February 27, 2007
HP-281

Remarks of Anna Escobedo Cabral
U.S. Treasurer
U.S. Department of the Treasury
Before the Credit Union National Association’s
Government Affairs Conference

Washington, DC- Good morning. Thank you, Paul, for that introduction. It's a pleasure to be here, and I want to thank Dan Mica and CUNA for once again putting together a great conference. 

CUNA works extremely hard in communities across our country to deliver financial services to Americans. These efforts make a positive difference to the quality of life individuals and families enjoy.  We often talk about the benefits of our strong economy – from the low 4.6 percent unemployment rate to the more than 7 million jobs that have been added to our economy over 41 straight months. 

This is all good news. It means that our economy is moving in the right direction, that there are lots of opportunities, and that people understand how to take advantage of this wonderful place that we all enjoy. But we also need to make sure people understand that today increasing levels of education are required to be competitive – not only in the traditional sense, but also in terms of being able to understand how to manage our resources well.  That's why financial education is so important.

When we talk about financial education, we're talking about improving lives and helping all Americans feel the positive benefits of the strong numbers I mentioned earlier.  This is an issue that President Bush and Secretary Paulson are extremely committed to. But I've been in Washington long enough to know that if we want to make real change, we cannot do it alone. There's always strength in numbers. That's why we appreciate the dedication of CUNA and so many credit unions across the country. You play a critical role in reaching your communities, and you are making a real difference.

This conference is about coming together to share ideas, to listen to each other and to share experiences so that we can continue making progress.

I understand our partners from the National Endowment for Financial Education as well as the Jumpstart Coalition are here. Organizations like these play an important part in serving our communities.

I know my friend, Chairman JoAnn Johnson is here. She is, of course, doing great work at the National Credit Union Administration. Some of you may have heard from one of my Treasury colleagues, Dan Iannicola, Deputy Assistant Secretary for Financial Education who leads the Office of Financial Education. He participated on panel yesterday and talked a little bit about what we're working on at Treasury to improve financial literacy throughout our country.

For example, as a result of the FACT Act, Treasury now leads the Financial Literacy and Education Commission. The Commission brings together representatives from 20 agencies across the federal government to exchange ideas and work together in ongoing financial education efforts.

Last year, the Financial Literacy and Education Commission released Taking Ownership of the Future: The National Strategy for Financial Literacy. The Commission has also developed a financial education web site and toll-free hotline, in English and Spanish – www.MyMoney.gov and 1-888-MyMoney. The Strategy that I just mentioned can be downloaded from this web site.

Just last week, Treasury partnered with the Department of Education to host a two-day Kindergarten through Postsecondary Financial Education Summit. The purpose of the Summit was to discuss the challenges involved in teaching young people about money. It also encouraged a meaningful national dialogue about an increasingly significant challenge. 

The challenges included learning how to integrate financial education into the school day and how to identify effective materials and curricula. Many credit unions lead successful programs that bring volunteers into the classroom. These volunteers often offer a new perspective and can be extremely effective in reenergizing the classroom and reaching students. We appreciated hearing from some of these credit union representatives about their experiences.

As described in one of the several Calls to Action listed in the National Strategy, the Summit's findings will be compiled and made available to educators, policymakers, and the public at large.

Now many of you probably know that as U.S. Treasurer, I also deal with issues relating to coin and currency. I want to share some important efforts led by the United States Mint to promote youth financial literacy. Most of you have seen the Fifty State Quarters, and some of you might even collect them. The Mint has drawn on the popularity of the coins by incorporating currency lessons with lessons on social studies, math and a variety of subjects. Lesson plans from the Mint's Fifty State Quarters Program have been downloaded over 3.4 million times. 

Now, they have created a similar program with the new Presidential $1 Coins. I don't know if anyone has seen them yet, but the new one dollar coin was released last week. Four new coins with a new President will be released every year for the next ten years. Lesson plans similar to those in the Quarters Program can be downloaded at no charge from the U.S. Mint website at www.usmint.gov/kids. This is a great opportunity to teach students about currency.

Last week's financial education summit was a chance to highlight programs like these and to find out what others are doing throughout the country to strengthen financial literacy. We know financial education is a continued process that is most successful when started at an early age. The consequences of not understanding the basics of money and credit management can be overwhelming.  For example, college students these days are signing up for every credit card offer they receive in the mail without really understanding how to manage them. They're maxing out each one, and before they know it they're in over their heads in debt. Young people between the ages of 20 and 29 are filing for bankruptcy. That's no way to begin a professional career. 

One of the panelists at the Summit called financial illiteracy a "silent bandit" because it unknowingly robs people of wealth, of opportunities, and quality of life. Our dynamic economy was designed so that people, regardless of where they start, can have the opportunity to climb the economic ladder to success. But this can only happen through education.

For example, one of the issues we often talk about with respect to financial literacy is the "unbanked." Now I know Credit Unions don't particularly like this term but the idea behind it is really that these are people who have not established a relationship with any kind of banking institution – whether it's a credit union or a bank. An estimated 10 million households fall into this category.

These individuals operate outside of the financial mainstream. As a result, their lives are more complicated and much more difficult. These individuals often don't realize the resources that are available to help them gain better economic footing, and it's very common that this lack of information is costing them more money.

I've been quoted several times over saying: It costs more to be poor. I speak from experience when I say that. I grew up in a home where we didn't have very much in terms of resources. There are many families, unfortunately, who find themselves in similar circumstances. But when they have no relationship with a banking institution or credit union, that cost increases. For example, they're paying additional fees for the privilege of having a check cashed, or perhaps they're paying with money orders, or they're paying their bills by standing in line and that has opportunity costs. Not to mention, they're subjected to greater levels of crime and theft because they're walking around with cash.

When they finally do have enough set aside – because they're very good savers and know how to manage cash – they're set behind a couple of years because they can't get a mortgage approved and they don't have the credit history to help them. They're not going to be in a position of understanding how to prepare for retirement, how to invest, or how to participate in their 401(K).

We have seen that unbanked individuals don't just lack information or education – they also lack trust in traditional financial institutions. In this case, we need an effective messenger along with a strong message if we are going to reach the people who need it most. That's where you come in.

Credit Unions have a real opportunity to bridge this gap by partnering with trusted community organizations. For example, the IRS partners with local community organizations such as the United Way to offer free tax preparation services to low-income individuals. This helps ensure they claim all the benefits they're entitled to. Credit Unions can be tremendously successful in creating similar partnerships. Credit Unions and Financial Institutions can also reach unbanked individuals by offering low-cost services – such as remittance services or low minimum balance savings or checking accounts. All of these efforts help bring individuals into the financial mainstream and improve quality of life.

Financial education has a place in all of our lives as we look at what is we need to do to ensure that each of us has the tools necessary to make the most of our lives and to pave the way for a better future. Because if we are well-informed individually, then our communities are better off, the economy moves in the right direction, and we all keep pace with each other.

Again, I want to thank you for your ongoing partnership and dedication to serving the financial needs of families and individuals in communities throughout our country.