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THE MORE YOU KNOW, THE BETTER BUYER 

YOU BECOME: FINANCIAL LITERACY FOR 

TODAY’S HOMEBUYERS 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

ECONOMIC POLICY 

OF THE

COMMITTEE ON 

BANKING, HOUSING, AND URBAN AFFAIRS 

UNITED STATES SENATE 

ONE HUNDRED TENTH CONGRESS 

SECOND SESSION 

ON 

FINANCIAL LITERACY AND EDUCATION EFFORTS TARGETED TO BOTH 

FIRST TIME HOME BUYERS AND EXISTING HOME OWNERS AND TO 

IMPROVE ACCESSIBILITY TO EDUCATION PROGRAMS 

THURSDAY, MAY 1, 2008 

Printed for the use of the Committee on Banking, Housing, and Urban Affairs 

( 

Available at: http://www.access.gpo.gov/congress/senate/senate05sh.html 


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(II) 

COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS 

CHRISTOPHER J. DODD, Connecticut, Chairman 

TIM JOHNSON, South Dakota 

JACK REED, Rhode Island 

CHARLES E. SCHUMER, New York 

EVAN BAYH, Indiana 

THOMAS R. CARPER, Delaware 

ROBERT MENENDEZ, New Jersey 

DANIEL K. AKAKA, Hawaii 

SHERROD BROWN, Ohio 

ROBERT P. CASEY, Pennsylvania 

JON TESTER, Montana 

RICHARD C. SHELBY, Alabama 

ROBERT F. BENNETT, Utah 

WAYNE ALLARD, Colorado 

MICHAEL B. ENZI, Wyoming 

CHUCK HAGEL, Nebraska 

JIM BUNNING, Kentucky 

MIKE CRAPO, Idaho 

ELIZABETH DOLE, North Carolina 

MEL MARTINEZ, Florida 

BOB CORKER, Tennessee 

SHAWN MAHER, Staff Director 

WILLIAM D. DUHNKE, Republican Staff Director and Counsel 

AARON D. KLEIN, Economist 

MEGAN BARTLEY, Legislative Assistant 

DAWN RATLIFF, Chief Clerk 

SHELVIN SIMMONS, IT Director 

JIM CROWELL, Editor 

SUBCOMMITTEE ON ECONOMIC POLICY

THOMAS R. CARPER, Delaware, Chairman 

JIM BUNNING, Kentucky, Ranking Member 

SHERROD BROWN, Ohio 

CHUCK JONES, Staff Director 

WILLIAM HENDERSON, Republican Staff Director 


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(III) 

C O N T E N T S 

THURSDAY, MAY 1, 2008 

Page 

Opening statement of Chairman Carper ............................................................... 1 

Opening statements, comments, or prepared statements of: 

Senator Bunning ............................................................................................... 4 

Senator Menendez ............................................................................................ 3 

Senator Dole 

Prepared statement ................................................................................... 32 

WITNESSES 

Sarah Bloom Raskin, State of Maryland Commissioner of Financial Regulation, on behalf of the Conference of State Bank Supervisors ........................... 6 

Prepared statement .......................................................................................... 34 

Kenneth D. Wade, Chief Executive Officer, Neighborhood Reinvestment Corporation, d/b/a NeighborWorks America ............................................................ 8 

Prepared statement .......................................................................................... 47 

Ronni Cohen, Executive Director, Delaware Money School ................................. 11 

Prepared statement .......................................................................................... 105 


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jbell on DSKDVH8Z91PROD with HEARING
(1) 

THE MORE YOU KNOW, THE BETTER BUYER 

YOU BECOME: FINANCIAL LITERACY FOR 

TODAY’S HOMEBUYERS 

THURSDAY, MAY 1, 2008 

U.S. SENATE, 

SUBCOMMITTEE ON ECONOMIC POLICY, 

COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS, 

Washington, DC. 

The subcommittee met at 2:03 p.m., in room SD–538, Dirksen 

Senate Office Building, Senator Thomas R. Carper, (Chairman of 

the Subcommittee) presiding. 

OPENING STATEMENT OF CHAIRMAN THOMAS R. CARPER 

Chairman CARPER. The hearing will come to order. 

I want to welcome warmly our three witnesses today. We have 

been joined by Senator Menendez from New Jersey. We will be 

joined, I am told, by Senator Jim Bunning a bit later, and others 

of our Members may drift in and out. I just checked in with our 

cloakroom to see if we are likely to have votes during this hearing, 

and I am told that we will not likely have votes. So we can just 

focus on what you have to say and listen to you or take in your 

words and ask you some questions. We are delighted that you are 

all here. 

Our hearing today, as you will know, will focus on financial literacy and education efforts in our State and other States for both 

first-time homebuyers and for existing homeowners. The recent 

subprime mortgage crisis has put a spotlight on and has raised 

questions regarding the financial knowledge of homebuyers and 

homeowners. Buying a home is perhaps the most complicated financial transaction that most Americans will ever undertake. Studies have shown that most Americans lack a certain knowledge 

about the basics of buying a home. 

Financial innovation is generally a good thing. We should encourage markets to become more efficient and better able to manage 

risk. However, the fundamentals of the game tend to remain constant. Potential homebuyers will always need to determine if buying a home makes financial sense. 

Often, the potential homebuyer is not sure they are financially 

ready to buy a home or how much they can afford to borrow. Many 

times the homebuyer seeks advice from those also involved in the 

transaction, maybe the real estate agent, the real estate broker, 

perhaps the lender. And there is nothing wrong with soliciting the 

advice of brokers or lenders, but sometimes potential homebuyers 


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need more than advice. Homebuyers need to know that they can 

and should meet with a qualified, independent counselor before 

starting down the path to homeownership. 

It is often said that homeownership is the American dream. I 

have said that myself. I suspect my colleagues have, too. But for 

many Americans, that dream is fast becoming something of a 

nightmare. The real American dream is sustainable hospital. 

Before sitting down with a lender, some homebuyers should meet 

with a qualified, independent counselor to look at their credit history, to examine how much debt they have, and to examine their 

income to determine whether they should remain a renter or 

whether they should purchase a home. The buyer also needs to 

have access to a counselor who can walk them through the many 

mortgage products available on the market. For some families, a 

fixed-rate product is best, and for some families, an adjustable-rate 

mortgage is better. The best decision depends on the buyer’s personal circumstances. However, the buyer should look at their ability to repay the loan regardless of changes in interest rates. 

Again, these are things that a potential homebuyer should examine before purchasing a home. The more we know, the better buyer 

we become. 

Financial education is not stopped once a home is purchased. 

New homeowners receive a number of solicitations every day in the 

mail. They used to receive them every day on the phone as well. 

But some of these mailings urge the new homebuyers to refinance 

at a much lower rate and have some cash left over. Refinancing a 

mortgage can make great financial sense, but a homeowner needs 

to look at more than the new interest rate or how much cash they 

can pocket. Homeowners should also seek the advice of an independent, qualified counselor if they have questions about the pros 

and about the cons of refinancing. 

Many of the subprime loans now currently in foreclosure were refinanced. The homeowner started off with a fixed-rate mortgage, 

but opted for the exotic mortgage to pay less in the short term and 

get cash out of their home. As a result, many homeowners, too 

many homeowners, have little or no equity in a home that they can 

no longer afford because their adjustable-rate mortgage is due to 

reset to a much higher rate. Many of these homeowners must now 

try to get back to a fixed-rate product in order to keep their homes 

and to avoid foreclosure. 

On April 10th, the Senate passed the Foreclosure Prevention Act 

of 2008, which included some $100 million for housing counseling. 

We will hear today from our witnesses about the state of our Nation’s financial education. I hope we will hear testimony on not 

only the importance of financial education, but also on ways to improve the many literacy programs around our country. I also hope 

that we will hear how it can make financial education more accessible. 

Before I introduce our witnesses, let me yield to Senator Menendez and just say we are delighted you are here. Thank you so much 

for coming. 


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STATEMENT OF SENATOR BOB MENENDEZ 

Senator MENENDEZ. Thank you, Mr. Chairman, and thank you 

for holding what I think is a very important hearing. I really think 

it should be packed, as we have had other hearings packed, because at the end of the day—we are here. Don’t worry about it. 

[Laughter.] 

But the reality is this is at the root of a lot of our challenges, 

and I really appreciate your leadership in bringing this up, because 

as we continue to work to help homeowners who are suffering from 

the subprime meltdown, I think it is equally important that we 

look at why so many Americans ended up entangled in mortgages 

that they could not afford in the first place. 

Over the last year, we have examined a number of factors that 

contributed to the crisis, and while there is no single specific cause, 

the lack of financial literacy is clearly at the top of the list. 

Let’s be honest. I think no one knowingly accepts a bad deal. 

More often than not, they are misled into something they do not 

understand or led into an arrangement that sounds good but is not. 

And despite this, we have heard time and time again that because 

people signed agreements that they could not afford to pay, they 

are somehow accomplices, not victims. I think this assessment generally is not just wrong, but it is offensive. The vast majority of 

people facing foreclosure are in my mind, as I see it in my office 

increasingly, victims of unscrupulous mortgage lenders who really 

got snookered into contracts they did not understand. And the reason so many lenders were able to get away with it is because financial literacy in this country is below what it should be. 

Mr. Chairman, in a recent banking hearing, I asked our witnesses to gauge the average American’s financial literacy on a scale 

of 1 to 100, and across the spectrum, they gave me all low scores, 

something along the lines of 20 or 30. Well, 20 or 30 in making the 

major financial decisions of our lives is not a good score. We are 

talking about people trying to understand what they are signing. 

When I used to practice law, Mr. Chairman, I would go to great 

pains to describe to individuals who are entering for what them is 

probably the single financial transaction of their lives, purchasing 

of a home, what it is that they were getting into, both in their contract in the first place, what were the contingencies, what were the 

challenges, and in their mortgage commitments, what they were 

getting into there. And, generally, they did not know. It was only 

because of something that I saw as a responsibility to do, which I 

would say many of my colleagues did not necessarily spend as 

much time in telling their client what, in fact, they were getting 

into. They depended upon the mortgage lender or the broker to do 

that. But, in fact, these people were not getting the right information. 

How many understand their credit card agreements? They are 

very complex. There are layers and layers—I am, you know, an attorney, a legislator. I get those multiple-page forms and look at it 

and say, ‘‘My God, how thick is it?’’ They are designed to be complex and to be difficult because the harder to read, the harder to 

understand, the easier it is for unscrupulous lenders to get away 

with higher rates, extra fees, and terms that are not what they 

seem. 


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There is no doubt that we have to punish predatory lenders who 

took advantage of homebuyers and tricked them into signing contracts they could not afford. But perhaps most importantly, what 

we need to do is arm the American people with the financial knowhow so that they can continue to make—so they can ultimately 

make the right decisions. 

Finally, Mr. Chairman, I have introduced a bill, the Financial 

Education Counseling Assistance Act, that would help Americans 

with more tools, especially those Americans most at risk of financial peril. The bill will help organizations such as NeighborWorks 

to expand financial counseling services and help new organizations 

offer these services. These are vital for people who need some financial assistance but who, like the majority of Americans, cannot 

afford to hire a personal adviser. 

We have learned from the subprime crisis that often families in 

trouble hold on as long as they can until they are too deep in the 

hole to get out. We have also seen how a housing crisis not only 

takes people’s homes away but their financial stability as well. 

So I look forward to the discussion that is going to be held, and 

I appreciate all of our witnesses coming forth, especially Mr. Wade 

from NeighborWorks. We have worked with NeighborWorks quite 

a bit on counseling issues, and I certainly appreciate seeing Commissioner Raskin here, who I understand is a former Senator Sarbanes staffer, sat behind here, so you know what this is all about, 

what is going on up here. 

Thank you, Mr. Chairman. 

Chairman CARPER. Thank you, Senator Menendez. 

Senator Bunning, welcome. 

STATEMENT OF SENATOR JIM BUNNING 

Senator BUNNING. I apologize, Mr. Chairman. I had a group from 

Kentucky and I could not get away, and I am sorry I was late, but 

I—— 

Chairman CARPER. We understand. 

Senator BUNNING. Thank you for holding this hearing. Today’s 

topic is obviously very timely. We only need to look at what has 

happened in the housing market over the last few years—more 

than a few, to know how important financial education is for homebuyers. 

There is a role for Government in protecting investors, but homebuyers must also arm themselves with information about financial 

services. And our school system, God rest it, ought to be able to 

help out here. We do not have good financial literacy being taught 

in our school systems. And I say that as a grandfather of 39 kids 

that they better learn what is going on when they get to the world 

and have to live in it and buy homes, because everybody wants to 

buy a home. 

I have some doubt that Government can be both a neutral and 

effective financial educator without giving consumers a false sense 

of security. We do not want to do that. We want to make sure that 

they are armed, or at least are wise enough to arm themselves 

with somebody who, like Bob just said, knows what the heck is in 

that contract or is in that mortgage or in whatever they are required to sign. 


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I hope we can shed some light on resources available to new and 

repeated homebuyers in today’s market. Maybe you and I will even 

learn something today, Mr. Chairman. I look forward to hearing 

from our panel of witnesses. Thank you all for being here. 

Chairman CARPER. Senator Bunning, thank you. 

The first thing I would like to learn is when you have 39 grandchildren, how do you remember everybody’s name? 

Senator BUNNING. My wife has a great memory. 

Chairman CARPER. God bless her. All right. We are delighted you 

are here. It is good to be with you. 

Let me just provide a brief introduction for our witnesses and 

start off by saying to Sarah Bloom Raskin, Commissioner, welcome, 

welcome back, currently the Commissioner of Financial Regulations for the State of Maryland. I understand you are here today 

representing the Conference of State Bank Supervisors. As Senator 

Menendez has suggested, you are not a stranger to this Committee. 

How long did you serve here on the staff when Senator Sarbanes 

was here? 

Ms. RASKIN. About 41⁄2 years. 

Chairman CARPER. OK, 41⁄2 years. All right. We are glad you are 

back. It is a testimony to your legacy and to his legacy that you 

are now the Banking Commissioner for the State of Maryland. Congratulations. How long have you been in that post? 

Ms. RASKIN. Only since August 28th. 

Chairman CARPER. All right. Good enough. 

Ms. RASKIN. It feels like an eternity. 

[Laughter.] 

Chairman CARPER. I guess it does these days. 

Kenneth Wade, Kenneth D. Wade, Chief Executive Officer of 

NeighborWorks, and someone who was kind enough to come to our 

State—I want to say 1 or 2 years ago—when a nonprofit called 

INCALL, which is part of NeighborWorks’ national network, was 

celebrating their anniversary, and we very much appreciated your 

coming there on that occasion. But as we all know, NeighborWorks 

America is a public nonprofit corporation established as the Neighborhood Investment Corporation by an act of Congress in 1978, and 

its Board of Directors includes a number of senior people in the 

Federal Government, as I recall. It is an interesting structure 

there. 

Ronni Cohen—all the actual words on this sheet of paper that 

are said about you, they do not begin to tell the story, but currently 

the Executive Director of the Delaware Money School. The Money 

School is part of the Delaware Financial Literacy Institute, which 

was created by our State Treasurer, Jack Markell. And for my colleagues, I would also say that Ronni Cohen is also one of the finest 

educators that we have had in Delaware in the last several decades. And every year in our State, as I am sure in your States, we 

have teachers that are nominated to be Teacher of the Year, and 

we have 19 school districts, so we have 19 nominees each year, and 

Ronni Cohen was selected as our Teacher of the Year, I want to 

say about 8 or 9 years ago. 

Ms. RASKIN. Exactly. 

Chairman CARPER. And I was privileged to be there as Governor, 

I believe, when the presentation was made. But when we are tryVerDate Nov 24 2008 02:23 Mar 23, 2010 Jkt 050401 PO 00000 Frm 00009 Fmt 6633 Sfmt 6602 E:\HR\OC\A401.XXX A401

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ing to think about how to better educate people young and not so 

young with respect to financial literacy, we probably could not have 

anybody better at the table or in the venues than you. So thank 

you so much for coming today. 

Commissioner Raskin, I am going to recognize you. I want to say 

take no more than 30 minutes for your opening statement. 

[Laughter.] 

Chairman CARPER. No. We are not going to be real tight on the 

clock today. I do not think we have any votes, so if you go over 10 

minutes, we will probably rein you in, but your entire statement 

will be made part of the record. Thank you for joining us. 

STATEMENT OF SARAH BLOOM RASKIN, STATE OF MARYLAND 

COMMISSIONER OF FINANCIAL REGULATION, ON BEHALF 

OF THE CONFERENCE OF STATE BANK SUPERVISORS 

Ms. RASKIN. Well, thank you. Thank you for inviting me today, 

and good afternoon, Chairman Carper, Senator Bunning, Senator 

Menendez, and distinguished Members. My name is Sarah Bloom 

Raskin, and I serve as Commissioner of Financial Regulation for 

the State of Maryland. I am happy to be here today to testify on 

behalf of the Conference of State Bank Supervisors on the importance of financial literacy counseling for potential homebuyers and 

new mortgage borrowers. 

Chairman Carper, I certainly do not need to tell you what an important role States have always played in the development and 

oversight of essential financial services in our country. Your understanding and support of the State’s role in financial regulation is 

well known and longstanding, and we deeply appreciate it. 

But for Members of the Committee who may not be familiar with 

this role, I want to emphasize the importance of maintaining a system of local oversight and accountability for this most personal of 

financial products. For more than 4 years, we at the State level 

have been working on solutions to the challenges raised by the revolution in mortgage finance during the 1990s and the fragmented 

system in place to supervise its players. 

CSBS is implementing a national licensing system, and we have 

a framework for a system of coordinated regulatory policy with the 

Federal banking agencies. Our goal is a streamlined consistent system of oversight that protects consumers and enforces best practices while maintaining a stable flow of credit through our markets. 

Pre-loan counseling and follow-up counseling to new borrowers is 

a key element of these best practices. 

Homebuyer and homeowner counseling and education are necessary, but they are not sufficient. It is important to combine such 

counselling and education with regulatory initiatives to bring 

greater transparency and accountability to the mortgage origination process. 

For the homeowners in trouble, though, counseling alone may not 

be enough. This is a multi-faceted problem with many routes and 

implications and demands a multi-faceted approach. In Maryland, 

we have learned that we need, and we are now providing, housing 

counseling offices that provide not only counseling but also other 

basic services, such as litigation support. 


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Something else we are learning is that even at the point of foreclosure, there are important opportunities for counseling and education. In particular, we are seeing distressed homeowners become 

victims to foreclosure rescue scams and equity skimming scams. 

These scams are often complicated and intricate transactions that 

no homeowner should navigate alone. Maryland, for example, has 

enacted strong consumer protections now that ban these types of 

scams. 

One ironic benefit of the current crisis is that it is showing us 

what borrowers did not know and needed to. Thus, the architects 

of financial literacy programs can learn from this experience and 

readjust to help prevent future crises. A good financial literacy program includes at least three essential elements: 

First, participant involvement. Consumers gain confidence when 

they can identify the pieces of the process they already know. So 

a good training program should begin with the instructor asking 

practical questions that students can relate to. 

Second, train the trainers. Financial literacy instructors themselves need to know not only the nuts and bolts of personal finance, 

but also the psychology of money and how adults and young adults 

learn about it. 

Finally, financial literacy training is most effective when it can 

capitalize on so-called teachable moments, that is, teaching when 

the student wants the information and when the information will 

stick. Clearly, purchasing a home is one of these moments. 

Federal and State governments should endorse and promote the 

national industry standards issued last fall by HUD, NeighborWorks, and a host of industry leaders. We are and we should be 

looking for ways to help nonprofit counselors achieve and demonstrate compliance with these standards. We can and should work 

together to set similar standards for broader financial literacy programs. Federal and State governments should present a better 

aligned approach to building the capacity of the homeownership 

and financial education nonprofit sector. 

The national mortgage licensing system, proposed and developed 

by CSBS and Armor, comes at the issue from the other side, requiring standards of education for mortgage bankers and brokers 

as a condition for licensure. While in forums like these we tend to 

focus on the need to educate the consumer, in the structure and realities of today’s marketplace, it is often equally important to educate the lenders and the lenders’ agents. 

Any Federal initiative to improve consumer protection must recognize, support, and not interfere with the State’s ability through 

legislative and enforcement authority to protect consumers from 

emerging problems. It is crucially important not to undercut the 

work we have already done and are continuing to do. Federal legislation should build on State expertise and efforts to protect our 

consumers. Our uniform licensing initiative is only one part of this 

effort. 

Congress has the ability and opportunity to create a new system 

of State and Federal coordination for protecting homeowners and 

enforcing best practices in the mortgage lending industry. Consumer education and counseling are crucial elements of those best 


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practices, and CSBS would support Federal efforts to support and 

encourage these practices. 

We ask, however, that you remember that when it comes to protecting consumers, even globally funded mortgages are originated 

locally. Grass-roots outreach and education programs are more effective, more efficient, farther-reaching, and longer-lasting than 

top-down initiatives. 

Thank you for inviting me to testify on this important subject 

today, and I am pleased to answer any questions the Committee 

may have. 

Chairman CARPER. Commissioner, thank you so much for joining 

us today and for your testimony. 

Mr. Wade. 

STATEMENT OF KENNETH D. WADE, CHIEF EXECUTIVE OFFICER, NEIGHBORHOOD REINVESTMENT CORPORATION, D/B/A 

NEIGHBORWORKS AMERICA 

Mr. WADE. Thank you, Senator Carper, Senator Bunning, and 

Senator Menendez, for inviting me to be part of this hearing today. 

The importance of financial education and counseling cannot be 

overstated, particularly in light of the rise of non-traditional financial services outlets, and obviously the rising foreclosure crisis that 

all of us are so concerned about. 

Today I would like to highlight five areas that we are working 

on that make a contribution in this broad area of financial literacy. 

One is a financial fitness program that we are operating that deals 

with basic financial literacy: a pre-purchase education counseling 

program that we have; a post-purchase education counseling program, which includes foreclosure prevention initiatives; the training that we do related to supporting all of these activities; and then 

the national industry standards that we are supporting, along with 

a broad set of other players in the industry, in order to create some 

standards that help govern this activity. 

First, in our financial fitness program area, we see that it is critical to help consumers and communities. For consumers, financial 

education is the key to protecting their assets and building wealth. 

For communities, it is clear that financial education programs promote stronger and more stable neighborhoods where residents are 

more resistant to downturns in the economy and other threats to 

their financial well-being. 

Our financial fitness program teaches basic financial planning, 

money management, both how to budget, save, invest, how to access financial services and financial institutions; it teaches about 

credit, taxes, and insurance. Those are all basic things that all consumers need in order to be successful in navigating this very complicated environment out here today. 

We also know that financial education works. In our own efforts, 

we have seen that financial education changes consumer behavior 

and improves financial confidence. And it also dramatically improves saving rates for consumers who participate in formal financial literacy efforts. 

We have provided financial fitness training to more than 900 

counselors since 2001, helping to create a network of fully trained 


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people who are able to provide this kind of service to their local 

communities. 

We also have a very pre-purchase education and counseling effort. It is pretty clear that high-quality pre-purchase counseling 

that adheres to national industry standards helps people with 

budgeting, credit repair, making good decisions on their mortgage 

products, and through pre-purchase counseling and education, 

NeighborWorks organizations have been able to prepare foreclosure-resistant borrowers who qualify for reasonably priced traditional mortgage loans and achieve sustainable homeownership. We 

have been tracking the performance of the loans made through consumers who have been assisted with organizations in our network, 

and we have been able to demonstrate that there have been a significant—or to think about it another way, these borrowers perform 

better than subprime loans for sure, better than FHA and VA 

loans, and on par with prime loans. So I think it demonstrates that 

if people get good pre-purchase counseling, they can be successful 

homeowners, even if they have limited incomes. 

So we think the best defense against delinquency and foreclosure 

is objective education and advice before the borrower begins shopping for a home and selecting a product. In fact, the vast majority 

of consumers that we are seeing in foreclosure today by and large 

had no benefit of any pre-purchase counseling from anyone. 

On the post-purchase education and counseling front, through 

our post-purchase counseling efforts, new homeowners learned all 

the things that you need to know when you become a homeowner 

for the first time: you know, how the home maintenance issues will 

affect you, how you have to set money aside to address that; how 

to evaluate and in many cases turn down all the plethora of additional financing offers you are going to get when you become a 

homeowner; how to evaluate refinancing opportunities to see if 

they make sense for you and your family; and, obviously, minimizing consumers’ becoming overleveraged with more debt than 

they can handle. 

NeighborWorks organizations also establish an ongoing relationship with their customers so they know those customers know 

where to turn when they do or if they do get into trouble. And, obviously, like any other consumer, life events happen, illnesses, job 

loss, and the like. And so oftentimes consumers need someone to 

turn to that can help them work through those issues. 

Post-purchase counseling also helps people understand that if 

they do run into trouble paying their mortgage, it is also important 

to seek help early. That is one of the things that we have learned 

through our foreclosure prevention efforts. As you probably heard 

quoted, up to 50 percent of consumers who go to foreclosure every 

year never have any contact with their servicer. They do not respond to the phone calls, the outreach efforts, and the letters. In 

addition to that, a good number of consumers who finally do show 

up for assistance on average show up very late in the foreclosure 

process. So, clearly, being able to reach out to consumers early 

makes a big difference. 

That is why one of the things that we did to contribute to this 

issue in the foreclosure arena is develop a public education campaign with the Ad Council that we launched last June. It is a naVerDate Nov 24 2008 02:23 Mar 23, 2010 Jkt 050401 PO 00000 Frm 00013 Fmt 6633 Sfmt 6602 E:\HR\OC\A401.XXX A401

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tional public awareness campaign. It encourages struggling homeowners to call the toll-free number of the Homeownership Preservation Hotline, which is staffed by professional counselors 24/7, 24 

hours, 7 days a week, which connects them with the kind of counseling that is possible to help them maintain homeownership. 

We also, as you know, have been charged with the responsibility 

of administering a consolidated appropriations foreclosure prevention counseling program. We have been pleased to be able to respond to that responsibility. We set up a program where over $350 

million worth of requests came in for that effort, which was $180 

million appropriated. And we were able to, within the 60 days of 

enactment of that legislation, award the first round of those grants, 

roughly $130 million that went out to help support foreclosure prevention counseling. 

We also do a lot in the area of training. It has been one of the 

areas that we have felt the need to make a contribution in for a 

long time. In the area of financial education alone, since 2004, our 

NeighborWorks America has issued 25,000 certificates of completion to housing counseling professionals, both in the pre- and postpurchase counseling area. 

And then, in addition, as you know, we are also supporting national industry standards. One of the challenges facing the counseling community today is the ability to ensure that we are providing high-quality counseling to the consumers who need it. And 

so together with many other industry players, we have developed 

a set of national industry standards that helps set the bar, so to 

speak, for performance benchmarks in the area of not only foreclosure counseling but pre-purchase counseling as well. And those 

standards have been attached to my written testimony, so they are 

available to the Committee. 

In closing, let me just say that an informed consumer obviously 

knowledgeable of all the options available to them is key to sustaining and strengthening the family and their community. We 

have been able to demonstrate that pre-purchase education and 

counseling makes a real difference in terms of preparing consumers 

for the responsibility of sustainable homeownership, and that postpurchase counseling provides help to those families that run into 

unexpected problems or face major challenges once they become 

homeowners. 

Funding this important service obviously continues to be a challenge, and I know many organizations struggle with the way that 

you can pay for this service in order to make it broadly available. 

So we are committed to ensuring that we can do all we can to help 

ensure that every American who wants pre- and post-purchase 

counseling gets access to it, and we look forward to working with 

the Committee in any way we can to help ensure that becomes the 

case. And, obviously, I am willing to answer any questions that the 

Committee has. 

Chairman CARPER. Mr. Wade, thank you. We will have, I suspect, a number of questions. Just hold on tight there, and we will 

recognize Ms. Cohen for her testimony, and then we will start our 

questions. 

Ms. Cohen, please proceed. Thank you. 


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STATEMENT OF RONNI COHEN, EXECUTIVE DIRECTOR, 

DELAWARE MONEY SCHOOL 

Ms. COHEN. It is an honor to be here today, and Senator Carper 

has been very important in my career as a classroom teacher, 

where I did try to teach financial education for over 33 years. I did 

get out of schools before the No Child Left Behind Act, and there 

was more chance to teach financial education. 

In my role now as Director of the Delaware Financial Literacy 

Institute, our signature program is the Delaware Money School. 

This is the vision of Delaware Treasurer Jack Markell, and it was 

created in 1999, and it became a nonprofit in 2001. We offer now 

over 600 classes a year free across the State of Delaware. We offer 

classes in basic budgeting, credit repair, business startup, homeownership, and we offer the classes to a very diverse community 

of learners. 

In my position, I have been following, obviously, the exotic and 

toxic mortgage dilemmas and the tragedies. I appreciate this opportunity to share these experiences that I have had. Mine basically 

have been with low- to moderate-income people who are looking for 

financial education. 

Yesterday, of course, somebody called and asked if we taught 

martial arts, and we do not, but other than that. 

Most of grew up believing that homeownership was the American 

dream, and if you did not believe in it, people said to you, ‘‘You 

have to own. You are throwing your money away if you rent. This 

is for your future. This is for your family’s future.’’ And we saw 

that that dream became nightmares, as Senator Carper has said. 

We saw people who would just go on the Internet, look at houses, 

look at the multiple listings, and drive around to find their dream 

home. They really did not educate themselves. So it was no wonder 

the subprime market blossomed. 

For those who thought it was never possible to own a home, 

signs that said ‘‘No money down. Let us put you in the home of 

your dreams’’ were very appealing. These were big billboards. 

These appeared everywhere. In our culture of instant gratification, 

many were tempted by these ads, the adjustable rate mortgages, 

and they did not think or did not know to worry about the balloon 

payments and the rising fees down the road. 

With the low and zero down payments and lax document and 

credit checks, many jumped at this chance and became instant 

homeowners. And often these homebuyers were led to believe that 

owning would be cheaper than renting, and it could be. But buyers 

did not always check or understand the fine print or their capacity 

to pay mortgages and living expenses before they jumped on this 

bandwagon. No one thought about the taxes, the trash removal, the 

maintenance, the upkeep, the utilities, the furniture to fill the 

dream house, and the inevitable emergencies. 

While these options provided opportunities for more consumers to 

get into the housing market, they did pose considerable risk because of the higher monthly payments. And we know that the complexity and variety of mortgage products require consumers to take 

an active and informed role when evaluating products. And one of 

the important parts of that role is to ask questions, and people 

often are embarrassed to ask questions. Without this training or 


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education, making personal financial decisions is a confusing, frustrating, and dangerous road to maneuver for most Americans. 

The Delaware Money School is able to offer its 600 classes across 

the State because we have over 100 partners. We have 125 volunteers who are experts in the field that offer free introductory classes covering the basics of financial education. The problem is not all 

people who need this financial education avail themselves of these 

free classes. Some potential buyers decide it is not worth taking the 

time when that dream house might not be available, someone else 

may get it. So they skip the housing homeownership free financial 

education classes. They skip the one-on-one counseling, and they 

get right to the mortgage—and I have had people call me and say, 

‘‘When I got to sign my papers, the figures were not what I thought 

they were going to be.’’ And one of the things the counselor can do 

is help you prevent that from happening. Often, a counselor can tell you that that $400,000 house that you 

have been prequalified for is not the house you are going to be able 

to afford. Two years ago, I had an AmeriCorps volunteer who made 

$15,000 a year who prequalified for a $400,000 house. She thought 

that was really funny, but she actually prequalified, and it was 

scary that on $15,000 she could have the house of her dreams. She 

did not buy the house. She just wanted to see what she 

prequalified for. 

It is ironic now that laws mandate that people declaring bankruptcy have to study financial education, but not all first-time 

homebuyers are required to participate despite the statistics showing that informed buyers are less likely to encounter problems 

making their mortgage payments. So the Delaware Financial Literacy Institute and my partners recommend financial education for 

all first-time homebuyers, not just for those applying to special 

products. And what should it look like? It is what has been mentioned here today. Budgeting: the old concept of spend less than 

you earn, live within your means. Goal setting: Where do you want 

to be? Is this the house of your dreams? Is this a good first house? 

Where do you want to be 10 years down the road? 

The concept of paying yourself first. One of my students said, 

‘‘Doesn’t that mean I take my spending money first and then I pay 

my bills?’’ So there is a lot of education that needs to be done. 

Financial education must include the wise use of credit, building 

a positive credit history, repairing poor credit, and improving credit 

scores. It should include banking basics, what account is best for 

you. One important thing that we like to teach is being a responsible renter. If you have a good rental history, that will help you. 

Rational decisionmaking is something we do not teach, but that 

is something that should be a part of financial education, looking 

at pros and cons, costs and benefits; looking at loan products, predatory lending practices, and, last but not least, financial education 

should let people identify the people in the community who can 

help them with financial decisions, people who are not motivated 

by commissions and sales. 

Many of our housing instructors teach these basics. We have people who are from NeighborWorks that teach financial fitness. These 

are free courses. They also offer a seminar for which they are beginning to charge, and they bring in the major players: the mortVerDate Nov 24 2008 02:23 Mar 23, 2010 Jkt 050401 PO 00000 Frm 00016 Fmt 6633 Sfmt 6602 E:\HR\OC\A401.XXX A401

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gage broker who can explain what points mean, what PMI is, about 

closing costs; a realtor, an attorney, a home inspector, and an insurance agent. 

And one of the best things about these pre-homebuying classes 

is the opportunity to ask questions in a small group. And sometimes someone will ask a question that will spur your own question. This targeted personal financial education itself often comes, 

we find, during the counseling session, the one-on-one counseling, 

where the information can be targeted to the individual buyer’s 

needs. 

There are books on the market: ‘‘Homebuying for Dummies,’’ 

‘‘The Idiot’s Guide to Buying a First Home.’’ There are many Internet sites that will help you buy a home. They just do not provide 

you with an adviser who can help you make the best choice. 

Whatever the means, the potential homebuyer must have a grasp 

of basic financial concepts and be able to grasp the meaning of 

mortgage terms and the necessity to read and understand the 

mortgage documents and requirements, to not be embarrassed to 

ask questions when they do not understand. Delaware Bank Commissioner Robert Glen and his Deputy, Gerry Kelly, have worked 

tirelessly on preventing foreclosures and building awareness of 

predatory practices. From their experiences and from those we 

have talked to with Money School instructors, it is clear that homebuyers who have had basic financial education, counseling, and access to counseling are significantly less likely to go into foreclosure 

because they have made wise mortgage choices. 

In Delaware, through the Community Reinvestment Act, corporate sponsors sponsor the Delaware Financial Literacy Institute 

and have made it possible for us to offer free financial education. 

With Citigroup, we have a unique program targeting low- to moderate-income women, getting them prepared for homeownership, 

business startup, Purses to Portfolios. What it gives these women 

is a cadre of professionals they can call for information at any time. 

Two weeks ago, the President of Discover Bank approached us to 

develop a housing program for Kent County, which has the highest 

foreclosure rate in Delaware. Discover, Bank of America, and State 

Farm fund financial education summits for high school juniors, getting them ready to understand the rules of financial choices. And 

JPMorgan Chase has provided funding for us to teach asset building and financial concepts to at-risk youth. 

One strategy I think that was particularly helpful was developed 

by PNC Bank with Interfaith Housing and NeighborWorks, a 

homebuyers club that meets 11 weeks. Not only do they have classes, they provide dinner and child care, which is critical to the 

young homebuyer. They go over all the basic concepts of financial 

education, and during the duration of the club, buyers become acquainted with counselors and get familiar with them and know 

they can call for help. They learn to repair their credit, if necessary, and the counselor helps them look at specific mortgage 

products and what best suits the buyer’s needs. The best thing is 

it is not an overnight decision to buy a home. There is time to 

judge the merits of waiting to qualify for a mortgage with better 

terms. 


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Talking with my partners, in conclusion, I would like to say that 

what we need is all first-time homebuyers, especially those in the 

low- to moderate-income bracket, should be required to complete 

basic financial education, including the pros and cons of different 

types of mortgage products. They need to understand predatory 

lending. The Deputy Bank Commissioner said I should ask that 

you work to simplify the mortgage documents. When you get that 

pile of documents and you are there by yourself, perhaps with your 

attorney, and you are afraid to ask questions, if there were a simpler form or one form, perhaps, earlier in the process, it would be 

much more helpful. 

We know that homebuying counselors must be certified and required to maintain and update their certification. And a number of 

counselors have said to me, ‘‘We do not get people coming back to 

the post-homeownership classes. They figure they are in the house, 

they do not have to worry.’’ And in order to protect these people 

so that they can keep their home, sweet home, there should be 

some type of incentive, perhaps a tax credit, like the Home Energy 

Improvement Credit, for people who do pursue this post-homeownership education, because it is critical that we give homebuyers the 

tools not just to buy that home, but to hold onto the American 

dream. 

Thank you all. 

Chairman CARPER. Thank you, and I thank each of you for just 

really wonderful testimony, excellent testimony. 

Let me just make an observation. I think about my generation 

or even my children’s generation, and I consider the generation of 

my parents who grew up in the Great Depression. Today, when I 

watch television—I do not watch a lot of it, but I think of this almost as an instant gratification society. I remember seeing commercials that ‘‘You are worth it. It costs a lot of money, but you 

are worth it.’’ And ‘‘Have it now,’’ and ‘‘Pay for your furniture in 

3 years, but you can have it today.’’ 

To what extent does that mentality, the notion that we can have 

it all and we can have it now, we do not have to wait, to what extent does that play into this problem or lead to this problem? 

Ms. COHEN. I believe people right now, instead of having their 

first starter home, when they find that they can pre-qualify for a 

larger home in a great neighborhood with very little down, they 

jump on the chance to get that home now, not starting with the 

starter home and moving up, but starting right away with the 

home above their means. 

Chairman CARPER. I remember when I was looking for my first 

home, the advice I got was buy the biggest home that you can, the 

biggest home that you can qualify for, because the expectation is 

that housing prices will go up, they almost always have, at least 

in the long run, and you will be able to, you know, trade out of that 

at some point in time and into another house, but buy the biggest 

house you can in terms of your buying power. I remember that advice. I did not do it, but probably a mistake. 

[Laughter.] 

Other thoughts on this notion of instant gratification? To what 

extent does this play into it, Mr. Wade? 


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Mr. WADE. I mean, I think clearly that is a challenge we have 

in this country. We have got a negative savings rate. I think Americans are saving less now than they have ever saved in the country’s history. I think the revolution in financial services is a good 

thing, because obviously today there are more financial services 

products than ever before. 

The downside, it seems, to that new environment is that people 

basically are financing today’s activity with tomorrow’s money, and 

that is a big challenge we have and something that I think, you 

know, we need to do a little public education around. And I think 

all of us know that—I know when we were created 30 years ago, 

the big challenge was access to financial services. That is what the 

Community Reinvestment Act was all about. Today it is not so 

much access. It is whether you are going to get the financing that 

is right for you. 

Chairman CARPER. Commissioner Raskin? 

Ms. RASKIN. Yes, I would just add in terms of the instant gratification, there has been a delinking really of ability to repay, right? 

So because of this instant gratification mentality, the notion that 

there should be the ability to repay comes across as foreign to a 

lot of people. And in Maryland, we were successful in actually legislating an ability to repay, but I have to say it was not particularly easy. And you would think that it would be just, you know, 

complete common sense. 

I think another aspect of the instant gratification argument is a 

lot of people were using their home equity as really an ATM, and 

the sense that the run-ups in home values was a good source of 

cash. And, you know, the pairing of the instant gratification is really clashing with that as we see downward pressure on home values. 

Chairman CARPER. All right. Thank you. 

Ms. Cohen spent—did you say 3 years of your life as an educator 

in schools, but you continue to be certainly very much of an educator. In our State, in fact, I think in almost every State in this country, we have all adopted academic standards that say what we expect our students to know in math, science, English, and social 

studies, and other subjects, and we basically say we are going to 

measure their ability to master certain skills in those subjects, certain knowledge in those subjects. And we leave it—not entirely, but 

we leave it largely up to schools and to teachers to figure out how 

to teach the math or how to teach the science and so forth. 

I am wondering if—it seems to me like particularly in sort of like 

basic math and maybe pre-algebra, the notion of buying a house 

and figuring out what compound interest is, those kinds of subjects 

just really lend themselves to taking academic standards, particularly in math, and being able to apply them in our everyday lives. 

Are you aware, whether it is Delaware or Maryland or other 

States, are we actually doing that? 

Ms. COHEN. We are trying. In Delaware, we do not have required 

economics or consumer economics. Some consumers economics is 

taught in family and consumer science. We find that people do not 

know the rule of 72. They do not know compounding interest. But 

those are not measured in our State standards. Very few of the economic concepts, consumer economic concepts, are measured in our 


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standards. And basically one of the things is teachers who learn to 

integrate those concepts across the math and English curriculums, 

science curriculums, can get in some economic financial education, 

but it is basically under social studies. And social studies is on the 

back burner. We, unfortunately, do not think it is—we do not put 

our values in civic education, financial education. But they are critical life skills, and a lot of teachers in Delaware will say to you, 

‘‘I do not do anything until after the test is over. And then I only 

have 2 months to teach.’’ 

So it is tight. In Delaware, we have a wonderful elective, Keys 

to Financial Success. It has been copied in Pennsylvania. It has 

been copied in some other States. But it is an elective, and the University of Delaware has just said they would not accept it as college 

credit. So we are working on that. But it can be taught. It can be 

taught effectively. And what they do is look at homebuying. They 

look at learn more, earn more, looking at the U.S. Department of 

Labor statistics on higher education will impact your earnings over 

your lifetime. 

There are lots of ways we can teach children if we make the 

time, but I guess it goes back to the fact that we do not educate 

teachers in financial education. So they come out of colleges with 

no financial education themselves. 

Chairman CARPER. And as a result, it is difficult for them to create a lesson plan that actually relates an academic standard in 

math to lessons in life, whether it is buying a home or handling 

your credit cards or your personal finances. 

Anybody else on this before I yield to Senator Bunning? 

Ms. RASKIN. I would just say that that idea of integrating financial literacy concepts into an existing curriculum is—that is quite 

an original concept, so that even if we hit resistance in building a 

core curriculum that focuses just on financial literacy, you would 

think that at least financial literacy concepts could become integrated into the existing curriculum. And I think that is a good idea. 

Chairman CARPER. All right. Thank you. 

Senator Bunning. 

Senator BUNNING. I am just going ahead of you because I have 

got to get to a meeting. Sorry. 

First of all, Kentucky has been very not well educated. I mean, 

we are about 46th in education in the 50 States. But on this subject, on foreclosures, I want you to know that we are the sixth best 

in the United States, 1 to 2 percent foreclosure rate. And why? We 

are only first in horseracing. We will prove that Saturday. 

Why are we doing well in foreclosures, or as well as we are? I 

just had a meeting with the community bankers and our banking 

community, our realtors, our homebuilders, our mortgage brokers, 

which were a major problem in this crunch and crisis that we have 

had, and our regulators. And it is because of the cooperation of all 

of those people that we did not go off the trolley—I mean, we kept 

on the tracks. 

My question is on this: From your perspective, can Government 

stay on the track without going overboard? In other words, can we 

as the Federal Government, which is what we are talking about, 

keep things in perspective without taking sides here? Anybody. 


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Ms. RASKIN. Sure. I think that that is what we all achieve—what 

we try to achieve as regulators. We never want to overreact, and 

the tendency as a regulator is to always be behind the eight ball. 

So we are often in a position where we did not catch it when we 

should have caught it, and we need to compensate, and we overcompensate. And that clearly is not ideal, and I think that what 

good regulators try to do is try to have measured responses and tailored responses, and to react appropriately to the situations that 

they find themselves in. 

I happen to believe that, with good regulation, you can do it. You 

can achieve a balance, and you will not create more problems, you 

know, than you started with. 

Senator BUNNING. But the situation we find ourselves in now is 

because we did not. The Fed, who was responsible since 1994 for 

governing mortgage brokers and all banks, did not regulate properly, and we got into sophisticated ARM, sophisticated non-traditional mortgages. And we also had a lot of personal pride come into 

the effect, and I liked his opening line where he said, ‘‘Did we try 

to overextend?’’ Well, I don’t know anybody in the world that 

doesn’t try to buy the biggest house with the least money down. 

But, in fact, when I grew up, you could not do that. They would 

not give you a 30-year mortgage if you did not have a certain 

amount down. 

The people that were put into $400,000 homes, prequalified for 

them, were actually renters. They rented for 5 years, and then 

when all of the bills came due, they got stuck with the bill. And 

so they became what we call foreclosed, or about two-thirds are 

going to be foreclosed out of their homes, and they were actually 

renters during the 5 years or 6 years that they were in the home, 

not paying—or not having enough money down to pay for it. 

We have to do some solving of some problems of those who can 

not afford the home they are in, and we are going to do that in the 

Banking Committee. This hearing will help us. 

Can you think that the FHA—and I ask everybody—can have a 

role in solving this problem without getting way overboard on the 

amount of money that they can borrow from the FHA? 

Mr. WADE. Sure. We generally feel that the FHA has a role to 

play. We think it has been an underutilized resource. It is a resource that exists, created by the Government basically to serve 

this niche. They have not been very competitive in recent years, so 

we think expanding the FHA’s ability to serve more people would 

be a great contribution that can be made to help address this issue. 

There is no question there is room for, I would say, modernizing 

the regulatory regime. I think with regulation it oftentimes lags behind innovations in the market. That is just the way it works. I 

mean, that is just the nature of—— 

Senator BUNNING. Nobody is watching the store. 

Mr. WADE. Right. Absolutely, Senator. And in a sense, I think 

the current regulatory environment needs to come up to the current—and recognize the current innovations in the market and be 

modernized to address that. And one of the challenges we have 

today, and I think while I do not know a lot about the specifics in 

Kentucky, at least what we have heard from some of our members 

there is that you still have a robust community banking network. 


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People have primarily relied on those institutions for financing 

home purchases. Typically, that is not where the problem has been 

in the market. 

Senator BUNNING. Zero problem. None. 

Mr. WADE. Right. It has been traditionally, you know, primarily 

in the subprime sector. That has been the main driver. And I 

would say that the regulatory environment just was not adequate 

to address the innovations that the subprime market brought forward. So I think that is one of the things that I know the Committee is wrestling with. Where is the right balance to strike between enhancing the regulation that is necessary, and obviously 

not impeding innovation that is necessary that has made financial 

services more broadly available in this country than it has ever 

been before? 

Senator BUNNING. Thank you, Mr. Chairman. 

Chairman CARPER. You are welcome, and thank you. 

Senator Menendez. 

Senator MENENDEZ. Thank you, Mr. Chairman. Thank you to all. 

Ms. Cohen, I was interested in that story of the young AmeriCorps 

individual. For $15,000 I cannot pay my rent in Washington, much 

less own anything at the end of the day. 

Let me ask you all, on a scale of 1 to 100, with 100 being the 

best score, how would you rank the average American’s financial 

literacy abilities? 

Mr. WADE. You know, I had not really thought of it along those 

terms, but I would say clearly probably less than 50 percent. But 

I would say some of that is not necessarily the fault of the consumer in this regard. We do not expect the consumer to understand 

certain other kinds of things that are complex in the marketplace. 

So most consumers when they have a legal matter, they need to get 

an attorney. 

I think one of the questions that I think we need to think about 

today, particularly in the mortgage finance arena, has it become so 

complex that consumers need a mortgage adviser at the time of 

that transaction? And I think that is really the challenge that we 

are facing in the mortgage arena. It has become so complex. The 

average consumer does not do it often enough to become proficient. 

I mean, it is not like, you know—you know, when you are buying 

clothes and food, you do that often enough, you kind of know what 

milk ought to cost. But in the case of mortgage finance, you do not 

do it enough, and there are so many innovations in the market, it 

is very hard for the consumer to be proficient. And so I think that 

is one of the challenges that we have got to address. 

Ms. COHEN. I have a comment. I think that some Americans believe they know more than they actually do know, and I think that 

is a problem. 

When the Money School started in 1999, the first 12 classes were 

on investing. When I became the director in 2002, the instructor 

said to me, you know, ‘‘These people should not be investing.’’ People tell them, ‘‘You should invest. You should invest.’’ ‘‘These people 

are deeply in debt. They need to be paying off their credit.’’ 

So we have revamped what we offer, and we do still offer investment classes, but we have had to do—our big favorite is a crash 

course in credit, Kiss Debt Good-bye. Those are the ones that are 


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most popular, and those are the ones people take over and over 

again. 

We did a study of the Money School last year, and we found the 

people who did take Money School classes on a consistent basis— 

and that is what we are looking at—they were able to reduce their 

debt, they were able to start saving, and they were able to begin 

the road to homeownership. But I think if you look at Jump Start, 

the average high school student is not well versed in financial education. We do not teach it. We do not talk about money. That is 

the whole problem. We do not talk about money. It is embarrassing 

to tell people. We tell very intimate details of our life, but we do 

not talk about our financial situations. 

In Delaware, we have over 300 women who have now amassed 

over 8,000 hours of financial education, and what we are working 

on is not taking one course, not just taking 10 courses, but making 

financial education lifelong learning. 

Ms. RASKIN. I would really echo the sentiments of the other panelists. Clearly, Americans are not well versed in these transactions, 

and they are complicated. Even after the point of purchase, what 

we are now seeing, as homeowners move closer into foreclosure, is 

the complexity in which they have found themselves, because they 

do not often just have first mortgages, they have got second mortgages. And now what we are asking them to do is to go into situations where they are going to enter into some kind of mitigation 

possibilities with their servicer. It is mind-boggling trying to figure 

out exactly what the borrower entered into and how they got to the 

point that they now find themselves in. 

One sort of interesting fact we are seeing—and we are going out 

into the communities to talk to people who are in foreclosure, and 

last night, for example, we had a meeting in Prince Georges County, right over the line here, and we have had a number of these. 

And as we continue these seminars, these foreclosure fora, we are 

finding that people know more. They are actually learning quite a 

bit more than they probably knew when they bought their homes. 

They are speaking at an increasing level of sophistication, which is 

obviously—it is a good thing, but it is also evidence of how difficult 

situations have become. 

Senator MENENDEZ. Well, I appreciate your answers. I notice 

that you all diplomatically did not score, but I will derive from your 

answers some of the views. 

You know, in my view, certainly I do not expect people to know 

the nature of some of the mortgage transactions and whatnot in detail. But I think part of the question is a baseline—although we are 

focusing, Mr. Chairman, on mortgages today and homeownership, 

the reality in my view is financial literacy widely spread. You 

know, we are going to have a big, a huge credit card problem in 

terms of growing debt of credit cards. We want people to have credit cards. We want them to make the right decisions as to how they 

do that. And there is a whole host of other financial transactions 

that we make that are not necessarily as uncommon as the purchase of a home, but that at the same time does not have the level 

of financial literacy needed for people to make informed decisions. 

So let me just close and ask two last questions. One is, Commissioner, you talked about your State passing ability to pay as a 


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State standard. If, in fact, we had that as the standard in a regulatory process, wouldn’t we, you know, cut through a lot of the 

challenges of individuals? Certainly the AmeriCorps individual 

would not have received their commitment. And we would actually 

have a system in which people would likely qualify. They may not 

buy the biggest house, but they will get to buy a house if they qualify. And they are not going to end up losing their home. Wouldn’t 

that be something significant? 

And then, last—and anyone else who wants to respond to that. 

Last, isn’t there some incentive, whether in the marketplace itself, 

to get people to do particularly pre-purchase education, maybe even 

post-purchase education, Mr. Chairman, isn’t there some incentive 

that the marketplace—you know, like in driving insurance, you 

know, car insurance. If you take certain courses, if you do certain 

things, you actually get a benefit on your insurance premium. Is 

there something along those lines that we can do in the private sector? And if not, what is there governmentally that might be done 

to create an incentive for people to move to the pre-counseling? If 

you could just talk about those two issues, I would appreciate it. 

Ms. RASKIN. Sure. I will just back up to address some of your 

comments. Credit cards clearly are something that is a much more 

accessible and widely used tool that financial literacy can be geared 

around, and I think that is just an excellent point, and it shows 

quite a bit of foresight, because, you know, what we are learning 

and what we are seeing in the housing context is that we now face 

a very different marketplace when we buy a home than our parents 

did when they bought homes and just dealt with a bank and it was 

a bank that held onto the mortgage, and we did not have all these 

different players. 

Similarly, we are going to learn things, and we are starting to 

see things in the credit card context, and I can speak just, you 

know, from the perspective of my children who are, you know, preteenage years, and they think that transactions all occur by swiping plastic. To them, you do not hold onto cash; you actually use 

plastic. This sort of ties in, also, to sort of the cultural pressures, 

too. I mean, you know, the Barbie doll now has her own ATM that, 

you know, she swipes and this is what children now see as the toy. 

In terms of the ability to repay, yes, I mean, I clearly think that 

that is a very important legislative solution, and it is not a silver 

bullet, by any means. But we are hoping in Maryland that that is 

going to be a big step forward. Lenders, too, benefit from an abilityto-repay standard. You would think this is Banking 101, but good 

credit risk management would indicate that an ability to repay is 

something that lenders would support as well. 

And then, finally, in terms of the incentives in the marketplace, 

that is a very important thing to think about, and one thing that 

just comes to mind, listening to you—and I am not sure this is 

what you quite had in mind, but, you know, we do have credit 

scores. Now, this isn’t an incentive, but it is something to watch 

because credit scores are now the metric by which a lot of people— 

it is determined whether a lot of people get access to certain kinds 

of credit. And I think the way the credit system and the credit scoring system works is something that we need to study. 


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Mr. WADE. Sure. Let me start with the latter question there. We 

support the notion of creating market incentives to help incent 

counseling. A number of years ago, actually the FHA used to have 

such an incentive. They would offer a discount to consumers who 

participated in counseling. The notion was that obviously if a consumer took advantage of pre-purchase counseling, they would be a 

better customer for the FHA and would mitigate the risk. We are 

recommending that Fannie and Freddie consider that sort of thing 

as well, because to a certain extent I think, you know, while there 

is anecdotal evidence from our own network, I think if you talk to 

all of the local jurisdictions that have downpayment and closing 

cost assistance, where they require counseling, they will also have 

the same kind of positive loan performance with those consumers 

as we have been able to indicate in our network. 

So I think there is a value to ensuring that consumers get it up 

front. It is good for the consumer. It is a risk mitigant for the institution. And there ought to be a way to create an incentive in the 

marketplace to make that a more likely occurrence. 

In addition to that, I would agree that on the broad financial literacy front, doing more better and earlier as well—I mean, there 

is no question—I mean, I know when I went to school, I did not 

know any college student that had a credit card, unless it was their 

parents’. Today, college kids get solicited directly on their own 

merit for credit. So we have, in a sense, less financial education occurring today and access to more credit than ever before. And I 

think that is part of the dynamic that we are struggling with. 

I have heard that as well, having a couple of educators in my 

family, that some of the focus on the standards today, reading and 

writing, have crowded out some of the things that used to be part 

and parcel of the curriculum that we had in all of our public 

schools, and that is a challenge we have got in the public school 

arena. It is one of the places that we obviously have an ability to 

do a lot. And then I think the colleges need to do more as well for 

students who end up there. I saw a statistic the other day that the 

average college student comes out of college $5,000 in debt on consumer debt, set aside the student loans. This is just consumer 

debt—store charges, credit cards, and the like. It seems to me we 

are not doing something right if that is the case. 

Ms. COHEN. I taught fourth, fifth, and sixth grade economics and 

entrepreneurship, and the last year I taught, one little boy said, 

‘‘We are going to have a terrible Christmas.’’ And one little girl 

said, ‘‘Why?’’ And he said, ‘‘Well, my father was laid off at Chrysler.’’ She said, ‘‘So what?’’ And he said, ‘‘Well, we won’t have 

money.’’ She said, ‘‘Just go to the man in the machine. He’ll give 

it to you.’’ 

And I must have made a terrible face at her, and she said, ‘‘OK, 

OK. It could be a woman in a machine.’’ 

So I had done well with gender equity, but I had not done well 

with the whole principle of banking. 

When I was little, we went to the bank with our parents. We 

walked through the bank. We actually saw our parents put cash in 

the bank. Nowadays, the most children see is a drive-through 

where the dog can get dog biscuits and they can get lollipops. And 

they see the ATM machine, which dispenses cash. That is it. 


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‘‘Where are you going?’’ ‘‘I’m going to the grocery store to get 

money.’’ 

So we really have to begin earlier. We have actually started in 

Delaware the National Council for Economic Education, and the 

Delaware Council on Economic Education have actually worked 

with us to start lessons for daycare providers and pre-school providers on teaching financial education. And what we are teaching 

is rational decisionmaking, making wise choices. 

We just created a hundred kits for first-grade teachers which integrates financial education across the reading curriculum so that 

teachers in the first grade can start working with children about 

making wise choices about money. And it is being done in places, 

but I agree, it has to begin earlier, and the other thing I would like 

to say is we have these 300 women who get—we issue a little 

award certificate if you finish 10, 20, 30, or 100 hours. We now 

have people surpassing 250 hours. They earn volunteer hours in 

the earned income tax credit as cash coordinators and tax preparers. That certificate, which will not get them anything, is rewarding to them, and learning can be its own reward. And I think 

that is what we need to give people—the financial education to 

have their dreams come true. 

Senator MENENDEZ. Thank you very much. 

Chairman CARPER. Well, these are great responses, aren’t they? 

I am glad we are here. 

Commissioner Raskin, you sat today on this side of the table, but 

previously you sat on this side of the dais, and something that Mr. 

Wade said—he was talking about—I think in response to your 

question about FHA, maybe. He talked about FHA needs—maybe 

there is some lesson there for Fannie Mae and Freddie Mac. And 

we are going to be possibly marking up legislation in a week or so 

here dealing with the creation of an independent regulator for Government-sponsored enterprises like Fannie Mae and Freddie Mac, 

and we will have an opportunity to consider the very issue that I 

think you have raised, Mr. Wade. And we have already adopted 

and sent out of the Senate over to the House FHA reauthorization. 

And we will end up, I suspect, in a conference with the House and 

be able to consider further changes to FHA going forward as we try 

to make it relevant for the 21st century. 

That is sort of a lead-in to my question, Commissioner Raskin. 

Having sat today now on both sides of the tables here, what lessons 

are there maybe for us, a to-do list, if you will, for us as Federal 

legislators, as we attempt to deal with these issues? One of the 

things we have done is we have provided in the legislation, which 

included FHA reauthorization, $100 million for housing counselors. 

That is one of the things we have done. But what else could we do 

or should we do in the context of the legislation, especially that we 

are going to be considering here next week or so in this room? 

Ms. RASKIN. Well, that is a great question, a great opportunity, 

and I will say that to pick up on just a bit of the dialog that I had 

with Senator Bunning, you know, we—it is an opportunity now. I 

mean, what we are seeing at the State level is really heart-breaking. And we talk about, you know, the foreclosure crisis, and I 

know there is an instinct to be very abstract about it. And we talk 

about the importance of counseling and a multi-faceted approach. 


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And, you know, one thing that when I—what is sort of hidden behind these words is the fact that the foreclosure crisis has a very 

human face. And when people call counselors and we say we need 

a multi-faceted approach, it is because many people who call are 

calling, you know, saying that they are about to commit suicide. I 

mean, it is a very—it is a dysfunction in the market that has a 

very human face to it. 

I think that as you all go forward and contemplate and enact legislation that is going to help in this set of issues, I would ask that 

you, you know, very carefully consider the efforts that are being 

done by the States. We are the lines of first defense, and we are 

seeing it very close up and personal. And it is, again, I think there 

is a lot that we are doing at the State level. I happen to believe 

that the crisis that we are dealing with now is a failure of regulation, and it is a failure of regulation up and down. I mean, I am 

not going to say it was the Federal regulators or it was, you know, 

the State regulators. It was a failure of regulation, and I think we 

need to obviously correct that. And I think we need to correct it at 

all levels, at the State level and at the Federal level. And I would 

like to urge you as you move forward to consider carefully what is 

being done at the State level, because I can say at least from the 

perspective of Maryland and from very many other States that are 

dealing with this that there are a lot of very, very strong initiatives 

going on. We are dealing with this in our own backyards. It is very 

complicated, but we are acting, and we are acting, I think, quite 

wisely. 

Chairman CARPER. One of our colleagues, Senator Martinez, two 

of our colleagues, I think Senator Feinstein, have put their heads 

together, I believe on legislation dealing with mortgage brokers, 

and the question is certification, licensing, continuing education for 

mortgage brokers—— 

Ms. RASKIN. And that is a very—— 

Chairman CARPER [continuing]. Not for us to spell out what it 

ought to be, but to direct—maybe to set some kind of minimum 

standards, but to then say to States these are the minimum standards, and if you want to go beyond that, you are free to do that. 

Does that kind of thing make any sense? Again, what I am looking for in response to my question is: What are the kinds of things 

that we should do? And I mentioned we provided an extra $100 

million for NeighborWorks, this idea of the mortgage brokers’ licensure, ongoing education, the question of FHA, should there be 

something in FHA where people actually benefit financially if they 

go through the pre-purchase counseling. Those are the kinds of 

things I am looking for that you might think are good ideas that 

we should pursue. 

Ms. RASKIN. I would just add then, to be very concrete, that 

something like Feinstein-Martinez, you know, would have the 

full—it has the very full support of regulators on the State level. 

That would, in essence, permit the States to coordinate better in 

terms of their creating standards, licensing standards for brokers, 

for originators, for many of the entities that have gone unregulated. And that is a very good first step. 

Chairman CARPER. Other ideas? Mr. Wade, you sort of opened 

this up, at least in my mind. 


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Mr. WADE. Well, I would say, you know, I think a lot of the 

things you have commented on clearly, and other panelists, are 

what is needed. You know, we need to modernize the regulatory regime. I know that the Fed has out for comment regulations that 

would govern these high-cost mortgages. That is something that obviously we need clarity on in the market so that we can end up 

with a clear set of rules. I think obviously regulations for brokers 

at the national and State level are important. 

I think one of the challenges with the regulatory environment 

today, you know, the mortgage market used to be somewhat contained State by State. You know, it is pretty much a national market. So I think you have to do it in concert. 

Chairman CARPER. Even international. 

Mr. WADE. And international, absolutely. So I think the coordination between the Federal and the State is very important, and 

we have seen even in some of the cases that have been—actions 

that have been brought against brokers, they will leave one State 

and hop right across the border and operate, you know, with a new 

name, and it is just very hard, I know, for the States that have attempted enforcement actions to keep track of that. 

We also think that, you know, clearly being able to create a clear 

way that the counseling resources or the counseling activities can 

be paid for over the long term. I think in the short term the emergency assistance that Congress has provided is going to be great. 

I think over the long term we are going to have to be able to provide a sustainable way to support counseling. 

Chairman CARPER. It is interesting you should say that because 

as we consider creating a strong, independent regulator for Fannie 

Mae and Freddie Mac, one of our principles is to be able to—for 

them not to have to live from year to year on the appropriations 

that we provide. 

Mr. WADE. Right. 

Chairman CARPER. But to have a source of independent funding. 

Mr. WADE. Right. So those would be just some of the things I 

would offer. 

Chairman CARPER. All right. 

Ms. COHEN. I guess my only concern is that we cannot regulate 

ethics. The mortgage broker who says you can buy more house, the 

realtor who says you can buy a better house, that is always going 

to be. I guess it has always been. But that is why financial education is so critical. 

Chairman CARPER. We cannot legislate or regulate that. I wish 

we could also have somehow the ability to rescind the laws of supply and demand when we watch what is going on in terms of commodity prices, although I suspect that some of that that is going 

on is not really supply and demand but the work of speculators and 

scam artists and so forth. 

I want to come back to the point that I made early on, and that 

is, virtually every State has established academic standards of 

what students ought to know and be able to do. A lot of the times— 

and my own kids, one of whom, Ms. Cohen, taught and who turned 

out really well, in no small part because of your stewardship. But 

any number of times I worked with my kids on their homework, 

and they have said, ‘‘We have to learn this for the test’’—and not 


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the State test, but just for the test that they were preparing for. 

And they would say, ‘‘I am not really sure I will ever use this in 

my life.’’ But everybody, almost everybody in this country is going 

to use credit cards. The lion’s share of people are going to own a 

home. And in terms of using our academic standards and trying to 

create lesson plans, a curriculum that helps students learn and embrace the standards and understand the math or science, but to 

make it relevant in their lives, it just seems to be a no-brainer. 

And I do not think it is appropriate for the State, certainly not the 

Federal Government, but for States to say to teachers, ‘‘This is the 

lesson plan you have to learn.’’ But it is tough when an educator 

himself or herself is not especially financially literate to create a 

lesson plan that enables us to make relevant that academic standard in the life of a person. They deal with their own personal finances. 

I am not sure how to make—that is not one that the Federal 

Government can do. It is not one that the Federal Government can 

do. 

Ms. COHEN. I think we need to go back to teacher education. In 

1972, I had the opportunity to study with Marilyn Kourilsky, who 

invented the system called ‘‘mini-society,’’ which for some teachers 

is all they have ever studied in economics, but children create a 

community in the classroom, and they create the rules, they create 

their currency, they set the prices. It made me change as a teacher 

that I began to be a learner as well. But there are ways to integrate this into our lessons. There are really clever lessons out 

there. It is just giving teachers the liberty to do this. And we do 

have Councils of Economic Education in every State, and they are 

doing unbelievable things. It is just getting it to the teachers who, 

at the end of a school day, are so tired they are not going to go 

to in-service. We need to get those materials out. We need to get 

workshops out. And they are there. It is just hopefully the testing 

will get back in line and teachers can get back to teaching. 

Chairman CARPER. All right. Thank you. 

Are you all aware of any States that are doing a particularly admirable job with respect to financial literacy? We are very proud 

of what Delaware is doing, and I suspect some other States are 

equally proud of what they are doing. But are you all aware of 

some States that are doing an especially good job, commendable job 

from which the rest of us might learn? 

Ms. COHEN. I obviously think we are best. 

[Laughter.] 

But we do have a strong Delaware Council for Economic Education. What I think we are missing is we need to teach children 

entrepreneurship. That is the best way for them to learn why they 

are learning, what they are studying, why it is important, and to 

show them that they can build assets. And I think that is the 

way—that is the exciting way for kids to learn. 

You hear people say that economics is the dismal science, but 

you can teach fourth, fifth, and sixth graders, and they think economics is fun. We are in the 24th year of our economic competition 

in economics, personal finance, and entrepreneurship where 500 

kids across the State compete in economics, and they think it is 

fun. 


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So there are ways we can do this. California has some great economic educators, personal finance educators. The State of New Jersey actually has a very strong coalition of people teaching financial 

education. The Federal Reserve is out there offering great, great 

lessons plans. The U.S. Mint. There are materials out there. It is 

just getting the teachers to access them and finding the time to do 

them. 

Chairman CARPER. All right, thanks. OK. 

I just have a couple more, and we will let you go. Something that 

Senator Menendez said made me write down this question. My wife 

and I never thought a lot about figuring out how to perform childbirth, participate in childbirth, until my wife became pregnant. 

And then we signed up for childbirth lessons. We never thought a 

whole lot about parenting skills—hopefully we had some from our 

own—being reared and all. But we never thought about learning 

them until we actually had a child on the way. 

I remember my boys who I think wanted to drive from the time 

that they got in the car coming home from the hospital after they 

were born, but we really focused on learning how to drive when 

they were eligible and started to take driver’s education. 

Some States are actually requiring people to go through counseling when they are contemplating getting married to be able to 

create more lasting unions. 

Citing all those is a way of—the notion of when somebody is preparing to buy a house, who wants to buy a house, is that the time 

for States to say, ‘‘And, by the way, before you buy this house, you 

have got to go through this counseling.’’ Is that appropriate or inappropriate? Mr. Wade and then others. 

Mr. WADE. I would agree that we need a better job of baseline 

financial literacy for all citizens, I mean, no ifs, ands, or buts about 

it. But I think there are certain things that do provide the teachable opportunity, and clearly at the time of a home purchase—you 

know, you can sit through a class, and if you are not interested in 

really purchasing a home, it is not clear that the complexity of a 

home purchase will stick enough with you when you are actually 

ready to make the transaction. So we think for at least the home 

purchase, that is the kind of financial education and counseling 

that is best handled at the time that the consumer is thinking 

about purchasing a home. It seems to have the best payoff. People 

value it, clearly, and it does seem to have an effect. 

There are some baseline things you can do to help teach people 

about generally, you know, what APR is and how, you know, interest rates work. But I think the complexity of the mortgage market 

suggests that you do need something also at the point in time that 

the consumer is ready to take action. 

Chairman CARPER. I remember when we were refinancing our 

home—there was a time when interest rates were going down, and 

we wanted to refinance our home. We also wanted, I think, to build 

a room or something onto our house, a garage onto our house. And 

we took it as an opportunity to refinance at a lower mortgage rate, 

to take some money out of the house and use it for building onto 

our house. And we were asked by the bank at the time if we wanted to pay our mortgage payments through automatic deduction 

from our—they basically said you will get a lower interest rate if 


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you use your checking account and we just automatically deduct 

twice a month, once a month. And so that was a real incentive, and 

we said OK, we will do that. 

I wonder if rather than for States to mandate this kind of thing, 

this kind of training, but to say if you go through it, there is a financial advantage for you. How might that work? How might we 

incentivize folks to do this kind of thing? Any ideas? 

Mr. WADE. Well, clearly on the pre-purchase side, as I said, historically the FHA did provide a concession on rate for consumers 

who took advantage of counseling. We think another variation on 

that theme, rather than a rate concession, might be a rebate to the 

consumer. I think if you look at the way the auto finance world 

works, they have kind of figured out that consumers seem to value 

a rebate back to them more than a slight break on the rate, even 

sometimes when the break on the rate will be more. 

So I think there are a lot of creative ways that you can think 

about how to create an incentive to get consumers to take advantage of the counseling and to a certain extent reward them because 

it is going to create a better credit risk for the lender anyway. So 

it seems to me that some value ought to accrue to the borrower. 

Chairman CARPER. So kind of a related item, we learned when 

our boys were actually old enough to start driving that we could 

realize—even though our insurance rate was going to go up, it 

would not go up by as much if our kids were good students. 

Mr. WADE. Right. 

Chairman CARPER. We learned that it would go up, but it would 

not go up as much if they would not only just take driver’s ed in 

school, but also take a defensive driving course, and that 

incentivized us all. I am sure it does others, too. 

Anybody else on these points before we move on? Yes, ma’am. 

Ms. RASKIN. Yes, I would just add in terms of, you know, the 

teachable moments, at the time of a home purchase, that clearly 

is a teachable moment. And we have considered and there is a task 

force in Maryland that has been established for looking at improving financial literacy. But there can be gradations, too, because 

some of the proposals that have been put out have to do with home 

purchases involving a subprime loan or home purchases involving 

a certain kind of adjustable rate loan. So you can tie the literacy, 

obviously, the counseling, to particular kinds of purchases, and you 

can consider gradations. 

Chairman CARPER. I am going to direct this question—I want to 

telegraph a pitch. I am sitting next to a guy who is in the Hall of 

Fame, the Baseball Hall of Fame, Jim Bunning, who has actually 

pitched no-hit games in both the American and National Leagues. 

With deference to him, I am going to telegraph a pitch, and the last 

question I am going to ask—I am not there yet, but the last question I will ask is in terms—three of our colleagues were here. There 

are probably four or five who did not come on the Subcommittee 

to be able to hear, although they have the ability in many cases 

to watch on television from their offices, and I am sure some of 

them and their staffs do. 

The last question I will probably ask is a take-away for those of 

us who are here on this Committee, on our staffs, and those who 

did not come in person, take-aways from what you have heard said 


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here today that you really think we should take to heart as Federal 

legislators. There are some things we can do. There are a lot of 

things we cannot do. We are not classroom teachers. We are not 

principals in schools. We do not write lesson plans for schools. But 

we can provide some money for counseling, for housing counseling. 

We can do some things with respect to reauthorization of FHA or 

providing regulations through a strong regulator for Fannie Mae 

and Freddie Mac. There are some things we can do, but there is 

a lot we cannot. 

But just be thinking, if you will, as we come here to the end, 

about some things that you would really want us to take away. 

And it could be in sort of a form of a to-do list, but just lessons 

learned for us that you think you would especially like to emphasize. 

And while you are thinking of that, Ms. Cohen, let me just say, 

you identified a number of initiatives where the Delaware Money 

School has partnered with a private sector financial institution. Let 

me just ask, how important do you feel these partnerships are? 

And does this contribute to making the courses that you offer more 

effective? 

Ms. COHEN. The funding we receive is critical to the Financial 

Literacy Institute. Basically, the people on our staff are administrators, and we have these volunteer instructors. But the contributions we have make it possible for us to offer free classes. We do 

not offer anything that costs money. So we have had a problem 

now with the housing counselors who charge a fee. We can no 

longer advertise the class that has the fee because that is not the 

Money School policy. 

If we did not have funding from our corporate sponsors, we 

would not exist. We have a small grant in aid from the State. I was 

told it was a big grant in aid, but according to our budget, it is 

small. But we subsist on these contributions. 

Chairman CARPER. What are the incentives for financial institutions or others to make these contributions? 

Ms. COHEN. CRA. 

Chairman CARPER. Talk a little bit about that. 

Ms. COHEN. I learned about this when I took this job. I did not 

realize that MBNA gave grants to schools when MBNA was in 

Delaware and existed. But the CRA officers look for ways to provide funding to programs that will meet their requirements for 

CRA credits, Community Reinvestment credits. Avanta called us 

last year—no. AIG called last year and said they wanted to put 

money in financial education, could I use $50,000? Well, I am a 

small—— 

Chairman CARPER. What did you say? 

Ms. COHEN. I said, ‘‘Oh, no, I am not interested.’’ 

[Laughter.] 

I wanted to start a program in prison, so I got money from AIG. 

We think financial education is critical in prisons. 

In 2004, Citigroup came to us and said, ‘‘We do not want a 1- 

day women’s conference. We want an ongoing financial program.’’ 

Their sponsorship, which will be about a half million dollars 

through the end of this year, allowed us to create—to put momentum into our financial education program. And not only do we have 


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a huge—we have a 1,500-women conference every other year, but 

we are able to advertise. We do not have a marketing budget unless someone gives us money with marketing dollars. We were able 

to bring the Purses to Portfolios program across the State. It is now 

being replicated in Philadelphia. It has been replicated in Florida. 

We were able to advertise. And not only did that bring women in, 

it increased the visibility of the Money School. 

And so we really rely on corporate dollars. Our individual donors, 

we have generous individual donors, but that is a very small portion of our budget. 

Chairman CARPER. I remember when I was in the House of Representatives on the House Banking Committee, and we had a big 

debate in the Committee on whether or not Community Reinvestment Act evaluations, CRA ratings should be made public or remain at the time private. And we had quite a debate in Committee 

and later on the floor, and those of us who felt that it was probably 

a positive thing for them to be made public prevailed. And we are 

really blessed in our States with a number of financial institutions 

who—it is almost a badge of honor for them to earn outstanding 

on their CRA. 

Ms. COHEN. It is. 

Chairman CARPER. And we have figured out by virtue—I am not 

sure if they would be quite as ardent about it if no one ever knew 

what an institution’s CRA rating was. But it is public knowledge, 

and the institutions take great pride in not a race to the bottom 

but a race to the top. 

Ms. COHEN. I think one of the things that people do not realize 

is we get our dollars from corporate sponsors. We also get a huge 

amount of volunteer help. We have a new finance director this 

week. We had somebody from one of our corporate sponsors come 

in and work with her. 

When I first opened our office, we had no equipment. One of the 

corporate sponsors sent us a fax machine and a computer. 

So they provide technical advice. They provide marketing advice. 

They will chaperone and judge our events. So it is a lot of time 

commitment. Our board is almost 50 percent corporate sponsors; 

the rest are from nonprofits and just public citizens who are interested. 

So I think people do not realize how really vital community reinvestment is. 

Chairman CARPER. Well, we do in our State. 

Ms. COHEN. We do. 

Chairman CARPER. All right. And this is really a chance for you 

to just tell us some of your closing thoughts along the lines that 

I outlined before when I telegraphed that pitch. Just take-aways 

for those of us who are here and those of us that are not. 

Ms. RASKIN. Sure. Well, first of all, I do commend you for holding 

this hearing, and it really is quite forward-looking. And what I 

have most appreciated listening to the other testimony and listening to the comments of your Committee and your views is how you 

have been able to put financial literacy really into the context not 

just of the current crisis, which clearly has all our minds completely focused, but into the context of really the whole notion of 

consumer debt and the problems to come from that and looking 


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back to see whether financial literacy can be made into an effective 

tool that can help mitigate the next set of issues that come our 

way. And for that I do really commend your vision. 

In terms of another take-away, I would say that I would urge the 

Committee in its deliberations in considering reform to really build 

on what the States are doing in terms of enforcement, in terms of 

building an important set of tools to license and register and track 

and examine mortgage originators and lenders and the other players in this very diverse field. And I think you are considering legislation that does that, and, again, that the States do have a very 

strong base in this, and I think to build on top of that would be 

exemplary. 

Chairman CARPER. All right. Thank you, Commissioner Raskin. 

Mr. Wade. 

Mr. WADE. Sure. I also would like to commend you for this hearing. It is pretty timely given what is happening in the market 

today. I would just highlight, you know, five things right quick that 

I would see as take-aways from our perspective. 

One, pre- and post-purchase counseling works, and so I think to 

the extent that we can make it more broadly accessible, it will help 

us avoid these kinds of problems in the future. 

We have got to modernize the regulatory framework so that it, 

you know, obviously is set up to deal with the market that we have 

today, which is very complex and much different than we have ever 

had before. 

Modernize FHA. It is a resource that the Federal Government 

has. It has been underutilized. It is right there, and it seems like 

it is an easy win. 

Help us promote the industry standards so that we can ensure 

that the kind of counseling that is out there is high quality so that 

we can ensure consumers get something that will work for them. 

And then you could also help us with the community outreach. 

We have offered the opportunity to have folks publicize the toll-free 

number that we are supporting, that belongs to the Homeownership Preservation Foundation, as well as, you know, help co-brand 

the Ad Council ads so that we can reach many more consumers 

who are in trouble out there so they can get the kind of help that 

they need. 

Chairman CARPER. I am going to go back to one of your points, 

and that is modernization of FHA. Any particular do’s or don’ts 

there that you would especially like to emphasize or underline? 

Mr. WADE. Well, no particular dont’s. I think the things that 

seem to be on the table all make sense: Increase the loan limits so 

the FHA can be much more competitive in a lot of the markets. 

Allow the FHA to be able to, obviously, adjust its risk premiums 

to take into account additional risk it might be taking on. Allow the 

FHA, particularly in this crisis, to be much more flexible than it 

would have been, than it would be normally, recognizing that we 

are in a crisis and we need every tool available to help consumers. 

And then, you know, clearly, if the FHA—and I know that they are 

thinking this through, but obviously finding a way to create incentives so that we can ensure consumers get access to counseling. 

Chairman CARPER. Good. Thank you very much. 

The last word to Ronni Cohen. Ms. Cohen? 


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Ms. COHEN. One of my very good sponsors has a big poster that 

says ‘‘Knowledge is your greatest asset.’’ And so I really do urge 

you to do what you can for pre- and post-homeownership education. 

I think it is critical. And in Delaware, we have found it has been 

very successful, significantly helping the homebuyer. 

Thank you. 

Chairman CARPER. Thank you. This has been a wonderful hearing, and it is because of the testimony that you brought to us 

today, the ideas that you have brought to us today. Sometimes you 

have folks who testify, and it is almost like they are a silo or a 

stovepipe, and the interaction between the two and the interplay 

between the two is not that great. That has not been the case here 

at all today. And I think there has been a bit of a synergy that has 

flowed out of your testimonies, which has been most welcome and 

I think most helpful. 

My colleagues and I may be submitting some additional questions in writing. We would ask that if you receive those, you respond to us promptly so that we could have the full record for this 

hearing. 

And, with that having been said, again, it is great to see all of 

you. Welcome back to the scene of your earlier crimes when you 

were telling Paul Sarbanes what to say and what to do. You managed him well. We miss him. 

Mr. Wade, thank you for the leadership that you provide in an 

important organization. And thanks for coming to Delaware to help 

celebrate INCALL’s anniversary a few years ago. 

And to Ronni Cohen, thank you for continuing to be just a terrific educator, even though you are no longer in the classroom of 

our schools where you were, again, just a terrific, a widely admired 

teacher. Thank you for continuing to have the heart of an educator 

and the heart of a teacher and making sure that a lot of folks in 

our State benefit from that. 

With that having been said, I think this hearing is adjourned. 

[Whereupon, at 3:48 p.m., the hearing was adjourned.] 

[Prepared statements supplied for the record follow:] 


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