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IMPROVING CONSUMER FINANCIAL LITERACY 

UNDER THE NEW REGULATORY SYSTEM 

HEARING 

BEFORE THE

SUBCOMMITTEE ON FINANCIAL INSTITUTIONS 

AND CONSUMER CREDIT 

OF THE

COMMITTEE ON FINANCIAL SERVICES 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED ELEVENTH CONGRESS 

FIRST SESSION 

JUNE 25, 2009 

Printed for the use of the Committee on Financial Services 

Serial No. 111–50 

( 

(II) 

HOUSE COMMITTEE ON FINANCIAL SERVICES 

BARNEY FRANK, Massachusetts, Chairman 

PAUL E. KANJORSKI, Pennsylvania 

MAXINE WATERS, California 

CAROLYN B. MALONEY, New York 

LUIS V. GUTIERREZ, Illinois 

NYDIA M. VELA ́ ZQUEZ, New York 

MELVIN L. WATT, North Carolina 

GARY L. ACKERMAN, New York 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

DENNIS MOORE, Kansas 

MICHAEL E. CAPUANO, Massachusetts 

RUBE ́ N HINOJOSA, Texas 

WM. LACY CLAY, Missouri 

CAROLYN MCCARTHY, New York 

JOE BACA, California 

STEPHEN F. LYNCH, Massachusetts 

BRAD MILLER, North Carolina 

DAVID SCOTT, Georgia 

AL GREEN, Texas 

EMANUEL CLEAVER, Missouri 

MELISSA L. BEAN, Illinois 

GWEN MOORE, Wisconsin 

PAUL W. HODES, New Hampshire 

KEITH ELLISON, Minnesota 

RON KLEIN, Florida 

CHARLES A. WILSON, Ohio 

ED PERLMUTTER, Colorado 

JOE DONNELLY, Indiana 

BILL FOSTER, Illinois 

ANDRE ́ CARSON, Indiana 

JACKIE SPEIER, California 

TRAVIS CHILDERS, Mississippi 

WALT MINNICK, Idaho 

JOHN ADLER, New Jersey 

MARY JO KILROY, Ohio 

STEVE DRIEHAUS, Ohio 

SUZANNE KOSMAS, Florida 

ALAN GRAYSON, Florida 

JIM HIMES, Connecticut 

GARY PETERS, Michigan 

DAN MAFFEI, New York 

SPENCER BACHUS, Alabama 

MICHAEL N. CASTLE, Delaware 

PETER T. KING, New York 

EDWARD R. ROYCE, California 

FRANK D. LUCAS, Oklahoma 

RON PAUL, Texas 

DONALD A. MANZULLO, Illinois 

WALTER B. JONES, JR., North Carolina 

JUDY BIGGERT, Illinois 

GARY G. MILLER, California 

SHELLEY MOORE CAPITO, West Virginia 

JEB HENSARLING, Texas 

SCOTT GARRETT, New Jersey 

J. GRESHAM BARRETT, South Carolina 

JIM GERLACH, Pennsylvania 

RANDY NEUGEBAUER, Texas 

TOM PRICE, Georgia 

PATRICK T. MCHENRY, North Carolina 

JOHN CAMPBELL, California 

ADAM PUTNAM, Florida 

MICHELE BACHMANN, Minnesota 

THADDEUS G. McCOTTER, Michigan 

KEVIN McCARTHY, California 

BILL POSEY, Florida 

LYNN JENKINS, Kansas 

JEANNE M. ROSLANOWICK, Staff Director and Chief Counsel 

(III) 

SUBCOMMITTEE ON FINANCIAL INSTITUTIONS AND CONSUMER CREDIT

LUIS V. GUTIERREZ, Illinois, Chairman 

CAROLYN B. MALONEY, New York 

MELVIN L. WATT, North Carolina 

GARY L. ACKERMAN, New York 

BRAD SHERMAN, California 

DENNIS MOORE, Kansas 

PAUL E. KANJORSKI, Pennsylvania 

MAXINE WATERS, California 

RUBE ́ N HINOJOSA, Texas 

CAROLYN MCCARTHY, New York 

JOE BACA, California 

AL GREEN, Texas 

WM. LACY CLAY, Missouri 

BRAD MILLER, North Carolina 

DAVID SCOTT, Georgia 

EMANUEL CLEAVER, Missouri 

MELISSA L. BEAN, Illinois 

PAUL W. HODES, New Hampshire 

KEITH ELLISON, Minnesota 

RON KLEIN, Florida 

CHARLES A. WILSON, Ohio 

GREGORY W. MEEKS, New York 

BILL FOSTER, Illinois 

ED PERLMUTTER, Colorado 

JACKIE SPEIER, California 

TRAVIS CHILDERS, Mississippi 

WALT MINNICK, Idaho 

JEB HENSARLING, Texas 

J. GRESHAM BARRETT, South Carolina 

MICHAEL N. CASTLE, Delaware 

PETER T. KING, New York 

EDWARD R. ROYCE, California 

WALTER B. JONES, JR., North Carolina 

SHELLEY MOORE CAPITO, West Virginia 

SCOTT GARRETT, New Jersey 

JIM GERLACH, Pennsylvania 

RANDY NEUGEBAUER, Texas 

TOM PRICE, Georgia 

PATRICK T. MCHENRY, North Carolina 

JOHN CAMPBELL, California 

KEVIN McCARTHY, California 

KENNY MARCHANT, Texas 

CHRISTOPHER LEE, New York 

ERIK PAULSEN, Minnesota 

LEONARD LANCE, New Jersey 

(V) 

C O N T E N T S 

Page 

Hearing held on: 

June 25, 2009 .................................................................................................... 1 

Appendix: 

June 25, 2009 .................................................................................................... 35 

WITNESSES 

THURSDAY, JUNE 25, 2009 

Diaz, Lautaro ‘‘Lot,’’ Vice President, Housing and Community Development, 

National Council of La Raza (NCLR) ................................................................. 10 

Gannon, John M., Senior Vice President, Office of Investor Education, and 

President of the FINRA Investor Education Foundation, The Financial 

Industry Regulatory Authority (FINRA) ............................................................ 17 

Jones, Stephanie J., Executive Director, National Urban League Policy Institute ........................................................................................................................ 13

Lauber, Gerald, Chief Senior Advisor, National Urban Alliance (NUA) ............ 15 

Levine, Laura, Executive Director, Jump$tart Coalition for Personal Financial 

Literacy ................................................................................................................. 8 

Neiser, Brent A., Director of Strategic Programs and Alliances, National 

Endowment for Financial Education (NEFE) .................................................... 19 

Salisbury, Dallas L., President and CEO, Employee Benefit Research Institute (EBRI) ........................................................................................................... 11 

APPENDIX 

Prepared statements: 

Hinojosa, Hon. Ruben ....................................................................................... 36 

Diaz, Lautaro ‘‘Lot’’ .......................................................................................... 45 

Gannon, John M. .............................................................................................. 52 

Jones, Stephanie J. ........................................................................................... 60 

Lauber, Gerald .................................................................................................. 67 

Levine, Laura .................................................................................................... 73 

Neiser, Brent A. ................................................................................................ 78 

Salisbury, Dallas L. .......................................................................................... 82 

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

Hinojosa, Hon. Ruben: 

GAO Testimony Before the Subcommittee on Oversight of Government 

Management, the Federal Workforce, and the District of Columbia, 

Committee on Homeland Security and Governmental Affairs, U.S. Senate, entitled, ‘‘Financial Literacy and Education Commission, Progress 

Made in Fostering Partnerships, but National Strategy Remains Largely Descriptive Rather Than Strategic,’’ dated April 29, 2009 ................... 126 

Washington State Financial Literacy Work Group Final Report entitled, 

‘‘Putting The Pieces Together,’’ dated December 1, 2008 .......................... 146 

(1) 

IMPROVING CONSUMER FINANCIAL 

LITERACY UNDER THE NEW 

REGULATORY SYSTEM 

Thursday, June 25, 2009 

U.S. HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON FINANCIAL INSTITUTIONS

AND CONSUMER CREDIT, 

COMMITTEE ON FINANCIAL SERVICES, 

Washington, D.C. 

The subcommittee met, pursuant to notice, at 2 p.m., in room 

2128, Rayburn House Office Building, Hon. Luis V. Gutierrez 

[chairman of the subcommittee] presiding. *(Chairman Gutierrez 

was unable to preside at this hearing due to a pressing commitment at the White House.) 

Members present: Representatives Sherman, Hinojosa, McCarthy 

of New York, Baca, Green, Scott, Cleaver; Hensarling, Royce, 

Marchant, and Paulsen. 

Mrs. MCCARTHY OF NEW YORK. [presiding] Good afternoon everybody. 

We certainly appreciate everybody being here. 

This hearing of the Subcommittee on Financial Institutions and 

Consumer Credit will come to order. I want to thank everybody 

and the witnesses for agreeing to appear before the subcommittee 

today. 

Today’s hearing, entitled, ‘‘Improving Consumer Financial Literacy Under the New Regulatory System,’’ will examine the continuing need for financial literacy, with a particular focus on the 

role of consumer financial literacy under the President’s newly proposed regulatory framework. 

Among the issues that will be addressed here: how the consumerfriendly plain-language products proposed under the regulatory reconstruction plan will be created and regulated; the efficiency of 

previous Federal financial literacy efforts; and which agency should 

have primacy over financial literacy efforts going forward under the 

new plan. 

We will be limiting our opening statements to 15 minutes per 

side. But without objection, the hearing record will be held open for 

all members’ opening statements to be made a part of the record. 

I now recognize Mr. Hensarling for 5 minutes. 

Mr. HENSARLING. Thank you, Madam Chairwoman. 

I very much appreciate this hearing being called. 

I do believe that financial literacy is a very important subject, 

one that Members on both sides of the aisle have championed in 

2 

the past, so it continues to be a very laudable goal for our Nation 

to improve the financial literacy of our fellow citizens. 

And, in fact, although I cannot do the quote justice, I will paraphrase something that one of our Founding Fathers, Thomas Jefferson, once said, and that is, if we disagree with how our fellow 

citizens exercise their discretion, the remedy is not to take it from 

them but to help inform their discretion. 

My apologies to any Jeffersonian scholars in the audience. I 

know that was not a literal quote, but that is essentially the paraphrase. And so, in some respects, although I appreciate the hearing, I am curious why we are having the hearing. I am curious because, as I look at the underlying legislation that would create the 

Financial Product Safety Commission, our colleague Mr. Delahunt’s 

bill, which roughly parallels what the Obama Administration has 

furthered, I essentially see a rather draconian effort that allows an 

unelected body of bureaucrats to essentially decide that if they subjectively believe that a consumer financial product is ‘‘unfair,’’ if 

they subjectively believe that a consumer financial product is ‘‘anticonsumer,’’ they can ban it, just ban it from the market. 

It is not even a Federal preemption. It is essentially a layer of 

regulation and regulators that is poured on top of the present regulatory structure. And as I read the statute that was presented, 

again, by our colleague yesterday in our full committee hearing, it 

also encompasses the goal of having these regulators create ‘‘plain 

vanilla’’ products. 

You know, it is laudable if people want vanilla, but some people 

want strawberry, some people want chocolate, and some people 

want the 32 flavors of Baskin-Robbins. Typically, in a competitive 

market, the competitive market is going to produce what the people 

want. That is kind of one of the basic tenets of capitalism. And so, 

again, I wish our fellow citizens would indeed be—that we could 

help achieve and figure out a coherent strategy and plan to achieve 

a greater level of financial literacy, but I don’t know if it is going 

to be needed if this legislation becomes law. 

I mean, after all, you really don’t need to know how to read if 

your nanny reads you all your material at the end of each evening. 

And, in fact, if your nanny prevents you from putting your hands 

on any piece of literature, you are foreclosed from being able to 

read. 

And so now we are going to have an unelected group of bureaucrats who ultimately can decide what mortgages we have, what 

bank accounts we can open, and whether or not we will even be 

trusted with a credit card. 

And given that there is an entire new level of criminal and civil 

penalties that can be applied for those who produce subjectively 

unfair products or subjectively anti-consumer products, functionally 

no product is going to come to market that isn’t pre-cleared by this 

unelected group of bureaucrats. 

And so, on the one hand, maybe only plain vanilla products will 

be available on the market. I am not sure how financially literate 

one needs to be. If you are only offered one flavor of ice cream, I 

suppose all you need to read on the board is vanilla. There is nothing else to read. 

3 

And so, again, we have these philosopher-kings who will decide 

what is best for us, philosopher-kings whom I feel quite confident 

are not familiar with the Rodriguez family of Mesquite, Texas, that 

I have the opportunity of representing in Congress. My guess is 

they don’t know exactly what precise bank account will help that 

family the most. 

My guess is that this unelected group of bureaucrats will be 

unacquainted with the Laird family of Athens, Texas, and they 

probably don’t know what mortgage product is going to be best for 

their homeownership dreams in America. 

My guess is they probably are not well acquainted with the 

Shane family of Kaufman County, Texas, whom I represent in Congress. And my guess is they really shouldn’t decide whether or not 

Kenneth Shane and his wife can use a credit card to help finance 

their American dream. 

Part of our challenge clearly is ineffective disclosure. We all 

agree on that. But most of the disclosure, I mean, it is kind of like 

Pogo. We have met the enemy, and it is us. We are the ones who 

require it. When you disclose everything, you end up disclosing 

nothing. And so we should work to have effective disclosures written in English, not voluminous disclosures written in legalese. 

So, again, I appreciate calling the hearing. I hope it proves to be 

a useful hearing. But ultimately, if the President’s initiative is 

passed, it is all for naught. 

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

Mr. HINOJOSA. [presiding] Thank you, Ranking Member Hensarling. 

I am glad to be able to make my statement. And I want to welcome the witnesses to today’s hearing. I especially want to commend Chairman Luis Gutierrez for holding it. 

Today’s hearing on financial literacy is important to all of us in 

Congress, for today’s witnesses, to all of you attending this hearing 

in person, via live webcast, or archived webcast, and really, each 

and every resident in the United States, but especially for our children and the generations to come. 

I ask that those of you with financial literacy programs understand that we have a limited amount of time and space for everyone to testify today. But I believe that we have put together a comprehensive panel of witnesses, and I personally welcome any statements you might make for submission in today’s record. 

I am wearing several hats today. I am a member of this subcommittee. I am a co-Founder and co-Chair of the Financial and 

Economic Literacy Caucus, alongside my good friend and colleague 

from Illinois, Congresswoman Judy Biggert, and her dedicated 

staff, Nicole Austin and Zach Cikanek. I am chairman of the Subcommittee on Higher Education, and I am chairman of the Congressional Hispanic Caucus Task Force on Education. I am a consumer, just like all of you here today, and most important, I am 

a father. I have five children and six grandchildren. So financial 

literacy is extremely important to my family and to millions and 

millions of families throughout our country. 

What we do here today, the actions we take during the 111th 

Congress, and the steps that the States take to graduate financially literate students are all of the utmost importance. We need 

4 

to improve the financial literacy rates of all residents throughout 

the United States, and I believe that today we might find some of 

the tools necessary to accomplish this goal which most definitely 

will include revamping the Financial Literacy and Education Commission and selecting one agency to have primacy over financial literacy efforts going forward under the new Financial Services regulatory plan proposed by President Obama. 

With that, I yield back the remainder of my time, and I want to 

recognize Mr. Paulsen for 3 minutes. 

Mr. PAULSEN. Thank you, Mr. Chairman. I appreciate it. 

I also strongly believe that we must increase the financial literacy of our citizens. This is a basic life skill that, unfortunately, 

many in our country truly lack. This is really a family and a financial security issue. 

What concerns me is that nowhere in the Administration’s proposal that we have now begun hearings on are the words ‘‘financial 

literacy’’ mentioned. The plan doesn’t do anything to encourage individuals, from what I can see, to empower themselves or help people better understand personal finance and the decisions that they 

have to make on a daily basis. 

Instead, what I see is that, is one of my chief concerns, that it 

actually takes away the ability of individual choice and decisions 

from individuals. And rather than seeking to increase financial literacy, the underlying legislation creates this panel that potentially 

will take away choices from consumers out of a fear that things 

will be too complicated for them to understand. In other words, 

someone else is going to make decisions about what is best for you. 

And I think that is the wrong approach. 

Congress should not be taking away choices from the American 

people. Congress shouldn’t be stifling innovation at a time when we 

need innovation. Instead, I think Congress should be helping these 

individuals understand what options are available so that they can 

make the right decisions for themselves. And I sincerely hope that 

this committee can work in a bipartisan way to improve upon the 

Administration’s proposal as we go forward in crafting really some 

commonsense legislation that is needed to make sure that ultimately we are empowering all Americans to make sound and educated judgements with regard to their own personal finances. 

And I yield back. 

Mr. HINOJOSA. Thank you. 

I, at this time, wish to recognize Congressman Green for 3 minutes. 

Mr. GREEN. Thank you, Mr. Chairman. 

I thank Chairman Gutierrez for his assistance with this as well. 

Mr. Chairman, generally speaking, financial success is directly 

proportional to financial literacy. People who understand financial 

products can make good decisions about the products that they 

have to negotiate. I think that this hearing is exceedingly important because it will give us an opportunity to examine the means 

by which we can, not only improve the products themselves by way 

of conveying what they are about to the public, but also, it helps 

us to understand where best to have this type of assistance located. 

We can have it in many different places, or we can have it in one 

place. I think that this is the type of hearing where we can get the 

5 

intelligence necessary to make some decision as to where the actual 

delivery mechanism is located. 

I am exceedingly excited about this, and I look forward to our 

being able to develop the plain language that Americans would like 

to have so that they can understand and, to be quite candid with 

you, so that I can understand. I have had the good fortune to get 

a decent education in this country. And I can tell you that when 

I read some of my credit card materials, I am tempted to call a 

lawyer. I happen to have a law degree, but I haven’t found that it 

has been of great benefit to me on some occasions, and went so far 

as to talk to my friend, who is a lawyer, who reminded me that 

he, too, has problems. 

So I am looking forward to our working together to come up with 

the kind of language that people can understand that makes a lot 

of sense and deciding where we should have the agency, or which 

agency is most appropriate to help us with this line of products. 

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

Mr. HINOJOSA. Thank you. 

At this time, I would like to recognize Congressman Marchant 

for 4 minutes. 

Mr. MARCHANT. Thank you, Mr. Chairman. 

After reviewing last night all of the testimony that we will be 

given today, I am struck that all of your testimony seems to be directed towards a system that I think Mr. Hensarling has already 

pointed out is most likely not to be in place this time next year. 

In fact, with the current—the legislation that we just passed in 

the last few months, two pieces of legislation about credit cards, 

and the President has signed one of those pieces of legislation, significantly limiting the terms and conditions of credit cards and simplifying the credit card system; and taking into consideration that 

probably 80 percent of all home loans are made now through either 

FHA, VA, Fannie Mae, or Freddie Mac, and all of those documents 

are promulgated through HUD and through government agencies 

already; it seems to me that your task in the future may be trying 

to figure out how you can work with those Federal agencies, this 

new Financial Consumer Protection Agency, how you can work 

with them to try to help them promulgate all of these loan forms 

and all of the loan documents that each and every banker and 

lender in America will most likely have to go and get their loan papers approved and everything they do, and make sure that promulgation of documents is done through that agency. 

So it may simplify your job if you can, if you think you can trust 

this new financial consumer agency to draft the documents to 

where everyone who reads them will have no problem. So I think 

my questions today, Mr. Chairman, are going to be directed in that 

direction, and ask you what your opinion is of that agency and how 

you plan on interfacing with that agency. 

Thank you. 

Mr. HINOJOSA. Thank you. 

I would like to ask Congressman Cleaver to take 3 minutes, 

please. 

Mr. CLEAVER. Thank you, Mr. Chairman. 

I appreciate very much the hearing. I am very much concerned 

about the issue of financial literacy. The purpose of this hearing is 

6 

to discuss plain-language initiatives and financial literacy promotion. Both of these subjects are extremely important to me. And 

I have advocated in our hearings over the years for plain language. 

In fact, in the 2006 GAO report, ‘‘Increased Complexity in Rates 

and Fees Heightens Need For More Effective Disclosure to Consumers,’’ is I think a bold and accurate statement about what is 

needed. Some credit card disclosure statements, and I think all of 

you are familiar with this, are written in 27th grade language. 

That is 12 years of high school and 12 years of college and 3 years 

of graduate school. 

And this sort of deliberate and sometimes deceptive way of presenting credit card information is at worst appalling and despicable, and at best, just plain arrogant. Plain-language regulations 

could go far to help eliminate these misleading and confusing practices. 

When I teach Bible study, I always teach that, in the Bible, the 

main thing is the plain thing, and the plain thing is the main 

thing. And it would be, I think, appropriate if we adopted a similar 

policy as it relates to what we incorporate into insurance—I am 

sorry, into our credit card statements and frankly, even into mortgage documents. 

Plain language can lead to the watering down of ideas also, 

which can also create some problems as well. And for this reason, 

I have just introduced H.R. 3037, to create a pilot program for financial literacy. I will incorporate into this program a pilot project 

for 10 school districts across the country. These projects would receive Federal funding to help them educate and train the teachers 

in order to integrate financial literacy into the curricula of grades 

K through 12. And this pilot program is just one step toward ensuring that all students in all school districts will be able to participate in similar programs in their schools. 

And finally, Mr. Chairman, if you look at the crisis that we have 

found ourselves in today, it doesn’t take a Ph.D. to realize that we 

have a public that, in many instances, just did not understand 

what they were getting into when they participated in these exotic 

mortgages. And so I think the thing we need to let people know is 

that what you don’t owe won’t hurt you. 

Mr. HINOJOSA. Thank you. 

At this time, I would like to call on Congressman Royce for 1 

minute. 

Mr. ROYCE. Thank you, Mr. Chairman. 

I think financial literacy here is key. I think, in my view, I am 

a little afraid that one of the reasons we are here today is because 

of the overreliance on the government to determine what is best for 

consumers. And I think a lot of consumers looked at this and said, 

well, if the government says it is okay, then it must be. And I think 

this flawed line of thinking led millions of consumers to get involved in subprime and Alt-A loans. They, after all, had that government support. 

And I think a similarly faulty line of thinking led investors in institutions around the world to embrace financial derivatives based 

on the U.S. housing market. Why? Well, the government-supported 

rating agencies rated these products Triple-A. So what could the 

problem be? 

7 

And there was a belief that the rating agencies and Federal regulators knew something that everyone else did not know. And clearly, they didn’t know the problem. But there was a reliance on the 

government, and in fact, in many instances, they were responsible 

for the development and proliferation of these products. 

According to a former Federal Reserve official, CRA regulations 

led to the development of subprime loans, and the proliferation of 

subprime and Alt-A loans was in itself enabled through low-income 

housing goals that were placed on Fannie Mae and Freddie Mac by 

their regulators and by Congress. 

So, clearly, the belief in an all-knowing regulator is flawed. And 

instead of attempting to address this problem through increasing 

the regulatory presence over the industry, which will exacerbate 

the belief that the government does know best, we should be encouraging an educated, knowledgeable consumer and investor base 

that makes sound financial decisions for themselves and their families; hence, the importance of financial literacy and the importance 

of disclosure. 

Thank you, Mr. Chairman. 

Mr. HINOJOSA. Thank you, Congressman Royce. 

I want to announce that the House has begun the voting. I am 

going to ask that the technicians put that work that is going on in 

the House of Representatives on the screens so that you can see 

the progress that we are making. But we have seven amendments 

to vote on, plus the eighth, which is final passage. We anticipate 

that it is going to take 1 hour. So I am going to recess to allow all 

members to participate. And we will reconvene in 1 hour. 

I am looking forward to the testimony of these witnesses. I think 

that it is going to be very informative and something that we are 

going to be very proud of in getting into the record. 

With that, we stand in recess. 

[recess] 

Mrs. MCCARTHY OF NEW YORK. [presiding] Let me apologize. Unfortunately, we are running through a whole bunch of votes, and 

we are going to have more votes in probably less than an hour. I 

am fairly fast, to say the least, so we are going to go on, get all 

your testimony in, so that we don’t have to have another recess, if 

that is all right with everybody. 

First, I would like to introduce the witnesses from today’s panel: 

Ms. Laura Levine, executive director, Jump$tart Coalition for 

Personal Financial Literacy; Mr. Lot Diaz, vice president, community development, National Coalition of La Raza; Mr. Dallas Salisbury, president and CEO, Employee Benefit Research Institute; 

Mr. Brent Neiser, director of strategic programs and alliances, National Endowment for Financial Education. 

I am sorry, I skipped one; Mr. John Gannon, senior vice president, Office of Investor Education, and president of the Financial 

Industry Regulatory Authority, Investor Education Foundation. 

That is a mouthful. 

And Dr. Gerald Lauber, chief senior advisor, National Urban Alliance. 

I would like to certainly extend a warm welcome to Dr. Lauber. 

He is the chief advisor and a board member of the National Urban 

Alliance. He brings an extensive background to the position, includVerDate Nov 24 2008 11:05 Nov 04, 2009 Jkt 052407 PO 00000 Frm 00013 Fmt 6633 Sfmt 6633 K:\DOCS\52407.TXT TERRIE
8 

ing academic, technology, and corporate experience in New York 

schools and was a first responder at Ground Zero. 

Mr. GREEN. Madam Chairwoman, did we cover the Urban 

League? Ms. Jones? 

Mrs. MCCARTHY OF NEW YORK. I’m sorry. They didn’t give it to 

me. Stephanie Jones is the executive director of the National 

Urban League Policy Institute, a position she has held since the 

year 2005. Prior to coming to the Urban League, she was chief 

counsel for Senator John Edwards. 

Welcome to all of you, and thank you. 

Let me explain the lighting system. You will each get 5 minutes. 

The yellow light means you have a minute left. We will ask you 

to try to finish off your sentence or thought at that particular time. 

With that, Ms. Levine. 

STATEMENT OF LAURA LEVINE, EXECUTIVE DIRECTOR, 

JUMP$TART COALITION FOR PERSONAL FINANCIAL LITERACY 

Ms. LEVINE. Thank you, Representative McCarthy, and members 

of the subcommittee. 

Good afternoon. Thank you for this opportunity to speak with 

you today. 

My name is Laura Levine, and I am the executive director of the 

Jump$tart Coalition for Personal Financial Literacy, a nonprofit organization based here in Washington, D.C. 

Jump$tart is a coalition of about 180 companies, such as Visa 

and Charles Schwab, and organizations like NEFE, EBRE, and 

FINRA, as well as Federal agencies which share a commitment to 

advance financial literacy among students in kindergarten through 

college. Jump$tart is also a network of 48 affiliated State coalitions. 

The Coalition was founded in 1995 by a small group of organizations that recognized the need to educate students about personal 

finance, as well as the importance of meeting this need through a 

collaborative effort. Jump$tart does not conduct financial education 

itself or create financial education resources; rather, its role is to 

support and promote individual and collective efforts to educate 

young people about money management. 

As the committee considers the importance of financial literacy 

within the regulatory system, Jump$tart encourages you to keep in 

mind the difference between educating and informing adult consumers and providing standards-based tested personal finance education for students in kindergarten through high school. Any widespread effort to require personal finance education at that level 

must be coordinated by or with the Department of Education, as 

well as the State Departments of Education and the various appropriate educational organizations at the State, local, and national 

levels. 

Jump$tart believes that financial literacy is an important element of consumer protection, and even with better regulation designed to protect consumers and more readable disclosures that 

most consumers can easily understand, an adequate level of financial literacy would give most consumers comfort, confidence, and 

9 

the ability to make decisions most advantageous to their specific 

needs. 

But today, many young people are not adequately prepared to 

handle the growing variety and complexity of financial products 

and services or to make wise decisions in managing their own 

money. In 1997, the Jump$tart Coalition launched its first survey of financial literacy among high school students. The survey was conducted again in 2000 and has been repeated biannually since. Nationally, the average score on the test portion of the survey has 

ranged from 48.3 percent and, unfortunately, that was the most recent survey in 2008, to a high of 57 percent, which still could be 

called a failing grade. 

In each of the surveys, participants were 12th grade students recruited from randomly selected public high schools. It is important 

to note that the Jump$tart survey is intended as a general measure of the level of financial literacy among high school students 

and is not designed to be an assessment of the effectiveness of specific financial education curricula, and therefore, we should not 

conclude that the low scores reflect that financial education is ineffective. 

Rather, the consistently disappointing results over more than a 

decade of research do seem to indicate the need for more and better 

financial education. 

In 2008, Jump$tart also surveyed college students for the first 

time. Given the same test questions, college students on average 

answered 62.2 percent of the questions correctly, substantially better than their high school counterparts. But, unfortunately, college 

graduates are still a relatively small segment of our total population. 

Jump$tart believes that personal finance must be included in the 

education of all students during the kindergarten through high 

school years to provide young people with the knowledge and skills 

they need to make smart financial decisions. Some positive strides 

have been made in financial education in recent years. 

Jump$tart has identified three States, Missouri, Tennessee and 

Utah, that currently require all students to take and pass a onesemester course devoted to personal finance in order to graduate 

from high school. And another 18 States require some personal finance content to be incorporated into the other subject matter. 

I think it is important to note that personal finance education is 

taking place in schools across the country, whether or not the State 

or local jurisdiction requires it. We believe that personal finance 

education needs to be introduced early in the elementary school 

years while students are forming their behaviors and beliefs, and 

we believe that effective financial education in the middle grades 

could help troubled or unmotivated students make the connection 

between staying in school and their lifelong income-earning potential, possibly changing the path of would-be dropouts. 

Thank you for the opportunity to speak with you today. And as 

you start to shape the future of the regulatory atmosphere for financial institutions, I urge you to keep the financial literacy of our 

Nation’s students in mind, too. More and not less personal finance 

education is needed, and we need to have a long-term nationwide 

10 

strategy in place to ensure that this education is available to all 

students. 

Thank you. 

[The prepared statement of Ms. Levine can be found on page 73 

of the appendix.] 

Mr. HINOJOSA. [presiding] Thank you, Ms. Levine. 

At this time, I would like to recognize Mr. Diaz. 

STATEMENT OF LAUTARO ‘‘LOT’’ DIAZ, VICE PRESIDENT, COMMUNITY DEVELOPMENT, NATIONAL COUNCIL OF LA RAZA 

(NCLR) 

Mr. DIAZ. Good afternoon. My name is Lot Diaz, and I am vice 

president for housing and community development at the National 

Council of La Raza. 

NCLR is the largest Hispanic civil rights organization in the 

United States dedicated to improving the opportunities for Hispanic Americans. 

I would like to thank Chairman Gutierrez and Ranking Member 

Hensarling for inviting us to share our views. 

I would also like to thank Congressman Hinojosa for his leadership in the area of financial literacy. 

In my remarks today, I will lay out a strategy for using national 

financial counseling programs as a glue to hold major asset-building programs together. 

There are a number of Federal programs, like housing counseling, individual development accounts, and the VITA initiative 

that aim to increase asset ownership among low- and moderate-income families. However, none of them offer a targeted strategy for 

improving the choices of financial consumers and advancing them 

to more sophisticated products and transactions. 

In 1997, NCLR created a counseling network that today consists 

of 51 community-based counseling providers that will this year provide counseling education to over 40,000 families. 

Also in 2005, NCLR released a report which found that most financial education programs did not have the impact of helping Hispanic families obtain assets. We have learned that one-on-one 

counseling to low-income families is a meaningful and effective tool 

for building financial knowledge and sustainable wealth. 

While one goal of the Administration’s proposed Consumer Finance Protection Agency would be to streamline financial literacy 

and education efforts, we believe a bolder, more targeted approach 

is necessary to achieve a shared goal, the shared goal of changing 

consumer choices and behavior. 

A successful national counseling program should include elements like in-person, one-on-one service, provide advice on a wide 

range of financial services, and deliver services through community-based organizations currently providing asset programs. 

As Congress considers regulatory reform, it must also consider 

how to improve the efforts of Federal agencies to educate financial 

consumers. Several proposed reforms, like additional disclosure, 

will curb deceptive practices. However, these reforms will not necessarily improve the daily financial decisions of families or ensure 

that these decisions set them on a path to build true financial security. 

11 

Many times, improving families’ financial decisions requires tailored guidance from a professional who can take into consideration 

the totality of the family’s circumstances and goals. In fact, this is 

a mainstream approach taken by families with the means to do so. 

They seek advice from a professional financial planner or investment advisor. 

One NHN member, the Resurrection Project in Chicago, provides 

a model that brings these large wealth-building programs together 

through financial counseling. TRP is a certified housing counseling 

agency which provides free tax preparation, financial counseling, 

and other services. A typical client meets with a counselor individually to determine their financial status. A counselor reviews the 

client’s credit report, budget, and financial goals. 

On average, 80 percent of the Resurrection Project’s clients are 

not ready to purchase a home and likely need to work through 

other financial barriers before pursuing homeownership. In some 

cases, homeownership may not be the right choice. Together, the 

client and the counselor establish an action plan that would address credit repair, plan savings accounts, financial dictation and 

available tax programs. As the family works through their action 

plans, they continue to meet with the counselor, who helps them 

tackle basic and complex financial issues. 

Organizations like the Resurrection Project run into several barriers implementing this model due to the structure of the current 

system. As stated earlier, financial counseling is not a federally 

funded stand-alone service. They are also limited in size and scope 

of the current Federal programs. 

A national financial counseling program would allow counselors 

to move families through asset-building programs to create a real 

opportunity for families to make fruitful financial choices. 

NCLR applauds the Administration’s and Congress’ efforts to 

modernize our financial regulatory system. We urge you not to lose 

sight of the long-time bipartisan goal of improving families’ understanding and choices in financial matters. 

A national financial counseling program would offer meaningful 

tailored financial advice, link existing asset programs, and improve 

the relationship between underserved communities and the banking sector. 

In conclusion, NCLR recommends that: Congress establish a national financial counseling program; they expand programs that 

help families obtain assets; and finally, they create new incentives 

for low-income families. 

Thank you. 

[The prepared statement of Mr. Diaz can be found on page 45 of 

the appendix.] 

Mr. HINOJOSA. Thank you, Mr. Diaz. 

And now, I would like to recognize Mr. Salisbury. 

STATEMENT OF DALLAS L. SALISBURY, PRESIDENT AND CEO, 

EMPLOYEE BENEFIT RESEARCH INSTITUTE (EBRI) 

Mr. SALISBURY. Mr. Chairman, members of the committee, it is 

a pleasure to be here. I thank you for the invitation to testify 

today. 

12 

My employer since 1978, the Employee Benefit Research Institute, I would note, does not lobby or take positions for or against 

proposals. And my full submission for the record includes a significant amount of survey data and financial literacy status information as dealing with the full description. 

The letter you sent me, however, inviting me to testify asked four 

specific questions that actually call for the statement of positions, 

and in that sense, I would want to stress that my statements from 

this point forward are my own personal views and not those of my 

employer. 

First, as a consumer of financial services, my reaction is positive 

to the creation of an independent consumer financial protection 

agency if, and I would stress this, the consumer is a dominant 

presence on the board and in advisory council positions. 

For example, deep experience in financial services, in quotation 

marks, should be interpreted broadly enough to include lifetime 

consumers of financial services, not just individuals working for the 

financial services industry. I would personally prefer regulation 

and protection by an entity that is not governed by the regulated 

or, as stated on page 29 of the President’s document, captured by 

the regulated, a problem found in recent years at the regional Federal Reserve banks, the Federal Reserve, and other existing regulatory agencies. 

As a consumer, I currently see no such independent regulator, 

which if properly implemented, the CFPA could become. If the consumer is not dominant at CFPA, however, I would stress that the 

agency would likely be a waste of time, money, and effort and 

would only serve to mislead the public into thinking that they will 

be protected. 

Second, the plain-language financial products proposed need to 

be what my grandmother termed, and the ranking member termed, 

plain vanilla. For example, a 20 percent down, 30-year fixed-rate 

mortgage with clearly specified closing costs and that can be paid 

off with no penalties; or a 3-year fixed-rate car loan that can be 

paid off any time without the complexity of the Rule of 78 that I 

got tripped up by in 1972 personally, in spite of thinking that I am 

an informed consumer; or a charge or credit card that tells you any 

and all fees in advance and cannot change fees without giving you 

notice that the opportunity to cancel is present and giving you a 

prorated refund for any annual card fee. 

Research has found that individuals make the same choices with 

a 1-page disclosure as with multiple pages of fine print; thus, they 

require one plain English summary page with all key facts in addition to more detailed disclosure. 

Third, the President’s Advisory Council on Financial Literacy has 

proven to be a worthy effort. It has also provided direct input to 

the Treasury and to the Financial Literacy Education Commission. 

Long-term value, however, will depend upon some formalization 

of the role of the White House and some level of dedicated funding 

and staffing. The current approach of heavily depending upon those 

appointed to donate time, money, and other resources or to raise 

them from others, leads to potential conflicts of interest and confusion of roles. 

13 

Related to FLEC, I find, regrettably, that I am in agreement 

with the critical review by the Government Accountability Office 

that, as currently structured, FLEC has not met the legislated objectives. The Administration may already contemplate integration 

of FLEC into CFPA, but if it is not focused on this issue, the Administration and the Congress should do so as details of CFPA are 

developed. 

Fourth, and finally, as your request letter notes, the President’s 

document states the CFPA should review and streamline existing 

financial literacy and education initiatives government-wide. Based 

upon my work on savings and retirement issues since joining the 

Labor Department in 1975, giving one agency the absolute responsibility for direction of all Executive Branch activities in the area 

of financial literacy and education could possibly add needed coordination and consistency. But that would only occur if the leadership of the agency was committed to the issue and to the approach 

set out in the legislation. 

Over my 34 years of working on this issue, I have watched multiple agency programs and priorities and financial education shift 

dramatically as political leadership changes. This is not just the 

case when party control changes, but occurs within a party even 

with new staff changes. Thus, the role being set out for CFPA may 

or may not add value in this area, depending upon the specificity 

of the legislation, the attitudes and priorities of the director, and 

adequate staff and budget resources provided for funding. 

Assurance that most of those appointed to the board and advisory committee with ‘‘deep experience in financial services’’ are 

there as individual financial services consumers, not as financial 

services industry representatives, would make success more likely. 

Needed technical expertise can be hired. But policy direction from 

the appointed leadership and advisors will determine ultimate results. 

I look forward to working with your committee and all others on 

these important issues. Financial literacy on issues as simple as 

understanding compound interest would be essential, even if there 

are plain-vanilla products. 

Thank you. 

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

82 of the appendix.] 

Mr. HINOJOSA. Thank you, Mr. Salisbury. 

Now, I would like to call on Ms. Jones. 

STATEMENT OF STEPHANIE J. JONES, EXECUTIVE DIRECTOR, 

NATIONAL URBAN LEAGUE POLICY INSTITUTE 

Ms. JONES. Thank you, Chairman Hinojosa. 

I thank the subcommittee for this opportunity to testify today. I 

am Stephanie J. Jones, executive director of the National Urban 

League Policy Institute. 

Based upon our long experience providing frontline financial education and housing counseling services in Urban League affiliate 

programs throughout the country, the National Urban League has 

developed considerable experience and insight on this issue. We are 

glad to offer our recommendations, which I will briefly outline now 

but are presented in greater detail in my written testimony. 

14 

In this whole process, our overarching concern is the consumer, 

and we feel very strongly that the new regulatory framework must 

include inherent checks and balances that guarantee the advancement of the five consumer protection objectives. And those objectives are: consumer financial services markets operate fairly and 

efficiently; consumers have the information they need to make responsible financial decisions; consumers are protected from abuse, 

unfairness, deception and discrimination; traditionally underserved 

consumers and communities have access to lending, investment, 

and financial services; and national community-based organizations, such as the National Urban League, the National Council of 

La Raza, and others that have demonstrated effectiveness in reaching underserved minority communities, be included as full partners 

in any consumer protection effort. 

We are pleased that this committee is focusing on financial literacy today. This is a critical aspect of this issue, and it is a top 

priority for the National Urban League. But we can’t forget that 

while financial literacy is important, the fundamental problem at 

the heart of today’s foreclosure crisis was not the inadequacy of the 

disclosures or the financial literacy of the borrowers. Rather, it was 

that lenders should not have made loans that they knew borrowers 

would be unable to sustain without refinancing. Therefore, to effectively protect consumers, it is critical that the regulatory system 

monitor and address market incentives that encourage loan originators to push risky or unsuitable loan products, and must also include independent, redundant back-up systems that provide layers 

of protection against financial excess. 

And as you know, financial literacy is at the core of the Urban 

League’s mission to empower African Americans to attain economic 

self-sufficiency. The rationale for our emphasis on financial literacy 

is buttressed by some startling data, as revealed in our annual, 

‘‘State of Black America’’ report. Among other things, we have 

found that African Americans’ economic standing is 57 percent that 

of White Americans, and that the median net wealth of African 

Americans is $10,000 versus $109,000 for whites. 

The Urban League strategy for addressing this glaring gap is to 

create culturally competent programs that address both financial 

principles and long-term behavioral change. Overall evaluation research of our financial literacy programs consistently finds significant correlations between the level of financial knowledge and good 

financial management practices. 

Housing counseling also plays a key role in support of the goal 

to increase financial awareness and sophistication and to close the 

wealth gap between minority and non-minority households. In addition to a deeper national commitment to housing counseling, a 

core tenet of our Homebuyers Bill of Rights, the National Urban 

League advocates three primary objectives that the Federal Government and the Financial Literacy and Education Commission 

should pursue to promote economic opportunity for minority and 

low-income families and communities. 

First, we must expand access to capital and financial services 

through mainstream banks and thrifts, particularly by ensuring 

that the CRA remains effective. 

15 

Second, bank the unbanked with innovative new private sector 

products and services driven by new incentives for financial services for the poor. 

Third, we must promote savings among the poor by catalyzing 

wide-scale establishment of individual development accounts and 

other mechanisms that help low-income families save for homeownership and other key assets. 

And of course, particular emphasis must be placed in all of this 

on reaching neighborhoods with low-income and minority populations. 

On behalf of the National Urban League, I thank you for the opportunity to offer our views today on this very important issue, and 

we look forward to continuing to work with you as you develop and 

implement a new regulatory system. 

Thank you very much. 

[The prepared statement of Ms. Jones can be found on page 60 

of the appendix.] 

Mr. HINOJOSA. Thank you very much, Ms. Jones. 

And I now call on Dr. Lauber. 

STATEMENT OF GERALD LAUBER, CHIEF SENIOR ADVISOR, 

NATIONAL URBAN ALLIANCE (NUA) 

Mr. LAUBER. Thank you. 

Good afternoon, Mr. Chairman, and distinguished members of 

the committee. Thank you for the opportunity to testify before you 

today about the need for effective financial literacy education for 

Americans. 

I am Gerald Lauber, the financial literacy advisor to the president of the National Urban Alliance, which is a not-for-profit corporation out of Syosset, New York. 

Prior to working with the NUA, I was a school superintendent, 

an assistant superintendent for instruction, a principal, and a 

classroom teacher. In all, I have devoted over 45 years to the process of helping students. 

The mission of the NUA is to focus on helping schools assess 

their instructional programs and deliver professional development 

for teachers so they are better prepared to help their students master content and learning skills. We have learned a great deal about 

education and organizations. We know that teaching a subject does 

not ensure that all students will learn it. 

Financial literacy programs must contend with common complications for teaching and learning while competing for sufficient 

space in the crowded instructional day. To contend successfully 

with these complications is a matter of professional skill and organizational focus. Without plans for professional development and 

content that is integrated into the curriculum through material relevant to students, financial literacy will be just another catch 

phrase in our past history of failing to educate our citizens about 

how they manage their daily life to position them for long-term financial security. 

I hope the creation of a new government consumer financial protection agency, as expressed by the Administration, will exemplify 

a real commitment to fight for the education and protection of consumers. That fight must recognize that financial education right 

16 

from the start is part of the answer to protect consumers and build 

a foundation for behaviors that support a healthy U.S. economy. 

Why can’t we provide the impetus to help our children create a 

new generation of consumers who use reason to direct the use of 

their resources rather than celebrating conspicuous consumption 

and debt accumulation that currently endanger the basic fabric of 

our country? 

Strategies that help people make informed decisions will work if 

we provide education programs that help all people obtain financial 

literacy and decision-making skills. Application of these skills will 

strengthen their knowledge in areas such as credit cards, mortgages, insurance, and other financial products. In a consumer-credit-based society, we must teach children about credit and the wise 

use of it so they are prepared to be informed consumers. The lack 

of inclusion of financial literacy in the vast majority of our Nation’s 

schools continues to create a new generation of consumers who are 

not informed about the use of money. 

Unfortunately, what is clear is that the current effort to transfer 

knowledge about financial literacy has not worked. While more 

than 90 percent of America’s students attend public schools, the 

President’s Advisory Council on Financial Literacy, as it is presently constituted, has only one member who has any public school 

experience. This fact has not gone unnoticed by the Nation’s educational community. How does this government demonstrate its 

commitment to this issue when only 1/20th of the advisors have 

classroom experience? 

Yes, consumers need to be presented financial products in a simpler, straightforward manner that is clear, accurate, and contains 

understandable information. I applaud efforts by this subcommittee 

and the Congress to demand that our financial products industry 

makes information about their products more transparent to consumers. 

Yet I must warn and emphasize that without effective financial 

literacy education, an understanding of these products will continue to be difficult and will not result in desirable behavioral 

changes by consumers. Consumer protection and relevant financial 

education must go hand-in-hand and must include an emphasis on 

our Nation’s young people. 

Over the past 6 months, this Congress has authorized nearly $1 

trillion of American taxpayers’ money to Wall Street to clean up 

our financial mess that they created that brought this country to 

an economic condition not seen since the Great Depression. 

On January 6, 2009, the President’s Advisory Council on Financial Literacy, established by President Bush, stated as its principal 

recommendation: ‘‘The United States Congress should mandate financial education in all grades for students, kindergarten through 

12.’’ 

Local school districts cannot afford another unfunded mandate. 

Now is the time to supplement that investment by committing 

some of those resources to sound financial literacy education for 

Americans. 

I urge this committee to strongly support both this message and 

the messengers working to refine and deliver effective financial literacy education. It is critical to building the information base our 

17 

citizens need to live as informed consumers. But just using wellwritten financial literacy material without a well-thought-out delivery system will not enable them to transform information into action. 

Thank you again for inviting me to testify today. And I will be 

happy to answer any questions you may have. 

[The prepared statement of Dr. Lauber can be found on page 67 

of the appendix.] 

Mr. HINOJOSA. Thank you. 

At this time, I would like to recognize Mr. Gannon. 

STATEMENT OF JOHN M. GANNON, SENIOR VICE PRESIDENT, 

OFFICE OF INVESTOR EDUCATION, AND PRESIDENT OF THE 

FINRA INVESTOR EDUCATION FOUNDATION, THE FINANCIAL INDUSTRY REGULATORY AUTHORITY (FINRA) 

Mr. GANNON. Mr. Chairman, Ranking Member Hensarling, and 

members of the subcommittee, I am John Gannon, senior vice 

president for investor education at the Financial Industry Regulatory Authority, or FINRA. On behalf of FINRA, I would like to 

thank you for the opportunity to testify today. 

Mr. Chairman, I commend you for having today’s hearing on the 

critically important topic of improving financially literacy. In these 

uncertain financial times, the role of financial education is more 

important than ever. FINRA and the FINRA Investor Education 

Foundation are committed to expanding the knowledge and confidence of all Americans wishing to build a more secure financial 

future through saving and investing. And we share your interests 

in considering how best to promote financial literacy in the context 

of reforming the financial regulatory system. 

FINRA’s Office of Investor Education provides an array of educational opportunities to investors. These include maintaining our 

prominent investor information area on the FINRA Web site, providing a comprehensive market data resource, and publishing information on such critical topics as investment fraud, job dislocation 

and investing in bonds. 

Interactive tools, such as FINRA’s Fund Analyzer, allow investors to compare fees and expenses among competing investment alternatives. 

In 2003, FINRA established the FINRA Investor Education 

Foundation, which is the largest foundation in the United States 

dedicated to investor education. The Foundation’s mission is to provide Americans with the knowledge, skills, and tools necessary for 

financial success throughout life. 

Foundation grants are used solely to fund educational programs, 

publications, and research. Recent grants have supported efforts to 

help low-income individuals build savings and achieve financial 

goals and guide working Americans as they make the transition 

into retirement. 

FINRA commends the Administration’s inclusion of recommendations focused on improving financial education and literacy in its 

proposals for regulatory reform. The Administration’s proposal to 

mandate a financial education authority signals a commitment to 

increasing financial literacy of all consumers. 

18 

It will be important for all regulators with roles in financial oversight and consumer protection to coordinate and communicate 

about their financial education initiatives to ensure that the government leverages its resources for maximum impact. 

FINRA further commends the Administration’s proposal to enact 

an automatic IRA program with an opt-out. A similar and successful approach has been taken by a number of employers with 401(k) 

plans. FINRA has teamed with the Retirement Security Project 

and AARP to establish Retirement Made Simpler, an effort to increase participation rates among employees whose companies offer 

401(k) plans by encouraging more employers to adopt automatic 

401(k)s. 

FINRA’s work in investor education has provided us with experience in managing the challenges of how to most effectively and efficiently get information out to investors and consumers. Let me 

highlight now some issues to consider for improving financial education and literacy efforts. 

First, there is a need for baseline data on financial capability and 

literacy. The FINRA Foundation is currently working on a survey 

that should provide that crucial data. Recommended by the President’s Advisory Council on Financial Literacy, the survey of over 

25,000 Americans addresses a comprehensive array of financial 

topics, including retirement planning, investment choices, household budgeting, credit consumer protections, and the use of financial education resources. This data will help inform the efforts of 

both public and private entities as they attempt to best structure 

financial literacy and investor education initiatives. 

Second, I would want to emphasize the importance of distribution channels in financial literacy efforts. Recognizing that highquality investor education resources already exist, the FINRA 

Foundation and its partners focus on making sure that such resources get into the hands of all those who need them the most. 

The FINRA Foundation’s grants and projects leverage partnerships with other organizations and use new and conventional 

media to widen access necessary to the resources for financial success. Sometimes this is via the Internet or public broadcasting. At 

other times, it is through a counselor or a workplace representative. 

The government has a variety of existing robust distribution 

channels at its disposal. The Social Security Administration, the 

IRS, the Postal Service, and the Federal Citizens Information Center are just some of the potential channels that could be used to 

promote and advance financial literacy efforts with an extremely 

wide reach. 

Finally, as Congress considers how to improve financial literacy, 

it is vital to provide adequate funding for whichever agencies or 

groups are given responsibility for this task. Further, given that a 

variety of existing agencies and departments have roles to play in 

investor and consumer protection and education, those agencies 

should have a clear mandate to provide financial education, coordinate those efforts with other Federal agencies, and engage in partnerships to broaden their reach. 

19 

FINRA appreciates the opportunity to testify on these important 

issues, and I would be happy to answer any questions you may 

have. Thank you. 

[The prepared statement of Mr. Gannon can be found on page 52 

of the appendix.] 

Mr. HINOJOSA. Thank you. 

And finally, I would like to call on Mr. Neiser. 

STATEMENT OF BRENT A. NEISER, DIRECTOR OF STRATEGIC 

PROGRAMS AND ALLIANCES, NATIONAL ENDOWMENT FOR 

FINANCIAL EDUCATION (NEFE) 

Mr. NEISER. Thank you, Mr. Chairman, Ranking Member Hensarling, and members of the subcommittee. 

I am Brent Neiser, director of strategic programs and alliances 

for the National Endowment for Financial Education, otherwise 

known as NEFE. We are based near Denver, Colorado. We are a 

501(c)(3) private-operating foundation, nonprofit, nonpartisan, noncommercial. 

At the end of my written testimony, there are several examples 

of initiatives we undertake. Our high school program trained over 

6 million students in public and private high schools throughout 

the United States in the last 20 years; a college program with nearly 300 enrolled institutions; and a free, noncommercial source 

called CashCourse.org. There is a growing interest among community colleges signing up for this Web resource. We do research on 

retirement issues, teacher training, unique populations, immigration issues, and student financial behavior all related to personal 

finance. We are also concerned about workplace, and collaborate 

with many of the organizations represented on this panel, as well 

as the Boy Scouts of America, the American Cancer Society, and 

scores of other nonprofit groups. 

We believe financial literacy is an important component of consumer protection, and any kind of work toward regulatory reform 

should consider it. It is a baseline. Financial markets and products 

change, but consumers need to be equipped with a basic understanding of personal finance so they can make the best decisions 

and be aware of the positive and the negative consequences of 

those decisions. Also, there are appropriate times to connect financial education to events in their lifespan and when products are appropriate. This has to come out through this basic baseline and financial understanding. 

We think that individual financial literacy and education are not 

the whole solution. Automatic features in behavioral economics, 

product disclosure, social markets, etc., all play into this beautifully. 

The President’s advisory council, on which NEFE CEO and president Ted Beck serves, has identified some of the concepts and definitions for a proposed body of knowledge that can form as a baseline for this effort. 

We want to empower Americans to make their own decisions 

about which products and behaviors will maximize their financial 

wellbeing; be aware of financial products and strategies that may 

not be suitable and would concern them. 

20 

Also, financial literacy needs to move to a level of full engagement in society through a public education campaign, social marketing, a nationwide financial checkup, consistent and repetitive 

messaging, and a clear link to financial literacy tools at points of 

transaction where appropriate, and, again, across one’s financial 

lifespan. 

I will close by mentioning five points or principles that might be 

considered under any regulatory reform that links financial literacy 

education and issues with consumer reform considerations. 

First, definition: Building on the President’s advisory council, 

setting baseline standards, as Mr. Gannon mentioned, will create 

a consistent framework for public and private financial education 

efforts. 

Number two, context: Providing the context for understanding a 

product and its relationship to life goals and timing within one’s 

economic lifespan will increase the effectiveness of any disclosures 

that are contemplated by Congress. 

Number three, simplicity: We need to actually take a step back. 

And we talk about plain vanilla, there needs to be plain vanilla financial literacy, too, to make any type of disclosures work, focusing 

on financial understanding, capability, and literacy. Again, a social 

marketing campaign could include basic messages, principles that 

people can think about when they are interacting or contemplating 

a product and interacting or working with an adviser. Thrift, paying yourself first, having an emergency fund, understanding the 

time value of money when it comes to debt as well as growth of 

an equity investment, the appropriate use of credit and diversification—without these principles embedded in the minds of Americans 

at all ages, at different times in their lifespans, disclosures may not 

be effective and might even be confusing. 

Number four, relevance: Message campaigns need to be culturally and circumstantially relevant and age-appropriate. Underserved audiences need special attention. 

Finally, number five, self-assessment: A nationwide financial 

checkup, as recommended by the President’s advisory council, 

would allow Americans to assess their own financial knowledge 

and provide appropriate links to trustworthy sources of information 

to fill any gaps. 

Finally, let me just congratulate the leadership of Congress, especially the Financial Literacy and Economic Caucus, Representative Hinojosa, Representative Biggert, and all Members, for a true 

bipartisan approach to this issue. 

Thank you. 

[The prepared statement of Mr. Neiser can be found on page 78 

of the appendix.] 

Mr. HINOJOSA. Thank you. 

I want to say that, before we start a line of questioning by each 

of the Members of Congress, I ask unanimous consent to submit for 

the record GAO’s April 29th, 2009, testimony before the Senate 

Subcommittee on Oversight of Government Management. 

Hearing no objections, so be it. 

I would like to recognize myself for 5 minutes. And every other 

member will also receive 5 minutes to have an opportunity to ask 

questions. 

21 

I am dissatisfied with the Financial Literacy and Education 

Commission, commonly known as FLEC. They have yet to produce 

a true national strategy for financial literacy despite having 4 

years to produce one. 

On April 29th, the GAO testified before the Senate Subcommittee on Oversight and Government Management, and, in 

their testimony, GAO concluded that the so-called national strategy 

remains more descriptive than strategic. Others have referred to 

this, their strategy, as, ‘‘the strategy to strategize on a national 

strategy,’’ which I don’t understand what that means and I don’t 

think they do either. 

Congresswoman Judy Biggert and I knew that this likely would 

happen prior to the enactment of the FACT Act. We had our own 

competent legislation that would not have created an unwieldy entity unable to arrive at a national strategy to help the United 

States and its economy. 

So, moving on to ask my first question of Mr. Diaz, Mr. Salisbury, and Ms. Jones, and I would ask you to react to my statement 

and tell me what you think of this legislation, of this Act. 

Mr. DIAZ. Mr. Chairman, the financial literacy for us has been— 

it increases awareness. Our take on it has been we have done, run 

many programs. We have seen a lot of programs operate. It does 

impart knowledge, but it doesn’t change decision-making behavior 

necessarily. We have seen lots of examples, whether it is credit 

cards or payday lending, where consumers have been given a lot 

of education and yet it does not change behavior. 

So my feeling related to financial literacy education awareness is 

that it never hurts anybody, but our concern is to really increase 

wealth amongst Latino families. And that is a little bit more targeted and a little bit more tricky objective, because it requires 

changing behavior, in many cases, and that usually requires both 

time and a situation where you can actually exchange information. 

So, in my testimony, I referred to one-on-one counseling as an effective tool to do that. I can tell you of countless examples where 

families are taken from a starting place and end up at a very different place anywhere from 6, 12, 18 months later because they 

have had the ability to converse and reflect on their situation with 

an impartial party who is only interested in making sure they 

progress. 

Mr. HINOJOSA. Thank you, Mr. Diaz. 

I would like to get a response from Mr. Salisbury. 

Mr. SALISBURY. Mr. Chairman, first, I would just note that, at 

the most recent meeting of FLEC, it was noted by Assistant Treasury Secretary Barr, who was in his first week at the Department, 

that a multi-agency review of the documents and of the report from 

the Government Accountability Office has begun and is underway. 

I mention that because I think that is a very positive statement 

on an initial review process that tries to be responsive to what the 

Government Accountability Office said. I think that the combined 

testimony of this panel, but in particular the suggestions of Mr. 

Gannon and Mr. Neiser, essentially laid out the core of what could 

become a strategic document that could then move to implementation. 

22 

I think that, as I noted in my testimony, the key is the focus, 

and it is one of the reasons that I have discussed the desirability 

of a new agency such as that suggested by the Administration, 

with FLEC being built into it. Essentially, the entire realm of financial literacy coordination across the Administration would be 

directed by an agency that puts far more particular focus on the 

consumer. This is opposed to what, most particularly in the last 18 

months, has been a rather large national economic problem that, 

quite appropriately, is where most of the attention of the Treasury 

Department has been. And, given where we are, frankly, for the 

next 2 years, as a citizen, I hope that is where most of their attention will be. 

Mr. HINOJOSA. Thank you, Mr. Salisbury. 

I would like to get a reaction from Ms. Jones. 

Ms. JONES. Mr. Chairman, we feel very strongly that anything 

that is done at the Federal level related to financial literacy must 

take into account what the actual needs are in the communities 

and must link very directly to those communities. 

That is one of the reasons we strongly suggest that the government work closely with national intermediaries such as La Raza 

and the National Urban League, who are working on the ground, 

in the communities, who know what the needs are and can get directly to the people but, also, who people will come to. People trust 

us; they understand what we do there. They know that we are 

there in the community working every day. 

Because there often is a disconnect. And there really is no shortage of housing counseling providers. There are all sorts of, for example, for-profit providers out there who are offering all manner of 

services that don’t necessarily address the real needs of our constituents. And so it is important for people to know where to go 

and to go to organizations and entities that have a proven track 

record and know what they are doing, frankly. 

And I think anything that is done at the Federal level must take 

that into account and must consider that and should be used in a 

way that enables our constituents to get the best possible service. 

Mr. HINOJOSA. My time has run out, Ms. Jones. Thank you very 

much. 

I now yield 5 minutes to the ranking member, Congressman 

Hensarling. 

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

recognize your leadership in this effort, along with the gentlelady 

from Illinois, Mrs. Biggert. Clearly, this entire committee respects 

your body of work, your leadership, her leadership, in trying to 

help educate our populace on the financial products that are available to them and help our communities. 

I continue to be concerned, if you were here for my opening statement. I know the subject has to do with financial literacy. 

My first question would be, how many on the panel are familiar 

with H.R. 1705, which is the House version of the President’s initiative for the Consumer Financial Products Agency? Have any of 

you studied that? 

Mr. Salisbury, have you studied it? And, I am sorry, Ms. Jones, 

as well? Did I understand, are you all supportive of that legislaVerDate Nov 24 2008 11:05 Nov 04, 2009 Jkt 052407 PO 00000 Frm 00028 Fmt 6633 Sfmt 6633 K:\DOCS\52407.TXT TERRIE
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tion? Or have you formed an opinion? Have your organizations 

formed—not yet? You continue to study the legislation? Okay. 

Mr. Diaz, in your testimony, I think, if I heard you properly, you 

mentioned the term ‘‘choice’’ on many occasions, leading me to believe that consumer choice is at least something that would be valued by your organization. Is that correct? 

Mr. DIAZ. Absolutely. That is critical. 

Mr. HENSARLING. Section 5(B)(i)(a) of H.R. 1705 creates an 

unelected group that has the legal authority to ban from the marketplace any consumer financial product, practice, or feature it considers ‘‘unfair’’ or ‘‘anti-consumer.’’ Those seem to be rather subjective terms, as opposed to objective terms. 

If, for some reason, this bill became law and the unelected members of the Financial Products Safety Commission decided to ban 

electronic remittances because they viewed them as inherently unfair or anti-consumer, would that trouble your organization? 

Mr. DIAZ. Well, that is a big hypothetical. Remittances are obviously a current standard practice that many immigrant families 

transfer excess income down to families of their place of origin. I 

can’t imagine the question of whether they would ban remittances. 

I mean, that is—I don’t know if there is anything in the legislation 

where they have written or seen about that that would be even the 

case. So it is a hypothetical— 

Mr. HENSARLING. But it doesn’t trouble you that this particular 

commission could have that power without any review. So you 

would be trusting that simply wouldn’t happen. 

How about with respect to payday lending, which is controversial 

within a number of areas and communities? It seems among some 

disadvantaged and low-income communities, some believe they 

serve a valuable purpose; other people, frankly, would like to see 

them banned. 

I don’t know what the position of La Raza is. But would it trouble you if this particular panel decided to ban all payday lending 

as inherently ‘‘unfair’’ or ‘‘anti-consumer?’’ 

Mr. DIAZ. Well, like I said, the devil is always in the details. But 

what we would be focused on is access to credit, did that change. 

We at NCLR believe low-income families have to have access to 

credit. We don’t believe that families should be taken advantage of, 

so just because they can sell a family a product doesn’t mean it is 

right for that family. 

So what I would tell you is that the key for us is, whatever that 

new commission sets up to do, we would be focused on: What is the 

civil rights implication, one? And, two, is it still going to allow 

product innovation even within the rules that it establishes? 

Mr. HENSARLING. And, as various panel members look at the 

challenge of disclosure, financial literacy—it takes two to communicate, the communicator, the communicatee. And I have heard 

some verbiage, and there is no doubt, that there have been lenders 

who have purposely tried to deceive borrowers. There has been a 

lot of controversy in subprime mortgages and in credit cards. 

I am just curious if any of you have undertaken an analysis of 

the disclosures necessary in the average credit card agreement. 

I just happen to have one in front of me that indicates that 43 

percent of the content is mandated by Federal law, including ReguVerDate Nov 24 2008 11:05 Nov 04, 2009 Jkt 052407 PO 00000 Frm 00029 Fmt 6633 Sfmt 6633 K:\DOCS\52407.TXT TERRIE
24 

lation P, Regulation Z, the FACT Act; 5 percent of the content is 

dictated by State statutory law; 16 percent arises from legal risk 

management—in other words, liability exposure; meaning essentially two-thirds of the disclosure written in legalese is, frankly, 

mandated by Federal and State government and liability exposure. 

So I am curious if anybody on the panel has engaged in a similar 

study and have come to the same or different conclusion. Anybody 

who cares to— 

Mr. LAUBER. I will jump in quickly. 

It is not the content of the disclosure that is important, because, 

as we have heard from many distinguished members, they read it 

and they don’t understand it. Eighty percent of what we take in we 

take in visually. And if we can’t visualize and understand the concepts, no matter how long and extensive the regulations may be, 

they are going to fall on deaf ears. 

We talk about a product, but we don’t talk about how to market 

the product. And the marketing of the product comes from the understanding of the concepts that you are addressing. So failure to 

educate consumers to understand how to ask the right questions, 

or banks or financial institutions, how to present information so it 

is understandable, that is a major part of the problem. 

Mr. SALISBURY. And, Congressman, I would just quickly note 

that, with that versus the disclosure, I personally would look at the 

statement. 

And before this hearing, I looked last night. I have five credit 

cards; I looked at my most recent five credit card statements. From 

one of the companies, it is a clean, uncluttered statement that has 

the basic information in large print and nothing hidden. With the 

worst of them, it takes minutes to figure out how much you pay, 

if what you want to do is pay it off. 

Mr. HENSARLING. So the market has provided at least one plain 

vanilla. 

Mr. SALISBURY. One plain vanilla. And so, what I mean by plain 

vanilla is something that is instantly and easily, by visualization, 

understandable. 

Mr. HINOJOSA. The gentleman’s time has expired. 

I would like to call on Congresswoman McCarthy from New 

York. 

Mrs. MCCARTHY OF NEW YORK. Thank you. 

And I thank everybody for their testimony. 

By the way, we are hoping that we are going to clear that up as 

we go forward with the credit card clarity, so that we can have that 

kind of a credit card. But five credit cards, I don’t know. I only use 

one, that is it. 

One of the things that I want to say is that—not only do I sit 

on this committee, but I also sit on the Education Committee. And 

in the higher education bill, financial literacy would be included in 

that. We are now starting to work on Leave No Child Behind or 

whatever name it is going to be. There is language in that, which 

I plan on offering that will be from kindergarten to 12th grade. I 

happen to think it can be worked into the school day, so there is 

no extra time. 

I have already spoken in front of a large group of superintendents, teachers, parents, PTAs, and they are starting to get it, mainVerDate Nov 24 2008 11:05 Nov 04, 2009 Jkt 052407 PO 00000 Frm 00030 Fmt 6633 Sfmt 6633 K:\DOCS\52407.TXT TERRIE
25 

ly because we want to educate the children, and especially those 

children learning a second language, so they can help their parents 

when they go home. 

So we have a lot of work to do for the future, but I guess the 

question—I am going to start with Dr. Lauber. We have been, unfortunately, under terrible economic strain, everybody. I doubt very 

much if there are too many people who haven’t been touched by 

this. 

Now, obviously, we know there are an awful lot of people who are 

excellent in financial literacy, hopefully—but they still got hurt. 

But what would you say to the majority of our constituents, do you 

think they had enough financial literacy background that wouldn’t 

have gotten them into the amount of debt they have carried, taking 

their money out of their home? 

Mr. LAUBER. I think, especially on Long Island, where we know 

best, and affluent areas, that was one level of the population that 

was hurt. But the populations that we work with at the National 

Urban Alliance were hurt much more than that, because these are 

people who started without all of the assets that we have to deal 

with. 

Why did they get hurt? They got hurt not necessarily because 

they didn’t have the knowledge someplace in their mind, but there 

was a problem with the application of the knowledge. So I heard 

a comment before, it is not what we can do, it is what we should 

do. And unfortunately, the process of thinking about making decisions, about what we should do with economic choices, is not ingrained in our students. 

Thinking is not taught in our schools. Our schools are basically 

content-based. And I think the challenge that you identified is absolutely correct: How do we fit this in the school day? It cannot be 

a replacement to mandated courses. We work with teachers to help 

them substitute examples in financial literacy for the courses that 

they are currently teaching and use brain-based learning strategies. The brain can only take in new information for 5 to 7 minutes, and that may be a good thing for all of us to listen to, but 

then you need another 10 or 15 minutes to apply that knowledge; 

otherwise, it doesn’t stick. 

And I think if we could somehow take all of the work that is 

being done to focus on financial literacy education—and there is 

wonderful material out there. Where it falls apart is that it is not 

being integrated into the school day; it is not a high priority. 

And you know from the forums that we are having around New 

York State, where we are bringing all the school stakeholders together—parents, teachers, administrators, superintendents, board 

members—this is a topic that they are starting to want to discuss, 

because it has just been ignored. 

Mrs. MCCARTHY OF NEW YORK. I thank you. 

One of the other things, you know, when you are talking about 

private and government working together, I think we are going to 

have to do that, because the government can’t answer everybody’s 

questions, and they can’t. 

For years, talking to the bankers, talking to the credit unions, 

talking to many other financial institutions, saying we need financial literacy, and they said, ‘‘We are doing it,’’ and I said, ‘‘Where?’’ 

26 

because I have never really seen that much out there. I am seeing 

it now, to be honest with you. There is more out there. I hope that 

we can continue to do that. 

But how do we work with—how does the government work with 

a private enterprise, whether it is our bankers—we can’t mandate 

them to do this with us. Maybe we can, I guess the way we are 

going today. But how do we bring those two together so that we 

can also not only reach all the young students for the future generations, but how do we also reach out to the families? 

One thing I found out, especially with all the foreclosures, people 

knew they were in trouble, and they didn’t know who to go to. They 

could have prevented half the foreclosures out there if they had 

found out who to go to. 

If you could just give me a quick answer, because I see my time 

is up. 

Mr. SALISBURY. I will give you one quick example, which could 

be dealt with by an amendment to the FACT Act or by this new 

agency. FLEC put together a Web site called MyMoney.gov. Under 

Treasury regulations, MyMoney.gov cannot have anything on it 

that relates to nongovernmental organizations. So it can’t be a onestop shop across for-profit, nonprofit, government, or noncommercial. 

So there are relatively simple things that could be done to bring 

information together just by making some changes in regulation. 

Mrs. MCCARTHY OF NEW YORK. Thank you. 

Mr. HINOJOSA. At this time, I would like to recognize the Congressman from Texas, Mr. Marchant. 

Mr. MARCHANT. Thank you, Mr. Chairman. 

I would like to follow a line of questions based on the number 

of groups that are attempting to accomplish the same thing. And 

would any of you venture to say how many different groups in the 

United States have their sole focus on the financial literacy of 

America? There are about seven here, so— 

Mr. SALISBURY. The American Savings Education Council Program has partners from all 50 States, and there are State banking 

agencies and various others across the United States working on 

this. 

What is lacking is as much of a coordination mechanism as 

would be desirable and, frankly, a place to go in the Federal Government to work broadly with the Federal Government. I think 

this was the intention of what FLEC would become, but it hasn’t 

gotten there yet. 

Ms. JONES. Also, I want to clarify the National Urban League, 

while financial literacy and housing counseling is an important 

part of what we do, it is certainly not our sole focus. We provide 

all manner of training. 

I do think, though, that the fact that there are so many entities 

out here doing it shows the extent of the need. And I know, at least 

from the National Urban League’s perspective, we could serve exponentially more people if we had the capacity. People are beating 

down our doors trying to get help, because the need is so great out 

in the community. 

Ms. LEVINE. And I might add that my organization, the 

Jump$tart Coalition, is a coalition of about 180 organizations naVerDate Nov 24 2008 11:05 Nov 04, 2009 Jkt 052407 PO 00000 Frm 00032 Fmt 6633 Sfmt 6633 K:\DOCS\52407.TXT TERRIE
27 

tionally over a network of 48 affiliated State coalitions, each with 

their own partners. And we know we don’t have all of them, but 

there is an effort to work together. And the Coalition members do 

come from the private and the public and nonprofit sectors. And so 

I think that it is a step in the right direction and we need to do 

more. 

Mr. MARCHANT. Was there an expectation that, under FLEC, 

there would be a national coordinator of this, someone that is responsible for giving all government grants out, and that there was 

a place to go to get funding for this? 

And I know HUD funds it. Every entity probably has some kind 

of a funding mechanism for this, correct? Some of you are saying 

yeah. 

Mr. DIAZ. I will take that. 

Financial literacy education is funded through a variety of mechanisms and different types of institutions. 

But I would also say that it is something that is—we don’t treat 

it as a stand-alone product, generally. Because, as someone said before, you don’t learn unless you do, to some degree. And so, our experience with financial education is it does increase awareness of 

certain aspects of financial transactions; it doesn’t change their 

ability to transact well. 

And so, what we have done, we have embedded the tools of financial literacy inside other programs as they are practicing something 

that they want to achieve in their lives. 

Mr. MARCHANT. I am going to lose my time, sir. 

I want to ask Mr. Salisbury, you are the one who talked about 

the new CFPA. How would you make the new CFPA independent 

of financial institutions’ influence? 

Mr. SALISBURY. I would say it is not as much totally independent 

as making sure that consumers are included. That is, if there is a 

board of five, a majority of that board is made up of people who 

view themselves principally as financial consumers, as opposed to, 

for example, members of the regional Federal Reserve banks. 

Six of the nine board members are appointed by the banks, who 

own the Fed. The Federal Reserve Board banks are basically selfregulatory organizations, the banks regulating the banks. If that 

was what this agency was, I would argue a consumer agency that 

is run by the financial services organizations definitionally can’t be 

a consumer protection agency. 

So it would be that, if there is a board of five, making sure a majority of that board are actually financial consumers, not those who 

basically have come out of the financial services industry and, if 

history is a guide, would go back to work for the financial services 

industry after service on the board. 

Mr. MARCHANT. Thank you. 

Mr. HINOJOSA. I have just been informed that in 10 minutes, we 

are going to start another long series of votes. And I would like to 

give all the members present an opportunity to ask questions. And 

I ask unanimous consent that we shorten the time to 21⁄2 minutes 

so that everybody can ask questions. 

Hearing no objections, I would like to recognize the gentleman 

from Texas, Congressman Al Green. 

Mr. GREEN. Thank you, Mr. Chairman. 

28 

Friends, to properly understand why these contracts that we are 

talking about are written in such legalese, I think we have to understand what they are designed to do. Are they designed to inform 

the consumer, or are they designed to protect one of the parties? 

And if they are designed to protect one of the parties, then we 

have one set of circumstances to deal with. But let’s just assume 

it is designed to inform the consumer, then we have to ask ourselves, will this contract in some way entrap the consumer? 

Because there are many who would have language somehow associated with a contract that would indicate, ‘‘I have read this, I 

understand what I have read,’’ and once you indicate you have read 

it and you understand, at some point later on the party who designed the contract to protect himself or herself uses that language 

against you by saying, ‘‘You knew, or should have known, because 

you read, and we assume that you understood because you said you 

understood.’’ 

So I am mentioning this to you in my 21⁄2 minutes simply because I think that we do have to give a lot of thought to what we 

want these contracts—and that is what they are—to do. 

When we close on a home—and I am sure all of you have closed 

on a home—when you close on a home, you are sitting there, it is 

a great, happy occasion, and somebody brings in a stack of documents with no blanks filled in, saving the one that you will sign 

on, and your name is typed there perhaps, and then, ‘‘Sign here,’’ 

you sign, and later on you find out that you may have signed something that was not in your best interest. 

So the question becomes this, friends: How do we get to a point 

where we can have these documents inform the consumer and work 

to benefit the consumer, as opposed to the person who drew the 

contract and is trying to protect himself? That is what we have to 

do now. 

If anybody would give me a quick response, I think my time is 

almost up. 

Mr. LAUBER. Quick response. I think it is important that, whatever documentation is presented, that the consumer demonstrates 

that they understand it. Someone saying, ‘‘Do you understand it?’’ 

and them saying, ‘‘Yes,’’ does not prove they understand it. 

Mr. GREEN. Quick question. Do we need to let the consumer take 

it home? 

Mr. LAUBER. They can take it home. They can do it online. In 

New York, when I wanted to take get a reduction on my insurance, 

I take a driving test online. 

Mr. GREEN. Just quickly, should the consumer have the opportunity to peruse it for some period of time before signing it? 

Mr. LAUBER. Absolutely. 

Mr. GREEN. Should there be some opportunity for the consumer 

to perhaps rescind the contract if the contract is one that proves 

to be adverse to the consumer’s best interests and the consumer 

doesn’t have time to peruse it, a take-it-or-leave-it kind of deal? 

Mr. LAUBER. Yes. 

Mr. GREEN. And finally, let me just ask this with the 21⁄2 minutes, or maybe it is just a comment that I would make. 

I am concerned about this agency. Is it going to be a watchdog, 

as some have said, which means that it would have some bark, 

29 

maybe some bite? Is it going to be a guard dog that would have 

a lot of bite, maybe some bark? Or is it going to be one of these 

dogs with no bark, no bite, which is really a dog to watch as opposed to a watchdog? 

I am very concerned about what this agency will ultimately become. Because if it becomes a watchdog with no bark, no bite, then 

we have done the consumer a disservice. 

Thank you. I yield back. 

Mr. HINOJOSA. Thank you. 

At this time, I would like to recognize the gentleman, Congressman Cleaver. 

Mr. CLEAVER. Thank you, Mr. Chairman. 

Mr. Salisbury, I just have one question. In your comments, in 

your written statement, you said that you believe that financial literacy ought to be mandated for K through 12 and that it ought to 

be tested. I happen to agree with you. I think there is anecdotal 

evidence aplenty that would support your position. 

My question is that the critics, I think, would say that if we 

mandated such a curriculum and teachers realize that they would 

be measured by the ability of the students to regurgitate the information, that they may do what many of them are doing all across 

the country now, which is teaching the test. And teaching the test 

doesn’t always equate to teaching the student, and the student, in 

the long run, turns out not to have accomplished much. 

What would you say to the critics? 

Mr. SALISBURY. I would basically play off of what Dr. Lauber 

said, with which I totally agree, which is: Part of this can simply 

be to, by mandate, require that the equivalent of the financial literacy education be built into the existing curriculum through examples, etc., which, to his point, can be 4 and 5 minutes here and 

there, with some type of quiz to follow. 

I think that I am hopeful vis-a-vis the current situation because 

the President himself had extensive exposure to this in Chicago 

through the Ariel Academy. The current Education Secretary was 

involved with the Ariel Academy and recognizes and has stated in 

his confirmation hearings and elsewhere his view that that basic 

financial literacy education is absolutely essential. 

And so I think, if you can do it by building it into curricula, and 

if what you are trying at the earliest grades to teach are very basic 

concepts such as what is money, what is interest, what is compound interest, if one is going to be critical of testing to that or 

teaching to that, as long as it is—pick a number, if it is 15 simple 

critical elements of knowledge for people to have, then my response 

would be, so be it. If they teach to that test, that it is 15 key things 

that will help everyone get more successfully through life, hey, fine. 

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

Mr. HINOJOSA. Thank you. 

At this time, I would like to recognize the Congressman from 

Georgia, Congressman Scott. 

Mr. SCOTT. Thank you, Mr. Chairman. 

And thank you all for coming. 

I can’t think of really any more important thing we can do than 

financial literacy to deal with what has happened in this financial 

30 

crisis. Because, quite honestly, if we had had an informed, educated constituency consumer base, we wouldn’t be in this situation 

we are in now, where we are literally having to spend trillions of 

dollars just to find our way back to shore. 

And education is important; K through 12 is important. But this 

financial system of ours is so complicated, it is so complex, and 

even as we are dealing with trying to fix it now, it is getting even 

more complex and more complicated, for the public not only lacks 

the education to understand how we got into this situation, they 

are lacking the education as to what we are doing to fix it. 

So financial literacy has to come front and center. And I am so 

glad, Mr. Chairman, that we are hosting this hearing. And I hope 

that we will be able to lift financial literacy up to the proper level 

it needs to be as a major component of our financial regulatory reform. 

So the question that we have to ask is, how can we incorporate 

financial literacy into our new financial regulatory system in a way 

that can certainly protect the consumer today, as they stand? And 

I don’t see how we can do this without having some infrastructure 

and money and resources behind it connecting the Federal Government to this. 

By that, I mean this: I believe that we have to have something 

out there, right now, as a part of our reform, to have the consumer 

to say, ‘‘Here is somewhere I can call to get information now.’’ Our 

system is complex. There are credit cards coming, we have credit 

card reform; there is banking coming. 

Plus, we need a monitoring system to make these loan originators, these credit card companies behave themselves. Because if nobody is monitoring them, we are going to be right back in the situation that we have now. 

So I would like for us to give some thought to trying to come up 

with a monitoring system, a toll-free 1–800 number with human 

beings at the end of it anchored here in the government, at the 

Treasury Department, not a counseling program, but folks like the 

Urban League and the NAACP and ACORN and the senior citizens 

group, people who have a relationship with the most vulnerable out 

there. Because the damage is that these folks out there target people, and we need something that we have that targets them to give 

a help line. Therefore, we can have a way for people to call in and 

ask questions about what that situation is. And I am hopeful we 

can put something like that together and probably put it in Treasury in the reform. 

I know my time is up, Mr. Chairman, but I just wanted to say 

that, and commend everybody for coming, and I look forward to 

working on this going forward. 

Mr. HINOJOSA. I thank you for your remarks and especially your 

recommendations. 

I would like, at this time, to call on the gentleman from California, Mr. Brad Sherman. 

Mr. SHERMAN. Thank you very much. 

First, a comment about this new protection agency, consumer 

protection agency. I think it is important that it be a law enforcement agency, not a law-making agency. I have seen a tendency to 

think in terms of, ‘‘We will have the Fed take care of investment 

31 

in the economy, and we will have this new agency take care of consumers and make all the rules for consumers, and then we can go 

out of business here in the Financial Services Committee.’’ I think 

lawmaking should be done here in Congress. 

Second, as to this education program, I couldn’t agree with it 

more. And I think that a use of Quicken or similar software would 

be an important part of this. Financial literacy should be for the 

21st Century, not what I learned when I had hair. 

As to Mr. Gannon, I will ask you to just respond for the record, 

but one thing we have to educate consumers about is the fact that 

FINRA is not really a government agency. And the name implies 

that it is. So I hope that either FINRA would change its name or 

add something to all of its communications or that its foundation 

would get the word out that it is wonderful private association but, 

in spite of the word ‘‘regulatory’’—most regulatory authorities are 

government agencies. 

I will let you respond very briefly. 

Mr. GANNON. Congressman, thank you for that comment. 

I think that we try to make sure that people understand that we 

are a private-sector regulator. Most of our messaging goes to that. 

But that is a very good point. 

Mr. SHERMAN. I hope that you would do that. And you might 

even think of a name change, although you are a relatively new organization. 

Now, for the one question. The fact is consumers in mortgage 

transactions often don’t see their loan documents until they arrive 

at the closing and they are presented them. In April of this year, 

in the mark-up of H.R. 7028, an amendment was offered to amend 

RESPA to give borrowers at least 24 hours to review their closing 

documents, which, with the exception of extenuating circumstances, would be complete and finalized by the lender and the 

settlement agent 24 hours before the closing. 

And I will ask whoever wants to to respond to this: Would providing key closing documents to consumers in advance help consumers to understand the closing process better and to help ensure 

that they do not enter into an unsuitable loan transaction, which 

so often leads to unpleasant surprises, frustration, potential nonperformance, which then can collapse an entire free world economy? 

Mr. SALISBURY. It would have helped me. 

Mr. SHERMAN. It would have? 

Mr. NEISER. I would say, Representative, it would prompt a 

kitchen table conversation, if there is a spouse or a partner involved, where two or more can counsel each other as to, are we 

doing this, are we in agreement. And if they are not, it gives them 

an out. 

Mr. LAUBER. I think, providing they were given the right questions to ask. I think two people not knowledgeable about a mortgage statement talking to each other could be very humorous at 

times. They must have structured questions and understand the 

concepts of what they are asking, perhaps with assistance of some 

of the organizations that were represented here today. 

Mr. SHERMAN. And the documents would have to disclose, ‘‘Here 

is the check you are going to have to write at closing; here are your 

32 

monthly payments.’’ Because those are the two most basic questions. ‘‘Honey, can we afford this house?’’ 

Mr. Salisbury? 

Mr. SALISBURY. The reason I made my comment—and so I don’t 

disagree with the doctor, but I sort of do, in that my wife and I, 

over the years, walked out of three different settlements because 

what was put in front of us at the settlement table was not consistent with what we told were told beforehand the deal was. 

Mr. SHERMAN. Mr. Salisbury, you are so much stronger than the 

average consumer. Every other average consumer signed the papers in those three closings. 

Mr. SALISBURY. Fair enough. They are not married to my wife. 

Mr. SHERMAN. I believe my time has expired. 

Mr. HINOJOSA. Thank you, Mr. Sherman. 

I wanted to ask unanimous consent that a December 2008 report 

prepared by the Washington State Financial Literacy Work Group 

entitled, ‘‘Putting the Pieces Together,’’ be entered into the record. 

Without objection, it is so ordered. 

Also, I would like to ask on behalf of other members of this committee for unanimous consent that the following six written statements be entered into this hearing record: a statement by Dr. 

Annamaria Lusardi, professor of economics at Dartmouth College; 

second, the testimony of Dr. Camille Busette, vice president of 

EARN organization; the third one is the statement by Dr. Rickie 

Keys on behalf of the National Indigenous Literacy Association; the 

fourth is a statement by J. Bradley Jansen, executive director of 

the Center for Financial Privacy and Human Rights; the fifth is the 

testimony of the SIFMA Foundation for Investor Education; and 

lastly, unanimous consent for the testimony from the Financial 

Services Roundtable. 

Without objection, it is so ordered. 

I would like to make some closing remarks and simply say that 

it is very helpful to listen to the presentation made by each of the 

witnesses and that I hope, when this is all finished, that we would 

consider having some of the methods that are now being used in 

classrooms—a congressional hearing on the Education Committee 

that I sit on was held here 2 weeks ago, showing us what 16 percent of schools in our country are now using to keep students from 

getting bored by what is being taught, how to keep their interest 

in math and science and many other courses being taught. 

And it is blackboard where they use cell phones, they use 

texting, they use what the weathermen use on television where 

they can touch the screen and move things around, making it very 

interesting, particularly for K–12 students. They must get this kind 

of education. But let me tell you, what works for them will also 

work for adults, because it can be interesting. 

And there should be tests like the ones that are now being given 

to high school students, who are only passing, I think, with a 48 

percent passing percentage, or college students. It doesn’t matter 

that they pass it or don’t pass it; it is just so that they will know 

just how much they know and understand about financial literacy. 

I think that we are going to have to think out of the box and 

have a way in which to progress on what has already been built 

on the last 4 years. 

33 

I want to particularly thank the group that was responsible for 

helping us start the Financial Caucus. And I will just do it very 

shortly. I want to say thank you to Ms. Levine, because Jump$tart, 

Junior Achievement, and the Council for Financial Education coordinated with me on several Financial Literacy Day fairs in the 

Cannon Caucus Room, and have been very successful. And I think 

that it has proven one thing: that even the people who work here, 

Members of Congress and staff, want to have this kind of financial 

literacy. And so we are going to have to really build on it. 

Time has run out, and I have to have some parts to close out this 

hearing. And I want to thank the witnesses and the members for 

their participation in this hearing. 

The Chair notes that some members may have additional questions for these witnesses, which they may wish to submit in writing. Therefore, without objection, the hearing record will remain 

open for 30 days for members to submit written questions to the 

witnesses and to place their responses in the record. 

This subcommittee hearing is now adjourned. And I thank you. 

[Whereupon, at 5:20 p.m., the hearing was adjourned.] 

(35) 

A P P E N D I X 

June 25, 2009 

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