Aloha. Before I begin, I want to say mahalo nui loa for all of your work to help make our country more financially literate. I am delighted to have this opportunity to address the Financial Literacy and Education Commission, which was established, as you know, with a very specific purpose. Quoting from the conference report for the Fair Credit Reporting Act which established the Commission, "The Commission shall serve to improve the financial literacy and education of persons in the United States through development of a national strategy to promote financial literacy and education." I recognize the efforts of my colleagues, Senators Sarbanes, Enzi, and Stabenow, in the creation of the Commission, and I thank them for their leadership on financial and economic literacy. I also commend all of you here today for providing from each of your agencies the federal leadership that is needed on this important issue and for working to move the Commission to produce the national strategy mandated in statute.
In the formation of programs sponsored by your agencies, we have acknowledged that too many Americans are financially illiterate. Americans of all ages and backgrounds face increasingly complex financial decisions as members of the nation's workforce, managers of their families' resources, and voting citizens. Many find these decisions confusing and frustrating because they lack the tools necessary that would enable them to make wise, personal choices about their finances. Now, although there are signs of improvement in the economy, statistics show that there is an even greater need for improved financial literacy. For instance, last year, consumer debt increased for the first time to more than 2 trillion dollars. Personal bankruptcies nearly doubled in the past decade, including more than 1.6 million people who filed for personal bankruptcy in fiscal year 2003.
I know that we, individually and collectively, are moving toward reaching the real people behind these statistics, and a national strategy will only make these efforts more effective. I look forward to seeing the fruits of the Commission's efforts as you move towards constructing this strategy. It is vitally important that, as the statute dictates, state and local governments and private, nonprofit, and public institutions are involved in the creation and implementation of the national strategy. Another challenging task that you have in front of you is to develop methods to increase the general financial education level of current and future consumers of financial services and products and enhance the general understanding about these services and products. The Commission is also charged with reviewing federal activities designed to promote financial literacy and education, and developing a plan to improve coordination of such activities. It will also be important to identify areas of overlap and duplication among federal financial literacy and education activities and propose means of eliminating any such overlap and duplication to ensure that federal efforts are more efficient. I look forward to viewing the online clearinghouse and the resources it will have to offer, and being able to refer constituents to the toll-free hotline, as well as being able to point out to my grandchildren and great grandchildren the value of the concepts transmitted by the coordinated multimedia campaign. All of this as stated in the Commission statute provides all of you at this table with a tall order to fill, because you are dealing with a relatively tight deadline for the production of a national strategy of 18 months from enactment of the law. I expect the collaborative efforts of the Commission to be as successful as many of your own individual agency efforts have been thus far.
As you move forward on your strategy, I want to leave you with part of my financial literacy philosophy. I see financial literacy as having three key components. The first is education. We must take steps to ensure that individuals develop a base of knowledge so that they can participate effectively in the modern economy. We need more financial education in our elementary and secondary schools and college campuses. In addition, we must find opportunities to get information to individuals at the appropriate times throughout their lives as their financial situations and needs change.
The second component is consumer protection. We must ensure that individuals are provided with the relevant and necessary and timely information to make informed financial decisions. We must also appropriately regulate practices to provide additional protection against predatory or unscrupulous practices such as refund anticipation loans.
The third component is to provide opportunities for individual empowerment. For example, having a bank or credit union account provides low- and moderate-income families alternatives to high-cost fringe financial services and allow them to keep more of their hard earned income. Accounts provide opportunities to save for a down payment on a first home, education expenses, or an unexpected illness.
You will see these three components reflected in my financial literacy legislative efforts. I wanted to share these with you as you proceed with your mandated tasks.
The Commission will go a long way toward coordinating the many economic and financial literacy products and programs sponsored by the federal government, and I look forward to continuing to work with all of you and champions in the Senate and House to ensure that your efforts are a resounding success.
