Washington, D.C. – U.S. Sen. Mike Enzi, R-Wyo., said financial literacy and education is essential to families and individuals and he hopes the development of a national strategy for providing consumers with financial information will help them focus today on what they will need for tomorrow.
Enzi testified today at a hearing of the Financial Management, Budget and International Security Subcommittee on "The Federal Government's Role In Empowering Americans To Make Informed Financial Decisions". The hearing was called to examine the current status and effectiveness of federal financial literacy programs, and to assess the proposed activities of the new federal Commission on Financial Literacy and Education.
The Fair and Accurate Credit Transactions (FACT) Act of 2003, signed into law last year, established the Commission in order to provide a one-stop-educational shop for consumers for various federal financial literacy programs, and create a national strategy to bring consistency and focus to the federal government's overall financial literacy goals.
Enzi, an original cosponsor and author of the legislation for financial literacy which became part of Title V of the FACT Act, said today he hopes the Commission can continue to improve and build upon the existing framework for financial literacy and education information currently being provided by the federal government.
"Financial literacy and education is essential in today's financial markets. Only an educated individual consumer will be able to fully unlock the financial markets available to them. It takes good people, making good decisions based on good values to give consumers a basic understanding of the credit and securities markets to help them and their families make major financial purchases. I hope the Financial Literacy and Education Commission can help fill that role."
Enzi's statement given at the hearing today follows.
Statement of Senator Michael B. Enzi
"The Federal Government's Role in Empowering Americans
to Make Informed Financial Decisions"
U.S. Senate Committee on Governmental Affairs
Subcommittee on Financial Management,
the Budget, and International Security
Tuesday, March 30, 2004
Thank you for inviting me to testify before you today on the Federal Government's financial literacy efforts.
Wyoming is very much a rural state. As mayor of Gillette, Wyoming, and as a member of the Wyoming legislature, I saw first hand the power a consumer had over his or her own financial information when they went to purchase a home. Many who thought that they never could afford a home found out that they in fact qualified for a variety of affordable mortgages. The effect of homeownership on a community cannot be underestimated. Once a family becomes an owner in a community, the family generally becomes involved in all aspects of a community in order to improve the community. Generally, this is something that does not happen with renters.
Based upon my experiences with witnessing the homebuying experience for many young rural families, I helped to establish compressed video courses for first-time homebuyers with a broad consortium of bankers, realtors, community development and housing agencies, the University of Wyoming and Fannie Mae. This technology could be used to bring financial literacy to a broad cross-section of the Wyoming population and could be distributed through all areas of Wyoming, both urban and rural. To date, more than 4,500 individuals have taken the compressed video courses. Many of those went on to purchase their very first homes.
When we looked at the federal government's financial literacy efforts, we found that there were many excellent programs and initiatives. For example, the Federal Deposit Insurance Corporation (FDIC) has the Money Smart Program, the Securities and Exchange Commission has depositories for broker/dealer and investment adviser information, and the Department of Labor and the Social Security Administration have extensive initiatives on retirement savings/investment issues. In addition, other agencies, such as the Department of Defense, have financial literacy programs targeted to assisting their employees. These are just a few of the many financial literacy and education programs found through out the federal government.
However, we also found that from a consumer's perspective much of the information was buried on different agencies' web sites and through different toll-free numbers. There was not one single point of entry or source that a consumer could access all of the federal government's financial literacy efforts. In addition, there was no overlay to help a consumer understand what tools he or she needed for a particular financial need. For example, a consumer seeking to invest/save for retirement may find information on more than a dozen federal web sites, however, a consumer may not know whether the information may best be found with any of the federal banking regulators, the Securities and Exchange Commission, the Social Securities Administration, or the Department of Labor, just to name a few.
Legislation introduced last summer by Senator Stabenow and I, the Financial Literacy Community Outreach Act, S.1532, would have required the federal government to take stock of its financial literacy efforts and to establish one point of entry for consumers. Senator Sarbanes also came to the same conclusion when he introduced his legislation last summer as well. I am grateful that Chairman Shelby included both pieces of legislation as part of the Banking Committee draft of the amendments to the Fair Credit Reporting Act. These became Title V of the Fair and Accurate Credit Transactions Act which was enacted into law on December 4, 2003. The law established the Financial Literacy and Education Commission. The Commission is mandated to develop a national strategy on financial literacy and education as well as establishing a web site and toll-free number as the entry points for consumers to gain access to the federal government's financial literacy efforts. The Commission shall take such steps as necessary to coordinate and promote financial literacy and education efforts at state and local levels including working with state and local governments, nonprofit organizations and private enterprises.
Secretary Snow of the Department of the Treasury chaired the first meeting of the Commission on January 29. That meeting featured heads of federal agencies including Chairman Greenspan of the Federal Reserve Board, Chairman Powell of the FDIC, Chairman Muris of the Federal Trade Commission, Director Gilleran of the Office of Thrift Supervision, Commissioner Barnhart of the Social Security Administration and Chairman Dollar of the National Credit Union Administration.
From all indications, the first meeting was a great success. Many of the federal agencies pledged to work closely with the Commission and several agencies pledged resources to assist the Commission in achieving its statutory mandates. We will continue to monitor the Commission's progress through the year as well as all of the participating agencies.
Financial literacy and education is essential in today's financial markets. Only an educated individual consumer will be able to fully unlock the financial markets available to them. A basic understanding of the credit and securities markets will prepare consumers and their families for making major financial purchases such as a home, saving for college and/or planning for retirement. Many excellent non-governmental financial literacy initiatives exist today. You will hear about a few of them during this hearing.
With respect to the federal government, financial literacy and education information is already available to help consumers make those decisions. It is our hope that the Financial Literacy and Education Commission can improve upon and build onto the existing framework. More importantly, however, the development of a national strategy will focus our attention on the needs of consumers today and what they will need for tomorrow.
Thank you very much for inviting me to testify today.