NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

1

UNITED STATES OF AMERICA

DEPARTMENT OF THE TREASURY

+ + + + +

FINANCIAL LITERACY AND EDUCATION COMMISSION

+ + + + +

PUBLIC MEETING

+ + + + +

Tuesday,

February 14, 2012

+ + + + +

The Financial Literacy and 

Education Commission met in the Cash Room, 

1500 Pennsylvania Avenue, NW, Washington, 

D.C., at 10:30 a.m., Louisa Quittman, 

presiding.

PRESENT

ANNA ALVAREZ-BOYD, Federal Reserve Board

CYRUS AMIR-MOKRI, Dept. of the Treasury

KAREN BELLESI, Office of the Comptroller of

the Currency

NATHANIEL BISHOP, Small Business

Administration

ROGER BLAKE, NCUA

ELIZABETH COOGAN, Dept. of Education

RICHARD CORDRAY, Consumer Financial 

Protection Bureau

MICHAEL DAVIS, Dept. of Labor

JIM COURTNEY, Social Security Administration

MATT FELLOWES, HelloWallet

WILLIAM GLAVIN, Dept. of Housing & Urban

Development

MARK GREENBERG, Dept. of Health & Human

Services

MICHAEL HERNDON, CFTC
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

2

JEANNE HOGARTH, Federal Reserve Board of

Governors

RAYMOND KIRK, Office of Personnel Management

BRENDA MCDANIEL, Dept. of Defense

LOUISA QUITTMAN, Dept. of the Treasury

SOPHIE RASEMAN, Dept. of the Treasury

LUKE REYNOLDS, Federal Deposit Insurance

Corporation

LORI SCHOCK, Securities & Exchange 

Commission

JULIE SCHROEDER, Dept. of Veterans Affairs

SUSAN SHOCKEY, Dept. of Agriculture

COLLEEN TRESSLER, Federal Trade Commission

CHRIS VEIN, White House Office of Science 

and Technology Policy

BARRY WIDES, Office of the Comptroller of 

the Currency

JAMES ZAWADA, General Services 

Administration
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

3

1 P-R-O-C-E-E-D-I-N-G-S

2 (10:35 a.m.)

3 COMMISSIONER QUITTMAN: Good 

4 morning. If everyone could be seated we'd like 

5 to get started with our first Commission 

6 meeting of 2012. Thank you and welcome --

7 thank you for coming and welcome to the 

8 Treasury Department.

9 I'll start by turning it over to 

10 Cyrus Amir-Mokri, our Assistant Secretary for 

11 Financial Institutions.

12 COMMISSIONER AMIR-MOKRI: Thanks, 

13 Louisa. Thanks very much, and thank you all 

14 for being here today at the Financial Literacy 

15 and Education Commission's first meeting of 

16 2012.

17 Just a couple of remarks before I 

18 -- can everyone hear me? All right. How about 

19 this, is this better? How about this? There 

20 we go. It's hard for me to hear myself since 

21 I'm not there.

22 Okay, so just thanks again 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

4

1 everyone for being here today.

2 Just a couple of brief remarks. I 

3 just wanted to say that I'm very pleased to be 

4 here today to support the Financial Literacy 

5 and Education Commission's important work.

6 In particular, I'm grateful for 

7 the Commission's dedication to providing 

8 Americans with the tools and skills that will 

9 assist them to navigate our complex financial 

10 system.

11 I'm also appreciative of the 

12 Commission's work coordinating the efforts of 

13 many agencies. Though each of our agencies 

14 has particular missions, objectives, and 

15 expertise, we improve the effectiveness of 

16 government by sharing resources and 

17 collaborative action.

18 A few words about the discussion 

19 topics for today. First we'll hear about Smart 

20 Disclosure, actually something I'm very 

21 excited about. The idea behind Smart 

22 Disclosure is to use information and 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

5

1 technology in a way that focuses on and 

2 improves consumer's decision making. This 

3 empowers them to better understand products, 

4 and to make better informed decisions.

5 The White House is encouraging 

6 agencies to use Smart Disclosure to empower 

7 consumers to make complex decisions about all 

8 aspects of their lives. That includes energy, 

9 health, education, and so on. And at Treasury 

10 we're actively exploring the potential for 

11 Smart Disclosure to expand our financial 

12 capability, financial access, and consumer 

13 protection efforts. So, today you'll hear both 

14 from policymakers and from private sector 

15 innovators who are pioneering Smart Disclosure 

16 efforts in personal finance.

17 We hope to open the dialogue on 

18 this subject and work with your agencies to 

19 identify future opportunities to collaborate 

20 on Smart Disclosure projects.

21 Second, I look forward to learning 

22 more about the joint research agenda that 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

6

1 you've developed to examine how and why 

2 financial education and access to financial 

3 services can be effective at enhancing 

4 Americans' financial well being.

5 I understand the research roadmap 

6 that you will propose identifies critical 

7 questions to assist federal agencies working 

8 together with our colleagues, and the private 

9 sector, and academia to support research 

10 needed to fill gaps in our knowledge about 

11 these important subjects.

12 This research has the potential 

13 both to inform public officials on developing 

14 better policies and to help innovators in the 

15 private sector to develop products and 

16 services that better meet consumer needs.

17 I commend you making this a joint 

18 effort. Again, your coordination on this issue 

19 allows for combining scarce resources, avoids 

20 duplication, and provides for a robust 

21 exchange of perspectives that will allow you 

22 to general more insightful research.
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

7

1 This week the Treasury and the 

2 Social Security Administration will sign a 

3 Memorandum of Understanding to support such a 

4 combined research project in the year ahead 

5 based on this Commission's research agenda.

6 I'd also like to take a minute to 

7 report on last month's meeting of the 

8 President's Advisory Council on Financial 

9 Capability. The Council had an important 

10 discussion on the fundamental role employers 

11 can play in promoting the financial well being 

12 of their employees.

13 A key recommendation from that 

14 meeting was that the federal government should 

15 be a model employer in this regard. The 

16 Council's recommendation is a reminder to us 

17 of the many ways in which federal agencies can 

18 be influential agents for positive change. In 

19 this case, the emphasis is on federal agencies 

20 in their capacity as employer.

21 So, as you plan your financial 

22 capability activities and policies in the 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

8

1 coming years, I hope that you will consider 

2 how the Commission and its members can develop

3 ways to address the Council's recommendation.

4 Finally, I'd like to warmly 

5 welcome Rich Cordray, Director of the Consumer 

6 Financial Protection Bureau and his colleagues 

7 for being here today. The Bureau is the 

8 Commission's newest member, and Rich will now

9 serve as Vice Chair of the Commission.

10 Many of you know Rich, but let me 

11 say a few words by way of introduction. He's a 

12 graduate of Michigan State University, Oxford 

13 University, and as we were discussing just a 

14 few moments ago, most importantly the 

15 University of Chicago Law School, just a plug 

16 for our alma mater. 

17 Rich was Editor-in-Chief of the 

18 University of Chicago Law Review and later 

19 clerked for Supreme Court Justices White and 

20 Anthony Kennedy. Throughout his career, Rich 

21 has been a dedicated public servant serving 

22 both in the Executive and Legislative branches 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

9

1 of government. He served on the front lines 

2 of consumer protection as Ohio's Attorney 

3 General. He was elected to serve as Treasurer 

4 of the State of Ohio, and as Franklin County 

5 Treasurer. And as Ohio's Treasurer he 

6 resurrected a program to provide low-interest 

7 loan assistance to small businesses to create 

8 jobs in the state.

9 Earlier, Rich had served as State 

Representative for the 33rd 10 Ohio House 

11 District. And he's been no stranger to the 

12 Judicial branch. Not only was he the first 

13 Solicitor General in Ohio's history, he's 

14 argued seven cases before the U.S. Supreme 

15 Court, including by special appointment of the 

16 Justice Department under the Administrations 

17 of both Presidents Clinton and George W. Bush. 

18 So, Rich, thank you very much for joining us. 

19 It's a real honor.

20 COMMISSIONER CORDRAY: Thank you, 

21 Cyrus, for the kind introduction. We did 

22 compare notes and found that I graduated from 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

10

1 the law school, let's just say which chagrin I 

2 realized several years before Cyrus graduated 

3 from the law school, and we'll just leave it 

4 at that. So, I guess I have from your 

5 accounts numerous credentials, not necessarily 

6 particularly relevant to my current position.

7 But let me, if I could, as the 

8 first meeting I've attended briefly talk about 

9 financial education, which has been a passion 

10 of mine for years, and describe the work that 

11 Consumer Bureau is doing to support the 

12 objectives of this Commission.

13 The ability to understand and 

14 control one's finances is one of the most 

15 important life skills. It creates a path to 

16 economic independence and mobility. I view it 

17 as fundamental to responsible citizenship in 

18 our system of economic democracy. 

19 As the first Director of the 

20 Consumer Financial Protection Bureau, I'm 

21 keenly interested to serve as Vice Chair of 

22 the Financial Literacy and Education 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

11

1 Commission. I'm proud to work with you, the 

2 federal government agencies you represent, and 

3 the White House as we share a common vision of 

4 sustained financial well being for all 

5 Americans.

6 When I was Ohio Treasurer, I 

7 pushed for financial education as an integral 

8 part of our work. Our campaign called "Your 

9 Money Now," taught people about everything 

10 from budgeting, to bank rates, to building 

11 wealth.

12 We also successfully pushed for 

13 new law requiring high school students to 

14 receive instruction in personal finance 

15 education in order to graduate. We then 

16 worked to implement that new law by 

17 establishing a statewide curriculum and 

18 working with local school districts, there are

19 over 600 school districts in Ohio, to train 

20 teachers to teach personal finance education.

21 At the Consumer Bureau, one of our 

22 responsibilities is to provide consumers with 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

12

1 tools to manage their own financial lives. 

2 We're hard at work. 

3 Gail Hillebrand, formerly of the 

4 Consumers Union, heads our Consumer Education 

5 and Engagement Unit. Gail has now established 

6 our Office of Financial Education headed by 

7 Camille Busette, which is mandated by law to 

8 develop and implement initiatives intended to 

9 education and empower consumers. We've 

10 launched several "Know Before You Owe" 

11 campaigns to bring greater transparency to the 

12 markets for mortgages, credit cards, and 

13 student loans. This included a model 

14 financial aid shopping sheet that we released 

15 with the Department of Education so the 

16 students can properly calculate the cost of 

17 college.

18 Yesterday we posted a draft 

19 monthly mortgage statement to our website to 

20 solicit feedback from consumers, industry 

21 stakeholders, and others. The information is 

22 intended to help consumers stay on top of 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

13

1 their mortgage costs, and hold mortgage 

2 services accountable for fixing errors. You 

3 can see all our work at our website, Consumer 

4 finance.gov.

5 Giving people the tools and 

6 helping them build the skills to manage their 

7 money boosts personal confidence and protects 

8 their dignity. Dr. Martin Luther King, Jr. 

9 once said, "That the dignity of the individual 

10 will flourish when the decisions concerning 

11 his life are in his own hands, when he has the 

12 means to seek self-improvement."

13 At the Consumer Bureau, we believe 

14 in empowering people to make informed 

15 financial decisions and then take 

16 responsibility for those decisions.

17 Financial literacy is as much an 

18 equality issue as literacy itself. Knowledge 

19 is power, and financial knowledge offers an 

20 important cushion against some of the bumps 

21 and bruises of economic life. So, it's with 

22 great enthusiasm and commitment that I pledge 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

14

1 our work together on this Commission. Thank 

2 you for welcoming me.

3 COMMISSIONER QUITTMAN: Thank you. 

4 And thanks to both of our -- our Chair and our 

5 Vice Chair for being here with us today.

6 As we mentioned, it's a new year 

7 and we wanted to start off with a panel on a 

8 topic that we think will be of great interest 

9 to all of us in the room going forward, the 

10 topic of Smart Disclosures.

11 We think that this will be 

12 critical to our work in the financial 

13 education and literacy field going forward. 

14 And Smart Disclosures, as you'll hear more 

15 about, can be defined as the use of product 

16 and consumer data to provide customized 

17 information to consumers in order to make 

18 those better decisions that we're hearing 

19 about.

20 To moderate this panel, I could 

21 think of no better person than Chris Vein, who 

22 is the Deputy Chief Technology Officer for 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

15

1 Government Innovation in the White House 

2 Office of Science and Technology policy.

3 Prior to joining the White House, 

4 Chris was the Chief Information Officer for 

5 the City and County of San Francisco where he 

6 led the city in becoming a national force in 

7 the application of new media platforms, use of 

8 open-source applications, creating new modules 

9 for expanding digital inclusion, and 

10 emphasizing green technology to transform 

11 government.

12 Chris was this year again named 

13 one of the top 50 public sector CIOs by 

14 Information Week Magazine, and he's been named 

15 to the Government Technology Magazine's top 25 

16 dreamers, doers, and drivers, and has been 

17 honored by the Community Broadband Visionary 

18 of the Year by the National Association of 

19 Telecommunications Officers and Advisors. So, 

20 thank you, Chris, for being with us, and I'll 

21 let you introduce the panel.

22 MODERATOR VEIN: Thank you, Louisa, 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

16

1 and I have to get a shorter bio and send it 

2 out. Good morning. As Louisa said, I am Chris 

3 Vein, and it is indeed a pleasure and an honor 

4 to be here to speak on a subject that is very 

5 near and dear to my heart, which is called 

6 Smart Disclosure.

7 We've heard a bit about what the 

8 definition is of Smart Disclosure, and I'm not 

9 going to repeat that definition because you'll 

10 hear more about it. But I will talk about 

11 some policy levers that we have as a 

12 government that can aid in the release of that 

13 kind of data, the data that helps consumers 

14 make better informed decisions.

15 And there are really two levers, 

16 or two types of data that we can focus on. 

17 There is the government data. And as you know, 

18 the President has been very emphatic about 

19 asking agencies to release data about goods 

20 and services or consumers that we host or we 

21 have.

22 The other part, though, which is 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

17

1 equally important and almost more interesting 

2 is enticing or convincing non-federal 

3 government owners or holders of data to 

4 release their data in order for a more 

5 complete picture, if you will, of consumer 

6 data to be released and can be used.

7 Recently, there was an exciting 

8 example of just that aspect. My former boss 

9 who was the Chief Technology Officer for the 

10 federal government worked with three of the 

11 largest utility companies in the State of 

12 California and convinced all three to have 

13 them release their data on what consumers are 

14 using for energy in those areas. And we know 

15 have about six million people who are having 

16 access by simply going to the website for 

17 their energy company and downloading their 

18 personal data. 

19 And it may sound kind of silly, 

20 but a use case of that, I was describing this 

21 to a friend of mine and she said, "Oh, 

22 really." And she typed in -- she went to the 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

18

1 website, typed out her data and said, "I had 

2 no idea I was spending that much money on 

3 energy. I need to find out why." And it turns 

4 out that after talking with her husband and 

5 her daughter, her daughter was taking hour6 long showers, and those showers were requiring 

7 lots of hot water, and a hot water heater in 

8 order to heat it. And they made a decision to 

9 ask their daughter to stop taking long 

10 showers, and low and behold their utility bill 

11 dropped precipitously. An interesting kind of 

12 humorous story, but a real story, 

13 nevertheless, of what we're talking about, 

14 which is the impact on the consumer to make 

15 better informed decisions on using their hard 

16 earned resources.

17 So, with that said I'm going to 

18 turn now to the real experts on Smart 

19 Disclosure, and have a pretty exciting, I 

20 think, panel discussion about Smart 

21 Disclosure.

22 The first person up is both a 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

19

1 friend and a colleague of mine, Sophie 

2 Raseman, because Sophie serves as Co-Chair of 

3 the Task Force on Smart Disclosure that is 

4 part of the White House National Science and 

5 Technology Council. And Sophie is a very 

6 active member, a very visionary member of that 

7 council, and that task force, and she is our 

8 first speaker today. Sophie.

9 MS. RASEMAN: Thank you. Can you 

10 hear me? 

11 First of all, I'd like to thank 

12 the Commission for having me here today. This 

13 is a topic that I'm very passionate about. As 

14 Chris mentioned, I am a Co-Chair of the Task 

15 Force on Smart Disclosure, and in my day job I 

16 work in the Department of Treasury Office of 

17 Financial Institutions, where I lead up our 

18 efforts on consumer protection.

19 I will try to go quickly today, 

20 but as some folks in this room can attest, I 

21 can speak for hours on Smart Disclosure, so 

22 you may have to get the hook.
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

20

1 So, the first thing I want to talk 

2 to you about is what is Smart Disclosure, and 

3 then I want to talk about how it connects to 

4 financial education.

5 As folks have already mentioned, 

6 we define Smart Disclosure as giving access to 

7 the information that consumers need to make 

8 informed choices. And it's establishing 

9 public access to this information in formats 

10 that can be reused and repackaged by third 

11 parties.

12 Why do we care about doing this? 

13 The answer is that we believe that 

14 establishing public access to this useable 

15 data on products and services will allow third 

16 parties like non-profits and commercial 

17 enterprises to take that data and repackage it 

18 into tools that can help consumers make wiser 

19 choices.

20 So, what does this mean for 

21 financial consumers? It means, essentially, 

22 taking the data on products and services that 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

21

1 are like pricing and the features of financial 

2 products and making it available to the public 

3 in machine readable formats for people over 

4 the internet. And we believe that through 

5 doing that, and we have evidence that we will 

6 spark the creation of financial tools that can 

7 help people make better choices.

8 So, the financial education 

9 community is very familiar with tools of this 

10 sort. In fact, the financial education 

11 community has been quite a leader in promoting 

12 access to these kinds of tools.

13 I threw up on the slide for you a 

14 couple of the goals from the National Strategy 

15 for Financial Literacy from 2011, where you 

16 focus on promoting broader access to tools 

17 that can help financial consumers make wiser 

18 choices. So, this gets to the heart of why we 

19 should care as financial education 

20 practitioners about Smart Disclosure. And the 

21 answer is, it is one of the most effective and 

22 powerful ways that we have of stimulating the 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

22

1 creation of tools for financial consumers.

2 Next, I want to walk you through 

3 some examples to make this concrete. What do 

4 we mean by tools? For simplicity sake, I'm 

5 going to focus first on one of the most 

6 important categories of tools, and that's 

7 comparison shopping websites. 

8 The first bullet you see there is 

9 Bankrate.com, which allows folks to go on line 

10 and shop for a variety of types of financial 

11 products from savings accounts, to checking 

12 accounts, to mortgages. You're probably 

13 familiar with sites like these.

14 The next slide is Kayak.com, which 

15 probably even more of you are familiar with. 

16 These kinds of flight search comparisons are 

17 increasingly popular. They allow you to 

18 perform quite sophisticated searches and use 

19 quite sophisticated and rich filters to find 

20 flights that are the best deal for the unique 

21 needs that you have.

22 Now, I put these two examples next 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

23

1 to each other because I wanted to spark a 

2 question in all of our minds that I'll get to 

3 in a minute; which is: why is it that the 

4 market for flight search is so comparatively 

5 rich and well developed, and the market for 

6 comparison shopping for financial products is 

7 so comparatively underdeveloped. So, 

8 Bankrate.com is one of the leading outlets for 

9 this kind of information for financial 

10 consumers, but it has far from the ubiquity 

11 and the richness of some of the search tools 

12 in travel.

13 We don't have a Kayak.com for 

14 every kind of financial product, and why don't 

15 we? So, we'll get back to that in a minute. I 

16 want to show you one more example before we 

17 get back to that, which is I want to talk 

18 about how mobile devices are changing how 

19 comparison shopping applications are used by 

20 consumers.

21 Comparison shopping is not just 

22 about sitting at home online buying products 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

24

1 online. Mobile devices have allowed us to 

2 bring tools, comparison shopping tools to 

3 consumers in the real world in brick and 

4 mortar retail decision making environments. 

5 Goodguide right here is an example of how you 

6 can do that. Goodguide is for consumer 

7 packaged goods. What they allow you to do, as 

8 you can see, is take a snapshot of the barcode 

9 of a bottle of shampoo or similar product and 

10 get instant access to very rich comparison 

11 shopping information about that product.

12 We don't have this today, but you 

13 could imagine a tool, say if you walk into a 

14 check casher and there was a barcode on the 

15 disclosure for that check cashing service, or 

16 similarly if you're looking at mortgages and 

17 sitting down with a broker, why shouldn't you 

18 be able to take a snapshot of a barcode on the 

19 disclosure and instantly have access to 

20 information and advice from third parties on 

21 that product? Just a question for us.

22 Okay. So, what is the role for the 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

25

1 government here? We already know there are 

2 many comparison shopping tools out there. The 

3 role for the government is to address the gaps 

4 and problems that we see in this marketplace 

5 for tools today.

6 This gets back to the question 

7 that I posed about why don't we have a 

8 Kayak.com for type service for all sorts of 

9 financial products, and why aren't they more 

10 popular? There simply aren't very useful 

11 tools in many product areas, and they're not 

12 very widely available.

13 And more importantly I think for 

14 the financial education community, many of 

15 these tools do not address the needs of lower 

16 income consumers and other consumers outside 

17 the financial mainstream. So, what's the 

18 bottleneck, or why don't we see more and 

19 better comparison shopping tools?

20 The answer boils down, it's pretty 

21 simple, and the answer is the data. If the 

22 data is there, the applications are built and 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

26

1 when the data is not there we don't see them. 

2 So, this is where we get to the role for the 

3 government and the role for Smart Disclosure.

4 Government in the Smart Disclosure 

5 approach tries to break this bottleneck by 

6 establishing access to the information that 

7 can fuel the creation of these apps.

8 So, this slide has a lot of 

9 detail, but I just want to make two points, 

10 which is there are two important levers that 

11 government has for establishing access to the 

12 data that can be the fuel for these 

13 applications. One is releasing data sets, as 

14 Chris mentioned. And many of the agencies on 

15 the Commission have already been leaders in 

16 this area. 

17 Michael will talk later about his 

18 pioneering efforts at the Department of Labor. 

19 I'll just mention a couple of others. The 

20 Consumer Financial Protection Bureau publishes 

21 a database of credit card agreements. The SEC 

22 makes available interactive data on mutual 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

27

1 fund fees and financial disclosures of public 

2 companies. All of these data sets can then be 

3 used for the creation of consumer tools.

4 The second lever, which Chris also 

5 mentioned is making information that sellers 

6 of financial products disclose to the 

7 marketplace more usable. This is a very 

8 critical lever since, as you know, most of the 

9 information on products and services is not 

10 collected by the government. It's disclosed 

11 directly by providers to customers, and to the 

12 marketplace.

13 So, Smart Disclosure solution here 

14 is to say all that information that you're 

15 making available today in the form of fine 

16 print, or you have to actually go into the 

17 store and get the information, make that 

18 information available, and usable, machine 

19 readable data formats over the internet, and 

20 by doing so we can help stimulate the creation 

21 of more and better comparison shopping tools.

22 So, I'm going to switch gears and 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

28

1 talk about another frontier for Smart 

2 Disclosure, which Chris also touched on, and 

3 that is personal data, the customer's access 

4 to his or her own information.

5 What we know from our financial 

6 education work is that financial education, 

7 advice about products and services that's 

8 generic can be powerful, but it can be a lot 

9 more powerful if it's tailored to the unique 

10 needs of the individual's particular financial 

11 circumstances. So Smart Disclosure of a 

12 person's own data, giving a customer access to 

13 his own financial usage data for a particular 

14 financial product, or giving him access to 

15 other financial data like his historical tax 

16 information, or his federal and state benefits 

17 information can be an important way of 

18 stimulating the creation of more personalized 

19 financial tools.

20 I'll just give you one example. 

21 This is Mint.com, and I think Matt will talk 

22 in a moment about HelloWallet, which is also 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

29

1 provides personalized information. Mint.com 

2 is a free application online and on mobile 

3 devices that aggregates a person's own account 

4 information from many different financial 

5 providers. And it allows people to use an 

6 array of personal financial management tools 

7 like budgeting, goal setting, and spending 

8 tracking to help that person better manage his 

9 or her finances. Mint.com and sites like it 

10 also provide personalized recommendations on 

11 products that are suited to an individual's 

12 unique circumstances.

13 I won't go too far into it, since 

14 I'm about out of time, but there are some 

15 similar limitations and issues in the market 

16 for personalized financial tools as we saw in 

17 the comparison shopping site context. And it 

18 boils down to the same problem, which is that 

19 where there are limitations on data 

20 availability, these sites or these 

21 applications are limited in the kind of 

22 functionality that they can deliver to 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

30

1 consumers. So, there's a role for the 

2 government to explore how it can facilitate 

3 broader and cheaper access to an individual of 

4 his own data so he has access to better 

5 personalized tools.

6 I'll make one final plug, which is 

7 the Task Force for Smart Disclosure is here in 

8 part to be a resource to agencies who are 

9 interested in exploring how Smart Disclosure 

10 can help them in their work. I've already --

11 with my colleagues on the task force, we've 

12 already been in dialogue with a number of your 

13 agencies on some of your Smart Disclosure 

14 efforts, and I would just leave by encouraging 

15 those of you who are not already in touch with 

16 the task force to get in touch with us, and we 

17 look forward to talking to you more about how 

18 Smart Disclosure can help promote financial 

19 access, financial education, and financial 

20 capability. Thank you. 

21 MODERATOR VEIN: Thank you, Sophie. 

22 Our next panelist is Michael Davis, Deputy 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

31

1 Assistant Secretary Employee Benefits Security 

2 Administration at the Department of Labor. And 

3 Michael is going to talk about some of the 

4 pioneering work that they're doing at the 

5 Department of Labor.

6 COMMISSIONER DAVIS: Good morning. 

7 Can everybody hear me? Is that good?

8 Well, first I'd like to say Happy 

9 Valentine's Day for those who are celebrating 

10 Valentine's Day, and hopefully everybody in 

11 here has someone to love, or somebody that 

12 loves you. I am going to be sharing a lot of 

13 love today with the Commission.

14 First for this opportunity to 

15 address the Commission, and secondly for the 

16 collaboration that happens around this table 

17 both in these meetings and away from these 

18 meetings, because there's been a tremendous 

19 amount of activity that's happened as a result 

20 of the Commission's existence.

21 We're going to talk about 

22 adventures today in Smart Disclosure. I say 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

32

1 adventures in Smart Disclosure sort of evokes 

2 these ideas of sort of marching down a journey 

3 along with lots of your companions, and we 

4 are, in fact, marching down a journey, and 

5 it's a journey of Smart Disclosure. 

6 Smart Disclosure actually has real 

7 impact on the lives of Americans, and we're 

8 going to talk about some of the bright 

9 examples as they exist within the Department 

10 of Labor.

11 So, as was said, I am Deputy 

12 Assistant Secretary for EBSA, the Employee 

13 Benefits Security Administration. I have been 

14 in that role since 2009. Prior to that, I was 

15 -- I tell people I'm a recovering investment 

16 banker. I was an investment banker for many 

17 years in New York, and then the latter part of 

18 my career I spent actually working in asset 

19 management. We sold 401(k) plans, pension 

20 plans, so I think part of the reason I joined 

21 the Administration and was asked to join is 

22 some of the perspectives I have from that 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

33

1 perspective. And a lot of things we do, do 

2 directly impact the retirement marketplace.

3 So, first let's talk about EBSA. A 

4 lot of people here may not have heard about 

5 EBSA. Don't be ashamed if you have not. I 

6 actually had not for a long time. The only 

7 way I knew about it is there was an Assistant

8 Secretary who used to be at the agency who I 

9 worked with when I was in the private sector 

10 for many years. EBSA has a tremendous mission. 

11 Its mission is to protect the benefits of 

12 working Americans and retired Americans, 

13 Americans who are enrolled in private sector 

14 plans. They could be retirement plans or 

15 health plans. 

16 There about 140 million Americans 

17 who are affected by these plans. Most people 

18 who have health insurance get them through 

19 health plan, and there are trillions of 

20 dollars in assets that are deposited in these 

21 plans, currently over $6 trillion. So, EBSA's 

22 role is the regulation and enforcement around 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

34

1 the operation of these plans.

2 It is a voluntary decision to set 

3 up a retirement plan, but once you do set up a 

4 retirement plan there are lots of rules and 

5 laws that affect how that plan has to operate. 

6 It's got to be funded a certain way, the 

7 people that operate the plan have to operate 

8 it with standards of -- fiduciary standards 

9 which are standards of prudence. You have to 

10 act with exclusive loyalty to the people in 

11 that plan, and act only in their best 

12 interest. You are compelled to act in their 

13 best interest by law. That law is ERISA. It's 

14 the Employee Retirement Income Security Act 

15 signed into law in 1974.

16 The law also provides for both

17 civil and criminal penalties to the extent 

18 that those rules are not adhered to. So, 

19 EBSA's role is to interpret the law as it 

20 pertains to these plans. We had a big 

21 regulatory division, and we had a big 

22 enforcement division. We actually do 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

35

1 investigations, criminal and civil. Charges 

2 are brought if there -- criminal charges are 

3 brought by the U.S. Attorney's Office, civil 

4 charges are brought by the Solicitor's Office, 

5 and we have been very active on the 

6 enforcement side.

7 Just a couple of examples. 

8 Everybody, of course, is familiar with Enron. 

9 We brought action against Enron to the extent 

10 that it affected those employee benefit plans. 

11 There was about $134 million that we were able 

12 to get reinstated to those individuals who 

13 lost as a result of malfeasance at Enron. And 

14 also Bernie Madoff, we also brought an 11-

15 count indictment against Bernie Madoff for 

16 violations of ERISA and a variety of other 

17 provisions that were violated in conjunction 

18 with the SEC and the FBI. So, we're very, 

19 very active in these areas.

20 But there are about 700,000 

21 retirement plans, two and a half million 

22 health plans. The agency has about 1,000 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

36

1 employees in 10 regional offices across the 

2 country. One of the big things that we do and 

3 people don't know is participants can actually 

4 call and get a live person on the phone if 

5 they have a question about their benefits, 

6 they have concerns about their benefits, 

7 either retirement or health. They can call one 

8 of our people on the phone and actually get a 

9 live person to talk to about your benefits. 

10 That number is (866)444-EBSA. That's not a 

11 paid political advertisement.

12 Next page is, as I said, I have a 

13 lot of love for the FLEC, and I want to talk 

14 about just coordination. So, we've been 

15 members of the FLEC since '03, since the 

16 establishment of the FLEC. We're co-chair of 

17 a working group to implement the National 

18 Strategy. 

19 There were a number of things that 

20 have happened over the course of FLEC the last 

21 couple of years that have really made us think 

22 and follow-up. One of those was something I
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

37

1 think Louisa organized with an organization 

2 that worked with victims of domestic violence. 

3 And I think that presentation was last year, 

4 and the speaker said that one of the key 

5 reasons that abused partners stay in those 

6 relationships is for financial reasons. They 

7 don't feel like they have the financial 

8 independence to step away, and we thought 

9 well, with respect to retirement to the extent 

10 they don't understand about their access to 

11 those benefits, we need to get involved. So, 

12 we actually did follow-up. We've done now two 

13 webcasts with the people that help those 

14 victims of domestic violence. We're going to 

15 schedule another webcast with actual victims 

16 of domestic violence across the country, so a 

17 lot of great stuff there.

18 We do think that Smart Disclosure, 

19 as I said, makes a difference. We are 

20 encouraging the development of tools and 

21 resources to help. One of those key tools is 

22 the Form 5500. Now, people around this table 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

38

1 probably have not heard about the 5500, 

2 doesn't sound exciting, but I tell you it's 

3 exciting because the information that is 

4 embedded in this form, this form was required 

5 by ERISA back in 1974, the first time the 

6 report was issued was in 1975. The information 

7 has specific data on plans, so if it's a 

8 retirement plan it would have information on 

9 the investments, fees both direct and 

10 indirect. A direct fee is a fee that the plan 

11 would pay to that provider, an indirect fee 

12 would be a third-party fee that the provider 

13 receives. 

14 So, you guys may have heard, or 

15 may not have heard of revenue sharing, but 

16 there are third-party payments that do come to 

17 providers for settlement of funds. And we 

18 think that those fees should be understood 

19 because they do affect the way that provider 

20 operates, and the fund complexes that may 

21 recommend.

22 The form was initially manual. We 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

39

1 gave it electronic option back in 2000. Back 

2 in 2010, just a couple of years ago, we 

3 required all filings to be electronic, so that 

4 information is more easily digested, and we 

5 can post it within one day.

6 So, I wanted to give you guys an 

7 example of how this actually works for an 

8 individual company. If you go on our website 

9 you can pull up the information that we're 

10 showing right now on the screen. This is an 

11 example of IBM's plan. IBM is a large plan. 

12 They have 100,000 active employees, 200,000 

13 people that have accounts. This would include 

14 retirees, people who have been separated from 

15 the company voluntarily or involuntarily.

16 This is the first page you would 

17 see if you went to their form on our website 

18 which, as I said, is free and available to 

19 all. It shows very basic information. It shows 

20 the name of the fund. This is their 401(k) 

21 plan. It shows the signatory, the information 

22 has to be attested by an individual by their 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

40

1 signature, and just basic information on the 

2 form.

3 Next page gets into a little bit 

4 more detail, talks about the number of active 

5 participants, as I said about 110,000, 200,000 

6 though people who have accounts with IBM. I 

7 think in this plan they have about $36 

8 billion.

9 What's more interesting, however, 

10 is what we can do with that information as a 

11 result of EFAST2. EFAST2 is our electronic 

12 filing system that we use to sort of keep this 

13 data, make this data available to the public. 

14 This is sort of a three-part package that we 

15 did with PBGC and Treasury. We share that 

16 information, we share the cost of EFAST2, but 

17 EFAST2 allows us to post information very 

18 quick, make it available in a way that's 

19 consumable, and make that information useful 

20 for people in a way that they could actually 

21 consume it.

22 The raw data sets are up on our 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

41

1 website right now, so you can go to our 

2 website right now and download that raw data. 

3 Those data sets have been viewed last couple 

4 of years over 47,000 times. 

5 What's interesting is how the 

6 private sector is using this data. There are 

7 a couple of companies that I'd like to cite 

8 that have used this data we think to great 

9 effect to create the kind of public policy 

10 objectives that we have with this data. We 

11 think that the disclosure of this data can 

12 make plan sponsors rationalize the cost of 

13 their plans, allow consumers to make better 

14 informed decisions about their plans. And we 

15 think make these plans more cost-effective, 

16 and create more wealth for middle class 

17 savers. As those fees come down as a result of 

18 transparency from the providers, that directly 

19 benefits retirement savers. 

20 So, two companies have used the 

21 data in a big way. BrightScope that I 

22 mentioned earlier that actually rank different 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

42

1 401(k) plans by fees, and FreeERISA that makes 

2 the information available, mostly the people 

3 that are in the industry.

4 The next page is BrightScope. So, 

5 we saw the basic data that we have on the form 

6 on our website. This is how a company like 

7 BrightScope uses it. So very colorful display, 

8 you can get this data right now if you went to 

9 Google, pulled up their site, search for IBM, 

10 this page will come up. It shows, again, this 

11 first page is basic information on IBM. Right? 

12 The name of the plan, who signed off on the 

13 information, the year of the information, just 

14 again very, very basic information.

15 Next page I think is much more 

16 interesting. As I said, one of the schedules 

17 in the 5500 talk -- next page, please. Talks 

18 about fees and investments. So, what 

19 BrightScope does is they will group plans in 

20 certain files, in certain peer groups. And 

21 they'll group them by the size of the plan, 

22 size of assets, number of participants, type 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

43

1 of industry, and they will rank that plan in 

2 terms of fees and other components. So, you 

3 see with respect to IBM they have a rating of 

4 86. The highest in that category is 88, so 

5 that means that they're at the top of that 

6 category.

7 Now, there are other funds that 

8 would not be at the top, they'd be near the 

9 bottom, and if you were a participant in that 

10 plan you could call up the director of your 

11 plan and say why are we ranked near the bottom 

12 in our peer group? Right? It's pressure on the 

13 Chief Investment Officers, the people who 

14 operate these plans to make better decisions 

15 about these plans. And we have heard 

16 anecdotally of stories where people have done 

17 exactly that.

18 Next page is FreeERISA. As I said, 

19 this company actually makes information more 

20 available to people in the industry. This is 

21 a snapshot of how they would show the 

22 information from IBM on their website. Again, 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

44

1 it's targeted to industry professionals. 

2 These screen shots are free, but they actually 

3 will do reports for you for an additional fee 

4 if you want them, but they're another service 

5 out that they use this information.

6 So, we think that the 5500, the 

7 electronic disclosure of that information, 

8 posting it on our website, making it very easy 

9 for people to access combined with rulemakings 

10 that we recently issued, we just announced on 

February the 3rd 11 , that compels companies to 

12 release the information, both direct and 

13 indirect information on the fees. 

14 So, 4(a)(b)(2) is the one that we 

15 just announced, and this is for the first time 

16 creating an affirmative obligation on behalf 

17 of retirement service providers, primarily 

18 record keepers to disclose both the direct 

19 fees that people pay, and indirect fees.

20 This information we know will 

21 empower plan sponsors to make better 

22 decisions. There has been already a very 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

45

1 significant response to these activities in 

2 the press, and by the marketplace. Certainly, 

3 there are people who applaud these activities, 

4 and I would say most of the coverage has been 

5 positive. 

6 There is a concern, though, that 

7 this may put pressure on active investment 

8 managers to lower their fees. We think that 

9 to the extent that there is room to 

10 rationalize fees, that benefits middle class 

11 savers, and that's a good thing.

12 So final thoughts. We think Smart 

13 Disclosure makes a difference. In our case, we 

14 think that difference is going to be 

15 experienced in retirement plans, particularly 

16 401(k) plans. We think consumers will benefit 

17 from the disclosure of this information. And 

18 one of the things I didn't mention is one of 

19 our rulemakings will require a chart to be 

20 issued to participants in 401(k) plans. People 

21 will start to get those charts in August of 

22 this year, and those charts will show in a 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

46

1 very simple format the fees you pay, 

2 performance on one, three, and ten-year basis, 

3 and a variety of other just basic information 

4 about funds. But we think that's going to 

5 benefit people in terms of lower fees, better 

6 information about the way their plan is 

7 operated. Thanks.

8 MODERATOR VEIN: Thank you, 

9 Michael. Thank you very much. Our last 

10 panelist is Matt Fellowes, the Founder and 

11 Chief Executive Officer of HelloWallet at 

12 HelloWallet. He will provide a private sector 

13 perspective on how companies can use Smart 

14 Disclosure data to promote financial 

15 capability and access. Matt.

16 MR. FELLOWES: Thanks, Chris, and 

17 thanks to the Commission for the invitation to 

18 be here this morning. We're running a little 

19 short on time, so I'm going to be motoring 

20 through some of the slides, probably not all.

21 So, I was asked to come here this 

22 morning and talk about how HelloWallet uses 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

47

1 Smart Disclosure to help workers increase 

2 their savings and overall financial wellness, 

3 as well as how additional Smart Disclosures 

4 would help that objective even further. But I 

5 couldn't resist providing a little context up 

6 front. I used to be a Brookings scholar up 

7 until about two years ago, consumer finance 

8 scholar, and it's really these data that I 

9 found very provocative which motivated me to 

10 take the jump off of the cliff into 

11 entrepreneurship from my comfy perch at 

12 Brookings. And I thought this context might be 

13 useful for you all as you're considering 

14 potentially ambitious work to promote 

15 additional disclosure, since it's quite 

16 provocative, and we'll just go very quickly.

17 But to start with, most workers 

18 are living pay check to pay check, and the 

19 specific distribution of the population really 

20 varies depending on how you look at the data. 

21 This is my favorite source; it comes from pay 

22 checks just because of the size of the sample. 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

48

1 But about 70 percent of workers are reporting 

2 that they live pay check to pay check. So, the 

3 practical implication for workers is that 

4 they're not able to effectively allocate their 

5 pay checks as a result of that. Their money is 

6 going to bills, and spending, and debt, and 

7 health and fees, and really the needs of 

8 retirement ultimately are going unmet along 

9 with emergency funds, other savings goals, and 

10 so on.

11 So, for instance, the number one 

12 reason why people are reporting that they're 

13 not contributing enough to their 401(k) or at 

14 all is because of liquidity concerns. They're 

15 concerned that they don't have enough money to 

16 contribute in the first place. So, it should 

17 be no surprise that workers are about $6 

18 trillion now behind on retirement savings, 

19 just a massive retirement savings gap exists 

20 in this country.

21 So, I think what's even worse is 

22 that when they do manage to save, there's a 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

49

1 massive amount of money leaking out of 401(k)s 

2 every year, so we've - this estimate comes 

3 from other scholars elsewhere, but about $85 

4 billion is annually leaking out of 401(k)s. 

5 We've put together a variety of data to 

6 estimate about $200 billion is going into the 

7 plans, so almost 40 percent is coming out of 

8 the plans every year in the form of loans or 

9 hardship withdrawals. 

10 But I think perhaps worst of all, 

11 and this is where it becomes most relevant to 

12 Smart Disclosures, is because workers are 

13 living paycheck to paycheck, because they're 

14 struggling to pay their bills, they're really 

15 not focused then on understanding financial 

16 products and services. It's not something they 

17 think about, and it makes sense. Why would 

18 you if you're having trouble putting food on 

19 the table, or if you're having trouble paying 

20 your bills.

21 So that lack of focus has created 

22 all sorts of inefficiencies in the consumer 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

50

1 financial product market. And I could talk all 

2 day about this, these data, but just a few 

3 examples.

4 We know about a third of working 

5 households store more than two months of their 

6 annual income in their checking account, and 

7 that includes about 25 percent of low-income 

8 households. So, that's money that just piles 

9 up in their checking account, and then is not 

10 allocated into a better performing savings 

11 vehicle. So, it's there if someone has binge 

12 spending. It makes people feel like they have 

13 more money to spend than they actually do.

14 Households, I think you all have 

15 probably reported on these data before, spend 

16 about $38 billion in overdraft fees. The 

17 really stunning statistic, though, is that we 

18 found in work I did while I was at Brookings, 

19 that over half of those households that are 

20 paying overdrafts have savings at the bank 

21 they're overdrawing at that can cover those 

22 overdrafts. All they need to do is link their 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

51

1 accounts, but there's no incentive in the 

2 world for the FIs to provide that -- basically 

3 make that option obvious for people.

4 Another is that we have this 

5 glaring example of all these millions of 

6 people that bought homes that never should 

7 have bought homes in the first place. Right? 

8 Millions of people are foreclosed on. If they 

9 were talking to someone objective during the 

10 process of the evaluation, they would have --

11 the majority would have walked away thinking 

12 no, I cannot afford this house that I'm about 

13 to buy.

14 So, anyway, the lack of focus on 

15 financial products has created all sorts of 

16 inefficiencies. And the blame for those 

17 inefficiencies is all around, but the reality 

18 is they exist in the marketplace.

19 So, bottom line, workers aren't 

20 saving enough, they on too much debt and risk, 

21 and are ultimately vulnerable to abuses 

22 because of that. So, how we help, and how we 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

52

1 help in particular through Smart Disclosure is 

2 we're essentially helping workers find the 

3 money to save for savings.

4 Part of that is about finding them

5 better prices in the marketplace, part of it 

6 is about using behavioral science and 

7 psychology to nudge people. All of it, 

8 though, is about providing very personalized 

9 messages and guidance based off of the data 

10 that we're observing on individual households. 

11 So I'll show you that in a moment.

12 I should mention we're primarily 

13 distributed through large Fortune 500 

14 companies, and it's everyone from very large 

15 retailers, to manufacturing companies, to 

16 rocket scientists, so we have a really broad 

17 demographic.

18 Okay. So here's some examples of 

19 how we actually apply Smart Disclosure in the 

20 market through personalized messaging. On the 

21 left-hand side there you see an individual's 

22 accounts, and there you'll see that that data 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

53

1 is actually being piped in automatically every 

2 day from the individual's financial account, 

3 so we've got access to 12,000 different bank's 

4 transaction level data. The individual has to 

5 agree to disclose that data to us, but the 

6 real magic then is the analytical and the 

7 behavioral layer that we apply on top of that 

8 where we provide this personalized messaging. 

9 So, a couple of examples.

10 First, we see that an individual 

11 hasn't bought a car in a couple of years. I 

12 know from my research this is one of the ways 

13 people get into trouble financially and go 

14 after a hardship loan and build up too much. 

15 We know that they're not saving for a car. We 

16 know that their car is old, so we're 

17 proactively reminding them. We do the same 

18 thing with small stuff.

19 My five-year old had a birthday 

20 yesterday. I got a message from HelloWallet 

21 three months ago saying your five-year old's 

22 birthday is coming up. This is how much we 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

54

1 think you should set aside for her cupcakes 

2 and clothes, and all the other stuff. 

3 Another example is running a 

4 surplus. We're automatically running this 

5 algorithm every day looking at an individual's 

6 bank balance and figuring out how much they 

7 can safely allocate into a better performing 

8 vehicle. So, that's one of literally hundreds 

9 of types of guidance that we provide to 

10 people, all very personalized, and all 

11 completely dependent on our ability to get 

12 access to their everyday data.

13 I'll skip over the next -- yes, 

14 another example. We just rolled this out a few 

15 months ago. We're using data on location-based 

16 information about the location of retailers 

17 and pairing that with an individual's 

18 transaction history, so that when they walk 

19 into a store they can press this button on our 

20 app and figure out how much they have spent at 

21 that store year-to-date. And it's just a nice 

22 little psychological trigger so when you're 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

55

1 walking into Caribou you can say hey, I've 

2 spent $200 this year. You might be preparing 

3 to spend $1.50, but it just is a little light 

4 bulb that goes off in people's head.

5 Similarly, we recognize that it's 

6 a coffee shop, so we can tell you how much 

7 you've got to safely spend in your coffee 

8 budget. So, this is one of the additional 

9 ways that we use Smart Disclosure. I could 

10 talk about a lot of additional ways, but why 

11 don't we go forward.

12 Briefly, we've been able -- we 

13 launched our enterprise application in May of 

14 last year, and since then we've signed 

15 contracts where this will roll out to about 2 

16 million workers this year. To date we've 

17 rolled it out to about 300,000. We've been 

18 able to increase savings contributions on 

19 average by about 80 percent. Let's skip this, 

20 skip this, skip this.

21 So, let's talk just how -- I just 

22 want to make two other points. How do we --
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

56

1 how could additional Smart Disclosure help 

2 our service or others like us, or other 

3 services out there even further? One example 

4 would be an IRS data. If you want to create an 

5 opportunity for workers to put $6 billion 

6 additionally into savings every year, you 

7 could automate the tax filing process for 

8 people.

9 There was an experiment run in 

10 California, I think Austan Goolsbee's like --

11 his idea originally called "Ready Return," 

12 which basically automatically processed taxes 

13 for people out in California, a subset of 

14 them. The reason why it ran into some problems 

15 is that the government didn't have full data 

16 about an individual's tax filings, so the 

17 filings were often wrong. But with the 

18 combination of these bank data I was just 

19 talking about, you could get a much more 

20 richer picture of someone's finances.

21 We're spending about $6 billion a 

22 year every day, or every year on tax 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

57

1 preparation, so this is a way that you could 

2 potentially create savings by having the 

3 government automate tax filing for people.

4 A second, and this is where I'll 

5 stop on the examples, but there's -- companies 

6 are very focused right now on proactively 

7 improving the health of their employees. The 

8 health reforms that were passed a couple of 

9 years ago provide further incentive dollars 

10 for employers to do this.

11 If they were able to, or if 

12 companies like us were able to get to item 

13 level data about how people are consuming, 

14 again with the consent of the individual, it 

15 could be a very powerful way to incentivize 

16 people to choose to eat different food than 

17 what they're currently doing, and improve 

18 their health.

19 So, why don't we go to the last 

20 slide then, keep going, one more. Okay. So, 

21 closing thought here. There's an enormous 

22 amount of power with Smart Disclosure. We're 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

58

1 an example of that. We have increased savings 

2 contributions by 80 percent within three 

3 months, a huge impact. But there's risk with 

4 disclosure, as well, so I think for them to be 

5 truly smart, those risks really need to be 

6 accounted for.

7 One of those risks is privacy. 

8 Some of the free sites that are out there 

9 right now are selling people's transaction 

10 level data with just very modest consent. You 

11 have a little checkbox when you sign it, but 

12 no one reads that stuff. So, that's a risk.

13 A second is that it can create 

14 some false advertising. So, one of the sites 

15 that we monitor regularly is encouraging 

16 people to move their 401(k) into an IRA, and 

17 dramatically inflates the return that that 

18 individual investor will get because they're 

19 not regulated. And they can get away with a 

20 little bit more loose advertising of the 

21 benefits of this IRA product.

22 So, anyway, the bottom line is we 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

59

1 see an enormous amount of power. We're 

2 realizing some of that power but for it to be 

3 truly smart, I think a lot of care needs to be 

4 given in thinking about the unintended 

5 consequences, as well. Thank you.

6 MODERATOR VEIN: Thanks, Matt, 

7 appreciate that. I think -- let me see, we 

8 have about five minutes or so for question and 

9 answers. So, obviously, I've got lots of 

10 questions that I'd like to ask, but let me 

11 open it up to the Commission and see if the 

12 Commission has any questions, or else I'll 

13 just launch into mine. So, any questions?

14 Well, I think my question to the 

15 three of you is really, you all have done such 

16 a great job of saying what the potential is. 

17 And, Matt, thanks for identifying some of the 

18 risks. I guess the question is: where do we go 

19 from here? How do we prioritize all of the 

20 different ways that we could go in this, and 

21 all the different types of tools, and all of 

22 the bottom line financial literacy questions 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

60

1 that are yet to be answered? How would you 

2 start prioritizing our work? Matt, you want to 

3 start?

4 MR. FELLOWES: Thanks a lot. That's 

5 a great question, and it's a very practical 

6 question, and I don't have a practical answer 

7 for you, because the reality is the universe 

8 is quite large. I think we're -- the 

9 automation of data that sort of ends in a 

10 machine readable format is something that 

11 we're still kind of at the tip of an iceberg 

12 so to speak. So, I think a useful exercise 

13 might be to first define the iceberg.

14 We've come up with five ideas 

15 sitting around in my office for about 10 

16 minutes. There's a lot of opportunities there 

17 to help consumers get ahead, so I think I 

18 would start with getting more clear about what 

19 that universe of opportunities looks like, and 

20 then I think you could get various criteria to 

21 evaluate priority.

22 MODERATOR VEIN: Michael, do you 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

61

1 want to --

2 COMMISSIONER DAVIS: Yes. I think 

3 with the data I talked about we're discussing 

4 ways we can make that data more available and 

5 more consumable. And, actually, we've had 

6 great conversations with Sophie and her team 

7 about things that we can do. We've actually 

8 had conversations with your team in the White 

9 House about what we can do, and the Office of 

10 Technology. So, we think there are more things 

11 we can do. We don't have answers yet, but 

12 we're actively talking about it right now.

13 MS. RASEMAN: I'll give some 

14 practical very near-term advice, which I've 

15 seen work for a number of agencies on the 

16 Commission as they've gone about their open 

17 data efforts, including -- I'll use the 

18 Department of Health and Human Services as an 

19 example.

20 Talking to the data user 

21 communities, getting to know who those people 

22 are and starting a dialogue with them so that 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

62

1 you can get feedback about what's most 

2 valuable is critical. And I think those 

3 conversations, if you start them now, will 

4 help define the iceberg that Matt is talking 

5 about, and help set priorities.

6 MODERATOR VEIN: Thank you. Cyrus.

7 COMMISSIONER AMIR-MOKRI: Thanks, 

8 Chris. Matt, this question I think is 

9 basically for you, and it may go to this whole 

10 iceberg thing. 

11 As you were -- I thought your 

12 presentation was fascinating. And as you went 

13 through and you had a couple of slides talking 

14 about the household's budget and how they 

15 organize that. I could use that, but the 

16 question I have for you is where does the data 

17 input come -- does the individual themselves 

18 have to have the discipline to sit down and 

19 make the input?

20 MR. FELLOWES: Yes. So, while I was 

21 at Brookings I was largely paid to stare at a 

22 wall and think, and -- I mean, I was also 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

63

1 working with policymakers and so on various 

2 policies, but -- so, I basically lined up all 

3 the barriers that have prevented 

4 democratization of independent guidance for 

5 everyday spending. And one of the big barriers 

6 was just the amount of bloody work that goes 

7 into just figuring out how much you're 

8 spending on various things, and what your 

9 priorities should be on everything from 

10 education, and retirement, and so on.

11 So, one of our goals on the outset 

12 was to automate as much of this as possible. 

13 In this case we were able to solve for that 

14 problem by essentially patching into 12,000 

15 different banks and transaction level data. 

16 Now, how we actually go through that takes 

17 about literally one minute. It's shocking how 

18 efficient it is, but a user will come into our 

19 application. They will enter their user name 

20 and password for their online bank, and then 

21 we automatically pull the data from that point 

22 on. So, there's no data entry after they've 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

64

1 entered their user name and password.

2 A second big barrier was trust. 

3 Giving over your user name and password is a 

4 big deal, especially at an online company. So 

5 a couple of ways that we overcame that barrier 

6 is we are distributed through employers. 

7 There's a very intense vetting process. We've 

8 answered to date about 1,600 unique security 

9 questions. We work with some of the biggest 

10 companies in the country now, as a result.

11 The second is that we're 

12 independent. There's no advertising. We don't 

13 do any kind of lee generation stuff. We're 

14 totally product agnostic, and institution 

15 agnostic. 

16 And then third is we have a social 

17 mission. We were created initially with 

18 support from the Rockefeller Foundation, and 

19 we give away one free subscription for every 

20 five, so those -- that combination of the 

21 value gives people enough confidence that they 

22 can automate this process.
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

65

1 MODERATOR VEIN: Actually, one last 

2 question then. Obviously, as you heard from my

3 introduction, San Francisco, digital 

4 inclusion, digital divide, very important in 

5 my work. So, we've been talking a lot about 

6 perhaps some sophisticated concepts, and some 

7 sophisticated tools in order to do what we

8 need to be doing.

9 What can we do, or what should we 

10 be doing to make sure that we're not 

11 inadvertently making that divide worse as we 

12 move forward with digital?

13 MR. FELLOWES: I, actually -- we 

14 work very closely with Mayor Newsom, former 

15 Mayor Newsom. We may have talked, but it's a 

16 fundamental question. It's particularly 

17 important to us because we have a social 

18 mission in which we believe passionately, and 

19 we give away one free subscription to a needy 

20 family for every five subscriptions that we 

21 sell. And we work with community groups around 

22 the country, so we needed to solve this 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

66

1 problem for our own purposes.

2 The answer is, actually, you talk 

3 to a lot of -- if your goal is to serve a 

4 diverse group, you have to talk to that 

5 diverse group intensely and the sort of 

6 outcome of the discussions to date and our 

7 innovation to date is that there's different 

8 products needed for different populations. Big 

9 surprise, right, but practically what that 

10 means is for low wage populations we have a 

11 text-based application, which is just as 

12 automated, but a lot of the population doesn't 

13 have bank accounts so there's no automated 

14 pulling data. What we are pulling is peer 

15 data, though, about that individual. And 

16 that's data that we have from federal 

17 resources. And that's influential, and then 

18 we deploy various services for that population 

19 through a text phone.

20 So, I think the key is to just be 

21 very mindful about the fact that there is a 

22 very diverse group of needs out there, and 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

67

1 that there's not a silver bullet.

2 MODERATOR VEIN: Well, I think 

3 we're out of time, so on behalf of the panel 

4 we, again, thank you for your time and 

5 attention, honor to be here, and we hope we've 

6 provided some valuable information to the 

7 Commission. Thank you.

8 COMMISSIONER QUITTMAN: Thank you. 

9 Let me again thank the panel for being with us 

10 today and sharing their insights. This is an 

11 issue I think that has peaked everyone's 

12 interest, and we do hope to continue 

13 conversations on this topic. I hope the panel 

14 will engage with us in those conversations, as 

15 well. I know at least two of you kind of have 

16 to, so -- so, again, I hope you all will join 

17 me in thanking the panel.

18 (Applause.)

19 COMMISSIONER QUITTMAN: I will 

20 shortly turn to you updates from the 

21 Commission. We're going to try to keep these 

22 updates fairly brief. All the members of the 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

68

1 Commission have more detailed information in 

2 their binders.

3 Let me start, though, by welcoming 

4 in addition to Director Cordray some members 

5 of his team, Gail Hillebrand, the Associate 

6 Director of Consumer Education and Engagement, 

7 and Camille Busette, who is the Assistant 

8 Director for the Office of Financial Education 

9 at the Consumer Financial Protection Bureau 

10 joining us today, and I know we'll see Camille 

11 around much more in the months ahead. We've 

12 been working with her and her team since she 

13 joined the Bureau, and we are certainly 

14 looking forward to their engagement in the 

15 Commission in the months ahead.

16 I also want to welcome two other 

17 members of the Commission, Michael Herndon, 

18 who is representing the Commodity Futures 

19 Trading Commission's new Consumer Outreach 

20 Office, and Roger Blake from the National 

21 Credit Union Administration is sitting in for 

22 Tanya Green who has a very good reason, she 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

69

1 just gave birth a couple of weeks ago, so she 

2 has a good reason for not being with us today.

3 Let me give a little more detailed 

update from the January 19th 4 meeting of the 

5 President's Advisory Council on Financial 

6 Capability, which was held here at the 

7 Treasury Department. 

8 As Cyrus mentioned, that meeting 

9 focused on work place financial education and 

10 included a very encouraging discussion about 

11 the roles employers can play in promoting the 

12 well-being of workers and the sustainability 

13 as businesses by providing access to financial 

14 education resources and related services.

15 The intention is not only does 

16 this make Americans better financial 

17 consumers, but it also makes them more 

18 effective and productive workers by reducing 

19 financial stress which can relate to 

20 absenteeism, turnover, and distraction in the 

21 work place.

22 As Cyrus mentioned, the Council 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

70

1 recommended that the government serve as a 

2 model employer to promote the financial 

3 capability of more than 2 million federal 

4 employees. And Ray Kirk of the Office of 

5 Personnel Management will be leading the way 

6 on this effort. And I think he'll be providing 

7 the Commission with updates on his work in the 

8 months ahead.

9 Additionally, you can find the 

10 interim report of the President's Council on 

11 the Treasury Department's website under the 

12 "Resources" section.

13 Speaking of websites, our office 

14 with the very able assistance of Jim Gatz has 

15 been working on upgrading the Mymoney.gov 

16 website you all know and love. And we've been 

17 also working on integrating the financial 

18 research clearinghouse that we've been working 

19 on, as well we consumer finance data sets, 

20 very apropos of the discussion of making 

21 available public data. 

22 The upgraded website will also 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

71

1 include a self-assessment tool on the core 

2 competencies. And work is progressing well, 

3 and we expect to have those available and 

4 ready to re-launch later this spring. And I 

5 do want to thank all the members of the 

6 Commission who have been helping us and 

7 sharing information and ideas for the website.

8 Finally, I want to remind you that 

9 the National Financial Capability Challenge 

10 will kick off in a month from now, and we'd 

11 like to ask you again to help us promote it. 

12 We've included a flier in the binders, and 

13 there's fliers out on the table, as well. And 

14 you can certainly find more information about 

15 that at Challenge.Treas.gov. 

16 The Financial Capability Challenge 

17 is a non-monetary awards program, which 

18 challenges high school-aged students to take 

19 control of their financial futures by learning 

20 more about personal finance, and encourages 

21 educators to share financial lessons with 

22 youth in the classroom, after school, and 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

72

1 elsewhere, so we certainly encourage everyone 

2 to spread the word.

3 I'll now turn to the Working Group 

4 Chairs to provide a brief update on their 

5 work. And the members of the Commission will 

6 note that the full Working Group Reports are 

7 in your binders. First, Luke Reynolds from 

8 the FDIC who's chair of the Core Competencies 

9 Working Group and the Financial Access Working 

10 Group. 

11 COMMISSIONER REYNOLDS: Thank you, 

12 Louisa. 

13 First, the Financial Access 

14 Working Group is an ongoing resource for 

15 agencies considering financial access projects 

16 and initiatives. Our financial access guide,

17 which we distributed at the time of the last 

18 meeting is a resource designed to help 

19 agencies identify existing financial access 

20 programs within other agencies within federal 

21 government with the goal of promoting greater 

22 synergies between financial education and 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

73

1 access initiatives. 

2 Looking forward, we will also 

3 coordinate efforts to advise the Commission on 

4 implementing a safe strategy relating to 

5 remittances.

6 Moving on to the Core Competencies 

7 Working Group, marketing concepts including an 

8 edugraphic has been developed to prompt 

9 initial consideration and encourage people to 

10 learn more about the core competencies.

11 These materials were developed by 

12 marketing experts who have insights learned 

13 from nationwide focus groups. The marketing 

14 materials are currently under review by the 

15 Department of Treasury. After they are cleared 

16 for release, the working group will provide 

17 leadership for communicating, integrating the 

18 core competencies on the federal level, as 

19 well as promoting the competencies for 

20 strategic non-commission partners.

21 Our ultimate vision of the project 

22 is that just as the consumers will view the 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

74

1 graphic and be motivated to go to MyMoney.gov 

2 to learn more about the competencies, so just 

3 we're asking individuals practitioners and 

4 providers to do their own curriculums and 

5 initiatives, we need to align MyMoney.gov so 

6 that consumers can go to MyMoney.gov and 

7 access resources from the agencies aligned 

8 with each of the core competencies.

9 So, we're currently reviewing the 

10 existing resources available on MyMoney.gov, 

11 and categorizing them by the core 

12 competencies, identifying where there are 

13 gaps, and identify other resources that may be 

14 able to fill those gaps that have already been 

15 created within the federal government.

16 And then we'll be developing 

17 introductory content to introduce each of the 

18 five core competencies, and select the two or 

19 three best resources to supplement those core 

20 competencies.

21 I wish to once again thank all the 

22 members of our Working Group, in particular 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

75

1 James Gatz, Ray Kirk, Lisa Quittman, as well 

2 as our new assistant -- new colleagues from 

3 GSA, SSA, and USDA will be helping us with the 

4 next step of the project.

5 Do members of the Commission have 

6 any questions? Thank you.

7 COMMISSIONER QUITTMAN: Thanks, 

8 Luke. Next we'll hear from Jeanne Hogarth 

9 from the Federal Reserve Board, Chair of the 

10 Research and Evaluation Working Group.

11 COMMISSIONER HOGARTH: Good morning 

12 and thank you. 

13 I, too, would like to recognize 

14 the members of the Committee or the Working 

15 Group. They are printed in your documents, 

16 and I won't read off all the names, but know 

17 that they are all very hard at work on this. 

18 Everybody is very active and engaged.

19 We have two major projects that we 

20 have been working on. One is a list of 

21 updating the research priorities. Some of you 

22 may know that in 2008 there was a convening 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

76

1 that brought together a team of scholars and 

2 agency staff to identify key priorities. That 

3 happened in the fall of 2008, and as many of 

4 you know, things have happened since then. 

5 And we decided that it was time to update 

6 those priorities.

7 We held a convening in September 

8 that was broad group of Commission members 

9 along with researchers, funders, community 

10 practitioners to really identify what the 

11 priorities were moving forward. Those have 

12 been worked, and reworked, and vetted, and 

13 they are in your notebooks for you. And we 

14 are asking you to get back to us by March 1 

15 for comments. And our goal is to release these 

16 in the spring.

17 This is a living document. It is 

18 not something that's meant to be cast in 

19 concrete. We're not asking for official move 

20 it up the chain of command approval, but we do 

21 want to have a consistent set of priorities 

22 that researchers and funders can respond to. 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

77

1 And I will note that we have in the spirit of 

2 cutting back moved the priorities from 10 

3 priorities down to nine.

4 The other project that we have is 

5 the research clearinghouse that Louisa alluded 

6 to. The work is progressing on that. This will 

7 be building a database of federal research in 

8 the area of financial literacy and capability, 

9 and federal data sets in the area of financial 

10 capability that other researchers can use. 

11 So, the goal is to have a kind of a portal

12 that people will be able to access research 

13 and data that they can use in their own 

14 research.

15 And then finally, I would like to 

16 mention something that is not in your 

17 notebooks but is a personal interest of mine, 

18 and that is I happen to serve on the Program 

19 for International Student Assessment Advisory 

20 Committee that is putting together the 2012 

21 PISA Financial Literacy Test. Those of you who 

22 are familiar with PISA know that every three 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

78

1 years the -- there is an international effort 

2 to go out and survey 15-year olds, and you 

3 read these in the newspapers about how 

4 different countries stack up with math, or 

5 literacy, or problem-solving skills.

6 In 2012, we're going to be 

7 assessing the financial literacy skills of 

8 youth worldwide, and I am thrilled that the 

9 United States is a participant country in this 

10 initiative. 

11 We hope to have -- we have field 

12 tested the document, the test exam, and there 

13 is a preliminary report available on the PISA 

14 website. Those of you who are interested in 

15 it, I do have slips of paper with the website 

16 written down so you can go and check it out. 

17 And next fall we should have preliminary 

18 results from the assessment. So, stay tuned, 

19 more research.

20 COMMISSIONER QUITTMAN: Thanks, 

21 Jeanne. That's a lot of great information. 

22 Next we'll hear from Karen Bellesi, who is one 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

79

1 of the Co-Chairs along with Deborah Golding of 

2 the National Strategy Working Group.

3 COMMISSIONER BELLESI: Thank you, 

4 Louisa. I'm very pleased to talk about the 

5 work of the National Strategy Working Group.

6 As you recall, over the past 18 

7 months the Commission launched both the 

8 National Strategy for Financial Literacy and 

9 the Implementation Plan for promoting 

10 financial success. Both of those documents 

11 are now posted on MyMoney.gov in the "About 

12 Us" section.

13 With the issuance of both of those 

14 documents, the National Strategy Working Group 

15 decided to step back and reflect on how it can 

16 continue to add value to the Commission. And 

17 along those lines, we revamped our mission 

18 statement. And it includes two focus areas. 

19 The first is to keep the National Strategy 

20 relevant and up-to-date. And the second is to 

21 help coordinate the efforts to carry out the 

22 Implementation Plan at the federal level.
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

80

1 So, Working Group members are 

2 coordinating with the staffs of both the 

3 Department of Treasury and the Consumer 

4 Financial Protection Bureau, as well as other 

5 working groups on the following planned 

6 activities. 

7 The first is an outreach plan for 

8 the National Strategy and the Implementation 

9 Plan. We think it's important to increase the 

10 public awareness of both of those documents 

11 certainly among the FLEC, but beyond the FLEC, 

12 and also beyond Washington, D.C.

13 We think it's important to discuss 

14 what the federal government is doing to 

15 implement the National Strategy. And we also 

16 think it's important to provide examples of 

17 how it can be applied to organizations that 

18 are doing the day to day work of financial 

19 education.

20 The second activity is to 

21 coordinate a Commission-wide action plan. And 

22 that will include plans of action by the 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

81

1 Commission's Working Groups to implement the 

2 four goals. It will also include 

3 opportunities for agencies to increase their 

4 communication and work together on common 

5 financial education topics.

6 The third activity is to recommend 

7 and it helps implement focus themes for use by 

8 the Commission's agencies in collaborating on 

9 outreach and other activities. So, for 

10 example, financial literacy month is coming 

11 up, and we hope to help coordinate some 

12 activities around that.

13 And finally, we are working on a 

14 web-based vehicle for Commission members to 

15 share information and ideas, as well as 

16 promote partnerships on the Commission's 

17 activities. We hope to include information 

18 about programs, activities, and initiatives on 

19 this web-based vehicle. Agency contacts on 

20 particular financial literacy topics, as well 

21 as a calendar of events.

22 So, after appropriate vetting with 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

82

1 other Commission Working Groups, as well as 

2 with the Commission agencies, more details 

3 about these activities will be discussed at 

4 future Commission meetings.

5 And finally, I also want to thank 

6 Deborah Golding, who's the Co-Chair of the 

7 Committee, as well as the other members of the 

8 National Strategy Working Group. I really 

9 appreciate their hard work and many 

10 contributions to all of our efforts.

11 Thank you, and I'd be happy to 

12 respond to questions.

13 COMMISSIONER QUITTMAN: Thank you, 

14 Karen.

15 Before I open up the floor, let me 

16 just also acknowledge Cassandra McConnell of 

17 the CFPB's Office of Financial Education who 

18 has recently stepped up to serve as Chair of a 

19 reinvigorated Outreach Working Group. That 

20 slot has been vacant for some time, and we 

21 certainly appreciate that Cassandra has just 

22 taken on this task. And we expect -- there 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

83

1 she is, great work ahead from Cassandra and 

2 from those of you who have volunteered to 

3 serve on the Working Group. So, thanks again 

4 for stepping up to this important role, and we 

5 look forward to the good efforts of that 

6 Working Group.

7 And then one more item before I 

8 open up. First, let me thank the Working 

9 Group Chairs for those reports, and for the 

10 efforts of all the members of the Working 

11 Groups who have made so much progress in the 

12 last few months on these collaborative 

13 efforts.

14 I did also want to note back to 

15 the topic of financial education in the 

16 workplace, Susan Shockey of the USDA asked to 

17 make a brief announcement about the event that 

18 they have tomorrow that I think is very 

19 exciting progress in that very area. Susan.

20 COMMISSIONER SHOCKEY: Good 

21 morning, everyone. Thank you, Louisa.

22 FLEC members, you received a flier 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

84

1 at your seats reminding you about tomorrow's 

2 meeting. It is from 9:00 a.m. to 12:00 noon. 

3 We are having Dr. Barbara O'Neill from Rutgers 

4 present the Small Steps to Health and Wealth. 

5 This is the signature program offered by USDA 

6 through all land grant universities and 

7 cooperative extensions reaching the 3,000 

8 communities. 

9 But we're really pleased, our USDA 

10 employees asked for this in service. We have 

11 space for 500, and we're hoping that all of 

12 those individuals will come. Louisa will be 

13 presenting, representing FLEC from U.S. 

14 Treasury, and then you are invited to have --

15 bring your displays and display tables, not 

16 displays but actually handouts. 

17 So, again, thank you, Louisa for 

18 letting me make that announcement. We're 

19 really pleased that we can provide leadership 

20 in this area. USDA Secretary Vilsack is very 

21 engaged with this. The Under Secretaries --and 

22 then also printed in the program will be the 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

85

1 FLEC Commission, where you will be verbally 

2 thanked for your leadership. Any questions? 

3 Okay, thank you.

4 COMMISSIONER QUITTMAN: Thank you, 

5 Susan. It looks like an exciting event, and 

6 hopefully a number of the members of the 

7 Commission will be there tomorrow to help 

8 support you.

9 So, let me open the floor in the 

10 remaining minutes for discussion and questions 

11 from any members of the Commission, any 

12 additional questions for the Working Groups, 

13 or announcements, or discussion items.

14 COMMISSIONER KIRK: Thank you. As 

15 was mentioned a couple of times, the 

16 President's Advisory Council passed a 

17 recommendation that the federal government 

18 become a model employer for providing 

19 financial education. I think Susan just gave 

20 us an example how some of the resources 

21 developed primarily for external audiences can 

22 be used for internal audiences. And at OPM 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

86

1 we'll be reaching out to the Commission 

2 members asking for you to help us identify 

3 those programs that you may have developed 

4 primarily for your external audiences that we 

5 can then make available to improve the 

6 financial education of federal employees.

7 Thank you for your cooperation 

8 when we ask you for your help.

9 COMMISSIONER QUITTMAN: Thank you, 

10 Ray. I know a number of you have mentioned 

11 that you're very interested in being part of 

12 that work.

13 If there are no other comments or 

14 questions, that brings us to the conclusion of 

15 our meeting. I want to extend another thanks 

16 to our panelists this morning, as well as to 

17 the Commission members and their staffs for 

18 all their work in advancing the work of this 

19 Commission, as well as the members of the 

20 public who joined us today.

21 So, I again want to extend another 

22 special thanks and welcome for the Consumer 
NEAL R. GROSS

COURT REPORTERS AND TRANSCRIBERS

1323 RHODE ISLAND AVE., N.W.

(202) 234-4433 WASHINGTON, D.C. 20005-3701 www.nealrgross.com

87

1 Financial Protection Bureau for their 

2 engagement and support and being with us, and 

3 we look forward to seeing you all again. We 

4 have a tentative meeting date scheduled of May 

22nd 5 , and you'll receive a Save The Date on 

6 that in early May, so thanks very much for 

7 being here.

8 (Whereupon, the proceedings were 

9 concluded at 11:55 a.m.)

10

11

12

13

14

15

16

17

18

19

20