December 14, 2006
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Iannicola Remarks before BITS Financial Services Roundtable Advisory Committee

Before the BITS Financial Services Roundtable Advisory Council Meeting

Washington, DC - Good morning. Thank you for inviting me to speak today. I'm here to give you an update on the field of financial education and to tell you how you can play a role in that field.

First of all the good news is that there truly is a field of financial education.  If you go back as recently as 10 to 15 years ago you won't find the emphasis on this issue as we have today.  While some people certainly did write about and learn about personal finance before then, the same focus simply wasn't there.  Financial education was a minor detail or an asterisk, and was targeted to a relatively small segment of the population.  But today financial education is a pursuit in its own right with broad applicability for all Americans.  Now policy makers, non-profits, for-profits and consumers are all beginning to see how financial literacy issues come up frequently in everyday life.  The inevitability, the necessity of this topic is quickly becoming more obvious to more people.

Our robust marketplace for financial services has placed all of us in charge of a large and growing number of our own financial decisions.  For instance, your retirement savings program used to be managed solely by your employer without your input.  That's not as common anymore.  Also, credit cards used to be hard to come by.  If you've checked your mailbox lately, you'll know those days are gone.  And at one time there were only a few basic ways to finance a home.  Now there are a number of options for structuring or restructuring a mortgage.
 
Times have changed on us.  It's as if every American adult has suddenly received an unwelcome promotion to the position of CFO of his or her household.  Are we ready for the job?  And if not, why not?  Is it that we know less than our parents' or grandparents' generations?  Or is it perhaps that we simply need to know more now than they did then?

Everything that I've seen leads me to the same basic conclusion – that over the years our financial choices have simply outpaced our financial knowledge.  And the only way to catch up to those choices is through financial education.

When I'm asked about the status of financial education in America, I frequently say that the movement of financial literacy is in its adolescence.  It's not new anymore, but it is not mature yet either.  At the federal level we're trying to bring this issue to adulthood.  So let me give you a high level update about our efforts the last few years. 

In 2002 the Department of Treasury set up its Office of Financial Education.  As the Office has developed it has grown to execute a variety of functions including:  setting standards for financial literacy programs; giving technical assistance to financial educators; brokering partnerships between the supply and demand sides of financial education; and performing outreach across the country to raise the awareness of the need for financial education and the resources available to meet those needs. 

In 2003 Congress passed and the President signed the Fair and Accurate Credit Transactions Act which, among other things, addressed financial literacy by establishing a commission of 20 federal agencies, all of which do something in financial education.  Treasury was named the head of that commission.

In 2004 that commission launched a central web site and toll free hotline.  The address is www.mymoney.gov & the hotline is 1-888 my money.  Both are available in English and Spanish.  These resources provide a one-stop shop for free, federal financial education information covering a broad range of topics.  I encourage you to visit the site and to have your institutions link to it for the benefit of your customers. 

In April of this year that same commission released the first-ever national strategy for financial literacy. The document is called "Taking Ownership of the Future."  It is available for you here today and at mymoney.gov.
 
The purpose of the Strategy and of our efforts in general is to help advance the noble goal of bringing more people, more families into the sunlight of prosperity, of giving them a tangible, enduring stake in their own futures. 

There are two paths before each person we are trying to help.  The first is a rocky path that leads to a place where the complexity of the marketplace is overwhelming, where people are easy prey for fraud and where bad choices lead to bad outcomes that can last a lifetime.

The other path travels through financial literacy and it takes people to a place where understanding replaces apprehension, where people make the most of their abundant options and where people have that real stake in their futures – it is a place some of us refer to as the Ownership Society.  It is based on the idea that a community is defined as much by shared aspirations as shared geography.  All of us want to provide for our families, save for a "rainy day," own a home and have a financially secure retirement.  Our growing economy opens the door to those things for us; financial knowledge empowers us to walk through that door.

But what can financial institutions like yours do to help?  Quite a bit.  Your organizations are uniquely positioned to help not just your customers but all Americans learn more about their money. 
I am here today to encourage you to do just that.  In my work at Treasury's Office of Financial Education, I've seen a number of solid programs sponsored by financial institutions which represent a good start.  However the need is great and there is still room for programs that are well-researched, carefully designed and actively distributed.  In fact the National Strategy's Call to Action 4.3 specifically invites consumer lenders to play a role in promoting financial literacy.  Our office stands ready to help your institutions play this important role in raising our nation's level of financial literacy.

As I close, let me remind you of something I'm sure you already know.  That in business making a profit and making a difference are not just compatible, they're complementary.  The best educated consumers will be your best customers.  People with a good understanding of financial concepts will be your best employees.  Citizens who understand basic economic issues will be better informed voters.  Because of all this I'm sure you can see how starting or expanding your efforts to promote financial literacy is in the best interest of everyone, including your shareholders.  Thanks for your time today and best wishes on a successful conference. 

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