[House Hearing, 111 Congress] [From the U.S. Government Publishing Office] IMPROVING CONSUMER FINANCIAL LITERACY UNDER THE NEW REGULATORY SYSTEM ======================================================================= HEARING BEFORE THE SUBCOMMITTEE ON FINANCIAL INSTITUTIONS AND CONSUMER CREDIT OF THE COMMITTEE ON FINANCIAL SERVICES U.S. HOUSE OF REPRESENTATIVES ONE HUNDRED ELEVENTH CONGRESS FIRST SESSION __________ JUNE 25, 2009 __________ Printed for the use of the Committee on Financial Services Serial No. 111-50 U.S. GOVERNMENT PRINTING OFFICE 52-407 WASHINGTON : 2009 ----------------------------------------------------------------------- For sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC, Washington, DC 20402-0001 HOUSE COMMITTEE ON FINANCIAL SERVICES BARNEY FRANK, Massachusetts, Chairman PAUL E. KANJORSKI, Pennsylvania SPENCER BACHUS, Alabama MAXINE WATERS, California MICHAEL N. CASTLE, Delaware CAROLYN B. MALONEY, New York PETER T. KING, New York LUIS V. GUTIERREZ, Illinois EDWARD R. ROYCE, California NYDIA M. VELAZQUEZ, New York FRANK D. LUCAS, Oklahoma MELVIN L. WATT, North Carolina RON PAUL, Texas GARY L. ACKERMAN, New York DONALD A. MANZULLO, Illinois BRAD SHERMAN, California WALTER B. JONES, Jr., North GREGORY W. MEEKS, New York Carolina DENNIS MOORE, Kansas JUDY BIGGERT, Illinois MICHAEL E. CAPUANO, Massachusetts GARY G. MILLER, California RUBEN HINOJOSA, Texas SHELLEY MOORE CAPITO, West WM. LACY CLAY, Missouri Virginia CAROLYN McCARTHY, New York JEB HENSARLING, Texas JOE BACA, California SCOTT GARRETT, New Jersey STEPHEN F. LYNCH, Massachusetts J. GRESHAM BARRETT, South Carolina BRAD MILLER, North Carolina JIM GERLACH, Pennsylvania DAVID SCOTT, Georgia RANDY NEUGEBAUER, Texas AL GREEN, Texas TOM PRICE, Georgia EMANUEL CLEAVER, Missouri PATRICK T. McHENRY, North Carolina MELISSA L. BEAN, Illinois JOHN CAMPBELL, California GWEN MOORE, Wisconsin ADAM PUTNAM, Florida PAUL W. HODES, New Hampshire MICHELE BACHMANN, Minnesota KEITH ELLISON, Minnesota THADDEUS G. McCOTTER, Michigan RON KLEIN, Florida KEVIN McCARTHY, California CHARLES A. WILSON, Ohio BILL POSEY, Florida ED PERLMUTTER, Colorado LYNN JENKINS, Kansas JOE DONNELLY, Indiana BILL FOSTER, Illinois ANDRE CARSON, Indiana JACKIE SPEIER, California TRAVIS CHILDERS, Mississippi WALT MINNICK, Idaho JOHN ADLER, New Jersey MARY JO KILROY, Ohio STEVE DRIEHAUS, Ohio SUZANNE KOSMAS, Florida ALAN GRAYSON, Florida JIM HIMES, Connecticut GARY PETERS, Michigan DAN MAFFEI, New York Jeanne M. Roslanowick, Staff Director and Chief Counsel Subcommittee on Financial Institutions and Consumer Credit LUIS V. GUTIERREZ, Illinois, Chairman CAROLYN B. MALONEY, New York JEB HENSARLING, Texas MELVIN L. WATT, North Carolina J. GRESHAM BARRETT, South Carolina GARY L. ACKERMAN, New York MICHAEL N. CASTLE, Delaware BRAD SHERMAN, California PETER T. KING, New York DENNIS MOORE, Kansas EDWARD R. ROYCE, California PAUL E. KANJORSKI, Pennsylvania WALTER B. JONES, Jr., North MAXINE WATERS, California Carolina RUBEN HINOJOSA, Texas SHELLEY MOORE CAPITO, West CAROLYN McCARTHY, New York Virginia JOE BACA, California SCOTT GARRETT, New Jersey AL GREEN, Texas JIM GERLACH, Pennsylvania WM. LACY CLAY, Missouri RANDY NEUGEBAUER, Texas BRAD MILLER, North Carolina TOM PRICE, Georgia DAVID SCOTT, Georgia PATRICK T. McHENRY, North Carolina EMANUEL CLEAVER, Missouri JOHN CAMPBELL, California MELISSA L. BEAN, Illinois KEVIN McCARTHY, California PAUL W. HODES, New Hampshire KENNY MARCHANT, Texas KEITH ELLISON, Minnesota CHRISTOPHER LEE, New York RON KLEIN, Florida ERIK PAULSEN, Minnesota CHARLES A. WILSON, Ohio LEONARD LANCE, New Jersey GREGORY W. MEEKS, New York BILL FOSTER, Illinois ED PERLMUTTER, Colorado JACKIE SPEIER, California TRAVIS CHILDERS, Mississippi WALT MINNICK, Idaho C O N T E N T S ---------- Page Hearing held on: June 25, 2009................................................ 1 Appendix: June 25, 2009................................................ 35 WITNESSES Thursday, June 25, 2009 Diaz, Lautaro ``Lot,'' Vice President, Housing and Community Development, National Council of La Raza (NCLR)................ 10 Gannon, John M., Senior Vice President, Office of Investor Education, and President of the FINRA Investor Education Foundation, The Financial Industry Regulatory Authority (FINRA) 17 Jones, Stephanie J., Executive Director, National Urban League Policy Institute............................................... 13 Lauber, Gerald, Chief Senior Advisor, National Urban Alliance (NUA).......................................................... 15 Levine, Laura, Executive Director, Jump$tart Coalition for Personal Financial Literacy.................................... 8 Neiser, Brent A., Director of Strategic Programs and Alliances, National Endowment for Financial Education (NEFE).............. 19 Salisbury, Dallas L., President and CEO, Employee Benefit Research Institute (EBRI)...................................... 11 APPENDIX Prepared statements: Hinojosa, Hon. Ruben......................................... 36 Diaz, Lautaro ``Lot''........................................ 45 Gannon, John M............................................... 52 Jones, Stephanie J........................................... 60 Lauber, Gerald............................................... 67 Levine, Laura................................................ 73 Neiser, Brent A.............................................. 78 Salisbury, Dallas L.......................................... 82 Additional Material Submitted for the Record Hinojosa, Hon. Ruben: GAO Testimony Before the Subcommittee on Oversight of Government Management, the Federal Workforce, and the District of Columbia, Committee on Homeland Security and Governmental Affairs, U.S. Senate, entitled, ``Financial Literacy and Education Commission, Progress Made in Fostering Partnerships, but National Strategy Remains Largely Descriptive Rather Than Strategic,'' dated April 29, 2009................................................... 126 Washington State Financial Literacy Work Group Final Report entitled, ``Putting The Pieces Together,'' dated December 1, 2008.................................................... 146 IMPROVING CONSUMER FINANCIAL LITERACY UNDER THE NEW REGULATORY SYSTEM ---------- Thursday, June 25, 2009 U.S. House of Representatives, Subcommittee on Financial Institutions and Consumer Credit, Committee on Financial Services, Washington, D.C. The subcommittee met, pursuant to notice, at 2 p.m., in room 2128, Rayburn House Office Building, Hon. Luis V. Gutierrez [chairman of the subcommittee] presiding. *(Chairman Gutierrez was unable to preside at this hearing due to a pressing commitment at the White House.) Members present: Representatives Sherman, Hinojosa, McCarthy of New York, Baca, Green, Scott, Cleaver; Hensarling, Royce, Marchant, and Paulsen. Mrs. McCarthy of New York. [presiding] Good afternoon everybody. We certainly appreciate everybody being here. This hearing of the Subcommittee on Financial Institutions and Consumer Credit will come to order. I want to thank everybody and the witnesses for agreeing to appear before the subcommittee today. Today's hearing, entitled, ``Improving Consumer Financial Literacy Under the New Regulatory System,'' will examine the continuing need for financial literacy, with a particular focus on the role of consumer financial literacy under the President's newly proposed regulatory framework. Among the issues that will be addressed here: how the consumer-friendly plain-language products proposed under the regulatory reconstruction plan will be created and regulated; the efficiency of previous Federal financial literacy efforts; and which agency should have primacy over financial literacy efforts going forward under the new plan. We will be limiting our opening statements to 15 minutes per side. But without objection, the hearing record will be held open for all members' opening statements to be made a part of the record. I now recognize Mr. Hensarling for 5 minutes. Mr. Hensarling. Thank you, Madam Chairwoman. I very much appreciate this hearing being called. I do believe that financial literacy is a very important subject, one that Members on both sides of the aisle have championed in the past, so it continues to be a very laudable goal for our Nation to improve the financial literacy of our fellow citizens. And, in fact, although I cannot do the quote justice, I will paraphrase something that one of our Founding Fathers, Thomas Jefferson, once said, and that is, if we disagree with how our fellow citizens exercise their discretion, the remedy is not to take it from them but to help inform their discretion. My apologies to any Jeffersonian scholars in the audience. I know that was not a literal quote, but that is essentially the paraphrase. And so, in some respects, although I appreciate the hearing, I am curious why we are having the hearing. I am curious because, as I look at the underlying legislation that would create the Financial Product Safety Commission, our colleague Mr. Delahunt's bill, which roughly parallels what the Obama Administration has furthered, I essentially see a rather draconian effort that allows an unelected body of bureaucrats to essentially decide that if they subjectively believe that a consumer financial product is ``unfair,'' if they subjectively believe that a consumer financial product is ``anti-consumer,'' they can ban it, just ban it from the market. It is not even a Federal preemption. It is essentially a layer of regulation and regulators that is poured on top of the present regulatory structure. And as I read the statute that was presented, again, by our colleague yesterday in our full committee hearing, it also encompasses the goal of having these regulators create ``plain vanilla'' products. You know, it is laudable if people want vanilla, but some people want strawberry, some people want chocolate, and some people want the 32 flavors of Baskin-Robbins. Typically, in a competitive market, the competitive market is going to produce what the people want. That is kind of one of the basic tenets of capitalism. And so, again, I wish our fellow citizens would indeed be--that we could help achieve and figure out a coherent strategy and plan to achieve a greater level of financial literacy, but I don't know if it is going to be needed if this legislation becomes law. I mean, after all, you really don't need to know how to read if your nanny reads you all your material at the end of each evening. And, in fact, if your nanny prevents you from putting your hands on any piece of literature, you are foreclosed from being able to read. And so now we are going to have an unelected group of bureaucrats who ultimately can decide what mortgages we have, what bank accounts we can open, and whether or not we will even be trusted with a credit card. And given that there is an entire new level of criminal and civil penalties that can be applied for those who produce subjectively unfair products or subjectively anti-consumer products, functionally no product is going to come to market that isn't pre-cleared by this unelected group of bureaucrats. And so, on the one hand, maybe only plain vanilla products will be available on the market. I am not sure how financially literate one needs to be. If you are only offered one flavor of ice cream, I suppose all you need to read on the board is vanilla. There is nothing else to read. And so, again, we have these philosopher-kings who will decide what is best for us, philosopher-kings whom I feel quite confident are not familiar with the Rodriguez family of Mesquite, Texas, that I have the opportunity of representing in Congress. My guess is they don't know exactly what precise bank account will help that family the most. My guess is that this unelected group of bureaucrats will be unacquainted with the Laird family of Athens, Texas, and they probably don't know what mortgage product is going to be best for their homeownership dreams in America. My guess is they probably are not well acquainted with the Shane family of Kaufman County, Texas, whom I represent in Congress. And my guess is they really shouldn't decide whether or not Kenneth Shane and his wife can use a credit card to help finance their American dream. Part of our challenge clearly is ineffective disclosure. We all agree on that. But most of the disclosure, I mean, it is kind of like Pogo. We have met the enemy, and it is us. We are the ones who require it. When you disclose everything, you end up disclosing nothing. And so we should work to have effective disclosures written in English, not voluminous disclosures written in legalese. So, again, I appreciate calling the hearing. I hope it proves to be a useful hearing. But ultimately, if the President's initiative is passed, it is all for naught. With that, Mr. Chairman, I yield back the balance of my time. Mr. Hinojosa. [presiding] Thank you, Ranking Member Hensarling. I am glad to be able to make my statement. And I want to welcome the witnesses to today's hearing. I especially want to commend Chairman Luis Gutierrez for holding it. Today's hearing on financial literacy is important to all of us in Congress, for today's witnesses, to all of you attending this hearing in person, via live webcast, or archived webcast, and really, each and every resident in the United States, but especially for our children and the generations to come. I ask that those of you with financial literacy programs understand that we have a limited amount of time and space for everyone to testify today. But I believe that we have put together a comprehensive panel of witnesses, and I personally welcome any statements you might make for submission in today's record. I am wearing several hats today. I am a member of this subcommittee. I am a co-Founder and co-Chair of the Financial and Economic Literacy Caucus, alongside my good friend and colleague from Illinois, Congresswoman Judy Biggert, and her dedicated staff, Nicole Austin and Zach Cikanek. I am chairman of the Subcommittee on Higher Education, and I am chairman of the Congressional Hispanic Caucus Task Force on Education. I am a consumer, just like all of you here today, and most important, I am a father. I have five children and six grandchildren. So financial literacy is extremely important to my family and to millions and millions of families throughout our country. What we do here today, the actions we take during the 111th Congress, and the steps that the States take to graduate financially literate students are all of the utmost importance. We need to improve the financial literacy rates of all residents throughout the United States, and I believe that today we might find some of the tools necessary to accomplish this goal which most definitely will include revamping the Financial Literacy and Education Commission and selecting one agency to have primacy over financial literacy efforts going forward under the new Financial Services regulatory plan proposed by President Obama. With that, I yield back the remainder of my time, and I want to recognize Mr. Paulsen for 3 minutes. Mr. Paulsen. Thank you, Mr. Chairman. I appreciate it. I also strongly believe that we must increase the financial literacy of our citizens. This is a basic life skill that, unfortunately, many in our country truly lack. This is really a family and a financial security issue. What concerns me is that nowhere in the Administration's proposal that we have now begun hearings on are the words ``financial literacy'' mentioned. The plan doesn't do anything to encourage individuals, from what I can see, to empower themselves or help people better understand personal finance and the decisions that they have to make on a daily basis. Instead, what I see is that, is one of my chief concerns, that it actually takes away the ability of individual choice and decisions from individuals. And rather than seeking to increase financial literacy, the underlying legislation creates this panel that potentially will take away choices from consumers out of a fear that things will be too complicated for them to understand. In other words, someone else is going to make decisions about what is best for you. And I think that is the wrong approach. Congress should not be taking away choices from the American people. Congress shouldn't be stifling innovation at a time when we need innovation. Instead, I think Congress should be helping these individuals understand what options are available so that they can make the right decisions for themselves. And I sincerely hope that this committee can work in a bipartisan way to improve upon the Administration's proposal as we go forward in crafting really some commonsense legislation that is needed to make sure that ultimately we are empowering all Americans to make sound and educated judgements with regard to their own personal finances. And I yield back. Mr. Hinojosa. Thank you. I, at this time, wish to recognize Congressman Green for 3 minutes. Mr. Green. Thank you, Mr. Chairman. I thank Chairman Gutierrez for his assistance with this as well. Mr. Chairman, generally speaking, financial success is directly proportional to financial literacy. People who understand financial products can make good decisions about the products that they have to negotiate. I think that this hearing is exceedingly important because it will give us an opportunity to examine the means by which we can, not only improve the products themselves by way of conveying what they are about to the public, but also, it helps us to understand where best to have this type of assistance located. We can have it in many different places, or we can have it in one place. I think that this is the type of hearing where we can get the intelligence necessary to make some decision as to where the actual delivery mechanism is located. I am exceedingly excited about this, and I look forward to our being able to develop the plain language that Americans would like to have so that they can understand and, to be quite candid with you, so that I can understand. I have had the good fortune to get a decent education in this country. And I can tell you that when I read some of my credit card materials, I am tempted to call a lawyer. I happen to have a law degree, but I haven't found that it has been of great benefit to me on some occasions, and went so far as to talk to my friend, who is a lawyer, who reminded me that he, too, has problems. So I am looking forward to our working together to come up with the kind of language that people can understand that makes a lot of sense and deciding where we should have the agency, or which agency is most appropriate to help us with this line of products. I thank you, Mr. Chairman, and I yield back. Mr. Hinojosa. Thank you. At this time, I would like to recognize Congressman Marchant for 4 minutes. Mr. Marchant. Thank you, Mr. Chairman. After reviewing last night all of the testimony that we will be given today, I am struck that all of your testimony seems to be directed towards a system that I think Mr. Hensarling has already pointed out is most likely not to be in place this time next year. In fact, with the current--the legislation that we just passed in the last few months, two pieces of legislation about credit cards, and the President has signed one of those pieces of legislation, significantly limiting the terms and conditions of credit cards and simplifying the credit card system; and taking into consideration that probably 80 percent of all home loans are made now through either FHA, VA, Fannie Mae, or Freddie Mac, and all of those documents are promulgated through HUD and through government agencies already; it seems to me that your task in the future may be trying to figure out how you can work with those Federal agencies, this new Financial Consumer Protection Agency, how you can work with them to try to help them promulgate all of these loan forms and all of the loan documents that each and every banker and lender in America will most likely have to go and get their loan papers approved and everything they do, and make sure that promulgation of documents is done through that agency. So it may simplify your job if you can, if you think you can trust this new financial consumer agency to draft the documents to where everyone who reads them will have no problem. So I think my questions today, Mr. Chairman, are going to be directed in that direction, and ask you what your opinion is of that agency and how you plan on interfacing with that agency. Thank you. Mr. Hinojosa. Thank you. I would like to ask Congressman Cleaver to take 3 minutes, please. Mr. Cleaver. Thank you, Mr. Chairman. I appreciate very much the hearing. I am very much concerned about the issue of financial literacy. The purpose of this hearing is to discuss plain-language initiatives and financial literacy promotion. Both of these subjects are extremely important to me. And I have advocated in our hearings over the years for plain language. In fact, in the 2006 GAO report, ``Increased Complexity in Rates and Fees Heightens Need For More Effective Disclosure to Consumers,'' is I think a bold and accurate statement about what is needed. Some credit card disclosure statements, and I think all of you are familiar with this, are written in 27th grade language. That is 12 years of high school and 12 years of college and 3 years of graduate school. And this sort of deliberate and sometimes deceptive way of presenting credit card information is at worst appalling and despicable, and at best, just plain arrogant. Plain-language regulations could go far to help eliminate these misleading and confusing practices. When I teach Bible study, I always teach that, in the Bible, the main thing is the plain thing, and the plain thing is the main thing. And it would be, I think, appropriate if we adopted a similar policy as it relates to what we incorporate into insurance--I am sorry, into our credit card statements and frankly, even into mortgage documents. Plain language can lead to the watering down of ideas also, which can also create some problems as well. And for this reason, I have just introduced H.R. 3037, to create a pilot program for financial literacy. I will incorporate into this program a pilot project for 10 school districts across the country. These projects would receive Federal funding to help them educate and train the teachers in order to integrate financial literacy into the curricula of grades K through 12. And this pilot program is just one step toward ensuring that all students in all school districts will be able to participate in similar programs in their schools. And finally, Mr. Chairman, if you look at the crisis that we have found ourselves in today, it doesn't take a Ph.D. to realize that we have a public that, in many instances, just did not understand what they were getting into when they participated in these exotic mortgages. And so I think the thing we need to let people know is that what you don't owe won't hurt you. Mr. Hinojosa. Thank you. At this time, I would like to call on Congressman Royce for 1 minute. Mr. Royce. Thank you, Mr. Chairman. I think financial literacy here is key. I think, in my view, I am a little afraid that one of the reasons we are here today is because of the overreliance on the government to determine what is best for consumers. And I think a lot of consumers looked at this and said, well, if the government says it is okay, then it must be. And I think this flawed line of thinking led millions of consumers to get involved in subprime and Alt-A loans. They, after all, had that government support. And I think a similarly faulty line of thinking led investors in institutions around the world to embrace financial derivatives based on the U.S. housing market. Why? Well, the government-supported rating agencies rated these products Triple-A. So what could the problem be? And there was a belief that the rating agencies and Federal regulators knew something that everyone else did not know. And clearly, they didn't know the problem. But there was a reliance on the government, and in fact, in many instances, they were responsible for the development and proliferation of these products. According to a former Federal Reserve official, CRA regulations led to the development of subprime loans, and the proliferation of subprime and Alt-A loans was in itself enabled through low-income housing goals that were placed on Fannie Mae and Freddie Mac by their regulators and by Congress. So, clearly, the belief in an all-knowing regulator is flawed. And instead of attempting to address this problem through increasing the regulatory presence over the industry, which will exacerbate the belief that the government does know best, we should be encouraging an educated, knowledgeable consumer and investor base that makes sound financial decisions for themselves and their families; hence, the importance of financial literacy and the importance of disclosure. Thank you, Mr. Chairman. Mr. Hinojosa. Thank you, Congressman Royce. I want to announce that the House has begun the voting. I am going to ask that the technicians put that work that is going on in the House of Representatives on the screens so that you can see the progress that we are making. But we have seven amendments to vote on, plus the eighth, which is final passage. We anticipate that it is going to take 1 hour. So I am going to recess to allow all members to participate. And we will reconvene in 1 hour. I am looking forward to the testimony of these witnesses. I think that it is going to be very informative and something that we are going to be very proud of in getting into the record. With that, we stand in recess. [recess] Mrs. McCarthy of New York. [presiding] Let me apologize. Unfortunately, we are running through a whole bunch of votes, and we are going to have more votes in probably less than an hour. I am fairly fast, to say the least, so we are going to go on, get all your testimony in, so that we don't have to have another recess, if that is all right with everybody. First, I would like to introduce the witnesses from today's panel: Ms. Laura Levine, executive director, Jump$tart Coalition for Personal Financial Literacy; Mr. Lot Diaz, vice president, community development, National Coalition of La Raza; Mr. Dallas Salisbury, president and CEO, Employee Benefit Research Institute; Mr. Brent Neiser, director of strategic programs and alliances, National Endowment for Financial Education. I am sorry, I skipped one; Mr. John Gannon, senior vice president, Office of Investor Education, and president of the Financial Industry Regulatory Authority, Investor Education Foundation. That is a mouthful. And Dr. Gerald Lauber, chief senior advisor, National Urban Alliance. I would like to certainly extend a warm welcome to Dr. Lauber. He is the chief advisor and a board member of the National Urban Alliance. He brings an extensive background to the position, including academic, technology, and corporate experience in New York schools and was a first responder at Ground Zero. Mr. Green. Madam Chairwoman, did we cover the Urban League? Ms. Jones? Mrs. McCarthy of New York. I'm sorry. They didn't give it to me. Stephanie Jones is the executive director of the National Urban League Policy Institute, a position she has held since the year 2005. Prior to coming to the Urban League, she was chief counsel for Senator John Edwards. Welcome to all of you, and thank you. Let me explain the lighting system. You will each get 5 minutes. The yellow light means you have a minute left. We will ask you to try to finish off your sentence or thought at that particular time. With that, Ms. Levine. STATEMENT OF LAURA LEVINE, EXECUTIVE DIRECTOR, JUMP$TART COALITION FOR PERSONAL FINANCIAL LITERACY Ms. Levine. Thank you, Representative McCarthy, and members of the subcommittee. Good afternoon. Thank you for this opportunity to speak with you today. My name is Laura Levine, and I am the executive director of the Jump$tart Coalition for Personal Financial Literacy, a nonprofit organization based here in Washington, D.C. Jump$tart is a coalition of about 180 companies, such as Visa and Charles Schwab, and organizations like NEFE, EBRE, and FINRA, as well as Federal agencies which share a commitment to advance financial literacy among students in kindergarten through college. Jump$tart is also a network of 48 affiliated State coalitions. The Coalition was founded in 1995 by a small group of organizations that recognized the need to educate students about personal finance, as well as the importance of meeting this need through a collaborative effort. Jump$tart does not conduct financial education itself or create financial education resources; rather, its role is to support and promote individual and collective efforts to educate young people about money management. As the committee considers the importance of financial literacy within the regulatory system, Jump$tart encourages you to keep in mind the difference between educating and informing adult consumers and providing standards-based tested personal finance education for students in kindergarten through high school. Any widespread effort to require personal finance education at that level must be coordinated by or with the Department of Education, as well as the State Departments of Education and the various appropriate educational organizations at the State, local, and national levels. Jump$tart believes that financial literacy is an important element of consumer protection, and even with better regulation designed to protect consumers and more readable disclosures that most consumers can easily understand, an adequate level of financial literacy would give most consumers comfort, confidence, and the ability to make decisions most advantageous to their specific needs. But today, many young people are not adequately prepared to handle the growing variety and complexity of financial products and services or to make wise decisions in managing their own money. In 1997, the Jump$tart Coalition launched its first survey of financial literacy among high school students. The survey was conducted again in 2000 and has been repeated biannually since. Nationally, the average score on the test portion of the survey has ranged from 48.3 percent and, unfortunately, that was the most recent survey in 2008, to a high of 57 percent, which still could be called a failing grade. In each of the surveys, participants were 12th grade students recruited from randomly selected public high schools. It is important to note that the Jump$tart survey is intended as a general measure of the level of financial literacy among high school students and is not designed to be an assessment of the effectiveness of specific financial education curricula, and therefore, we should not conclude that the low scores reflect that financial education is ineffective. Rather, the consistently disappointing results over more than a decade of research do seem to indicate the need for more and better financial education. In 2008, Jump$tart also surveyed college students for the first time. Given the same test questions, college students on average answered 62.2 percent of the questions correctly, substantially better than their high school counterparts. But, unfortunately, college graduates are still a relatively small segment of our total population. Jump$tart believes that personal finance must be included in the education of all students during the kindergarten through high school years to provide young people with the knowledge and skills they need to make smart financial decisions. Some positive strides have been made in financial education in recent years. Jump$tart has identified three States, Missouri, Tennessee and Utah, that currently require all students to take and pass a one-semester course devoted to personal finance in order to graduate from high school. And another 18 States require some personal finance content to be incorporated into the other subject matter. I think it is important to note that personal finance education is taking place in schools across the country, whether or not the State or local jurisdiction requires it. We believe that personal finance education needs to be introduced early in the elementary school years while students are forming their behaviors and beliefs, and we believe that effective financial education in the middle grades could help troubled or unmotivated students make the connection between staying in school and their lifelong income-earning potential, possibly changing the path of would-be dropouts. Thank you for the opportunity to speak with you today. And as you start to shape the future of the regulatory atmosphere for financial institutions, I urge you to keep the financial literacy of our Nation's students in mind, too. More and not less personal finance education is needed, and we need to have a long-term nationwide strategy in place to ensure that this education is available to all students. Thank you. [The prepared statement of Ms. Levine can be found on page 73 of the appendix.] Mr. Hinojosa. [presiding] Thank you, Ms. Levine. At this time, I would like to recognize Mr. Diaz. STATEMENT OF LAUTARO ``LOT'' DIAZ, VICE PRESIDENT, COMMUNITY DEVELOPMENT, NATIONAL COUNCIL OF LA RAZA (NCLR) Mr. Diaz. Good afternoon. My name is Lot Diaz, and I am vice president for housing and community development at the National Council of La Raza. NCLR is the largest Hispanic civil rights organization in the United States dedicated to improving the opportunities for Hispanic Americans. I would like to thank Chairman Gutierrez and Ranking Member Hensarling for inviting us to share our views. I would also like to thank Congressman Hinojosa for his leadership in the area of financial literacy. In my remarks today, I will lay out a strategy for using national financial counseling programs as a glue to hold major asset-building programs together. There are a number of Federal programs, like housing counseling, individual development accounts, and the VITA initiative that aim to increase asset ownership among low- and moderate-income families. However, none of them offer a targeted strategy for improving the choices of financial consumers and advancing them to more sophisticated products and transactions. In 1997, NCLR created a counseling network that today consists of 51 community-based counseling providers that will this year provide counseling education to over 40,000 families. Also in 2005, NCLR released a report which found that most financial education programs did not have the impact of helping Hispanic families obtain assets. We have learned that one-on- one counseling to low-income families is a meaningful and effective tool for building financial knowledge and sustainable wealth. While one goal of the Administration's proposed Consumer Finance Protection Agency would be to streamline financial literacy and education efforts, we believe a bolder, more targeted approach is necessary to achieve a shared goal, the shared goal of changing consumer choices and behavior. A successful national counseling program should include elements like in-person, one-on-one service, provide advice on a wide range of financial services, and deliver services through community-based organizations currently providing asset programs. As Congress considers regulatory reform, it must also consider how to improve the efforts of Federal agencies to educate financial consumers. Several proposed reforms, like additional disclosure, will curb deceptive practices. However, these reforms will not necessarily improve the daily financial decisions of families or ensure that these decisions set them on a path to build true financial security. Many times, improving families' financial decisions requires tailored guidance from a professional who can take into consideration the totality of the family's circumstances and goals. In fact, this is a mainstream approach taken by families with the means to do so. They seek advice from a professional financial planner or investment advisor. One NHN member, the Resurrection Project in Chicago, provides a model that brings these large wealth-building programs together through financial counseling. TRP is a certified housing counseling agency which provides free tax preparation, financial counseling, and other services. A typical client meets with a counselor individually to determine their financial status. A counselor reviews the client's credit report, budget, and financial goals. On average, 80 percent of the Resurrection Project's clients are not ready to purchase a home and likely need to work through other financial barriers before pursuing homeownership. In some cases, homeownership may not be the right choice. Together, the client and the counselor establish an action plan that would address credit repair, plan savings accounts, financial dictation and available tax programs. As the family works through their action plans, they continue to meet with the counselor, who helps them tackle basic and complex financial issues. Organizations like the Resurrection Project run into several barriers implementing this model due to the structure of the current system. As stated earlier, financial counseling is not a federally funded stand-alone service. They are also limited in size and scope of the current Federal programs. A national financial counseling program would allow counselors to move families through asset-building programs to create a real opportunity for families to make fruitful financial choices. NCLR applauds the Administration's and Congress' efforts to modernize our financial regulatory system. We urge you not to lose sight of the long-time bipartisan goal of improving families' understanding and choices in financial matters. A national financial counseling program would offer meaningful tailored financial advice, link existing asset programs, and improve the relationship between underserved communities and the banking sector. In conclusion, NCLR recommends that: Congress establish a national financial counseling program; they expand programs that help families obtain assets; and finally, they create new incentives for low-income families. Thank you. [The prepared statement of Mr. Diaz can be found on page 45 of the appendix.] Mr. Hinojosa. Thank you, Mr. Diaz. And now, I would like to recognize Mr. Salisbury. STATEMENT OF DALLAS L. SALISBURY, PRESIDENT AND CEO, EMPLOYEE BENEFIT RESEARCH INSTITUTE (EBRI) Mr. Salisbury. Mr. Chairman, members of the committee, it is a pleasure to be here. I thank you for the invitation to testify today. My employer since 1978, the Employee Benefit Research Institute, I would note, does not lobby or take positions for or against proposals. And my full submission for the record includes a significant amount of survey data and financial literacy status information as dealing with the full description. The letter you sent me, however, inviting me to testify asked four specific questions that actually call for the statement of positions, and in that sense, I would want to stress that my statements from this point forward are my own personal views and not those of my employer. First, as a consumer of financial services, my reaction is positive to the creation of an independent consumer financial protection agency if, and I would stress this, the consumer is a dominant presence on the board and in advisory council positions. For example, deep experience in financial services, in quotation marks, should be interpreted broadly enough to include lifetime consumers of financial services, not just individuals working for the financial services industry. I would personally prefer regulation and protection by an entity that is not governed by the regulated or, as stated on page 29 of the President's document, captured by the regulated, a problem found in recent years at the regional Federal Reserve banks, the Federal Reserve, and other existing regulatory agencies. As a consumer, I currently see no such independent regulator, which if properly implemented, the CFPA could become. If the consumer is not dominant at CFPA, however, I would stress that the agency would likely be a waste of time, money, and effort and would only serve to mislead the public into thinking that they will be protected. Second, the plain-language financial products proposed need to be what my grandmother termed, and the ranking member termed, plain vanilla. For example, a 20 percent down, 30-year fixed-rate mortgage with clearly specified closing costs and that can be paid off with no penalties; or a 3-year fixed-rate car loan that can be paid off any time without the complexity of the Rule of 78 that I got tripped up by in 1972 personally, in spite of thinking that I am an informed consumer; or a charge or credit card that tells you any and all fees in advance and cannot change fees without giving you notice that the opportunity to cancel is present and giving you a prorated refund for any annual card fee. Research has found that individuals make the same choices with a 1-page disclosure as with multiple pages of fine print; thus, they require one plain English summary page with all key facts in addition to more detailed disclosure. Third, the President's Advisory Council on Financial Literacy has proven to be a worthy effort. It has also provided direct input to the Treasury and to the Financial Literacy Education Commission. Long-term value, however, will depend upon some formalization of the role of the White House and some level of dedicated funding and staffing. The current approach of heavily depending upon those appointed to donate time, money, and other resources or to raise them from others, leads to potential conflicts of interest and confusion of roles. Related to FLEC, I find, regrettably, that I am in agreement with the critical review by the Government Accountability Office that, as currently structured, FLEC has not met the legislated objectives. The Administration may already contemplate integration of FLEC into CFPA, but if it is not focused on this issue, the Administration and the Congress should do so as details of CFPA are developed. Fourth, and finally, as your request letter notes, the President's document states the CFPA should review and streamline existing financial literacy and education initiatives government-wide. Based upon my work on savings and retirement issues since joining the Labor Department in 1975, giving one agency the absolute responsibility for direction of all Executive Branch activities in the area of financial literacy and education could possibly add needed coordination and consistency. But that would only occur if the leadership of the agency was committed to the issue and to the approach set out in the legislation. Over my 34 years of working on this issue, I have watched multiple agency programs and priorities and financial education shift dramatically as political leadership changes. This is not just the case when party control changes, but occurs within a party even with new staff changes. Thus, the role being set out for CFPA may or may not add value in this area, depending upon the specificity of the legislation, the attitudes and priorities of the director, and adequate staff and budget resources provided for funding. Assurance that most of those appointed to the board and advisory committee with ``deep experience in financial services'' are there as individual financial services consumers, not as financial services industry representatives, would make success more likely. Needed technical expertise can be hired. But policy direction from the appointed leadership and advisors will determine ultimate results. I look forward to working with your committee and all others on these important issues. Financial literacy on issues as simple as understanding compound interest would be essential, even if there are plain-vanilla products. Thank you. [The prepared statement of Mr. Salisbury can be found on page 82 of the appendix.] Mr. Hinojosa. Thank you, Mr. Salisbury. Now, I would like to call on Ms. Jones. STATEMENT OF STEPHANIE J. JONES, EXECUTIVE DIRECTOR, NATIONAL URBAN LEAGUE POLICY INSTITUTE Ms. Jones. Thank you, Chairman Hinojosa. I thank the subcommittee for this opportunity to testify today. I am Stephanie J. Jones, executive director of the National Urban League Policy Institute. Based upon our long experience providing frontline financial education and housing counseling services in Urban League affiliate programs throughout the country, the National Urban League has developed considerable experience and insight on this issue. We are glad to offer our recommendations, which I will briefly outline now but are presented in greater detail in my written testimony. In this whole process, our overarching concern is the consumer, and we feel very strongly that the new regulatory framework must include inherent checks and balances that guarantee the advancement of the five consumer protection objectives. And those objectives are: consumer financial services markets operate fairly and efficiently; consumers have the information they need to make responsible financial decisions; consumers are protected from abuse, unfairness, deception and discrimination; traditionally underserved consumers and communities have access to lending, investment, and financial services; and national community-based organizations, such as the National Urban League, the National Council of La Raza, and others that have demonstrated effectiveness in reaching underserved minority communities, be included as full partners in any consumer protection effort. We are pleased that this committee is focusing on financial literacy today. This is a critical aspect of this issue, and it is a top priority for the National Urban League. But we can't forget that while financial literacy is important, the fundamental problem at the heart of today's foreclosure crisis was not the inadequacy of the disclosures or the financial literacy of the borrowers. Rather, it was that lenders should not have made loans that they knew borrowers would be unable to sustain without refinancing. Therefore, to effectively protect consumers, it is critical that the regulatory system monitor and address market incentives that encourage loan originators to push risky or unsuitable loan products, and must also include independent, redundant back-up systems that provide layers of protection against financial excess. And as you know, financial literacy is at the core of the Urban League's mission to empower African Americans to attain economic self-sufficiency. The rationale for our emphasis on financial literacy is buttressed by some startling data, as revealed in our annual, ``State of Black America'' report. Among other things, we have found that African Americans' economic standing is 57 percent that of White Americans, and that the median net wealth of African Americans is $10,000 versus $109,000 for whites. The Urban League strategy for addressing this glaring gap is to create culturally competent programs that address both financial principles and long-term behavioral change. Overall evaluation research of our financial literacy programs consistently finds significant correlations between the level of financial knowledge and good financial management practices. Housing counseling also plays a key role in support of the goal to increase financial awareness and sophistication and to close the wealth gap between minority and non-minority households. In addition to a deeper national commitment to housing counseling, a core tenet of our Homebuyers Bill of Rights, the National Urban League advocates three primary objectives that the Federal Government and the Financial Literacy and Education Commission should pursue to promote economic opportunity for minority and low-income families and communities. First, we must expand access to capital and financial services through mainstream banks and thrifts, particularly by ensuring that the CRA remains effective. Second, bank the unbanked with innovative new private sector products and services driven by new incentives for financial services for the poor. Third, we must promote savings among the poor by catalyzing wide-scale establishment of individual development accounts and other mechanisms that help low-income families save for homeownership and other key assets. And of course, particular emphasis must be placed in all of this on reaching neighborhoods with low-income and minority populations. On behalf of the National Urban League, I thank you for the opportunity to offer our views today on this very important issue, and we look forward to continuing to work with you as you develop and implement a new regulatory system. Thank you very much. [The prepared statement of Ms. Jones can be found on page 60 of the appendix.] Mr. Hinojosa. Thank you very much, Ms. Jones. And I now call on Dr. Lauber. STATEMENT OF GERALD LAUBER, CHIEF SENIOR ADVISOR, NATIONAL URBAN ALLIANCE (NUA) Mr. Lauber. Thank you. Good afternoon, Mr. Chairman, and distinguished members of the committee. Thank you for the opportunity to testify before you today about the need for effective financial literacy education for Americans. I am Gerald Lauber, the financial literacy advisor to the president of the National Urban Alliance, which is a not-for- profit corporation out of Syosset, New York. Prior to working with the NUA, I was a school superintendent, an assistant superintendent for instruction, a principal, and a classroom teacher. In all, I have devoted over 45 years to the process of helping students. The mission of the NUA is to focus on helping schools assess their instructional programs and deliver professional development for teachers so they are better prepared to help their students master content and learning skills. We have learned a great deal about education and organizations. We know that teaching a subject does not ensure that all students will learn it. Financial literacy programs must contend with common complications for teaching and learning while competing for sufficient space in the crowded instructional day. To contend successfully with these complications is a matter of professional skill and organizational focus. Without plans for professional development and content that is integrated into the curriculum through material relevant to students, financial literacy will be just another catch phrase in our past history of failing to educate our citizens about how they manage their daily life to position them for long-term financial security. I hope the creation of a new government consumer financial protection agency, as expressed by the Administration, will exemplify a real commitment to fight for the education and protection of consumers. That fight must recognize that financial education right from the start is part of the answer to protect consumers and build a foundation for behaviors that support a healthy U.S. economy. Why can't we provide the impetus to help our children create a new generation of consumers who use reason to direct the use of their resources rather than celebrating conspicuous consumption and debt accumulation that currently endanger the basic fabric of our country? Strategies that help people make informed decisions will work if we provide education programs that help all people obtain financial literacy and decision-making skills. Application of these skills will strengthen their knowledge in areas such as credit cards, mortgages, insurance, and other financial products. In a consumer-credit-based society, we must teach children about credit and the wise use of it so they are prepared to be informed consumers. The lack of inclusion of financial literacy in the vast majority of our Nation's schools continues to create a new generation of consumers who are not informed about the use of money. Unfortunately, what is clear is that the current effort to transfer knowledge about financial literacy has not worked. While more than 90 percent of America's students attend public schools, the President's Advisory Council on Financial Literacy, as it is presently constituted, has only one member who has any public school experience. This fact has not gone unnoticed by the Nation's educational community. How does this government demonstrate its commitment to this issue when only 1/20th of the advisors have classroom experience? Yes, consumers need to be presented financial products in a simpler, straightforward manner that is clear, accurate, and contains understandable information. I applaud efforts by this subcommittee and the Congress to demand that our financial products industry makes information about their products more transparent to consumers. Yet I must warn and emphasize that without effective financial literacy education, an understanding of these products will continue to be difficult and will not result in desirable behavioral changes by consumers. Consumer protection and relevant financial education must go hand-in-hand and must include an emphasis on our Nation's young people. Over the past 6 months, this Congress has authorized nearly $1 trillion of American taxpayers' money to Wall Street to clean up our financial mess that they created that brought this country to an economic condition not seen since the Great Depression. On January 6, 2009, the President's Advisory Council on Financial Literacy, established by President Bush, stated as its principal recommendation: ``The United States Congress should mandate financial education in all grades for students, kindergarten through 12.'' Local school districts cannot afford another unfunded mandate. Now is the time to supplement that investment by committing some of those resources to sound financial literacy education for Americans. I urge this committee to strongly support both this message and the messengers working to refine and deliver effective financial literacy education. It is critical to building the information base our citizens need to live as informed consumers. But just using well-written financial literacy material without a well-thought-out delivery system will not enable them to transform information into action. Thank you again for inviting me to testify today. And I will be happy to answer any questions you may have. [The prepared statement of Dr. Lauber can be found on page 67 of the appendix.] Mr. Hinojosa. Thank you. At this time, I would like to recognize Mr. Gannon. STATEMENT OF JOHN M. GANNON, SENIOR VICE PRESIDENT, OFFICE OF INVESTOR EDUCATION, AND PRESIDENT OF THE FINRA INVESTOR EDUCATION FOUNDATION, THE FINANCIAL INDUSTRY REGULATORY AUTHORITY (FINRA) Mr. Gannon. Mr. Chairman, Ranking Member Hensarling, and members of the subcommittee, I am John Gannon, senior vice president for investor education at the Financial Industry Regulatory Authority, or FINRA. On behalf of FINRA, I would like to thank you for the opportunity to testify today. Mr. Chairman, I commend you for having today's hearing on the critically important topic of improving financially literacy. In these uncertain financial times, the role of financial education is more important than ever. FINRA and the FINRA Investor Education Foundation are committed to expanding the knowledge and confidence of all Americans wishing to build a more secure financial future through saving and investing. And we share your interests in considering how best to promote financial literacy in the context of reforming the financial regulatory system. FINRA's Office of Investor Education provides an array of educational opportunities to investors. These include maintaining our prominent investor information area on the FINRA Web site, providing a comprehensive market data resource, and publishing information on such critical topics as investment fraud, job dislocation and investing in bonds. Interactive tools, such as FINRA's Fund Analyzer, allow investors to compare fees and expenses among competing investment alternatives. In 2003, FINRA established the FINRA Investor Education Foundation, which is the largest foundation in the United States dedicated to investor education. The Foundation's mission is to provide Americans with the knowledge, skills, and tools necessary for financial success throughout life. Foundation grants are used solely to fund educational programs, publications, and research. Recent grants have supported efforts to help low-income individuals build savings and achieve financial goals and guide working Americans as they make the transition into retirement. FINRA commends the Administration's inclusion of recommendations focused on improving financial education and literacy in its proposals for regulatory reform. The Administration's proposal to mandate a financial education authority signals a commitment to increasing financial literacy of all consumers. It will be important for all regulators with roles in financial oversight and consumer protection to coordinate and communicate about their financial education initiatives to ensure that the government leverages its resources for maximum impact. FINRA further commends the Administration's proposal to enact an automatic IRA program with an opt-out. A similar and successful approach has been taken by a number of employers with 401(k) plans. FINRA has teamed with the Retirement Security Project and AARP to establish Retirement Made Simpler, an effort to increase participation rates among employees whose companies offer 401(k) plans by encouraging more employers to adopt automatic 401(k)s. FINRA's work in investor education has provided us with experience in managing the challenges of how to most effectively and efficiently get information out to investors and consumers. Let me highlight now some issues to consider for improving financial education and literacy efforts. First, there is a need for baseline data on financial capability and literacy. The FINRA Foundation is currently working on a survey that should provide that crucial data. Recommended by the President's Advisory Council on Financial Literacy, the survey of over 25,000 Americans addresses a comprehensive array of financial topics, including retirement planning, investment choices, household budgeting, credit consumer protections, and the use of financial education resources. This data will help inform the efforts of both public and private entities as they attempt to best structure financial literacy and investor education initiatives. Second, I would want to emphasize the importance of distribution channels in financial literacy efforts. Recognizing that high-quality investor education resources already exist, the FINRA Foundation and its partners focus on making sure that such resources get into the hands of all those who need them the most. The FINRA Foundation's grants and projects leverage partnerships with other organizations and use new and conventional media to widen access necessary to the resources for financial success. Sometimes this is via the Internet or public broadcasting. At other times, it is through a counselor or a workplace representative. The government has a variety of existing robust distribution channels at its disposal. The Social Security Administration, the IRS, the Postal Service, and the Federal Citizens Information Center are just some of the potential channels that could be used to promote and advance financial literacy efforts with an extremely wide reach. Finally, as Congress considers how to improve financial literacy, it is vital to provide adequate funding for whichever agencies or groups are given responsibility for this task. Further, given that a variety of existing agencies and departments have roles to play in investor and consumer protection and education, those agencies should have a clear mandate to provide financial education, coordinate those efforts with other Federal agencies, and engage in partnerships to broaden their reach. FINRA appreciates the opportunity to testify on these important issues, and I would be happy to answer any questions you may have. Thank you. [The prepared statement of Mr. Gannon can be found on page 52 of the appendix.] Mr. Hinojosa. Thank you. And finally, I would like to call on Mr. Neiser. STATEMENT OF BRENT A. NEISER, DIRECTOR OF STRATEGIC PROGRAMS AND ALLIANCES, NATIONAL ENDOWMENT FOR FINANCIAL EDUCATION (NEFE) Mr. Neiser. Thank you, Mr. Chairman, Ranking Member Hensarling, and members of the subcommittee. I am Brent Neiser, director of strategic programs and alliances for the National Endowment for Financial Education, otherwise known as NEFE. We are based near Denver, Colorado. We are a 501(c)(3) private-operating foundation, nonprofit, nonpartisan, noncommercial. At the end of my written testimony, there are several examples of initiatives we undertake. Our high school program trained over 6 million students in public and private high schools throughout the United States in the last 20 years; a college program with nearly 300 enrolled institutions; and a free, noncommercial source called CashCourse.org. There is a growing interest among community colleges signing up for this Web resource. We do research on retirement issues, teacher training, unique populations, immigration issues, and student financial behavior all related to personal finance. We are also concerned about workplace, and collaborate with many of the organizations represented on this panel, as well as the Boy Scouts of America, the American Cancer Society, and scores of other nonprofit groups. We believe financial literacy is an important component of consumer protection, and any kind of work toward regulatory reform should consider it. It is a baseline. Financial markets and products change, but consumers need to be equipped with a basic understanding of personal finance so they can make the best decisions and be aware of the positive and the negative consequences of those decisions. Also, there are appropriate times to connect financial education to events in their lifespan and when products are appropriate. This has to come out through this basic baseline and financial understanding. We think that individual financial literacy and education are not the whole solution. Automatic features in behavioral economics, product disclosure, social markets, etc., all play into this beautifully. The President's advisory council, on which NEFE CEO and president Ted Beck serves, has identified some of the concepts and definitions for a proposed body of knowledge that can form as a baseline for this effort. We want to empower Americans to make their own decisions about which products and behaviors will maximize their financial wellbeing; be aware of financial products and strategies that may not be suitable and would concern them. Also, financial literacy needs to move to a level of full engagement in society through a public education campaign, social marketing, a nationwide financial checkup, consistent and repetitive messaging, and a clear link to financial literacy tools at points of transaction where appropriate, and, again, across one's financial lifespan. I will close by mentioning five points or principles that might be considered under any regulatory reform that links financial literacy education and issues with consumer reform considerations. First, definition: Building on the President's advisory council, setting baseline standards, as Mr. Gannon mentioned, will create a consistent framework for public and private financial education efforts. Number two, context: Providing the context for understanding a product and its relationship to life goals and timing within one's economic lifespan will increase the effectiveness of any disclosures that are contemplated by Congress. Number three, simplicity: We need to actually take a step back. And we talk about plain vanilla, there needs to be plain vanilla financial literacy, too, to make any type of disclosures work, focusing on financial understanding, capability, and literacy. Again, a social marketing campaign could include basic messages, principles that people can think about when they are interacting or contemplating a product and interacting or working with an adviser. Thrift, paying yourself first, having an emergency fund, understanding the time value of money when it comes to debt as well as growth of an equity investment, the appropriate use of credit and diversification-- without these principles embedded in the minds of Americans at all ages, at different times in their lifespans, disclosures may not be effective and might even be confusing. Number four, relevance: Message campaigns need to be culturally and circumstantially relevant and age-appropriate. Underserved audiences need special attention. Finally, number five, self-assessment: A nationwide financial checkup, as recommended by the President's advisory council, would allow Americans to assess their own financial knowledge and provide appropriate links to trustworthy sources of information to fill any gaps. Finally, let me just congratulate the leadership of Congress, especially the Financial Literacy and Economic Caucus, Representative Hinojosa, Representative Biggert, and all Members, for a true bipartisan approach to this issue. Thank you. [The prepared statement of Mr. Neiser can be found on page 78 of the appendix.] Mr. Hinojosa. Thank you. I want to say that, before we start a line of questioning by each of the Members of Congress, I ask unanimous consent to submit for the record GAO's April 29th, 2009, testimony before the Senate Subcommittee on Oversight of Government Management. Hearing no objections, so be it. I would like to recognize myself for 5 minutes. And every other member will also receive 5 minutes to have an opportunity to ask questions. I am dissatisfied with the Financial Literacy and Education Commission, commonly known as FLEC. They have yet to produce a true national strategy for financial literacy despite having 4 years to produce one. On April 29th, the GAO testified before the Senate Subcommittee on Oversight and Government Management, and, in their testimony, GAO concluded that the so-called national strategy remains more descriptive than strategic. Others have referred to this, their strategy, as, ``the strategy to strategize on a national strategy,'' which I don't understand what that means and I don't think they do either. Congresswoman Judy Biggert and I knew that this likely would happen prior to the enactment of the FACT Act. We had our own competent legislation that would not have created an unwieldy entity unable to arrive at a national strategy to help the United States and its economy. So, moving on to ask my first question of Mr. Diaz, Mr. Salisbury, and Ms. Jones, and I would ask you to react to my statement and tell me what you think of this legislation, of this Act. Mr. Diaz. Mr. Chairman, the financial literacy for us has been--it increases awareness. Our take on it has been we have done, run many programs. We have seen a lot of programs operate. It does impart knowledge, but it doesn't change decision-making behavior necessarily. We have seen lots of examples, whether it is credit cards or payday lending, where consumers have been given a lot of education and yet it does not change behavior. So my feeling related to financial literacy education awareness is that it never hurts anybody, but our concern is to really increase wealth amongst Latino families. And that is a little bit more targeted and a little bit more tricky objective, because it requires changing behavior, in many cases, and that usually requires both time and a situation where you can actually exchange information. So, in my testimony, I referred to one-on-one counseling as an effective tool to do that. I can tell you of countless examples where families are taken from a starting place and end up at a very different place anywhere from 6, 12, 18 months later because they have had the ability to converse and reflect on their situation with an impartial party who is only interested in making sure they progress. Mr. Hinojosa. Thank you, Mr. Diaz. I would like to get a response from Mr. Salisbury. Mr. Salisbury. Mr. Chairman, first, I would just note that, at the most recent meeting of FLEC, it was noted by Assistant Treasury Secretary Barr, who was in his first week at the Department, that a multi-agency review of the documents and of the report from the Government Accountability Office has begun and is underway. I mention that because I think that is a very positive statement on an initial review process that tries to be responsive to what the Government Accountability Office said. I think that the combined testimony of this panel, but in particular the suggestions of Mr. Gannon and Mr. Neiser, essentially laid out the core of what could become a strategic document that could then move to implementation. I think that, as I noted in my testimony, the key is the focus, and it is one of the reasons that I have discussed the desirability of a new agency such as that suggested by the Administration, with FLEC being built into it. Essentially, the entire realm of financial literacy coordination across the Administration would be directed by an agency that puts far more particular focus on the consumer. This is opposed to what, most particularly in the last 18 months, has been a rather large national economic problem that, quite appropriately, is where most of the attention of the Treasury Department has been. And, given where we are, frankly, for the next 2 years, as a citizen, I hope that is where most of their attention will be. Mr. Hinojosa. Thank you, Mr. Salisbury. I would like to get a reaction from Ms. Jones. Ms. Jones. Mr. Chairman, we feel very strongly that anything that is done at the Federal level related to financial literacy must take into account what the actual needs are in the communities and must link very directly to those communities. That is one of the reasons we strongly suggest that the government work closely with national intermediaries such as La Raza and the National Urban League, who are working on the ground, in the communities, who know what the needs are and can get directly to the people but, also, who people will come to. People trust us; they understand what we do there. They know that we are there in the community working every day. Because there often is a disconnect. And there really is no shortage of housing counseling providers. There are all sorts of, for example, for-profit providers out there who are offering all manner of services that don't necessarily address the real needs of our constituents. And so it is important for people to know where to go and to go to organizations and entities that have a proven track record and know what they are doing, frankly. And I think anything that is done at the Federal level must take that into account and must consider that and should be used in a way that enables our constituents to get the best possible service. Mr. Hinojosa. My time has run out, Ms. Jones. Thank you very much. I now yield 5 minutes to the ranking member, Congressman Hensarling. Mr. Hensarling. Thank you, Mr. Chairman. And, again, let me recognize your leadership in this effort, along with the gentlelady from Illinois, Mrs. Biggert. Clearly, this entire committee respects your body of work, your leadership, her leadership, in trying to help educate our populace on the financial products that are available to them and help our communities. I continue to be concerned, if you were here for my opening statement. I know the subject has to do with financial literacy. My first question would be, how many on the panel are familiar with H.R. 1705, which is the House version of the President's initiative for the Consumer Financial Products Agency? Have any of you studied that? Mr. Salisbury, have you studied it? And, I am sorry, Ms. Jones, as well? Did I understand, are you all supportive of that legislation? Or have you formed an opinion? Have your organizations formed--not yet? You continue to study the legislation? Okay. Mr. Diaz, in your testimony, I think, if I heard you properly, you mentioned the term ``choice'' on many occasions, leading me to believe that consumer choice is at least something that would be valued by your organization. Is that correct? Mr. Diaz. Absolutely. That is critical. Mr. Hensarling. Section 5(B)(i)(a) of H.R. 1705 creates an unelected group that has the legal authority to ban from the marketplace any consumer financial product, practice, or feature it considers ``unfair'' or ``anti-consumer.'' Those seem to be rather subjective terms, as opposed to objective terms. If, for some reason, this bill became law and the unelected members of the Financial Products Safety Commission decided to ban electronic remittances because they viewed them as inherently unfair or anti-consumer, would that trouble your organization? Mr. Diaz. Well, that is a big hypothetical. Remittances are obviously a current standard practice that many immigrant families transfer excess income down to families of their place of origin. I can't imagine the question of whether they would ban remittances. I mean, that is--I don't know if there is anything in the legislation where they have written or seen about that that would be even the case. So it is a hypothetical-- Mr. Hensarling. But it doesn't trouble you that this particular commission could have that power without any review. So you would be trusting that simply wouldn't happen. How about with respect to payday lending, which is controversial within a number of areas and communities? It seems among some disadvantaged and low-income communities, some believe they serve a valuable purpose; other people, frankly, would like to see them banned. I don't know what the position of La Raza is. But would it trouble you if this particular panel decided to ban all payday lending as inherently ``unfair'' or ``anti-consumer?'' Mr. Diaz. Well, like I said, the devil is always in the details. But what we would be focused on is access to credit, did that change. We at NCLR believe low-income families have to have access to credit. We don't believe that families should be taken advantage of, so just because they can sell a family a product doesn't mean it is right for that family. So what I would tell you is that the key for us is, whatever that new commission sets up to do, we would be focused on: What is the civil rights implication, one? And, two, is it still going to allow product innovation even within the rules that it establishes? Mr. Hensarling. And, as various panel members look at the challenge of disclosure, financial literacy--it takes two to communicate, the communicator, the communicatee. And I have heard some verbiage, and there is no doubt, that there have been lenders who have purposely tried to deceive borrowers. There has been a lot of controversy in subprime mortgages and in credit cards. I am just curious if any of you have undertaken an analysis of the disclosures necessary in the average credit card agreement. I just happen to have one in front of me that indicates that 43 percent of the content is mandated by Federal law, including Regulation P, Regulation Z, the FACT Act; 5 percent of the content is dictated by State statutory law; 16 percent arises from legal risk management--in other words, liability exposure; meaning essentially two-thirds of the disclosure written in legalese is, frankly, mandated by Federal and State government and liability exposure. So I am curious if anybody on the panel has engaged in a similar study and have come to the same or different conclusion. Anybody who cares to-- Mr. Lauber. I will jump in quickly. It is not the content of the disclosure that is important, because, as we have heard from many distinguished members, they read it and they don't understand it. Eighty percent of what we take in we take in visually. And if we can't visualize and understand the concepts, no matter how long and extensive the regulations may be, they are going to fall on deaf ears. We talk about a product, but we don't talk about how to market the product. And the marketing of the product comes from the understanding of the concepts that you are addressing. So failure to educate consumers to understand how to ask the right questions, or banks or financial institutions, how to present information so it is understandable, that is a major part of the problem. Mr. Salisbury. And, Congressman, I would just quickly note that, with that versus the disclosure, I personally would look at the statement. And before this hearing, I looked last night. I have five credit cards; I looked at my most recent five credit card statements. From one of the companies, it is a clean, uncluttered statement that has the basic information in large print and nothing hidden. With the worst of them, it takes minutes to figure out how much you pay, if what you want to do is pay it off. Mr. Hensarling. So the market has provided at least one plain vanilla. Mr. Salisbury. One plain vanilla. And so, what I mean by plain vanilla is something that is instantly and easily, by visualization, understandable. Mr. Hinojosa. The gentleman's time has expired. I would like to call on Congresswoman McCarthy from New York. Mrs. McCarthy of New York. Thank you. And I thank everybody for their testimony. By the way, we are hoping that we are going to clear that up as we go forward with the credit card clarity, so that we can have that kind of a credit card. But five credit cards, I don't know. I only use one, that is it. One of the things that I want to say is that--not only do I sit on this committee, but I also sit on the Education Committee. And in the higher education bill, financial literacy would be included in that. We are now starting to work on Leave No Child Behind or whatever name it is going to be. There is language in that, which I plan on offering that will be from kindergarten to 12th grade. I happen to think it can be worked into the school day, so there is no extra time. I have already spoken in front of a large group of superintendents, teachers, parents, PTAs, and they are starting to get it, mainly because we want to educate the children, and especially those children learning a second language, so they can help their parents when they go home. So we have a lot of work to do for the future, but I guess the question--I am going to start with Dr. Lauber. We have been, unfortunately, under terrible economic strain, everybody. I doubt very much if there are too many people who haven't been touched by this. Now, obviously, we know there are an awful lot of people who are excellent in financial literacy, hopefully--but they still got hurt. But what would you say to the majority of our constituents, do you think they had enough financial literacy background that wouldn't have gotten them into the amount of debt they have carried, taking their money out of their home? Mr. Lauber. I think, especially on Long Island, where we know best, and affluent areas, that was one level of the population that was hurt. But the populations that we work with at the National Urban Alliance were hurt much more than that, because these are people who started without all of the assets that we have to deal with. Why did they get hurt? They got hurt not necessarily because they didn't have the knowledge someplace in their mind, but there was a problem with the application of the knowledge. So I heard a comment before, it is not what we can do, it is what we should do. And unfortunately, the process of thinking about making decisions, about what we should do with economic choices, is not ingrained in our students. Thinking is not taught in our schools. Our schools are basically content-based. And I think the challenge that you identified is absolutely correct: How do we fit this in the school day? It cannot be a replacement to mandated courses. We work with teachers to help them substitute examples in financial literacy for the courses that they are currently teaching and use brain-based learning strategies. The brain can only take in new information for 5 to 7 minutes, and that may be a good thing for all of us to listen to, but then you need another 10 or 15 minutes to apply that knowledge; otherwise, it doesn't stick. And I think if we could somehow take all of the work that is being done to focus on financial literacy education--and there is wonderful material out there. Where it falls apart is that it is not being integrated into the school day; it is not a high priority. And you know from the forums that we are having around New York State, where we are bringing all the school stakeholders together--parents, teachers, administrators, superintendents, board members--this is a topic that they are starting to want to discuss, because it has just been ignored. Mrs. McCarthy of New York. I thank you. One of the other things, you know, when you are talking about private and government working together, I think we are going to have to do that, because the government can't answer everybody's questions, and they can't. For years, talking to the bankers, talking to the credit unions, talking to many other financial institutions, saying we need financial literacy, and they said, ``We are doing it,'' and I said, ``Where?'' because I have never really seen that much out there. I am seeing it now, to be honest with you. There is more out there. I hope that we can continue to do that. But how do we work with--how does the government work with a private enterprise, whether it is our bankers--we can't mandate them to do this with us. Maybe we can, I guess the way we are going today. But how do we bring those two together so that we can also not only reach all the young students for the future generations, but how do we also reach out to the families? One thing I found out, especially with all the foreclosures, people knew they were in trouble, and they didn't know who to go to. They could have prevented half the foreclosures out there if they had found out who to go to. If you could just give me a quick answer, because I see my time is up. Mr. Salisbury. I will give you one quick example, which could be dealt with by an amendment to the FACT Act or by this new agency. FLEC put together a Web site called MyMoney.gov. Under Treasury regulations, MyMoney.gov cannot have anything on it that relates to nongovernmental organizations. So it can't be a one-stop shop across for-profit, nonprofit, government, or noncommercial. So there are relatively simple things that could be done to bring information together just by making some changes in regulation. Mrs. McCarthy of New York. Thank you. Mr. Hinojosa. At this time, I would like to recognize the Congressman from Texas, Mr. Marchant. Mr. Marchant. Thank you, Mr. Chairman. I would like to follow a line of questions based on the number of groups that are attempting to accomplish the same thing. And would any of you venture to say how many different groups in the United States have their sole focus on the financial literacy of America? There are about seven here, so-- Mr. Salisbury. The American Savings Education Council Program has partners from all 50 States, and there are State banking agencies and various others across the United States working on this. What is lacking is as much of a coordination mechanism as would be desirable and, frankly, a place to go in the Federal Government to work broadly with the Federal Government. I think this was the intention of what FLEC would become, but it hasn't gotten there yet. Ms. Jones. Also, I want to clarify the National Urban League, while financial literacy and housing counseling is an important part of what we do, it is certainly not our sole focus. We provide all manner of training. I do think, though, that the fact that there are so many entities out here doing it shows the extent of the need. And I know, at least from the National Urban League's perspective, we could serve exponentially more people if we had the capacity. People are beating down our doors trying to get help, because the need is so great out in the community. Ms. Levine. And I might add that my organization, the Jump$tart Coalition, is a coalition of about 180 organizations nationally over a network of 48 affiliated State coalitions, each with their own partners. And we know we don't have all of them, but there is an effort to work together. And the Coalition members do come from the private and the public and nonprofit sectors. And so I think that it is a step in the right direction and we need to do more. Mr. Marchant. Was there an expectation that, under FLEC, there would be a national coordinator of this, someone that is responsible for giving all government grants out, and that there was a place to go to get funding for this? And I know HUD funds it. Every entity probably has some kind of a funding mechanism for this, correct? Some of you are saying yeah. Mr. Diaz. I will take that. Financial literacy education is funded through a variety of mechanisms and different types of institutions. But I would also say that it is something that is--we don't treat it as a stand-alone product, generally. Because, as someone said before, you don't learn unless you do, to some degree. And so, our experience with financial education is it does increase awareness of certain aspects of financial transactions; it doesn't change their ability to transact well. And so, what we have done, we have embedded the tools of financial literacy inside other programs as they are practicing something that they want to achieve in their lives. Mr. Marchant. I am going to lose my time, sir. I want to ask Mr. Salisbury, you are the one who talked about the new CFPA. How would you make the new CFPA independent of financial institutions' influence? Mr. Salisbury. I would say it is not as much totally independent as making sure that consumers are included. That is, if there is a board of five, a majority of that board is made up of people who view themselves principally as financial consumers, as opposed to, for example, members of the regional Federal Reserve banks. Six of the nine board members are appointed by the banks, who own the Fed. The Federal Reserve Board banks are basically self-regulatory organizations, the banks regulating the banks. If that was what this agency was, I would argue a consumer agency that is run by the financial services organizations definitionally can't be a consumer protection agency. So it would be that, if there is a board of five, making sure a majority of that board are actually financial consumers, not those who basically have come out of the financial services industry and, if history is a guide, would go back to work for the financial services industry after service on the board. Mr. Marchant. Thank you. Mr. Hinojosa. I have just been informed that in 10 minutes, we are going to start another long series of votes. And I would like to give all the members present an opportunity to ask questions. And I ask unanimous consent that we shorten the time to 2\1/2\ minutes so that everybody can ask questions. Hearing no objections, I would like to recognize the gentleman from Texas, Congressman Al Green. Mr. Green. Thank you, Mr. Chairman. Friends, to properly understand why these contracts that we are talking about are written in such legalese, I think we have to understand what they are designed to do. Are they designed to inform the consumer, or are they designed to protect one of the parties? And if they are designed to protect one of the parties, then we have one set of circumstances to deal with. But let's just assume it is designed to inform the consumer, then we have to ask ourselves, will this contract in some way entrap the consumer? Because there are many who would have language somehow associated with a contract that would indicate, ``I have read this, I understand what I have read,'' and once you indicate you have read it and you understand, at some point later on the party who designed the contract to protect himself or herself uses that language against you by saying, ``You knew, or should have known, because you read, and we assume that you understood because you said you understood.'' So I am mentioning this to you in my 2\1/2\ minutes simply because I think that we do have to give a lot of thought to what we want these contracts--and that is what they are--to do. When we close on a home--and I am sure all of you have closed on a home--when you close on a home, you are sitting there, it is a great, happy occasion, and somebody brings in a stack of documents with no blanks filled in, saving the one that you will sign on, and your name is typed there perhaps, and then, ``Sign here,'' you sign, and later on you find out that you may have signed something that was not in your best interest. So the question becomes this, friends: How do we get to a point where we can have these documents inform the consumer and work to benefit the consumer, as opposed to the person who drew the contract and is trying to protect himself? That is what we have to do now. If anybody would give me a quick response, I think my time is almost up. Mr. Lauber. Quick response. I think it is important that, whatever documentation is presented, that the consumer demonstrates that they understand it. Someone saying, ``Do you understand it?'' and them saying, ``Yes,'' does not prove they understand it. Mr. Green. Quick question. Do we need to let the consumer take it home? Mr. Lauber. They can take it home. They can do it online. In New York, when I wanted to take get a reduction on my insurance, I take a driving test online. Mr. Green. Just quickly, should the consumer have the opportunity to peruse it for some period of time before signing it? Mr. Lauber. Absolutely. Mr. Green. Should there be some opportunity for the consumer to perhaps rescind the contract if the contract is one that proves to be adverse to the consumer's best interests and the consumer doesn't have time to peruse it, a take-it-or- leave-it kind of deal? Mr. Lauber. Yes. Mr. Green. And finally, let me just ask this with the 2\1/ 2\ minutes, or maybe it is just a comment that I would make. I am concerned about this agency. Is it going to be a watchdog, as some have said, which means that it would have some bark, maybe some bite? Is it going to be a guard dog that would have a lot of bite, maybe some bark? Or is it going to be one of these dogs with no bark, no bite, which is really a dog to watch as opposed to a watchdog? I am very concerned about what this agency will ultimately become. Because if it becomes a watchdog with no bark, no bite, then we have done the consumer a disservice. Thank you. I yield back. Mr. Hinojosa. Thank you. At this time, I would like to recognize the gentleman, Congressman Cleaver. Mr. Cleaver. Thank you, Mr. Chairman. Mr. Salisbury, I just have one question. In your comments, in your written statement, you said that you believe that financial literacy ought to be mandated for K through 12 and that it ought to be tested. I happen to agree with you. I think there is anecdotal evidence aplenty that would support your position. My question is that the critics, I think, would say that if we mandated such a curriculum and teachers realize that they would be measured by the ability of the students to regurgitate the information, that they may do what many of them are doing all across the country now, which is teaching the test. And teaching the test doesn't always equate to teaching the student, and the student, in the long run, turns out not to have accomplished much. What would you say to the critics? Mr. Salisbury. I would basically play off of what Dr. Lauber said, with which I totally agree, which is: Part of this can simply be to, by mandate, require that the equivalent of the financial literacy education be built into the existing curriculum through examples, etc., which, to his point, can be 4 and 5 minutes here and there, with some type of quiz to follow. I think that I am hopeful vis-a-vis the current situation because the President himself had extensive exposure to this in Chicago through the Ariel Academy. The current Education Secretary was involved with the Ariel Academy and recognizes and has stated in his confirmation hearings and elsewhere his view that that basic financial literacy education is absolutely essential. And so I think, if you can do it by building it into curricula, and if what you are trying at the earliest grades to teach are very basic concepts such as what is money, what is interest, what is compound interest, if one is going to be critical of testing to that or teaching to that, as long as it is--pick a number, if it is 15 simple critical elements of knowledge for people to have, then my response would be, so be it. If they teach to that test, that it is 15 key things that will help everyone get more successfully through life, hey, fine. Mr. Cleaver. Thank you, Mr. Chairman. I yield back the balance of my time. Mr. Hinojosa. Thank you. At this time, I would like to recognize the Congressman from Georgia, Congressman Scott. Mr. Scott. Thank you, Mr. Chairman. And thank you all for coming. I can't think of really any more important thing we can do than financial literacy to deal with what has happened in this financial crisis. Because, quite honestly, if we had had an informed, educated constituency consumer base, we wouldn't be in this situation we are in now, where we are literally having to spend trillions of dollars just to find our way back to shore. And education is important; K through 12 is important. But this financial system of ours is so complicated, it is so complex, and even as we are dealing with trying to fix it now, it is getting even more complex and more complicated, for the public not only lacks the education to understand how we got into this situation, they are lacking the education as to what we are doing to fix it. So financial literacy has to come front and center. And I am so glad, Mr. Chairman, that we are hosting this hearing. And I hope that we will be able to lift financial literacy up to the proper level it needs to be as a major component of our financial regulatory reform. So the question that we have to ask is, how can we incorporate financial literacy into our new financial regulatory system in a way that can certainly protect the consumer today, as they stand? And I don't see how we can do this without having some infrastructure and money and resources behind it connecting the Federal Government to this. By that, I mean this: I believe that we have to have something out there, right now, as a part of our reform, to have the consumer to say, ``Here is somewhere I can call to get information now.'' Our system is complex. There are credit cards coming, we have credit card reform; there is banking coming. Plus, we need a monitoring system to make these loan originators, these credit card companies behave themselves. Because if nobody is monitoring them, we are going to be right back in the situation that we have now. So I would like for us to give some thought to trying to come up with a monitoring system, a toll-free 1-800 number with human beings at the end of it anchored here in the government, at the Treasury Department, not a counseling program, but folks like the Urban League and the NAACP and ACORN and the senior citizens group, people who have a relationship with the most vulnerable out there. Because the damage is that these folks out there target people, and we need something that we have that targets them to give a help line. Therefore, we can have a way for people to call in and ask questions about what that situation is. And I am hopeful we can put something like that together and probably put it in Treasury in the reform. I know my time is up, Mr. Chairman, but I just wanted to say that, and commend everybody for coming, and I look forward to working on this going forward. Mr. Hinojosa. I thank you for your remarks and especially your recommendations. I would like, at this time, to call on the gentleman from California, Mr. Brad Sherman. Mr. Sherman. Thank you very much. First, a comment about this new protection agency, consumer protection agency. I think it is important that it be a law enforcement agency, not a law-making agency. I have seen a tendency to think in terms of, ``We will have the Fed take care of investment in the economy, and we will have this new agency take care of consumers and make all the rules for consumers, and then we can go out of business here in the Financial Services Committee.'' I think lawmaking should be done here in Congress. Second, as to this education program, I couldn't agree with it more. And I think that a use of Quicken or similar software would be an important part of this. Financial literacy should be for the 21st Century, not what I learned when I had hair. As to Mr. Gannon, I will ask you to just respond for the record, but one thing we have to educate consumers about is the fact that FINRA is not really a government agency. And the name implies that it is. So I hope that either FINRA would change its name or add something to all of its communications or that its foundation would get the word out that it is wonderful private association but, in spite of the word ``regulatory''-- most regulatory authorities are government agencies. I will let you respond very briefly. Mr. Gannon. Congressman, thank you for that comment. I think that we try to make sure that people understand that we are a private-sector regulator. Most of our messaging goes to that. But that is a very good point. Mr. Sherman. I hope that you would do that. And you might even think of a name change, although you are a relatively new organization. Now, for the one question. The fact is consumers in mortgage transactions often don't see their loan documents until they arrive at the closing and they are presented them. In April of this year, in the mark-up of H.R. 7028, an amendment was offered to amend RESPA to give borrowers at least 24 hours to review their closing documents, which, with the exception of extenuating circumstances, would be complete and finalized by the lender and the settlement agent 24 hours before the closing. And I will ask whoever wants to to respond to this: Would providing key closing documents to consumers in advance help consumers to understand the closing process better and to help ensure that they do not enter into an unsuitable loan transaction, which so often leads to unpleasant surprises, frustration, potential nonperformance, which then can collapse an entire free world economy? Mr. Salisbury. It would have helped me. Mr. Sherman. It would have? Mr. Neiser. I would say, Representative, it would prompt a kitchen table conversation, if there is a spouse or a partner involved, where two or more can counsel each other as to, are we doing this, are we in agreement. And if they are not, it gives them an out. Mr. Lauber. I think, providing they were given the right questions to ask. I think two people not knowledgeable about a mortgage statement talking to each other could be very humorous at times. They must have structured questions and understand the concepts of what they are asking, perhaps with assistance of some of the organizations that were represented here today. Mr. Sherman. And the documents would have to disclose, ``Here is the check you are going to have to write at closing; here are your monthly payments.'' Because those are the two most basic questions. ``Honey, can we afford this house?'' Mr. Salisbury? Mr. Salisbury. The reason I made my comment--and so I don't disagree with the doctor, but I sort of do, in that my wife and I, over the years, walked out of three different settlements because what was put in front of us at the settlement table was not consistent with what we told were told beforehand the deal was. Mr. Sherman. Mr. Salisbury, you are so much stronger than the average consumer. Every other average consumer signed the papers in those three closings. Mr. Salisbury. Fair enough. They are not married to my wife. Mr. Sherman. I believe my time has expired. Mr. Hinojosa. Thank you, Mr. Sherman. I wanted to ask unanimous consent that a December 2008 report prepared by the Washington State Financial Literacy Work Group entitled, ``Putting the Pieces Together,'' be entered into the record. Without objection, it is so ordered. Also, I would like to ask on behalf of other members of this committee for unanimous consent that the following six written statements be entered into this hearing record: a statement by Dr. Annamaria Lusardi, professor of economics at Dartmouth College; second, the testimony of Dr. Camille Busette, vice president of EARN organization; the third one is the statement by Dr. Rickie Keys on behalf of the National Indigenous Literacy Association; the fourth is a statement by J. Bradley Jansen, executive director of the Center for Financial Privacy and Human Rights; the fifth is the testimony of the SIFMA Foundation for Investor Education; and lastly, unanimous consent for the testimony from the Financial Services Roundtable. Without objection, it is so ordered. I would like to make some closing remarks and simply say that it is very helpful to listen to the presentation made by each of the witnesses and that I hope, when this is all finished, that we would consider having some of the methods that are now being used in classrooms--a congressional hearing on the Education Committee that I sit on was held here 2 weeks ago, showing us what 16 percent of schools in our country are now using to keep students from getting bored by what is being taught, how to keep their interest in math and science and many other courses being taught. And it is blackboard where they use cell phones, they use texting, they use what the weathermen use on television where they can touch the screen and move things around, making it very interesting, particularly for K-12 students. They must get this kind of education. But let me tell you, what works for them will also work for adults, because it can be interesting. And there should be tests like the ones that are now being given to high school students, who are only passing, I think, with a 48 percent passing percentage, or college students. It doesn't matter that they pass it or don't pass it; it is just so that they will know just how much they know and understand about financial literacy. I think that we are going to have to think out of the box and have a way in which to progress on what has already been built on the last 4 years. I want to particularly thank the group that was responsible for helping us start the Financial Caucus. And I will just do it very shortly. I want to say thank you to Ms. Levine, because Jump$tart, Junior Achievement, and the Council for Financial Education coordinated with me on several Financial Literacy Day fairs in the Cannon Caucus Room, and have been very successful. And I think that it has proven one thing: that even the people who work here, Members of Congress and staff, want to have this kind of financial literacy. And so we are going to have to really build on it. Time has run out, and I have to have some parts to close out this hearing. And I want to thank the witnesses and the members for their participation in this hearing. The Chair notes that some members may have additional questions for these witnesses, which they may wish to submit in writing. Therefore, without objection, the hearing record will remain open for 30 days for members to submit written questions to the witnesses and to place their responses in the record. This subcommittee hearing is now adjourned. And I thank you. 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