alan greenspan : financial education remarks by mr alan greenspan, chairman of the board of governors of the us federal reserve system, at the 33rd annual legislative conference of the congressional black caucus, washington, dc, 26 september 2003. * * * i am pleased to be here today to discuss the importance of financial education for consumers. forty years ago, dr. martin luther king, jr., challenged this nation to fulfill its promise of freedom and equality for all citizens, to ensure that all americans are able to participate in day - by - day business without being hampered by debilitating discrimination. in those forty years we have witnessed a great deal of change. however, the momentous goal of ensuring that everyone has access to the benefits of our free and efficient market economy has yet to be achieved and remains as relevant today as it was in august of 1963, when marchers gathered around the lincoln memorial. increasing economic prospects for people in traditionally underserved neighborhoods and granting every individual the opportunity to succeed remains crucial to our national well - being. a strong and effective system of education is one fundamental way to strengthen our economy and raise living standards. and education about personal finance that helps consumers of all ages meet the challenges and demands of our increasingly knowledge - based economy is one important component of such a system. trends in consumer finances today's financial world is highly complex when compared with that of a generation ago. forty years ago, a simple understanding of how to maintain a checking and savings account at local banks and savings institutions may have been sufficient. now, consumers must be able to differentiate between a wide range of financial products and services, and providers of those products and services. previous, less - indebted generations may not have needed a comprehensive understanding of such aspects of credit as the impact of compounding interest and the implications of mismanaging credit accounts. today, however, the advance of telecommunications technologies and the development of other new technological tools have broadened the availability of credit and other banking services. more generally, these advances mean consumers must be familiar with the role that computers play in the conduct of every traditional financial transaction, from withdrawing funds to borrowing. data, both empirical and anecdotal, point to trends in consumer financial conditions that have caused concern among some consumer groups. household debt has risen appreciably in recent years. while analyses suggest that, overall, the level of debt is being serviced adequately, a record number of nonbusiness bankruptcy filings reveals that many consumers

all have risen to the level of that sixth - grade class. we need to exert especial effort to improve the skills and earning power of those who appear to be falling behind. the federal reserve has a keen interest in promoting financial education and increasing the visibility of resources for consumers. in may, the federal reserve launched a national campaign to highlight the importance of personal financial education and money management to achieving short - and longterm goals such as pursuing higher education, purchasing a home, or starting a business. this initiative includes a public service announcement, a printed brochure, and a dedicated web site that identifies resources for learning more about financial management products and services. the federal reserve also has a long - standing interest in increasing minority access to credit markets. we study access to mortgage and small business credit for underserved populations and have participated in a pilot program teaching mortgage finance at select community colleges. this innovative program, targeted to minority students in underserved communities, trains individuals for a broad array of career opportunities in mortgage lending. we also are interested in measuring the effectiveness of financial education programs. studies evaluating such programs were presented at the federal reserve system's 2003 community affairs research conference. in addition, the federal reserve and the department of defense are collaborating on a study of the efficacy of personal financial management education provided to members of the military services and their families. this research will provide insights into what financial education interventions prove most effective with specific audiences and will provide valuable guidance for teachers, employers, and other financial education providers and funders. building bridges between community organizations, educational institutions, and private businesses is essential to increasing familiarity with new technological and financial tools. and the success of such efforts will bear significantly on how well prepared our society is to meet the challenges of an increasingly knowledge - based economy. in closing, let us remember that education is the primary means for creating new economic and financial opportunity for everyone. if we are able to boost our investment in people, ideas, and processes, just as we do in machines and technology, consumers and the economy can readily adapt to change, providing ever - rising standards of living for all americans.