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FINANCIAL LITERACY: EMPOWERING AMERICANS 

TO MAKE INFORMED FINANCIAL DECISIONS 

HEARING 

BEFORE THE

OVERSIGHT OF GOVERNMENT MANAGEMENT, 

THE FEDERAL WORKFORCE, AND THE 

DISTRICT OF COLUMBIA SUBCOMMITTEE 

OF THE

COMMITTEE ON 

HOMELAND SECURITY AND 

GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

APRIL 12, 2011 

Available via the World Wide Web: http://www.fdsys.gov 

Printed for the use of the Committee on Homeland Security 

and Governmental Affairs 

( 

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(II) 

COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS 

JOSEPH I. LIEBERMAN, Connecticut, Chairman 

CARL LEVIN, Michigan 

DANIEL K. AKAKA, Hawaii 

THOMAS R. CARPER, Delaware 

MARK L. PRYOR, Arkansas 

MARY L. LANDRIEU, Louisiana 

CLAIRE MCCASKILL, Missouri 

JON TESTER, Montana 

MARK BEGICH, Alaska 

SUSAN M. COLLINS, Maine 

TOM COBURN, Oklahoma 

SCOTT P. BROWN, Massachusetts 

JOHN MCCAIN, Arizona 

RON JOHNSON, Wisconsin 

JOHN ENSIGN, Nevada 

ROB PORTMAN, Ohio 

RAND PAUL, Kentucky 

MICHAEL L. ALEXANDER, Staff Director 

NICHOLAS A. ROSSI, Minority Staff Director 

TRINA DRIESSNACK TYRER, Chief Clerk 

JOYCE WARD, Publications Clerk and GPO Detailee 

OVERSIGHT OF GOVERNMENT MANAGEMENT, THE FEDERAL 

WORKFORCE, AND THE DISTRICT OF COLUMBIA SUBCOMMITTEE 

DANIEL K. AKAKA, Hawaii, Chairman 

CARL LEVIN, Michigan 

MARY L. LANDRIEU, Louisiana 

MARK BEGICH, Alaska 

RON JOHNSON, Wisconsin 

TOM COBURN, Oklahoma 

JOHN ENSIGN, Nevada 

LISA M. POWELL, Majority Staff Director 

BENJAMIN B. RHODESIDE, Professional Staff Member 

ALAN ELIAS, Legislatve Assistant Minority 

AARON H. WOOLF, Chief Clerk 

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(III) 

C O N T E N T S 

Opening statement: Page 

Senator Akaka .................................................................................................. 1 

Senator Johnson ............................................................................................... 3 

Senator Coburn ................................................................................................. 3 

WITNESSES 

TUESDAY, APRIL 12, 2011 

Hon. Gene L. Dodaro, Comptroller General of the United States, U.S. Government Accountability Office; accompanied by Alicia Puente Cackley, U.S. 

Government Accountability Office; Barbara D. Bovbjerg, U.S. Government 

Accountability Office; and Susan Offutt, U.S. Government Accountability 

Office ..................................................................................................................... 5 

Brenda Dann-Messier, Assistant Secretary, Office of Vocational and Adult 

Education, U.S. Department of Education ......................................................... 16 

Lori J. Schock, Director, Office of Investor Education and Advocacy, U.S. 

Securities and Exchange Commission ................................................................ 18 

Joshua Wright, Acting Director, Office of Financial Education and Financial 

Access, U.S. Department of the Treasury .......................................................... 20 

Hollister K. Petraeus, Director, Office of Servicemember Affairs, Consumer 

Financial Protection Bureau ............................................................................... 23 

ALPHABETICAL LIST OF WITNESSES

Dann-Messier, Brenda: 

Testimony .......................................................................................................... 16 

Prepared statement .......................................................................................... 50 

Dodaro, Hon. Gene L.: 

Testimony .......................................................................................................... 5 

Prepared statement .......................................................................................... 35 

Petraeus, Hollister K.: 

Testimony .......................................................................................................... 23 

Prepared statement .......................................................................................... 69 

Schock, Lori J.: 

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

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

Wright, Joshua: 

Testimony .......................................................................................................... 20 

Prepared statement .......................................................................................... 63 

APPENDIX 

Background .............................................................................................................. 74 

Statement of Ben Bernanke .................................................................................... 79 

Questions and responses submitted for the record from: 

Mr. Dodaro ........................................................................................................ 95 

Ms. Dann-Messier ............................................................................................. 98 

Ms. Schock ........................................................................................................ 102 

Mr. Wright ........................................................................................................ 104 

Mrs. Petraeus .................................................................................................... 110 

Safe Report submitted by Mr. Wright .................................................................... 114 

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(1) 

FINANCIAL LITERACY: EMPOWERING 

AMERICANS TO MAKE INFORMED FINANCIAL 

DECISIONS 

TUESDAY APRIL 12, 2011 

U.S. SENATE,

SUBCOMMITTEE ON OVERSIGHT OF GOVERNMENT

MANAGEMENT, THE FEDERAL WORKFORCE,

AND THE DISTRICT OF COLUMBIA,

OF THE COMMITTEE ON HOMELAND SECURITY

AND GOVERNMENTAL AFFAIRS,

Washington, DC. 

The Subcommittee met, pursuant to notice, at 2:33 p.m., in room 

628, Dirksen Senate Office Building, Hon. Daniel K. Akaka, Chairman of the Subcommittee, presiding. 

Present: Senators Akaka, Johnson, and Coburn. 

OPENING STATEMENT OF SENATOR AKAKA 

Senator AKAKA. I call this hearing of the Subcommittee on Oversight of Government Management, the Federal Workforce, and the 

District of Columbia to order. 

Aloha and good afternoon, everyone. I want to welcome our witnesses to today’s hearing, ‘‘Financial Literacy: Empowering Americans to Make Informed Financial Decisions.’’ Thank you for being 

here. 

This April is Financial Literacy Month, our opportunity to showcase the importance of financial literacy in America. My first lessons in financial literacy date back to my childhood. My fourth 

grade teacher required us to have a piggy bank to teach us about 

money management. We learned that money saved a little at a 

time can grow into a large amount, enough to buy things that 

would have been impossible without savings. My piggy bank taught 

me important lessons about money management that I never forgot. 

Growing up, my family did not have a bank account where we 

could save money securely and earn interest. I grew up in a large 

family and you could say we were poor. We budgeted by putting 

our money in a box that was divided into sections. If the food compartment was empty, we did not eat, even if there was money in 

the clothing compartment. 

I know personally the challenges that families face when they 

are unable to save or to borrow money for unexpected expenses. My 

parents made difficult choices to provide better opportunities for 

their children. I understand now how much worse off we would 

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have been if my parents had not worked so hard to understand difficult financial decisions and to make careful choices, or if they had 

fallen prey to the types of predatory practices we have seen flourish 

in recent years. 

All of this led to a better life for me and gave me an appreciation 

for the importance of financial literacy. Too many Americans do not 

have the financial knowledge they need to effectively manage their 

finances, use credit, and plan for retirement. Improving our Nation’s level of financial literacy has been a top priority for me during my time in the Senate. I have worked to educate, protect, and 

empower Americans through financial literacy. 

Through financial education, we can provide individuals with the 

knowledge and skills they need to make better financial choices. 

Through consumer protection, we can safeguard individuals against 

harmful practices and bad information that lead to poor financial 

choices. Accomplishing these two goals will result in economic empowerment for all Americans. 

Just 10 years ago, Congress made its first serious commitment 

to financial literacy when we enacted my Excellence in Economic 

Education Act as part of the No Child Left Behind Act. My bill authorized a range of activities to promote economic and financial literacy in our schools. Then in 2003, we created the Financial Literacy and Education Commission (FLEC). The Commission is 

tasked with coordinating and improving the effectiveness and efficiency of Federal financial literacy efforts. 

I am proud of my efforts with the help of many of my colleagues 

to educate, protect, and empower Americans. For example, credit 

card statements are now required to contain information about the 

costs of making minimum payments. More meaningful information 

will be available for consumers purchasing investment products or 

sending remittances to family members abroad. The Department of 

the Treasury is implementing provisions I authored to provide financial education to prospective homeowners and financial access 

to the unbanked and underbanked. Still, there is more work to be 

done. 

The Federal Reserve estimates that household debt in America 

totals $13.4 trillion. Most Americans do not have a budget and do 

not save for retirement, and many are unable to pay their bills on 

time. We are still in the midst of record rates of mortgage defaults 

and home foreclosures. One in three homeowners say their mortgages are not what they expected. 

It is when people lose jobs and wages fall, when home values decline and foreclosures rise, and when retirement account values 

plummet, that the true costs of financial illiteracy becomes apparent. Financial literacy is more important than ever, and the Federal Government has a vital role in promoting financial literacy 

throughout the country. 

Today, we will examine that role as well as the progress of Federal financial literacy initiatives and the Financial Literacy and 

Education Commission. I look forward to hearing from our witnesses today and I look forward to hearing from our other witnesses, as well. 

Senator Johnson, your opening remarks. 

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OPENING STATEMENT OF SENATOR JOHNSON 

Senator JOHNSON. Thank you, Mr. Chairman. Aloha. 

Senator AKAKA. Aloha. 

Senator JOHNSON. Mr. Dodaro, it is nice to see you again here. 

I would like to thank the Chairman, first of all, for holding this 

hearing. Financial literacy is pretty dear to my heart. The last 10 

years in Oshkosh, most of my volunteer efforts were really centered 

around education, and the last 2 years in particular, I was the 

Business Co-Chair of our Partners in Education Council of the Oshkosh Chamber. This was a group of individuals, educators from 

high school, administrators and teachers, as well as the University 

of Wisconsin-Oshkosh, Fox Valley Technical College, the private 

schools, as well as the Catholic school system, and a number of 

business leaders from the community. 

And as we discussed the problems with education, certainly the 

business leaders’ input always was what we were seeing in terms 

of recent graduates coming to our workplace, and it was amazing. 

The consensus view from all the business leaders was that recent 

graduates were coming to our workplace totally unprepared for not 

only work not understanding the importance of attendance, appearance, work ethic, attitude—but tragically coming to the workplace 

in way too much debt. And that is not only just high school graduates, that is also kids who have just graduated from college who 

had gotten in way over their head in debt with college loans. 

So I do believe that financial literacy is an incredibly important 

topic for our Nation. It really challenges our success as we move 

forward. But I guess what I would like to get out of this hearing 

is certainly what we were doing is we were addressing it at the 

local level, which I think, in general, is where this is going to have 

to be addressed, with each individual student. And so I guess the 

questions I will be having is what is the Federal role? How effective are we at performing that role? How cost efficient are we? 

That is really kind of what I am looking to get out of this hearing, so thank you, Mr. Chairman. 

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

Coburn, your opening. 

OPENING STATEMENT OF SENATOR COBURN 

Senator COBURN. First of all, Mr. Chairman, I love you tremendously. I think you are a sweetheart of a person. I have a completely different thought on this. 

I would go back to what you said. Who taught Chairman Akaka 

his financial literacy? His teacher. We have to fix the real problem. 

It means what we are doing is not teaching the teachers, and 

therefore it is not taught. The problem is our educators today are 

not taught financial literacy and not taught to teach financial literacy. 

I have heard you tell about your stories and your family at our 

prayer breakfast on Wednesday. It is always wonderful to hear 

what you learned from your family. I am not going to be able to 

stay for the whole hearing, but Mr. Dodaro is going to talk about 

some things that came about out of his report. What we know is 

that we have 20 different agencies in the Federal Government. We 

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know that we have 56 separate financial literacy programs and we 

in Congress have not done oversight on any of them. 

So I have some questions. No. 1 is do we have the moral authority to teach financial literacy from the Federal Government when 

we have a $14.2 trillion debt, when we run deficits of $1.2 to $1.6 

trillion a year. It takes a lot of arrogance on our part to think that 

we can teach young people when we are managing a Government 

that has that kind of imbalance. I think we lack the moral authority. 

I think we also lack the constitutional authority. If you look at education since 1978, we have spent $2 trillion on education. You 

cannot find one metric that is better since we have been involved 

in it. Again, Thomas Jefferson said, if you want the Federal Government involved in education, you have to change the Constitution. We did not do that. We just ignored it. 

What we do not lack is the goal that we would assume that we 

can teach somebody financial literacy. So I am very concerned 

about where we are going. This is an area where I think we ought 

to have oversight. I think we ought to have consolidation of programs. If, in fact, it is a legitimate role for the Federal Government, we ought to be consolidating and doing oversight to make 

sure that we get good value of the programs that we run. There 

is nothing wrong with our Federal employees in trying to do this, 

there is a problem with Congress in terms of oversight. 

So the fact that you are having this hearing today, I congratulate 

you. I think it is important that we do it so we can find out about 

the 20 different agencies and the 56 different programs. Thank 

you. 

Senator AKAKA. Thank you Senator Coburn. 

I welcome our first panel of witnesses to the Subcommittee, the 

Honorable Gene Dodaro, Comptroller General of the United States 

and head of the U.S. Government Accountability Office (GAO). 

It is the custom of this Subcommittee to swear in all witnesses. 

Please stand and raise your right hand. 

Do you swear that the testimony you are about to give this Subcommittee is the truth, the whole truth, and nothing but the truth, 

so help you, God? 

Mr. DODARO. I do. 

Senator AKAKA. Thank you. Let it be noted in the record that the 

witness answered in the affirmative. 

Before we start, I want you to know that your full written statement will be part of the record and I would like to remind you to 

please limit your oral remarks to 5 minutes. Mr. Dodaro, please 

proceed with your statement. 

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1The prepared statement of Mr. Dodaro appears in the appendix on page 35. 

STATEMENT OF HON. GENE L. DODARO,1 COMPTROLLER GENERAL OF THE UNITED STATES, U.S. GOVERNMENT ACCOUNTABILITY OFFICE; ACCOMPANIED BY ALICIA PUENTE 

CACKLEY, BARBARA D. BOVBJERG, AND SUSAN OFFUTT 

Mr. DODARO. Thank you very much, Mr. Chairman. Good afternoon to you, Ranking Member Senator Johnson, and Senator 

Coburn. It is nice to see all of you this afternoon. 

I am particularly pleased to be here on Financial Literacy month 

to talk about this topic which is important to the well-being of our 

citizens and the economic health of our country. Senator Akaka, I 

would like to recognize your leadership on the many initiatives 

that you taken over the years on this topic. 

GAO’s involvement has been, at the request of Congress, looking 

at a lot of these individual agency efforts on specific areas such as 

the student loan programs, disclosures in banking and investment 

products, products that are trying to be sold to members of our 

military, also in retirement and savings areas. So we have done a 

lot of work looking at individual areas. 

More broadly across the Government, as Senator Coburn mentioned, we have observed that there are 20 agencies engaged in this 

activity and there are over 56 different programs or activities that 

are underway, which raises questions about fragmentation and potential duplication. It places a premium on the need for Federal 

agencies, to the extent they are going to be involved in these activities, to coordinate their activities effectively. 

Consequently, we have also looked at the activities of the Financial Literacy and Education Commission since it was formed in 

statute back in 2003. 2006 was the first year that they had created 

a national strategy. We thought it was a useful first step, but that 

it was more descriptive of what was going on rather than strategic. 

Recently this year, they have issued the second version of their national strategy, which has more clear goals and objectives stated in 

it but does not yet have performance measures, what resources are 

required, or clear roles and responsibilities enumerated for the 

agencies. Senator Johnson and Senator Coburn, both of those areas 

go to the heart of your issue. We do not really know right now 

what the total investment is in these programs and what the clear 

roles and responsibilities should be. 

Now, the implementation plan that the Financial Literacy and 

Education Commission is going to create, I think, could be a platform for oversight activities of this Congress. It is due to be issued 

before the end of this fiscal year. 

Also, there is a new development with the creation of the Bureau 

for Consumer Financial Protection that was created under the Wall 

Street Reform Act. That new Bureau is to be up and running by 

July of this year and it is charged with developing a strategy on 

financial counseling activities, credit counseling for consumers as 

well as savings and borrowing areas. So its charter somewhat is 

similar to what the charter is for the Commission and that underscores the need for additional coordination and communication 

across the executive branch and with this new Bureau going forward. 

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6 

Clearly, this effort requires a partnership, whatever Congress determines to be the Federal role. There are partners at the local 

level in academia at the nonprofit organizations, and a lot of people 

interact with the public in this, and it really will require, I believe, 

a true partnership over a period of time. 

There is also a dearth of knowledge about what works and what 

does not work in financial literacy education. One of the mandates 

we have under the Wall Street Reform Act is to evaluate the effectiveness of Federal literacy education efforts that have taken place 

so far. We are in the process of completing that work. We will have 

a report out this summer. But it really does not look like there is 

a lot of empirical information on what works in terms of not only 

educating and increasing knowledge, but how you effect a change 

in behavior on the part of the individuals provided that education. 

So it is very important to continue to focus on these activities. 

I think congressional oversight is warranted, and could be a constructive force in making sure whatever is done is done effectively 

and efficiently. 

I can assure you GAO will remain committed to this area. It is 

one of my top priorities that I would like to focus on throughout 

my tenure at the GAO because I believe it is important. But we 

really have to figure out how best to tackle this subject and do it 

in a cost effective manner. 

So I thank you, Mr. Chairman. I would be happy to answer your 

questions. I have with me today some of our experts in financial 

markets and retirement and education areas that will help me answer questions, and I may call upon them, if it is OK with you, to 

answer some questions. Alicia Puente Cackley, Barbara D. 

Bovbjerg, and Susan Offutt, our Chief Economist. 

So thank you very much. I would be happy to answer questions. 

Senator AKAKA. Thank you very much, Mr. Dodaro, and I want 

to tell you that they are welcome to join you to answer questions. 

Mr. Dodaro, I want to commend and thank you for making promoting greater financial literacy in the United States a top priority. I share your belief that this issue is important enough to 

warrant the focus of the Comptroller General. My question to you 

is, how do you believe you can best leverage your position to accomplish this critical and challenging goal? 

Mr. DODARO. There are really three elements to it, Mr. Chairman. First, we have a strong foundation of knowledge in responding to congressional requests and looking at how Federal law as enacted has been implemented in these areas to try to provide financial literacy education and interact with the public on important 

Government programs that it offers and provide the protection. So 

to the extent to which Congress has already determined that certain activities will be done by the Federal agencies, we have evaluated how they are operating, and so we start off with a strong base 

of knowledge, institutional knowledge in GAO. 

Second, we have the resources and the support to effectuate and 

bring together multiple parties. So we have the convening power. 

The Comptroller General forums is one that we have used historically throughout GAO. It was used by my predecessors, Dave Walker, Chuck Bowsher, to bring people together from different elements of society to talk through issues so we can identify what 

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kind of gaps exist, what challenges are there, and what the proper 

role should be for GAO and for the Federal Government in that 

matter and advise the Congress on what others think about it. 

For example, I plan to convene a forum this fall to bring together 

people from Federal, State, and local levels, nonprofit, private sector, and academia, to talk about this subject and to get collective 

judgments and experiences of those people. Also, the unique position that I am in is that I have a 15-year tenure. So you have a 

long period of time to focus on the subject, and this subject will 

take time. To the extent to which the Federal Government wants 

to achieve objectives in this area, it will take time, and I believe 

that enables me to work across Congresses, across administrations, 

and be able to be a source of institutional knowledge and also one 

that can continue to track progress and what is working and what 

is not. 

Senator AKAKA. Thank you, Mr. Dodaro. 

As you noted in your testimony, providing Americans with the information they need to make responsible financial decisions is key 

to their well-being and the economic health of our Nation. What 

unique capabilities does the Federal Government contribute to financial literacy efforts? 

Mr. DODARO. Well, there are two things. First, I would say, there 

is a lot of expertise in departments and agencies on specific issues, 

whether it is investor information, retirement, pension information, 

or student loan programs. So there is a reservoir of knowledge. But 

also, importantly, the Federal Government is a source of unbiased 

objective information. There is no financial interest on the part of 

the Government in providing this information and it can make information available to people through its normal exchanges of dealing with the Federal Government. 

Now, I would say to Senator Coburn’s point, I think the Federal 

Government could do a much better job being a role model in this 

area and exhibiting behavior on the part of its financial practices 

itself. But I do think the Federal Government has both the ability 

to tap into resources that are there and to provide objective information. 

Senator AKAKA. Mr. Dodaro, I am concerned that GAO’s recent 

report noting possible fragmentation of Federal financial literacy 

efforts has been inaccurately characterized as evidence of duplication. Would you please clarify GAO’s findings and explain why enhanced coordination may be beneficial in the area of financial literacy. 

Mr. DODARO. Yes. Back in 2006, when we commented on the national strategy, one of the recommendations we made to the Financial Literacy and Education Commission was that it have an outside objective look at the extent of potential overlap and duplication in its activity. So we were concerned back then. They have had 

a couple of studies since then. Both studies have concluded there 

is little evidence of exact duplication of same services to the same 

beneficiaries, but clearly there is fragmentation in these areas in 

that you have multiple agencies acting in the same area of national 

interest. 

And so, our concern is that fragmentation left without proper 

oversight can lead to duplication down the road. I think in this parH605-41331-79W7 with DISTILLER

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ticular area, the fragmentation and potential duplication is heightened a bit by the creation of this new Bureau of Consumer Financial Protection at the Federal Reserve, so I think congressional 

oversight would be warranted in this area. 

So there really is not evidence to date. We are concerned about 

it. That is why we put it in the report that we gave to the Congress. And clearly, fragmentation is really only controlled through 

effective communication and coordination. If that does not happen, 

then these things can easily lead to inefficiencies in how we use 

our resources. 

Senator AKAKA. Well, we will have a second round of questions. 

I will now pass it on to Senator Johnson for his questions. 

Senator JOHNSON. Thank you, Mr. Chairman. 

You mentioned there are 20 agencies involved in this. In terms 

of how this is organized, is there a lead agency? Is there a pecking 

order here? 

Mr. DODARO. Yes. There is an Office of Financial Education within the Treasury Department that coordinates the work for the Financial Literacy and Education Commission. So they are sort of the 

coordinating entity, by statute, I believe. 

Senator JOHNSON. You say you really do not know how much is 

spent in total. I mean, can you hazard a guess? Are we talking millions, hundred millions, billions? I mean, do you have any clue at 

all? 

Mr. DODARO. Let me just check. Yes. There is really not a way 

to determine it because there are not budget items for this subject 

clearly marked. So we really cannot—I cannot give you a guess at 

this point, even an educated guess. 

Senator JOHNSON. Is there any line item within a particular 

agency that would give you some sort of feel of, well, the Treasury 

is spending—they have an office that spends $20 million on it, 

or—— 

Mr. DODARO. Yes. Well, I think there are a few people in the 

Treasury Department, and one of the things that we have recommended is their implementation plan is going to be issued by 

the end of this fiscal year, that it include resource estimates in the 

plan. We are saying is you ought to be clearer about the roles and 

responsibilities and the resources that are needed. I take it from 

our team we have tried to determine the amount of resources, but 

we have not yet been able to do so. 

Senator JOHNSON. Just in kind of getting ready for this hearing, 

I think one of the things that jumps off the page at me is the Financial Literacy and Education Commission was first formed in 

2003, is that—— 

Mr. DODARO. The law was passed in 2003, right. 

Senator JOHNSON. Can you point to some accomplishments since 

2003 of them creating strategies and then doing another strategy 

and then doing a report, or—— 

Mr. DODARO. Yes. Well, they have created a website. They have 

it established, it is mymoney.gov. It has resources that are connected and have links on it there. They have improved the coordination and communication among themselves within the Federal 

agencies. But they would be in a better position to give you more 

specifics. Those are the things that we have noted over time. 

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Senator JOHNSON. Financial literacy can be a relatively broad 

topic—— 

Mr. DODARO. Right. 

Senator JOHNSON [continuing]. And cover all types of things. Is 

there any kind of priority in terms of what we are trying to teach, 

I mean, what the Federal Government is concentrating on here? 

Mr. DODARO. Yes. One of the things in their new strategy that 

they just put out this year were developing some core competencies, and those competencies would deal with issues in terms 

of what they think the average citizen should know, savings, borrowing, credit, those sorts of things. They are due to be able to develop that coming forward and then we will be able to review that 

and be able to see whether or not that makes sense as the right 

approach to do. 

So far, they have focused a lot on awareness and raising education and providing resources to people to be able to use available 

resources to help inform them. But one of the things that we have 

noted is there really are not any performance measures in their 

plan, and that is what we are hoping to see in the implementation 

plan. If you do not have clear roles and responsibilities, if you do 

not know how much resources that you are using and you do not 

know how you are going to measure your performance going forward, you are really not going to be in a good position to demonstrate achievement or answer the questions you are asking about 

what progress have they made over a period of time. 

Senator JOHNSON. I mean, if they have not even in 7 years defined what it is they are going to teach—or am I misinterpreting 

that? When you started talking about they are trying to define the 

core competencies, I mean, that is 7 years just trying to lay out 

that, and, we really ought to teach kids about running up credit 

card debt or getting in too deep in terms of student loans or how 

do you educate the public in terms of mortgage literacy. Are we 

really, after 7 years, just laying out what those core competencies 

are? Is that as far as we have gotten? 

Mr. DODARO. Well, as I mentioned, they have established 

websites, have links, have created some partnerships and activities 

and getting other people involved, and so I think they are trying 

to go about this in a more systematic manner. Quite frankly, I 

think this was an important initiative, but I think the last recession has really underscored how important it is and that has 

spurred people to become a little bit more active in this area. Most 

of these programs we are talking about have only been created in 

the last decade, and we are going to be pursuing the individual cost 

of these programs in our future work. 

Senator JOHNSON. When you have 20 different agencies involved, 

again, you are spanning—can you just name the top five or six 

agencies that really have accomplished objectives here or actually 

have some sort of focused effort? 

Mr. DODARO. Well, I can name some of the ones that are involved. I am not sure I can name the ones that have the greatest 

accomplishments. But the Treasury Department is involved. The 

Department of Defense (DOD) is involved in providing information 

to military servicemembers, and for there, we have made a number 

of recommendations that they have implemented. So I think there 

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has been some progress in that area, as well. The Department of 

Health and Human Services (HHS) has a number of programs that 

are dealing with both health issues as well as aging. 

If I might, I might ask Alicia to come to the table and help give 

more specifics, Senator. 

Senator JOHNSON. That would be great. Thanks. 

Ms. CACKLEY. So the question being which agencies have the 

largest proportion of programs. I think some of the major ones 

would be the Department of Housing and Urban Development 

(HUD), and the Education Department (DOE), the Federal Trade 

Commission (FTC), the Securities and Exchange Commission 

(SEC). Those are some of the programs that we have identified. 

Senator JOHNSON. Can you just give me an example of—a program that has worked, in terms of what it is we are trying to educate and how we go about implementing that. How do we push this 

back down to the level of people actually learning. 

Ms. CACKLEY. I can give you examples of programs. We have not 

done the work to say which ones are working that we have identified best practices yet. There are certainly programs that we are 

looking at. There is a Homebuyers’ Counseling Grant Program that 

we are mandated to look at that is run out of the Office of the 

Treasury, actually, but it is for individuals who are planning on 

buying a home, that they get counseling beforehand about financial 

literacy issues, about how to save for a downpayment, about just 

how to go about doing the purchase of a home. 

Senator JOHNSON. Thank you. Well, I guess I have run out of 

time. Thanks. 

Mr. DODARO. Senators, one program at the Federal Deposit Insurance Corporation (FDIC) called Money Smart, we would be 

happy to provide some information for the record on that one. I 

think that one has a pretty good reputation and has a good evaluation component built into it. Excuse me, Senator. 

Senator AKAKA. Thank you very much. Senator Coburn. 

Senator COBURN. Mr. Dodaro, can you imagine anybody sitting 

at home—they are obviously not seeing this. This does not rank 

high on C–SPAN’s coverage. But this is the classic case of why this 

country is in trouble. In 2003, we passed a law. I question whether 

or not we had the authority to do that under the Constitution, but 

let us say we did. In 2006, you make major recommendations. 

Whether or not they have been followed or not, you have not reported on. In 2011, a full 8 years after the bill is passed, we now 

start with core competencies, which is the very thing we should 

have started with in 2003. I am not trying to Monday morning 

quarterback this, but can you think of a worse way to set things 

up than what we have done? Can you ask any American who would 

think that the Federal Government ought to have 56 different programs for financial literacy? Even if we were running our budget 

well, and even if we do have the constitutional authority, 56? What 

is our goal? Our goal is to be financially incompetent if that is the 

way we are going to run the Federal Government. 

I have a great relationship with your team and this is a classic 

example of a well-meaning intent by the Senator from Hawaii to 

accomplish a purpose. However, we have zero metrics that we 

know of. Your report could give us zero metrics on any of them. 

H605-41331-79W7 with DISTILLER

11 

That does not mean they are not out there, but right now, this 

Congress, 8 years after this has happened, we have zero metrics. 

And what do we do? We duplicate your Commission with the Consumer Product Safety Board with another set of rules, exactly the 

opposite of what we should have done. What we should have done 

is consolidate them all in one and say, what is our goal? How are 

we going to measure it? Who are we going to put in charge of it. 

Instead, we have financial literacy programs at 20 different Federal agencies. That is insanity. 

This is a classic case of what not to do. It does not mean people 

are not trying to do the right thing. It means we have not done the 

oversight to see what should happen. 

I will go back to the original thought. Our failure is in the Department of Education, because financial literacy is not hard. You 

can learn it in the sixth grade. Chairman Akaka learned it in the 

third grade. But the fact is, we are not teaching the teachers. Because we are failing at one program, now we have 56 programs to 

try to make up for it. 

You can tell I am intense on this issue, not because of this one 

program, but I can show you 100 other programs with great intentions, great compassion for people in this country that are failing 

just like this is. The fact that we do not have metrics and we do 

not know what it costs, the fact that we cannot even tell what it 

costs is another big problem, that you could not find out what it 

has cost. 

By the way, the reference for all this came out of the work that 

the GAO did in terms of the last debt limit extension to where we 

were trying to find duplication in the Federal Government. GAO 

has looked at about, I guess, a third of the Federal Government. 

But to me, it is very frustrating that we are where we are. The lesson we should learn from this report is, let us not go there again. 

And I tell you, what you are setting up in terms of the consumer, 

do not make the mistakes. There should not be one thing that does 

not have a metric on it. There should not be anything outside of 

core competencies, and if they are effective over here, then let us 

eliminate the rest of it, but let us do not have dual paths. Nobody 

can tell me with 56 different programs that we are efficient utilizing Federal employees in doing that when we could have three 

or four and accomplish the same thing. 

So end of my statement. No question. I apologize for ranting. 

Senator AKAKA. Thank you very much, Senator Coburn. 

Mr. Dodaro, as you noted in your testimony, evaluating financial 

literacy programs is challenging. However, you note that the 

FDIC’s Money Smart program does have a strong evaluation component. GAO is in the process of reviewing existing studies of the 

effectiveness of financial literacy. My question is, do the methods 

used to evaluate the Money Smart program show promise as a 

model that could be adjusted for other agency programs? 

Mr. DODARO. There are two components of the Money Smart 

evaluation program that I think are really important and could be 

helpful going forward. One is they are attempting to measure not 

only what information is passed to the people who use the program, participate in the program, but also whether it is changing 

their behavior, which is a real important outcome of this, not to 

H605-41331-79W7 with DISTILLER

12 

just in terms of provide the education, but hope it achieves an objective of having them make sounder decisions. 

And then, second, it has a longitudinal component, so it is trying 

to measure the performance over time, which I think is another important measure. So, yes, there are important lessons that could be 

learned out of that program. What we are finding overall, though, 

is there is very little empirical research on the effectiveness of financial literacy efforts and even fewer studies that are actually 

measuring the behavior as the Money Smart program is trying to 

do. So we are analyzing those studies now and we will be providing 

our report to the Congress this summer. 

Senator AKAKA. You say you are analyzing these studies now. Is 

there a timeframe for releasing the results of this report? 

Mr. DODARO. Yes. We have to report by the anniversary date of 

the Dodd-Frank Act, which will be by July, and so we will be reporting by then. 

Senator AKAKA. Mr. Dodaro, I am pleased that the 2011 National 

Strategy for Financial Literacy developed by FLEC incorporates 

many of the GAO’s recommendations. I am looking forward to reviewing FLEC’s forthcoming plan to implement the national strategy. Based on the best practices GAO has observed, what elements 

must an effective implementation plan contain? 

Mr. DODARO. There needs to be clear goals and objectives in the 

plan, a statement of what issues are trying to be addressed or the 

problem that it is trying to be solved or help improve the situation. 

There need to be clear resource measures as to what level of investment is going to be made in the program. There need to be measures of progress and metrics of success. 

We think the current plan that was produced this year has clear 

goals and objectives in it, but it lacks the performance measures, 

resources to be invested, and clear roles and responsibilities of the 

departments and agencies. So we are hoping that the implementation plan that the Commission is scheduled to release by the end 

of this calendar year contains those elements. I think that would 

be very important and it would provide a good benchmark, as well, 

as the new Bureau is stood up over at the Federal Reserve. 

Senator AKAKA. Mr. Dodaro, as you know, I have long championed efforts, such as the GPRA Modernization Act, aimed at enhancing collaboration and coordination across the Federal Government. In 2003, as you mentioned, we created the Financial Literacy 

and Education Commission to enable this coordination among the 

key agencies working to improve financial literacy. How can the 

FLEC buildupon the progress its members have already made? 

Mr. DODARO. Well, I think two things are important. One is this 

implementation plan. It has to be clear of what is expected to be 

achieved and over what period with what level of investment. They 

can also begin to do more evaluations of the programs of success 

to find out what works and what does not and how to buildupon 

the successful elements of what they are achieving. And third, they 

need to really coordinate closely with this new Bureau so that the 

resources that are spent by the Federal Government are spent as 

most effectively and efficiently as possible. 

Senator AKAKA. Mr. Dodaro, the GAO has found Americans with 

limited English proficiency face significant barriers to financial litH605-41331-79W7 with DISTILLER

13 

eracy. This places them at greater risk for predatory practices and 

poor financial decisions. In your view, how would increasing financial literacy among those with limited English proficiency benefit 

individual consumers and the economy as a whole? 

Mr. DODARO. Yes. Well, to the extent to which everyone would 

benefit from financial literacy, they would benefit, as well, in terms 

of increasing their self-sufficiency and being able to guard against 

practices that are really trying to be deceptive, if you will. 

Many of the people with limited English proficiency also would 

benefit from making sure that they are using our financial system 

so they are getting the benefit of those systems rather than payday 

lenders or using money orders or other more costly methods of basically conducting their financial business. It is estimated that one 

in four households does not have a checking or a savings account 

and thus they turn to these other measures. And so the extent to 

which people can be educated that there are better ways to be able 

to do it and more cost-effective ways for them, I think everybody 

would benefit. 

Senator AKAKA. Thank you very much for your responses. Senator Johnson. 

Senator JOHNSON. Thank you again, Mr. Chairman. 

Mr. Dodaro, you talked about studies being conducted. Who is 

conducting those studies? 

Mr. DODARO. One was done by the Research and Development 

(RAND) analysis. Let me let—Alicia can give you more specifics. 

Ms. CACKLEY. There were two studies that were done. The first 

was done by a post-doctoral student who was contracted to do the 

analysis. We looked at that work and suggested that there could 

be a more objective analysis done, and then the RAND study was 

done as a result. 

Mr. DODARO. Were you talking, Senator, about the studies that 

were done more broadly evaluating financial literacy efforts—— 

Senator JOHNSON. Yes. I am trying to determine—— 

Mr. DODARO [continuing]. Those studies? 

Senator JOHNSON [continuing]. First of all, who is conducting the 

studies—— 

Mr. DODARO. Right. 

Senator JOHNSON [continuing]. What are they studying. 

Mr. DODARO. Right. 

Senator JOHNSON. Specifically, what are they looking at? 

Mr. DODARO. Right. He is talking about the 200 studies we are 

currently looking at. 

Ms. CACKLEY. The 200 studies of—— 

Mr. DODARO. The financial literacy efforts, our current mandate. 

Ms. CACKLEY. Our current mandate looks at what—we started 

with a broad set of studies. I was looking puzzled because we got 

from 200 down to a smaller number when we established the criteria of whether they were good empirical studies, so it is a smaller 

number now. But GAO did an analysis of the literature, so we went 

out and looked across the academic literature and found which 

were the most robust studies of financial literacy that were within 

the last—how many years—10 years, I believe. 

Senator JOHNSON. So again, these are academic studies, not really commissioned by the GAO, but you are just searching the acaH605-41331-79W7 with DISTILLER

14 

demic literature in terms of people conducting studies on financial 

literacy. 

Ms. CACKLEY. Right. Conducting studies on the effectiveness of 

financial literacy programs, yes. 

Senator JOHNSON. OK. Which programs? What were they studying, or just they were studying everything? 

Ms. CACKLEY. I think there is a variety of different outcome 

measures or specifics. It is not as if everybody looked at exactly the 

same thing. So there is a range of populations that were studied. 

There is a range of outcome measures, whether or not the studies 

looked at, I think as we said before, just an increase in knowledge 

or a change in behavior. There is quite a difference. 

Senator JOHNSON. Again, I am sorry. I am confused. Mr. Dodaro, 

you were talking about you are mandated by the Dodd-Frank bill 

to complete the study by the anniversary date of the DoddFrank—— 

Mr. DODARO. Right. 

Senator JOHNSON. What study? 

Mr. DODARO. Right. 

Senator JOHNSON. I mean, are you studying the studies? 

Mr. DODARO. Basically, we are studying what is known about the 

effectiveness of various financial literacy efforts, and so we are 

doing a synthesis of the studies. We are not trying to go out and 

do a—we do not have time to be able to do a de novo study of this. 

So, yes, we are looking at all the studies that were done. We do 

this routinely in certain different areas, and then we determine 

which of the studies have enough good methodologies to be able to 

be relied on and then we will sort of summarize that for the Congress. I would be happy to give you a list of the studies that we 

are working on, what was studied and what was done, but this is 

in process and we should have the final results out. So, yes, we are 

analyzing studies done by others. 

Senator JOHNSON. And not necessarily targeting Government 

programs. So the study you are doing really may have nothing to 

do whatsoever with these 20 agencies or these 56 different programs. I mean, you are just kind of picking whatever is out there 

in the academic literature. 

Mr. DODARO. Well, it will cover whatever is done by the agencies 

plus what would be done by others. So it will cover everything that 

has been done. We are not excluding any studies that might have 

been done by Federal departments or agencies or focused on their 

programs, but it is broad-based. 

Senator JOHNSON. So have there been studies, then, that have 

been done by the Government agencies on their educational programs, their financial literacy programs? I mean, those things actually do exist? 

Ms. CACKLEY. Different agencies have done—have a different 

level of analysis of that, the effectiveness of their programs. So one 

example is the Department of Labor (DOL), which has done focus 

groups to determine the effectiveness of their different forms of 

outreach and understanding of the content of the material that 

they provide. So that is one example. But each agency—because 

each agency has a different program, may target a different popuH605-41331-79W7 with DISTILLER

15 

lation, they may have a different evaluation method. That is part 

of the fragmentation that we have identified. 

Senator JOHNSON. So let us just say the Department of Labor 

study, as one example. Who is the Department of Labor targeting 

for financial literacy education? 

Mr. DODARO. Yes. Let me—Barbara Bovbjerg handles our work 

in that area. Let me have her come up, Senator. 

Senator JOHNSON. Great. Thanks. 

Ms. BOVBJERG. Hi, Senator Johnson. I am Barbara Bovbjerg. I 

am Managing Director of Education, Workforce, and Income Security at GAO. We have looked at the Department of Labor’s outreach for a number of years, ever since Congress passed the 

SAVER Act back in the 1990’s, because they have been tasked with 

working with other Federal agencies and trying to reach out to 

American workers on how to save for retirement and how to understand some of the various retirement investment instruments that 

are out there. At our recommendation, they did try to look at how 

effective this outreach was, and I know that they have been running focus groups, I thought fairly regularly, although I have not 

seen any results from them really recently. 

But it is just an example of there are different ways that different agencies attempt to address this. I guess I also wanted to 

say that I think that different agencies have a different idea of 

what they are trying to do with regard to financial literacy. The 

Department of Labor is not trying to teach young people how to 

calculate rates of return or percentages. They are dealing with 

working adults and trying to explain to them what the different options are for them for retirement saving and how important it 

might be to pursue some of those options. So it can be different in 

the different agencies’ approaches. 

Senator JOHNSON. OK. Thank you. I am running out of time and 

I am just trying to get up to speed on this. 

Senator AKAKA. Thank you. If you have another question, you 

may proceed. 

Well, I want to thank you very much, Comptroller General 

Dodaro, for being here, and also thank you, Alicia and Barbara, for 

joining him. I want to tell you that we appreciate your testimony 

and your answers here. They have been valuable for us. We continue to look at what is happening so that we can improve the system and that is out intent. If we can work on this together and improve the system, it will certainly serve our country well. 

So I look forward to working with you and this Committee does, 

and hopefully, we can have better methods of oversight and measuring what we are doing and also the resources that we need, as 

well. Thank you very much for your testimony today. Thank you. 

Mr. DODARO. Thank you very much, Mr. Chairman. I will say 

that we will provide your staffs information on the methodology we 

are using for this study of financial literacy efforts and be happy 

to have any input that either you, Senator Akaka, or Senator Johnson have to help us make sure that we do the best job that we can 

in doing this review. 

Senator AKAKA. You can tell that Senator Johnson and I as partners in this Subcommittee are very anxious and excited about moving this along. So we look forward to working with you. Thank you. 

H605-41331-79W7 with DISTILLER

16 

1The prepared statement of Ms. Dann-Messier appears in the appendix on page 50. 

I would ask our second panel of witnesses to come forward, 

please. 

I welcome our second panel of witnesses to the Subcommittee: 

The Honorable Brenda Dann-Messier, Assistant Secretary for the 

Office of Vocational and Adult Education at the U.S. Department 

of Education; Lori Schock, Director for the Office of Investor Education and Advocacy (OIEA) at the U.S. Securities and Exchange 

Commission; Joshua Wright, Acting Director for the Office of Financial Education and Financial Access at the U.S. Department of 

the Treasury; and Holly Petraeus, Director of the Office of 

Servicemember Affairs of the Consumer Financial Protection Bureau (CFPB) at the U.S. Department of Treasury. 

It is the custom of the Subcommittee to swear in all witnesses, 

so will you please stand and raise your right hand. 

Do you solemnly swear that the testimony you are about to give 

the Subcommittee is the truth, the whole truth, and nothing but 

the truth, so help you, God? 

Ms. DANN-MESSIER. I do. 

Ms. SCHOCK. I do. 

Mr. WRIGHT. I do. 

Mrs. PETRAEUS. I do. 

Senator AKAKA. Thank you. Let it be noted for the record that 

the witnesses answered in the affirmative. 

Before we start, I want to note that your full written statements 

will be made part of the record and I would like to remind you to 

please limit your oral remarks to 5 minutes. 

Assistant Secretary Dann-Messier, will you please proceed. 

STATEMENT OF BRENDA DANN–MESSIER,1 ASSISTANT SECRETARY, OFFICE OF VOCATIONAL AND ADULT EDUCATION, 

U.S. DEPARTMENT OF EDUCATION 

Ms. DANN-MESSIER. Thank you very much. Good afternoon, 

Chairman Akaka and Ranking Member Johnson. Thank you for 

the opportunity to appear before you today to discuss what the 

United States Department of Education is doing to help Americans 

improve their ability to make informed financial decisions. 

The Department of Education remains committed to doing its 

part in its own programs and in coordination with others to help 

elementary, secondary, post-secondary, and adult students develop 

the knowledge and skills needed to make sound financial decisions 

for themselves, their families, and their communities. 

As you know, President Obama has set an ambitious goal. By 

2020, America will once again have the highest proportion of college graduates in the world. He has called this our No. 1 economic 

issue of our time, declaring the countries that out-educate us today 

will out-compete us tomorrow. So when we think about the role of 

the United States Department of Education in empowering Americans to make informed financial decisions, helping students and 

families navigate the decision to invest in higher education is front 

and center for us. 

As Secretary Duncan has said, we think financial education 

should happen at least as early as kindergarten and continue 

H605-41331-79W7 with DISTILLER

17 

throughout a student’s time in school. With that in mind, I am 

pleased to provide a review of our financial education efforts. 

Our Office of Innovation and Improvement (OII) continues to administer the Excellence in Economic Education Program, which 

supports national, State, and local efforts to improve student performance in economics, personal finance, and entrepreneurship. In 

2010, the Council awarded subgrants to 94 projects spanning 41 

States for activities such as conducting teacher training and program evaluation. One example, Mr. Chairman, is the work of the 

Junior Achievement in Honolulu, Hawaii, connecting schools with 

local businesses to help teachers improve students’ understanding 

of economics and personal finance. Another example is the Lakeland College Center for Economic Education in Plymouth, Wisconsin. They have established an economics and financial education 

curriculum at a Milwaukee public charter school that enrolls more 

than 600 students from preschool through grade eight. 

In July, I discussed the Department’s doubling of its commitment 

to financial literacy in Fiscal Year (FY) 2010 by reprogramming 

$1.7 million from the Data Quality Initiative to create the new Financial Education for College Access and Success Program. This 

grant was made to the Tennessee Department of Education to develop, implement, and evaluate the effectiveness of personal finance, instructional materials, and corresponding teacher training 

materials. 

Our proposal to reauthorize the Elementary and Secondary Edu- cation Act of 1965 includes $246 million for effective teaching and 

learning for a well-rounded education. This broader program would 

replace several often narrowly focused programs with a single authority supporting efforts to strengthen instruction and improve 

student achievement across multiple subject areas, including economics and financial literacy. The funds would be awarded competitively to States, high-need local education agencies, and other 

entities. This amount is $20.1 million, or a 9-percent increase over 

levels of the 2010 appropriations for the programs consolidated 

under this broader framework. We see this program as a cornerstone of our focused and flexible approach for Federal K through 

12 funding. 

Our TRIO programs are also geared toward helping individuals 

from disadvantaged backgrounds to enter college and post-secondary education. This year’s applicants for Talent Search, one of 

the TRIO programs, were required in their projects to provide connections to services designed to improve financial and economic literacy. 

Also, our National Center for Education and Statistics (NCES) is 

developing tools to help students and families identify the actual 

costs of higher education as they plan for college costs. Later this 

year, pursuant to the Higher Education Act (HEA), NCES will 

unveil a new College Affordability and Transparency Center to provide information on post-secondary institutions, public tuition, and 

net prices, ranked from high to low, indicating which institutions’ 

prices are climbing fastest. 

The efforts undertaken by our Office of Federal Student Aid 

(FSA) represents our largest and most focused investment at helping families to pay for post-secondary education. We estimate we 

H605-41331-79W7 with DISTILLER

18 

1The prepared statement of Ms. Schock appears in the appendix on page 55. 

provide over $155 billion this year in grants, loans, and workstudy, but we still have a lot of work to do to help ensure all of 

our students see higher education as a realistic goal, as something 

they can afford to do, even if their parents never went to college. 

Students can see how much Federal student aid they receive by 

completing our Free Application For Student Aid (FAFSA), and we 

have worked hard to make this process easier for students. We 

have eliminated over 20 questions, removed two-thirds of the 

screened applicants, and they now automatically can import their 

tax information from the Internal Revenue Service (IRS). 

Finally, I would like to highlight the financial literacy initiative 

we are working on with other Federal agencies. Last year, the Department had ongoing conversations with the Federal Deposit Insurance Corporation (FDIC) and the National Credit Union Administration (NCUA) to discuss the ways that we can work together on 

our shared literacy goals, and I am pleased to report that in November 2010, Secretary Duncan signed a new interagency agreement with these two agencies and we are off to a strong start. We 

look forward to our continued work with these agencies on empowering Americans to make informed financial decisions and to identify additional ways to work with our colleagues throughout the 

Federal Government. 

Thank you, Mr. Chairman, thank you, Ranking Member, for your 

leadership on this important issue and I am happy to answer any 

questions. 

Senator AKAKA. Thank you for your testimony. Director Schock, 

please proceed. 

STATEMENT OF LORI J. SCHOCK,1 DIRECTOR, OFFICE OF INVESTOR EDUCATION AND ADVOCACY, U.S. SECURITIES AND 

EXCHANGE COMMISSION 

Ms. SCHOCK. Thank you, Chairman Akaka and Ranking Member 

Johnson. My name is Lori Schock and I am the Director of the Office of Investor Education and Advocacy (OIEA) of the United 

States Securities and Exchange Commission. Thank you for the opportunity to testify today about the SEC’s efforts to improve the financial literacy of individual investors throughout the United 

States. 

Our office administers the SEC’s nationwide investor education 

program. OIEA provides a variety of services and tools to address 

the problems and questions that individual investors may face. We 

conduct educational outreach, assist with investor complaints and 

questions, and facilitate individual investors in bringing their perspectives to the Commission and its staff. Today, I would like to 

describe for you briefly some of the specific programs that we use 

to support our mission to educate U.S. investors. 

In October 2009, the SEC launched investor.gov, its first ever 

website focused exclusively on the retail investor and investor education. Earlier this month, we relaunched investor.gov with a new 

design and additional information in an even more user friendly 

format. Investor.gov also offers tools and materials targeted to inH605-41331-79W7 with DISTILLER

19 

vestors who may face particular investment needs, such as members of the military, teachers, and retirees. 

For those investors who prefer to have print publications, we continue to offer these materials, as well. Some of our brochures are 

targeted to specific audiences, such as senior guides. Some are 

more topical, like our guide on stopping affinity fraud, while others 

are product specific, such as our brochure on variable annuities. All 

of our print publications are available in both English and Spanish. 

Our materials are also available free of charge and are not copyrighted so that the widest possible dissemination is encouraged. 

Another way the SEC reaches out to individual investors is 

through investor alerts and bulletins. In the past year, we published alerts and bulletins on a variety of subjects, including stock 

trading basics, margin rules, pre-IPO investor fraud, and investment scams related to BP payouts. We issued a number of joint 

alerts, including one on target date funds with the Department of 

Labor and another on leveraged ETFs with the Financial Industry 

Regulatory Authority (FINRA). 

The SEC also partners with other Government agencies, localities, and private sector financial education groups to reach investors. Two recent examples of our partnerships include the Outsmarting Investment Fraud Program, where we continue to work 

with the FINRA Foundation, AARP, and State securities regulators 

on a campaign designed to reduce investment fraud among older 

Americans. With our partners, we regularly participate in events 

to teach seniors how to identify common persuasion techniques 

used by con artists and how to protect themselves from investment 

fraud. 

The second program is the SEC Graduate Program, where we 

work with the NYSE Euronext on professional development programs designed to help educators teach students about the financial marketplace and its importance in their lives and the global 

economy. Last July, more than 30 educators from across the country attended the inaugural SEC Graduate Program, a 4-day workshop that focused on the securities market, investor protection, and 

the Federal Government’s oversight role. 

In addition to our participation in various programs, the SEC 

through my office responds to tens of thousands of complaints and 

questions from individual investors every year. Our efforts to facilitate informal resolutions of complaints often succeed. In appropriate cases, OIEA refers complaints to other offices or divisions 

within the SEC, including the Division of Enforcement, or to State 

or other Federal regulators. 

Investor testing is another important component of our program. 

We are currently conducting investor testing to examine the effectiveness of certain SEC mandated disclosure documents in communicating useful information to individual investors. The study will 

also serve as a predicate for a significant portion of a separate 

study regarding the financial literacy among investors as mandated 

by Section 917 of the Dodd-Frank Act. That provision calls for the 

SEC to identify the existing level of financial literacy among retail 

investors, methods to improve the timing, content, and format of 

disclosures, and the most effective existing private and public efforts to educate investors. Section 917 requires us to deliver a final 

H605-41331-79W7 with DISTILLER

20 

1The prepared statement of Mr. Wright appears in the appendix on page 63. 

report to Congress in July 2012. Because the report requires us to 

focus on the financial literacy of investors as opposed to financial 

literacy more generally, we believe the study has the potential to 

arm us with a great deal of valuable data about individual investors in the United States. 

As the Committee recognizes, improving financial literacy is an 

important goal that can empower individual investors to participate in the financial markets and to secure their financial futures. 

Thank you for the opportunity to appear here today. I would be 

pleased to answer any questions you may have. 

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

Director Wright, will you please proceed. 

STATEMENT OF JOSHUA WRIGHT,1 ACTING DIRECTOR, OFFICE OF FINANCIAL EDUCATION AND FINANCIAL ACCESS, 

U.S. DEPARTMENT OF THE TREASURY 

Mr. WRIGHT. Chairman Akaka and Ranking Member Johnson, 

thank you for the opportunity to appear before you today on a topic 

of critical importance to the Administration, the Department of 

Treasury, and our Nation, empowering Americans to make better 

informed financial decisions. I want to especially thank you, Chairman Akaka. You have been a tremendous champion for financial 

empowerment of all Americans. 

All Americans, regardless of income and level of educational attainment, must have appropriate consumer financial protections, 

be equipped with financial knowledge and skills, and have financial 

access to make informed decisions in an increasingly complex financial marketplace. The future financial prosperity of our citizens 

and Nation depend in part on the ability of Americans to make 

these informed financial decisions. 

My testimony will include an update on the activities of the Financial Literacy and Education Commission, the President’s Advisory Council on Financial Capability (PACFC), and Treasury’s own 

Financial Education and Access Initiatives. All these efforts aim to 

improve the financial literacy and financial access and promote the 

economic stability of all Americans. 

Treasury is honored to serve as the lead agency for the Commission and to report on the Commission’s activities. I want to thank 

the members of the Commission that are here today for all of their 

continued efforts. The Department of Education, the Securities and 

Exchange Commission, as well as the implementation team for the 

Consumer Financial Protection Bureau have all been great partners. The Commission has been leveraging our unique resources in 

working together to better equip Americans with the necessary financial knowledge and skills. 

Recently, the Strategy for Assuring Financial Empowerment Report (SAFE), which is a summary of the Commission’s activities, 

was submitted to the Senate Banking, Housing, and Urban Affairs 

Committee and the House Financial Services Committee to inform 

members and the public of the Commission’s activities. My testimony includes several highlights from the report. I respectfully request that the SAFE Report be included in today’s hearing record.1

H605-41331-79W7 with DISTILLER

21 

1The Report submitted by Mr. Wright appears in the appendix on page 114. 

The Fair and Accurate Credit Transactions Act (FACT Act) requires the Commission to develop a national strategy to coordinate 

Federal efforts and promote basic financial literacy and education 

among all Americans. In July 2009, the Commission convened a 

special meeting to review its approach to carrying out its purpose 

and rule. Subsequently, Commission members set up a working 

group to craft a new national strategy, which is titled Promoting 

Financial Success in the United States: A National Strategy for Financial Literacy 2011. The Commission undertook a comprehensive 

and inclusive process in creating this new strategy. 

The new national strategy provides a road map for organizations 

providing financial education and provides goals to help guide 

America toward financial well-being. Treasury, in conjunction with 

the Commission members, is developing the implementation plan 

for the new national strategy. This includes Treasury engaging 

with Commission members to develop implementation plans specific to the constituents they serve. 

The new national strategy and its implementation plan will address many of the comments about financial literacy from the Government Accountability Office report, Opportunity to Reduce Potential Duplication in Government Programs, Save Tax Dollars, and 

Enhance Revenue. This was published in March 2011. But let me 

take this opportunity to comment further on the report. 

Educating Americans to be more financially literate is a difficult 

challenge and requires the attention of many agencies. The Federal 

entities engaged in financial literacy often have different missions, 

constituencies, and expertise which can and should be leveraged to 

deliver optimal financial literacy education and access. Just a few 

examples of the Federal entities that have financial education programs provide a window into understanding the need for this varied yet integrated approach. An example of these essential efforts 

include investor education provided by the SEC, promoting financial literacy among students provided by the Department of Education, housing counseling provided by HUD, military personnel 

educational initiatives provided by the Department of Defense to 

ensure financial readiness of our troops. 

In addition, the new Consumer Financial Protection Bureau will 

have a special focus on educating consumers and will assume the 

Vice Chairmanship of the Commission. Treasury will continue to 

work with the CFPB to clearly delineate the roles of both entities. 

Bringing these various approaches together to complement rather 

than duplicate efforts is a key role of the Commission, and we believe taken seriously by all member agencies. 

On January 29, 2010, the President signed an Executive Order 

which created the President’s Advisory Council on Financial Capability. The Council is tasked with recommending methods to coordinate and maximize the effectiveness of existing private and public 

sector efforts and identify new approaches to increasing financial 

capability through financial education and financial access. Treasury is coordinating efforts between the Council and the Commission. 

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22 

I will now briefly discuss the highlights of the Treasury’s specific 

financial education and access efforts. In conjunction with the Community Development Financial Institutions (CDFI) Fund, the 

Treasury has been implementing the Financial Education and 

Counseling (FEC) Pilot Program to provide competitive grants to 

promote financial education and counseling to prospective home 

buyers. The effort is aimed to ensure that working families have 

the financial knowledge required to effectively prepare for and 

evaluate housing choices. The CDFI Fund made a second round of 

awards in this program in October. 

Treasury’s Electronic Payment Initiative continues with the expansion of disbursement of Federal electronic payments through a 

GoDirect and Direct Express debit card MasterCard program. 

When fully implemented, these initiatives would save the Federal 

Government over $500 million in 5 years and provide basic financial access to many benefit recipients. Individuals receiving Federal 

benefit payments who do not have an account at a financial institution or who prefer to receive their payments on a prepaid debit 

card can receive a Direct Express card. This card is a safe, convenient, and consumer-friendly way for benefit recipients to receive 

payments and safely manage their benefits. 

Treasury is also currently conducting a Tax Time Account Pilot. 

This pilot has the potential to improve tax administration and provide basic financial access. The pilot has the potential to streamline 

the tax administration process, save the Government money, and 

deliver tax refunds in a faster, more efficient manner. 

Chairman Akaka, your work in authorizing Title 12 of DoddFrank will provide opportunities for increased financial access for 

the unbanked and underbanked. Our most significant proposed initiative utilizing the authority provided in Title 12 is Bank On USA. 

The program is designed to bolster local and private sector initiatives to ensure low-and moderate-income individuals have access to 

safe financial services and products as well as financial education. 

The Office of Financial Education and Financial Access, in conjunction with the CDFI Fund, is working with financial institutions, community-based organizations, community development and 

financial institutions, credit unions, financial education providers, 

and local government officials to ensure that Title 12 is quickly implemented once funding becomes available. These programs will include financial access, financial education, as well as efforts to spur 

new products and services that will better meet the needs of the 

unbanked and underbanked. 

We are developing the necessary infrastructure to support community-based efforts intended to increase financial access. Although we have begun these initial steps, appropriated resources 

are necessary to fully implement all the proposed activities that are 

envisioned to utilize the authority in Title 12. 

American families are focused on building more secure financial 

futures for themselves and they desire a fair, stable financial system as well as the skills and access needed to navigate a complex 

financial marketplace. Treasury looks forward to working with this 

Committee and others to improve the financial capability of all 

Americans. 

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23 

1The prepared statement of Mrs. Petraeus appears in the appendix on page 69. 

Thank you again, Mr. Chairman and Ranking Member Johnson, 

for the opportunity to appear before you today. 

Senator AKAKA. Thank you very much, Director Wright. 

Now, we will hear from Director Petraeus. Please proceed. 

STATEMENT OF HOLLISTER K. PETRAEUS,1 DIRECTOR, OFFICE OF SERVICEMEMBER AFFAIRS, CONSUMER FINANCIAL 

PROTECTION BUREAU 

Mrs. PETRAEUS. Chairman Akaka, Ranking Member Johnson, 

thank you for the opportunity to speak with the Subcommittee 

today about the importance of financial education for 

servicemembers and their families. 

I come from a military family. I am an Army daughter, sister, 

wife, and mother. I have seen the problems that can arise from too 

much month and not enough money, and I have also seen the devastating impact financial scams and predatory lending can have on 

servicemembers and their families. Unfortunately, too many troops 

still learn about wise spending through hard experience and years 

of paying off expensive debt rather than through an effective financial education class. 

As a Senior Family Readiness Group Advisor at Fort Campbell, 

Kentucky, during the first year of the Iraq War, I saw the unforeseen financial problems that came with deployment. In 2004, I became the Director of BBB Military Line, providing consumer education for military families, a position that I held for 6 years. While 

with the BBB, I guided development of 6 adult financial workshops 

and wrote a monthly military consumer newsletter to over 3,000 

subscribers. 

This January, I was asked to join the Consumer Financial Protection Bureau and set up the Office of Servicemember Affairs. My 

office is assigned the responsibility to, quote, ‘‘educate and empower servicemembers and their families to make better informed 

decisions regarding consumer financial products and services.’’ I 

consider this a high priority. In my years working with 

servicemembers and their families, I have seen them victimized by 

scams that might have been avoided if they knew the red flags of 

a bad deal. Many of them are in over their heads with expensive 

car financing and other costly loans, and the military has not been 

immune to the housing crisis, either. Many servicemembers who 

thought home ownership would be a good thing are now locked into 

mortgages in some of the worst-hit States, where houses have declined significantly in value. 

The financial well-being of our military personnel is not just an 

issue of dollars and cents. Financial problems can be a dangerous 

distraction for our troops and are the No. 1 cause of lost security 

clearances. Personal financial readiness equates to mission readiness, and a vital component of personal financial readiness is a 

sound financial education. 

Since I became the Director of the Office of Servicemember Affairs, I have been reaching out to the military to get input on how 

to make financial education work best for them. In late January, 

Professor Warren and I had two roundtable discussions at Joint 

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24 

Base San Antonio, Texas, and there are more trips to military 

bases planned in the next month. 

In San Antonio, the military financial counselors told us they 

were concerned about military debt, telling us that the average 

trainee arrives at their base already over $10,000 in debt. They 

spoke of the need for followup financial education after basic training. The military personnel and spouses we spoke with at the second roundtable felt strongly about the need for continuing financial 

education throughout a career, both for their own personal education and to help them be better leaders. The entire group thought 

that financial training should be mandatory. 

I agree with them that continuing financial education must have 

a central role in protecting the financial future of military families. 

I have already met with the Deputy Assistant Secretary of Defense 

for Military Community and Family Policy, who oversees financial 

literacy programs within the Department of Defense. I will work 

with the Pentagon, Veterans Service Organizations, and industry 

to identify and field the most effective financial education. 

No amount of prosecutors can stop every scammer or predatory 

lender, so we must provide the right tools to servicemembers so 

they recognize the red flags and make sound financial choices. 

I am committed to ensuring that we not reinvent the wheel and 

duplicate what has already been created. We will work to identify 

what techniques and materials work best and then apply them. We 

need to capitalize on the teachable moments, which may vary at 

different times in a military career. What is pertinent to a new soldier shopping for his first car may not be relevant to a 20-year lifer 

contemplating buying a house. We will work on engaging our students and developing metrics to engage the effectiveness of what 

we have taught, and we will keep tweaking it until we get it right. 

In conclusion, the Office of Servicemember Affairs is already 

working hard to ensure that servicemembers and their families, 

who devote their lives to protecting our Nation, will have a strong 

advocate to help protect them from financial threats. We will work 

with the military, the public sector, and the business community 

toward the goal of every military family being a financially-educated family that is armed with the knowledge of how to avoid 

scams and poor financial decisions and willing and able to invest 

toward long-term financial goals. 

Thank you for the opportunity to testify before the Committee 

today and I welcome any questions that you may have for me. 

Senator AKAKA. Thank you very much, Director Petraeus. 

This question is for all of the witnesses. A recent GAO report 

found that Federal financial literacy activities may be fragmented 

and recommended greater coordination of efforts. I would like to invite each of you to comment on this finding. 

Mr. WRIGHT. Thank you for the question, Senator Akaka. It is 

pretty clear that financial literacy and education is conducted in a 

number of agencies across the Federal Government. The report 

that we commissioned by RAND actually found that there is very 

little duplication across those efforts, but they do happen in lots of 

different places. And as I said in my testimony, we actually feel 

that we are leveraging the unique expertise and functions and outreach to constituents that these different agencies have, and so it 

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25 

makes sense that the Department of Education would be trying to 

educate students, that the Department of Defense would be focused 

on military readiness, that the FDIC would be providing the Money 

Smart curriculum that can be used by educators across the country, and that the SEC, for example, is focused on investor education. 

As a Commission, we need to continue to have our efforts focused 

on making sure there is not duplication in that. We need to leverage things like the mymoney.gov website to provide a sole location 

for people as an entry point to find out information, unbiased information that the Federal Government provides around curriculum 

and as we learn in the future what works and what does not. 

We are still making efforts to try and really determine what 

works in terms of outcomes. It is easier to measure what the inputs 

are. It is much harder to measure what the outcomes are, particularly when you are talking about behavior change. And so the Financial Literacy and Education Commission actually has two very 

interesting subcommittees connected to this. One is that we now 

have a Research and Evaluation Subcommittee that is focused on 

talking about the research efforts that we are funding across the 

Federal Government and really trying to focus those efforts in on 

figuring out what truly does work, what is absolutely best, and 

then the other is a Financial Access Subcommittee which is focused 

on thinking about how the different agencies and touchpoints they 

have can help the unbanked and underbanked. Thank you. 

Senator AKAKA. Thank you. 

Ms. SCHOCK. Well, why don’t I segue into what the SEC does. We 

are very unique in the fact that we are the only Federal agency 

that is charged with and focuses on investor education, and we 

think that because of the expertise that we have at the Commission—the people who wrote the rules work at the SEC, it is a very 

complex area—and so in order to distill these complex financial 

products and concepts into something that is meaningful for individual investors, that the SEC is best positioned for investor education. 

We do work through FLEC and we work with Federal agencies 

where we intersect. I talked about the joint alert that we did with 

the Department of Labor. They have oversight over 401(k) plans, 

but one of the products that was in there were these target date 

funds that we have jurisdiction over. So we worked together to put 

out this joint investor bulletin to talk about target date funds and 

what we saw that was happening with them. 

As far as working together with FLEC, we are on the Subcommittee for Research and Evaluation because we, too, believe 

that we need to have meaningful metrics in place to show that our 

messages do have consequences and behavior change—positive behavior change is taking part as a part of those messages. 

Ms. DANN-MESSIER. Mr. Chairman, at the Department of Education, we really agree that we need to do a better job of coordinating our efforts and really target our resources and do fewer 

things better, and that is why we are proposing to consolidate the 

seven narrow programs, including some of our financial literacy efforts, into a much larger program. But we will keep a focus on ecoH605-41331-79W7 with DISTILLER

26 

nomic and financial literacy, but we really think that it is just good 

Government policy, to do a better job of coordinating our resources. 

Senator AKAKA. Thank you very much, Assistant Secretary 

Dann-Messier. Mrs. Petraeus. 

Mrs. PETRAEUS. Mr. Chairman, I do agree certainly that coordination and consultation is very important. I will reiterate that the 

Director of the Consumer Financial Protection Bureau will be the 

Vice Chairman of the FLEC, so our intent is to work very closely 

with them to be sure that we coordinate our efforts and that we 

consult with them. 

From my office specifically, we are authorized to enter into 

agreements with the Department of Defense to be sure that we are 

working in tandem and that we are coordinating what we do, and 

I have already—I mentioned that I had spoken with the Deputy 

Assistant Secretary of Defense for Military Community and Family 

Policy, but I have also spoken with his counterpart with Wounded 

Warrior Care and Transition Policy so we can also coordinate with 

that office for the needs of transitioning servicemembers. 

Senator AKAKA. This question is for Assistant Secretary DannMessier. I have worked on the Excellence in Economic Education 

Program (EEE), which funds financial education projects in classrooms. The Hawaii Council on Economic Education is one of many 

subgrant recipients who have done great work with these funds. 

Additionally, the Native Financial Education Coalition has indicated that EEE can help meet the need for increased financial literacy in Native communities. For example, a EEE subgrant enabled a study that examined the financial literacy of Native American high school students in Montana, New Mexico, and South Dakota. Would you please discuss how EEE funding has benefited Native communities and how it can help reduce the disparity in Native and non-Native financial literacy. 

Ms. DANN-MESSIER. Certainly, Mr. Chairman. I am happy to do 

that. I just also wanted to remind you that I was formerly the 

President of a nonprofit adult and family learning center in Providence, Rhode Island, and we served the underserved and low-income communities, and I know from my own professional and personal experience the importance of financial literacy. So the initiative certainly from the Excellence in Economic Education Program 

and its work with Native communities has been very, very, very 

important to make sure that they have all the financial literacy information that they need to fully participate in our society. 

We think those efforts need to continue and we need to focus on 

reaching all of the underserved populations across our country so 

that they are not harmed by predatory practices and really can 

save enough money for themselves and their families, whether it 

is to buy a home or to go on to college. So we very much support 

those efforts and plan to continue those efforts and really understand the importance of embedding financial literacy in all of our 

educational programs so that everybody has that knowledge and 

information. Thank you. 

Senator AKAKA. Thank you very much for your response. Senator 

Johnson. 

Senator JOHNSON. Thanks, Mr. Chairman. 

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I would like to thank all of you for your efforts here again. This 

is important. In particular, Mrs. Petraeus, I would really like to 

thank you for the sacrifice you and your family and your husband 

have made to this Nation. I had the real privilege of meeting your 

husband on a trip to Afghanistan, so it is nice to meet you here. 

Just a quick question to all of you. I will throw it out there. As 

I was questioning Mr. Dodaro, were you wanting to answer any of 

those questions at all? I will first make that offer. [No response.] 

OK, not a problem. Certainly, I was trying to get to the bottom 

of what does this cost. I am hoping maybe within your agencies you 

have some sort of feel, so I will just kind of go down the line. Can 

you tell me approximately what, for example, the Department of 

Education is spending on its financial literacy efforts? 

Ms. DANN-MESSIER. Well, I can point to two initiatives. We are 

spending $1.7 million on a new initiative. We are giving funds to 

the State of Tennessee to develop teacher preparation programs 

and teacher materials for students. We also are spending $1.4 million on the Excellence in Economic Education, so that is $3.1 million. I am sure there is additional funding, but I do not have the 

exact figure. I am happy to get it back to you, Senator Johnson, 

but those are the two examples I can give you. 

Senator JOHNSON. So are you kind of thinking it is maybe in the 

millions? Tens of millions? I mean, is it a relatively small amount 

in the Department of Education, or—— 

Ms. DANN-MESSIER. I would rather get back to you with that figure so I do not mislead you. Thank you. 

Senator JOHNSON. OK. Ms. Schock. 

Ms. SCHOCK. If we include staffing costs as well as program costs 

for all of our programs—that includes handling investor complaints 

and questions, educational outreach, and then having input into 

policy matters at the SEC—we are under $10 million a year. 

Senator JOHNSON. OK. 

Mr. WRIGHT. In the Office of Financial Education and Financial 

Access, in 2010, we spent $2.1 million. The Financial Education 

Counseling Pilot Program was a $4.3 million grant program. But 

it is also hard to tell some of the numbers because you take things 

like our Direct Express program and electronic Treasury efforts 

and that has a financial education component and actually over 5 

years will save the Government $500 million. So there are different 

numbers and it depends on how much you want to be focused specifically on education within a program versus the other components of the program. 

Senator JOHNSON. OK. 

Mrs. PETRAEUS. Since we are a new agency, I obviously have no 

figures for you. We are just standing up and we are in the process 

of building our budget, so I have no figures at this time. 

Senator JOHNSON. OK. Mrs. Petraeus, I would kind of like to use 

you to get into some other issues, just in terms of you standing up 

this program. I particularly appreciate the fact that you said you 

do not want to reinvent the wheel here. So as you are trying to determine, first of all, what needs to be taught, I mean, have you already gone down the list within the military in terms of these are 

the core competencies, these are the subject areas that need to be 

taught to our troops? 

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28 

Mrs. PETRAEUS. No, we are not at that point yet. Right now, 

again, we are an agency in the process of being created. What I am 

doing right now is really listening and talking to the military very 

informally and hearing often from the mouths of servicemembers 

themselves and their spouses what they think is important. 

Senator JOHNSON. Do you have an idea of where you are going 

to go to access curriculum that is already developed or the best 

practice teaching methods for some of these things? 

Mrs. PETRAEUS. I would say that we are in the process of hiring 

staff, and one person within my office will be someone to look at 

those programs more closely to see exactly what are the ones that 

we think that will work the best with the military. So right now, 

we are not, again, at that point where we have a road map, if you 

will, of where we are going to go. 

Senator JOHNSON. OK. Mr. Wright, you mentioned mymoney.gov. 

Is that the kind of a go-to site that could provide Mrs. Petraeus 

with that kind of information? 

Mr. WRIGHT. That site has many links to the various Government programs, including the military’s current website about providing financial education to the troops. We are in regular conversation with the Consumer Financial Protection Bureau implementation team about as they are standing up the agency and figuring out what direction they want to go in and how they are going 

to do that, we are in constant conversation to make sure there is 

not duplication. 

So my money does provide an opportunity for a starting point 

and there are curriculum out there. I think there still will be efforts within each part of the CFPB to figure out, do those existing 

curriculums really meet their constituents’ needs. 

Senator JOHNSON. Is that a kind of goal of the overall FLEC in 

terms of developing a centralized clearinghouse for these best practice teaching methods? 

Mr. WRIGHT. Yes. There is actually—part of mymoney’s future 

upgrades is a research clearinghouse which would actually be, as 

this research comes online about what is being, what works most 

effectively at changing behaviors, the mymoney will have a clearinghouse that provides a central location for people, both educators 

and individuals as well as researchers, to go and see what research 

is out there and what actually works. 

Senator JOHNSON. OK. So that is research—would that be the 

same thing, though, as a clearinghouse for best practice? I mean, 

this is how you teach taking out a mortgage in an efficient manner—— 

Mr. WRIGHT. Well, best practice, I think, needs to be connected 

to research, right, because you do not want to—you are not just 

testing whether the person gets the answer right about how to do 

that. You actually want to see, do they carry out the behavior 

change. So those two are linked and best practice—figuring out 

what best practice is should be driven by quality evaluation and research. 

I would kind of like to ask, do you actually reach the targeted 

audience? I mean, on the one hand, in terms of education, it is 

pretty obvious. You teach in the schools. In the military, you 

taught to the troops. The SEC has websites in terms of investors 

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being able to go to. But when you start talking about things like 

teaching financial literacy to general consumers, to people that are 

shopping for a mortgage, I mean, is that not far more difficult to 

try and target and get information to those folks? I mean, what is 

the strategy behind that? 

Ms. SCHOCK. We have adopted the strategy of going where the 

investors are already gathered. So instead of holding town hall 

meetings where we are picking up the cost and expense of trying 

to drive people to a meeting, we go to other conferences and events 

where we know that investors will be there who would be receptive 

to our message. 

Mr. WRIGHT. We generally have a philosophy of trying to be relevant, timely, and actually connected to the product or decision 

that needs to be made. I think the Financial Education Counseling 

Pilot is a good example of this, trying to really work with prospective home buyers to educate them about the home purchase decision so that they make the—they improve their credit scores, they 

start budgeting, but also is focused on making that home purchase 

decision and figuring out if purchasing a home is the right thing 

for them. Sometimes it is the right thing, sometimes it is not. So 

relevant, timely, and connected to product and decision. 

Senator JOHNSON. OK. Well, again, thank you all for coming 

here. 

Senator Akaka, I am going to have to go to another appointment. 

Thank you very much for holding this hearing. This is, again, a 

very important subject, so aloha. 

Senator AKAKA. Thank you so much for being a part of this hearing, Senator Johnson. 

Director Schock, I worked to include a provision in the DoddFrank Act that requires the SEC to conduct a study of financial literacy among retail investors and to work with FLEC to increase investor financial literacy. How has the study progressed thus far, 

and what steps must be taken to implement a strategy that brings 

about positive changes in investor behavior? 

Ms. SCHOCK. We are very excited about the investor literacy 

study under Section 917 of the Dodd-Frank Act. We think that it 

will provide valuable data to the SEC as well as to our colleagues 

at the FLEC to help bring about more informed investment decisions. 

At this point in time, we have a plan in place. That project plan 

is ready to go. We also hope to publish information in the Federal 

Register for public comment regarding the best public and private 

efforts to educate investors. And then, also, we have been sort of 

doing a study of studies that have been done in the past. 

But I will be honest with you, Senator. It is a matter of funding 

at this point in time. We sort of are ready for gold level, silver 

level, or bronze level implementation of our project plan, and so if 

we have full funding for our study the way we would like to have 

it done, I think we would have a very robust study to submit to 

Congress in July 2012. Should the funding levels fall or if we do 

not have any additional money from our 2010 levels, that will impact the depth that we are able to do and we may end up doing 

a study of studies. 

Senator AKAKA. Thank you. 

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Director Wright, Title 12 of the Dodd-Frank Act was based on my 

Improving Access to Mainstream Financial Institutions Act. Title 

12 authorizes initiatives to improve financial access and empower 

the unbanked and underbanked. Will you please discuss the status 

of implementing Title 12. What challenges must be overcome to expand financial access for the underbanked? 

Mr. WRIGHT. Thank you for that question, Senator Akaka. We 

are right now in the process of planning out the Bank On USA Program, which is our signature program under Title 12 that uses 

those authorities. The President has money in the 2011 budget as 

well as the 2012 budget for Bank On USA, and right now, we are 

currently setting up the infrastructure to move forward with that 

program, but we will not be able to fully implement it until we 

have appropriations. 

So currently, we are working on making sure that we have in 

place the robust data gathering tools that we can use and work 

with banks figuring out ways to make sure that communities have 

the right tools to assess how they should best undertake the Bank 

On Program, as well as creating websites where participants in the 

Bank On USA Program can share information and knowledge 

about best practices. But really, to move forward with both Bank 

On USA and any efforts around small dollar loan alternatives for 

predatory small dollar loans, we really need appropriations. 

Senator AKAKA. My next question is for Director Petraeus. Individuals’ financial literacy needs change continuously throughout 

the stages of their lives. How must financial education and advice 

change based on where servicemembers are in their careers? 

Mrs. PETRAEUS. Well, I think you are absolutely right. There are 

different teachable moments at different times. I think it is important that you do reach military personnel at the very beginning of 

their service. Sometimes the message can be as simple as, I always 

joke and say, that good-looking girl in the kiosk at the mall is not 

there to be your girlfriend. She is there to sell you something very 

expensive. Or, do not ask what my monthly payment is. Ask what 

is the total cost I am paying for this computer that I am buying, 

or this hot new car that I am buying. Later in a career, it may be 

a decision about buying a home or even a decision about whether 

or not to transition out of the military, and then there are going 

to be other things that need to be taught. 

We have heard from servicemembers themselves that just having 

it in basic training is not enough. Basic trainees are usually tired, 

stressed, not really focusing on what they are hearing. You need 

to have something in there, but then you need to continue it, at the 

basic non-commissioned officer course, the advanced non-commissioned officer course, some of the more senior schools. And a good 

way to reach people is to tell them, we need you to know this so 

you can teach your soldiers this, as well. Then they are very much 

more open to hearing that. 

So I think there are different approaches, different teachable moments, and we need to be sure we are teaching the right thing to 

the right group at the right time. 

Senator AKAKA. I worked to establish the Office of Financial 

Education within the Consumer Financial Protection Bureau. The 

CFPB should have a consumer education focus. Please explain the 

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relationship between FLEC, the CFPB, and Office of Financial 

Education. What role will the CFPB and OFE have in FLEC? 

Mr. WRIGHT. So the Treasury Department will continue to be the 

chair of FLEC, and it is very intentional, as you know, in the legislation that the CFPB becomes the Vice Chair. And so we will continue to work very closely together to make sure that our efforts 

are coordinated and not duplicated between our offices as well as 

with the other FLEC members. 

The Treasury will continue to remain focused on coordinating the 

FLEC overall, taking advantage of its unique position to test out 

innovative products that connect education and access together, 

and the CFPB, as you said, will have a focus on really educating 

consumers, and it is still being determined, the best way to do that, 

as they stand up the office. 

Mrs. PETRAEUS. I will just add that we brought on yesterday, we 

now have an Associate Director for Education and Engagement, 

and her name is Gail Hillebrand. She has a long experience with 

Consumers Union, very experienced in consumer issues. Again, she 

just started yesterday or she might be sitting here talking to you 

instead of me. 

Senator AKAKA. Assistant Secretary Dann-Messier, an increasingly common product on college campuses is the student loan 

debit or credit card. These loan cards may have high or hidden fees 

that harm student borrowers. How can we ensure that students 

fully understand the risks of these products? 

Ms. DANN-MESSIER. Mr. Chairman, it is really what we have 

been talking about all afternoon, and it is making sure that all our 

students have all the financial literacy information that they need 

in order to make wise and informed decisions. And so that is part 

of the—it should be part of their discussion with the financial aid 

officers and with all of the counseling staff at the universities and 

colleges as they are entering into the institution as part of the admissions process, that they are informed about what resources are 

available, what resources are there to assist them, and that we direct them to the resources that they can take full advantage of that 

will not take advantage of them. So it is really a part of the financial literacy and counseling that we think needs to be part of the 

admissions process into higher education. 

Senator AKAKA. Director Schock, in order to bring about a positive change in investor behavior, we must provide investors with 

the tools and information they need to make informed decisions. 

My provision in the Dodd-Frank Act authorizes the Commission to 

require specific disclosures about investment products be made at 

the point of sale. What must be done to ensure that these disclosures are meaningful and effective? 

Ms. SCHOCK. We fully agree with you that these disclosures need 

to be made in the best interest of investors, and the best interest 

is at the time before they actually make the purchase. The disclosure needs to be clear, simple, and meaningful at or before the time 

of the purchase by the individual investor. 

Unfortunately, Dodd-Frank sort of derailed that initiative at the 

SEC. We have not abandoned it, but we just have some other work 

that we need to get done on some set time lines. But we are still 

actively pursuing the point of sale disclosure because we do think 

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that it is a meaningful product of what we need and that investors 

need. 

Senator AKAKA. Mr. Wright, with Hawaii’s high cost of living, 

home ownership is a challenge for many families. In order to educate prospective home owners and promote responsible home ownership, I authorized and secured funding for the Financial Education and Counseling Pilot Program. How will you measure and 

evaluate the success of these demonstrations in providing a strong 

model for home ownership education, and counseling? 

Mr. WRIGHT. Yes, in Hawaii, we have provided a grant to the 

Council for Native Hawaiian Advancement, and we have worked 

with the CDFI fund to make sure that there are very clear outcome 

measures, so looking at things like changes in people’s savings 

rates or their increase in credit scores and how that then helps 

them to make the decision around home purchase. Now, that is a 

3-year grant, so we will be tracking that over time and actually 

working with GAO on that project to make sure that the evaluation 

is thorough and we understand the outcomes. 

Senator AKAKA. Thank you. Director Petraeus, today’s operational tempo means that servicemembers are gone for extended 

periods of time. Many spouses must assume full responsibility for 

managing the family’s budget. What more must be done to ensure 

that spouses are prepared for this important task? 

Mrs. PETRAEUS. I think that is a very valid concern and a very 

good question. Many of the spouses are young and they may not 

have learned financial literacy at home, so it is important to reach 

out to them. I think the difficulty is, unlike the military member, 

you cannot order the spouse to come to class, but I think there are 

some things you can do. 

There is a great deal of success now reaching the spouses online. 

A lot of units have what is called a Virtual Family Readiness 

Group (FRG) when a unit deploys that is online and families use 

it because they are interested in getting the information about 

what the unit is doing overseas. In fact, as a military mother, I will 

tell you that I used the Virtual FRG for my son’s unit while he was 

deployed to Afghanistan. And I think there is a possibility, maybe, 

to tie some financial education into that venue, where you might 

be able to reach the spouses who are not apt to come onto base and 

participate in activities, but truly need that assistance and that 

education on good, smart financial management, or at the very 

least, where to go for help. 

Senator AKAKA. Mr. Wright, I authored the Taxpayer Abuse Prevention Act to increase safeguards against harmful refund anticipation loans. I am pleased that the IRS has eliminated the debt indicator and that regulators have acted against unsafe and unsound 

refund anticipation loan practices. I believe we must build on this 

progress and continue to empower taxpayers. How is Treasury 

working to improve financial access for low-and moderate-income 

taxpayers? 

Mr. WRIGHT. We have a number of efforts. One is related to research, so we just released recently a report done by the Urban Institute in conjunction with the IRS that looks at the use of refund 

anticipation loans across a number of factors. As we look to provide 

alternatives to people to refund anticipation loans, we want to 

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33 

make sure that we do that in a way that does not harm them as 

refund anticipation loans are removed from the market. So that report and research is the first step. 

In addition, I think the IRS’s effort to get rid of the debt indicator was a big step, and their ongoing efforts to license and require examination for preparers is also going to be very helpful in 

making sure that we have qualified preparers. 

In addition, Treasury has to provide, over time, choices for people 

at tax time. There are a couple examples of this already. One is 

the opportunity to put your tax refund into a savings bond to actually save at tax time. This is the second year that has been in effect and already the numbers show that people using that 

functionality is growing. 

And then, second, we are piloting a tax time account. We mailed 

out offers to 800,000 individuals across the country. People are enrolling in using that account and we will learn from that pilot to 

figure out the best way to provide an account in the future, integrate it into the tax return process. And that pilot and the study 

that will go along with that will be one of the factors to determine 

how best to do that and the timing under which to do it. 

And then the last thing is that we need to continue to make improvements to speed up the process for people to get their refunds. 

So the faster someone can get their refund, the less likely they are 

to need a refund anticipation loan and the less value a refund anticipation loan will have. I will say that we are optimistic that we 

will see the number of refund anticipation loans fall drastically because of some of the efforts that you mentioned around the debt indicator as well as the steps by the regulators. 

Senator AKAKA. I want to thank all of our witnesses for being 

here today. Your testimony and your responses have been very valuable. I look forward to continuing to work with all of you as we 

seek to empower Americans to make informed financial decisions. 

The hearing record will be open for 1 week for additional statements or questions other members may have. 

I look forward to our continuing to make progress in financial literacy and that we will continue to celebrate this month of financial 

literacy. Thank you very much for your participation. 

The hearing is adjourned. 

[Whereupon, at 4:25 p.m., the Subcommittee was adjourned.] 

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