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S. Hrg. 110–337

FEDERAL GOVERNMENT’S ROLE IN

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 TENTH CONGRESS

FIRST SESSION

APRIL 30, 2007

Available via http://www.access.gpo.gov/congress/senate

Printed for the use of the Committee on Homeland Security 

and Governmental Affairs

(

(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 

BARACK OBAMA, Illinois 

CLAIRE McCASKILL, Missouri 

JON TESTER, Montana 

SUSAN M. COLLINS, Maine 

TED STEVENS, Alaska 

GEORGE V. VOINOVICH, Ohio 

NORM COLEMAN, Minnesota 

TOM COBURN, Oklahoma 

PETE V. DOMENICI, New Mexico 

JOHN WARNER, Virginia 

JOHN E. SUNUNU, New Hampshire

MICHAEL L. ALEXANDER, Staff Director 

BRANDON L. MILHORN, Minority Staff Director and Chief Counsel 

TRINA DRIESSNACK TYRER, Chief Clerk 

OVERSIGHT OF GOVERNMENT MANAGEMENT, THE FEDERAL 

WORKFORCE, AND THE DISTRICT OF COLUMBIA SUBCOMMITTEE 

DANIEL K. AKAKA, Hawaii, Chairman 

CARL LEVIN, Michigan 

THOMAS R. CARPER, Delaware 

MARK L. PRYOR, Arkansas 

MARY L. LANDRIEU, Louisiana 

GEORGE V. VOINOVICH, Ohio 

TED STEVENS, Alaska 

TOM COBURN, Oklahoma 

JOHN WARNER, Virginia

RICHARD J. KESSLER, Staff Director 

EVAN CASH, Professional Staff Member 

MATTHEW PIPPIN, Legislative Assistant (Senator Akaka’s Office) 

JENNIFER A. HEMINGWAY, Minority Staff Director 

THERESA PRYCH, Minority Professional Staff Member 

EMILY MARTHALER, Chief Clerk 

(III)

C O N T E N T S 

Opening statements: Page 

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

WITNESSES 

MONDAY, APRIL 30, 2007

Sheila C. Bair, Chairman, Federal Deposit Insurance Corporation (FDIC) ....... 3

Morgan Brown, Assistant Deputy Secretary for Innovation and Improvement, 

U.S. Department of Education ............................................................................ 8

Dan Iannicola, Jr., Deputy Assistant Secretary for Financial Education, U.S. 

Department of the Treasury ................................................................................ 10

Robert F. Danbeck, Associate Director, Human Resources Products and Services, Office of Personnel Management ................................................................ 12

Yvonne D. Jones, Director, Financial Markets and Community Investment, 

U.S. Government Accountability Office .............................................................. 14

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

on Economic Education ........................................................................................ 26

Stephen Brobeck, Executive Director, Consumer Federation of America ........... 28

ALPHABETICAL LIST OF WITNESSES

Bair, Sheila C.: 

Testimony .......................................................................................................... 3

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

Brobeck, Stephen: 

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

Prepared statement .......................................................................................... 94

Brown, Morgan: 

Testimony .......................................................................................................... 8

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

Danbeck, Robert F.: 

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

Prepared statement .......................................................................................... 61

Duvall, Robert F.: 

Testimony .......................................................................................................... 26

Prepared statement .......................................................................................... 88

Iannicola, Dan Jr.,: 

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

Prepared statement .......................................................................................... 54

Jones, Yvonne D.: 

Testimony .......................................................................................................... 14

Prepared statement .......................................................................................... 70

APPENDIX 

Background .............................................................................................................. 100

North American Securities Administrators Association, Inc., prepared statement ...................................................................................................................... 103

Responses to questions for the Record from: 

Mr. Iannicola ..................................................................................................... 108

Mr. Brobeck ....................................................................................................... 109

Copy of Title V from Public Law 108–159 ............................................................. 112

(1)

FEDERAL GOVERNMENT’S ROLE IN 

EMPOWERING AMERICANS TO MAKE 

INFORMED FINANCIAL DECISIONS 

MONDAY, APRIL 30, 2007

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 2:30 p.m., in Room 

SD–342, Dirksen Senate Office Building, Hon. Daniel K. Akaka, 

Chairman of the Subcommittee, presiding. 

Present: Senator Akaka. 

OPENING STATEMENT OF CHAIRMAN AKAKA 

Chairman AKAKA. The U.S. Senate Committee on Homeland Security and Governmental Affairs, Subcommittee on Oversight of 

Government Management, the Federal Workforce, and the District 

of Columbia hearing will come to order. I call this Subcommittee 

to order. It is very appropriate that this hearing be conducted 

today, on the last day of Financial Literacy Month. 

My interest in financial literacy dates back to when my fourth 

grade teacher required me to have a piggybank. We were made to 

understand how money that was saved a little at a time can grow 

into a large amount, enough to buy things that would have been 

impossible to obtain without savings. 

My experience with a piggybank taught me important lessons 

about money management that have stayed with me throughout 

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

that they are better able to manage their resources. 

Americans of all ages and backgrounds face increasingly complex 

financial decisions as members of our Nation’s workforce, as managers of their families’ resources, and as voting citizens. Many find 

these decisions confusing and frustrating because they lack the information and skills necessary that would enable them to make 

wise personal choices about their finances. 

A sample of economic statistics presents some disturbing realities. Consumer debt exceeded a record $2.4 trillion in 2006, and 

household debt reached a record $12.8 trillion. Americans’ rate of 

personal savings as a percentage of disposable personal income deVerDate 0ct 09 2002 08:31 Apr 10, 2008 Jkt 035529 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 P:\DOCS\35529.TXT SAFFAIRS PsN: PAT
2

clined from minus 0.4 percent in 2005 to minus 1.1 percent in 

2006, making 2005 and 2006 the only years since the Great Depression when this savings rate has been negative. 

In a 2006 survey, Jump Start Coalition for Personal Financial 

Literacy found that high school seniors scored an average of only 

52.4 percent on an exam testing knowledge of basic personal finance. The Retirement Confidence Survey conducted by Employee 

Benefit Research Institute found that only 42 percent of workers or 

their spouses calculated how much they need to save for retirement, down from 53 percent in the year 2000. 

Millions of working families are susceptible to predatory lending 

because they are left out of the financial mainstream. The unbanked rely on alternative financial service providers to obtain 

cash from checks, pay bills, send remittances, utilize payday loans, 

and obtain credit. Many of the unbanked or low- and moderate-income families can ill afford to have their earnings diminished by 

reliance on these high-cost and often predatory financial services. 

In addition, the unbanked are unable to save securely to prepare 

for the loss of a job, a family illness, a downpayment on a first 

home, or education expenses. Without this sufficient understanding 

of economics and personal finance, individuals will not be able to 

manage their finances appropriately, evaluate credit opportunities, 

and successfully invest for long-term financial goals in an increasingly complex marketplace. 

It is essential that we work toward improving education, consumer protection, and empowering individuals and families 

through economic and financial literacy in order to build stronger 

families, businesses, and communities. 

My colleagues and I have worked on several important initiatives 

for financial literacy. My legislation, the Excellence in Economic 

Education Act, or the EEE Act, was enacted as part of the No 

Child Left Behind Act. The EEE is intended to fund a range of activities such as teacher training, research and evaluation, and 

school-based activities to further economic principles. I have obtained funding of approximately $1.5 million for the EEE Act each 

year, in each fiscal year since fiscal year 2004. I will continue to 

work to fund this important Federal program. 

In the year 2003, the Fair and Accurate Transactions Act created 

the Financial Literacy and Education Commission. The Commission is tasked with reviewing financial literacy and education efforts throughout the Federal Government, identifying and eliminating duplicative financial literacy efforts, and coordinating the 

promotion of Federal financial literacy efforts, including outreach 

partnerships between Federal, State, and local governments, nonprofit organizations, and enterprises. The Commission also established a website, MyMoney.gov, and a toll-free hotline to serve as 

a clearinghouse and provide a coordinated point of entry for information about Federal financial literacy and education programs, 

grants, and other information the Commission deems appropriate. 

I worked with my colleagues on this Subcommittee to bring 

about the enactment of the Thrift Savings Plan Open Elections Act 

of 2004. This mandated that the Office of Personnel Management 

develop and implement a retirement financial literacy and education strategy for Federal employees. During today’s hearing, we 

3

1The prepared statement of Ms. Bair appears in the Appendix on page 35. 

will learn more about the effectiveness of our Federal financial literacy efforts and what must be done to improve financial literacy 

throughout the Nation. Greater financial literacy will result in 

stronger families, better functioning markets, and a more secure 

future for our country. 

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

to your testimony and to working with all of you towards this very 

important goal. 

In our first panel, it is my pleasure to welcome the Chairman of 

the Federal Deposit Insurance Corporation, Sheila Bair. I know we 

share a deep commitment to improving the financial literacy of our 

country. I have greatly appreciated her outstanding financial literacy efforts during her service at the Department of the Treasury, 

the FDIC, and at the University of Massachusetts at Amherst. 

Chairman Bair, it is the custom of this Subcommittee to swear 

in all witnesses, so will you please stand and raise your hand and 

take the oath? Do you swear that the testimony you will give before 

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

the truth, so help you, God? 

Ms. BAIR. I do. 

Chairman AKAKA. Thank you very much. Let the record note 

that the witness responded in the affirmative. 

Although the statements are limited to 5 minutes, I want all of 

our witnesses to know that their entire statement will be included 

in the record. 

Chairman Bair, will you please proceed with your statement? 

TESTIMONY OF SHEILA C. BAIR,1 CHAIRMAN, FEDERAL 

DEPOSIT INSURANCE CORPORATION (FDIC) 

Ms. BAIR. Chairman Akaka, thank you very much. I appreciate 

this opportunity to testify on the state of financial literacy in America. 

The world of finance is far more complicated today than it was 

just a generation ago. Back then the average consumer had a 

checking account, a passbook savings account, and maybe a home 

mortgage with their local bank. Today, after 40 years of deregulation, new technology, and market innovation, consumers have a 

vast array of financial services from which to choose. More and 

more of these services are delivered outside traditional bank 

branches. Electronic payments are replacing cash and checks, and 

new credit products are reaching all parts of society. 

Competition and innovation ultimately give consumers more 

choices at lower prices. But it has gotten so complicated these days 

that it can make your head swim when you go to open an account 

or take out a loan. This is not good for anybody—consumers, bankers, lenders, or the U.S. economy at large. 

On top of that, we are a Nation that has forgotten how to save. 

We are great at spending, but we do not know how to save our 

hard-earned money. Nationwide, the savings rate, as you pointed 

out, Mr. Chairman, was a negative 1.1 percent last year. 

I am not suggesting that American consumers become accountants and penny pinchers. We are just saying it is time to get smart 

4

about your money and learn how to handle it, especially those just 

starting out or with a lower income. 

Recognizing the need for improved financial literacy, the FDIC 

developed its Money Smart curriculum in 2001 to help low- and 

moderate-income adults enhance their money management skills, 

understand basic mainstream financial services, avoid pitfalls, and 

become more savvy about using banking services. 

In light of emerging problems in the subprime mortgage markets, 

we will be updating Money Smart this summer to help consumers 

evaluate and compare different types of mortgages, in particular, 

the risks and trade-offs between fixed and adjustable rate mortgages. 

To date, more than 864,000 adults have attended at least one 

class using the Money Smart curriculum. A year from now, 1 million will have taken the training. This is a very popular program. 

We had hoped to train a million people by 2010, so we are 2 years 

ahead of schedule. 

Adults are not the only ones we need to reach. I am a big believer, as are you, Mr. Chairman, in educating our young people 

about money as early as possible. Children have a natural curiosity 

about money, so why not get started early teaching them how to 

handle it? 

The FDIC recently started a pilot project to further integrate our 

program into public schools. While a number of States, including 

Hawaii, already use Money Smart in their educational programs, 

we will be directly contacting about 120 school systems and related 

government agencies about using this program. 

In addition, many States such as Massachusetts have school 

bank programs that teach students practical financial skills. Building on these programs, the FDIC is also developing school-based 

initiatives as part of our Alliance for Economic Inclusion, to help 

financial institutions and others set up student-run banks in high 

schools. This can be a powerful—and I hope fun—way for students 

to learn financial skills. 

The final point I want to make is that these programs do work. 

This morning we announced the results of a new Gallup poll we 

commissioned to assess the impact of financial education on longterm consumer behavior. This is a landmark survey. It is the first 

ever to document what consumers do after being taught how to better handle their money. The results clearly show that education 

makes a big difference in the way people save and spend their 

money. 

The poll found that seven out of ten people said they saved more 

6 to 12 months after completing our Money Smart program. One 

in two reported that their debt decreased. And three in five said 

they were more likely to comparison shop when opening a bank account. Thirty-seven percent of those who did not have a savings account opened a savings account after completing our program, and 

over 25 percent started using direct deposit for the first time. 

This proves the lasting benefits and the power of learning how 

to manage your money. For consumers it is the ticket to financial 

freedom. 

Also this morning, we helped launch D.C. Saves, a new initiative 

to encourage Washingtonians to reduce debt, save money, and 

5

build wealth. Such community efforts, which are part of the FDIC’s 

mission, are another effective means to educate the public. 

Let me end by observing that financial education is no panacea, 

and it certainly is no excuse for irresponsible financial products or 

services. However, a consumer who knows the right questions to 

ask, understands economic fundamentals, and has the confidence 

to challenge products and practices that seem too good to be true 

is a regulator’s best weapon as we work to protect the public. 

Thank you very much. I would be happy to answer any questions, and before I completely conclude, I would like to acknowledge 

that we are a very proud partner of the Federal Literacy and Education Commission (FLEC). I focused mainly on our FDIC efforts 

this morning, but given the second panel, I did want to say that 

we are very pleased to work with that effort as well. 

I would also like to note that I was just advised that ABC News 

will be disseminating to its affiliates tonight a Money Minute segment on the Gallup poll survey results and the important impacts 

that Money Smart is having. And that should reach about a million 

individuals, and so that should also be an important way of getting 

our word out about our financial education efforts. 

Thank you, Mr. Chairman. 

Chairman AKAKA. Thank you for your statement, Chairman Bair. 

Thank you for doing all you can to support education of our young 

people, as you said, and the general public as well. 

I am very pleased to learn from your statement that the Money 

Smart program has resulted in positive behavioral change among 

consumers. 

Ms. BAIR. Yes. 

Chairman AKAKA. What lessons learned from Money Smart could 

help other agencies implement effective financial literacy programs? 

Ms. BAIR. I think a couple of things. First of all, Money Smart 

is written in a very direct, straightforward, basic way. It is very 

understandable to a wide segment of the population. 

Also, in terms of delivery mechanisms, we work very closely with 

nonprofits, and some banks, to offer the Money Smart curriculum 

as well. But I think working with nonprofits—people that are in 

the communities, groups that are in the communities—is particularly important to reach especially the lower- and lower-middle-income segments of the population. Also, making the financial education transaction-related so that it has an immediate relevance to 

the individual or family enrolled in the curriculum. A lot of the 

folks who come to use the Money Smart curriculum are buying 

homes for the first time. They are receiving counseling through 

NeighborWorks of America, and they receive the Money Smart curricula as part of that transaction-oriented impetus. 

Many others will open up a checking account or a savings account for the first time at a bank, after the curricula is offered. So 

tying financial education to a financial transaction and making it 

immediately relevant to that transaction, I think, is very helpful. 

Chairman AKAKA. Chairman Bair, I am deeply concerned that 

too many working families are taken advantage of by unscrupulous 

lenders through payday loans. In your statement, you indicate that 

the FDIC issued the Affordable Small-Dollar Loan Guidelines last 

6

year intended to develop low-cost small loans coupled with savings 

opportunities. 

Ms. BAIR. Yes. 

Chairman AKAKA. How have FDIC-insured banks responded to 

these guidelines? 

Ms. BAIR. They have been very supportive. The comment letters 

were almost all uniformly supportive, and we are encouraged. We 

have many banks that have approached us that are interested in 

launching a low-cost, small-dollar loan program, at least on a pilot 

basis. 

I think the one challenge we have in engaging the broader financial banking community is to prove that these loans can be responsibly priced and profitable. I think there are some misconceptions 

about the credit risk involved. They are not as high, I think, as a 

lot of banks perceive them to be, given the fact that we are talking 

about providing a product to an individual who is already a bank 

customer. The thing that is frustrating about payday loans is those 

folks already have banking accounts. They have to provide a check 

as collateral for the loan. 

So the customer is already there, and I think working with banks 

so that they can understand that there are models to lend in a way 

that is responsibly priced, but also profitable, is going to be our 

main challenge going forward. But we have had a tremendous and 

very encouraging response, so I am optimistic that we are going to 

be able to get some significant level of small-dollar alternative options at a lower cost, and also have a savings component built into 

that. 

Chairman AKAKA. Chairman Bair, I am worried also that Americans are not saving enough. 

Ms. BAIR. Yes. Me, too. 

Chairman AKAKA. Also they are accumulating so much debt. 

Ms. BAIR. Yes. 

Chairman AKAKA. I hear this a lot from parents of college students who receive their children’s bills. They are very concerned. 

What policies need to be implemented to encourage savings and 

discourage debts? 

Ms. BAIR. Well, I think what we are doing in financial education 

is helpful. Also, supporting the America Saves program, which is 

spearheaded by Consumer Federation of America and local efforts 

is important. I was in Ohio to support Cleveland Saves. We were 

involved with a D.C. Saves event this morning. I think these types 

of efforts are important in terms of getting the word out concerning 

how important saving is. 

Also, it is important to work with banks to make sure that there 

are savings vehicles available for lower-income people that do not 

have high minimum balances or high fees to get people started 

with just $5, $10 or $25 a month. Really, you just need to get started somewhere, but making sure that there is a low-cost savings 

product that is accessible to them is very important. 

I think also as regulators, bank regulators, we need to make sure 

that the incentives we provide banks are equally weighted between 

credit and savings products. Perhaps in the past we have put a little too much emphasis on the extension of credit. Certainly credit 

7

needs to be widely available. But I think we need to put at least 

as much emphasis on asset accumulation and savings products. 

And, finally, it is important to come up with savings products 

that facilitate making savings automatic, even tying them to debt 

programs, like a small-dollar loan program. For example, qualifying someone for a small-dollar loan, but as they make the repayment, an amount would automatically go into a savings account. 

There are a lot of creative ways, I think, that banks can make 

savings automatic, and all the research shows that if you make it 

automatic, and make it easy, people will save. 

Chairman AKAKA. As you know, approximately 10 million households in the United States do not have accounts at mainstream financial institutions. Unfortunately, too many of these households 

depend on high-cost, fringe financial services. They miss out on opportunities for saving and borrowing at credit unions and banks. 

What do you think must be done to bring these households into 

mainstream financial institutions? 

Ms. BAIR. Here, again, I think financial education is key. Also, 

it is important to work with banks to make sure that the product 

mix that they offer and the marketing that they offer taps into this 

vast untapped market. This is a huge market opportunity for banks 

as well as a very good public policy objective. 

It is important that the product mix is right, including a savings 

account and basic financial services like money orders. A lot of 

lower-income families do not need a complicated checking account 

when they are starting off on their banking relationship. If they 

are introduced to a product that is too complex that ends up costing them money as opposed to saving money, they are going to sour 

in their view of banks. 

Working with banks, to make sure that the regulatory incentives 

are of the right mix, and also encouraging the availability of very 

basic entry-level types of financial services that are needed by 

lower-income families is a good way to start. 

Chairman AKAKA. Yes. Well, I really appreciate your responses 

to my questions today, and we are all in this together to try to 

highlight financial literacy and to help people make better decisions. 

I want to thank you so much for your part in our government 

to help bring this about. There is no question we need to work together as a team to make this happen throughout the country, and 

you have been such an integral part of this. I look forward to working with you further on this, and I want to thank you again for 

being here. 

Ms. BAIR. I also very much appreciate the support you have 

given me over the years, and I am very pleased to be here this 

morning. Thank you. 

Chairman AKAKA. Thank you, Chairman Bair. 

Now I ask the second panel of witnesses to come forward. Testifying on the second panel are: Morgan Brown, Assistant Deputy 

Secretary for Innovation and Improvement, U.S. Department of 

Education; Dan Iannicola, Jr., Deputy Assistant Secretary for Financial Education, U.S. Department of the Treasury; Robert 

Danbeck, Associate Director for Human Resources Products and 

Services Division, Office of Personnel Management; and Yvonne 

8

1The prepared statement of Mr. Brown appears in the Appendix on page 50. 

Jones, Director, Financial Markets and Community Investment 

Team, Government Accountability Office. 

I want to welcome all of you and thank you so much for being 

here. As you know, it is the custom of this sUBCommittee to swear 

in all witnesses, so will you 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. BROWN. I do. 

Mr. IANNICOLA. I do. 

Mr. DANBECK. I do. 

Ms. JONES. I do. 

Chairman AKAKA. Thank you very much. Let the record note 

that the witnesses responded in the affirmative. 

Thank you very much for being here. This is a hearing that will 

certainly help every person in our country. So I would like to call 

on Mr. Brown to please proceed with your statement. 

TESTIMONY OF MORGAN BROWN,1 ASSISTANT DEPUTY SECRETARY FOR INNOVATION AND IMPROVEMENT, U.S. DEPARTMENT OF EDUCATION 

Mr. BROWN. Thank you, Mr. Chairman, and good afternoon. 

Thank you for the opportunity to appear before you today to discuss the important topic of financial literacy and what the U.S. Department of Education is doing to address this issue. 

In recognition of April being Financial Literacy Month, Secretary 

Spellings last week joined the heads of other Federal agencies, as 

well as business and nonprofit leaders at the White House, to, in 

the words of the President, ‘‘make sure that the Federal effort toward financial literacy is well coordinated with the private sector.’’

The first program I want to talk about is the Excellence in Economic Education (EEE) program that you earlier made reference 

to, Mr. Chairman. 

The EEE program is administered by the Office of Innovation 

and Improvement, which I head. This program promotes efforts to 

increase the economic and financial literacy of elementary and secondary students. The objectives of the program are to: one, increase 

students’ knowledge of and achievement in economics; two, 

strengthen teachers’ understanding of and competence in economics; three, encourage economic education research and development; four, assist States in measuring the impact of education in 

economics; and, five, leverage and expand increased private and 

public support for economic education partnerships at the national, 

State, and local levels. 

Under the statute, the Department is authorized to award one 

competitive grant to a national nonprofit educational organization 

whose primary mission is to improve the quality of student understanding of personal finance and economics. The grantee must 

subgrant 75 percent of its grant funds to State or local educational 

agencies and State or local economic, personal finance, or entrepreneurial education organizations. The subgrantees must work in 

9

partnership with other organizations that promote, among other 

things, personal finance education and economic development. 

Over the 3-year life of the program, the Department has awarded 

almost $4.5 million in grant funding to the National Council on 

Economic Education (NCEE), who you will be hearing from in the 

next panel of witnesses. During that time NCEE has implemented 

a variety of initiatives designed to improve financial literacy in our 

schools. NCEE’s mission is to promote economic and financial literacy for all students in grades K–12 through its network of State 

councils and university-based centers, by training thousands of 

teachers who will reach millions of students. NCEE’s project activities are intended to help students to develop the skills they need 

to become knowledgeable consumers, savers, investors, and effective participants in a global economy. 

Through the Excellence in Economic Education Program, NCEE 

has awarded 310 subgrants totaling nearly $3.35 million to State 

and local education agencies as well as State and local organizations that provide economic, personal finance, or entrepreneurial 

education programs. To ensure greater cost-effectiveness and corporate community involvement, subgrantees are required by the 

Excellence in Economic Education program statute to match their 

Federal funding dollar for dollar. 

My office is in the process of measuring the performance of the 

grantee by determining the percentage of students and teachers 

trained under the project that demonstrate an improved understanding of personal finance and economics as compared to similar 

students whose teachers have not had the training provided by this 

project. We expect to have baseline information by the end of the 

current fiscal year and comparison data a year later. 

With regard to the future of the EEE program, the President’s 

budget requests no funding for fiscal year 2008, consistent with the 

Admistration’s policy of eliminating small categorical programs 

that have limited national impact and reallocating these funds to 

high priorities. Districts that wish to implement economic education activities, however, can use funds provided under other Federal programs to do so. For example, the Improving Teacher Quality State Grants program supports efforts to ensure that all teachers of core academic subjects, including economics, are highly qualified, so funding under that program may be used for professional 

development activities in economics education. 

I want to say a word about the Financial Literacy and Education 

Commission. The Department of Education also continues to work 

in partnership with the Financial Literacy and Education Commission in its efforts to improve financial literacy in our country. Earlier this year, the Departments of Education and the Treasury 

cohosted a 2-day Kindergarten through Postsecondary Financial 

Education Summit. Attendees included a diverse group representing educational agencies and foundations, banking and investment institutions, nonprofit organizations, and private corporations. The focus of the summit was to engage public and private financial education practitioners in a dialogue to discuss innovative 

strategies to promote the integration of financial education into the 

core curriculum. 

10

1The prepared statement of Mr. Iannicola appears in the Appendix on page 54. 

In closing, let me once again thank the sUBCommittee for inviting me to speak today. We will continue to monitor the effectiveness of our grant to the NCEE and to work with the Department 

of the Treasury on future financial literacy initiatives. 

Thank you, Mr. Chairman. I would be happy to take any questions. 

Chairman AKAKA. Thank you very much for your statement, Mr. 

Brown. Mr. Iannicola. 

TESTIMONY OF DAN IANNICOLA, JR.,1 DEPUTY ASSISTANT 

SECRETARY FOR FINANCIAL EDUCATION, U.S. DEPARTMENT 

OF THE TREASURY 

Mr. IANNICOLA. Good afternoon, Chairman Akaka. Thank you for 

this opportunity to appear before you today to talk about the important issue of financial literacy in America. Mr. Chairman, your 

leadership on this issue stretches back several years, and I commend you for your early recognition of financial literacy as an area 

of national concern. 

I would like to briefly discuss the financial literacy issue we are 

faced with and then discuss the Federal responses to that issue. 

Our robust marketplace of financial products and services has 

given Americans more options than ever before on activities such 

as investing, financing a home, or obtaining other consumer credit. 

Additionally, the steady migration from defined benefit plans to defined contribution plans has given people even more decisions to 

make about retirement. It is as if every American has woken to 

find himself or herself promoted to the position of CFO of his or 

her own household. Are we ready for the job? And if not, how do 

we address the new reality that our economic choices have simply 

outpaced our financial knowledge? 

The answer, of course, is financial education. Only when we 

learn more about our money will we be able to move forward confidently in the modern financial marketplace. 

The Fair and Accurate Credit Transactions Act of 2003 established a 20-agency group called the Financial Literacy and Education Commission and named the Secretary of the Treasury as 

Chair of the Commission. The law required the group TO produce 

a website, a hotline, a multimedia campaign, and a national strategy. I will describe progress on each of these projects. 

In October 2004, the Commission launched MyMoney.gov, a onestop shop for Federal financial education information which is 

available in English and Spanish. The site has 399 links and has 

had 1.7 million hits. Also in October 2004, the Commission 

launched a toll-free hotline called 1–888–MyMoney, which is available in English and Spanish and has received 18,000 calls. The 

multimedia campaign is well underway and will be launched in the 

fall of 2007. 

The FACT Act also required the Commission to develop a national strategy for financial literacy. In April 2006, the Commission 

released the document entitled ‘‘Taking Ownership of the Future.’’ 

Each of the strategy’s 13 chapters end with numbered calls to acVerDate 0ct 09 2002 08:31 Apr 10, 2008 Jkt 035529 PO 00000 Frm 00014 Fmt 6633 Sfmt 6633 P:\DOCS\35529.TXT SAFFAIRS PsN: PAT
11

tion. These calls to action are milestones for the Commission which 

allow us to measure its performance. 

I will give a chronological summary of progress on the calls to 

action. 

In April 2006, the Small Business Administration completed Call 

to Action 3–2 by adding retirement training tools for small businesses to MyMoney.gov, and the Treasury Department completed 

Call to Action 5–2, with the release of an identity theft DVD. Sixty 

thousand of these DVDs were subsequently distributed. 

In July 2006, and following Call to Action 2–1, the Departments 

of Housing and Urban Development and the Treasury Department 

cohosted a homeownership roundtable. And in August 2006, Call to 

Action 12–2 was completed when GSA and the Treasury Department finished the first survey of Federal financial education programs and resources. 

As of December 2006, and as part of Call to Action 6–2, the Federal Reserve Banks and the Treasury Department converted threequarters of a million paper check benefit recipients to direct deposit 

enrollees. 

Under Call to Action 6–3, the Department of Health and Human 

Services implemented a public education campaign which helped to 

enroll more than 1.4 million beneficiaries in Medicare’s Part D program so they could take advantage of the new drug benefit. 

In February 2007, as mentioned by Mr. Brown, the Departments 

of Education and the Treasury cohosted a 2-day summit on youth 

financial education as part of Call to Action 10–1. 

In March 2007, under Call to Action 8–1, the third of four regional summits on the unbanked occurred in Seattle. Earlier summits occurred in Chicago in May 2006 and in Edinburg, Texas, in 

December 2006. These events were the result of a partnership with 

many financial institution regulators. 

Also in March 2007, the Treasury Department hosted a financial 

literacy roundtable focused on Native populations. And just last 

week, Call to Action 1–1 was completed when the Treasury Department launched a public service announcement campaign promoting 

the MyMoney website. 

In December 2006, the Government Accountability Office issued 

a report on the Commission. The Commission welcomed the insights of GAO. As part of the Commission’s statutorily mandated 

annual review of the strategy, the Commission incorporated many 

of the GAO recommendations into its 2007 strategy revisions, including defining the terms ‘‘financial education’’ and ‘‘financial literacy’’; committing to conduct a usability study and a customer satisfaction survey on the MyMoney website; and committing to have 

an independent review of Federal financial education programs and 

resources. 

Last, GAO recommended that the Commission work closely with 

private entities, State, and local governments, which was accomplished earlier this month when the Treasury Department and the 

Office of Personnel Management completed Call to Action 12–5, by 

establishing the National Financial Education Network of Federal, 

State, and local governments. 

As we move forward, the Commission will be implementing the 

remaining calls to action in the National Strategy. 

12

1The prepared statement of Mr. Danbeck appears in the Appendix on page 61. 

I hope this discussion has given you a useful overview of the 

Commission’s work. We hope that through our emphasis on increased financial literacy people gain the skills to make better decisions and, therefore, live better lives. 

Thank you, and I look forward to your questions. 

Chairman AKAKA. Thank you very much, Mr. Iannicola, for your 

statement. 

Mr. Danbeck, would you please proceed with your statement? 

TESTIMONY OF ROBERT F. DANBECK,1 ASSOCIATE DIRECTOR, 

HUMAN RESOURCES PRODUCTS AND SERVICES, OFFICE OF 

PERSONNEL MANAGEMENT 

Mr. DANBECK. Good afternoon, Mr. Chairman. It is my pleasure 

to be here today to outline the important work the Office of Personnel Management is doing to ensure Federal employees are 

ready for retirement. OPM is committed to educating Federal employees about the need for retirement savings and investments and 

providing information on how to plan for retirement, including how 

to calculate the retirement savings and investments needed to meet 

their retirement goals. As part of that commitment, we were 

pleased to participate in Financial Literacy Day on Capitol Hill last 

week, where we provided information about the various benefit programs available to Federal employees and had experts available to 

answer attendees’ questions. We also invited representatives from 

the Thrift Savings Plan (TSP) to join us, thereby providing attendees with additional resources to discuss this important facet of 

their retirement benefits. 

As you know, the Thrift Savings Plan is a Federal Governmentsponsored retirement savings and investment plan open to Federal 

civilian employees and to members of the uniformed services. The 

TSP offers savings and tax benefits comparable to what many private corporations refer to as 401(k) plans. We strongly encourage 

all eligible Federal employees to take advantage of TSP as a means 

of preparing for their future. Due to your leadership, Congress took 

steps to help make Federal employees more aware of the opportunities available to them through the TSP when it passed the Thrift 

Savings Plan Open Elections Act of 2004. The Act directed OPM 

to develop a ‘‘strategy to provide employees information on how to 

plan for retirement and how to calculate the retirement investment 

needed to meet their retirement goals.’’

OPM is doing this through a strategy based on an education 

model we call Retirement Readiness NOW. The model focuses on 

the outcome of our retirement financial education programs to provide employees information on how to plan for retirement and how 

to calculate retirement investments needed to meet their retirement goals. 

Retirement readiness combines basic information about the benefits provided by the government, as an employer, and the broader 

financial education needs of employees. Rather than being a ‘‘nearretirement’’ event, the retirement readiness model considers retirement financial literacy and education as a career-long process. The 

model incorporates the broad range of information employees need 

13

to help them make informed retirement planning decisions. It also 

recognizes that these needs change as a person moves through his 

or her career. 

Our Retirement Readiness NOW model takes a total balanced 

approach to planning that covers: 

Networking Engagement—finding enjoyable challenges, connecting with other people in meaningful activities such as volunteer work, or even exploring a new career; 

Overall Health—staying as healthy as you can for however long 

you live; and understanding the aging process and how best to approach health care such as preventative and disease treatment; 

And, finally, Wealth—preparing financially to have sufficient income to support your own standard of living in retirement. 

OPM has three key roles in retirement planning: Capacity, Coordination, and Catalyst. Building capacity means providing training and tools to agency benefits officers so that they can help employees understand their benefits and identify their financial education needs. 

OPM’s Retirement System Modernization (RSM) project will provide employees with tools that for the first time ever will allow 

them to model their future retirement benefits based on a complete 

set of their actual Federal employment information. RSM modeling 

tools will include a web-based application that will contain personalized content and decision support, enabling employee self-service 

access 24 hours a day, 7 days a week, by telephone or via a web 

interface. The RSM tools will allow a one-stop experience for employees to initiate changes to their retirement benefits. These capabilities will be available beginning February 2008. 

Another important step we have taken is the development of a 

partnership with the American Savings Education Council of the 

Employee Benefits Research Institute. Through this partnership, 

we have developed the Federal Ballpark Estimater, which is based 

on the widely-used American Savings Education Council Ballpark 

Estimater, and our Estimater will go live shortly. 

However, OPM and agencies cannot provide employee retirement 

readiness without the direct involvement of the employees themselves. Employees must take advantage of opportunities provided 

and must assume responsibility for taking steps to meet their own 

retirement goals. Our responsibility, and one we work on daily, is 

to provide as many tools as possible so that folks have this information as they near retirement. 

OPM also is very proud of the active role it has taken as a member of the Financial Literacy and Education Commission. We were 

on the national strategy working group and earlier this month cohosted with the Department of the Treasury the first meeting of 

the National Financial Education Network. This clearinghouse will 

not only serve as a valuable resource for State and local governments, it will identify a rich array of resources agency benefits officers can use to explain their retirement readiness education program for Federal employees. 

I appreciate this opportunity to testify before the Subcommittee 

on this very important issue. I will be glad to answer any questions 

you may have. 

14

1The prepared statement of Mr. Jones appears in the Appendix on page 70. 

Chairman AKAKA. Thank you very much for your statement, Mr. 

Danbeck. 

Ms. Jones, will you please proceed with your statement? 

TESTIMONY OF YVONNE D. JONES,1 DIRECTOR, FINANCIAL 

MARKETS AND COMMUNITY INVESTMENT, U.S. GOVERNMENT ACCOUNTABILITY OFFICE 

Ms. JONES. Mr. Chairman, I appreciate the opportunity to discuss how the Financial Literacy and Education Commission developed the National Strategy for Financial Literacy. My comments 

are based on a report that GAO issued in December 2006 that assessed the Commission’s effectiveness. Today I will discuss how the 

Commission developed a national strategy to promote financial literacy and education, implemented its website and telephone hotline, coordinated Federal financial literacy efforts, and promoted 

partnerships among government, nonprofit, and commercial organizations. 

First, the National Strategy includes a series of recommendations presented as calls to action. The calls to action are largely descriptive, not strategic, and mainly describe existing programs. 

Consequently, most Federal and nonprofit agencies we interviewed 

said that the strategy was unlikely to affect their financial literacy 

and education efforts. 

Based on our review, we recommended that the Commission include in the strategy concrete definitions for financial literacy and 

financial education, clear and specific goals and performance measures, actions needed to accomplish the goals, a description of required resources, and a discussion of the appropriate roles and responsibilities for Federal agencies and other organizations. 

The Treasury Department, as Chair of the Commission, responded that the Commission is a new entity and that the strategy 

is largely a blueprint to provide general direction. Also, the strategy will be updated annually. 

Additionally, in its April 2007 report to the Congress, the Commission partially responded to our recommendations by including 

definitions for financial literacy and financial education, as Mr. 

Iannicola mentioned. 

The Commission also established the MyMoney website that connects consumers with close to 400 Federal financial English language websites and over 40 similar sites in Spanish. Representatives of financial literacy organizations generally said that the site 

is effectively serving its purpose. Website usage has been growing 

and reached 76,000 visits in March 2007. 

However, we recommended that the Commission conduct 

usability tests and measure customer satisfaction. Last month, the 

Commission informed Congress that it would undertake these evaluations by the second quarter of 2009. 

Consumers can also use the telephone hotline the Commission 

established to order a free toolkit of English and Spanish language 

financial literacy publications from several Federal agencies. But 

we found that the number of calls to the hotline have been limited: 

526 calls in March 2007. 

15

The Commission was also required by law to develop a plan to 

improve Federal agency coordination. The Commission created a 

single Federal focal point, but it faced challenges because of the 

agency’s differing missions, its limited staff and funding, and the 

lack of legal authority to compel agencies to take action. 

The Act also tasked the Commission with identifying areas of duplication and overlap among Federal financial literacy activities 

and with reviewing the effectiveness of these activities. However, 

the Commission’s reviews relied largely on agency self-assessments. We recommended that the Commission provide for independent evaluations by a disinterested party, which the Commission has said it will do by 2009. 

To promote partnerships between Federal agencies and State 

and local governments as well as with the nonprofit and private organizations, the Commission has taken a number of steps, including public meetings and outreach events. But the impact of these 

steps is unclear. 

Our report recommended that the Commission explore additional 

ways to cultivate partnerships with nonprofit and private organizations. For example, enhancing cooperation with State and local governments is particularly important given the crucial role the school 

districts have in improving financial literacy. Last month, as Mr. 

Iannicola said, the Commission held the first meeting of the National Financial Education Network, one of whose goals is to create 

a dialogue on financial education. 

We recognize the significant challenges confronting the Commission, notably the inherent difficulty of coordinating the efforts of 20 

Federal agencies. Given the small number of the staff the Commission has and its limited funding, we believe that early efforts undertaken by it represent some positive first steps. At the same 

time, more progress is needed if we expect the Commission to have 

a meaningful impact on improving the Nation’s financial literacy. 

Mr. Chairman, this concludes my prepared statement. I would be 

pleased to respond to any questions that you may have. 

Chairman AKAKA. Thank you very much, Ms. Jones, for your 

statement. 

Mr. Iannicola, in your statement, I was glad to hear of the activities and the programs that you have and learn that there has been 

some coordination among Federal agencies as well. In fiscal year 2005, $1 million was appropriated for the development and implementation of the National Strategy. How have 

these resources been spent? 

Mr. IANNICOLA. Mr. Chairman, we did receive that appropriation 

and put it to good use. Roughly $200,000 of that appropriation was 

put towards the actual production of the National Strategy itself, 

which includes putting together transcripts from six public meetings we had used to get comments from organizations. That occurred over several months. And then we also spent a fair amount 

of money on translating the documents into Spanish so that more 

people could access it. We hired some professional editors to help 

make it more clear. In addition there were designing, printing, and 

distribution costs, so all that totaled a little over $200,000. 

The balance was put towards the development of a multimedia 

campaign, which is also required under the FACT Act and called 

16

for under the strategy. And that totaled somewhere around 

$700,000, and we have obligated those funds to a partnership with 

Ad Council and an ad agency out of New York called Lowe Advertising. And we have been working with them on developing a 

multimedia campaign, have gone through things like focus groups 

and some early creative stages and hope to see that completed in 

the fall of this year. 

Interestingly, based on what we have been talking about, the target that we have decided on is young people and credit management, so that will be the thrust of that ad campaign. 

Chairman AKAKA. Your Commission activities, as you mentioned, 

have been ongoing. In a statement made by Ms. Jones, she indicated that effective national strategies should include discussions 

of costs, the sources and types of resources needed, and where 

those resources should be targeted. 

Mr. Iannicola, what resources are needed to ensure that the 

Commission can adequately fulfill its mandates? 

Mr. IANNICOLA. Well, presently, under our situation, we have 

found that the coordination called for by the FACT Act, working together with the 20 agencies has provided us enough synergy such 

that we have been able to add value without having to add resources. And right now that is where we still are. We believe we 

can accomplish the mandates of the statute and the calls to action 

under the National Strategy with existing resources. 

Chairman AKAKA. Mr. Danbeck, as you know, a number of Federal agencies have campaigns intended to improve the financial literacy of their employees. Are there any specific efforts currently 

being conducted by agencies that you consider to be models that 

could be duplicated and implemented by other Federal agencies? 

Mr. DANBECK. Well, the one that immediately comes to mind is 

a program that is being currently coordinated by the Department 

of Agriculture through its benefits officers, where it is using its Cooperative State Research Extension Centers to disseminate information from a financial planning/financial literacy perspective to 

all of its constituents. So it is a rather creative program to use the 

extension centers that are already in place for normal function, but 

also to promote financial literacy. 

We are also working with the Social Security Administration, the 

Department of Justice, the Department of Health and Human 

Services, and with our colleagues at the Treasury Department on 

a number of financial fairs, where we go out and assist them in 

providing the information on-site to their employees. 

Chairman AKAKA. Ms. Jones, the GAO report recommends that 

the Commission implement outcome measures to gauge its success. 

Could you please give us some examples of outcome measures they 

could use? 

Ms. JONES. Mr. Chairman, it is difficult to—[off microphone]—

credit. They might also look at other things like a reduction in the 

number of people who are unbanked. 

Chairman AKAKA. Mr. Brown, in your testimony you state that 

the NCEE could continue its financial education activities without 

Federal support, solely relying on the Nation’s private institutions 

which have business incentives to stress certain consumer behaviors. This greatly concerns me because I believe that although priVerDate 0ct 09 2002 08:31 Apr 10, 2008 Jkt 035529 PO 00000 Frm 00020 Fmt 6633 Sfmt 6633 P:\DOCS\35529.TXT SAFFAIRS PsN: PAT
17

vate resources can be useful, we have an obligation that our students have a basic understanding of economics and personal finance so that they can effectively participate in the modern economy. 

Is your statement specifically aimed at the activities of the 

NCEE? Or are you suggesting that there is no need for any Federal 

funding for financial education and that our students should have 

to depend on private efforts for their education? 

Mr. BROWN. Thank you for your question, Mr. Chairman. My 

comments are specifically with regard to the EEE program in that 

because of the substantial increases the President has made in 

such high-priority areas as Title I funding for low-income children 

or School Improvement Grants, that to offset those substantial increases he has proposed not requesting funding in the next fiscal 

year for a number of smaller programs. 

Having said that, if the Congress were to decide not to fund the 

EEE program, we would certainly be willing to work with NCEE 

to give them information about other sources of funding that are 

not specifically focused on economic education or financial literacy 

but could be used, were State and local government entities aware 

of them, for that. And then, as you mentioned, in my written testimony I suggested that there may be opportunities to raise additional funds in some areas of the private sector that have a strong 

interest in financial literacy and consumer education among students as well. 

So those would be two areas that we would be happy to work on. 

Chairman AKAKA. Mr. Brown, in your testimony you stated that 

the Administration’s policy has been elimination of ‘‘small categorical programs that have limited national impact and reallocating 

these funds to high priorities,’’ such as EEE. However, in 2006, our 

Nation faced record consumer debt levels and negative savings 

rates. Even in your testimony, you state that ‘‘financial literacy has 

gained attention as it has become more financial literacy has 

gained attention as it has become apparent that improving financial education in our Nation’s schools is important to ensure that 

young people are equipped with the necessary skills to make sound 

financial decisions.’’

How does the Administration reconcile its policy with the pressing need for financial education? And what else is the Administration pursuing to address this issue? 

Mr. BROWN. Mr. Chairman, I think it is important to note, as I 

did in my testimony, that the President certainly thinks financial 

literacy is enormously important, and he even hosted a meeting at 

the White House just last week with the heads of both the Education Department and the Treasury Department, as well as leaders from the private and nonprofit sectors that are very interested 

in financial education to highlight the importance of it. And so 

through the efforts of a number of agencies, including the Treasury 

Department and including the Commission that we have talked 

about, I think there is a lot—there is certainly interest in making 

sure that we promote financial education and work with a lot of 

both public and private sector partners. 

However, within the K–12 education budget, in terms of the 

President’s proposal for that budget, he has made a decision that 

18

there are higher-priority areas for funding, again, Title I, School 

Improvement Grants, IDEA, etc., and that to offset those, he did 

not request funding for a number of smaller grant programs. 

So it was simply in the issue of the K–12 budget and the President setting priorities for his request to Congress, but it is not a 

statement that he believes the Administration should have no involvement in the efforts to promote financial literacy. 

Chairman AKAKA. Mr. Danbeck, I am concerned that not enough 

people have planned and prepared for retirement. As a consequence, they will not be able to retire on their own terms. What 

did OPM learn from the Retirement Readiness survey conducted 

among Federal employees? 

Mr. DANBECK. Thank you, Mr. Chairman. That is a very good 

question. 

What we found was that the majority of Federal employees, more 

than eight out of ten, stated that they are on track relative to their 

planning for retirement. And it is interesting because, if you look 

at the private sector, the same survey questions would say approximately four out of ten workers in the private sector feel that they 

are on track. So our Federal employees do feel that they are making progress towards their goal. 

Only one in four workers feel they will have to work in retirement in another position, which is rather interesting. And only two 

out of ten actually have a professional financial advisor who they 

use to help them with retirement plans. 

So it is a rather mixed bag, if you will, of responses. 

Chairman AKAKA. Mr. Iannicola, I understand that the Department of the Treasury is planning to hold roundtables on financial 

education topics that concern specific multicultural and multilingual populations. I am pleased that the first one in this series 

was held in March 2007, and it was focused on Native populations. 

What actions will be taken to address the financial literacy needs 

of American Indian, Alaska Natives, and Native Hawaiians? 

Mr. IANNICOLA. Well, thank you. We did have a productive meeting, and what we hope will come out of all these meetings are a 

few things. First, we will have some sort of documentation, some 

sort of White Paper to come out, so others can learn what happened there and what we want to see follow from it, even if they 

were not able to attend. But what we have seen already is an impetus towards networking. We had at that meeting lenders, we had 

those representing Native communities, as well as a whole host of 

representatives across the Federal Government. Many parts of the 

Federal Government touch native communities, and we found people who did not know who each other were and needed to. So those 

connections were made right away. 

We hope to have continued connections of those sorts and continue an informal network to make sure the assets and the resources the Federal Government does offer are getting to the right 

people. 

But part of the conference was about lenders and others having 

a chance to hear what the community really needs. For instance, 

the importance of trust is something that is necessary to get people 

in the door of a financial institution. People are told if something 

is too good to be true, it probably is, and so they put their guard 

19

up. But, by the same token, we want to tell them to walk into a 

financial institution and trust that institution to open an account. 

So there are some messages that appear to conflict, but it takes 

some special understanding of the community to get the point 

across. So that roundtable was an opportunity to give those ideas. 

We are also working with other communities and doing the same 

thing to try to advance the conversation and build new connections. 

Chairman AKAKA. Is this going to be extended to American Indians, Alaska Natives, and Native Hawaiians? 

Mr. IANNICOLA. We are certainly open to expanding to any organizations that would like to be involved in this effort. The whole 

point of this conversation is to broaden the circle. So, yes, we have 

put the invitation out far and wide, and if there are other groups 

that you would like to put us in touch with, we would be happy 

to follow through. 

Chairman AKAKA. Do you have a timetable on that? 

Mr. IANNICOLA. We will be having another one—actually, two of 

these over the summer, one with Asian and Pacific Islander organizations and another one with African American organizations. And 

in the fall, we will be working with Hispanic groups for another focused community conversation. And so anytime in the next several 

months would be appropriate to build this type of effort. 

Chairman AKAKA. Thank you. 

Ms. Jones, are there commissions similar to the Financial Literacy and Education Commission that share its challenges? If so, 

what lessons could be learned from those experiences that could be 

used to improve the Commission? 

Ms. JONES. Mr. Chairman, I think that GAO has done some 

other work looking at commissions that were broadly comparable 

to the Financial Literacy and Education Commission. I mentioned 

earlier in my testimony that having clear and specific goals and 

performance measures and specifying the actions and implementation plan to accomplish goals, including a description of resources 

that are needed and a discussion of the appropriate roles and responsibilities for Federal agencies and other organizations. These 

kinds of observations that we made about the Commission were 

based on prior work. 

What I could offer to do, Mr. Chairman, is to provide you with 

a more detailed summary of the work that GAO has done on other 

commissions, if that would be helpful. 

Chairman AKAKA. Yes, I would like that, please. 

Ms. JONES. OK. 

Chairman AKAKA. Mr. Iannicola, one of the mandates of the legislation establishing the Commission was to identify areas of overlap and duplication among Federal financial literacy and education 

activities and propose means of eliminating such overlap and duplication. 

Why has the Commission not found any duplication of government financial literacy efforts? 

Mr. IANNICOLA. That is a good question. Obviously, we are very 

concerned about being good stewards of Federal dollars and want 

to make sure that every dollar is being used properly. The Treasury Department and GSA do a survey every 6 months internally 

of our Commission members, and we have not found substantive 

20

1 Copy of Title from Public Law 108–159 appears in the Appendix on page 112. 

overlap, but we have found areas where we have avoided overlap. 

And let me talk about each. 

Sometimes it appears on the surface that there is some overlap. 

For instance, the Department of Labor has an Internet publication 

called ‘‘Preparing for Retirement.’’ SSA, the Social Security Administration, has something called ‘‘Step by Step Retirement Planner.’’ 

However, they both offer very different information when you dig 

a little deeper. The Department of Labor is focused on the private 

elements of one’s plan, maybe personal savings or something that 

you would get from your employer. However, the piece produced by 

Social Security, as you might imagine, is focused on Social Security 

benefits. So while they both deal with retirement and probably 

have a few pages of overlap, they differ when they get more specific. 

Other programs and other publications differ based on the community upon which they are focusing. We have some programs that 

focus on savings for adults and others that focus on kids. We have 

some publications that focus on teaching savings to adults so that 

they can save, and there is even a publication that teaches teachers 

about how to talk to kids about savings. 

So when we probed further, we found that any overlap has either 

been minimal or necessary, or both. So we do think it is important 

and will continue to keep an eye on this and believe it so strongly 

that even though the FACT Act does not require that we have an 

independent organization look at it, we took the good suggestion of 

GAO and committed to doing that going forward. So we share that 

concern. 

Chairman AKAKA. Thank you. 

Mr. Iannicola, legislation that created the Commission permits 

the President to appoint up to five additional members to the Commission. Has anyone been appointed? 

Mr. IANNICOLA. We presently have it at the existing 20 so, no, 

no one has been appointed additionally. 

Chairman AKAKA. Why has no one been appointed? 

Mr. IANNICOLA. We have had a lot of success working with organizations in an informal manner without appointing other agencies 

to this Commission. When we’ve found a need to work with another 

agency outside the Commission, we have called them up, and they 

have been cooperative. But the 20 covers just about most of our 

needs. I mean, it was a fairly strong list of those who were doing 

financial literacy in the government. 

Chairman AKAKA. Is there a timeline for these appointments? 

Mr. IANNICOLA. No. As I understand, under Title V,1 I think we 

can add an agency at any time, and so as situations change or as 

we see an agency that needs to be in the Commission that may not 

be, we will certainly reconsider adding such an agency. 

Chairman AKAKA. Mr. Danbeck, I am pleased to learn more 

about OPM’s effort to ensure that Federal employees have the resources they need to make informed decisions regarding their retirement. At the same time, retirement planning is just one part 

of the larger financial picture. Other than retirement preparation, 

how does OPM educate Federal employees about other aspects of 

21

economic education such as predatory lenders, credit card debt, and 

sound investing practices? 

Mr. DANBECK. Well, Mr. Chairman, our Retirement Readiness 

NOW model is much more. It takes a broader view than just the 

retirement related to financial literacy, and our approach is not 

just about money. It combines basic information about benefits that 

are provided by the government as an employer, and the broader 

financial education needs of employees, to include many of the 

things you just mentioned. And the model incorporates a broad 

range of information employees need to help them make informed 

retirement decisions. As I also mentioned in our Retirement Readiness NOW model we take into consideration overall health as well 

as networking and engagement as employees get ready for retiring. 

So we try to have a much more broader, holistic approach to retirement readiness than just thinking about the financial side, although that is a critical component. 

Chairman AKAKA. Mr. Brown, in his statement Dr. Duvall of the 

National Council on Economic Education mentions the need for 

well-prepared teachers and meaningful curriculum materials toward which some of the EEE subgrants have been directed in order 

to promote economic and financial education. 

Aside from EEE, have any other financial resources gone to support financial literacy education activities for teacher training? 

Mr. BROWN. Mr. Chairman, as I mentioned in my statement, 

there are other sources of funding, particularly for teacher professional development in the area of economics. Those are resources 

where they are not dedicated necessarily to financial literacy or economics education, but they could be used—they have the flexibility at both the State and local levels to be used that way. Certainly that would include some of the Title II program funding, and 

also it would include the Improving Teacher Quality State grants 

program that I mentioned earlier. 

So, again, that is something that, whether or not there continues 

to be funding specifically for the EEE program, we would certainly 

be happy to work with NCEE and other entities to get the word 

out at the State and local level that these funds can be used that 

way if the State and local entities wish to do so. 

Chairman AKAKA. Thank you. 

Mr. Iannicola, I have some questions pertaining to the website 

and the hotline. When will the website incorporate the Web Managers Advisory Council’s recommendations and best practices for 

websites? 

Mr. IANNICOLA. Well, we are in review of the website on a regular basis. However, I would think as part of the usability testing 

and the customer satisfaction, it will be done, if not sooner, it will 

be done by, I believe, the 2009 timeline we had given when we are 

implementing the GAO recommendation. We may have it sooner, 

but certainly by that time it will be completed. 

Chairman AKAKA. So no definite timeline was set for that type 

of information? 

Mr. IANNICOLA. No, but its safe to say it will be done by the second quarter 2009, and perhaps sooner. 

Chairman AKAKA. Has the Commission identified a point of contact for the website to address consumers’ questions and concerns? 

22

Mr. IANNICOLA. I believe there is a link right now on the site 

that will allow individuals to ask a question, but it is more for 

questions about the website. It is not for asking financial education 

information questions but, rather, it is for questions about the 

basic functioning of the website. So there is a possibility to eventually get a hold of someone through the website links. 

Chairman AKAKA. Mr. Iannicola, approximately 10 million households in the United States do not have accounts at mainstream financial institutions. What is being done by the Treasury Department and the Commission to encourage people to utilize mainstream financial institutions? 

Mr. IANNICOLA. We see that as an issue as well, Mr. Chairman, 

and that is why one of the more aggressive calls to action we have 

in the strategy is on the unbanked, and we already are threefourths of the way through it in that we have committed to having 

regional roundtables on this issue to bring together players in the 

private sector and not-for-profits and to focus on the different 

issues of the unbanked. 

We had one in Chicago last May. We also had one in Edinburg, 

Texas, back in December and focused more on border issues there 

and the special complexities involved with that. And then this 

March, we had a conference in Seattle, and we will be having a 

conference in the Northeast later on this fall. So the upshot of all 

these conversations is to produce a White Paper with recommendations. 

We found some interesting things. We found, as I mentioned before, the idea of trust is important, but also the idea of approachability. We had a credit union tell us in Seattle that one of the 

things that brought more people in the door was just dressing their 

people in jeans and T-shirts because that is the way the customers 

dress. The tradition coat and tie seemed to intimidate some people. 

So it is these unique observations that one gets by listening to 

the grass roots, and that is what we were able to do and bring a 

lot more of these ideas to the forefront. 

Also the conference provided networking possibilities, we heard 

from a lot of people already that they made connections at that 

conference and have asked to build a list and serve off of that. 

So these are the types of tools that will naturally flow from these 

types of conversations, so we are going to continue to do that with 

respect to the unbanked. 

Chairman AKAKA. Mr. Iannicola, the GAO report mentions that 

the financial literacy toolkit is missing information on some vital 

issues, such as home ownership and credit. 

What resources does the Commission need to provide a more 

comprehensive toolkit? 

Mr. IANNICOLA. We have also noted that there are publications 

we would like to get in the toolkit and are working with our agency 

partners to see what they can do to help us fill those holes. 

Chairman AKAKA. In his written statement, Mr. Brobeck from 

the Consumer Federation of America outlines several strategies to 

achieve significant and measurable improvements to specific financial decisions made by most Americans. Examples of these include 

encouraging self-measurement of net personal wealth, use of automatic savings opportunities, public checking of credit records, and 

23

on-time repayment of loans. He also recommends that the Commission develop an online toolkit that could be widely promoted as an 

annual financial checkup instrument. This is a very interesting recommendation that could lead to the development of concrete proposals that will result in positive behavioral change. 

Will the Commission be developing strategies to achieve significant and measurable improvement in the decisionmaking of consumers? 

Mr. IANNICOLA. We will continue to implement the strategy to 

reach these tangible goals you are talking about. One of our primary tools to do that right now is the MyMoney website and the 

toll-free number. And we do have links on there now that can do 

that, and I would note that the Ballpark Estimate that OPM has 

put together is something that can be useful for Federal employees, 

but similar calculations can be useful for everyone, as Mr. Brobeck 

notes, to see where they are and where they need to be. 

So we will continue to measure the amount of penetration we 

get, the amount of people who actually use the website, and we 

hope, through our customer satisfaction survey, to realize how we 

can do that better. 

Right now that is one of our better tangible measures, and so we 

will continue to watch that closely to see how we can get the 

website to people who need it. 

Chairman AKAKA. Mr. Danbeck, one of the keys to ensuring the 

financial literacy of Federal employees is the appropriate and ongoing training of agency benefit officers. Consequently, I am glad to 

hear about your upcoming Retirement Financial Education Symposium and your series of Workshops in a Box. I think, however, that 

it is also vital to have assessment measures in place to ensure that 

this training is effective. 

What, if any, measures has OPM put into place to ensure that 

benefits officers have the knowledge necessary to accurately convey 

retirement information to Federal employees? 

Mr. DANBECK. Mr. Chairman, we plan to survey benefits officers 

later in the year. Our strategy, as you mentioned, is to get the 

word out to the various agencies through the benefits officers, and 

we have done a number of things in that regard, including, as you 

noted, the series of Workshops in a Box and the financial education 

fairs. We have also provided the agency benefits officers recently 

with guidelines on how to perform retirement readiness plans. 

So we will check later in the year to assess how the agencies are 

performing. They will have to come back to us and tell us what 

they have implemented and what successes they have had. Then 

based on that, we will determine a measurement process. And to 

be perfectly honest, we have not gotten to that point yet, sir. 

Chairman AKAKA. Well, thank you very much for that response. 

Mr. Iannicola, what has the Commission done to address the 

issue of measuring results and ensuring accountability? 

Mr. IANNICOLA. As we mentioned, the calls to action are something that we hold ourselves accountable to, and they have dates 

and actors. But beyond that, we have collected and will continue 

to collect information from our member agencies. 

For instance, we know that, as mentioned in my testimony, about 

760,000 people were converted from receiving paper checks to elecVerDate 0ct 09 2002 08:31 Apr 10, 2008 Jkt 035529 PO 00000 Frm 00027 Fmt 6633 Sfmt 6633 P:\DOCS\35529.TXT SAFFAIRS PsN: PAT
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tronic deposit, and we know all the benefits of that. That was done 

by the Treasury Department and the Federal Reserve banks. We 

had a DVD that went out; 60,000 of those were ordered by the public. Also, we have seen a number of outreach activities, even in our 

own office at the Treasury Department. Over a few years, we have 

gone to 42 States, held 304 financial education sessions, and 

reached over 24,000 people. In addition to that, we generated 470 

media stories so that our word got out to more people than just attended the events. 

So these are the type of numbers that, while useful, are not everything we want; that is to say, the ideal measure is knowing that 

you have changed someone’s behavior. That measure for financial 

educators in Federal or private sector efforts is always a challenging number to get. And it is even harder to tell when financial 

education was the delta, the reason that some conduct changed. It 

could be many other things. 

Ms. Jones had mentioned that it is difficult coming up with those 

measures, and we would agree. 

So we try to keep the numbers that we can, largely input numbers, to see how we are doing, while continuing to try to figure out 

ways to get even better numbers. 

Chairman AKAKA. Mr. Brown, according to your advance testimony, you are currently measuring the NCEE’s progress and fulfilling the goals of the Excellence in Economic Education grant by 

determining the percentage of students and teachers trained under 

the project that demonstrate an improved understanding of personal finance. The Department of Education has not yet finished 

compiling its information on the efficacy of the EEE program. How 

then can the Department of Education assess the national impact 

of the EEE program and assure that the requirements will be met 

by shifting responsibilities for financial education training from 

EEE to other grants? 

Mr. BROWN. Mr. Chairman, as you noted in my testimony, we 

are in the process of doing an evaluation that we think will provide 

some quite clear results because there will be a control group of 

students who have not been instructed by teachers who have gone 

through the training provided by the program. And so we hope to 

get the kind of concrete results by using the control group that is 

sometimes difficult to get when you are doing these type of evaluations. 

I should also mention that for the first year of the grant program 

to NCEE, there has been an evaluation study done that we would 

be more than happy to share with you and other Members of the 

Subcommittee that was done for the first year of the grant program, which was fiscal year 2004, and that evaluation was released 

in the summer of last year. And that was not quite the thorough 

kind of evaluation we are doing now. It was mostly based on survey 

research of teachers and students and grantees. But the results 

were very positive, even for that first year, in terms of the survey 

research that came back. And I am sure Mr. Duvall, when he 

comes up to testify, will want to say even more about that. 

So, again, in no way is the discussion about looking at other resources for funding the EEE program or NCEE through that program a commentary on the performance of NCEE. Again, the evalVerDate 0ct 09 2002 08:31 Apr 10, 2008 Jkt 035529 PO 00000 Frm 00028 Fmt 6633 Sfmt 6633 P:\DOCS\35529.TXT SAFFAIRS PsN: PAT
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uations we have so far are very positive. It really has much more 

to do with funding priorities for the President in the context of the 

education budget. 

Chairman AKAKA. Thank you very much. I will just ask one more 

question, but I will also be keeping the record open for one week 

for other Members to submit questions they may have for you. 

Mr. Iannicola, on February 1, the Treasury Department officials 

kicked off a nationwide earned income tax credit awareness campaign. The EITC is a vitally important program for working families. 

What resources have been dedicated to this campaign? 

Mr. IANNICOLA. As you mentioned, on that day, February 1, Secretary of the Treasury and IRS Commissioner all got together and 

talked about the importance of EITC and declared that EITC 

Awareness Day, and that is also why we featured it in the National 

Strategy. 

There are just too many people who are leaving money on the 

table, as you well know, and some of the resources that have been 

put toward that from the Treasury Department’s perspective come 

through IRS and the working of their Volunteer Income Tax Assistance (VITA) sites. They work with organizations across the country 

to train them to help people get their taxes filed, and while they 

are doing that, they will introduce them to the idea of the earned 

income tax credit if they are eligible for it and help them to claim 

it. They can also use that as a teachable moment to get the person 

a bank account or a relationship with a credit union if they do not 

have one. 

The IRS has also recently developed a split refund technological 

ability so that now an individual can be enticed to put some of the 

money into an account and yet still have something to take home. 

That was new this tax year. So through the VITA sites and IRS, 

significant resources have been put to improving participation in 

the earned income tax credit. 

Chairman AKAKA. Well, I want to thank the second panel for 

your responses and tell you that your responses have been helpful. 

We will keep the record open for a week for any other questions. 

I also want you to know that we have a third panel that is coming up, and I would encourage you to stay if you can and have the 

time to hear the third panel. 

So, again, thank you very much for being here, and have a good 

day. 

Now I call on the third panel of witnesses to come forward: Robert Duvall, who is President and Chief Executive Officer of the National Council on Economic Education; and Stephen Brobeck, Executive Director, Consumer Federation of America. It is good to have 

you here as witnesses on the third panel. 

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

So will you 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. DUVALL. I do. 

Mr. BROBECK. I do. 

26

1The prepared statement of Mr. Duvall appears in the Appendix on page 88. 

Chairman AKAKA. Thank you very much, and let the record note 

that the witnesses responded in the affirmative. 

Let me ask you, Mr. Duvall, to please proceed with your testimony. 

TESTIMONY OF ROBERT F. DUVALL,1 PRESIDENT AND CHIEF 

EXECUTIVE OFFICER, NATIONAL COUNCIL ON ECONOMIC 

EDUCATION 

Mr. DUVALL. Thank you very much, Chairman Akaka, and thank 

you for inviting me to testify today on this timely, critical, and vital 

issue of the Federal Government’s role in empowering all Americans to make informed financial decisions. 

The National Council on Economic Education (NCEE), is a 

unique nonprofit, nonpartisan, independent organization directed 

by a governing board of volunteer leaders from education and business, with the clear purpose of helping young people learn while in 

school to think and choose responsibly and successfully when they 

go into the real world. 

For 60 years, the NCEE has been leading the charge to improve 

economic and financial literacy through education in the Nation’s 

schools. We believe that today both the need for what we do best 

and the opportunities to effect change and to show, as you have 

called for, measurable results are greater than ever. 

With partners, as you know, we helped to host and promote Financial Literacy Day on Capitol Hill last week, and your leadership 

has been inspiring for the development of that effort over the 

years. 

The NCEE is differentiated by our mission. We believe that financial literacy comes through effective economic education, and 

that this education ought to be part of the core learning experience 

that our young people get while they are in school. We believe they 

will best learn the basics of practical, applied economics and personal financial decisionmaking skills through well-trained teachers, 

who are equipped with excellent standards-based teaching materials. 

The need to strengthen, expand, and enhance education in basic 

practical economics and personal finance in our Nation’s schools remains urgent. We must prepare our students with the foundation 

of economic and financial competence so that they can succeed in 

life. 

There is widespread agreement for this proposition among policymakers, business leaders, and educators. The questions now before 

us, I believe, are: How can we best improve and expand economic 

and financial literacy efforts? How can we measure results and outcomes to be sure we are making a difference? And what role can 

both government and the private sector play in this effort? 

Let me pick up the theme of much of the discussion today in 

which I have an earnest interest, and that is, focus on the importance of the Excellence in Economic Education Act (EEE). 

Thanks to your efforts, Mr. Chairman, Congress authorized the 

EEE program as part of the No Child Left Behind Act ‘‘to promote 

economic and financial literacy of all students in kindergarten 

27

through grade 12.’’ The EEE directly supports activities that educators can take to improve financial education in our elementary 

and secondary schools—through professional development for 

teachers, distributing high-quality, standards-based, and standards-setting educational materials; fostering active learning for students; and evaluating and assessing outcomes and promoting, and 

then disseminating best practices. 

We know that well-prepared teachers instill in our children a 

sense that they are themselves future stakeholders, decisionmakers, and movers of the American economy. The EEE has provided meaningful resources for teacher training, which is at the 

heart of making a difference. 

In the first year of the EEE, 36 subgrants were awarded to establish and conduct teacher training programs, including for those 

teachers who specialize in another discipline. This is important. 

The infusion of personal finance and economics into other classes 

can be an effective way to assure that these subjects have a place 

in the core curriculum. 

This year, EEE funding allowed the NCEE to distribute 14,000 

Virtual Economics CD–ROMS to every school district in the country. Thanks to the EEE, this program is now available, a unique 

resource for teachers, in every school district in the United States. 

I think one of the most important ways we can improve economic 

and financial education and ensure results is through rigorous 

evaluation and assessment. Let me just mention—and it is in my 

written testimony in a fuller way—one glowing example of how the 

NCEE has used Federal funds provided by the EEE to make a real 

difference, pursuant to Deputy Secretary Brown’s comment. 

Financial Fitness for Life, developed by the NCEE, is an awardwinning, highly acclaimed, comprehensive K–12 personal finance 

program, which helps students apply economic and financial decisionmaking skills to the real world of earning and spending an income, saving, using credit, investing, and managing their money—

that is, a financial fitness program for getting in shape financially. 

The NCEE awarded a grant of funds, through the EEE program, 

to two researchers at Eastern Kentucky University, who tested the 

effectiveness of Financial Fitness for Life in an economically underprivileged region of Kentucky. This study found that the use of Financial Fitness for Life significantly increased student performance 

on a post-test basis when compared with a pre-test of those same 

students. The study also found that Financial Fitness for Life increases financial literacy, and that, for 7th-, 8th-, and 10th-grade 

students, this increase is higher than what resulted from any other 

curriculum, if any, that teachers were previously using to teach financial concepts. 

Now, this is a powerful study, and it was presented to the American Economic Association (AEA), in January in Chicago. This kind 

of evaluation and assessment is something that we are focused on 

at the NCEE and I see us doing as an increasing contribution to 

understanding where and how we can make a significant difference. 

Through your leadership, Senator Akaka, and the bipartisan support that you have mustered from many others, Congress has provided needed resources to make a difference through the EEE proVerDate 0ct 09 2002 08:31 Apr 10, 2008 Jkt 035529 PO 00000 Frm 00031 Fmt 6633 Sfmt 6633 P:\DOCS\35529.TXT SAFFAIRS PsN: PAT
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1The prepared statement of Mr. Brobeck appears in the Appendix on page 94. 

gram. And as I have illustrated, the Excellence in Economic Education program allows the Federal Government to strengthen, expand, and leverage effective economic and financial literacy education at the local level, at the grass-roots level, in our Nation’s primary and secondary schools, for relatively few dollars. 

The EEE maximizes the impact of each Federal dollar by requiring matches for subgrants and leveraging ongoing private sector efforts. And the EEE addresses the key pieces of the economic education and financial literacy puzzle: teacher training, development 

and delivery of curricular materials, student activities that work, 

and evaluation and assessment of results. 

So I would urge the Congress to maintain and, if possible, increase funding for this needed and outstanding program. 

I am very gratified that this Subcommittee is focusing on economic education and financial literacy. Teaching sound economics 

and personal finance, and making it stick, is not only vital to an 

individual’s success, but will ultimately contribute to ensuring a 

strong national economy and a more prosperous future for our 

country. 

Thank you again for inviting me to testify today, and I will be 

happy to answer any questions. 

Chairman AKAKA. Thank you very much, Dr. Duvall. And now, 

Mr. Brobeck, your testimony. 

TESTIMONY OF STEPHEN BROBECK,1 EXECUTIVE DIRECTOR, 

CONSUMER FEDERATION OF AMERICA 

Mr. BROBECK. Thank you, Mr. Chairman. CFA appreciates the 

opportunity to testify before this Subcommittee on the role of the 

Federal Government in helping Americans make more informed financial decisions, and we also appreciate your personal leadership 

in the area of financial education and many other pressing financial services issues. 

My written testimony suggests that for many years Federal 

agencies have played an important role in increasing financial literacy. It also notes that since its establishment, FLEC has 

strengthened this Federal role. The Commission, led by the Treasury Department’s Office of Financial Education, has compiled 

unique and valuable information about financial education programs and opportunities, has encouraged more cooperation among 

Federal agencies, and has provided information to increasing numbers of Americans through its MyMoney website. 

Our testimony, however, agrees with GAO that FLEC has not yet 

developed a comprehensive national strategy to advance financial 

literacy, though it also notes that the Commission faces severe constraints in seeking to develop such a strategy. These constraints 

suggest that it would be more useful for FLEC to develop and implement informational strategies for encouraging consumers to take 

specific financial actions. These actions could include—and you 

mentioned several of them in your questions to the previous 

panel—an annual financial checkup in which people assess the status of their spending, saving, and use of credit; a more detailed assessment of current and future net wealth; automatic savings 

29

through workplace retirement programs and through preauthorized 

regular transfers from checking to savings; periodic checking of 

credit reports and credit scores, which increasingly affect not just 

credit availability and costs, but also the availability of rental 

housing, utilities, insurance, and even employment; and prompt 

loan payments to avoid late fees, penalty interest rates, and lower 

credit scores. 

There are many FLEC members with a potential interest in promoting each of these prudent financial actions. They could develop 

strategies that involve cooperation with nonprofit and private 

groups as well as with other government agencies. These strategies 

should include specific national goals for different actions, such as 

X million additional Americans self-administering a web-based financial checkup, or estimating their current and future net assets 

using a website, or participating in workplace retirement programs, 

or checking their credit reports, or reducing the frequency of late 

loan payments. And the strategies should utilize the kind of social 

marketing approaches employed in campaigns against smoking or 

drunk driving. 

Our written testimony suggests that financial education has really yet to adequately prove its worth to the Nation. Targeted informational initiatives led by Federal agencies to help people use their 

financial resources more effectively would demonstrate the value of 

this education while improving the lives of millions of Americans. 

Thank you. 

Chairman AKAKA. Thank you very much, Mr. Brobeck, for your 

statement. 

Mr. Brobeck, you recommend urging the Commission to develop 

specific financial literacy strategies to achieve measurable improvements in financial decisions. Can you give us an example of the 

kind of financial decisions you are talking about and how the Commission could work to develop measures to improve these financial 

decisions? 

Mr. BROBECK. Well, in your question to the previous panel, you 

had actually focused on annual financial checkups, so let me use 

that as an example. 

This could be encouraged by FLEC, and I would assume there 

would be at least eight to ten Federal agencies, perhaps led by the 

Office of Financial Education, that would develop a very powerful, 

compelling web-based instrument that any American could use to 

check on how they manage their money, their use of credit, their 

saving, and their investments. 

After they develop this, they would then ask nongovernmental 

experts to critique and suggest improvements in that instrument. 

They would then test that instrument on groups in the population, 

including the disadvantaged, who may need the assistance of third 

parties in order to adequately use that instrument. Keep in mind 

that there is still a very high percentage of low- and moderate-income and minority Americans that do not have ready access to the 

World Wide Web. And then—and this is very important—they 

would set a specific goal of 3 million Americans, 10 million Americans, maybe eventually 20 million Americans, actually utilizing 

that instrument in the course of a year. 

30

And then—and this is in some ways the hardest thing—they 

would take the lead to put together a very aggressive, comprehensive national campaign that included thousands of organizations in 

order to encourage and to assist Americans to take this checkup. 

And that would include not just the media. It would include financial institutions we work with who I know would support this, I am 

certain. It would include a whole array of nonprofits, the housing 

community, and, of course, government agencies at the State and 

local level as well. 

And then, finally, in each year—this could be a multiyear campaign; it would probably have to be to be effective—the effectiveness would be measured. You could measure this, of course, by 

looking to see how many Americans actually used the website, 

accessed the website to check the state of their finances. But you 

could also go out and take random samples of the population or 

even people who utilized the checkup to ask them whether taking 

that checkup led to behavioral change. 

Chairman AKAKA. Thank you for that. 

Dr. Duvall, I was interested to hear during your testimony that 

more often than not, teachers assigned to educate students on financial literacy actually specialize in other subject areas. In your 

experience, what is the key to encouraging teachers to integrate financial literacy lessons into their classrooms? 

Mr. DUVALL. Well, we have seen some real progress in that area 

over the past several years, Senator, as the advocacy effort has had 

an effect to make people aware of the importance of the issue. You 

have been a real champion in that. 

As States through their own legislative actions have tried to address the problem within the States of financial illiteracy, more 

and more States are incorporating economics and personal finance 

into their State standards and making it a requirement that it be 

taught, and even in a growing number of States that a course be 

taken from graduation. 

As that kind of push is developed, teachers are called upon to respond to the challenge—and school districts—by having well-qualified people to teach those courses. So we are seeing a greater demand for educating the—teaching the teachers so that they can 

more effectively teach the students. 

In our nationwide network, there is a kind of standing joke that 

a lot of high school economics teachers have the same first name: 

‘‘Coach.’’ They are people who have been drafted into doing a 

course in personal finance or in basic practical economics. We can 

help those teachers by giving them good curriculum and training 

them, which is terribly important, in how to talk about these basic 

concepts. Too many teachers have not had themselves economics or 

personal finance in their own background. And then we can infuse 

economics into other subject areas. 

One of the publications that teaching resources at the NCEE did 

this past year and was published this summer and has already become a best seller for us, if you will, is a book for high school teachers of American history. It is called ‘‘Focus on Economics in U.S. 

History.’’ We think you cannot talk about the Boston Tea Party 

without saying something about taxation or the roots of the AmerVerDate 0ct 09 2002 08:31 Apr 10, 2008 Jkt 035529 PO 00000 Frm 00034 Fmt 6633 Sfmt 6633 P:\DOCS\35529.TXT SAFFAIRS PsN: PAT
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ican Civil War without saying something about the impact of the 

invention of the cotton gin on the Southern economy. 

That kind of infusion into other subject areas—math, history, geography, civics and government—is a way to get the basic concepts 

into the heads and hands of our kids, but it takes teacher training 

to do it. 

Chairman AKAKA. Thank you for that answer. 

Mr. Brobeck, in your opinion, why has the Commission not found 

any duplication of government financial literacy efforts? 

Mr. BROBECK. We are actually not that aware of much duplication in the financial education initiatives of the different FLEC 

members. But we would add that duplication is not necessarily undesirable because the needs of the people are so great here. 

What is really important to us, though, is greater interagency coordination to meet measurable goals related to behavioral change. 

And the specific initiatives that I mentioned in both my written 

and oral testimony I think provide an opportunity for such coordination. 

Chairman AKAKA. Dr. Duvall, as you noted in your testimony, 

one of the key components of an effective national financial literacy 

strategy is evaluation and assessment. I was pleased to hear about 

the Eastern Kentucky University study which indicated the effectiveness of the Financial Fitness for Life program. 

Can you tell me if there are any plans to conduct similar studies 

in the near future? What should be done to assure that critical assessments will continue? 

Mr. DUVALL. Well, it certainly is a priority for the ongoing work 

of the National Council on Economic Education. I think in the 

years that I have had the opportunity to think and talk with you, 

Senator, about this important issue, we have seen some real 

change. We have moved from the need for making people aware of 

the issue, although that need continues, to seeing how the issue 

can be best addressed. We have looked at best practices. We have 

been talking more and more about solutions to the problem that we 

have helped people become more aware of. And now I think we are 

standing right on the edge of the third important part of this effort, 

and that is, testing, evaluation, and assessment, to see what does 

work and how it changes behavior. So that will be a priority for our 

work going forward, and I think it is and can be an important part 

of the work of many others. 

That is why I am so pleased that it is the fourth component of 

the EEE legislation and why I so earnestly hope that program will 

continue. It is teacher training, curriculum, and teaching resources, 

student activities, active student learning, and then measuring results. 

Chairman AKAKA. Thank you. 

Mr. Brobeck, I am concerned that consumers are not provided 

with enough information about the long-term consequences of making only the minimum credit card payment. What do you think 

must be done to ensure that consumers are adequately informed of 

the true cost of making only the minimum payment? 

Mr. BROBECK. Senator, we are very concerned, too. Too many 

Americans run up thousands of dollars, sometimes tens of thousands of dollars of credit card debt, in part because the low miniVerDate 0ct 09 2002 08:31 Apr 10, 2008 Jkt 035529 PO 00000 Frm 00035 Fmt 6633 Sfmt 6633 P:\DOCS\35529.TXT SAFFAIRS PsN: PAT
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mums convince them that the debts are affordable. And they are 

not. And when they finally realize that they cannot even make a 

2- or 3-percent payment, it is just too late and they are candidates 

for bankruptcy. 

So credit card statements, in our view, should inform consumers 

about the consequences of paying at or just above the minimum, 

and the most useful type of information included is how long and 

how costly it is to pay off the debt just by making the minimum 

payments. 

Your proposed legislation, the Credit Card Minimum Payment 

Warning Act, provides this personalized disclosure, and so we 

strongly support it. 

Chairman AKAKA. Thank you. 

Dr. Duvall, according to your testimony, one of the most important actions educators can take to improve economic education is 

to foster active learning for students. Can you give me some examples of these active learning strategies? 

Mr. DUVALL. Yes. In our own lineup of things that we offer, there 

is the Economics Challenge. The Federal Reserve System has a Fed 

Challenge. These are programs that engage students in a competitive activity that requires that they know something and be able 

to show what they know. At the lower grade levels, you can have 

games and activities, even at the—I have been challenged by people who see our mission statement that we are concerned with K–

12 education: Can you really teach young people while they are in 

kindergarten something about some basic personal finance? Absolutely. They can borrow a little lunch money and then pay it back, 

and you begin to show them how that works. You can make a list 

of the things that you want and then put price tags by it and then 

divide that in half and say, ‘‘All right. What are you going to do 

now to make choices?’’ And if they say, ‘‘Well, we will pay for what 

we can, and then we will put the rest on a credit card,’’ as was just 

said, we have got some education work to do. 

But those kinds of things you take the dismal science—economics—and make it come alive. And, again, I would say that the 

things that have been laid out in the EEE legislation—the teacher 

training and the student activities—are very important if you are 

going to make that happen. 

Chairman AKAKA. Mr. Brobeck, I am deeply concerned that too 

many families are taken advantage of by unscrupulous lenders 

through payday loans. What must be done to better protect consumers and encourage the development of payday loan alternatives? 

Mr. BROBECK. Yes, Senator, we share your concern. Consumers 

spend billions of dollars annually on these loans that have tripledigit interest rates. 

Now, ideally, we think that Congress should extend the consumer protections that they approved for members of the military 

a year ago to all Americans. But failing that, we believe Congress 

should prohibit certain abusive practices, such as payday lenders, 

for example, partnering with banks to evade laws regulating small 

loans. This protection and many other important protections is part 

of your Predatory Payday Loan Prohibition Act, and we also strongly support that legislation. 

33

Chairman AKAKA. Thank you for the support. Mr. Brobeck, I 

want to thank you and your staff for working so closely with me 

on consumer protection issues: Travis Plunkett, Jean Ann Fox, 

along with Chi Chi Wu at the National Consumer Law Center, and 

Barbara Roper. They are all extremely dedicated and talented individuals. I want you to tell them how I feel. 

I will submit my last question pertaining to refund anticipation 

loans for the record. 

I want to again thank you so much for coming today and being 

a part of this hearing. I wanted to take the time to assess where 

we are. So many of you have participated in promoting financial 

literacy throughout our country. I am just at a point of trying to 

be sure we know what the situation is and where we should be 

going to improve financial literacy. You all have helped us do that, 

and I really appreciate your participation. 

I want to thank all the witnesses for appearing today. This is, 

again, an enormously important issue because financial literacy directly impacts the quality of life for our working families. Increasing the knowledge and opportunities of consumers will help them 

be better able to save for a child’s education, manage debt, utilizer 

lower-cost financial services, purchase a home, and retire on their 

own terms. I will continue to work with all of you to improve Federal financial literacy efforts. 

I want to tell you, again, I look forward to continuing these discussions and initiatives as well. The hearing record will be open for 

one week for additional statements or questions other Members 

may have pertaining to the hearing. 

And so with all of this gratitude, this hearing is adjourned. 

[Whereupon, at 4:29 p.m., the Subcommittee was adjourned.] 

(35)

A P P E N D I X 


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Æ


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