditor as well. 

Mrs. BIGGERT. Thank you. 

Ms. Braunstein? 

Ms. BRAUNSTEIN. Yes. We always encourage public/private partnerships and think that is very important; and, there are a number 

of ways to do that. 

One of the things, just to keep in mind if you move in that direction, is that the larger that FLEC gets, the more challenging it is 

to coordinate among the participants. I mean, as it is, there are 20 

agencies on there and sometimes I think that has been a challenge 

to coordinate among the 20 agencies. When you start adding other 

people, it becomes more challenging. There may be other ways to 

cooperate other than adding more and more people to the commission itself. 

Mrs. BIGGERT. My time is getting short. I’m going to ask the 

other question, and that is, we see FLEC and all the ideas and programs within the Federal agencies, but also the private groups. Do 

you think we should test FLEC in putting together a national comVerDate Aug 31 2005 11:34 Jul 09, 2008 Jkt 042717 PO 00000 Frm 00029 Fmt 6633 Sfmt 6633 K:\DOCS\42717.TXT TERRIE
24 

prehensive director of all of the programs, because there are so 

many out there, and how to get everybody to know what they are. 

Mr. Mooney? 

Mr. MOONEY. Well, I think the ‘‘My Money’’ Web site does a good 

job of providing that kind of information, but I would support your 

suggestion here. Anything we can do to make financial literacy 

more available would be a good idea. 

Mrs. BIGGERT. Ms. McConnell? 

Ms. MCCONNELL. I think that there are three important components to promoting financial education: the public; the private; and 

the consumer; and, so any efforts that we can do to coordinate 

those three to get information out using those, the public, the private, and the consumer, can be advantaged to promote financial 

education. 

Mrs. BIGGERT. Thank you. 

Mr. Wides? 

Mr. WIDES. I think a comprehensive directory would be a good 

initiative. I would be a bit concerned about the notion of a Federal 

endorsement of local initiatives and the notion of how to establish 

which of those are legitimate and good initiatives versus ones that 

are not. But, I think, as a general objective, it’s a laudable objective 

to pursue. 

Mrs. BIGGERT. Okay, thank you. 

The CHAIRMAN. Ms. Waters? 

Ms. WATERS. Thank you very much, Mr. Chairman, for holding 

this hearing. 

Financial literacy—we have been thinking a lot about what has 

happened that has caused the subprime crisis that we are in and 

we are discovering, or maybe some of us already knew, that many 

of the foreclosures that we are experiencing are foreclosures where 

our citizens did not understand what they were signing. They 

didn’t understand the contract that they signed and they got involved with these adjustable rate mortgages that they didn’t know 

were going to reset. They didn’t really understand what they were 

getting involved in, and so I’m wondering what can really be done 

with financial literacy in general and mortgages in particular. 

Is there anyone on the panel who has been involved with helping 

to start bank accounts for seniors, for example, and then following 

through with the seniors on an ongoing basis about how they add 

to those accounts; teaching them how interest accrues on those accounts? Do you know of any organizations that has done that kind 

of thing? 

Ms. JOHNSON. Congresswoman, I know that there are a number 

of credit unions that have set up age-specific classes all the way 

from the young to include the seniors. 

Ms. WATERS. No, specifically bank accounts or credit accounts, 

credit union accounts; because I have a feeling that it is one thing 

to teach people in a vacuum, but it is another thing to teach people 

who are dealing with real live issues, money, banking accounts, 

how to write a check, that kind of thing. Is anybody doing that? 

Mr. MOONEY. The FDIC’s Alliance for Economic Inclusion, now 

in 10 cities nationwide, does bring banks and nonprofits together 

to actually open accounts. 

Ms. WATERS. What about high school seniors? 

25 

Mr. MOONEY. We just released our ‘‘Money Smart for Young 

Adults’’ program. High schools around the country were looking for 

a free financial education program that teachers could use. It is 

geared for high school and college students, and anyone else between the ages of 12 to 20. 

Ms. WATERS. Okay. I would like to see exactly what is being 

done. I am only interested in programs where students actually 

open up checking accounts or bank accounts. I am not interested 

in the literature kind of in a vacuum. 

The other thing is, do you know of any programs that have set 

up second opinions on mortgages? For example, a homeowner buying a house may be involved in some kind of counseling program, 

but before they sign off, they have an opportunity to get a second 

opinion from qualified folks who could review the mortgage document. Is anybody doing that? 

Mr. MOONEY. I don’t know of anybody, offhand. We could look 

into it and get back to you. 

Ms. WATERS. Well, the reason I ask these questions is because 

I have always had the feeling that it is very difficult to counsel and 

teach in a vacuum and that things don’t really happen that way. 

That the real interaction that takes place is that which actually not 

only informs but equips our citizens to be able to manage money, 

to have the mortgage accounts, etc. 

And so as I look at what we are doing here to try and help with 

these foreclosures, I am interested in the kind of programs that 

will actually not just teach people in a vacuum, but be involved at 

the point that people are getting into these contracts. 

Yes, ma’am? 

Ms. JOHNSON. Yes, Congresswoman, we do have a number of 

credit unions that have actually set up student branches in the 

schools where the students are actually the tellers and I have visited both the local elementary school, which is close to our agency, 

and then Woodbridge High School in Virginia. And I have watched 

the students actually run the operation; of course, with guidance 

from credit union personnel who are with them. 

There are incentives for the students to open accounts, and then 

at least one day a week, sometimes more, there is a certain time 

set aside within the school day that the students come and make 

their deposits and get started on a savings program. 

Ms. WATERS. All right. I would like to ask one more question before my time is up, and that is this: As we think about working 

with our homeowners who are about to experience foreclosure or 

have experienced foreclosure, what do you think about credit 

unions and community banks having a separate operation to do 

workouts and modifications interacting with the servicers who had 

the responsibility for the foreclosures. 

Don’t you think that credit union personnel and our community 

bankers are better able to negotiate with these loan servicers than 

anybody else? 

Mr. MOONEY. Yes. Congresswoman, the FDIC is about to sponsor 

several one-day forums where we are bringing community bankers 

and credit unions together with servicers and counselors. We will 

provide them with information and work with them to see how 

26 

servicers might possibly step in and refinance some of these mortgages. 

We will be doing one in Los Angeles, one in Nevada, and probably one in Ohio. 

Ms. WATERS. Not just for refinancing, but there should be a revenue stream for them doing this work. Small banks need that. I 

would like to see you on that and see what you are doing. 

Mr. MOONEY. Yes. 

Ms. WATERS. Thank you. 

The CHAIRMAN. Ms. Braunstein. 

Ms. BRAUNSTEIN. I just wanted to say that we have been working 

through the reserve banks on a number of these issues. The Federal Reserve Bank of Boston has coordinated a number of banks up 

there that are working on loan modifications and they are mostly 

small community banks. 

We also, on your other question, we have initiatives going on in 

the reserve banks on the ground getting people accounts. There is 

an initiative in Atlanta, for instance, called ‘‘Get Checking,’’ where 

they actually try to take people who are unbanked and start relationships with financial institutions for them. 

The CHAIRMAN. Thank you. 

The gentlewoman from West Virginia. 

Mrs. CAPITO. Thank you, Mr. Chairman. 

I would like to thank the panel. I have a couple of questions really for whomever wants to jump in. In part of the briefing materials 

that we were provided, really a stark statistic is that the U.S. savings rate has hovered at or below one percent of disposable income; 

whereas, just in the 1980’s and 1990’s, it was between 7 and 8 percent. 

You know, trying to tie this to financial literacy, is there a tie 

between financial literacy and the willingness or the ability to 

save? And what are we doing to try to boost the savings rate? 

Mr. MOONEY. Congresswoman, when we conducted an effectiveness survey of the ‘‘Money Smart’’ program, we found that when individuals went through the course, 7 out of 10 saved more, and 43 

percent who didn’t have a savings or checking account opened one. 

It is very clear that type of financial education can work. We have 

also coupled that with financial inclusion activities such as our Alliance for Economic Inclusion. 

Banks can and do offer financial education as a means to encourage those who have been underserved to open savings and checking 

accounts. 

Mr. MARTIN. As experienced in the classroom, what I found is 

that today we have the availability in ease of credit to an extent 

you haven’t had to the degree 20 years ago, and so what has happened is 20 years ago, if you were worried about having a flat tire 

or your refrigerator dying, you needed to have a savings account 

to cover that. People just say, I’ll throw it on my credit card and 

worry about it later, and so a lot of that has to do with just the 

easy access to credit, which is in itself not necessarily a bad thing. 

It is when you only have that as your backstop and you have nothing else. 

Ms. CABRAL. Just to mention a couple of programs that I think 

have been particularly successful, and one of them is, of course, the 

27 

American Savings Education Council, launched with Treasury in 

April of 2007 a PSA campaign that was basically about choosing 

the same; and, I think that is critically important. 

The American Banker’s Association hosts a series of workshops 

across the country with young children; because, I think the point 

is that we have to start younger. We certainly have to do a good 

job of educating and providing financial literacy and education tailored to every segment of society, because it is just as important 

to the elderly individual as it is to a young individual taking their 

job for the first time. 

But teaching children to save is particularly important, and so 

I think that has been a wonderful campaign that has made a difference, and I think everyone on this panel probably has participated in that campaign. 

Mrs. CAPITO. Well, I know in my State of West Virginia, we have 

a bank at school program. I think it’s aimed at between fourth and 

fifth grade and I think it’s been very successful. 

The other question I had requiring free credit reporting, access 

to free credit reports, has this been embraced? I mean, is it shown 

that now that you have this available, how many more people are 

actually getting their credit reports? Is it making people more 

aware? Is it leading to more financial literacy? 

What are the results of this free credit reporting requirement? 

Anybody? Yes? 

Mr. MARTIN. In my experience it has been great. It is probably 

the best thing that has come from Congress in this area that has 

actually been useful in the classroom. Just getting individuals to 

understand the real responsibility with credit and the implications 

of their own actions and the fact that waiting 30 days, because, you 

know, I just didn’t feel like making my credit card payment, has 

long-term ramifications as to whether or not you can qualify for a 

house. 

Because what it has allowed us to do is make it personal as opposed to abstractly talking, we can say this is how this works, and 

you can pull up your own credit report and see how this applies. 

It really makes the teaching very personal and constructive right 

to their own situation. 

Mrs. CAPITO. Thank you. 

Oh, yes ma’am? 

Ms. CABRAL. Well, just the last. The other thing that we were 

tasked with, FLEC itself, was to create a multi-media campaign. 

And the campaign, the emphasis of the campaign that we have 

been working on is about credit and managing credit wisely. That 

should be released and launched this August, as well. And, hopefully, it will contain television, radio, and various types of ads to 

reach people in as many ways as possible. 

Mrs. CAPITO. All right. Thank you. I yield back. 

Ms. WATERS. [presiding] Thank you very much. Mr. Mel Watt, 

for 5 minutes. 

Mr. WATT. Madam Chairwoman, I think I will yield my time to 

Mr. Hinojosa who is the primary sponsor of this initiative and just 

express my support for financial literacy and thank the panel for 

being here. 

Ms. WATERS. Thank you very much. 

28 

Mr. Hinojosa. 

Mr. HINOJOSA. Thank you, Congresswoman Waters. I appreciate 

that very much. I believe that the first question that I wish to ask 

would be directed to the Honorable Anna Escobedo Cabral, as well 

as to the Honorable JoAnn Johnson, and to Robert Mooney from 

the FDIC. 

The FACT Act required that FLEC establish a Web site, establish a 1–800 number, and provide information in both English and 

Spanish, which I requested with the help of Chairman Frank. 

FLEC was also tasked with developing a multi-media financial literacy campaign. Yet, I find that FLEC has had 4 years to develop 

this campaign but has not done so. 

Why has it taken FLEC so long to produce a public service, 

multi-media campaign as authorized in the law, and why did FLEC 

inform my staff that they did not need the $2 million for a financial 

literacy campaign, as authorized in the FACT Act? I think that the 

information that I get from my staff is that it cost half-a-million 

dollars just to print the National Strategy on Financial Literacy 

and the remaining cash on hand is to be used for the campaign. 

So please tell me why—because I am upset that it has taken so 

long—that we find ourselves in the crisis that we are in. 

Treasurer Cabral? 

Ms. CABRAL. Yes, Congressman Hinojosa, thank you. 

We have worked hard to make sure that the multi-media campaign is one that will be very effective and it has taken longer than 

we had hoped. We have gone through the research stages, several 

focus groups, and now we are in production. We do expect it to be 

available this August to be launched and we do think that it will 

be something you will be proud of when it is launched. We were able to set aside $750,000 to dedicate to this project 

from funding that we already had on-hand, and that is what we 

have been using to move it forward. We do believe that it will 

make a tremendous difference in terms of reaching individuals and 

helping them to understand the importance of managing credit 

well. And we hope that you will have a chance to look at it soon. 

If you’d like, we would be happy to bring some of the developed 

materials by for your staff and yourself to look through for your 

comments. 

Mr. HINOJOSA. JoAnn? 

Ms. JOHNSON. Thank you. 

I’ll limit my comments more to the ‘‘MyMoney.gov’’ Web site, because that is the subcommittee that I was appointed to about a 

year-and-a-half ago, so that is a little bit more in my area. I am 

not quite as familiar with the appropriations or the funding area. 

It has been a lot of hard work. 

I think for me, personally, the most difficult thing is getting people together. We meet quarterly for our FLEC committee as a 

whole; and, then, in the off-time, we meet by conference call primarily, but bringing ideas to the table, sorting through them, determining which ones we continue to pursue, I would admit it’s just 

like the rest of government, I guess. It takes longer than what anyone anticipates or hopes for a project to be completed. 

I am pleased with the quality of the Web site and how we have 

monitored it and tried to come up with something that we can valiVerDate Aug 31 2005 11:34 Jul 09, 2008 Jkt 042717 PO 00000 Frm 00034 Fmt 6633 Sfmt 6633 K:\DOCS\42717.TXT TERRIE
29 

date the information. I know one of the big questions was, where 

do we draw the line; what information comes on; how can we check 

it out; how do we validate; and so making those decisions, is it government only? Do you allow the private sector? Do you allow those 

who are companies for-profit? Because we have to determine that 

the information is accurate. 

So there was certainly more involved on the surface, but I think 

we do have a good project. For me, the most disappointing thing 

is that a public service announcement is not enough for people to 

even become aware of the Web site in order to use it. 

You don’t have to reinvent the wheel. There are good materials 

there. We just need to get them in the hands of the user, and that’s 

the most difficult thing. That’s why I think it takes all of us working together to actually deliver it and get where the rubber meets 

the road. 

Mr. HINOJOSA. Mr. Mooney. 

Mr. MOONEY. Congressman, I defer to the Treasurer and her remarks concerning the media campaign. I will add to Chairman 

Johnson’s remarks that the ‘‘MyMoney’’ Web site is really quite 

good. We chair, the FDIC chairs, the hotline subcommittee and several agencies are including information that is sent out to consumers who call for it. 

It is difficult, as Ms. Braunstein said, to organize 20 different 

Federal agencies. Nevertheless, anything can be improved, any additional resources, I think, could be welcome, and perhaps we could 

coordinate something that would be more in line with what you 

would expect. 

Mr. HINOJOSA. Well, I am very disappointed, because I come 

from the world of business. And every time we had a marketing 

plan, we expected to have returns and to monitor the results of the 

marketing plan. And after 4 years, the results are horrible. We are 

in a crisis. 

We believe that we are in a recession, even though some people 

would debate that statement. I believe, Mr. Mooney, that your 

group through the FDIC were working on that survey that you 

talked about with the students. When will you release the results 

of that national survey of banks’ efforts to serve the unbanked 

adults? 

Mr. MOONEY. Actually, we just mailed the survey out to banks 

yesterday. We will be reporting on a biennial basis to this committee, as well as to the Senate Banking Committee, under the 

Federal Deposit Insurance Reform and Conforming Amendments 

Act of 2005. 

We would be delighted as we get results to share those with your 

staff. We think through this survey, we will find a great deal of information about what banks are doing, as well as through our 

household survey with the U.S. Census, and find out why individuals either are or are not working with banks. We hope to get a 

great deal of detailed information on that. We would expect by the 

end of the year or after the first of the year we will have analyzed 

the results of the first survey. 

Mr. HINOJOSA. If you say that you have just mailed it to the 

banks, what is a preview of that survey with regard to the many 

people who are limited English-speaking adults and in many cases 

30 

don’t trust banks because of experiences that they had in their 

motherlands? 

What is being done to address that concern? 

Mr. MOONEY. Well, at the FDIC, we formed Alliances for Economic Inclusion in 10 cities. We have one in South Texas, a very 

successful, active one. Banks, nonprofits, and others have come together to address issues such as that. They are coming up with 

new products and new marketing materials in a way that can 

reach individuals who do not have English as a first language. 

Our financial education program, ‘‘Money Smart,’’ is available in 

seven different languages, including Braille. The group in Texas, 

largely thanks to your leadership, Congressman, regarding financial literacy, has been quite successful in reaching into the Latino 

community there, and in finding ways that new citizens and others 

might feel more comfortable working with banks. 

Mr. HINOJOSA. I thank those of you who have helped us take financial literacy programs to the elementary schools and to the high 

schools. We have taken them to the community college at South 

Texas Community College and the last one was at the University 

of Texas, Pan American, which was very successful. But still, as a 

former businessman, I am very discouraged that the results that 

we have to show when we see the economy going into the tank, the 

results are just absolutely horrible. 

To the Treasurer, you spoke about the difficulty in working with 

such a large group, and Congresswoman Biggert and I talked about 

the need for the public and private sectors to work together: Do you 

all think that this group is just too big and unmanageable? Should 

it be made smaller so that it can move faster and get things done 

as we had expected when we passed this law? 

Ms. CABRAL. Well, I think that all the voices on the FLEC commission are important and I think that some of the difficulty, perhaps, is just knowing how to get started. I was not part of the Administration when FLEC was created, but I think they have done 

a phenomenal job of really just beginning the conversation and setting out for themselves a shared set of goals and some plans of action. 

I think we have moved far enough along that you now can bring, 

I think, FLEC and the council that was recently created by the 

President, the Financial Literacy Council, together to really help 

one another. I think it was Ms. Braunstein who suggested that it 

might be too difficult to enlarge FLEC to then add additional outside entities, that is the private sector, State, and local government. 

But it is important to have that conversation among all of those 

players for us to be successful, so I think to the extent that we can 

liaise between the two organizations and continue the dialogue, I 

think we are all going to be much better off. 

Mr. HINOJOSA. Please do not misunderstand me. 

I don’t want to expand it. I want it to move. I want it to be an 

expedited effort for the implementation, because as we say, we are 

right on the brink of falling into the canyon, and, if you all don’t 

find a way and recommend to Congress to expedite this, I think we 

are in for a deep recession if we don’t find a way to correct this. 

I yield back. 

31 

Ms. WATERS. Thank you very much. 

Mr. Clay, for 5 minutes. 

Mr. CLAY. Thank you, Madam Chairwoman, especially for holding this hearing today. And this question is for anyone on the panel 

who would like to address it. 

We all know that one of the contributing factors of the housing 

foreclosure crisis that we are currently in is inadequate financial 

literacy. We have had many programs created in the past few years 

to address this issue and have had some positive results, but not 

nearly the impact that was needed. 

We also know that housing and credit cards are not the only 

areas that need to be addressed today. How early do we need to 

start these financial literacy programs to get ahead of this lurking 

monster called debt? 

We see kids in high school with credit card debt and know that 

we have to start before that. What are the earliest ages that we 

can start teaching our children in schools and other formal settings 

about financial literacy, and at what ages does your research show 

that they are capable of understanding and retaining this knowledge? Anybody can take a stab at it. 

Yes, Ms. Johnson? 

Ms. JOHNSON. Sir, I have participated in financial reading classes at the 2nd and 3rd grade level that have gotten these kids started towards a savings account, especially when the credit union follows through then and has a student branch within the school. 

So the second and third grade level is certainly not too early to 

begin, and I agree with you that the sooner we get to them, the 

better. 

Mr. MOONEY. Congressman, I would add, yesterday I was at the 

Hope Charter School and we talked a little bit about financial education with a classroom of 8- and 9-year-old students. They understood the importance of savings. Many of them had savings accounts and they were telling us why they had savings accounts. 

One wanted to go to college, one wanted to buy a BMW, one wanted to buy a laptop computer. But, the point is, they were saving 

for that, so it was very encouraging. 

We also think junior high, high school, is a perfect opportunity 

to do that. That’s why we just released the ‘‘Money Smart for 

Young Adults’’ program. 

Mr. CLAY. Thank you for that. 

Anyone else? 

Yes, sir, Mr. Martin. 

Mr. MARTIN. Thank you, Congressman. 

I think at any age you integrate it with the existing curriculum. 

I have been in kindergarten classes where they were teaching them 

how to count using money, fake bills, and the concept of how much 

money do I have left, and how do I know after I bought something 

what’s left. And she was teaching them how to count by also teaching them the value of money at the same time. 

I don’t think you can start too early, but you can’t ever finish. 

It doesn’t end when they graduate from high school or college. 

They’re going to need it again, because this is something that if you 

don’t use it on a regular basis, you lose it. And, frankly, not that 

32 

many people buy houses every day, and so they need refresher 

courses. 

Mr. CLAY. So we need to get them into the habit at an early age, 

and the earlier the better. 

Mr. MARTIN. Yes. 

Mr. CLAY. Let me ask the entire panel again: The retirement of 

baby boomers is beginning to happen and many of them are inadequately prepared to financially handle retirement. Over the next 

few years, millions will retire and many of them have no idea of 

their total financial needs. 

How do we address this literacy shortage in the short term? In 

your experiences, are the adult literacy programs reaching those 

who are near retirement? Are they responding and seeking literacy 

about their immediate future? Are the numbers of programs that 

we have enough to reach the number of people who need this 

knowledge? 

Yes, ma’am? 

Ms. BRAUNSTEIN. I know that we are always very concerned 

about that at the Federal Reserve, and one of the things that we 

do is offer a number of programs in the workplace to our employees 

on a number of specific issues, one of them being retirement. 

And one of the challenges with financial education, especially 

with adults, is that people are very busy and it’s hard to get people 

to find the free time to attend classes, which is why if you can capture them in places like the workplace where they are, you have 

a much better chance of reaching them with information on this. 

Mr. CLAY. Yes, sir? 

Mr. MOONEY. Yesterday, we, the FDIC, signed a ‘‘Money Smart’’ 

partnership agreement with USOPM. They have 1,800 benefit specialists who service two million Federal employees worldwide. We 

will be training those counselors in how to train using financial 

education and work better to utilize their benefits including retirement benefits. 

Mr. CLAY. Thank you, Madam Chairwoman. Thank you for your 

indulgence. 

Ms. WATERS. You are certainly welcome. 

Mr. Cleaver, for 5 minutes. 

Mr. CLEAVER. Thank you, Madam Chairwoman. Thank you, Mr. 

Hinojosa. 

Our children’s generation will be remembered by historians as 

the most indebted generation in the history of our planet, and they 

have been trained poorly because their parents and grandparents 

created a crisis by dealing with brokers they did not know, buying 

homes they could not afford, and signing contracts they did not understand. 

And so I applaud all of the efforts that are underway for financial literacy, but my concern is that no football coach would wait 

until the National Anthem to develop the game plan. No person 

would wait until a tooth is rotting before they visited a dentist. No 

nation would enter a war without first counting the troops. Well, 

that’s a bad example. 

[Laughter] 

Mr. CLEAVER. No long distance driver would wait until the middle of the trip to map out the route, and so what we are doing, even 

33 

though I congratulate you and think it is good, is that we are waiting until the horse is out of the barn to do this. 

What I am wondering about is whether or not those of you here 

would support something that’s a lot more specific, and by that I 

mean if we entered into a tri-party agreement, the GSEs, the financial services industry, and the Federal Government, and we 

picked 110 districts around the country, 2 in each of the States and 

the territories, and we create a pot of money for a 4-year program 

in each of those schools as a pilot with a goal of moving toward establishing a curriculum in high schools for all high schools around 

the country on financial literacy, where people can’t even write a 

check. 

And so I think when we just say, well, you know, we have all 

these programs and we want you to take advantage of them, that 

may be good, and it’s the best thing that we can do at this time. 

But I believe we ought to build it into the very fabric of education 

in this country so that everyone gets that exposure. 

What’s wrong with that? Or your signals are that you all support 

it and I hope the press gets it down? Is everybody supportive of 

what I just said? 

Ms. JOHNSON. Sir? 

Mr. CLEAVER. Ms. Johnson. 

Ms. JOHNSON. I think having financial education in the schools 

is certainly a great goal. I think there are eight States that now 

have some sort of curriculum, but we need to go beyond that. I 

know the institutions, the banks and the credit unions that are in 

those eight States, also see the need to reach beyond the school 

system we have at all age levels. So getting the school age is certainly a good thing, but we don’t want to drop the other programs 

that are beyond that. 

Mr. CLEAVER. Yes, I am not suggesting that we drop that. I hate 

Shakespeare. I hated it when I was in high school, but I can quote 

some Shakespeare just from being in the classroom. I didn’t like 

Miss Holland who taught us and forced us to read that stuff, but 

I can quote Shakespeare sitting here right now, just because I was 

in the classroom. I’m not saying we eliminate all of that. I’m saying 

that we build it into the system that educates our children. We are 

doing a shotgun approach; some will be exposed and some won’t. 

Why not make it a part of the curriculum in schools all around 

this country and its territories? We have a crisis. It’s not going to 

get better. 

Mr. MOONEY. Congressman, some school systems have, and we 

have found that teachers on their own have downloaded financial 

education programs, and worked them into their classes. So there’s 

obviously a demand for this. 

Mr. CLEAVER. Ye, and I am happy. Thank you. Sometimes I am 

inarticulate. 

What’s wrong with trying to have that as a part of the curriculum in all of the school systems in the United States? 

Mr. MARTIN. I think that’s a great idea. I think it needs to be 

integrated. The biggest problem I found, and we are actually having a conference in Arizona, the local coalition, half the course of 

the conference, is teaching personal finance to teachers. 

34 

They never got this when they were going to school, and so they 

don’t feel comfortable teaching it yet. And so I don’t think you 

could make this as successful unless you also gave additional training to the teachers to make sure they understood the subject too, 

because they don’t feel confident in many cases about that. 

Ms. CABRAL. Congressman, to that end, I think FLEC and certainly the Department of the Treasury have been working hard to 

make sure we identify resources that make that possible for teachers in school districts that are interested. So not only are there curriculum that are readily available, but I think Mr. Martin’s point 

is a really important one. 

You have to make sure the teacher is in a position to also teach 

these topics, and many times, they are uncomfortable. So we have 

identified, for example, the nominal programs that exist currently 

in some States where they teach teachers over the course of the 

summer and prepare them so that they could administrate these 

classes as the fall semester arises. So a lot of the work is going on 

now and I think it will continue to move forward. 

Ms. WATERS. Your time has expired. 

Ms. Maloney, for 5 minutes. 

Mrs. MALONEY. I thank the gentlewoman for yielding, and I applaud my colleagues for their interest in supporting financial literacy. I, for one, join my colleague in calling for having it be part 

of the national curriculum that we have in our schools and with 

the increased complexity and the number of financial products, the 

need to save as a country, we need greater financial literacy. 

I would first like to ask the Treasury Department, the Honorable 

Anna Escobedo Cabral, about—and I really first want to congratulate all of you for your efforts to increase financial literacy, and I 

know Treasury has some new programs. 

In January, I sent Treasury a letter about a constituent, the 

W!SE program, Working in Support of Education. W!SE has developed a curriculum and test that has a strong track record of success, and my concern with Treasury’s new proposal is that it’s just 

a test, as I understand it, without the backup curriculum, and 

would ultimately possibly undermine the efforts of programs like 

W!SE that have a strong curriculum. What are you doing to ensure 

that financial education programs like W!SE continue and are not 

undermined by a test-only approach? 

Ms. CABRAL. Thank you, Congresswoman. W!SE is actually a 

phenomenally successful program, one that I certainly admire and 

respect personally. I have had the privilege of attending some of 

their certificate programs in New York City and I really do value 

their input. I think they are an incredibly important partner in this 

process. 

What has occurred is that Treasury, at the request of the President, came up with a series of ideas that were submitted to and 

approved by the President’s Advisory Council on Financial Literacy, one of them being this concept or model of making a test 

available that would determine what you need to know to graduate 

from high school and demonstrate that you truly are financially literate. 

And the model is really something along the lines of what we’ve 

seen was very successful in the area of physical fitness, creating 

35 

some sort of Presidential award, some recognition so that individuals who tested and demonstrated their capacity and their ability 

to really know the subject matter would be recognized for those efforts, to try and encourage more teachers across the school districts 

in the United States to make curriculum available and then to test 

and recognize excellence. 

W!SE is one of those programs that offers a particularly important component to that, and that is that they do have curriculum 

that makes a world of difference. There are a number of partners 

who have come together to give some advice to the Treasury Department about what would best serve or how we might best understand what a financially literate individual would have to prove. 

And that is in fact what we have done. 

We hired four economists who were outside of the government to 

come up with a test that we could use for this model. We have tested the test itself. We piloted the test, and it seems to be moving 

in the right direction. We hope to be able to launch this initiative 

in the next couple of weeks, and we hope that W!SE will continue 

to work with us to be a partner in terms of being able to administer curriculum that is critical to preparing students to pass those 

tests. 

Mrs. MALONEY. I know that a number of financial institutions— 

I received a letter from Chase Manhattan, J.P. Morgan, Citibank, 

others—have financial literacy courses. They go into the schools. I 

know that Mrs. Siebert has come up with a curriculum that is in 

the New York City school system, yet we’re seeing that it’s not 

working. And I just want to cite that just last week the Jump$tart 

coalition released the findings of its most recent survey of high 

school students for the first time, and for the first time, college students and high school seniors today have less financial literacy 

than their counterparts 2 years ago. 

So all of this effort appears not to be working. The mean scores 

for the 2008 high school senior class was 48 percent, lower than for 

their 2006 peers, who answered 52 percent of the questions correctly. And scores for college students are higher at 62 percent, but 

still, 62 percent for financial literacy for college students is very, 

very low. 

Some have argued that if we had better literacy, possibly we 

would not have had this financial crisis that we are confronting 

with the subprime if there was a greater understanding of the 

products that people were buying into. I would just like to ask all 

the panelists and just go right down the line, do you think that financial literacy should be required curriculum in our high schools 

now? 

Ms. CABRAL. I think that there are a number of States who have 

made a commitment to it, and it is a State-by-State decision at this 

point, and I respect the right of States to determine what their curriculum will look like. 

I think it’s incredibly important for us to make sure that we start 

teaching children about financial literacy from the time that they 

enter kindergarten all the way through high school. And the goal 

of the test that I just described a few minutes ago is really to add 

to a curriculum that teachers would offer and then also guarantee 

36 

that students had actually learned and that the behaviors had 

changed. 

Ms. JOHNSON. I would echo what the Treasurer has just said. 

And certainly those students who received the financial education 

classes and the exposure at an early age seem to do better. We 

need to change the mindset, particularly of these high school students and those heading off to college and the use of the credit 

card. No one would have thought 20 years ago about going to the 

bank to borrow money to get a Starbuck’s coffee. That is the ease 

of the credit card and the dangers therein today, so I think the earlier the better. 

Mr. MARTIN. I also agree. I think it should be integrated, though, 

in the curriculum. Having a single, stand-alone class is not the 

same as having this integrated as part—we still need to learn how 

to count and do math and do history. It should be incorporated all 

the way throughout. 

I think you have a lot greater retention when people understand, 

because finance and economics has a lot of social implications as 

well. And I think if you tie those two together, you will have a lot 

greater retention by the students than you would with just one 

stand-alone class that they may or may not remember later in life. 

Ms. BRAUNSTEIN. I agree that I think it would be a very worthwhile endeavor, and I also agree with Mr. Martin’s remarks that 

I think that we find with students, as we do with children, as with 

adults, that they learn more if it’s somehow put in context that 

they can understand. So if there’s a way to tie it to other kinds of 

lessons or find teachable moments for kids, it would be much more 

effective. 

Mr. MOONEY. Congresswoman, we have talked with teachers who 

on their own have tried to provide financial education, and they 

have gone to our Web site. They don’t have the resources to even 

download the free program, so they have asked us to mail it to 

them. Chairman Bair has long been an advocate of incorporating 

financial education into schools, and we think it would be an excellent idea to work toward that end. 

Ms. MCCONNELL. I think there are benefits to incorporating financial education into the schools, and I also think that we could 

yield additional benefits by finding ways to bring to scale the best 

practice programs so that we can have more benefits on a wider 

scale instead of school by school. 

Mr. WIDES. We would agree with the Treasurer’s remarks as well 

that integrating it into the curriculum is very important, but I also 

would point out there are a number of initiatives where financial 

institutions are working to bring hands-on exercises into the 

schools. At the Financial Literacy and Education Commission, we 

heard about the investment challenge, which brings in learning 

about the stock market. We talked earlier today about banks actually opening up branches in schools that are run by the students 

themselves. And I think we would also want to augment any activities like that with work to build this into the curriculum. 

Mrs. MALONEY. Thank you. 

Ms. WATERS. Thank you very much. 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 

37 

record will remain open for 90 days for members to submit written 

questions to these witnesses and to place their responses in the 

record. 

This panel is dismissed, and thank you very much for being here 

today. 

I would like to call up our second panel. Members of the second 

panel, please quickly take your seats at the table. We have a certain time that we have to be out of this room. Would you please 

clear both aisles and take your conversations outside of the room 

and let’s get our panelists seated at the table. 

Thank you very much. I’m going to start by asking Congresswoman Maloney to please introduce one of our panelists from her 

area. 

Mrs. MALONEY. I thank you, Madam Chairwoman, and I congratulate all of the panelists, and I have the great honor of having 

two panelists from the district that I represent, which is very interested in financial literacy. 

I would like to welcome Robert Duvall, president and CEO of the 

National Council on Economic Education, and also Phyllis Frankfort, whose program I have worked with over the years. She is the 

CEO and president of Working in Support of Education, or W!SE. 

W!SE is a nonprofit located in my district that has developed and 

operated a financial literacy certification program, and they started 

their program in New York City, but it has now expanded to 18 

States for the 2008 academic year. I want to thank her for her 

work in this area, and Mr. Duvall, and for the honor of representing you. Thank you for being here today. 

Ms. WATERS. Thank you very much. Mr. Moore, I understand you 

have someone you would like to introduce today? 

Mr. MOORE. I do. Thank you, Madam Chairwoman. Jill Docking, 

a friend of mine, is by profession a stockbroker from Wichita, Kansas. She co-founded, or excuse me, she’s a member of the Kansas 

Board of Regents appointed by Governor Sebelius in 2007, and 

most importantly this morning for the purposes of this hearing, she 

co-founded the Financial Fitness Foundation, a not-for-profit organization dedicated to teaching youth to make responsible financial 

choices for their future. 

So, I appreciate her being here and I thank you for the opportunity to introduced my friend. 

Ms. WATERS. Thank you very much. I will now introduce the 

other members of the panel: Mr. Marc Morial, president and chief 

executive officer of the National Urban League, and former mayor 

of the City of New Orleans; Mr. Stephen Brobeck, executive director, Consumer Federation of America; Ms. Janis Bowdler, associate 

director for wealth building policy project for the National Council 

of La Raza; and Mr. Dallas Salisbury, president, American Savings 

Education Council, and chief executive officer, the Employee Benefit Research Institute. 

Thank you all for being here. Without objection, your written 

statements will be made a part of the record. You will each be recognized for a 5-minute summary of your testimony. I will start 

then with Mr. Robert Duvall. 

38 

STATEMENT OF ROBERT DUVALL, PRESIDENT AND CHIEF EXECUTIVE OFFICER, NATIONAL COUNCIL ON ECONOMIC EDUCATION 

Mr. DUVALL. Thank you, Congresswoman Waters, for this opportunity. It is really good to be here and to be working with one of 

my heroes, Congressman Hinojosa, who has been a great champion 

of this cause, and my own Representative, Congresswoman 

Maloney, who introduced me. Thank you very much. 

Thank you for inviting me to testify on the timely, critical, and 

vital issue of the Federal Government’s role in empowering all 

Americans to make informed financial decisions. I think it’s especially fitting, as has been observed, for this committee to be holding 

this hearing during Financial Literacy Month. And as a member of 

the newly formed President’s Advisory Council on Financial Literacy, and as a parent, an educator, and as a concerned citizen, I 

commend you for focusing on this very important issue. There are 

few matters which more directly address the traditional American 

values and virtues of self-reliance, individual responsibility, and 

good citizenship than the issue we are talking about today. 

My organization, the National Council on Economic Education 

(NCEE), is a champion of financial literacy and a leader in the 

field. Our focus is on professional development for teachers. And I 

want to second several comments that have been made, particularly by Congressman Cleaver, in regard to the importance of getting this literacy into the core curriculum in the schools. We so 

often are spending our time and our resources on remedial action, 

as in some ways we’re trying to do now with the situation, Congressman Hinojosa, that you pointed out for this country. But we 

can prevent some of that need for remedial action if we educate our 

young people more consistently and clearly and fully in the skills 

that they need to make good decisions. 

We at the National Council on Economic Education believe that 

all of our young people need to know and deserve to know about 

the economic system they will be working in and contributing to 

and benefitting from and ultimately inheriting. Since our founding 

60 years ago, we have learned that the basics of financial literacy 

taught early, often, and well are a key to our Nation’s continued 

success and to being competitive in the global economy. 

Our charge is to ensure that all of our young people are empowered with an economic way of thinking that will help them make 

good decisions about managing their resources as members of families and communities, in the workforce, and as citizens. 

Too often, we think that economics is what they do at MIT, not 

what you do when you’re making day-to-day decisions about the 

management of resources in your life, and the need for educating 

all of our young people early is great. The NCEE is committed to 

contributing to solutions for this problem today and for the day 

after tomorrow. We are differentiated by our mission. We believe 

that financial literacy best comes through effective economic education, that this education ought to be a part of the core learning 

experience that our young people get while they are in elementary 

and high school. 

What do we know? We know that financial decisionmaking skills 

are learned behavior. You’re not born with it. And we know that 

39 

it’s best learned while you are in school, before you get into the 

school of hard knocks. And it’s best learned through well-prepared 

teachers, including parents as teachers, but the school system offers us a structural arrangement for conveying this kind of learning experience and making it stick. 

Financial circumstances in the lives of all of us keep changing. 

The basic principles of economics—cost benefit, opportunity costs, 

supply and demand—do not. We want to teach all of our young 

people a skill set that includes these tools to get into their heads 

and hands the ability to frame decisions that they have to make 

about financial services, about buying their first home, about managing credit and debt, about using financial institutions, to be able 

to make decisions about these things in a framework that has prepared them well to do it. 

[The prepared statement of Dr. Duvall can be found on page 103 

of the appendix.] 

Ms. WATERS. Thank you very much. 

Mr. Mark Morial. 

STATEMENT OF MARC H. MORIAL, PRESIDENT AND CHIEF 

EXECUTIVE OFFICER, NATIONAL URBAN LEAGUE 

Mr. MORIAL. First of all, good afternoon. Congresswoman Waters, 

thank you very much, and I want to thank the members of the 

committee for holding this hearing and for this very special opportunity to summarize my written testimony this afternoon. 

First, on behalf of the National Urban League, I want to share 

with you some startling but compelling information about African 

Americans and the American economic system. According to this 

year’s State of Black America Report, the standing of African 

Americans economically is but 57 percent that of white Americans. 

Further, African Americans hold 5 times more installment debt on 

average than do white Americans. And African-American net worth 

averages about $11,800 versus $118,000 for white Americans. This 

set of economic disparities is exacerbated and has been exacerbated 

by the subprime meltdown that has shattered and shocked this Nation. 

Indeed, I also want to share with you that the National Urban 

League has been involved in financial education and financial literacy now for almost 40 years. And it is an essential component of 

our economic empowerment agenda, that is an agenda to close the 

economic gaps that exist in this Nation. Last year, we served some 

25,000 people from coast to coast with financial literacy and financial education training. We do this work in 75 of our affiliate cities, 

75 of the 100 affiliate cities in our network. Indeed, these financial 

literacy and financial education services include workshops, one-onone counseling, case management, and a sophisticated asset-based 

approach to financial education, the idea that financial education 

should not only provide people with tools but with the objective of 

learning how to save, how to invest, and how to purchase homes. 

Of the 75 affiliates, 66 of them do homeownership education and 

counseling and that includes, Congresswoman Waters, homeownership education on the front side, to assist people before they even 

sign a mortgage and purchase a home, and post-purchase counseling, which involves assisting people who may get behind, may 

40 

get into default with negotiating with the mortgage holder in an effort to try to protect or save that asset. 

Today, I want to offer, one, some thoughts about the advantage 

of the National Urban League in providing these services. One, we 

are a trusted ally in the community. There is no mistake that the 

National Urban League is not a debt collector, not the bank, not 

seeking to foreclose on people’s homes but there to assist them. 

Number two, because of our trust people tend to come to us for assistance and help earlier rather than later. 

Here are some recommendations, and I agree with what Mr. 

Duvall has said and with what many of the earlier panelists said. 

First, I believe that Congress should lead the effort to dramatically 

expand financial education in this Nation, with both public and private resources with a focus on asset building, that is to help people 

save, invest, and buy homes. The question then is how do you examine, how do you evaluate, how do you measure the success of financial education? We should keep our focus on the bottom line 

and that bottom line is whether people’s net worth expands and increases over time. 

Number two, as has already been said, we should focus on financial education for young people, for kids in schools, for preteens and 

for teens, ruling people in effective financial decisionmaking is very 

important in a context in an America today where the range of 

services, the range of options, the complexity of options, from the 

choices for cellphones, for investments, and for retirement accounts 

is far more complex than it was a generation ago. 

And, finally, pertinent to the subprime crisis, homeownership 

counseling should be dramatically expanded, and I applaud the 

committee, your leadership, Congresswoman Waters, and yours, 

Congressman Watt, in pushing the Congress to do this. With this 

important caveat, those dollars must be geographically focused on 

those areas in those communities that have greatest need. 

Number two, the expansion of investment in homeownership 

counseling and financial education should not be a license for the 

creation of fly-by-night homeownership counseling agencies that 

sprout up because they see an opportunity. Indeed, fly-by-night 

mortgage brokers have been in fact one of the causes of the 

subprime meltdown. 

So, finally, I just want to thank you all for considering this as 

well as for the opportunity to testify today. 

[The prepared statement of Mr. Morial can be found on page 189 

of the appendix.] 

Ms. WATERS. Thank you, sir. 

Ms. Jill Docking? 

STATEMENT OF JILL DOCKING, PRESIDENT AND FOUNDER, 

FINANCIAL FITNESS FOUNDATION 

Ms. DOCKING. May I assume everybody has my testimony, and 

I may summarize it? 

Ms. WATERS. Yes, you may certainly assume that. 

Ms. DOCKING. This has all been quite interesting to me. I have 

been working on this issue for 10 years now, and by the way, I’m 

encouraged to hear everybody here is interested, and I thank all of 

41 

you for clearly staying through either your lunch hour or nap hour 

or whatever this is for everybody, you all have really hung in there. 

Financial Fitness Foundation was a not-for-profit formed about 

10 years ago in the State of Kansas in an effort to promote financial literacy. We started off by doing very interactive, high-energy 

seminars for young people in high schools, and we really could gin 

those kids up. They were fabulous, they were expensive to do, everybody was very engaged, especially kids from large urban districts. The board then concluded while that really caused a lot of 

excitement amongst the kids, it was not very efficient at spreading 

our message extensively. So as a little guerrilla group, as I call our 

little foundation, just a bunch of private citizens wanting to get 

this done in the State of Kansas. With the help of our executive 

director Carol Rupe, we launched an effort to change the law in the 

State of Kansas and we did so. Now it is mandatory in our K 

through 12th curriculum that we have financial literacy standards 

integrated into our standard curriculum of math, social studies, 

and language arts. So it is all the way through our curriculum. 

We now are trying to evaluate how well we are doing and how 

effective that has been and our conclusion is that it is spotty, that 

a lot of teachers do not really feel comfortable about teaching it and 

so they are therefore either not teaching it or not doing a very extensive job at doing so. So when I was asked to do this presentation, I differ from everybody here, I don’t run an organization. I 

am a businesswoman, I really care about this, and I agree it has 

to be part of the system in either a very incentive-based way or 

mandatory. In a sense, you have to set a FLIC under FLEC. We 

did that in Kansas. We tried to get all of the wonderful people 

doing everything to get a little bit more focused and a little bit 

more directive. 

I have written on my testimony three thoughts on incentives— 

or two thoughts on incentives and one on mandates. How can the 

Federal Government help to fuel interest in the subject? I think 

our government must own it. If we go State-by-State or city-by-city, 

we will not get the required results. There is no lack of material 

in this area of study. The scarcity is in the incentives or mandates 

available to drive the issue. 

Some thoughts on incentives would be the following: Government 

should help underwrite the training of K through 12 teachers in 

the subject matters with funds for continuing education at the postsecondary level. Two, we need to scale up personal finance in all 

post-secondary general education courses. A course platform that is 

Web-based, taught by well-trained faculty, would do the job but it 

requires resources. The third would be a mandate, a mandate 

much like Congressman Cleaver was talking about except I think 

it is not a mandate unless you have a proficiency exam. As a member of the Kansas Board of Regents, I will tell you they would have 

a heart attack listening to me talking about a mandate or proficiency exam in post-secondary, but as a business person, I believe 

that is some of what works. So a test of proficiency could be mandated by the Federal Government and funding provided for this 

test either at the end of high school or before entry into post-secondary school. In the event that the student fails, there should be 

funding remediation. 

42 

I have listened to everybody here today. There is a lot of really 

good stuff going on, so I would not be particularly discouraged. I 

know you are frustrated because it is government. I am actually 

encouraged as a private citizen because I do not think I had any 

idea there was this much going on but there is no coordination and 

so either the private and public sector have to come together in 

some coordinated way or we somehow have to get this mass with 

a single source of energy to get some things done. 

The subprime issue is a short-term issue, this is a long-term 

issue we need to be very patient about and move the system in 

order to protect the next generation. I might add that I think entitlement reform has a lot to do with this. You ought to care about 

your kids taking care of themselves or Social Security and Medicare are going to be very problematic to that generation. 

Thank you. 

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

101 of the appendix.] 

Ms. WATERS. Thank you very much. 

Mr. Stephen Brobeck? 

STATEMENT OF STEPHEN BROBECK, EXECUTIVE DIRECTOR, 

CONSUMER FEDERATION OF AMERICA 

Mr. BROBECK. Thank you, Madam Chairwoman. The Consumer 

Federation appreciates the chance to participate in this hearing. 

This is the fourth opportunity we have had in the past 2 years to 

testify before Congress on financial literacy issues. In the first section of our written testimony, we summarize the key points of our 

first testimonies. In the third section, we urge Congress to consider 

the improvement of financial product disclosures as an important 

strategy for improving consumer financial literacy and decisionmaking. But it is the second section of the testimony that I will 

now focus on. 

Judging from many indicators, including the lack of commitment 

by most schools, the minimal resources provided by government 

and the fact that most Americans have a limited understanding of 

the financial services marketplace, financial education has been 

paid lip service but not real attention by most of our society. And 

we believe that even the expansion of effective individual programs, such as those sponsored by the organizations represented 

on this panel, including my own, would not alter this unfortunate 

reality. 

So, how can we get society’s attention and persuade it to make 

a greater commitment to improving financial literacy? One approach, and it was suggested by a couple of earlier speakers, is for 

all organizations committed to this improved literacy to join forces 

to try to persuade millions of Americans to periodically assess and 

improve their financial condition and to make available tools for 

doing so. That opportunity now exists, we believe, through America 

Saves Week, which this past February brought together over 80 

major national organizations listed in an appendix to my written 

testimony, including more than a dozen Federal agencies and also 

hundreds of State and local groups, to urge individuals to evaluate 

and improve their spending, borrowing, and savings habits. 

43 

Frankly, America Saves Week 2008 was a mile wide, and with 

a few notable exceptions, only inches deep. But next year and beyond, those coordinating the week, including fellow panelist Dallas 

Salisbury, believe that we can add considerable depth as well as 

great breadth to this initiative. We will do so with assistance from 

an America Saves Week Web site, which contains specific advice 

about how different organizations can participate in an array of 

savings tools for individuals and families. These include video 

PSAs, the Savings Knowledge Test, a personal assessment of one’s 

savings progress, a personal wealth estimator, a personal ball park 

estimate of one’s retirement savings adequacy, and an opportunity 

to develop a specific plan for achieving a desired savings goal. 

While coordinated by ASEC and America Saves, America Saves 

Week is a brand and a program that we would like other organizations to appropriate as their own. This past year, for example, the 

Armed Services embraced Military Saves Week. The North American Securities Administrators Association developed a theme of 

America Saves through investor protection. The National Foundation for Credit Counseling emphasized the theme of America Saves 

through debt reduction, and all these organizations crafted their 

own messages and publicized them. 

Let me conclude by saying that America Saves Week provides 

many opportunities for leadership by Members of Congress, especially in their districts. Simply urging local organizations to participate in the week would be very helpful, but even more valuable 

would be inviting some of these organizations to a meeting to discuss planning local coordinated America Saves Week activities and 

both ASEC and America Saves are prepared to support and help 

staff in any such efforts. 

Thank you again for this opportunity to testify. 

[The prepared statement of Mr. Brobeck can be found on page 85 

of the appendix.] 

Ms. WATERS. Thank you very much. 

Ms. Janis Bowdler? 

STATEMENT OF JANIS BOWDLER, ASSOCIATE DIRECTOR, 

WEALTH-BUILDING POLICY PROJECT, NATIONAL COUNCIL 

OF LA RAZA (NCLR) 

Ms. BOWDLER. Good afternoon, and thank you. I am the associate 

director for the Wealth-Building Policy Project at NCLR and in this 

role I oversee our research and analysis on the ability of Latinos 

to obtain financial security. I would like to extend the greetings 

and regrets of our president and CEO, Janet Murigua, who was not 

able to be here at today’s hearing. But on her behalf, I want to 

thank the chairman and other committee members for the invitation, and I would also like to thank Congressman Hinojosa for your 

overall leadership especially in this area of financial literacy. 

The concept of financial literacy is one that is very important to 

the Latino and immigrant community, yet despite many great intentions, the financial education market is flooded with materials 

that do not work for Latino families. This is not to say, however, 

that there is a great need for more and better financial knowledge. 

In fact, low-income consumers need the same kind of advice and fiVerDate Aug 31 2005 11:34 Jul 09, 2008 Jkt 042717 PO 00000 Frm 00049 Fmt 6633 Sfmt 6633 K:\DOCS\42717.TXT TERRIE
44 

nancial planning that families with means pay for; they simply 

cannot afford it. 

Today, I will briefly discuss research and analysis done by NCLR 

in this area. I will also discuss promising community-based strategies to improve financial decisionmaking, and I will conclude with 

a set of recommendations. 

I will start by sharing some of our research. We recently released 

a report that examined financial education programs targeting Hispanic consumers. We found that most of the materials out there 

are just too broad. They do not effectively change consumer behavior, decisionmaking, or help families attain assets. This is troubling 

because we know that owning assets is the best way to help lowincome families become financially secure. Thus, financial education programs should, in one way or another, connect families to 

wealth building opportunities. This is the only way that we are 

going to close the race ethnic wealth gap that my colleague from 

the Urban League mentioned. 

As a sponsor of housing counseling, we also know that one-onone sessions are meaningful, effective tools for building both financial knowledge and sustainable wealth. Through our network, we 

work with more than 30,000 families every year. We understand 

what it takes to help marginalized communities build financial security through asset ownership. Every day, our counselors meet 

new families that need deeper services than they can currently provide. In fact, about 80 percent of families who seek advice through 

NHN are not ready to purchase a home in the near future. Our 

counselors develop work plans for these families, some of which extend up to 2 years, but what these clients really need is good quality financial planning. In fact, the high turnout rates at free tax 

preparation clinics and IDA programs shows that low-income families are interested in this kind of service but the financial planning 

market is driven by the amount of wealth a client already has. 

Planners that rely on commissions or fees do not have an incentive 

to serve low-income families. 

So NCLR has identified three road blocks to extending quality financial services to the families that need it. First, which I have already alluded to, is that there are few affordable certified financial 

counselors available. The going rate of $200 an hour is prohibitive 

for a family of modest means. 

Second, there is little incentive for low-income families to spend 

hard-earned money on a planner. Upper-income families who 

itemize their income taxes can deduct the expense of their financial 

planner. This stands in stark contrast to the situation from modest 

income families who have no such incentive. 

And, third, Congress is not investing in this area. In 2004, Congress provided more than $350 billion in tax benefits to upper-income workers to save and invest their money. No comparable investment in savings incentives has been made for low- and moderate-income workers. 

Plus, low-income communities are prime targets for financial 

predators. Hispanics are more than twice as likely as whites to become victims of fraud, and we know that these scammers often 

pose as ‘‘certified’’ counselors or consultants in order to push their 

predatory product. We must establish a network of reliable, indeVerDate Aug 31 2005 11:34 Jul 09, 2008 Jkt 042717 PO 00000 Frm 00050 Fmt 6633 Sfmt 6633 K:\DOCS\42717.TXT TERRIE
45 

pendent financial counselors who can provide financial planning 

services, budget and savings advice, basic banking skills, and a 

safe alternative to the scammers. 

Let me close with just a couple of recommendations. We need a 

refundable Federal income tax that will create an incentive for lowincome families to see a financial planner. We need an infrastructure of community-based financial counselors modeled on the successful housing counseling program, and we need Congress to explore this theme of financial scams through hearings and reports. 

Policymakers can take meaningful steps to increase asset ownership among Latinos, and we believe that financial counseling is the 

lynch pin in this strategy. 

Thank you, and I would be happy to answer any questions. 

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

67 of the appendix.] 

Ms. WATERS. Thank you. 

Next, we will hear from Ms. Phyllis Frankfort. 

STATEMENT OF PHYLLIS FRANKFORT, PRESIDENT AND CHIEF 

EXECUTIVE OFFICER, WORKING IN SUPPORT OF EDUCATION (W!SE) 

Ms. FRANKFORT. Chairwoman Waters and members of the committee, as president of W!SE, and chair of the New York Financial 

Literacy Coalition, I thank you for giving me this opportunity to 

share my thoughts regarding financial literacy and education for 

young people. America desperately needs financial education. We 

cannot correct the past. We can, however, strive to do better by 

preparing today’s youth to be responsible and financially savvy 

adults. 

We still lack of cohesive national policy on financial literacy that 

is widely known and an educational commitment. Very few States 

require or recommend the teaching of finance and the requirements 

are inconsistent in depth and breadth of content. There is also a 

lack of funding. I am encouraged by the interest W!SE has received 

from Representatives Ackerman, Serrano, Velazquez, and particularly my Congresswoman, Carolyn Maloney. 

On a national level, the introduction of H.R. 4335 and S. 2671 

offer hope for a critically needed, overarching national framework. 

While I am pleased that the Administration, too, recognizes the 

need, I am concerned that a recent initiative by the Treasury Department reflects the shortcomings of No Child Left Behind: testing 

without regard to teaching or learning. 

Five years ago, W!SE created the Financial Literacy Certification 

Program to help high school students become financially literate 

before they graduate. At the time, 18- to 25-year-olds comprised the 

fastest growing group filing personal bankruptcy and more young 

people were dropping out of college because of personal debt than 

academic failure. 

W!SE invites high schools to teach a course or unit on personal 

finance and then assesses the student’s acquired knowledge. We 

provide curriculum, pre-tests, online practice test questions, and 

our standardized certification test, available in English and Spanish and validated by industry professionals. Students who pass are 

certified financially literate and schools, teachers, and students are 

46 

eligible for awards based on test results. The word is out; this program is now in 21 States. It has reached 65,000 students and it 

has grown by 1,500 percent since 2003. We have an average 74 percent of students passing the certification test and the rate is improving to 82 percent in fall of 2007. Before instruction, pre-test 

passing is 49 percent. After instruction, results have consistently 

shown a statistically significant improvement of 24 percent or 

more. Most important, student behavior in managing their own 

money changes for the better. Clearly, our program and tests work, 

all tied to curriculum and instruction. We have empowered teachers. It helps teachers to measure whether or not they were effective 

and it asks students to demonstrate knowledge. 

In contrast, Treasury has spearheaded a high school challenge 

which simply replicates W!SE’s concept of a testing and recognition 

initiative. It is not tied to instruction and it will take precious, limited class time to a little effect. They say it is intended to spark 

interest when the priority needs to be on getting the job done. The 

challenge is not only a missed opportunity for innovation in financial education but also a waste of taxpayer dollars. 

I am not being self-serving or proprietary. I have conveyed my 

concerns to Treasury officials. I have offered our assessment tool 

tied to instruction as a more effective way forward. After all, this 

same Treasury awarded W!SE its Sherman Award for Excellence 

in Financial Education just 4 months prior to their decision to develop their own test. And the Department had solicited and received our copyrighted materials. They rejected our offer and have 

gone forward with their own test not tied to instruction. 

In terms of nourishing the minds of our youth, we feel the challenge is a plate of syrup without the pancakes. This is truly unfortunate. What is needed is a realistic, executable approach to financial education. More States need to mandate financial education in 

high schools, funds to facilitate implementation of these mandates 

and programs that work are needed, a strong focus on building 

teacher capacity, efforts to leverage best practices in instructional 

methods and, of course as mentioned before, coordination. We also 

need funds to study the long-term effects of financial education. We 

have young people who graduated 5 years ago, are they still financially well? 

Ms. WATERS. Thank you very much. Your time has expired. 

Ms. FRANKFORT. And we recommend the swift passage of bills 

pending before you and that our experience and model of certification aligned to instruction be embraced. Thank you. 

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

110 of the appendix.] 

Ms. WATERS. Mr. Salisbury. 

STATEMENT OF DALLAS SALISBURY, CHAIRMAN, AMERICAN 

SAVINGS EDUCATION COUNCIL; AND PRESIDENT AND CEO, 

EMPLOYEE BENEFIT RESEARCH INSTITUTE 

Mr. SALISBURY. Congresswoman Waters, I want to thank you for 

chairing this hearing along with Chairman Frank, and I also want 

to commend and thank Congresswoman Biggert and Congressman 

Hinojosa for their outstanding work over the years and encouragement in these areas. 

47 

Let me start where Ms. Frankfort just ended. Some years back, 

the American Savings Education Council undertook a Youth and 

Money Survey and a Parent’s Youth and Money Survey. In both of 

those what we found is that over 75 percent of high school students 

in America actually have a financial education course available to 

them in school as an elective, but less than 7 percent take that 

course. It is given very low priority. 

I was recently home—to age myself—for my 40th high school reunion in Everett, Washington. The person from whom I took a financial education course in high school was there to visit with 

some of us, along with the individual currently teaching that 

course. When I was in high school, seven students were in the 

class, then an elective. In this year’s last class, 17 students out of 

a high school population of 900 students chose to sign up for the 

elective. In many cases, as other speakers have noted, this is very 

frequently not an issue about an absence of material, about an absence of opportunity, or about an absence of curriculum; the issue 

is an absence of will and it is an absence of priority. 

The last panel was intriguing in terms of the heavy-duty fudge 

factor that marked responses to your direct questioning concerning 

whether such education should be a requirement in school. Others 

at this table have said it should be. As one who took it and benefitted from it, I have urged many of my nieces and nephews to sign 

up, and have been told other things were more important. I would 

simply, on a personal level, suggest that in the absence of a mandate, it is very unlikely that students will choose to take the 

courses even if they become universally available. So I encourage 

you to become more directive, so to speak. 

Secondly, I would note vis-a-vis the content issue, I have had the 

privilege the last 4 years of serving on the FENRA Investor Education Foundation Board. We have found it excruciatingly difficult, 

frankly, to give away money in a way that we felt would make a 

difference. Why? Because there is an extraordinary number of people and organizations that want money to create yet more content 

but do not want funding for delivery, funding for training, and 

funding to deliver real results, and we have been trying to get it 

to that point. So I encourage you as well, per the comments to 

FLEC and others, to consider the issue of getting people to be willing to use the existing resources effectively. 

For example, the American Savings Education Council, created 

in 1995, working with the Federal Government and now with over 

200 private partners, has created 86 public service announcements 

under its Choose to Save Program. These are high-quality announcements. They received the 2007 National Emmy Award for 

Savings. We have offered those PSAs free of charge to anyone in 

the Nation who wishes to take them, add their branding to the end, 

delete ours, and to use them for public education. Military Saves 

has used them. America Saves has done that. The U.S. military 

uses them internationally. It was noted by the U.S. Treasurer that 

FLEC chose to take one PSA and use it but, Congressman, per 

your point, they were offered 86 of them that could have been at 

the cost of about $400 per PSA and turned into promotions for 

money.gov. Instead, we have to create something new out of whole 

48 

cloth and 4 years have been lost, compared with what could have 

been. 

I do not say that to whine; I say that to suggest there is much 

that could be accomplished if everyone simply became a little competitive, a little less brand-oriented, and a little more oriented toward actually making something happen. 

And I conclude with the comments and endorsement of what Mr. 

Brobeck was saying. We worked with his organization, America 

Saves, to create a new Web site, non-branded, 

Americasavesweek.org, and to urge all organizations to use that as 

a rallying point for all of their own programs in order to attempt 

to take this more broadly to communities across the Nation, with 

the message of a very regular checkup. And I would again urge individuals and organizations to do that. I invite every single Member of Congress to promote Americasavesweek.org to their constituency. There is nothing commercial on it. Congresswoman Biggert 

and others have done this. Congressman Hinojosa has done this, 

and we would welcome that type of support from all. 

And, finally, I would simply underline to this committee the tremendous importance of what you are doing and also the tremendous importance of something that was downplayed a little bit by 

the first panel: The extraordinary importance of effective consumer 

protection and very, very powerful regulation. The subprime crisis 

has made the necessity for this absolutely important. 

Thank you. 

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

201 of the appendix.] 

Ms. WATERS. Thank you very much. I will now recognize myself 

for 5 minutes for questions. First, to you, Mr. Salisbury, what was 

the name of the class that you took when you were taking this literacy training? 

Mr. SALISBURY. Business education. 

Ms. WATERS. Business education. What is the name of the class 

today? 

Mr. SALISBURY. Business education. 

Ms. WATERS. Do you think people are just not interested enough 

and that the class is attractive enough to interest students but 

somehow students do not get it? 

Mr. SALISBURY. Based on the size of the enrollment on a consistent basis, I suggested to the school that, after so many years 

of getting such low enrollment, they might want to get a marketing 

approach and re-name the course something that would get people 

more aggressively interested in it, something like, ‘‘How to assure 

that you will be able to buy your iPod, your BMW, and afford college.’’ 

Ms. WATERS. That will do it, how to make money, how to get the 

things you want. That is what I was wondering, whether or not the 

title of the class was sexy enough. 

Let me turn to Mr. Marc Morial. We are concerned about literacy 

and not just focused on the subprime crisis, however, it is a crisis 

and we have to pay attention to it and try and figure out what to 

do to help owners save some of these homes. One of the things that 

we have documented is that minority neighborhoods were targeted. 

For both you, Mr. Morial and Ms. Bowdler, the Council of La Raza, 

49 

are you seeing this in the community that you serve? Do you have 

an extraordinary number of foreclosures? And, if so, what are you 

doing about it? What service do you offer, first Mr. Morial? 

Mr. MORIAL. Thank you for the question. We see, and the evidence is incontrovertible, that there are a high number of foreclosures in urban and African-American communities. It stems 

from the fact that about 50 percent of African Americans who purchased homes in 2005 and 2006 did so with subprime mortgages; 

that is 50 percent compared to about 13 percent in the overall population. 

Second, we have, and the evidence again is incontrovertible, that 

many African Americans who could have qualified for a normal 

customary fixed 30 year conventional mortgage, could have qualified, in fact were directed, steered, pushed, and targeted in a reverse redlining process into these high interest, subprime mortgages. 

What we have done in 2007 is we issued in February of 2007 a 

Homebuyer Bill of Rights that outlined a number of recommendations, key are the expansion of homeownership counseling, and we 

did about 4,000 cases like that in 2007. Secondly, urging this Congress to pass a national anti-predatory lending law to put some future controls on the excesses and practices that led to this meltdown, as well as a number of other things. So to answer your question, yes, it has disproportionately affected African Americans in 

urban communities. Yes, we have done a number of things, but we 

need to be able to expand dramatically our homeownership counseling to try to help more people who are in default, who are at 

risk of losing their homes to re-negotiate their mortgages and in 

order to protect their homes. 

Ms. WATERS. Ms. Bowdler, what are you doing, what is La Raza 

doing? 

Ms. BOWDLER. I would just echo the comments of Marc, I think 

that is exactly right, our communities were clearly targeted. We 

have been up here several times talking about that. We now have 

a massive counseling effort underway. Our counselors went from a 

call a couple of times a week to dozens upon dozens a day, and they 

are working at 150 percent to keep up with that but there are simply not enough counselors out there on the ground to do this work. 

They cannot keep up with it. We need more resources but we also 

need lenders to come to the table and servicers to come to the table 

and do the kind of loan modifications that we need to make these 

loans affordable for these families. Counselors play a really important role for the most vulnerable families out there. They are not 

going to get to see every family that needs this kind of help, so we 

need servicer and lender accountability as well. 

Ms. WATERS. Thank you very much. Ms. Docking, I think you 

talked about K through 12 curriculum that has been advanced by 

your program, Financial Fitness Foundation? 

Ms. DOCKING. Not advanced—it is a law, it was changed as part 

of a Senate bill. We advanced it in terms of just organizing all the 

players. By the way, an outstanding bipartisan effort. I am really 

proud of everybody in Kansas for getting that done. 

50 

Ms. WATERS. I am a little bit curious about what you do with 

kindergartners and first graders in teaching financial literacy, and 

I am wondering, is the piggy bank obsolete? 

Ms. DOCKING. No, actually, you would be surprised how much 

kids like the concept of money because it makes concrete math and 

fun math. The piggy bank is not obsolete. May I defer to Carol 

Rupe who actually runs our program to answer the specifics of your 

question on the curriculum? She is right there. 

Ms. WATERS. No, I do not think so. What we will do is we will 

ask you to submit that for the record. 

Ms. DOCKING. Alright. 

Ms. WATERS. We will get that information from you. We are 

going to continue with our panelists today because we have to be 

out in a certain length of time, so let me just move on. 

Ms. DOCKING. Alright, thank you. 

Ms. WATERS. Thank you very much. I am going to yield to Mrs. 

Biggert for 5 minutes. 

Mrs. BIGGERT. Thank you, Madam Chairwoman, and thank you 

all for being here. I am sorry that I missed some of the testimony, 

but I will review it. And, Mr. Duvall, it is great to see you, you 

have done so much for financial literacy and have been so active 

in this. I really appreciate all that you have done. I would like to 

ask you, looking at the education, and we have been since 2003 

working on this, and I am really kind of discouraged in the fact 

that we are still moving forward but there is not any great movement for how we are going to address financial literacy for kids or 

seniors or those in between, and we are seeing the mortgage crisis 

and people getting into things that they did not understand. So you 

are advocating having this financial literacy in the curriculum in 

schools, is that correct? 

Mr. DUVALL. Absolutely, that is the heart of our mission as you 

know, Congresswoman Biggert. 

Mrs. BIGGERT. Right. 

Mr. DUVALL. And we do keep chipping away at it. I have not gotten discouraged yet. You are seeing more States that are including 

economics and personal finance in their requirements. 

Mrs. BIGGERT. That is what I wanted to ask you, about how 

many States now have really mandated that for curriculum? 

Mr. DUVALL. All of the States now include economics, basic applied economics in their standards for the schools. 

Mrs. BIGGERT. But do the children have to take the course? 

Mr. DUVALL. No, a smaller number are required to take a course 

and only about half the States include personal finance in their 

State standards and a smaller number make it a requirement for 

graduation. 

Mrs. BIGGERT. Is there anything—we do not want to be the national school board, and I think we have gotten into a lot of things 

through No Child Left Behind and things that maybe we should 

have left some of this to the States, so I am cautious about what 

we do but how can we show the States and the educators that this 

is really an important issue that they should be teaching? And you 

have developed materials, it is right there for them. 

Mr. DUVALL. I think what is required to change the situation is 

to have standards-based materials and then to do the teacher 

51 

training that enables the teachers to use those materials effectively 

and then to do testing and assessment and evaluation. 

Mrs. BIGGERT. Do you think that No Child Left Behind is getting 

in the way? 

Mr. DUVALL. Well, it has had what the economists call the unintended consequence of crowding other subjects besides reading literacy and math literacy to the side. Efforts have been made, and 

you have been a champion of some of those like the Excellence in 

Economic Education Act, to restore an emphasis on economics and 

personal finance to the core curriculum. I think that is the way to 

go for the future to make a difference is in the re-authorization debate for No Child Left Behind, to make sure that economic and financial literacy are not crowded out. 

Mrs. BIGGERT. Thank you. And then, Mr. Salisbury, you talk 

about the messages that individuals receive each day to spend and 

if need be to borrow, and I suppose we go back to a generation that 

is not as visible any more but the ones that went through the 

Great Depression. I can remember my husband telling a story 

about the fact that he and his mother were taking the street car, 

and he had his money and he lost a penny and so they could not 

take the street car because that penny was part of the fare and 

how those messages—and now we want to even do away with 

penny because it is superfluous right now. It does not add up to 

anything, I guess is what they are saying, but what can we do for 

this message for saving? We have minus one percent saving in this 

country, how are we going to encourage people to save? 

Mr. SALISBURY. Well, I lost my father last summer just short of 

94. When I went to work at age 13, he said, ‘‘Now, you save 15 percent of everything you earn and you do that from now until you 

quit working and you will be fine.’’ That kind of a message at home 

is something that is irreplaceable. But as a practical matter, even 

as the last panel kept emphasizing as they are financial industry 

regulators, we need to consider what various financial firms do in 

this area. That is, take any of those firms and look at what they 

are spending on financial education, and then look at what they 

spend every week on advertising encouraging people to borrow and 

spend, and the amount they spend simply to send me the flow of 

applications for credit cards that I do not want each and every 

month. So I think part of this is recognizing that, if we want a 

focus on savings education and financial literacy, frankly it is going 

to happen only if it is mandated. It is only going to happen, with 

a Federal Government that is frankly de-regulation oriented, if 

there are mandates for consumer protection legislation and if that 

effort is intense. 

And as a practical matter, a focus on basic financial education, 

public service announcements, etc., needs to be required, not merely encouraged. On the front page of the Business Section of The 

Washington Post this morning, it noted, ‘‘Will we keep the consumer spending? They are 70 percent of the economy.’’ If we cannot 

keep them spending, good gosh, we will not have growth, every emphasis is on getting people to borrow and spend, even with the 

stimulus package—spend your tax refund, certainly do not put it 

in an IRA or save it. 

52 

So I think it is cultural, it is cultural from the government on 

down. As my father, were he still here today would and did tell me 

throughout my life, ‘‘They will tell you to spend it, you cannot 

spend it until you already have it in the bank. They want to sell, 

that is how they make their money. Recognize it is a self-interested 

message and look out for yourself first.’’ 

Mrs. BIGGERT. Thank you. 

Mr. HINOJOSA. [presiding] The gentlewoman’s time has expired. 

We need to continue to expand our discussion but we must move 

on. I am delighted to have been given the opportunity to continue 

the chairman’s work here. I would like to call on the gentlewoman 

from New York, Carolyn Maloney, for 5 minutes. 

Mrs. MALONEY. I thank the gentleman for yielding and for his 

deep concern about financial literacy and all of his hard work, 

along with Ranking Member Biggert. 

I would like to ask Mr. Duvall, your organization’s Economic and 

Personal Finance Education Report Card on the Nation’s Schools 

found that only seven States require a personal finance course as 

a prerequisite for graduation. NCEE found that only nine States 

actually test the students knowledge of personal finance. What specific initiatives are your members working on to increase these 

numbers? 

Mr. DUVALL. We work on that issue by both advocacy and by 

service and delivery. In the advocacy area, our State organizations, 

our affiliates in all of the States, try to push this cause with the 

State legislatures and with the decisionmakers for education within the states. 

Mrs. MALONEY. Are you active in every State, is your organization active in every State? 

Mr. DUVALL. Yes, we have a council in every State, some are 

stronger than others but evidence of the difference that can be 

made was given by my colleague in regard to the State of Kansas 

where they have put through legislation that calls for personal finance being taught and delivered in the schools in the State. 

And then in terms of service and delivery, we do the massive 

teacher training effort in every State through our 200 universitybased centers. We get to the teachers because they come to the university centers for continuing education credit. So we are working 

with K to 12 teachers, 150,000 last year. And in turn that has a 

multiplier effect because those teachers teach several generations 

of students. 

In improving the situation and the national map, I think both of 

those things are required, advocacy and service, working through 

the school systems and with the teachers and the school boards 

and the decisionmakers to really get it into the schools. One of the 

challenges is shelf space and the competing claims for attention 

within the curriculum. So our strategy on that is to work by infusion to get basic personal finance and basic applied economics into 

the math curriculum, into the social studies generally, into history, 

and in science as well. 

Mrs. MALONEY. I would like to really ask a question to any panelists if they would like to respond. I am a former teacher, and I 

watch education in my district, I watch it with my children, I 

watch it very carefully, and I have noticed, I believe, and this is 

53 

my interpretation, I want to make it clear, it is my own interpretation and not a statistic, that there is almost an attitude against financial literacy in the schools. And I cite one school, and my 

daughter was in this school actually, and I thought the teacher was 

great, she was teaching financial literacy, she divided the kids up 

into teams, they were buying stocks, they were investing, they 

were studying finance. It was a tremendously exciting interactive 

financial learning and one of the parents complained, and they had 

it removed from the curriculum. I thought it was outrageous. But 

there seems to be an attitude of fighting it. 

I am a product of the public school system and in the public 

school system when I was growing up, we got a little bank card 

and we were encouraged to save, and we got our allowance and we 

all saved and some people have criticized that this ‘‘helps the financial system’’ and it has been taken out of the school curriculum. 

And to me finance, as all of you have said, are part of our lives, 

it is part of our next generation’s lives. It should be required curriculum. Why are we having so much trouble getting this as part 

of the curriculum and in many cases removing it. They have removed the curriculum that I had as a child. And I just want to 

open it up for comments because it seems to be an attitude or 

something. And actually the financial curriculum that is taught in 

my district, in many cases it is done as an extracurricular activity, 

and I have been invited in for a day where they ‘‘teach finance’’ 

today. It is not an integrated part of the curriculum and there 

seems to be, and maybe it is my own interpretation, but they do 

not even have the little bank cards anymore that we had in school 

and this is how you save and this is how you bank and this is how 

you use the financial system. So I would like to open it up for any 

comments? And my time has expired, I thank the gentleman. 

Mr. MORIAL. I want to offer an observation and again, this is a 

personal observation, I think number one, the foundation of this 

Nation’s political system is democracy. And it used to be that we 

focused and it was required in schools that children learn civics, 

the Declaration of Independence, the basis of the Constitution, the 

three branches of government. The foundation of our economic system is the free enterprise system, which is based on individual and 

collective choices. Each system is based on and presumes that citizens have basic knowledge and information that empowers them to 

make personal choices. We have forgotten and walked away from 

an understanding that this basic information and preparation is 

needed and necessary for people to be able to navigate. 

My second point is this, I had an opportunity to teach a financial 

education class to high schoolers in Chicago about 2 years ago. I 

started the class by raising up my cellphone and asking each high 

schooler who had a cellphone to raise it up. Then we went around 

the room and asked each of them, how much are you paying for 

your cellphone? It ranged from $13 a month to $160 a month. And 

the students were shocked that they did not even know, and they 

felt very cheated that some students had $13 a month cellphones 

and some had $170 a month cellphones because they were falling 

prey to marketing and aggressive appeals without even being empowered to ask questions, to examine choices. The point is that the 

financial system that our children live in and we live in today is 

54 

different than 30 years ago when only wealthy people had credit 

cards, when there was one kind of phone bill, one kind of mortgage, 

and one kind of way you could purchase a car. There were no 

leases, open-end, closed-end, none of the choices that are available. 

So it has been positive that there are choices but it also means that 

there is potential for abuse. So I think that it requires a fundamental understanding and a shift in our thinking that training and 

preparing young people to make these intelligent choices is going 

to improve our system. 

And that is an observation of what in fact—I think sometimes we 

are stuck in the past in thinking and not understanding how sophisticated things have gotten. I think that we do not understand 

that the fundamental is that an educated society about its government and about its economic system is necessary for the overall 

health, quality, and performance of our Nation. That is why, for us, 

when we look at the disparities that exist in income net worth and 

jobs, we recognize that a component of it is to inform and empower 

people with knowledge and information. That is not all it requires 

but it is fundamental. 

Mr. HINOJOSA. Thank you, Mr. Morial. The gentlelady’s time has 

expired. I am going to take the opportunity to ask a few questions. 

I am going to start with Ms. Jill Docking and say that I have enjoyed listening to everyone who has made their presentations on 

both panels. I am a little bit happier with the second panel than 

the first, so I will probably show you that by the line of questioning 

that I am going to use. 

It was exciting to hear what has been done in Kansas, and I commend you for the spirit and the optimism that you have shown in 

your presentation. Listening to everyone, I have come to the conclusion that possibly the reason that Mr. Salisbury gave that very 

few students signed up for the elective of business education is because of the answer that my youngest of four daughters, oftentimes 

says, ‘‘Dad, it is because it is boring.’’ When I say something about 

what is going on in school and possibly the lack of interest, and 

that is one of the common responses of a 12-year-old. I have four 

daughters and the youngest one is highly spirited and oftentimes 

answers exactly how she feels. 

Possibly, Mr. Salisbury, we need to talk about how to take the 

boredom out of this subject. And I am going to ask Ms. Docking if 

maybe you could answer that question: How can we make this 

more exciting like music, like theater, like the things that our kids 

like? 

Ms. DOCKING. Yes, Congressman. I would refer you to the front 

page of the Wall Street Journal today that has an article on how 

they have made accounting fun. It is a little easier to make financial stuff fun than accounting, and there are all sorts of programs 

that are now being used interactively on cellphones to teach kids 

in a much more interesting way how to do this. On our seminars, 

we specifically, we zeroed in on that question because we had kids 

in our audience who were going to Harvard, and we had kids who 

might be going to jail, and I am not kidding because we had full 

senior classes in large urban areas, and we had to keep everybody 

interested. 

55 

If I were queen and I were doing this FLEC thing, I would hire 

a company, and I think Apia is one of the private companies, I 

know there are many that do that interactive, Web-based teaching. 

That is how this generation appears to learn, and I know people 

who are doing programming with W!SE, you probably sort of figured that out, haven’t you, how to get them to do it? So I would 

use we have a lot of very creative private companies, but is not this 

FLEC just government-oriented, are you allowed to use the partnership with private companies to get that done? 

Mr. HINOJOSA. Congress can modify FLEC and amend the FACT 

Act. If it is not working, we are responsible for making changes so 

that it does work, so Congress is pretty powerful. 

Ms. DOCKING. Yes, that answers the question. By the way, as 

Congressman Cleaver has come in, Financial Fitness Foundation 

has looked intensively at—now that we have gotten it into the 

school system, I would love to get it in the churches in Kansas because there is a lot of curriculum teaching faith-based financial 

planning in urban areas inside churches. I know a lot of teaching 

goes on, and I can get it from the kid to the mom and dad to the 

grandparents, so I think we need to think a little bit outside of the 

box. I do not know if Congress can think that way, but we have 

been trying to think that way. 

Mr. HINOJOSA. Thank you. I like your response. I want to ask 

some other questions. Yes, Ms. Frankfort? 

Ms. FRANKFORT. I just would like— 

Mr. HINOJOSA. I cannot hear you. 

Ms. FRANKFORT. I am sorry. I would like to add to what Ms. 

Docking said by suggesting that we talk to and have a conversation 

with the hundreds of teachers who are very successful in teaching 

personal finance. We have a system whereby we honor teachers 

who have 90 percent or more passing. And in most of our schools, 

we are reaching all the seniors in a high school, and so we have 

students who are special education, we have students who are very 

bright, students in difficult economic situations, but they are consistently very successful. So I think that there should be some kind 

of follow-up or discussion with them that might inform and help 

answer that question. 

Mr. HINOJOSA. Thank you for adding your thoughts on that. I 

want to forewarn you that Chairman Frank is going to be coming 

in a few minutes and taking over the Chair’s responsibilities here, 

and he let me know earlier that he wants to have some follow-up, 

in other words, what is next, be thinking about answers to his 

questions because we think that we have heard some very valuable 

information here from all of the panelists but now what we need 

to know are what are the next two or three steps we need to take 

to be able to turn this around and make it work because we are 

in a crisis? 

And, finally, I want to conclude my questioning by saying to Ms. 

Bowdler thank you for coming in place of Ms. Janet Murigua. I 

think those of you who addressed the limited English-proficient 

population and those who are so challenged because of low-income 

families, as you did Mr. Morial, I think that it is like teachers who 

are asked to go to neighborhood schools where 80 and 90 percent 

of the children qualify for the free lunch program because in those 

56 

schools, they oftentimes are the ones who are scoring the lowest on 

standardized tests, not because they are not smart, it is because 

our programs just are not designed to really help the children who 

remind me the theory of a great pair of educators known as the 

Cardinas and Cardinas’ ‘‘Theory of Incompatibility,’’ and I said, 

‘‘What in the world is that?’’ They said, ‘‘That is where you try to 

take a square peg and put it into a round hole,’’ and that I think 

is happening in our public schools and certainly is a serious problem. I am not going to ask any more questions because there are 

some of my colleagues who would love to have time to ask their 

questions, so now I would like to recognize the gentleman from 

New York, Congressman Greg Meeks. 

Mr. MEEKS. Thank you, Mr. Chairman. Let me ask this question 

because I am concerned, in my community and all across America, 

we had a program in the Congressional Black Caucus called WOW, 

With Ownership Wealth. We just a very short period of time we 

were telling everybody to buy a home. Why? Because our home is 

an appreciating asset and we were urging folks to buy homes and 

take advantage of these products, etc., and I don’t know whether 

or not we were doing the proper kind of counseling or training even 

while were doing that, just urging folks to buy a home and they 

were doing it, and now we have this terrible crisis. Let me ask Mr. 

Morial first with the Urban League, I know that you are in Nashville and you are doing a lot counseling in different places, could 

you tell me the difference between what you provide to communities as the counseling is concerned what NeighborWorks does and 

whether or not your services are the same or not, can you give me 

an idea on that? 

Mr. MORIAL. Thank you, Congressman Meeks, and I appreciate 

your question and certainly your leadership and advocacy. There is 

a great deal of compatibility with what others may do and what we 

may do with this distinction. We not only help people with homeownership education and counseling, we provide job training, job 

placement, and a broad array of services through our affiliates 

from coast to coast. So if a person is behind on a mortgage, for example, and one of the challenges is that they may have lost their 

job, then our approach would be not only to assist them in re-negotiating with the mortgage holder but to assist them with job placement. So it is a case management approach that the Urban League 

has employed now for its almost 100 years of existence. 

Secondly and very importantly, our affiliate offices are located in 

the communities that we serve. By and large, we are located in the 

neighborhood, near to the constituency that we serve, not an access 

by going downtown or going across town but in the communities 

that we serve. And we think that the proximity of financial education, homeownership education and homeownership counseling 

services to neighborhoods is a very important part of the delivery 

system. If we are going to expand the availability of financial education and homeownership counseling, it has to be provided 

through multiple sites and multiple locations. Schools, yes; faithbased, yes; community-based, yes, and we are a community-based 

organization that does that. 

Ms. BOWDLER. Thank you for your question, and I want to respond to one of the comments that you made in your opening about 

57 

what were counselors out there doing? We told them to go out and 

buy homes and now where are they at? The role of a housing counselor has always been and continues to be an independent advocate 

for that family. And what counselors do is they take a family in, 

they make a financial assessment, and they put them on a track. 

Their goal is to put that family in a situation where they are getting a home for long-term sustainability. So from our perspective, 

the question is not just should a family buy a home, it is when 

should they buy a home and when are they ready, which is why 

you see families that have gone through counseling programs like 

NCLR or Urban League perform much better. And we are talking 

about low-income borrowers who got prime products, who were the 

prime targets for all of the subprime mess that are now performing 

very well. It is that kind of success that we would advocate that 

you need to replicate in the area of financial counseling. 

The fact of the matter is that affluent families, whether or not 

you went to a class in high school, need this kind of service; they 

need financial advice. They go out and purchase it, they pay somebody to tell them what to do with their money. Low-income folks 

who have even less resources and less means have even more of a 

need to know exactly what to do with each one of their hard-earned 

precious dollars. And so we would advocate for a similar kind of 

independent financial counselor that could provide free or low-cost 

advice to families as they are about to make major purchases, not 

just homes but credit cards, open your bank accounts or get your 

tax credit back. 

Mr. MEEK. That is exactly right because sometimes when folks 

go through counseling, you do not get into the larger credit issue 

to understanding. That is one of the questions I wanted to ask you 

and maybe Mr. Morial and the others, when you counsel individuals do you go into the other credit aspects because a lot of people 

do not understand credit and look into further their financial 

needs, etc., is that part and parcel of the model that you use when 

you counsel with them because I know when I have had individuals 

come into my office and had some counseling, they did not go into 

it at all. And I was just wondering whether your two organizations 

would do something of that nature? 

Mr. MORIAL. If I can, I think, as I shared earlier, because we 

take a holistic approach, the way we would approach it is to provide and sort of deal with all of the family or all of the client’s 

issues, challenges, and problems. If you do financial education/ 

homeownership counseling in the correct way, then it is holistic. It 

is not just narrowly tailored, and that is why providing the service 

through a trusted community-based organization like the National 

Urban League and its affiliates, like the National Council of La 

Raza and its affiliates or faith-based is much different than if it is 

provided by a mortgage broker, a mortgage company, a financial 

services company, a real estate concern whose only emphasis is to 

try to get a person into a home now versus helping the person prepare themselves financially for asset building and certainly ultimately to get into a home at the right time and on the right terms 

and under the right circumstances so that they can sustain that 

asset. 

58 

Mr. HINOJOSA. The gentleman’s time has expired, and I have 

been told that another committee is coming in at 1:30. Being that 

the chairman has not returned, I am going to ask the question that 

he said he would be asking you, and that is, what are the next 

steps? I apologize, Mr. Cleaver, that I am not going to give you the 

5 minutes that you are entitled to, but I guarantee you that you 

are going to like the answers that you are going to hear because 

being that I have to be out of here, I am going to give each one 

of you 1 minute, and only 1 minute, to answer the question, what 

are the next steps that we should take to turn this thing around 

and say as a result of panel one and panel two, we have found the 

answers to turn this around and make it better. So I will start with 

you, Mr. Salisbury. You have 1 minute. 

Mr. SALISBURY. Number one, Congress recognizing, in spite of 

State education requirements, that the No Child Left Behind program should include a mandate that some type of financial literacy 

education be a part of every curriculum in the United States. Secondly, I think that— 

Mr. HINOJOSA. Do not give me two, just give me that one. Thank 

you. Ms. Frankfort? 

Ms. FRANKFORT. And, secondly, the legislation that creates this 

mandate should also include funding to support the rapid expansion of that which works because there are initiatives that are very 

effective, whether it is the counseling or a program in a high school 

but resources are required to make that happen. 

Ms. BOWDLER. Yes, I would say that we need to expand the incentives that we offer to affluent and upper-income families to save 

and get financial advice to low-income families. There is no reason 

why low-income families should somehow be held to a higher 

standard of financial literacy, to sort of inherently know how to invest their money and so they need those same incentives. 

Mr. HINOJOSA. Thank you. Mr. Brobeck? 

Mr. BROBECK. All or most of us, I think, need to join together behind a very high impact initiative, and I cannot think of a more 

effective initiative than all of us encouraging all Americans annually to assess our financial condition and take any remedial steps, 

and to provide the tools and encouragement to Americans to perform that assessment. 

Mr. HINOJOSA. Thank you. 

Ms. DOCKING. If I only had one extra dollar, I would spend it on 

getting teachers in the K through 12 curriculum, as well as postsecondary, educated on personal finance with continuing education. 

Mr. HINOJOSA. Thank you. 

Mr. MORIAL. For this committee and this Congress to lead a 

broad, national partnership between the public, private, and notfor-profit sectors to develop a womb-to-tomb system of financial 

education, which has as its goal helping all Americans increase 

their net worth and build assets and close the wealth gap. 

Mr. HINOJOSA. Thank you. Mr. Duvall? 

Mr. DUVALL. Legislation that makes it a mandate that personal 

finance, financial decisionmaking skills will be taught in the Nation’s schools, K to 12, and then a massive program for teacher 

training and professional development for teachers so they can do 

that. 

59 

Mr. HINOJOSA. Thank you. We did it in record time, and so I am 

going to do exactly what I said earlier, Congress is powerful and 

can do whatever they want, I am going to recognize Congressman 

Cleaver so that he can have his 5 minutes. 

[Laughter] 

Mr. CLEAVER. Thank you, Mr. Hinojosa. Frankly, the panel has 

already responded to the questions that I had planned to ask. And, 

like you, Mr. Chairman, I appreciate this panel, appreciate the fact 

that the others came, appreciate the testimony from this panel. 

One out of four Americans tragically and painfully are unable to 

lay out for themselves or anyone else how they are going to manage their money and most of them according to polls, a Nielsen 

poll, they cannot even tell you whether or not they will have extra 

money at the end of the month. And so I appreciate your presence 

here today and the information has been valuable. Thank you. 

Mr. HINOJOSA. Thank you. 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. With 

that, I declare that this hearing is adjourned, and we thank you. 

[Whereupon, at 1:30 p.m., the hearing was adjourned.] 

(61) 

A P P E N D I X 

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