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94–201 PDF 2004

S. Hrg. 108–657

THE FEDERAL GOVERNMENT’S ROLE IN

EMPOWERING AMERICANS TO MAKE

INFORMED FINANCIAL DECISIONS

HEARING

BEFORE THE

FINANCIAL MANAGEMENT, THE BUDGET, AND 

INTERNATIONAL SECURITY SUBCOMMITTEE

OF THE

COMMITTEE ON 

GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE

ONE HUNDRED EIGHTH CONGRESS

SECOND SESSION

MARCH 30, 2004

Printed for the use of the Committee on Governmental Affairs

(

(II)

COMMITTEE ON GOVERNMENTAL AFFAIRS 

SUSAN M. COLLINS, Maine, Chairman 

TED STEVENS, Alaska 

GEORGE V. VOINOVICH, Ohio 

NORM COLEMAN, Minnesota 

ARLEN SPECTER, Pennsylvania 

ROBERT F. BENNETT, Utah 

PETER G. FITZGERALD, Illinois 

JOHN E. SUNUNU, New Hampshire 

RICHARD C. SHELBY, Alabama 

JOSEPH I. LIEBERMAN, Connecticut 

CARL LEVIN, Michigan 

DANIEL K. AKAKA, Hawaii 

RICHARD J. DURBIN, Illinois 

THOMAS R. CARPER, Delaware 

MARK DAYTON, Minnesota 

FRANK LAUTENBERG, New Jersey 

MARK PRYOR, Arkansas

MICHAEL D. BOPP, Staff Director and Chief Counsel 

JOYCE A. RECHTSCHAFFEN, Minority Staff Director and Counsel 

AMY B. NEWHOUSE, Chief Clerk

FINANCIAL MANAGEMENT, THE BUDGET, AND INTERNATIONAL 

SECURITY SUBCOMMITTEE 

PETER G. FITZGERALD, Illinois, Chairman 

TED STEVENS, Alaska 

GEORGE V. VOINOVICH, Ohio 

ARLEN SPECTER, Pennsylvania 

ROBERT F. BENNETT, Utah 

JOHN E. SUNUNU, New Hampshire 

RICHARD C. SHELBY, Alabama 

DANIEL K. AKAKA, Hawaii 

CARL LEVIN, Michigan 

THOMAS R. CARPER, Delaware 

MARK DAYTON, Minnesota 

FRANK LAUTENBERG, New Jersey 

MARK PRYOR, Arkansas

MICHAEL J. RUSSELL, Staff Director 

RICHARD J. KESSLER, Minority Staff Director 

NANCI E. LANGLEY, Minority Deputy Staff Director 

TARA E. BAIRD, Chief Clerk 

(III)

C O N T E N T S 

Opening statements: Page 

Senator Fitzgerald ............................................................................................ 1

Senator Akaka .................................................................................................. 3

Senator Lautenberg .......................................................................................... 6

WITNESSES 

TUESDAY, MARCH 30, 2004

Hon. Mike Enzi, a U.S. Senator from the State of Wyoming ............................... 7

Hon. Paul S. Sarbanes, a U.S. Senator from the State of Maryland .................. 10

Hon. Debbie Stabenow, a U.S. Senator from the State of Michigan ................... 12

Brian C. Roseboro, Acting Under Secretary for Domestic Finance, U.S. Department of the Treasury .................................................................................... 15

Nina Shokraii Rees, Deputy Under Secretary for Innovation and Improvement, U.S. Department of Education ................................................................. 17

Susan Ferris Wyderko, Director, Office of Investor Education and Assistance, 

U.S. Securities and Exchange Commission ....................................................... 18

Don M. Blandin, President, American Savings Education Council ..................... 28

Dara Duguay, Executive Director, Jump$tart Coalition for Personal Financial 

Literacy ................................................................................................................. 31

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

on Economic Education ........................................................................................ 35

ALPHABETICAL LIST OF WITNESSES

Blandin, Don M.: 

Testimony .......................................................................................................... 28

Prepared statement .......................................................................................... 73

Duguay, Dara: 

Testimony .......................................................................................................... 31

Prepared statement .......................................................................................... 77

Duvall, Robert F.: 

Testimony .......................................................................................................... 35

Prepared statement .......................................................................................... 82

Enzi, Hon. Mike: 

Testimony .......................................................................................................... 7

Rees, Nina Sokraii: 

Testimony .......................................................................................................... 17

Prepared statement .......................................................................................... 51

Roseboro, Brian C.: 

Testimony .......................................................................................................... 15

Prepared statement .......................................................................................... 48

Sarbanes, Hon. Paul S.: 

Testimony .......................................................................................................... 10

Prepared statement .......................................................................................... 43

Stabenow, Hon. Debbie: 

Testimony .......................................................................................................... 12

Prepared statement .......................................................................................... 45

Wyderko, Susan Ferris: 

Testimony .......................................................................................................... 18

Prepared statement .......................................................................................... 55

Page

IV

APPENDIX

Kathy Cloninger, Chief Executive Officer, Girl Scouts of the USA, prepared 

statement .............................................................................................................. 87

Visa U.S.A. Inc., prepared statement .................................................................... 89

The Bond Market Association, prepared statement ............................................. 91

Hon. Susan Molinari, Chairman, Americans for Consumer Education and 

Competition, prepared statement ....................................................................... 95

(1)

THE FEDERAL GOVERNMENT’S ROLE IN 

EMPOWERING AMERICANS TO MAKE 

INFORMED FINANCIAL DECISIONS 

TUESDAY, MARCH 30, 2004

U.S. SENATE,

FINANCIAL MANAGEMENT, THE BUDGET, AND

INTERNATIONAL SECURITY SUBCOMMITTEE,

OF THE COMMITTEE ON GOVERNMENTAL AFFAIRS, 

Washington, DC. 

The Subcommittee met, pursuant to notice, at 2:32 p.m., in room 

SD–342, Dirksen Senate Office Building, Hon. Peter G. Fitzgerald, 

Chairman of the Subcommittee, presiding. 

Present: Senators Fitzgerald, Akaka, and Lautenberg. 

OPENING STATEMENT OF SENATOR FITZGERALD 

Senator FITZGERALD. This hearing will come to order. Today, we 

are conducting an oversight hearing to examine the current status 

and effectiveness of Federal financial literacy programs and to assess the proposed activities of the new Federal Financial Literacy 

and Education Commission. 

I would like to welcome all of the witnesses who are present 

today and thank them for taking time out of their busy schedules 

to share their expertise and insights with us. 

I also want to acknowledge the dedication and hard work in this 

area of Senator Sarbanes, Senator Enzi, and Senator Stabenow, 

from whom we will hear shortly, and our Ranking Member, Senator Akaka. Senator Akaka’s resolutions marking April of this year 

as Financial Literacy Month and April of last year as Financial Literacy for Youth Month have laid the foundation for Financial Literacy Day on Capitol Hill. The second annual Financial Literacy 

Day will be held here in the Dirksen Building on April 22 and will 

be sponsored by the National Council on Economic Education, Junior Achievement, Goldman Sachs Foundation, and the Jump$tart 

Coalition. 

Today, across the Nation, scores of State and local agencies, 

schools, nonprofit organizations, businesses, and other entities are 

working to empower individuals with financial and economic 

knowledge that will be helpful toward making sound personal investment choices. In my home State of Illinois, for example, the 

City of Chicago soon will be celebrating the 2004 Money Smart 

Week. The Federal Reserve Bank of Chicago, along with members 

of its Money Smart Advisory Council, designated the week of May 

10 this year for the sponsorship of free educational activities to 

2

teach consumers about managing their personal finances and to 

provide awareness of various financial education programs. 

Agencies throughout the Federal Government also play a major 

role in promoting financial literacy. In 2002, the Bush Administration established the Office of Financial Education within the Treasury Department, and in 2003, Congress passed the Fair and Accurate Credit Transactions Act, which created the Financial Literacy 

and Education Commission. The major purpose of the Commission, 

which is supported by Treasury, is to complement, encourage, and 

coordinate the work of individuals and institutions committed to financial literacy. 

Financial education can empower consumers of all ages to create 

effective budgets, enhance strategic investment decisions, and 

achieve both short- and long-term financial goals, such as the accumulation of savings. It is important to note that regardless of an 

individual’s income, saving must be done steadily and deliberately, 

and it must occur over a lifetime. 

Policy changes have also contributed to a credit explosion. Today’s young adults have access to credit at a much earlier age than 

their parents did. Our young consumers, therefore, need a more 

comprehensive understanding of credit than previous generations. 

Because of technology, a favorable legal structure under the Fair 

Credit Reporting Act, and innovation in the financial services industry, there is now a wider variety of credit products offered to 

a greater number of people, including those at risk, and at more 

accessible prices than ever before in our Nation’s history. 

The Treasury Department reports that 64 percent of credit card 

holders ages 18 to 24 do not even know the interest rates they pay 

on their credit cards. In addition, a recent survey by Consumer Reports reveals that 28 percent of 12-year-olds did not know that 

using credit cards is synonymous with borrowing money. And 40 

percent of 12-year-olds do not realize that banks charge interest on 

loans. Yet more than 20 percent of students ages 12 to 19 have 

their own credit cards or access to a parent’s credit card. 

Another significant development is the role that technology now 

plays in the financial services market. Technology allows increased 

organizational efficiency and enhanced consumer convenience, but 

today’s consumers must have a greater understanding of and comfort level with the way in which computers are a part of every financial transaction, from the clearing of a check to the purchase 

of shares of stock. 

Consumers also need to have a greater understanding of more 

complex investment transactions, such as the buying and selling of 

mutual funds. This Subcommittee recently held two hearings on 

the mutual fund industry. One of the major themes discussed 

during the hearings was that many investors did not have the necessary information or the requisite knowledge to make truly informed investment decisions. Our hearings revealed that many investors were allowing their mutual funds and brokers to charge 

fees significantly higher than what the investors thought they were 

paying. Moreover, our hearings revealed that unnecessary or excessive mutual fund fees can alone erode one’s retirement nest egg by 

35 to 40 percent over 30 years of investing. 

3

Our hearings and hearings before the Senate Banking Committee underscore the need to educate investors and make the mutual fund fee structure more transparent. In part for this reason, 

on February 10, 2004, Senator Levin, Chairman Collins, and I introduced S. 2059, the Mutual Fund Reform Act of 2004. This bill 

would improve the financial literacy of Americans by mandating 

clear and comprehensive disclosures, simplifying the fee structure, 

eliminating certain indefensible transactions as to which disclosure 

would only confuse investors, and directing the Securities and Exchange Commission to determine ways in which the Internet may 

be better used as a vehicle for investor education. I look forward 

to hearing from our witnesses their views on this legislative proposal. 

Today, we will hear a broad spectrum of informed opinions on 

the importance of financial literacy. On our first panel, we will 

hear from Senators Sarbanes, Enzi, and Stabenow, who are playing 

leadership roles in the U.S. Senate to support financial literacy efforts. 

The administration’s perspective will be presented on our second 

panel. These officials are active in the promotion of financial education among America’s consumers and youth and will provide a 

status report on the administration’s efforts in this area. 

Finally, on our third panel, experts from leading private not-forprofit organizations will provide their recommendations on what 

more can be done to help consumers truly help themselves in 

achieving the American dream of financial security. 

At this time, I would like to welcome our Ranking Member, Senator Akaka. I know, Senator Enzi, that you are under somewhat 

of a time constraint, so we want to get to you quickly. Do we have 

time for Senator Akaka? OK, Senator Akaka will make an opening 

statement, followed by Senator Lautenberg, who has joined us, as 

well. 

OPENING STATEMENT OF SENATOR AKAKA 

Senator AKAKA. Thank you very much, Mr. Chairman. I want to 

express my deep appreciation to you for conducting this hearing. 

You have been a great leader and Chairman of our Subcommittee. 

I appreciate your willingness to work with me on this important 

issue. 

I am also pleased to be joined today by some of my colleagues 

who are important advocates for financial literacy. I am grateful for 

my colleagues’ efforts, which were essential in the creation of the 

Financial Literacy and Education Commission, and their work with 

me on financial literacy legislation and funding. 

As Chairman of the Senate Banking Committee, Senator Sarbanes held a series of hearings on financial literacy and related 

topics like remittances and bringing unbanked individuals into 

mainstream financial institutions. I enjoyed participating in those 

hearings as a Member of the Banking Committee. Senator Sarbanes has been an outstanding leader on this issue and we have 

worked extensively on a number of initiatives, such as the Commission, the authorization for the financial literacy multimedia campaign, and funding for the Excellence in Economic Education Act. 

4

Senator Enzi has also been a staunch ally in financial literacy efforts in addition to his role in the creation of the Commission. Together, we introduced the Financial Literacy and Higher Education 

Act, S. 1968, which seeks to improve the financial literacy of college 

students. 

I also welcome Senator Stabenow, who is a strong voice for the 

need for improving financial literacy and the creation of the Commission. 

I also want to briefly recognize the efforts of a couple of our colleagues, Senator Corzine and Senator Allen, who will not be here 

today but who are also champions of financial and economic literacy. 

Mr. Chairman, my interest in financial literacy dates back to 

when I was in the fourth grade. My teacher made sure that we 

each had a piggy bank. She made us save our pennies and count 

what we saved. We were made to understand how money saved a 

little at a time—we didn’t have much at that time—can grow into 

a large amount, enough to buy things that would have been impossible to obtain without savings. 

My experience with a piggy bank taught me important lessons 

about money management that have stayed with me throughout 

my life. More people need to be taught these important lessons so 

that they are better able to manage their resources as well. 

Americans of all ages and backgrounds face increasingly complex 

financial decisions as members of the Nation’s workforce, managers 

of their family’s resources, and voting citizens. Many find these decisions confusing and frustrating because they lack the necessary 

tools that would enable them to make wise personal choices about 

their finances. Now, statistics show that there is an even greater 

need for improved financial literacy. 

For instance, last year, consumer debt increased for the first time to more than $2 trillion. The rate of FHA foreclosures was the 

highest ever recorded, and the percentage of income used for household debt payments, including mortgages, credit cards, and student 

loans, rose to the highest level in more than a decade in 2001 and 

remained above 13 percent. Personal bankruptcies nearly doubled 

in the past decade, including more than 1.6 million people who 

filed for a personal bankruptcy in fiscal year 2003. And despite 

technological advances that make it even more convenient and less 

costly to manage money through accounts at banks and credit 

unions, between 25 million and 56 million adults are unbanked or 

are not using mainstream insured financial institutions. 

All of this tells me that we cannot overlook the need for financial 

literacy and education in this country, starting with early years in 

school and continuing throughout life. 

My colleagues and I have worked on several important initiatives 

for financial literacy. My legislation, the Excellence in Economic 

Education Act, or Triple-E Act, was enacted as part of the No Child 

Left Behind Act and was finally funded in fiscal year 2004. Although the $1.49 million appropriation is a relatively small amount 

when compared to amounts for Federal programs emphasizing 

other basic educational subjects, it is a start. The competitive grant 

process for this funding recently started, and I hope the program 

is given time to work. 

5

As some of you know, the Triple-E is intended to fund a range 

of activities, such as teacher training, research and evaluation, and 

school-based activities to further economic principles. I was disappointed that the administration recommended no funding for this 

program in its fiscal year 2005 budget, but I am committed to ensuring that funding is included for this important program in the 

fiscal year 2005 appropriations process. 

In another example, and Senator Enzi may touch on this, as 

well, last year, we introduced S. 1968, the Financial Literacy in 

Higher Education Act. This was a compromise version of legislation 

I introduced earlier as S. 1800, the College LIFE, or Literacy in Finance and Economics Act, in preparation for the Higher Education 

Act reauthorization. The legislation includes financial and economic 

education and counseling as allowable activities within existing 

programs, such as TRIO, GEAR-UP, and minority-serving institutions. It also proposes a pilot program involving annual credit counseling and personal financial literacy courses and measuring these 

efforts’ effectiveness in, hopefully, positive behavioral change. 

The reason for these and other provisions in the bill are simple. 

Many students start college with little understanding of economic 

concepts like supply and demand, or benefits versus costs, or personal finance concepts like money management or the importance 

of maintaining a good credit history. The result is that college students are not effectively evaluating credit alternatives, managing 

debt, and preparing for long-term financial goals. I am hoping that 

this legislation will move forward whenever the Higher Education 

Act reauthorization proceeds. 

Mr. Chairman, for students and adults alike, many Federal agencies have already been working to improve financial literacy and 

have attempted to engage in innovative programs to better inform 

students, consumers, and investors. The Securities and Exchange 

Commission has been extremely creative in its efforts to protect investors, despite being challenged with limited resources. I am 

pleased that as a result of the global settlement, a nonprofit organization will be created and provided with $52.5 million over 5 

years to equip Americans with the knowledge and skill necessary 

to make informed investment decisions. 

The Federal Reserve, the U.S. Department of Agriculture’s Cooperative Extension, the FDIC, and many other agencies have financial education programs for their various constituencies. We can 

improve the effectiveness of these programs through increased collaboration and coordination between agencies. 

Title V of the Fair and Accurate Transactions Act created the Financial Literacy and Education Commission in December of last 

year. The Commission is charged with developing a national strategy to promote financial literacy and education among all American 

consumers. It will review financial literacy and education efforts 

throughout the Federal Government, identify and eliminate duplicative financial literacy efforts, and coordinate the promotion of 

Federal financial literacy efforts, including outreach partnerships 

between Federal, State, and local governments, nonprofit organizations and enterprises. I have great expectations for the Commission. I will be closely monitoring its development activities. 

6

We must continue to work together to encourage better economic 

and financial literacy, which in turn will result in stronger families, better functioning markets, and a more secure future for our 

Nation. 

I thank our witnesses for being with us today and I look forward 

to working with all of you to ensure that the Commission is effective and that the financial literacy of our country increases. 

Thank you very much, Mr. Chairman. 

Chairman FITZGERALD. Thank you, Senator Akaka. Senator Lautenberg. 

OPENING STATEMENT OF SENATOR LAUTENBERG 

Senator LAUTENBERG. I will try to be brief, Mr. Chairman, and 

I am pleased to see our colleagues on the firing line here because 

we know that they will be able to enlighten us in terms of where 

they come from and where their committee positions think we 

ought to be going. 

The one thing that we have to try to include in our financial information flow, and that is beware of the unscrupulous company. 

Beware of those investments that look so good that you can’t lose 

anything, that you will make a fortune in a short time. As soon as 

you hear that it is going to be quick and it is going to be enormous, 

we should say, turn away from it, because for the most part, 98 or 

99 percent of the people who invest in those, maybe even 100, will 

not profit by it. 

In our view, in my view, teaching our children and the public to 

be more sophisticated about money matters is critically important, 

especially to understand what happens if when someone reaches 

retirement age, and as we now know, pensions aren’t there, typically, to provide the sort of security that we often thought would 

be there. 

I remember days when if you worked for a particular company, 

you could count on that just as much as you could count on the sun 

rising the next day to be there. We don’t see that anymore, and as 

a consequence, it is much more critical that the average person 

know something about investing their money, protecting their assets, so that if it comes to a catastrophic case with an illness or 

loss of job or something like that or a child’s special needs, that 

they have the reserves to do it. 

One of the things that we have to be conscious of is that when 

a company seduces an employee to invest in the company, like 

Enron, if you are getting bad information, no matter what the company tells you about your future security or what have you, the 

question is, should you be there? But this is offset and it is a complicated situation, Mr. Chairman. It is offset. 

I will brag for a moment about my own company, ADP, which I 

helped start, 40,000 employees today. It was started from nothing. 

People who invested in that company made lots and lots of money 

over the years, but it depends on the honesty within the country. 

It depends on their commitment to appropriate messages out to the 

public and if there is something awry, they talk about it. You can’t 

protect anybody, no matter how well educated they can be, against 

an unscrupulous leadership in the company. 

7

So we have got a task on our hands and we want to make sure 

that people understand what happens. The statistics are legendary 

about all of the people, more than half of the American workers not 

having saved a penny for their retirement. I think as important a 

message as it is to invest wisely, it is also important to save, no 

matter what you think. You can’t be invested to your last penny 

in something that you have no control over and hope that you are 

going to be all right when a day, if a day comes and you need support. 

So, Mr. Chairman, while I think this is an important hearing, I 

think it is critical that we continue providing information about 

how you deal with your financial requirements, how you deal with 

the assets. It is too bad that the administration has decided to cut 

the Excellence in Economic Education programs, those programs 

that help teach those who work for not-for-profits to manage whatever resources they have carefully. It is a subject that needs airing 

and review, and above all, to be careful when you invest and make 

sure that you understand fully what is in that investment. 

I commend you, Mr. Chairman and our friends who are here to 

make their statements. 

Chairman FITZGERALD. Thank you, Senator Lautenberg. 

Before I begin with Senator Enzi, I just saw that ADP was listed 

in Barron’s magazine this week as one of the few companies that 

has for the last 25 years consistently increased its dividend and 

earnings every year. 

Senator LAUTENBERG. If I may correct the record, the last 42 

years. 

Chairman FITZGERALD. The last 42 years. [Laughter.] 

Senator LAUTENBERG. It increased its earnings. 

Chairman FITZGERALD. Anyway, our first witness is the Hon. 

Mike Enzi from Wyoming, the only accountant in the U.S. Senate. 

Senator Enzi was elected to the Senate in 1996. He is Chairman 

of the Securities and Investment Subcommittee of the Banking 

Committee. He is also Chairman of the Employment, Safety, and 

Training Subcommittee of the Health, Education, Labor, and Pensions Committee, and he serves as a Member of the Committees on 

Foreign Relations, the Budget, and Small Business and Entrepreneurship, and the Special Committee on Aging. You are on an 

awful lot of committees. 

Senator Enzi is an original cosponsor of S. 1532, the Financial 

Literacy Community Outreach Act, which would create a commission for agencies to coordinate and assess their financial literacy efforts. 

Senator Enzi, I know you have been waiting for some time and 

you have another appointment. If it is OK with Senator Sarbanes 

and Senator Stabenow, I would like to allow Senator Enzi to proceed at this time. 

Senator SARBANES. Mr. Chairman, we waive the seniority rules. 

[Laughter.] 

TESTIMONY OF HON. MIKE ENZI, A U.S. SENATOR FROM THE 

STATE OF WYOMING 

Senator ENZI. I very much appreciate that, and I thank you, Mr. 

Chairman, for holding this hearing. Anything we can do to promote 

8

financial literacy will make a difference in this country. You not 

only have some very strong advocates at this table and I know 

Members of the Subcommittee are strong advocates, but probably 

nothing compared to some of the people that are sitting behind us 

today. If we all work together on this, America will be a better 

place because each individual will have a brighter financial outlook. 

My first involvement with financial literacy, over 30 years ago, 

was when I got elected mayor of a boom town. I was 29 years old 

and I was one of the oldest people in the boom town, because when 

you have a boom town, the people that come there to work are not 

the ones that already have jobs. It is the ones willing to take a risk 

who need a job, so they are very young people. 

But they make a lot of money and they were making more money 

than their parents had ever made, and their parents owned the 

house and a recreational vehicle and a motorcycle and a boat and 

a whole bunch of other things, and since they were making more 

money than their parents were, they thought they deserved those 

things, too. They ran out and bought them. Then they found out 

that paying for them is a little difficult no matter how much you 

are making. 

We had to find a way to get financial literacy to these young people because it caused a lot of family problems. One of the things 

we did discover was that people that bought a house were more 

stable, and once they bought a house, once they figured out how 

to do that, they became owners of the community. They became 

real participants in the community. But that only comes out of 

good financial literacy. 

Since I got here, I have been able to work with a consortium of 

bankers and realtors and community development and housing 

agencies, the University of Wyoming, and Fannie Mae and put together a series of videos for people in Wyoming to learn financial 

literacy and how to buy homes. That program has been working 

out very well. 

But Senator Stabenow and I noticed that most of the Federal 

Government agencies also had requirements for financial literacy 

efforts with excellent programs and initiatives. For example, the 

FDIC has the Money Smart program. The Securities and Exchange 

Commission has depositories for broker dealer and investment advisor information. The Department of Labor and Social Security 

Administration have extensive initiatives on retirement savings 

and investment issues. And other agencies, such as the Department of Defense, have financial literacy programs targeted at assisting their employees, and these are just a few of the many programs that we have found. 

So we got together and worked on an amendment along with 

Senator Akaka to make sure that we could get some information 

on this. We had direction in the early timeframe when we were 

working on it from Senator Sarbanes’ efforts, who was then the 

Chairman of the Banking Committee. He not only contributed his 

ideas to us, but he also drafted some additional legislation and 

then, fortunately, when Senator Shelby became Chairman, he also 

continued to help on this and incorporated things that Senator Sarbanes and Senator Stabenow had put together. Those efforts beVerDate 0ct 09 2002 09:23 Nov 02, 2004 Jkt 094201 PO 00000 Frm 00012 Fmt 6633 Sfmt 6633 C:\DOCS\94201.TXT SAFFAIRS PsN: PHOGAN
9

came a part of the Fair Credit Reporting Act amendments, the Fair 

and Accurate Credit Transactions Act. 

That law established the Financial Literacy and Education Commission. It is mandated to develop a national strategy on financial 

literacy and education, as well as establish a Website and toll-free 

number as entry points for consumers to gain access to the Federal 

Government’s financial literacy efforts. 

The Commission shall take steps as necessary to coordinate and 

promote financial literacy and education efforts at State and local 

levels, including working with State and local governments, nonprofit organizations, and private enterprises. 

Secretary Snow of the Department of the Treasury chaired the 

first meeting of the Commission on January 29. There were a number of notable people from a number of different commissions. I 

won’t go into all of those who attended. I would ask that my full 

statement be a part of the record. 

Chairman FITZGERALD. Without objection. 

Senator ENZI. From all indications, that first meeting was a 

great success. We do know that financial literacy and education is 

essential in today’s financial markets. Senator Sarbanes held very 

extensive hearings on some of the problems with corporate America 

that have been mentioned, and brought to light some of the things 

that I am pretty sure go back to when they were young people, and 

have come up with some solutions that I think will straighten the 

country out. Of course, it still relies on good people making good 

decisions based on good values and good moral background. 

I thank you for holding this hearing and Senator Akaka for all 

of his different efforts that he has had as well as the people here 

on the panel with me. Thank you, and thank you for your courtesy. 

Chairman FITZGERALD. Senator Enzi, thank you very much. 

Our second and third witnesses are Senator Sarbanes and Senator Stabenow. Senator Sarbanes is the senior Senator from Maryland and the Ranking Member of the Senate Committee on Banking. Senator Sarbanes also is a senior member of the Foreign Relations Committee, the Budget Committee, and the Joint Economic 

Committee. 

He was elected to the Senate in 1976 and was the chief Senate 

sponsor of the Sarbanes-Oxley Act, which has been referred to as 

the most far-reaching reform of American business practices since 

the time of President Franklin Roosevelt. Senator Sarbanes also is 

the author of S. 1470, the Financial Literacy and Education Coordinating Act. 

Senator Stabenow is the junior Senator from Michigan. She was 

elected to the Senate in the year 2000. She now serves on the Committee on Budget, Banking, Agriculture, and on the Special Committee on Aging. Within the Banking Committee, she serves on 

three subcommittees: Financial Institutions, Securities and Investment, and Housing and Transportation. 

Prior to her election to the Senate, Senator Stabenow served for 

two terms in the House of Representatives, for 4 years in the 

Michigan State Senate, and for 12 years in the State House of Representatives, where she rose in leadership to become the first 

woman to preside over the State House. Does that mean the Speaker of the House? 

10

1The prepared statement of Senator Sarbanes appears in the Appendix on page 43. 

Senator STABENOW. Assistant Speaker, yes. 

Chairman FITZGERALD. Assistant Speaker, OK. Well, welcome. 

Senator Sarbanes and Senator Stabenow, thank you very much. 

Returning now to the seniority system, we will let Senator Sarbanes go first. Thank you, Senator, for your patience. 

TESTIMONY OF HON. PAUL S. SARBANES,1 A U.S. SENATOR 

FROM THE STATE OF MARYLAND 

Senator SARBANES. Thank you very much, Chairman Fitzgerald, 

Ranking Member Akaka, and Senator Lautenberg. It is a pleasure 

to be here before you. 

Senator Lautenberg referred to these advertisements that were 

too good to be true, and usually they are not true. If they are too 

good to be true, there is a very high probability that they are not 

true and people need to be aware of that. 

Mr. Chairman, I want to commend you and the Ranking Member 

for holding this important hearing on the government’s role in enabling Americans to make informed decisions about financial affairs. 

As was mentioned, it was high on the agenda of the Banking, 

Housing, and Urban Affairs Committee in the last Congress and 

we held a series of hearings on financial literacy and education. 

In this Congress, under Chairman Shelby’s leadership, we included in the Fair and Accurate Credit Transactions Act a separate 

title for the purpose of promoting financial literacy. This had been 

introduced earlier as the Financial Literacy and Education Improvement Act. It is now part of the law of the land. 

I want to underscore the tremendous and terrific work that was 

done by Senator Akaka, who previously was on our panel, and Senators Enzi and Stabenow in putting together this legislation and 

also the support it received from Chairman Shelby when we included it in. 

Mr. Chairman, there is no mystery to financial literacy. It plays 

a role in our lives with respect to financial matters, which is analogous to the role played by basic literacy in our daily lives. We know 

that basic illiteracy exacts a heavy toll. The same is true of financial illiteracy. 

Numerous statistical studies have shown significant numbers—

amazing numbers, actually—of men and women of all ages are financially illiterate or have only a limited degree of financial literacy. They are ill equipped to make informed and responsible decisions about crucial financial matters. Lacking the context to make 

thorough and realistic assessments, they are at serious risk, vulnerable to exploitation, with potentially devastating consequences 

for themselves and their family. 

In a series of hearings we held in the Banking Committee, we 

received sobering testimony on this point. Our witnesses were men 

and women of all ages and from all backgrounds. They included 

college-age youth, retirees, newly employed, and workers near the 

end of their employment years, those who are investing in capital 

markets and those without bank accounts. And what came across 

from that testimony was that we needed to improve and expand financial education in this country. 

11

Now, our hearings established that while there are some significant programs in the area of financial education both within the 

government and in the private sector and a number of States—Senator Enzi actually, when he served in the Wyoming legislature, 

took the lead in developing financial literacy programs at the State 

level in Wyoming. But there is not an overall comprehensive strategy. Too little coordination, too much overlap and duplication. 

Don Blandin, whom you are hearing from later in this hearing, 

testified before our committees as President of the American Savings Education Council, and I am just quoting him: ‘‘Organizations 

in both the private and public sectors must collaborate on all levels 

to help educate Americans about the importance of taking control 

of their financial future. By combining and leveraging our comprehensive networks and resources, we have a better chance of 

reaching people that none of us would be able to reach alone.’’

That is why in the legislation, we established the Financial Literacy and Education Commission. They are charged with a mandate to develop a national strategy. Using its own Website and 1–

800 number, the Commission has served consumers by providing 

one-stop user accessible information about all financial literacy programs offered by government agencies. 

By bringing together the heads of the Federal agencies that sponsor active financial education programs, the Commission will be 

able to better coordinate the activities of the various departments 

and agencies, eliminate unnecessary duplication, facilitate collaboration, promote cooperation of the Federal agencies with State and 

local government, and with the nonprofit and other private sector 

organizations to sponsor programs in financial literacy and education. I want to underscore the very find work being done by a 

number of nonprofit and other private sector organizations. 

Now, the first meeting of the Commission was held on January 

29. I am going to take a minute to read some of the leading members there. Senator Enzi refrained from doing so. But Treasury 

Secretary Snow was there. He chairs a commission under the legislation. Federal Reserve Board Chairman Greenspan, Commissioner 

of Social Security Barnhart, FDIC Chairman Powell, FTC Chairman Morris, OTS Director Gilleran, and National Credit Union Administrator Bauer. 

I think this active participation by the heads of these agencies 

will testify to the importance of its work, and the Commission 

needs to sustain an unflagging support of its members. I know you 

are going to be hearing from Acting Under Secretary for Domestic 

Affairs Roseboro, who has already indicated his own keen interest 

in this subject matter. 

Americans today face a daunting array of complex financial decisions that have both long-range and short-term consequences. Financial literacy is critical to responsible decisionmaking. 

Mr. Chairman, I applaud you and Senator Akaka for holding today’s hearings and I look forward to working with you and other 

colleagues to strengthen our financial education programs and 

raise the standards of financial literacy in every part of our country. Thank you very much. 

12

1The prepared statement of Senator Stabenow appears in the Appendix on page 45. 

Senator FITZGERALD. Senator Sarbanes, thank you. Thanks very 

much for taking time out of your busy schedule to be here. We appreciate it very much. 

Senator Stabenow. 

TESTIMONY OF HON. DEBBIE STABENOW,1 A U.S. SENATOR 

FROM THE STATE OF MICHIGAN 

Senator STABENOW. Thank you, Mr. Chairman, and to our Ranking Member, Senator Akaka, and Senator Lautenberg, it is wonderful to be here with you. I join with my colleagues in thanking you 

for holding this very important hearing and also, Senator Akaka, 

for all of your leadership and support. It has been wonderful to 

work with Senator Sarbanes and Senator Enzi and others—including Senator Shelby, our Banking Chairman—on this very important issue and to actually be able to get results, and I think it is 

exciting to see that we are making steps forward. 

I can’t stress enough how important I feel that financial literacy 

is to all Americans, and I know you share that feeling. The financial services industry has changed a great deal over the last several 

years and continues to change. A large number of new and diverse 

products are available in the marketplace. 

In addition, as we have all said, people are finding it easier to 

get credit, whether for a new home, a car or a credit card. I know 

as a parent of two young people who went through their high 

school years and every day I saw a new credit card or a new credit 

card application coming in the mail, which I would take and make 

sure they didn’t receive. But there is no question that we are seeing a constant bombardment with young people as well as people 

of all ages on the availability of new credit cards. 

However, more credit comes with increased responsibilities, as 

we have all said today, and a greater need to manage resources effectively, and I think that is all of our challenge. 

Mr. Chairman, it is also important to note that we are seeing an 

economic environment in which people are increasingly having to 

plan more aggressively to meet a number of financial needs, including our children’s education as well as our own retirement. 

Unfortunately, as we have all indicated today, we are nowhere 

near where we should be in terms of financial education, financial 

literacy, and we all have a stake in making sure that happens for 

the future of our country and for our families. 

Just to share some statistics as well, the personal savings rate 

fell to only 1.6 percent of disposable income in 2001. One-point-six 

percent was saved. From 1990 to 2000, outstanding credit card 

debt among American households more than tripled, from $200 billion to $600 billion. In 2001, the total household debt of Americans 

exceeded total household disposable income by nearly 10 percent. 

With all the opportunities for investments available today, barely 

half of American households hold any stock in any form, including 

mutual funds or a 401(k) style pension plan. And almost 50 percent 

of all workers have accumulated less than $50,000 for their retirement. One-third have saved less than $10,000 for their retirement. 

13

Mr. Chairman, Senators Sarbanes, Enzi, and I wanted to do 

something about this, and the Banking Committee along with Senator Akaka, to address these problems and that is precisely what 

we did. I introduced my bill, the Financial Literacy Community 

Outreach bill, last July along with Senator Enzi and six other cosponsors from the Banking Committee with a simple goal in mind, 

to make the Federal Government more efficient and strategic in 

how we deliver financial literacy assistance to the American people. 

We teamed up with Senator Sarbanes, who had his own bill, and 

we merged the best parts of each of those bills into a new package 

that was enacted into law, as has been indicated, during the reauthorization of the Fair Credit Reporting Act. The new law will 

streamline and improve the delivery of Federal financial literacy 

services. 

Prior to the enactment of our law, many Federal agencies offered 

financial literacy services, materials, and grants, but there was absolutely no coordination. In fact, we were amazed when we looked 

at what was there to find that, in fact, there were many different 

programs. But we weren’t aware of them and neither was the public, necessarily. 

Our Federal Financial Literacy Commission changes that. For 

the first time, all stakeholders in the government who work on financial literacy will sit at the same table and be able to coordinate 

their message. They will be able to eliminate duplication and fill 

in the gaps where we are providing no financial literacy assistance 

and where we should be. 

I am also happy to note that not only do we strive to get key 

members of the government talking to each other, our bill is also 

designed to make the government more accessible to the people 

that we serve. We instructed the Commission to set up a one-stop 

Website for consumers. Now the American people won’t have to 

surf dozens of government Websites to find the information that 

they need. They will be able to go to one site and get information 

on everything from credit card management to buying a home to 

understanding their Social Security benefits. 

For those who are less Web-savvy, we have a 1–800 number that 

consumers can use, as well. People will be able to call the number, 

indicate what sort of information they are seeking, and the Commission will mail it to them. 

So as you can see, as its very core, our legislation improves what 

the government does on financial literacy and then we do everything we can to make all government information readily available 

to those who are seeking it. 

I am excited to see that the administration is moving forward to 

implement the Act and commend everyone who was involved with 

that. I am particularly pleased to see the high level of commitment 

by many administration officials, as has been noted already. I 

think this bodes well and sends a very strong message for the importance of the Commission’s work. 

Mr. Chairman, financial literacy is really about empowering people. It is about helping them to help themselves and that is something that I know all of us feel is very important, whether it is 

teaching a retiree in Detroit how to avoid a predatory mortgage 

loan or helping a sophomore at Michigan State University avoid 

14

taking on credit card debt that he or she can’t afford. I have high 

hopes for the concrete benefits that the new law can bring to the 

American people, both in my State of Michigan and around the 

country. 

I once again thank you for your leadership on this issue. I am 

looking forward to working with you, with this Subcommittee, my 

colleagues, and with the Commission in order to make sure that we 

do everything that we can to make sure people have the information they need to be successful. Thank you, Mr. Chairman. 

Senator FITZGERALD. Senators, thank you very much for being 

here. We really appreciate your testifying before our Subcommittee. 

We appreciate your interest in the issue and thank you so much 

for being here. We appreciate it. 

Senator SARBANES. Thank you, Mr. Chairman. 

Senator STABENOW. Thank you. 

Senator FITZGERALD. Thanks. At this point, I would like to call 

the witnesses on panel two up to the table. I would like to introduce our witnesses on the second panel. Nina Shokraii Rees leads 

the newly-created Office of Innovation Improvement at the Department of Education. This office oversees the administration of approximately 25 competitive grant programs and has a program 

budget of $2 billion and approximately 100 full-time staff. The Office of Innovation and Improvement supports education innovation, 

disseminates the lessons learned from these programs, and helps 

to make strategic investments in promising educational practices. 

Prior to joining the Education Department, Ms. Rees was a senior aide to Vice President Cheney, advising him on domestic policy 

issues, including education, crime, home ownership, race, welfare, 

and other issues affecting families and children. 

Also joining us is Susan Ferris Wyderko, who serves as the Director of the Office of Investor Education and Assistance for the 

U.S. Securities and Exchange Commission (SEC). This office serves 

individual investors by ensuring that their problems and concerns 

are known throughout the SEC. In addition to handling questions 

and complaints, the Office of Investor Education and Assistance 

creates and disseminates educational literature and materials to 

help Americans learn how to save and invest wisely, prepare for retirement, and achieve financial security. 

Ms. Wyderko previously served as the SEC’s Director of Legislative Affairs and Acting Director of Public Affairs. She was counsel 

to former Chairman Arthur Levitt and has held other senior positions within the SEC. 

Brian Roseboro serves as the Acting Under Secretary of the 

Treasury for Domestic Finance. He also serves as Chief Advisor to 

the Treasury Secretary and Deputy Secretary on domestic financial 

matters and oversees the Assistant Secretary for Financial Markets, the Assistant Secretary for Financial Institutions, and the 

Fiscal Assistance Secretary. 

Mr. Roseboro has served as Assistant Secretary for Financial 

Markets and as a senior advisor to the Secretary of the Treasury 

in developing and implementing the Federal Government’s policies 

for debt management in all matters relating to financial markets. 

Mr. Roseboro, I was giving a nice introduction of your biography. 

We appreciate you joining us. 

15

1The prepared statement of Mr. Roseboro appears in the Appendix on page 48. 

If you are ready to proceed, Mr. Roseboro, we are ready to begin 

with you and then we will go right down the line with Ms. Rees 

and Ms. Wyderko. Thank you. 

TESTIMONY OF BRIAN C. ROSEBORO,1 ACTING UNDER SECRETARY FOR DOMESTIC FINANCE, U.S. DEPARTMENT OF 

THE TREASURY 

Mr. ROSEBORO. Thank you very much, Mr. Chairman. Chairman 

Fitzgerald, Ranking Member Akaka, and distinguished Members of 

the Subcommittee, I welcome this opportunity to testify today on 

the Treasury Department’s role in ensuring that Americans have 

access to financial education programs and in helping to learn to 

make informed financial choices throughout their lives. 

America has great economic opportunity, and never before have 

we had access to such a broad array of financial products and services to make our lives better. We choose from a variety of options 

for financing everyday purchases, from buying cars and homes to 

financing college educations. But along with the rewards of a plentiful marketplace go notable risk. The blessings of the marketplace 

might remain locked, or even become a burden, to the uninformed 

or the unwary. Financial education does make a difference. 

To prove this point, allow me to enlist the help of three individuals, Sarah, Maria, and Tom. They are fictional people, but they 

don’t need to be. Any one of them could live in one of the communities you represent. 

Sarah is a typical high school student. She and her teenage peers 

spent $175 billion in 2003, and yet only a little over 25 percent of 

young people report that their parents actively taught them how to 

manage money. She is among the one in three teens who carries 

his or her own credit card, yet only 21 percent of students like 

Sarah say that they have taken a finance course in school. 

Next, let us move on to Maria. Recently, Maria legally immigrated to America and speaks English as a second language. She 

comes to this country from a place where access to consumer financial services is not common, where checking accounts, credit cards, 

and credit reports are virtually unknown, and where a bank has 

not always been seen as a safe place to place one’s money. Moreover, Maria is among the estimated ten million individuals in the 

United States who do not have a relationship with a financial institution. Without a bank account, Maria is more vulnerable to financial scams at worst, and at best, her choices appear to be limited 

to higher-cost financial services. 

Now consider Tom, who is near retirement. He is among the onefourth of our workers 45 or older who plan to delay retirement for 

financial reasons. He could be among the 16 percent of all workers 

who say they are not confident at all about having enough money 

to retire comfortably. 

Sarah, Maria, and Tom are familiar to all of us. When we do not 

understand the most important and fundamental concepts of finance, we are less likely to achieve our full economic potential. 

This would hurt us as individuals and all of us as a community, 

State, and as a Nation. 

16

Recognizing the role that financial education plays in preparing 

Americans to make better financial decisions, the Department of 

Treasury established the Office of Financial Education in 2002. The 

office helps Americans obtain practical knowledge and skills to 

make informed financial choices throughout their lives by focusing 

on four key subject areas: Basic savings, credit management, home 

ownership, and retirement planning. 

Many of the office’s efforts are focused on three groups in particular where financial education needs are most acute: Young people, recent immigrants, and those nearing retirement. While financial education is important for all Americans, we believe our efforts 

can be of the greatest impact on these groups. 

We have found that there are many wonderful financial education programs around the country, often providing their services 

at little or no charge to participants. The great challenge is making 

people aware of these programs, and equally challenging, making 

people aware of the need for these programs. Our office seeks to 

meet these challenges by setting standards for successful financial 

education programs and recognizing exemplary programs that meet 

those standards. 

Last year, Congress selected the Office of Financial Education to 

lend its expertise and support to the newly created Financial Literacy and Education Commission. The Financial Literacy and Education Commission is chaired by the Secretary of the Treasury and 

composed of 20 Federal departments and agencies and commissions. The Commission’s goal is to promote financial education and 

to improve the financial literacy of all Americans. Its charge is to 

coordinate the financial education efforts of the Federal Government and to encourage government and private sector efforts to 

promote financial literacy. 

At the Commission’s first meeting on January 29, the members 

of the Commission established two subcommittees. The first is to 

establish a Website to serve as a clearinghouse for people in search 

of financial education information and programs. This effort is 

being led by the Commodity Futures Trading Commission. The second subcommittee, chaired by the Federal Deposit Insurance Corporation, is to establish a toll-free hotline for financial education 

information. 

In the 60 days since the first meeting of the full Commission, 

these two groups have convened and begun their important work. 

The Commission members are working together and learning from 

each other how we can best succeed in our efforts to make Americans aware of the many benefits of our financial system. This effort 

demonstrates the high priority President Bush and the administration place on financial education and on teamwork. 

Thank you, sir, and I am pleased to answer any questions the 

Subcommittee may have. 

Senator FITZGERALD. Secretary Roseboro, thank you very much. 

Ms. Rees. 

17

1The prepared statement of Ms. Rees appears in the Appendix on page 51. 

TESTIMONY OF NINA SHOKRAII REES,1 DEPUTY UNDER 

SECRETARY FOR INNOVATION AND IMPROVEMENT, U.S. DEPARTMENT OF EDUCATION 

Ms. REES. Chairman Fitzgerald and Ranking Member Akaka, I 

am pleased to be here today to discuss the Department of Education’s efforts to improve the financial and economic literacy of our 

Nation’s students. 

Our focus at the Department of Education is on educating every 

child so that no child is left behind. Last year, Secretary Page 

joined hands with the then-Treasury Secretary Paul O’Neill in announcing the administration’s initiatives to raise awareness about 

financial education and he acknowledged that, in addition to learning skills in the core academic subjects, it is important for students 

to gain financial literacy. 

Toward that end, the Department has made several investments 

to promote financial literacy. First and foremost, in fiscal year 2002 

the Department made a grant to the Jump$tart Coalition worth up 

to about $250,000. The Jump$tart Coalition is a coalition of about 

140 national organizations that is carrying out a project aimed at 

improving students’ knowledge about personal finances so that 

they can make informed financial decisions. The grant from the Department supports such activities as an online clearinghouse that 

provides a central listing of personal finance books, lesson plans, 

videos, software, and other high-quality educational resources. 

In addition, the Jump$tart Coalition has created a set of voluntary national standards in personal finance that identify what K 

through 12 students should know and be able to do in personal finance. These standards can be aligned with local education goals 

or be used as a tool to help policy makers create standards for personal finance. 

In addition to that, in fiscal year 2003, the Department made a 

grant to Operation Hope, again worth about $250,000, to expand 

the number of schools that are using its ‘‘Banking on Our Future’’ 

program. Banking on Our Future is a year-round financial literacy 

program for youth ages 8 through 18, taught in schools and community-based organizations that serve primarily low- and moderate-income students. The project matches each lesson with the 

math standards of each grade level and integrates the modules into 

the mathematics curriculum in the classroom. 

The Department also administers Mr. Akaka’s Excellence in Economic Education program, which Senator Akaka sponsored, and 

which received $1.5 million for the first time this year. We are very 

proud to also let you know that we have announced the competition 

for this grant. The closing date notice for this competition is on 

April 16, and we look forward to getting applications for this program. 

This program will consist of a competitive grant to a single national nonprofit educational organization to promote economic and 

financial literacy among students in kindergarten through the 12th 

grade. Once the grantee is selected, that organization will be responsible for national activities, such as building relationships with 

economic education organizations, dissemination of effective ecoVerDate 0ct 09 2002 09:23 Nov 02, 2004 Jkt 094201 PO 00000 Frm 00021 Fmt 6633 Sfmt 6633 C:\DOCS\94201.TXT SAFFAIRS PsN: PHOGAN
18

1The prepared statement of Ms. Wyderko appears in the Appendix on page 55. 

nomics teaching, research on effective economics teaching, and dissemination of materials to foster economic literacy. 

In addition, the grantee will award sub-grants to State education 

agencies, local education agencies, and State or local economic personal finance or entrepreneur educational organizations for a variety of purposes, including teacher training, economics curriculum 

development, evaluations of the impact of economics education on 

students, research on economic education, and so forth. 

I also want to mention the options that school districts currently 

have to use flexible formula grant programs for financial education 

and economic literacy. Activities to promote consumer economic 

and personal finance education are specified as an allowable use of 

funds for school districts receiving grants under the State Grants 

for Innovative Programs, the Department’s broad formula program 

that supports State and local efforts in education reform and improvement. 

In addition, if a school district chooses to exercise the flexibility 

available through the No Child Left Behind Act, the district may 

transfer funds from several other eligible programs to its Innovation Programs formula grant to make funds available for this purpose without having to go through a separate grant application 

process. 

In the post-secondary arena, departmental regulations require 

post-secondary institutions to provide loan counseling to Federal 

student loan borrowers. This includes both initial and exit counseling. During the exit counseling, borrowers are reminded of their 

obligations to repay their loans, informed of the repayment options, 

and provided with information about effective debt management 

strategies that facilitate repayment. Some institutions include more 

general credit counseling as part of these required activities. 

In conclusion, I would like to emphasize the fact that the Department of Education is very pleased to be working as a member of 

President Bush’s newly established Commission on Financial Literacy and Education, headed by Secretary Snow, to coordinate the 

financial education resources of the government and the private 

sector. 

I would be pleased to answer any questions you may have about 

the programs that we currently have, and thank you for having me 

testify today. 

Senator FITZGERALD. Thank you very much, Ms. Rees. Ms. 

Wyderko. 

TESTIMONY OF SUSAN FERRIS WYDERKO,1 DIRECTOR, OFFICE 

OF INVESTOR EDUCATION AND ASSISTANCE, U.S. SECURITIES AND EXCHANGE COMMISSION 

Ms. WYDERKO. Chairman Fitzgerald and Ranking Member 

Akaka, on behalf of the Securities and Exchange Commission, 

thank you for the opportunity to be here to testify about our efforts 

to educate investors. 

I am the Director of the SEC’s Office of Investor Education and 

Assistance. My office is the front door of the Commission to all individual investors. Each year, my staff answers tens of thousands 

19

of complaints and questions from investors who contact the SEC. 

We attend investor fairs, speak at gatherings, and we talk with the 

media about financial education concepts. We create and disseminate a great deal of neutral, unbiased information directed at helping people make wise investment choices and avoid fraud. We don’t 

copyright any of our materials. We make them freely available in 

both Spanish and English. 

Our goal is to empower investors, to give them the tools they 

need to evaluate their investment options and to make informed 

decisions. We maintain a database containing information on the 

products, people, and firms about which people complain. We use 

that information to inform other divisions at the SEC so the agency 

can better deploy its investigative and enforcement resources and 

better identify the next problem down the road. 

We use our Website, www.sec.gov, to disseminate all of our educational materials. Our Website contains interactive tools, such as 

our mutual fund cost calculator, which allows investors to compare 

the costs of holding different mutual funds over a period of time 

that they specify. 

We also make it easy to research whether a broker or an investment advisor has a history of customer complaints or fraud. 

We do realize that many people who are on the Internet looking 

for that ‘‘can’t miss’’ investment opportunity aren’t stopping to read 

our prudent, sensible advice before investing. That is why we also 

run a series of fake investment scams on the Internet, designed to 

illustrate the warning signs of online investment fraud. If you click 

to invest, you get a message from us about the necessity of researching before you invest. 

We are also working with public libraries. Libraries are where 

many Americans who don’t have computers at home go to E-mail 

their families and to research their stocks. We are working to provide reference librarians with the resources they need to help their 

patrons effectively research their investment options. 

Our commitment to financial literacy does not stop with our own 

efforts. Last year, the Commission entered into a $1.4 billion global 

settlement of an action against ten leading investment firms over 

conflicts of interest between investment banking and research at 

those firms. Fifty-two-point-five million dollars of that money will 

be paid into a new nonprofit entity that will fund programs designed to equip investors with the knowledge and skills necessary 

to make informed investment decisions. 

While the Federal Government can play an important role in encouraging financial literacy for all Americans, we can’t do it all. 

That is why it is so important for us to work in partnership with 

other agencies, localities, and private sector entities that sponsor 

high-quality financial education. 

The SEC is a proud member of the Financial Literacy and Education Commission, which had its inaugural meeting earlier this 

year. We are also a member of the Jump$tart Coalition, the American Savings Education Council, and the Department of Defense’s 

Financial Readiness Initiative. 

In closing, I would like to thank the Subcommittee Members for 

recognizing the importance of the Commission’s role in empowering 

Americans to make informed financial decisions. I appreciate your 

20

inviting me to speak on behalf of the Commission and I would be 

happy to answer any questions that you may have. 

Senator FITZGERALD. Ms. Wyderko, thank you very much. 

I just want to clarify one thing. I am not sure if I heard you correctly. In describing the Commission’s efforts on the Internet, you 

said that if you put the word ‘‘invest’’ into a search engine, such 

as a Google search, you will come up with an actual SEC Website 

on things to look out for when you invest? 

Ms. WYDERKO. We run a series of fake scams on the Internet, so 

we have a fake company, McWhortle.com——

Senator FITZGERALD. OK. 

Ms. WYDERKO [continuing]. And it urges you to invest quickly in 

order to become amazingly wealthy. But if you click to invest, you 

get a warning message. Watch out. If you had invested in an opportunity like this, you could have been taken. 

Senator FITZGERALD. I bet you get a lot of hits on that Website—

that fake investment scam—don’t you? 

Ms. WYDERKO. We have a series of fake sites, and yes, we have 

had over two million hits thus far. 

Senator FITZGERALD. Can you get us more detailed statistics on 

how long those Websites have been up and how many people click 

on it every day, every week, every month? I would be very interested in that. 

It seems to me that there are a couple angles we could go at on 

financial literacy. Most of our government efforts seem to be focused on just telling people how to manage their own finances in 

terms of use of credit, good banking products, and good mutual 

fund products. But there is a whole other angle that I think the 

SEC is focused on in terms of helping people preserve their principal, such as not losing it in a scam—and there are lots of scams 

out there. 

I was a banking attorney before I went into government and politics and I remember in one bank, there was a Ponzi operation 

being run across the street from the bank. Customers were coming 

in and the bank was offering maybe 6 percent interest at the time 

and the customer said, hey, across the street they are offering a 

guaranteed 21 percent return. People were coming in, and taking 

their money out. 

The bank didn’t really know who it was across the street, but 

sure enough, after a while, the bank looked into it, and made a 

complaint to the authorities. It was shut down. It was a pyramid 

scheme. Of course, they were just taking the last money in, using 

it to pay somebody who wanted their money out today, and the proprietors of that operation had absconded with some $40 or $50 million. 

I would say in the Chicago area, every 2 weeks or so, we read 

about a new pyramid scheme or Ponzi operation that is shut down. 

My guess is only a small number of them are detected. Some of 

these go on for years and years before they actually fall apart. 

I also have had the experience years ago in referring some of 

those scams to State or Federal regulators, and it does take a long 

time for the Feds to be able to shut them down. For me, when I 

hear somebody is offering a guaranteed 21 percent, I just know it 

is a scam without having to do any research on it. 

21

1The information from Ms. Wyderko appears in the Appendix on page 69. 

Is there anything Congress could do to enhance the SEC’s ability 

to shut these scams down? Sometimes it can be very time consuming. The defendants can hire lawyers to really delay and draw 

it out. Has the SEC ever taken a look at this as to whether there 

would be enhanced authorities that Congress could give you to shut 

these down? 

Ms. WYDERKO. I am going to defer to my enforcement division on 

an answer to that question. They are going to have to get back to 

you. I do investor education and I don’t want to speak for them.1

Senator FITZGERALD. I certainly would be interested in that, if 

there is anything we could do to enhance your powers to shut them 

down. I also think that sometimes these scams are referred to 

State securities authorities who are often just bamboozled and confused by these people and complaints are not directed to the SEC, 

which has more resources and more capability, typically, to handle 

these complaints. I wonder if there shouldn’t be more of an effort 

to concentrate consumer complaints about pyramid schemes and 

Ponzi operations at the Federal level as opposed to the State level. 

I have seen these guys delay and bamboozle State regulators. 

Ms. WYDERKO. I think that the State and the Federal regulators 

all work together, and so for all intents and purposes, notifying one 

of them is as good, I think, as notifying everyone. We do work together to make sure that investors are protected, particularly in 

the area of securities fraud. I can’t speak to other types of fraud. 

Senator FITZGERALD. Senator Akaka, would you have some questions at this time? 

Senator AKAKA. Yes. Secretary Roseboro, thank you very much 

for visiting. We had a good chat the other day. 

The Financial Literacy and Education Improvement Act mandates that the Commission develop a national strategy to promote 

financial literacy and education among all American consumers 

within 18 months of the date of enactment, which was December 

4, 2003. My question to you is, what actions are being taken by the 

Department and the Commission to ensure that this mandate is 

met? 

Mr. ROSEBORO. Thank you, sir. The Commission has, since the 

first meeting in January, has been working very hard in laying the 

foundation to move forward on the statutory agenda of setting the 

national agenda. In particular, it has been laying the foundation in 

terms of making sure the national agenda is going to be effective 

as well as achievable. 

On the effective side of the equation, it has been meeting with 

numerous public as well as private agencies, basically soliciting 

what are best practices, what is working, where are the synergies 

among the private as well as public agencies in terms of achieving 

the results—I mentioned in my testimony that the Commission initial set forth and established two subcommittees, one on the tollfree line and one on the Web—to gather resources and make access 

to them more centralized and more effective. 

The Commission is next looking toward a national strategy in 

the time table of 18 months. At its next meeting that is scheduled, 

it is to form a subcommittee specifically to define the national 

22

strategy with the support that it has garnered from the actions and 

we will follow that meeting and going forth will look forward to 

communicating with you on how that is developing. 

Senator AKAKA. Thank you. Ms. Wyderko, I am concerned that 

certain mutual fund advertisements are misleading to investors. In 

particular, I am concerned about the use of unsustainable past performance data, incubator funds and claims about merged funds. 

What is the SEC doing to prevent consumers from being misled by 

these advertisements and what else should be done to protect investors from deceptive advertising? 

Ms. WYDERKO. Well, as you may know, last September, the Commission adopted amendments to raise the standard for mutual fund 

advertising. The amended rules require that in the advertisements, 

the investors have to be told that they need to consider fees as well 

as objectives and risks before investing. That is very important information. 

The rule also says that the advertisements have to direct the investors to the prospectus to get information about the fees and the 

risks, and the rules require more balanced information when the 

mutual funds do advertise their performance, as well as access to 

more timely performance information. 

The prior problems have stemmed from untimely, essentially, 

performance information, or stale performance information in those 

ads, and now they are being directed to allow consumers to update 

that information. 

Senator AKAKA. Ms. Rees, I mentioned in my opening statement 

that the Excellence in Economic Education Act is a program that 

I strongly believe in. You noted in your written testimony that the 

Department’s intention to terminate the program in fiscal year 

2005 is consistent with the administration’s policy of terminating 

small categorical programs in order to fund higher priorities. How 

is the Department defining and distinguishing small categorical 

programs from others? 

Ms. REES. Well, our general belief is that States are better 

served in being given more freedom and flexibility in the use of 

Federal funds so, since taking office, we have made a strong push 

towards eliminating most every categorical program, allowing 

States to roll those programs into their funds in programs such as 

the Title I aid to disadvantaged students, and to also decide where 

those funds should be invested. 

We feel that the best thing we can do at the Federal level in the 

area of financial literacy is through our work with the Commission 

and highlighting the need for more financial literacy and encouraging States and school districts to then use their flexibility with 

Federal funds to make better investments in the programs that 

best suit their needs, rather than to have one small program at the 

Federal level focused on a specific categorical area. 

Senator AKAKA. Ms. Rees, you also mention in your testimony 

that, currently, the flexibility exists to allow school districts to promote consumer economic and personal finance education through 

one of the Department’s broad formula programs. Can you quantify 

for me how many State dollars have gone toward the promotion of 

consumer economic and personal finance education, or how many 

programs the States have initiated under this provision? 

23

Ms. REES. I am happy to take a look at the way States are using 

Title V funds to see how they are expending the funds and see if 

they are investing in this particular area, but it would be very difficult, because again, this is a flexible pot of money. We try not to 

micromanage what States are doing. But I am happy to get back 

to you. 

Having said that, the investments we have made in the Jump$tart program that I just mentioned and in Operation Hope 

do indicate that some States are taking steps towards incorporating financial literacy in their curricula. Some States, like 

Pennsylvania, have set standards in this field, and I think once you 

have a few States that have paid attention to this area, more 

States will follow suit. 

Senator AKAKA. You also mentioned in your written statement 

that you made grants in 2002 and 2003, respectively, to the 

Jump$tart Coalition, who will be testifying today on panel three, 

and Operation Hope. I believe that the 2002 grant was in the 

amount of $250,000. What was the amount of the 2003 grant? Is 

the Department committed to making this type of grant annually, 

or if so, how will it go about selecting the grant recipient? 

Ms. REES. The second installment to Operation Hope was also for $250,000. We don’t have any plans to continue funding these programs. However, we believe that the new program that we have—

the one you have put in place, the $1.5 million program, is one that 

a lot of entities that are currently getting money from us could certainly apply for. We also hope that this entity will research different methods of teaching financial literacy so that we gain a 

greater understanding of how to go about teaching this subject so 

that more students are able to learn the basics of financial literacy. 

Senator AKAKA. Mr. Roseboro, seeking your advice again, what 

lessons should be learned from the American Savings Education 

Council’s Governmental Interagency Group, and how can these be 

helpful with the continuing development of the Financial Literacy 

and Education Commission? 

Mr. ROSEBORO. In the beginning, they were started in 1996 as 

they brought together different Federal agencies involved in this 

initiative, as well as those in the private sector, will give the Financial Literacy and Education Commission and has given the Financial Literacy and Education Commission a great base which to 

start from, depending on reinventing of the wheel, as it were, in 

terms of working with the other agencies, coordinating, being able 

to move from a networking which was developed among some of 

these agencies with their efforts to delivering tangibles as mandated by the Act, the Commission we have been working on. 

For the last 10 years, Treasury’s Office of Financial Education 

has been participating with this group. Even prior to that, one of 

our bureaus, the Bureau of Public Debt, was active with the group 

prior to the Treasury establishing the office. We wanted to build 

on what they have set as a standard for us to start with as they 

participate, as well, with the Commission. 

Senator AKAKA. Thank you. Ms. Wyderko, I know that a series 

of additional SEC investor meetings have been discussed to be held 

in various locations across the country, including Honolulu. Could 

you please provide me an update on the status of these events? 

24

Ms. WYDERKO. We have been discussing with the Department of 

Defense hosting town meetings aimed at military families. Last fall 

and earlier this year, we were exploring the possibility of hosting 

one in Hawaii aimed at the military families who live in Hawaii. 

However, during this spring, during the time period where we were 

planning this event, Hawaii experienced a massive troop deployment and the event got postponed or put off. 

But right now, the Department of Defense, we understand, is rethinking the best approach to informing their service members, 

their personnel and families, about financial education. We continue to stand ready to work with them when they decide on the 

best course of action. 

Senator AKAKA. Thank you very much. Thank you very much, 

Mr. Chairman. 

Senator FITZGERALD. It just occurs to me that we have many financial literacy programs across the whole government, and there 

are probably many in departments that are not even here today. 

I would imagine HUD has programs teaching people on how to go 

about buying a home and taking out a mortgage and so forth. For 

all of the panelists, do you think it would make some sense for us 

to divide up some responsibilities here? 

For example, for the Education Department that Ms. Rees represents, it would seem to make sense that our K through 12 schools 

focus on some very basic issues like maintaining a checking account, using basic banking services, and avoiding excessive credit 

card debt at young ages. HUD or the Treasury Department perhaps could focus on different people who at a later stage in their 

life are considering buying a home and taking out a mortgage. The 

Department could assist them to avoid paying too many points or 

excessive interest rates, and to understand the differences between 

variable and fixed rate mortgages. Then leave it to the SEC to 

focus on securities, which they do anyway, and how to buy stocks 

and bonds, using brokers, and how to buy mutual funds. 

Do you think it makes sense for us to divvy up the responsibilities? Because it seems to me right now there are so many different 

agencies involved in some aspect of the issue that no one is really 

accountable across the government for making sure people are educated about basic banking services or mortgages. 

I would say that the SEC probably feels an obligation to educate 

the public on securities because that is specifically their mission. 

But what do you think about that, Mr. Roseboro? 

Mr. ROSEBORO. It ultimately may, but I would say at this point 

it is too early to tell. I would like to have the Commission have a 

bit more time to inventory, to work together, to find out what 

synergies, what conflicts, what type of programs, activities can supplement each other. Just from the perspective of while they are, 

and I also personally feel strongly about this, it makes sense in 

terms of educating K through 12 on basic economic fundamentals 

and finance, but those citizens are going to move into the mainstream and buying homes, investing, such that issues that concern 

that group will concern senior citizens and all the ones in between. 

It may not be the optimal structure to partition it, but to, as the 

Commission is seeking to do now, have the agencies work better together instead of going off on individual paths to development 

25

within particular specialties. I think as the national strategy is developed, that may show the long-time answer to whether or not 

that is ultimately the appropriate way or not the appropriate way 

to go in terms of fragmenting the mission. 

Senator FITZGERALD. Well, if you would take that idea back to 

the Commission, I think that might make some sense, because 

right now, nobody seems to be accountable amongst the government agencies for making sure we are getting the job done. 

We need some more financial literacy on Capitol Hill amongst 

our own staffs. I think it was reported recently that some Capitol 

Hill staffers had fallen for one of those scam letters from Nigeria 

which you see all the time. That is really kind of frightening that 

somebody working here in the Congress was misled. We need more 

financial education at all levels and in all strata of our society. 

Just back to Ms. Wyderko, one final question. I compliment the 

SEC for your new initiatives on trying to clean up the advertising 

of mutual funds. Some in the fund industry think it is almost unethical to advertise past performances. I know John Bogel, the 

founder of the Vanguard Group, has always thought that is very 

misleading. In fact, there are many studies that show you that 

whoever was the highest performing last year, in the top quartile 

last year, is likely to be in the bottom quartile this year. It is the 

last who will be first and first who will be last. Just seeing what 

the performance was last year is not at all an indicator of what it 

is likely to be in future years. 

So I compliment you on pointing out that people should consider 

fees. But I wonder if you shouldn’t encourage people to look at fees 

even more than you are now poised to do, because my understanding is 88 percent of mutual funds outperform the market and 

that the single most determinative factor in deciding how well your 

funds will do over a lifetime of investing is fees. The fund industry 

doesn’t want you to believe that because they live on your fees, and 

nearly $200 billion a year are being paid to investment advisors on 

fees. But one percentage point of fees charged to your mutual fund 

will reduce someone’s retirement nest egg by 35 to 40 percent over 

a lifetime of investing. 

Almost all funds underperform the markets. The markets have 

averaged at 12 percent return in the last 20 years. Mutual funds 

have averaged a 9 percent return during the last 20 years. The disparity between the market return and the funds’ returns is attributable to the fees. 

Now, the average mutual fund shareholder has averaged a 2.6 

percent return over the last 20 years. That is not all attributed to 

the funds’ performance. A lot of it is due to individual investors 

coming into their mutual funds in the advanced stages of a bull 

market, at exactly the wrong time, and then pulling out when everything collapses. They should do exactly the reverse. They should 

go in when things are at the bottom, and get out when it is in the 

advanced stages of a bull market. That is where we need more financial literacy, too. 

But I would encourage you to take that message back to the SEC 

to emphasize the importance of considering fees even more, and I 

would encourage you to go forward with rules you are considering 

that would require a dollar disclosure of the fees. The way the fees 

26

are disclosed now is as a percentage of the assets in your account 

and they are made to sound like they are minimal or diminutive, 

that they don’t matter. You are charged 11⁄2 percent or 1 percent 

a year. No one knows what that means. 

If there are mandatory disclosures that one percentage point of 

fees can dramatically reduce your retirement nest egg and if those 

fees were disclosed in dollars and cents, it would be similar to 

when a bank takes money out of a bank account, they have to put 

it on your statement in dollars and cents. If they took $30 out last 

month for a check charge, it appears on your statement. 

Mutual funds take money out of your account all the time and 

don’t have to disclose it to you except in a prospectus when you 

first opened the account and it is in percentage terms. We take 1, 

11⁄2 percent out a year, and then about half the expenses aren’t disclosed at all. Those are the transaction expenses. Only about 50 

percent of the expenses are disclosed at all. 

So I encourage those at the SEC who are working on reform to 

continue those reforms and go even farther. Given that most Americans are now relying on mutual funds for their household, college, 

and retirement savings, I think that is an extremely important 

issue. 

So with that, I would like to thank you all for being here and 

invite the third panel to testify. Thank you all for your time. 

Wait, I was a little bit too abrupt. Senator Akaka has another 

question. I am sorry. 

Senator AKAKA. Thank you so much, Mr. Chairman. I have a 

question for Mr. Roseboro and one for Ms. Wyderko. 

Mr. ROSEBORO. Almost got away. [Laughter.] 

Senator AKAKA. Mr. Roseboro, an estimated $1.75 billion intended to assess low-income families went to commercial tax preparers and affiliated national banks for tax assistance, electronic 

filing fees, and high costs to refund loans in 1999. These fees unnecessarily diminish Earned Income Tax Credit benefits for working families. 

Senator Bingaman and I have introduced legislation to regulate 

refund anticipation loans, RALs, and expand access to free tax 

preparation services. S. 685 would create a grant program to link 

tax preparation services with the establishment of a bank or credit 

union account. Having an account provides consumers alternatives 

to rapid refund loans, check cashing services, and lower cost remittances. 

What is the Treasury Department doing to expand access to free 

tax preparation services for low-income taxpayers? 

And what is the Department doing to encourage people to utilize 

mainstream financial institutions? 

Mr. ROSEBORO. I will go to the former question and the Treasury 

Department’s support of tax counseling. One of the IRS’s major initiatives in that area is to supply training and help with a program 

called the Volunteer Income Tax Assistance program, which basically is directed at wage earners earning $35,000 and less in terms 

of giving help in terms of tax preparation. 

In addition to that, supporting and identifying programs, private 

sector programs such as one in Dade County, Florida, recently we 

recognized which not only helped in the tax program preparation, 

27

but if someone was getting a refund, took that opportunity to also 

encourage them to open up a direct deposit checking account to 

savings account, along those lines. 

With regard to the latter question in terms of trying to bring 

more individuals to the banking system, Treasury’s largest initiative there had to do with the First Accounts program. As of May 

2002, 15 programs were granted a total of $8.4 million to encourage that type of development and we are right now in the process 

of actually seeking someone to do an evaluation of these programs 

and their effectiveness to again identify best practices and where 

those areas can be most effective in the future if these programs 

are to continue. 

Senator AKAKA. Thank you for that. My final question is to Ms. 

Wyderko. I have been impressed by your fake scam Websites. Despite limited resources, you have taught investors valuable lessons, 

and I think that was your intent. Please describe for the Subcommittee the most memorable inquiry that one of your sites generated. [Laughter.] 

Ms. WYDERKO. Well, we have had more than a few investors 

send us their bank account numbers, wire transfer instructions, 

and credit card numbers. We have had a few complain that our 

Website won’t take their credit card number. 

I personally recall a lengthy conversation with a psychiatrist 

from Long Island who could not understand that the SEC was related to that investment opportunity that he was sure was terrific. 

I think the highlight of our life in crime came last fall when we 

were contacted by the venture capitalist from a very well-known investment banking firm who wanted to get in on one of our fake 

IPOs. But more disturbingly, just last week, our fake hedge fund, 

GRDI, that is pronounced ‘‘greedy,’’ was contacted and solicited to 

participate in something called a capital introduction session. We 

were promised that the event would put us in contact with high net 

worth individuals, foundations, and endowments. We were, of 

course, very interested in learning how much it would cost to get 

access to these groups, these investors, but sadly, the promoter 

must have clicked to invest before sending us the material. 

But it is an interesting lesson. Our fake sites have fooled the 

most sophisticated people in industry as well as ordinary individuals alike. I think that gives you a good understanding of the 

depths of the issues that we have to confront when people are faced 

with an investment opportunity that just simply is too good to be 

true. 

Senator AKAKA. Thank you very much, Mr. Chairman. 

Senator FITZGERALD. Do you ever get anybody referring your 

fake Websites to the SEC and say, this must be a scam? 

Ms. WYDERKO. We certainly do. We have been referred to our Enforcement Division a number of times and we are thrilled when 

that happens, sir. 

Senator FITZGERALD. OK. Thank you all for your time. 

At this point, we will invite the third panel up to testify. 

I would like to introduce our panelists on the third panel now 

and appreciate your patience. You have had two previous panels to 

sit through, and so we thank you very much for your forbearance. 

28

1The prepared statement of Mr. Blandin appears in the Appendix on page 73. 

Don Blandin is President of the American Savings Education 

Council. The Council was established in 1995 and is a coalition of 

public and private sector institutions that undertake initiatives to 

raise public awareness about the importance of obtaining personal 

financial independence. The Council works through its partners to 

educate Americans on all aspects of personal finance and savings, 

including credit management, college savings, home purchase, and 

retirement planning. Mr. Blandin serves on a number of boards, including for the Jump$tart Coalition for Personal Financial Literacy 

and the Certified Financial Planner Board of Standards. 

Dara Duguay is the Executive Director of the Jump$tart Coalition for Personal Financial Literacy. The Coalition’s mission is to 

improve the financial literacy skills of young adults so they can 

make informed financial decisions. The Coalition consists of 150 organizations, including Junior Achievement, the Federal Reserve, 

the Credit Union National Association, Visa, the National Council 

on Economic Education, and others. 

Previously, Ms. Duguay was the Director of Education for the 

Consumer Credit Counseling Service of Los Angeles that specializes in providing free budget and debt counseling. Ms. Duguay also 

is the author of several books on personal finance and money management. 

Dr. Robert Duvall has served as President and Chief Executive 

Officer for the National Council on Economic Education, NCEE, 

since 1995. The NCEE was founded as an independent, nonpartisan, nonprofit organization 55 years ago by business leaders 

and educators who saw the need to improve economic and personal 

finance education in the Nation’s schools. Under Dr. Duvall’s leadership, NCEE has grown to be a preeminent national organization 

promoting economic and financial literacy. 

Dr. Duvall is recognized as a national and international spokesman for the cause of improving economic and financial education 

as a core component of the K through 12 curriculum. Prior to joining NCEE, Dr. Duvall was President of Pacific University in Oregon for 12 years. 

We thank all of you for being here today. In the interest of time, 

we will include your full statements in the record, and if you are 

able, we ask that you limit your remarks to no more than 5 minutes, please. 

Mr. Blandin, you may proceed with your opening statement at 

this time. 

TESTIMONY OF DON M. BLANDIN,1 PRESIDENT, AMERICAN 

SAVINGS EDUCATION COUNCIL 

Mr. BLANDIN. Thank you. Chairman Fitzgerald, Ranking Member Akaka, and other distinguished Members of the Subcommittee, 

I want to thank you for the opportunity to appear before you today 

to discuss the role the Federal Government can play in helping 

Americans understand how to better manage their money and 

learn about personal finance. 

ASEC works through its partners, as you mentioned earlier, to 

educate Americans on all aspects of financial management, anyVerDate 0ct 09 2002 09:23 Nov 02, 2004 Jkt 094201 PO 00000 Frm 00032 Fmt 6633 Sfmt 6633 C:\DOCS\94201.TXT SAFFAIRS PsN: PHOGAN
29

thing from first home ownership to long-term health care to planning for retirement to sending your children through college, any 

aspect of financial education including the wise use of credit cards. 

We were launched in July 1995 following discussion between the 

U.S. Department of Labor and the Employee Benefit Research Institute, our parent organization, who then decided that it was time 

to bring the savings message to the American public. At an event 

in July 1995 involving the Department of Treasury and the Department of Labor, ASEC was launched as a public-private coalition 

made up of large membership organizations, financial services 

firms, as well as many Federal and State Government agencies to 

help with the education message. It is a 501(c)(3) nonprofit organization. We do not lobby or take public policy positions. 

As President of ASEC, I have had the unique opportunity and 

privilege to work closely with private sector organizations since 

1996 in helping them, what I call ‘‘connect the dots’’ among and between the various financial education efforts. As Senator Sarbanes 

mentioned earlier, we feel very strongly that by combining and 

leveraging our partners’ comprehensive networks and resources, we 

are able to reach people collectively who none of us could be able 

to reach alone. 

Education, in our mind, is still key to helping individuals make 

changes in their financial behavior and we fully support any initiative to forward this mission that we all share. 

First and foremost, I would like to commend the creation by the 

Congress of the Financial Literacy and Education Commission. I 

attended the Commission’s first meeting in January and it was reassuring to see so many heads of agencies and their key staff participating in the meeting and showing their support for and commitment to the Commission’s work. 

Additionally, I would like to commend the Congress for enacting 

the Financial Literacy and Education Empowerment Improvement 

Act. This document is comprehensive and well thought out and 

clearly lays the groundwork for the Commission’s work, including 

points at which that work will be measured by independent agencies. 

The American Savings Education Council looks forward to helping the Commission meet all of its goals and objectives. 

At ASEC, our goal is to bring together organizations and groups 

that might not normally be at the same table, but that clearly 

should be at the same table. From the beginning, we recognized the 

important contributions and efforts of each of our government partners. As a matter of fact, two Federal agencies were integral in 

helping to launch ASEC, Treasury and Labor. 

In an attempt to facilitate coordination and open the lines of 

communication between our Federal Government partners, in 1996, 

we created the ASEC Government Interagency Group, or GIG, as 

it has been commonly referred to. GIG meetings take place every 

2 months and are coordinated and co-convened jointly by ASEC 

and the Department of the Treasury Bureau of the Public Debt. 

Representatives from approximately 12 Federal agencies have regularly participated in these meetings over the last 8 years and GIG 

meetings are informative and informal and serve as a highly effective information clearinghouse. 

30

We feel that three factors greatly contribute to the success and 

longevity of GIG. One, a commitment by our partner organizations 

to attend the meetings. Over time, attendees have gotten to know 

each other very well, having a real feel for what each organization 

can bring to the table, and work well together. 

Two, it is a trusted, non-threatening forum for information exchange. People are very comfortable sharing their ideas and opinions, asking for assistance and counsel, and providing materials 

and support to assist each other’s events and initiatives. 

And finally, three. It has provided effective time management. A 

lot of work can be accomplished in a short period of time. For example, ASEC updates all the agencies about upcoming opportunities and events at local, State, and national levels and agency representatives are quick to express an interest and offer their assistance and input on various projects. 

GIG attendees leave the meetings knowing what all the other 

agencies are doing in the area of financial education, and those 

seeking assistance with a project usually come out with valuable 

contacts of people and agencies willing to immediately help. Overall, it is truly a win-win situation for everyone. 

However, despite our efforts to coordinate our work and explore 

all possibilities in pushing the savings education message, we still 

face major challenges. First, it is very challenging to engage the 

public about the importance of saving and planning for their future 

when many people are not receptive to hearing the message. 

We have all tried to reach out to individuals through public service campaigns, educational materials and Websites, meetings, and 

seminars. Those we are able to reach are small segments of the 

population. Millions of Americans remain laxidasical about their financial planning approach. To borrow from Aesop’s Fable about the 

grasshopper and the ant, we seem to be dealing with a lot more 

‘‘live for today’’ grasshoppers than ‘‘plan for tomorrow’’ ants. Millions of baby boomers are expecting to retire in the near future, but 

our research shows that many are inadequately prepared to support themselves financially in retirement. 

Second, we are not seeing enough coordination and outreach 

among groups that are very involved in this issue of financial education. Organizations are more apt to create their own campaign or 

event, even reinvent the wheel, rather than collaborate on programs and initiatives that will have the biggest impact. The potential with this new Commission exists for public and private sector 

organizations to align themselves under one massive, far-reaching 

umbrella, financial education campaign. 

Finally, the Congress and the President have an opportunity in 

2005 to build added momentum and coordination when the Third 

White House and Congressional Summit on Retirement Savings 

will be held, as called for by the SAVER Act, Savings Are Vital to 

Everyone’s Retirement Act of 1997. Previous summits in 1998 and 

2002 provided an opportunity for hundreds of delegates to work together to design the educational initiatives that can make a difference. For example, the SAVER Summit endorsed the ‘‘choose to 

save’’ television and radio PSA program. We are in its seventh 

year, which now lands in 49 States. 

31

1The prepared statement of Ms. Duguay appears in the Appendix on page 77. 

What we know from the summits and from the many partners 

of ASEC is that there are many organizations and individuals truly 

committed to helping Americans become financially literate and 

even savvy about money management. That is the topic that touches all of us and will have a lasting effect on future generations. 

We believe that the Commission can help the President and the 

Congress with the agenda for the 2005 SAVER Summit and thus 

be able to mobilize a larger group of Coalition members nationally 

at all levels and reaching all social and economic incomes for all 

Americans in the years ahead. 

As an entity made up of government agencies, we feel that the 

Commission will be able to achieve its goals if they are able to coordinate the limited resources that are already out there within 

both the public and the private sector. 

As I said at the beginning of my testimony, by reaching out to 

groups and organizations at all levels, we will be able to achieve 

greater things collectively than any of us would be able to do alone. 

Thank you very much for your time. 

Senator FITZGERALD. Thank you, Mr. Blandin. Ms. Duguay. 

TESTIMONY OF DARA DUGUAY,1 EXECUTIVE DIRECTOR, 

JUMP$TART COALITION FOR PERSONAL FINANCIAL LITERACY 

Ms. DUGUAY. Thank you, Chairman Fitzgerald and Ranking 

Member Akaka for this opportunity to testify today, and thank you 

also for the opportunity to speak extemporaneously, which I prefer, 

so I will try to go through my notes in a quick fashion. 

I am the Executive Director of the Jump$tart Coalition, and 

when I moved to Washington, DC, in 1995, the Coalition had about 

a dozen members. And here we are now in 2004 and we have 150 

national organizations. Almost all of the members of the new Commission are members of the Jump$tart Coalition, so they have been 

involved in our effort and most of them are on our Board of Directors, also. They have been involved since the very beginning. We 

also have financial corporations, many nonprofit organizations, and 

associations together. 

The main commonality is that they are all interested in promoting financial literacy for youth, K through college. So my comments today are really going to be directed more toward K through 

college and K through 12, specifically, education policy and how I 

feel the Commission can help in that regard. 

I think the main reasons that the Commission was formed is we 

look at surveys that have been conducted showing their dire financial literacy results, and the Jump$tart Coalition conducted our 

first survey in 1997. It was a survey conducted in public high 

schools of high school seniors. We gave them a 31-question test to 

find out what they knew about the basics in money management, 

checking, saving, and investing, and the average score was an F, 

a 57 percent. 

Unfortunately, every 2 years, we have been readministering this 

test and the score has gone down. In 2000, it went down to 52 percent. In 2002, it went down to 50 percent. Our 2004 results, I canVerDate 0ct 09 2002 09:23 Nov 02, 2004 Jkt 094201 PO 00000 Frm 00035 Fmt 6633 Sfmt 6633 C:\DOCS\94201.TXT SAFFAIRS PsN: PHOGAN
32

not release them today, I will be breaking embargo, but please stay 

tuned. In 2 days at the Federal Reserve at 10:30 in the morning, 

we will have our press conference with our 2004 results. This is a 

huge survey. Four thousand high school seniors have been surveyed. And although I can’t tell you the results yet, I can tell you 

that we are still not encouraged that high school seniors are graduating with the skills that they need to make wise decisions in the 

marketplace. 

Let me give you some results from the 2002 survey, just the 

highlights. Sixty-eight percent of the high school seniors had failing 

scores on the survey. Keep in mind that the high school seniors, 

when they reach the age of 18, of course, they are legally responsible for these financial instruments. But we found that their average score, again, was just 50 percent, which on a basic grading 

scale is considered an F. 

And so we look at the fact that this score is in light of the fact 

that also a third of high school students have access to a credit 

card. Even a higher percentage have access to an ATM card. And 

when we look at statistics that are showing the bankruptcy filings 

for those in the 18 through 25 year-old age bracket, numbered 

150,000 in the year 2000. This, in terms of the total number of 

bankruptcy filings, is a small percentage, but we have to keep in 

mind this was a ten-fold increase in just 5 years. So this is extremely disturbing to us in terms of the number of young adults 

filing something as drastic as a bankruptcy. The Jump$tart Coalition is deeply committed to the works of the 

Commission because we believe in what it is all about and in its 

essence because we also believe in not reinventing the wheel. That 

is one of the main missions of Jump$tart, is to collaborate, to network, to make sure that other members of the Coalition are not duplicating exactly what other members are doing. We feel that this 

is a waste of resources. We feel that through teamwork and collaborating together as a solid entity, we as a coalition, as Mr. 

Blandlin also explained, coalitions take their strength from its 

membership, doing as a group what any single individual organization could not do on their own. 

So in that regard, the Coalition has offered the Commission already access to a wide variety of personal finance tools that we 

have developed over the years and I just wanted to highlight a few 

of them. 

Number one, we have a wide, enormous variety of educational 

materials listed on our Website. We have been identifying and evaluating. We don’t list anything that exists. It must pass our quality 

standards. So our online database of curricula for kindergarten 

through college currently has over 600 listings. You can search by 

age, you can search by subject, you can put in a key word like 

‘‘bankruptcy.’’

You can also search by free. At last count, about a third of the 

materials listed in our site have absolutely no cost whatsoever. So 

one of the biggest push-backs we hear from school districts is, we 

are broke. We have no money. We say, look, there are many free 

resources that are available. 

And so keep in mind that this clearinghouse, we would love the 

Commission to link to. It is a database that we have wide access 

33

to already. We encourage our membership to advertise and publicize the existence of this clearinghouse. And we also don’t want 

people to reinvent the wheel by creating something that we have 

been now creating and evaluating for over 7 years. 

The second tool that we have is something that is going to prove 

to be, I think, very important. One of the mantras that we are 

hearing now as a consequence of No Child Left Behind is that assessment is critical in K through 12 education. If it is not tested, 

it is not taught. 

And so what we decided to do is, in addition to our standards 

that Ms. Rees from the U.S. Department of Education referenced 

earlier, we have developed, or we are in the process—we hope to 

have this whole process completed within a month—of developing 

an assessment. This is going to be a test bank of almost 1,000 

questions at the high school level that is going to be linked to these 

standards. 

But particularly, we would like this assessment test bank to be 

given, again for free, to assessment directors around the country, 

at State Departments of Education, at large local school district 

levels that are in the process of developing assessments for other 

disciplines and say, listen, if you are developing the math assessment, can you take a couple of these thousand questions. Many of 

them are computation examples. If they are figuring out compound 

interest, it is a multiplication exercise. 

And please put them into a test because that is the reality in 

education policy today. If it is not in the standards, if it is not tested, you can have the best curricula in the world and it will never 

ever get into the classroom. So these are just some of the realities 

that we see today in education policy. 

And then finally, we felt the need to develop a series of best practices. The first set of best practices that a task force has developed 

is in curricula. Best practices is, in essence, what works, and we 

have a wonderful document on our Website which we have shared 

with all the Coalition members that are creating curricula all the 

time, and it just basically lists things like obvious things, must be 

accurate, must be up to date, and then things that are not so obvious, such as must have connectivity to the school’s Internet system 

and so forth, but basically a compilation of what works in terms 

of producing curricula so that the curricula that is out there is of 

the highest quality. 

Really, the problem in this country is not lack of supply. With 

our 600-plus items in our clearinghouse, many of which are just 

fantastic materials, the problem is not lack of supply. The problem 

is lack of demand. Our 2002 survey found that only 15 percent of 

students in this country graduate from high school ever having received financial education while in school. We find that many of 

them don’t learn from their parents if it is a taboo subject, or it 

is the situation of the blind leading the blind. Parents have never 

learned themselves, or if your parents have filed bankruptcy for the 

third time, are they the best teachers to show you how to use credit 

wisely. 

So we find that schools are one of the best places for kids to 

learn, because if they don’t learn there and they don’t learn at 

home, by default, they are learning in the school of hard knocks, 

34

and they always say the school of hard knocks has a very high tuition, so we definitely don’t want them to learn there. 

And so these are just some of the recommendations, in closing, 

to the Commission where I think that they can be extremely effective when we talk about education policy in this country. 

I wanted to share with you one of the positive—so far, I have 

talked about some of the negative results of the survey. I want to 

talk about a positive trend that we have been seeing in the last 2 

years, especially last year and this year. In 2003, six bills were 

passed on a State level, and in total, 27 bills were introduced requiring some kind of inclusion of personal finance in the K through 

12 curricula. We are very excited by this resultant success of the 

bills, because in the past, there would be a bill introduced here and 

there and they would always fail. So the fact that six bills passed, 

we think is incredibly exciting. 

Just to give you one example, the State of Utah passed a bill that 

is requiring as a mandate that every high school student must 

have a course in personal finance. So this, to us, is very encouraging. Now we can actually get the doors open and get the curricula into the classrooms. 

We have also seen that there is an incredible amount of increase 

in teacher training, because it is not enough to just give a teacher 

a material and say, teach this. We have to remember that most 

teachers feel very uncomfortable teaching this subject. Again, it is 

in many cases the situation of the blind leading the blind. So we 

have found through many of Jump$tart’s members that offer teacher training and through our vast State coalition network, we have 

been able to conduct statewide teacher training in 18 States last 

year and we had representation by many State treasurers, attorney 

generals, governors, first ladies, that came in attendance to these 

statewide teacher training to make sure the teachers get up to 

speed. 

So I feel that legislative record last year, in addition to so far 

this year, we found that there has been a wide plethora of bills already introduced, in fact, 17. And if you are interested, Jump$tart’s 

Website, jump$tart.org, has a whole, very accurate, up-to-date legislative section that lists all of these bills. So, so far this year, 17 

bills, resolutions, proclamations have been introduced on the State 

level. We think this is an incredible area and we hope that the 

Commission will applaud these efforts. 

Second, we would like for the Commission to urge the inclusion 

of personal financial standards into the standards of other disciplines. Personal finance is not a separate discipline unto itself. 

Therefore, it is the stepchild. It has to piggyback onto economics or 

math. Currently, it piggybacks in many cases onto business or family and consumer science, which in many States are electives and 

not required classes. So the more that we can include personal finance into classes like economics or math that are more required 

disciplines in more States, so much the better. So the more that the 

Commission can encourage the inclusion of our standards, especially the U.S. Department of Education, this would really help our 

efforts. 

And then finally, I have been at, I would say half-a-dozen financial literacy symposia over the last 2 years and the audience is usuVerDate 0ct 09 2002 09:23 Nov 02, 2004 Jkt 094201 PO 00000 Frm 00038 Fmt 6633 Sfmt 6633 C:\DOCS\94201.TXT SAFFAIRS PsN: PHOGAN
35

1The prepared statement of Mr. Duvall appears in the Appendix on page 82. 

ally packed. But what we found is that the groups that are missing 

in the audience are really the key education groups in the country. 

We are missing education associations. We are missing the State 

Departments of Education. We are missing involvement from the 

educators. 

What I feel is one of our greatest challenges is that we have a 

gap that exists between the financial institutions, the nonprofit, 

the government agencies that are true believers in this cause, and 

there is a chasm between those groups and the education policy 

makers that are really the ones that are responsible for helping 

with all of the integration of personal finance into their curricula. 

So if we can somehow figure out how to close this gap, I think 

if the Commission can encourage more involvement with the State 

Departments of Education, we find that in the States where legislation is pending that they are fighting our efforts in many cases. 

And in many cases, their fears are unfounded. They think it is 

going to cost money to buy the curricula or money to train the 

teachers, and we have proved that in States where legislation has 

passed, this is not the case. 

So if we can close the gap, I guess that is my last and final hope, 

that if the Commission can help us in that regard, and I was encouraged by Ms. Rees’s comments, that she said that would be the 

way that the U.S. Department of Education could help the most, 

and really, that will be the most beneficial way, is to spread the 

word about the importance of financial education and urge their 

adoption and also promotion of this issue. So thank you very much 

for the opportunity to testify today. 

Senator FITZGERALD. Thank you very much, Ms. Duguay. 

With Senator Akaka’s permission, I would like to turn the gavel 

over to him now. I have another appointment I am going to have 

to run to, but I appreciate Dr. Duvall’s contribution to this hearing. 

I am sorry I have to go, but we have your written testimony. I am 

going to turn the gavel over to Senator Akaka, and you can go 

ahead and deliver your opening statement. Thank you all very 

much. 

TESTIMONY OF ROBERT F. DUVALL,1 PRESIDENT AND CHIEF 

EXECUTIVE OFFICER, NATIONAL COUNCIL ON ECONOMIC 

EDUCATION 

Mr. DUVALL. Thank you, sir, for the opportunity. Senator Akaka, 

we have been together before and it is an honor for me to have this 

opportunity and particularly to be the clean-up hitter in an obviously timely and important hearing. 

As Senator Fitzgerald said, you have my written testimony for 

the Subcommittee and I just want to say that, with the others, I 

appreciate very much what this testimony means, what this series 

of testimonies means in terms of giving focus to a very important 

issue. 

The National Council on Economic Education, the NCEE, was 

formed 55 years ago after the Second World War by a group of 

business leaders and educators who saw the GIs pouring back into 

the workforce after the war and saw a growing number of high 

36

school graduates and college graduates entering the workforce and 

realized that too many of them did not have a clue about how the 

economic system worked that they were going to work in. 

So we were given the mission, the charge of trying to improve 

on that situation by following the very strategies that have been 

enumerated by my colleagues—setting standards, teaching the 

teachers how to make economics and personal finance come alive 

in the classroom, and arming those teachers with good materials 

and resources, doing assessment and evaluation and follow-up so 

that you could see results, and then enunciating those best practices for others, communicating, getting the word out, serving as 

both an advocacy group for the importance of the issue and a service provider in terms of making available resources for teachers 

that could make a difference in the schools. 

One way to make a real and lasting difference, we believe, in the 

lives of young people, and indeed of all Americans, is to teach the 

teachers how to make economics and personal financial decisionmaking skills seem relevant to them and useful in their lives. Too 

many people think that economics is what they do in Economics 

101 at MIT, not what you do when you are making basic, practical 

decisions. Getting the principles of economics into the curriculum, 

cost-benefit analysis, supply and demand, opportunity cost, things 

that you can use as a framework for making good decisions in your 

life, opens the door and sets the stage for making good personal finance decisions. 

In many ways, personal finance is the entre to learning something about economics that you can use in your life all your life as 

a responsible citizen and informed consumer. It is also the result 

of knowing some good basic economic principles. 

So we try to work to respond to the local and regional needs and 

interests of the States and of the school districts through a unique 

nationwide network of State councils and university centers. That 

is how we get to the teachers. The teachers come to our more than 

200 university centers for teacher training in using these materials 

and infusing them into the curriculum. 

Still, too many high schools do not offer economics as a standalone subject, let alone, as Ms. Duguay said, personal finance. The 

trick is to get it into the social studies and into history and geography and into mathematics. We have produced a curriculum in economics and math, Connections for Life, which is an example of the 

way in which you can get basic principles into the curriculum in 

many subject areas. I don’t believe you can talk about U.S. history 

and the Boston Tea Party if you don’t say something about taxation 

and how it works, and that is our approach to this question. 

What we need is a strategy and support for seeing not only that 

the life skills of economics and personal finance are taught, but 

that they are taught well. What we know is that well-prepared 

teachers instill in our young people a sense that they themselves 

are future stakeholders, decisionmakers, and movers of the American economy. By teaching the teachers, we and other organizations 

can help equip them to teach economics as a stand-alone subject 

and to weave it into other subject areas K to 12. 

The question that has come up today, the focus of this hearing, 

is what can Congress do? Let me respectfully commend two actions 

37

that will have impact on the issue, actions already referenced by 

others giving testimony, as a kind of concluding note. 

First, we urge that attention be paid to ensure that the Financial 

Literacy and Education Commission go forward to develop and 

produce a real national strategy to coordinate Federal financial literacy efforts. Get as much public participation as possible and 

encourage public-private sector partnerships. 

We believe it is important for the Commission’s charge to be 

implemented and for its work to be proactive. Coordination and 

coherence are essential to enable us all to go forward in financial 

literacy efforts, especially with the 2006 first-ever National Assessment of Educational Progress, the NAEP assessment in economics, 

coming up, the report card on the Nation. 

Second, Congress has recently implemented your modestly funded but important program that will go a long way to improve K to 

12 economic education. The 2004 Consolidated Appropriations Act 

did provide $1.5 million for Excellence in Economic Education seed 

money, and we hope that your efforts and the efforts of other Senators to promote that and to carry it forward will succeed, and we 

offer you all possible support from the National Council on Economic Education and from our nationwide network of affiliated 

councils and centers. 

In conclusion, on behalf of the National Council on Economic 

Education, let me say that we are very pleased that the Subcommittee is focusing on economic education and financial literacy, 

especially the work ahead for this Commission. I have been very 

interested in listening to the testimony today, because we believe 

that effective and effectively teaching practical economics and personal finance and personal financial decisionmaking skills is not 

only vital to an individual’s success and well-being, but will ultimately contribute to ensuring a strong national economy. Thank 

you very much. 

Senator AKAKA [presiding]. Thank you very much, Dr. Duvall. 

I want to thank all of you for your testimony. 

Mr. Blandin, please provide the Subcommittee with your assessment of the Department of Defense’s Financial Readiness Campaign. This is a question I directed to our witness from the SEC. 

I know that a series of additional SEC investors’ town meetings 

have been discussed to be held in various locations across the country, including Honolulu, and as I asked on that question, could you 

please provide me with an update on the status of these events? 

Mr. BLANDIN. Certainly, I will try to. As you know, the Department of Defense is one of our partner institutions and we worked 

very closely with the DOD in the establishment of the Financial 

Readiness program, which we think is very much needed and very 

welcome as a coordinating activity within the Department of Defense among the various uniformed services. 

You probably also know the uniformed services have had financial education initiatives for many years. The one that I am most 

familiar with is the Department of the Navy, which for over 20 

years has been teaching recruits, enlistees, young service members, 

the basic principles of learning to save and spend and earn money 

and invest it. That program has been going on for almost 25 years 

now. 

38

There has been also, obviously, activities in the Army, the Navy, 

the Air Force, the Coast Guard, the Reserve and others, the Air 

Force in particular that I am familiar with. 

As I said, the Department of Defense’s Financial Readiness Initiative is to make sure that all of the men and women who serve 

our country have the educational tools available to them to better 

manage their day-to-day personal finances. I think the last thing 

we want when we are asking those men and women who could be 

defending our country is to have them be worried about financial 

issues at home. 

And so what we are trying to do is go out to the various military 

bases and try to get them at a time when they are receptive to educational programs, not necessarily the time they are being deployed 

to another part of the world, but certainly in the time when they 

are home on base and can attend workshops and learn the basic 

skills that they might not have learned, as Dara said, in high 

school and in other more formal educational settings. 

We are also taking the great model that we have been very much 

a part of over the years of the SEC investor town meeting and 

doing a variation of that to see if we can fine-tune it and make it 

very targeted to military families, particularly those spouses who 

stay at home when the man or wife is out—the husband or wife 

is out on deployment, in the situation where the family is split up, 

yet the bills keep coming and financial decisions need to be made 

for both the short term and the long term. 

So what we are doing, as Susan Wyderko said, is working closely 

with the Department of Defense to see if we could design essentially an educational fair, a savings and investment opportunity, 

educational opportunity for those men and women in our military 

who serve us both in difficult times and at times when we hopefully will get to when it is not so difficult and there will be more 

peace. 

Senator AKAKA. Ms. Duguay, last year I enjoyed learning about 

the numerous private and governmental efforts to help increase financial literacy during the Financial Literacy for Youth Day held 

on the Hill last April. Can you please describe this year’s Financial 

Literacy Day for the Subcommittee, I believe which will be held on 

April 22? 

Mr. DUVALL. Sure. The event this year, we are hoping that we 

will get at least equal the participation of last year, which was very 

good. We hope we will either get equal or increase the population. 

But primarily, the format is to have staffers on the Hill come and 

be able to see all of the different financial literacy programs, curricula, and initiatives that will be exhibited. 

So far, we have invited all of the Jump$tart Coalition members 

to attend this day. Where is Marissa? She has the grid. I gave it 

to her earlier. But I think there are about 22 organizations so far 

that have said they wanted to exhibit at this event. So this is more 

than last year. 

There she is. She heard her name. You will say, well, I don’t 

know if she gave me the spreadsheet or not, but suffice it to say 

we have very good participation this year. 

The format last year was having presentations by yourself and 

some other noted dignitaries and really talk about the issue of fiVerDate 0ct 09 2002 09:23 Nov 02, 2004 Jkt 094201 PO 00000 Frm 00042 Fmt 6633 Sfmt 6633 C:\DOCS\94201.TXT SAFFAIRS PsN: PHOGAN
39

nancial literacy. So I believe that was an extremely informative 

day and I can’t imagine that this year will not surpass the success 

of last year’s. 

Senator AKAKA. I must tell you that last year, I was pleasantly 

surprised at the materials that were available and the interest that 

people had in it. I am looking forward to this one with more agencies involved. I am sure there will be better materials all around, 

but it really was a great exhibit for me. 

Dr. Duvall, you recall history very well when men were returning 

from the wars and had to face the unknown. I was one of them, 

and I have got to thank God for the GI Bill, which helped to educate many of us. We learned a lot, but I must admit that there was 

no focus on financial literacy at that time. It was just to get a good 

education, and we struggled along. But this time we are wiser and 

I hope that we will give the focus that is needed towards financial 

and economic education. 

I want to thank NCEE for all of its efforts over the past 55 years, 

all that you have done and others have done in bringing attention 

to that need. We are going to make every effort to join you in doing 

this. 

I look upon what we are doing here today and what we have 

done last year as a springboard to better things in the future. You 

have expressed many good ideas and programs that can be done in 

the future to help to bring this about. We are no longer saying financial literacy for youth, but it is financial literacy for everybody, 

and a Financial Literacy Day event, as well. 

So I am wondering, Dr. Duvall, if you could give your thoughts 

about the role that the Federal Government can play to support 

States and local agencies so that what we know about economics 

and personal finance can be effectively translated in the classroom. 

Mr. DUVALL. Well, we are making some progress, Senator, as you 

pointed to. Several years ago, there were fewer than 30 states that 

included economics in their State education standards. Today, it is 

48, and we are going to get those last two as soon as I can go out 

of this room. 

There is a growing awareness of the need for financial and economic literacy, that that literacy is very much as important for successful lives of individuals and for communities as literacy in mathematics or literacy in reading or literacy in technology. 

I think the Jump$tart Coalition, of which we are a founding 

member, has helped enormously to put the spotlight on the need 

and then to show how that need can be better met. So there is increased public consciousness, and the Federal efforts can continue 

to do that. 

Two years ago, the National Council on Economic Education, together with the Federal Reserve, put on the first National Summit 

on Economic and Financial Literacy. Senator Sarbanes was our 

keynote speaker. The call to action at the end of that summit was 

for a national commission to take a look at how our efforts could 

be coordinated starting at the Federal level, but then going out into 

the States and into the education systems of the country. 

We are off to a good start with this Commission and with others 

who have expressed that hope. I believe the Commission’s work can 

40

help set the pace for better coordination, which means better concentration on the issue in the States. 

So the government can provide leadership. The government can 

provide support, such as funding for the Excellence in Economic 

Education Act, recognizing that economics, including personal finance, is one of the ten core subject areas in No Child Left Behind. 

We can continue to push that from the Federal level while having 

it enacted and acted upon by the States according to their individual circumstances and State standards and requirements. 

Senator AKAKA. Mr. Blandin, in your statement, you mentioned 

that you are not seeing enough coordination in outreach among 

groups that are very involved in financial education and that organizations are more apt to create their own campaign or event rather than collaborate on programs and initiatives that have the biggest impact. 

My question is, what should be done to facilitate increased coordination and collaboration amongst financial education organizations? 

Mr. BLANDIN. Well, first, let me say what could be done and then 

maybe give you some examples of what probably needs to be done 

more. What could be done is that this whole national Commission, 

once it feels that it has lined up the various Federal agencies that 

sit around its table and possibly invite a few more in that aren’t 

at the table right now, get their efforts coordinated in a way where 

they are targeting specific areas of need. They are finding and looking at the right agency with the right skill set to help in that area, 

and that they are meeting on a regular basis to compare how they 

are doing in terms of making progress. 

Once the Commission has been able to organize the Federal 

agencies and hopefully bring in some of the State agencies, as 

well—Susan Wyderko mentioned the States securities regulators, 

many of whom have their own financial education offices—so 

reaching out to, say, State securities regulators, reaching certainly 

out to State treasurers who are in many cases managing the 

State’s major pension fund for the citizens of that State. There are 

a lot of what I call stakeholders in this area that could be brought 

together. 

So once the government has kind of gotten its act together, and 

I also want to add to that some of the things that you have done, 

Senator Akaka, including the upcoming event here on the Hill, I 

think before Federal agencies and Congress go out telling others 

what they should be doing in the financial education, it is good to 

see that some agencies and the Congress are bringing educational 

programs to their own staffers. 

The Federal Reserve Board, under direction from Chairman 

Greenspan, is doing internal financial education for the employees. 

The Office of Personnel Management is working with other Federal 

agencies to promote financial education in the Federal workforce. 

The SEC is having an internal program. So I think it is good that 

before we go out and tell other sectors what to do about financial 

education, that the Federal Government and other government entities get their act together. 

Having said that, there are tremendous opportunities for public 

and private sector partnerships. One example I would give where 

41

1The prepared statement of Ms. Cloninger appears in the Appendix on page 87. 

2The prepared statement of Visa USA, Inc. appears in the Appendix on page 89. 

I think there needs to be more coordination is this idea of new public service announcements. The Ad Council up in New York has an 

initiative underway to try to fund for the first time a financial literacy campaign. That campaign, they are looking for private sector 

contributions from the financial services industries. 

I would ask the question, well, how does that campaign link to 

what is being planned by the Department of Treasury through the 

National Commission on Financial Education and Financial Literacy? Are they at all related? Is the Ad Council and the private 

sector talking to anyone in Treasury? And then the basic question 

is, do we need more public service announcements? Do we need 

more PSAs? Is that the most effective use of our money? I think 

that question has to be asked, as well. 

So I really think that the Commission can generate the kind of 

discussion among the various sectors, whether it is nonprofit, private sector, governmental sector, what is called the independent 

sector, the faith-based sector, whatever the sector is, get them at 

the table together with the Federal Government kind of showing a 

vision of where we ought to be going and also giving some credit 

to those in the private sector who are doing a lot of this good work, 

as well. I think that we have an opportunity with this new Commission to do that. It is that umbrella I talked about earlier in my 

testimony. 

Senator AKAKA. I want to thank all of you for your enthusiastic 

responses and your dedication to the effort and to tell you that I 

really appreciate your attendance here today. 

Senator Fitzgerald and I want to thank our witnesses for being 

with us today to discuss this, for us, very important subject. The 

hearing record, I want you to know, will remain open until the 

close of business this Friday, April 2. If any Members of this Subcommittee wish to submit a written statement, they must do it by 

that time. 

I would like to insert into the record a written statement submitted by Kathy Cloninger, Chief Executive Officer of the Girl 

Scouts of the USA.1

I would also like to insert a statement from Visa USA, Inc.,2

which has been submitted for the record. 

Senator AKAKA. If there is no further business to come before 

this Subcommittee, this hearing is adjourned. 

[Whereupon, at 5 p.m., the Subcommittee was adjourned.] 

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