[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
EXAMINING HOW TECHNOLOGY CAN PROMOTE
CONSUMER FINANCIAL LITERACY
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON FINANCIAL INSTITUTIONS
AND CONSUMER CREDIT
OF THE
COMMITTEE ON FINANCIAL SERVICES
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
SECOND SESSION
__________
APRIL 30, 2014
__________
Printed for the use of the Committee on Financial Services
Serial No. 113-76
U.S. GOVERNMENT PRINTING OFFICE
88-538 WASHINGTON : 2014
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HOUSE COMMITTEE ON FINANCIAL SERVICES
JEB HENSARLING, Texas, Chairman
GARY G. MILLER, California, Vice MAXINE WATERS, California, Ranking
Chairman Member
SPENCER BACHUS, Alabama, Chairman CAROLYN B. MALONEY, New York
Emeritus NYDIA M. VELAZQUEZ, New York
PETER T. KING, New York BRAD SHERMAN, California
EDWARD R. ROYCE, California GREGORY W. MEEKS, New York
FRANK D. LUCAS, Oklahoma MICHAEL E. CAPUANO, Massachusetts
SHELLEY MOORE CAPITO, West Virginia RUBEN HINOJOSA, Texas
SCOTT GARRETT, New Jersey WM. LACY CLAY, Missouri
RANDY NEUGEBAUER, Texas CAROLYN McCARTHY, New York
PATRICK T. McHENRY, North Carolina STEPHEN F. LYNCH, Massachusetts
JOHN CAMPBELL, California DAVID SCOTT, Georgia
MICHELE BACHMANN, Minnesota AL GREEN, Texas
KEVIN McCARTHY, California EMANUEL CLEAVER, Missouri
STEVAN PEARCE, New Mexico GWEN MOORE, Wisconsin
BILL POSEY, Florida KEITH ELLISON, Minnesota
MICHAEL G. FITZPATRICK, ED PERLMUTTER, Colorado
Pennsylvania JAMES A. HIMES, Connecticut
LYNN A. WESTMORELAND, Georgia GARY C. PETERS, Michigan
BLAINE LUETKEMEYER, Missouri JOHN C. CARNEY, Jr., Delaware
BILL HUIZENGA, Michigan TERRI A. SEWELL, Alabama
SEAN P. DUFFY, Wisconsin BILL FOSTER, Illinois
ROBERT HURT, Virginia DANIEL T. KILDEE, Michigan
STEVE STIVERS, Ohio PATRICK MURPHY, Florida
STEPHEN LEE FINCHER, Tennessee JOHN K. DELANEY, Maryland
MARLIN A. STUTZMAN, Indiana KYRSTEN SINEMA, Arizona
MICK MULVANEY, South Carolina JOYCE BEATTY, Ohio
RANDY HULTGREN, Illinois DENNY HECK, Washington
DENNIS A. ROSS, Florida
ROBERT PITTENGER, North Carolina
ANN WAGNER, Missouri
ANDY BARR, Kentucky
TOM COTTON, Arkansas
KEITH J. ROTHFUS, Pennsylvania
Shannon McGahn, Staff Director
James H. Clinger, Chief Counsel
Subcommittee on Financial Institutions and Consumer Credit
SHELLEY MOORE CAPITO, West Virginia, Chairman
SEAN P. DUFFY, Wisconsin, Vice GREGORY W. MEEKS, New York,
Chairman Ranking Member
SPENCER BACHUS, Alabama CAROLYN B. MALONEY, New York
GARY G. MILLER, California RUBEN HINOJOSA, Texas
PATRICK T. McHENRY, North Carolina CAROLYN McCARTHY, New York
JOHN CAMPBELL, California DAVID SCOTT, Georgia
KEVIN McCARTHY, California AL GREEN, Texas
STEVAN PEARCE, New Mexico KEITH ELLISON, Minnesota
BILL POSEY, Florida NYDIA M. VELAZQUEZ, New York
MICHAEL G. FITZPATRICK, STEPHEN F. LYNCH, Massachusetts
Pennsylvania MICHAEL E. CAPUANO, Massachusetts
LYNN A. WESTMORELAND, Georgia PATRICK MURPHY, Florida
BLAINE LUETKEMEYER, Missouri JOHN K. DELANEY, Maryland
MARLIN A. STUTZMAN, Indiana DENNY HECK, Washington
ROBERT PITTENGER, North Carolina
ANDY BARR, Kentucky
TOM COTTON, Arkansas
KEITH J. ROTHFUS, Pennsylvania
C O N T E N T S
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Page
Hearing held on:
April 30, 2014............................................... 1
Appendix:
April 30, 2014............................................... 41
WITNESSES
Wednesday, April 30, 2014
Cackley, Alicia Puente, Director, Financial Markets and Community
Investment, U.S. Government Accountability Office.............. 5
Kehoe, Stephen, Senior Vice President and Head of Global
Financial Inclusion, Visa Inc.................................. 9
Krajicek, Gabriel, Chief Executive Officer, BancVue.............. 7
Lamb, Sabrina, Founding CEO, WorldofMoney.org.................... 13
Saik, Barry, Senior Vice President and General Manager, Consumer
Ecosystem Group, Intuit........................................ 11
APPENDIX
Prepared statements:
Duffy, Hon. Sean............................................. 42
Cackley, Alicia Puente....................................... 44
Kehoe, Stephen............................................... 60
Krajicek, Gabriel............................................ 68
Lamb, Sabrina................................................ 77
Saik, Barry.................................................. 80
Additional Material Submitted for the Record
Capito, Hon. Shelley Moore:
Written statement of the Center for American Racial Equality
(CARE)..................................................... 85
Joint written statement of the Credit Union National
Association (CUNA) and the National Credit Union Foundation
(NCUF)..................................................... 86
Written statement of the Property Casualty Insurers
Association of America (PCI)............................... 89
Ellison, Hon. Keith:
Written responses to questions submitted to Alicia Puente
Cackley.................................................... 94
Written responses to questions submitted to Stephen Kehoe.... 96
Written responses to questions submitted to Gabriel Krajicek. 97
Stivers, Hon. Steve:
USA Today article entitled, ``Financial literacy education
has lasting impact,'' dated April 8, 2014.................. 98
EXAMINING HOW TECHNOLOGY
CAN PROMOTE CONSUMER
FINANCIAL LITERACY
----------
Wednesday, April 30, 2014
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 10:02 a.m., in
room 2128, Rayburn House Office Building, Hon. Shelley Moore
Capito [chairwoman of the subcommittee] presiding.
Members present: Representatives Capito, McHenry, Pearce,
Posey, Luetkemeyer, Stutzman, Pittenger, Barr, Cotton; Meeks,
Maloney, Hinojosa, McCarthy of New York, Scott, Green, Ellison,
and Heck.
Ex officio present: Representative Hensarling.
Also present: Representative Stivers.
Chairwoman Capito. The Subcommittee on Financial
Institutions and Consumer Credit will come to order. Without
objection, the Chair is authorized to declare a recess of the
subcommittee at any time.
I now recognize myself for the purpose of making an opening
statement.
One of the most important skills that a child can learn is
how to properly manage their personal finances. Earlier this
month, I had the privilege of visiting with high school
students, business and economics students in Ripley, West
Virginia. And then, I visited a third-grade class in Dunbar,
West Virginia. We discussed the importance of making sound
financial decisions, including the importance of
differentiating wants from needs.
These visits were a wonderful opportunity for me to better
understand the challenges facing these students. I must admit,
when I was watching the PowerPoint and listening to some of the
hints on good personal financial management, there were a few
violations I am doing myself, so we can all learn how to do
better.
Although financial literacy efforts are often focused on
students, learning the life skills of financial management
continues throughout adulthood. This morning's hearing will
serve as an opportunity for Members to learn more about the
Federal Government's financial literacy efforts and how they
compare to new and innovative private sector solutions to
promote greater financial literacy among students and adults
alike.
In 2012, the GAO released a report that provided an
overview of the Federal Government's activities and programs to
promote financial literacy. They found 13 different programs
offered by 13 different agencies, which spent about $31 million
a year on financial literacy efforts in the year 2010.
The report also found that there was significant overlap
among the agencies, and recommended consolidation of the
government's efforts to promote financial literacy.
Furthermore, the GAO found that there was no mechanism to
evaluate the effectiveness of these programs.
If we are going to be devoting Federal resources to
financial literacy programs, we must ensure these dollars are
invested properly and effectively, and I look forward to
hearing from the GAO this morning about additional measures
that we can take to ensure these goals are met.
The rest of this morning's panel will update Members on
private sector efforts to promote financial literacy through
technology-based programs. We will hear from three different
private sector entities that have developed Web-based and
mobile-based platforms for consumers to gain a better
understanding of financial management. These tools, readily
available to anyone with a mobile phone or a computer, are
helping consumers gain a better understanding of personal
finance, thus helping them make better financial decisions.
Moving toward Web-based and mobile-based platforms to
deliver financial literacy skills is essential as consumers
become more reliant on mobile phones and smartphones. A recent
Federal Reserve survey found that 87 percent of adults used a
mobile phone, and of that population, 61 percent used
smartphones.
The same survey also found that consumers are becoming more
comfortable with accessing financial services and payments
through their mobile device. Again, I would put myself in that
category. I am inching into that realm myself and really seeing
the ease of use and the convenience and the accountability that
it provides.
As these trends continue, mobile apps can help consumers
gain a better understanding of their finances. Apps can be
updated to meet the evolving needs of consumers. As we will see
today, private sector entities are developing apps ranging from
educating children on the importance of saving to providing
adults with a complete picture of their personal finances.
I would like to thank each of our witnesses for joining us
here this morning, and for their efforts to provide consumers
with a better understanding of the impact of their financial
decisions.
I will now yield to the ranking member of the subcommittee,
Mr. Meeks, for an opening statement.
Mr. Meeks. Thank you, Madam Chairwoman. And I, too, am
still learning certain tools myself and moving on.
What I find is that by the time most children in this
country finish middle school, we have a great deal of
confidence that they are comfortable using computers and
smartphones and social media and that they are tech-savvy. By
the time they graduate from college, we have little confidence
that they are equipped with the basic financial skills and
understanding to make the most important financial decisions
they will face as responsible adults.
We often talk admirably about the new information age and
about how successful our Nation has been in coming up with
technological innovations that have improved the lives of
millions. Today, Americans hold in their smartphones more
computer capability than the most powerful supercomputers of
the 1960s and 1970s that occupied entire basements of Federal
buildings.
Today, we are able to communicate instantaneously, see our
pictures within seconds, and connect with family and friends
remotely from anywhere on the globe in a matter of seconds. And
today, we are able to trade in milliseconds and have market
efficiency and price updates in ways that we never imagined. As
technology has changed our way of living and our culture, our
youth, from very early ages, naturally learn and become tech-
savvy.
But as much as we have seen transformational innovations in
the technological area, major evolutions have also occurred in
the financial markets. Our mortgage products are so much more
complicated. Our banks are offering and engaging in
increasingly more sophisticated transactions and operating in
much-evolved financial markets with more complex financial
products being offered to consumers every day, some of which
caused some of the confusion and the Great Recession that we
had and the banks falling down when we had the financial
crisis.
So unfortunately, unlike in the technological area, our
kids today are not keeping up with the innovations and added
complexities of the financial markets. We have a generation of
teenagers and young adults who are increasingly computer-
literate and financially illiterate. As much as they know about
smartphones, and connecting on Facebook and Google, our kids
are increasingly clueless about how financial markets work, how
to manage their finances, and how to juggle the financial
responsibilities of owing debt.
In an economy and society where the biggest decisions that
we make for economic prosperity and financial stability depend
on making the right financial decisions, from investing in our
education to buying a home or saving for retirement, we clearly
need to do better to equip our youth with the proper skills
they need in financial literacy.
After all, how do you prepare for college when you don't
understand your student loan? How do you buy a home when you
don't understand the terms and obligation of your mortgage? And
how do you invest or save for retirement when you are clueless
about the financial tools and options at your disposal?
We must do better, and instead of just saying, ``Reading,
writing, and arithmetic,'' we should be saying, ``Reading,
writing, arithmetic, and financial literacy.'' I believe it
should also be part of the educational curriculum in every
school so that we can make sure they have the tools that they
need to be successful.
Thank you, Madam Chairwoman. I yield back, and I look
forward to hearing the testimony.
Chairwoman Capito. Thank you.
I recognize Mr. Pittenger for 2 minutes for an opening
statement.
Mr. Pittenger. Thank you, Madam Chairwoman, for yielding me
the time today to discuss technology that can promote consumer
financial literacy.
According to the Federal Reserve, nearly 90 percent of
American adults have a mobile phone. As access to mobile
technology increases, so does the ability to conduct financial
transactions and make more-informed financial decisions.
These devices can be used as a tool to help Americans
budget for the future and track their spending and savings
habits through resources like having immediate access to bank
account balances or depositing a check using a phone's camera.
At the same time, studies indicate that financial literacy in
the United States is at relatively low levels, making it
difficult for many Americans to take full advantage of these
payment systems.
While the Federal Government has devoted increased
resources to financial literacy initiatives in recent years,
its efforts have been marked by excessive duplication and lack
of coordination across agencies. The results of those efforts
have been mixed at best.
For the past several years, the U.S. Government
Accountability Office has examined the effectiveness and
efficiency of Federal financial literacy programs and found
that Congress and the Federal agencies have devoted more
resources to financial literacy, which has resulted in overlap
and duplication, but little evidence of improved financial
literacy among Americans. There was also a RAND Corporation
study back in 2009 entitled, ``Federal Financial and Economic
Literacy Education Programs'' which found that Federal
financial literacy activities are fragmented across multiple
agencies, with more than 20 different Federal agencies
providing over 50 programs related to financial literacy.
It is my hope that this hearing will shed light on how to
make the government far more efficient for the American
taxpayer, but also how innovations in mobile technology can
contribute to the financial literacy of Americans by empowering
them to make more informed decisions in their daily and long-
term financial planning.
I yield back the balance of my time.
Chairwoman Capito. Thank you.
Mr. Green, for 2 minutes.
Mr. Green. Thank you, Madam Chairwoman.
I thank the ranking member, as well, and I would like to
associate myself with his comments.
I am honored to note that the Dodd-Frank Act established
the Office of Financial Education within the Consumer Financial
Protection Bureau (CFPB) to enhance financial literacy
education. And I believe that this Act and this portion of it
is going to be of great benefit to the American people.
My hope is that as we move forward, the funding issue will
become secondary, if not tertiary, to what we are trying to
accomplish. It is important to make sure agencies are properly
funded and it is important to make sure that funds are used
efficaciously. But it is also important to make sure that
agencies have the opportunity to fulfill their missions.
Currently, as was indicated, the phone is one means by
which persons can receive a good deal of information. I am
proud to say that I have a phone. I am hopefully going to move
to the latest technology; I still have a BlackBerry, but I am
blessed to have an iPad. Not everybody has an iPad, but most
people have a phone.
In fact, the Federal Reserve reported that 63 percent of
unbanked consumers have a mobile phone. And the indication is
that 91 percent of underbanked consumers have a mobile phone.
It appears to me that this technology can become the
methodology by which people can acquire a good deal of
intelligence.
I hope that we will be able to move forward such that we
can completely explore how this collaborative effort between
the CFPB and other agencies will be of great benefit to the
American people. This is a good piece of legislation that we
passed. We just now have to make sure that it works
effectively.
I yield back.
Chairwoman Capito. Thank you.
I think that concludes our opening statements, so I am
going to go to the panel.
And we welcome each of you. You are distinguished
witnesses.
Each of you will be recognized for 5 minutes to give an
oral presentation of your testimony. And without objection,
each of your written statements will be made a part of the
record.
I would ask each witness to pull the microphone as close to
you as you can so that we can hear you properly.
Our first witness is Ms. Alicia Cackley. She is the
Director of Financial Markets and Community Investment at the
U.S. Government Accountability Office.
Welcome.
STATEMENT OF ALICIA PUENTE CACKLEY, DIRECTOR, FINANCIAL MARKETS
AND COMMUNITY INVESTMENT, U.S. GOVERNMENT ACCOUNTABILITY OFFICE
Ms. Cackley. Thank you.
Chairwoman Capito, Ranking Member Meeks, and members of the
subcommittee, I am pleased to be here today to testify on the
important topic of financial literacy. In my statement today, I
will provide a brief review of Federal financial literacy
programs, activities, and agency roles, as well as a progress
update on recommendations we have made in this area in the past
several years.
In 2010, there were 16 significant Federal financial
literacy programs or activities spread among 14 agencies, as
well as 4 housing counseling programs spread among 3 Federal
entities. Since that time, at least 4 of these programs have
been discontinued or are no longer funded, and according to
Treasury and CFPB, no new Federal programs have been added.
With respect to agency roles, the CFPB became operational
in 2011 and has a primary role in addressing financial
literacy, with offices that offer specific help to certain
subpopulations such as servicemembers, older Americans, and
students.
In addition, the 22-member Financial Literacy and Education
Commission coordinates among other Federal agencies and between
Federal agencies and State, local, nonprofit, and private
entities. The Commission is also charged with developing a
national strategy for improving financial literacy and
proposing means of eliminating overlap and duplication among
Federal financial literacy activities.
Furthermore, since 2008, three Presidential advisory
councils related to financial literacy have been tasked with
creating partnerships among Federal, State, local, nonprofit,
and private entities.
In our reviews of Federal financial literacy efforts in
recent years, we have observed important improvements or
successes in four areas: coordination; partnerships; the CFPB's
role; and evaluation tools. And we have identified one major
area in which we believe significant work remains to be done:
determining the most effective and efficient allocation of
Federal resources.
In terms of the successes, overall, coordination on
financial literacy has improved in recent years, largely due to
the role of the Commission. The Commission has also built and
promoted partnerships among Federal and non-Federal sectors,
including academics, nonprofits, and other entities.
As we recommended, the CFPB has taken steps to delineate
and distinguish its role in Federal financial literacy efforts
from that of other Federal agencies, and the CFPB and the
Commission have taken steps to develop and disseminate a
standard set of evaluation tools or benchmarks to help assess
outcomes and effectiveness of financial literacy programs.
Turning to our most recent recommendations, however, we
continue to believe that further progress is needed in terms of
ensuring that the most effective and efficient allocation of
Federal literacy resources occurs. We noted in 2012 that the
creation of the CFPB signaled an opportunity for reconsidering
more broadly how Federal financial literacy efforts are
organized.
As a result, we recommended to Treasury and the CFPB that
the Commission identify for Federal agencies and Congress
options for consolidating Federal financial literacy efforts
into the agencies and activities that are best suited or most
effective. While Treasury and the CFPB both agreed with this
recommendation, it has not yet been implemented.
One natural vehicle for thinking strategically about how
best to allocate resources is through the Commission's national
strategy. We recommended that in revising its national
strategy, the Commission incorporate clear recommendations on
the allocation of Federal financial literacy resources across
programs and agencies. Again, Treasury and the CFPB agreed with
our recommendation but have not yet implemented it.
We acknowledge that the governance structure of the
Commission presents challenges in addressing resource issues.
It relies on the consensus of multiple agencies and has no
independent budget or legal authority to compel members to act.
However, the Commission can identify resource needs, make
recommendations, and provide guidance on how Congress or
Federal agencies might allocate scarce Federal resources. This
will give policymakers the information they need to help ensure
the most effective and efficient use of Federal funds.
Chairwoman Capito, Ranking Member Meeks, and members of the
subcommittee, this concludes my prepared statement. I would be
happy to answer any questions.
[The prepared tatement of Ms. Cackley can be found on page
44 of the appendix.]
Chairwoman Capito. Thank you.
Our next witness is Mr. Gabriel Krajicek, chief executive
officer of BancVue.
Welcome.
STATEMENT OF GABRIEL KRAJICEK, CHIEF EXECUTIVE OFFICER, BANCVUE
Mr. Krajicek. Thank you.
Chairwoman Capito, Ranking Member Meeks, and members of the
subcommittee, it is an absolute honor to speak with you today,
so thank you.
My name is Gabe Krajicek. I am the CEO of a company called
BancVue, and we serve about 700 community banks and credit
unions across the country, providing products and services.
As my written testimony shows, we have won numerous awards
for our technology and we are widely regarded as one of our
industry's top innovators. And that is important because
innovation and receiving financial advice from a trusted
adviser are the key components of any good financial literacy
program.
Our mobile and Web-based products--MoneyIsland, PiggyBot,
and Kasasa 360--are already changing lives.
For BancVue, this mission on financial literacy began in
2009 when I was teaching an afterschool class on
entrepreneurship for middle schoolers. I worked hours and hours
preparing lesson plans and activities and homework assignments
for my young students, and the class culminated in our
participation in the National Lemonade Day event, where
students would design, market, and operate their own lemonade
stand.
I was really excited. The kids were excited--especially one
girl who wanted to be the CEO of the lemonade stand and run the
cash register. Unfortunately, I realized very quickly that she
could not make proper change, even after I handed her my iPhone
and let her use the calculator.
If you could have seen her face when someone handed her a
$10 bill and she did not know what to do, you would have seen
all of her enthusiasm vanish; you would have seen that self-
confidence that she had sink into self-doubt; and her
excitement was just gone. Managing money, handling money should
not make any child feel that way. It shouldn't make any adult
feel that way.
These financial literacy products that we offer are not big
moneymakers for BancVue nor are they for our clients. But
helping people with their financial future is vital to all of
us. That is why MoneyIsland, PiggyBot, and Kasasa 360 are
offered exclusively by community banks and credit unions,
because these institutions understand that they provide trusted
financial advice and help serve their communities one
household, one parent, one child, one teacher, or one small
business at a time so that people can achieve their financial
goals.
Please let me describe our products.
MoneyIsland is a multilevel online video game that is
designed for kids 8- to 14-years old. Collaborating with real
students in real classrooms, we designed this to be an exciting
adventure full of financial quests that teach eight key
financial principles ranging from spending to saving,
investing, as well as other topics.
I know personally how hard it is to build a lesson plan, so
we wanted to make it easier for the teachers to teach these
financial concepts. We have included 17 preplanned lessons that
make it kind of a paint-by-numbers approach for the teacher to
explain the concepts to the students. And that is very
important because less than 30 percent of American teachers
have ever taught financial literacy, and less than 20 percent
of them feel prepared to do so.
MoneyIsland is a turnkey solution and our curriculum meets
both the Jump$tart Coalition for Personal Financial Literacy
and the Common Core math standards. It is offered by more than
100 institutions across the country in 2,000 classrooms, and
70,000 students have already completed their financial
journeys.
PiggyBot is a completely free mobile app that transforms
the age-old practice of distributing kids' allowances into an
interactive collaboration between Mom, Dad, and each child.
Using PiggyBot, the kids set goals, like a new bike or a new
doll, and then the mom and dad place portions of their
allowance into three distinct buckets: spending; saving; and
sharing. This is important because it teaches kids the value of
planning how they are going to spend their money as well as how
money can be used and should be used for different purposes.
It was launched just earlier this month--on April 1st--and
it has already had an immediate impact. It has been the number
one free app for children on the iTunes Store; we have had over
50,000 downloads; and already, 9,000 kids have established and
achieved their financial goals all across the country.
But adults need help managing their money too, and they
want that help from someone they trust. Ninety-three percent of
community bank and credit union customers really trust their
financial institutions. Compare that to the 66 percent of
Americans who still feel flat-out anger toward the megabanks
for their role in the recent economic crisis. Even 31 percent
of megabank customers don't trust their own bank.
Plus, people want assistance from people they are familiar
with, and that is why 75 percent of consumers say they want
personal finance management (PFM) services from their primary
financial institution, not from a third-party provider. That is
why we launched Kasasa 360 earlier this month.
Kasasa 360 is a very easy to use PFM that enables an
individual to view, organize, budget, and manage all of their
bank accounts, all their credit cards, their car loans, their
mortgages, their investments, their retirement accounts--you
name it, they can manage it all from their Web-based or mobile
device. Kasasa 360 brings home our commitment to personal
financial literacy offerings because it give parents hands-on
control over how they manage their money, because, as financial
guru Dave Ramsey would say, your children are watching you, and
they will learn how to manage money based on how you do it.
So what can Congress do to help? Well, as the pace and cost
associated with compliance and regulatory oversight continues
to grow, community banks and credit unions have no choice but
to cut back on programs that don't directly generate new
revenue. If there was a way, without sacrificing safety and
soundness, to reduce the regulatory burden on community
financial institutions, more of them would be able to provide
services like these that offer financial literacy programs in
every small town across America.
Thank you for your time, and thank you very, very much for
your commitment to financial literacy. BancVue will continue to
build new, innovative products and services. Our community
banks and credit unions will continue to provide the trusted
advice that our fellow citizens need and deserve. And
individually and collectively, we stand ready to help in any
way we can.
[The prepared statement of Mr. Krajicek can be found on
page 68 of the appendix.]
Chairwoman Capito. Thank you very much.
Our next witness is Mr. Stephen Kehoe, who is senior vice
president and global head of financial inclusion at Visa.
Welcome.
STATEMENT OF STEPHEN KEHOE, SENIOR VICE PRESIDENT AND HEAD OF
GLOBAL FINANCIAL INCLUSION, VISA INC.
Mr. Kehoe. Thank you, Chairwoman Capito, Ranking Member
Meeks, and members of the subcommittee. My name is Stephen
Kehoe, and I am head of global financial inclusion at Visa.
Thank you for the invitation to be here today to discuss how
technology can advance financial education.
At Visa, we believe that the most valuable financial tool
is not a product, but knowledge. Empowering consumers with
knowledge and skills to make informed decisions about and
manage money wisely not only improves their own financial
situation, but contributes to strengthening the economy.
Our CEO, Charlie Scharf, was recently appointed to the
President's Advisory Council on Financial Capability for Young
Americans and is committed to sharing the work Visa is doing in
this field.
For over 50 years, Visa has enabled people, businesses, and
governments everywhere to make and receive payments and connect
to financial institutions. But providing consumers with access
to quality financial services is just one piece of the puzzle.
They need to know how to use these products wisely, thereby
gaining the skills and confidence required to manage their
money responsibly, because unless we empower them with this
knowledge, we are doing them no favors. Lack of financial
knowledge is the economic equivalent of handing a teenager the
keys to a brand new car when he has never driven before. A
wreck, financial or otherwise, is inevitable.
The best way in which we can help that new account holder
from crashing is to provide them with financial education long
before they ever acquire a financial account.
For nearly 2 decades, Visa has focused on developing
financial education programs that teach individuals of all ages
the basics of money management. This includes how to budget,
save, and spend responsibly. In the last 6 years, we have
reached more than 30 million people in 30 countries.
In the United States, our flagship program, Practical Money
Skills for Life, helps parents, teachers, students, and
consumers learn the essentials of personal financial
management. We know learning and, for that matter, teaching
personal finance can be a challenging endeavor. In order to
ensure success in educating everyone from elementary school
students to adults, it is important to focus on creating and
developing tools which not only are effective and relevant, but
are wholly engaging for consumers of all ages, and that is
where technology can really make a difference.
Our programs' Web sites attract more than 49 million views
per year and provide a range of free, innovative, and engaging
resources such as classroom lesson plans, educational video
games, smartphone apps, podcasts, and other tools.
One of the most effective ways to make learning fun for
children and young adults is through the use of games and
entertainment. As part of Practical Money Skills, we have
developed a suite of educational games online and for a variety
of operating systems. These include games for younger kids such
as Peter Pig's Money Counter, which has been downloaded more
than 50,000 times, and Money Metropolis for middle schoolers.
But by far, our most popular and successful educational
game is Financial Football. Working with the NFL and the NFL
Players Association, we developed an interactive money
management video game which has now been played more than
650,000 times online and continues to be downloaded from iTunes
more than 50,000 times a year.
Since the launch of Financial Football in 2007, we have
worked with State governments to distribute the game for free
to schools in 44 States. In fact, Chairwoman Capito's home
State of West Virginia was the first to distribute Financial
Football to every middle and high school through a public-
private partnership.
We were also pleased to partner with Ranking Member Meeks
to hold a Financial Football event in February at the Super
Bowl. As of today, we have partnered with governors, State
treasurers, and other officials to distribute Financial
Football to more than 28,000 middle and high schools across the
country.
In addition to State governments, we have worked with over
300 nonprofits, credit unions, community banks, and financial
institutions to distribute our core literacy materials. We have
found public-private partnerships to be an effective way to
deliver financial education resources.
Beyond games and educational entertainment resources, we
have used technology platforms to create free, consumer-
friendly smartphone apps to teach the basics of budgeting and
savings. These come in all shapes and sizes, from planning for
retirement to budgeting for the prom to figuring out how much
the tooth fairy should leave under the pillow.
Twenty years of experience, however, tells us there is no
silver bullet. The solution to creating a more financially
literate, healthy citizenry requires a multipronged approach
and constant innovation.
In conclusion, technology offers many opportunities to
reach people through new channels, but the technology must
appeal to the people we are trying to reach. To impact today's
young people, we must engage with them on their terms, which
means on the technology platform of their choice, be it iPad,
tablet, smartphone, or online. If we are serious about using
technology to create a more financially literate society, we
must be wholly committed to creating apps, programs, and
resources that consumers want to use.
Thank you for the opportunity to highlight some of the work
Visa is doing to improve financial literacy. We are ready to
work with this committee to advance this important cause, and I
look forward to answering any questions.
[The prepared statement of Mr. Kehoe can be found on page
60 of the appendix.]
Chairwoman Capito. Our next witness is Mr. Barry Saik, who
is the senior vice president and general manager of Consumer
Ecosystems Group with Intuit.
Welcome.
STATEMENT OF BARRY SAIK, SENIOR VICE PRESIDENT AND GENERAL
MANAGER, CONSUMER ECOSYSTEM GROUP, INTUIT
Mr. Saik. Thank you.
Good morning, Chairwoman Capito, Ranking Member Meeks, and
members of the subcommittee. My name is Barry Saik and I am the
senior vice president and general manager for the Consumer
Ecosystem Group at Intuit. The Consumer Ecosystem Group
includes our Quicken and Mint products.
I appreciate the opportunity to speak with you today about
how technology can promote consumer financial literacy. While I
am here to talk today about Mint, I would like to first give
you some brief background on Intuit.
Intuit creates products and services with one mission in
mind: We strive to improve people's financial lives so
profoundly they cannot imagine going back to the old way of
doing things. At its heart, this is all about financial
literacy.
Over 30 years ago our founder, Scott Cook, sat at his
kitchen table watching his wife struggle to balance the family
checkbook. This inspired him to create Quicken. Today, we are
one of the Nation's leading providers of tax and financial
management solutions for consumer and small businesses as well
as the accountants who serve them.
Through our flagship products and services, including
QuickBooks, Quicken, Mint, and TurboTax, we remain committed to
creating new and easier ways for consumers and small businesses
to tackle life's financial chores with the help of technology.
We help our customers make and save money, comply with laws
and regulations, and give them more time to live their lives
and grow their small businesses. Most of the small businesses
are family businesses, and these tools help them survive and
thrive.
Mint, the leading personal finance app, enables users to
link their financial accounts and view all of their financial
statements in one place. We currently have over 15 million
registered customers in the United States and Canada, and they
are connecting to a total of over 220 million bank accounts and
other financial accounts at different institutions.
Additionally, Mint provides the tools for easy and free
money management. Goal-setting is a unique tool which helps our
customers set financial targets that matter to them, such as
paying down credit card debt or repaying your student loans.
Mint tracks an individual's progress towards meeting their
personal goals and sends regular reminders to keep you on
track.
We currently have nearly 3 million customers who have set
up over 7 million goals in Mint, and thousands of these goals,
including paying off debt, buying a house, and saving up for a
trip have already been completed by many Mint customers who are
currently saving over $1 billion a month towards their personal
goals.
Mobile has also been a focus of ours for a few years. It
has allowed us to reach a mass audience because, as you guys
have mentioned, smartphones are the device that most people use
to access the Internet today.
Currently about 70 percent of our users start on and use
our mobile app, with about 40 percent of them continuing to be
mobile-only customers. Our mobile customers use the app to
check their account balances and review their transactions--
things like checking recent spending and deposits--before
making new purchases.
With Mint, people don't have to think about how much they
spend or spend hours with a financial planner. We do the hard
work of collecting and categorizing transactions for them.
For about 80 percent of people, the upward trajectory of
their spending was tempered after they joined Mint and began
monitoring their transactions. And most people's spending was
further tempered if they used the information and set up
budgets and goals. The biggest effects were observed in
people's spending on things like groceries, restaurants, and
credit card financial charges.
Mint also provides ways for you to save more money beyond
just budgeting. Mint has found over an average of $1,700 in
savings for nearly 5 million of our users. That is a total of
over $10 billion in savings identified by our users.
Through our partnerships, we evaluate customer accounts and
identify alternatives for them--things like better insurance,
or credit card options, or even refinancing loans--and we allow
them to opt in for these options. Should the customer choose
one of these options, they are directed to the partner sites to
apply and sign up for that option. By identifying these
alternatives, we take away the common inhibitor to finding
these deals on their own, which is the time it takes to
research and apply for them.
Intuit's mission is about empowering individuals. This
shows up one customer at a time. I often hear from customers
how Mint has helped them literally transform their lives for
the better.
Financial knowledge is a foundation on which individuals
can build upon, but education alone is not enough. Our customer
research has shown that simply providing people with knowledge
about their credit card or student loan rates or how to save
for retirement does not spur an individual to pay attention to
these things in real life.
Our research has shown that people learn by doing. It is
one thing to learn about personal finances, but until you are
faced with a real-world situation such as facing a large
student loan debt when you are taking your first job and just
setting out in life, that is when you really begin to practice
what you have learned. And it is by going through that
experience that you really learn about financial literacy.
Mint provides the tools to help people with these real-
world situations and develop true financial literacy.
Thank you again for the opportunity to testify, and I would
be happy to answer any questions you may have.
[The prepared statement of Mr. Saik can be found on page 80
of the appendix.]
Chairwoman Capito. Thank you.
Our final witness is Ms. Sabrina Lamb, who is the CEO of
WorldofMoney.org.
Welcome.
STATEMENT OF SABRINA LAMB, FOUNDING CEO, WORLDOFMONEY.ORG
Ms. Lamb. Thank you.
Chairwoman Capito, Ranking Member Meeks, and members of the
subcommittee, on behalf of the WorldofMoney.org Youth Financial
Education Institute, known as WorldofMoney.org, also
represented here today by our youth board members Dante Stewart
and Ciana Montero, thank you for the opportunity to testify at
today's hearing.
About 10 years ago, a disturbing trend swept across
America. Young people, often accompanied by adults, began
forming long lines outside of retail stores, shoving and
clawing to purchase another pricey item to make them feel, for
the moment, better about themselves. These youth and adults
seemed oblivious to the fact that they were jeopardizing their
already fragile financial condition.
In response to this crisis, the WorldofMoney.org, a New
York City-based nonprofit organization, was founded in 2005.
The organization was selected as a Promise Place by American's
Promise Alliance and by AOL Impact as one of 10 top social good
organizations in America.
WorldofMoney.org is acknowledged in President Obama's
Advisory Council on Financial Capability report. Our mission is
to challenge the way youth ages 7 to 18 engage with and manage
money by equipping them with a robust, 40-classroom-hour
curriculum taught by Wall Street professionals so that they can
plan to live a financially secure and philanthropic life. To
date, the WorldofMoney.org has provided critical financial
education to over 3,000 youth and their parents.
Over the years, unfortunately some parents have openly
expressed their despair or their belief that living a
financially secure life is not for them, that they are not
worthy or able to experience generational wealth. Recently, one
student said that he thought that the term ``financial
freedom'' sounded like a scam.
Other parents admitted how embarrassed they feel about the
financial missteps that they have made. Alternatively, one
mother defiantly shared, ``What I don't know, my child won't
know.''
Hundreds of well-intentioned individuals, corporations, and
nonprofit organizations provide excellent online and gaming
financial education. However, of the 3,000 youth that we have
served, 98 percent of our economically diverse parents report
that they have never felt compelled to search for or access
this online information.
How can technology help stem the widening gulf of
financially uneducated and vulnerable Americans? Disrupt and
interrupt.
Creative content interruptions beyond one's primary Web
site or application are warranted for at least three reasons:
one, difficulties associated with motivating adults to pursue
financial literacy; two, generational family history of being
financially vulnerable; and three, predatory lenders' and
fringe financial service providers' aggressively
disproportionate targeting of communities of color.
Technology can create a financial education cultural
revolution by integrating a brand's message via social media as
the new normal, targeting communities which generationally are
reluctant to discuss or have a lack of knowledge in managing
their finances. Millions of these families, often unbanked,
still voraciously consume social media and cell phones.
An online blended interruption could have a powerful
subliminal impact on uninformed Americans. As a result, seeds
of financial education would be planted and would provide a
time-efficient experience of learning outside of the confines
of one's personal fiscal crises.
For maximum appeal, technology can also help by reflecting
the cultural and racial diversity of Americans and how various
communities interface with their personal finances. One content
does not fit all.
Thus, the user must feel that their issues are being
addressed. Technology providers cannot build content and assume
Americans will come and apply the information to their lives
when they have had a generational distrust in doing so.
Our parents report that they appreciate when they receive
information that is protective in nature, that steers them away
from toxic financial products and scams and bolsters their self
esteem.
The creators of financial education technology realize that
they are already preaching to the choir. However, mobile
technology messages can disrupt and influence a greater number
of Americans by providing a learning experience while using
mobile devices. Technology can support by being interrupters by
sharing real-world, compelling testimonial videos which are
mirror images of a mobile device user.
Creators of financial education technology must have an up-
front understanding of the challenges of Americans so that the
content can address a diversity of family statuses--for
example, creating an application which sends real-time e-mails
to working parents about the expenditures and bank transactions
that are being made by their children while including a savings
roadmap. Or e-mail reminders could ask young adults, ``Have you
reviewed your credit report this year?''
Third, a nonprofit organization's newsletter could instruct
how to research investment options. And lastly, since the use
of technology is overwhelmingly popular, our organization is
determined to empower our youth so that they will move beyond
being solely consumers. Thus, we will teach them how to create
and understand the fundamentals behind the Web sites and
applications that they are using.
Through personalized videos on tablet applications and
games, Americans could have the ability to interact and
communicate with a service provider's financial expert rather
than simply passively reading. Financial institutions and cell
phone companies could send money lessons via text message
directly to a mobile unit or embed a message when the customer
makes a bill payment or an online bank transaction, such as
Ciana Montero's post on Facebook, ``When I grow up, I am
determined to be a PIG farmer; Passive. Income. Generator.''
And Dante Stewart posted, ``Did you know that 55 percent of
students acquire their first credit card during their freshman
year?''
In conclusion, technology holds the promise of expanding
access to personal finance education by providing flexibility
in how, where, and when learning occurs. However, mobile
technology will never be a replacement for the power of in-
person, motivating instruction between students and financial
experts.
Thus, technology should be used as an instructional
supplemental activity that is supported by compassionate
financial coaching or attending the WorldofMoney.org Youth
Financial Education Institute in New York City.
Thank you.
[The prepared tatement of Ms. Lamb can be found on page 77
of the appendix.]
Chairwoman Capito. Thank you all.
I will now recognize myself for 5 minutes for the purpose
of asking questions.
Ms. Cackley, in the report that you generated you mentioned
that there were, I think, 14 different programs across a lot of
different agencies and that there is some coordinative effort
but really not a whole lot to evaluate the effectiveness of the
different programs. Is that a correct statement?
Ms. Cackley. Essentially what we found is that there are
now 13 different basic financial literacy programs, because we
started with 16, and 3 are no longer funded or no longer exist.
And then of the housing counseling programs, which have a
financial literacy component, there were four and now there are
three. So we have seen some trend toward consolidation and that
is a positive thing as long as you are consolidating in the
most efficient way and with the most effective programs.
When we looked at the evaluation of the different programs
across the Federal Government, we found that many have been
evaluated, but some have not. Not all of them are conducive to
having a good evaluation done and we tried to look at what made
sense, and basically we found that there is more work that
needs to be done there, and part of our recommendation to the
Commission was that they consolidate where programs had been
found to be effective. So, the evaluations have to be done.
Chairwoman Capito. Yes. Right. I think that sounds like a
judicious use, obviously, to look and to consolidate, but it
looks like--certainly from the panelists that we have here
today, there is a lot of innovation going on in the private
sector and the nonprofit sector to try to answer the same
question.
So I would like to ask Mr. Krajicek and Mr. Kehoe: You both
talked about your--and Mr. Saik, too--programs going into the
school systems. Is this just a--is it a dedicated reflection of
a certain State, of a certain region, or is it sort of
haphazard? And how do you get into that space, because I think
that is obviously where it has to start.
Are you in the schools right now, Mr. Krajicek? I know you
are in the banks and the credit unions.
Mr. Krajicek. We are in over 2,000 classrooms, yes.
Chairwoman Capito. And how did that occur?
Mr. Krajicek. It occurs because we partner with local
community banks and credit unions, and--
Chairwoman Capito. So you leave it to the community banks
to get with your local school boards, et cetera?
Mr. Krajicek. Yes. The leaders of the local institutions
are the same people who are interacting with the school
superintendents and the principals, so they already have that
natural community network, and it is a lot easier for them to
bring a product like this into the education system than it
would be for an outsider.
Chairwoman Capito. Right.
Mr. Kehoe, is that the same with you?
Mr. Kehoe. Yes. It is very similar. We have a core set of
materials, classroom plans, curricula that we make available to
schools all over the country, and really the whole objective is
to provide teachers and educators with the materials and then
really leave it to them to figure out how to adapt it to their
own sort of local needs and circumstances.
And the way in which we get the material into schools is a
whole variety of ways--
Chairwoman Capito. Right.
Mr. Kehoe. --through nonprofits, but also working with
State governments.
Chairwoman Capito. Let me ask you a question, since you are
global and you are doing financial literacy around the globe.
And I don't know if there is any kind of ranking here, but how
do our American youth and adults rank around the globe in terms
of financial literacy?
Mr. Kehoe. There is no formal ranking in terms of that. I
think our experience as we look around is that you see a clear
differentiation between developed countries and nondeveloped
countries.
Chairwoman Capito. Right.
Mr. Kehoe. If you look at the developed systems, I would
hazard to estimate that you have some developed countries
around Europe that are probably ahead of the game because of
the way in which financial literacy is built into the school
curricula as more of a sort of fundamental thing, and I think
that picture is growing here but it is more mixed.
Chairwoman Capito. Mr. Saik, do you have a comment on--is
Mint in this--Mint is something that you buy, or that you
purchase, I guess, on an app or is it--
Mr. Saik. Mint is free either through the app store on your
mobile phone or on the Web. There is a Web site, Mint.com.
Chairwoman Capito. Okay. Are you in the school systems as
well?
Mr. Saik. We are not actively pushing ourselves into the
curriculum of schools. From time to time, we do have educators
who contact us. In the past, we have had educational programs
to provide Quicken software.
Chairwoman Capito. Right.
Mr. Saik. Nowadays, people use Mint, and access is free and
generally happens without us really knowing that it is
happening in a school.
Chairwoman Capito. Right. Okay.
I now recognize Mr. Meeks.
Mr. Meeks. Thank you, Madam Chairwoman.
Let me first go to Ms. Lamb. In your testimony you talked
about the importance of coaching, mentoring, and face-to-face
interaction between youth and financial professionals, and how
that plays a role along with technology. Can you tell us why
this personal interaction is so important, in your opinion?
Ms. Lamb. A computer can maybe convey a ding or bingo,
``You won,'' or, ``You have the correct answer,'' and so forth,
but when a child is looking for motivation, or even when a
parent is looking for motivation, the body language and the
credentials of the person conveying that information is just
more powerful, as is reported and experienced by the parents
who send their children to our institute.
I have heard from teachers across the country, for example,
who are resentful of having to be mandated to teach this
curriculum because they feel intimidated because they feel
their own houses--financial houses--are on fire. So as a
result, their resentment appears when they are reluctantly
having to teach this course when they feel they have their
burden to teach other subjects.
So when you have a skilled faculty of Wall Street
professionals who are enthusiastic, that this is good, this is
how you need to create generational wealth and convey that
positive energy, so to speak, to children and to their parents,
it has a more--we can't replace human beings. We have value.
And the technology should be just a catalyst in order to--it is
a follow up, but not the main source. It also should be backed
up by a person.
Mr. Meeks. What about the--because you also talked about
educating not only the children, but the parents, and I think
it is clear from our opening statements that both the
chairwoman and myself are still learning--connection between
the child and the parent in regards to financial literacy?
Ms. Lamb. There are thousands of workshops for adults
across the country. However, there is not a long line of
parents trying to access those workshops. How we get parents to
the table is we empower the children so that they can become
financial team leaders and go home every night and say, ``Let's
have a financial meeting with our family and decide, for
example, how are we going to lower our bills, how are we going
to save more?'' So the children are given the tools to bring
home the information, thus empowering the parents.
It has to be a holistic approach. One person just having
the information is not enough.
Mr. Meeks. Thank you.
Ms. Cackley, let me ask you--I heard you say a number of
times in your testimony how a lot of it was relying on the CFPB
to carry out various financial literacy programs or to try to
make sure that the products are not abusive or predatory. My
question to you, though, is what additional role do you think
that we are playing, government is playing, in developing and
promoting financial capabilities for consumers? What more could
we do as a government to try to make sure that we are getting
people financially literate other than just saying, this
product is bad? What more do you think we could do as a
government?
Ms. Cackley. The Federal Government is already doing quite
a lot across a number of different agencies. As we said, we
found programs that do provide information and tools for
consumers not just about how to avoid fraud or bad products,
but some of the things that we have been talking about already.
There are a variety of ways that the Federal Government
provides information.
The Federal Reserve System has a number of Web-based games
for children. Money Smart, which is the FDIC's financial
education curriculum, is available, and a number of others.
What I haven't done is looked more specifically at the
technology piece and evaluated some of the newer things that
are out there yet.
Mr. Meeks. Is there any coordination? Because I understand
in recent years, the GAO has encouraged the Federal agencies to
do more to coordinate resources among themselves.
Mr. Green, I think, talked earlier about how we utilize our
resources. Are we coordinating the resources that we have so
that we can promote financial capability among the American
public?
Ms. Cackley. We have seen more coordination, especially
since the Consumer Financial Protection Bureau (CFPB) came into
existence. They have a played a role in increasing the
coordination across the Federal agencies.
The Financial Literacy and Education Commission existed
before the CFPB, but since the CFPB was created and the
Director of the CFPB became the Vice Chair of that Commission,
we have seen more coordination happen.
Chairwoman Capito. Thank you.
I now recognize Mr. Luetkemeyer.
Mr. Luetkemeyer. Thank you, Madam Chairwoman.
Financial literacy is extremely important. Being in the
financial industry myself for the last 40 years, it is
important, I think, to begin at the youth stage, because I have
seen where the adults who don't have this background can't make
good decisions, and then the financial services people have to
sit there and spend their time to educate those people, and
sometimes it works and sometimes it doesn't. And sometimes, you
end up getting people out of messes they got themselves into
that they may not have if they had just had a little knowledge.
You would have been very helpful to them. So to me, this is an
extremely important hearing, and I applaud all of you for being
involved in it.
Ms. Cackley, can you tell me what the total cost across all
agencies is for the efforts by the Federal Government to put
these programs in place?
Ms. Cackley. I don't have an updated number for this year,
but when we did our report, we found that in Fiscal Year 2010,
the total Federal Government expenditure was about $68 million.
Mr. Luetkemeyer. Okay. Did you do a return on your
investment there? Do you have an idea of how much you helped
people to be able to protect themselves and by doing that--
Ms. Cackley. No. We don't have that kind of a calculation
done--
Mr. Luetkemeyer. Okay. In your discussion and
investigation, do you see any gaps in the Federal programs that
we need to be looking at or need to be--that these different
agencies need to be coordinating to find a way to solve that
gap? Or are they pretty well covering most of the bases?
Ms. Cackley. We have seen that Federal agencies cover a lot
of different pieces, especially the ones that serve specific
populations. So I don't think that we have identified a gap,
per se, but what we have suggested is that the Federal
Government needs to make sure that they are putting their money
where the most effective programs are, and what we would like
to see is some assurance that--
Mr. Luetkemeyer. I would guess that the biggest gap
probably is keeping up with the technology to make sure that
the education background is there for people to be able to
utilize things like these other four folks here are trying to
provide. I would think that would probably be the biggest
challenge.
Ms. Cackley. I am not sure I understood--
Mr. Luetkemeyer. Okay. To me, the challenge is to be able
to work with the other technology here, to be able to help
those people access what these other folks are doing .
Ms. Cackley. That is certainly something that the Federal
Government is doing, using some of the new technologies.
Mr. Luetkemeyer. Okay.
Mr. Saik, in your discussion of your products I kind of
take from that, that it is a service you are providing, that
you actually still have--you have access to these people's
information. Is that correct? Am I getting that part--
Mr. Saik. Mint is a service that allows consumers to
aggregate their information from their banks, so the consumer
can view the information on the service, yes.
Mr. Luetkemeyer. Okay. Do you have access to their
information then?
Mr. Saik. No, I do not.
Mr. Luetkemeyer. You don't. From your testimony here and
from reading it, it seemed to me that you still had a part to
play in this, and I was kind of curious about that, if there
were protections in place to be able to do that, but if that is
not the case, if they purchase the application or it is given
to them for free and then they utilize it and you have nothing
to do with it after that point?
Mr. Saik. Sorry. I thought you were addressing me, whether
I have access. Yes, the--
Mr. Luetkemeyer. No, your company.
Mr. Saik. Mint.com is a service, yes, and we store the
information for our customers on the service. We take the
security and privacy of our customers' data extremely seriously
and use all the latest technology to ensure that is the case.
Mr. Luetkemeyer. So then, are you providing advice to them,
as well?
Mr. Saik. We do provide advice and tips, yes.
Mr. Luetkemeyer. Are you watching their accounts or is it
just that the program automatically says, hey, if you are--you
didn't save enough this week, or you didn't make your payment
this week, or your checkbook is about ready to go into
overdraft protection? Do you, as a company, provide advice and
say, hey, you missed an opportunity here to do something with--
Mr. Saik. Yes. We analyze their statements and things like
their bank accounts. We actually guide them through setting up
budgets and then alert them when they have overspent their
budgets, for example. We also alert them for things like extra
finance charges on credit cards that they can avoid and suggest
ways to avoid that. So, we do provide those types of tips and
advice.
Mr. Luetkemeyer. Okay. I guess the metric on how you gauge
the success of your program is the number of people who--how
you grow your business as a result of referrals from other
folks or the satisfaction of individuals. How do you gauge the
success of your programs?
Mr. Saik. That is partly the way. We also ask our customers
if they would recommend our service to other people because it
is helping them achieve their goals.
Mr. Luetkemeyer. Are you interacting with your customers
and asking, ``How else can we improve our product? Are there
other financial concerns you have that we could help you
address?'' Do you ask that question of them?
Mr. Saik. Yes, we do. We do a number of surveys of our
customers. We are constantly in contact with them. That is one
of the ways, and we ask them about what types of features or
other additional things they would like to get out of the
service. Yes.
Mr. Luetkemeyer. Very good.
I see my time is up. Thank you, Madam Chairwoman.
Chairwoman Capito. Thank you.
Mr. Hinojosa, for 5 minutes.
Mr. Hinojosa. Thank you. Thank you very much, Chairwoman
Capito and Ranking Member Meeks, for holding this important
hearing focused on financial literacy.
Financial literacy is truly a bipartisan cause. In 2005,
former Congresswoman Judy Biggert and I joined forces to found
the first congressional caucus devoted to furthering financial
literacy for all Americans. Over the years, that congressional
caucus has grown and supported legislation, hosted briefings,
and engaged with many Federal agencies on promoting financial
literacy at all levels of policy.
So I am happy to have Congressman Steve Stivers of Ohio as
the new co-chair for our caucus. We share a belief in the power
of financial literacy to decrease inequality and increase
financial stability and hope for one's future.
Over the last few years, developments in technology have
created opportunities to deliver financial education in new and
innovative ways. So I am going to go right into the questions
and ask the first two-part question of Mr. Barry Saik, of
Intuit.
Your company has been at the forefront of consumer
software. Can you please share with us, in your opinion, what
role your budgeting software can play in facilitating behavior
change? And the second part: Can you share how your company has
partnered with nonprofit and public organizations to empower
those underserved communities financially?
Mr. Saik. Yes. I have seen personally how our products,
especially personal finance products like Mint, can help people
learn about personal finance. I think what happens is it is one
thing to learn about it and the theory about it, but until you
actually--and I see this with--when first-time customers set up
Mint and actually get all their data into Mint for the first
time and see where they have spent their money, then you really
realize how you are--what choices you are making and what the
results of those choices are and are able to make corrections
over time. And that is where the power and the real learning
comes is by doing, and then learning through the experience.
So, that is one way.
Our company does have a number of programs where we work
with nonprofits to provide services, particularly in our tax
prep area. We have a lot of programs to help the
underprivileged have access to tax prep software and services,
as one example.
Mr. Hinojosa. Is it possible to start getting children to
understand the importance of financial literacy in the 3rd and
4th grade, or would it be in middle school?
Mr. Saik. I am not really an expert on education, so I
would think yes, but I am probably not the best person to
answer that question.
Mr. Hinojosa. Ten years ago, we were told in the Education
Committee that in order to recruit young children into STEM
careers--science, technology, engineering, and math--we needed
to start at the 7th grade. A decade later, today, we are being
told that we need to introduce them in the 4th grade because
many students can begin to understand the importance of looking
at those opportunities.
So it seems to me that we need to change our mindset that
it is just for adults. It is for young children, and especially
those who are now in high school, making big decisions on how
to use a credit card and what schools to attend and what kind
of loans to make, and so forth.
My next question is for Mr. Stephen Kehoe, of Visa. Visa
created exceptional financial literacy game applications for
tablets entitled, ``Financial Football,'' but has also focused
on leveraging mobile phones to engage the unbanked. In my
district down in Deep South Texas, south of San Antonio to the
McAllen-Edinburg area, nearly one in three are unbanked. Can
you share how Visa has utilized mobile technology in developing
countries and how this might be translated to the American
market?
Mr. Kehoe. Thank you for that question, Congressman.
The nature and the scale of the unbanked challenge around
the world and here in the United States is huge. And to see
people locked out of financial services altogether is something
that I think all of us recognize as being a huge public policy
issue and one which I think the private sector is geared
towards answering.
There really is, in our view, no reason today why anybody
should be locked out of formal financial services. The
technology exists to connect people and the mobile phone is,
indeed, that catalyst that we are seeing everywhere to enable
the connection to be made.
So in developing countries around the world, in fact, we
are seeing some of the most cutting-edge use of mobile phones
to enable payments to be made, transactions to occur, and basic
financial services to be provided to some of the most
underserved and poorest communities around the world. And in
many ways, the reason why that is taking place is because
technologies leapfrog. They have not had to go via the typical
landline infrastructure that other countries are looking at.
So to come to the United States, and particularly your
constituents, Congressman, I think there are huge parallels in
terms of the way in which you see some of your community groups
beginning to operate and think about how mobile phone
technology can be--
Mr. Hinojosa. My time has expired. Thank you for your
response.
Mr. Luetkemeyer [presiding]. Thank you.
With that, Mr. Pittenger from North Carolina is next.
Mr. Pittenger. Thank you, Chairman Luetkemeyer.
Ms. Cackley, you mentioned that there are 13 separate
Federal programs dealing with financial literacy. Have you done
a comparison with the effectiveness of our Federal programs as
they relate to private sector financial literacy efforts?
Ms. Cackley. No, sir. We haven't done a comparison against
the private sector. We have looked at whether effectiveness
studies have been done of the different programs, and there is
some variation across the different agencies and programs
partly because they are very different.
But we have certainly recommended that effectiveness
studies be done, and in doing that I would expect a comparison
against what else is out there would be useful.
Mr. Pittenger. Did any of the rest of you have any comments
on that?
Okay.
I will address this to Mr. Krajicek: What technology is
currently being used to improve mobile payment security and
prevent fraud?
Mr. Krajicek. At BancVue, we do not provide mobile payments
offerings, so I am not an expert on that and would probably
like to defer to the man to my left, perhaps, on that answer.
Mr. Pittenger. That would be good.
Mr. Kehoe?
Mr. Kehoe. The technology is evolving so quickly, and
certainly one of the biggest concerns that we were seeing early
on was people's concern about the use of security in using your
phone to make payments and new technology. But I think that we
are seeing--we have seen the technology move so quickly,
encryption of the phone devices themselves, the use of the
chips in the phone to secure the device, and then the
transaction itself, there are now, in many places, multilayers
of security which are now impacting the phone. So both the
device and the actual network and its users are getting safer
and safer all the time.
Mr. Pittenger. So you would say that you haven't seen fraud
increase with the utilization of mobile payment technology?
Mr. Kehoe. At the moment, actually, the use of mobile
payment technology here in the United States is very, very
small. And so, the amount of fraud that we are seeing in that
system is extremely small, indeed. But we are not anticipating,
as the technology increases, for that to be a big issue.
Mr. Pittenger. Sure.
Mr. Saik, do you have any comments?
Mr. Saik. No. We don't do any mobile payments in Mint.
Mr. Pittenger. Sure.
Ms. Lamb, any comments on your part?
Ms. Lamb. I just want to underscore that children are very,
very interested in this subject, but only as consumers. We
serve children as young as 6, and they are very interested in
being financially educated.
Mr. Pittenger. Thank you. I yield back.
Mr. Luetkemeyer. Thank you.
With that, Mrs. McCarthy from New York is next for 5
minutes.
Mrs. McCarthy of New York. Thank you, Mr. Chairman.
And again, I thank Mr. Meeks for having this hearing.
We have worked on this for quite a while. Both of us are on
the Education Committee, and a few of us--during Dodd-Frank, we
really were pushing to have financial literacy put into part of
Dodd-Frank, which has ended up with you having the educational
piece of it.
So it is important to us, and the debate among us was at
what age, also, to start reaching out to our young people. And
certainly the consumers that we were looking at were more into
the middle income to lower income range, mainly because they
usually did not have the tools to figure out how to save.
And we certainly knew here that most Americans don't save,
those who should be saving don't save. After the financial
collapse in this country, the good news is people did cut back
on their debt and they did start saving. So that is a good
thing and hopefully that will go into--because the average
person who is retiring these days only has $30,000 to $40,000.
Some have done better, but on the average they don't, because
they are living from paycheck to paycheck.
So I guess my question to all of you would be, as we are
going into the technology age--and my colleague had brought
this up on the security--especially with the breech that we
have seen over the last couple of weeks going into--now I am
older so I am a little more wary about doing my banking online,
because all we do is get warned constantly. Most of us probably
have very easy passwords where you would have to write them
down if you really followed the techniques that some of the
keys ask for. And we have constant hackers out there, so it is
a concern for me.
But with that being said, I still think it is important
that financial advice and literacy go together, because people
don't know how to save. And my parents came through the
Depression so they did learn how to save because they knew that
something could happen in the future.
So I guess my question to you is--and I know a couple of
you don't do banking, but it is going to be an issue for an
awful lot of constituents back home on how we are going to do
this, because it seems like when we come up with an answer the
hackers get a step ahead of us, and it is only going to get
worse. So I would just like your opinion.
I know that you probably don't have anything to do with
that because you are putting the financial literacy into the
government programs. And it is really just information for them
to go where they need to go.
Ms. Cackley. We haven't done any work looking at the
security issues around the financial literacy programs that the
Federal Government provides. Certainly, GAO has done work on a
variety of computer security issues, so I could defer to my
colleagues back at the office who do that work and find out
more information for you if you would like.
Mrs. McCarthy of New York. Thank you.
Mr. Krajicek. Obviously, technology is not without its
risks. Things can be hacked.
But as I often will remind consumers and bankers, when you
have your paper statements mailed to your mailbox or you have
your checks mailed to your mailbox, it is not terribly
difficult for someone to get in there and steal that
information either. So while there are risks associated with
technology, I firmly believe that the benefits outweigh the
risks.
Even something as simple as a consumer being able to check
their balance before they make a purchase to ensure that they
can afford what they are about to buy can have transformative
impacts on how they spend their money because they are always
aware of exactly where they stand with their finances. And so
benefits like that, when you imagine them deployed across the
entire United States, I think are significantly outweighing the
possible risks of occasional breeches, which will occur.
Mrs. McCarthy of New York. I would love Mr. Kehoe to be
able to answer, if you don't mind, sir.
Mr. Kehoe. Thank you. I certainly agree that technology is
certainly more of an enabler than on the risk side.
Building trust is utterly critical to people of all ages
enabled in the system, and of course, when you see headlines
about breeches and things, these don't help. In our programs,
we have extensive security educational modules, as well. There
is a particular Web site called Visa Security Sense, which
gives individual consumers advice on how to protect themselves
online and with their money. And certainly we see that as being
a vital part of the financial literacy curriculum.
Mrs. McCarthy of New York. Thank you all for your
responses.
Mr. Luetkemeyer. Very good.
Mr. Posey from Florida is next for 5 minutes.
Mr. Posey. Thank you, Mr. Chairman.
I thank the Chair and the ranking member for bringing this
issue before us, and I want to thank all of the witnesses. Your
testimony has been very interesting and actually, very
pleasing. Never, as long as I have been elected, has financial
literacy appeared as a concern of any citizen on any poll at
any time. And of the probably over a million different
constituents I have represented, none of them have ever
mentioned it. That is a problem.
Except for one. A financial planner in my district--and I
probably shouldn't mention her name because some people might
think that is indiscreet--Eileen Davis, has mentioned it 100
times, and every time I see her, she mentions it. And I know it
is a problem when we look at the statistics and we see how
upside down so many young people are.
I wasn't aware of a lot of the programs that you all are
performing right now until we had this hearing, and I
appreciate the great insight. And I am very pleased to hear the
direction that we are going.
The answer that I am kind of looking for to a question is
how much you feel the affluence of our current-day society
contributes to this problem? In most of our parents'
generation, as the gentlelady from New York mentioned a little
while ago, they were raised in a depression and they watched
their money pretty doggone close. They didn't take anything for
granted. They would been hungry. They would have been in want.
Today's generation, for the most part, has no idea what
that is like. And I would just like to get your quick view from
each of you on how much you think the affluence of society has
contributed to the irresponsibility, actually, that has become
financial illiteracy. And we can start with Ms. Cackley.
Ms. Cackley. I don't have an opinion as to whether or not
it is worse now than it was before, but I think what we have
found is that at all income levels, there is a need for
information. That doesn't happen at this point; there are
people, very wealthy people, who still don't have the
information they need, and certainly middle-income and lower-
income people, as well.
But I can't say over time what the change has been.
Mr. Posey. Okay. And I have seen many times the credit card
companies will send credit cards to high school and college
students. I think there really needs to be a law that if you
send somebody an unsolicited credit card, you have no right or
redress if they don't pay it.
I think that would be a fair game. It ought to work two
ways. But you know what my chances would be of ever passing
something like that, don't you?
Mr. Krajicek?
Mr. Krajicek. A few years back, when I was volunteering to
teach middle school students originally entrepreneurship and
then financial literacy, these were normal 6th, 7th, and 8th
graders in not a terribly low-income but relatively low-income
area in Austin, Texas, and it was amazing to see the amount of
consumerism in those young children, comparing their
smartphones to one another to see who has the coolest gadget or
who has the best shoes.
And, I can't speak to whether or not it was any different
whenever I was in school, so I don't know if the trend has
altered, but I can say that overt popularity of
commercialization definitely is a hindrance to being able to
teach financial literacy.
Mr. Posey. Thank you.
Mr. Kehoe. Congressman, I think there is probably something
in the growing affluence of society that lends to that, but I
think that the age-old challenge of people, regardless of their
income level, living within their means, the need to sort of
emphasize that and educate it just doesn't go away no matter
what your income level is.
I think one of the potential drivers for the need for more
financial education today than yesterday is really just the
plethora of choice and complexity out there of the number of
potential financial products that people can buy and how much
more easy it is to access them today.
Mr. Posey. Thank you.
Mr. Saik. Yes. I don't know if it is the affluence, but I
certainly agree there are more inputs and more comparisons of
people having gadgets and fun things in society today.
But one thing I think about is the importance of the
awareness and knowledge and the tools to actually make
progress, and that is where I see the real gap. It is kind of
like dieting. People know basically, eat less and exercise and
you can lose weight, but it is hard for people to take the
steps, and that is where I think we really need to focus is on
how do you make the little steps and see some progress and make
it simple to make choices and simple choices that help you get
back on track is something to focus on.
Mr. Posey. Yes, and I think we have all seen people spend
money they don't have to buy things they don't need to impress
people they don't even like. We see the government doing that,
actually, too much.
But lastly, Ms. Lamb?
Ms. Lamb. I will say that for the parents and children whom
I represent, it is not the affluence; it is the illusion of
affluence and the tremendous emotional pain they feel with
regard to this subject, so much that they are not going to
whisper their pain to anyone that they are having financial
hardships except in the case of an emergency. And the marketing
is actually the success story here because it often teaches
young people--the young people that I represent--that they are
nothing unless they have someone else's name on their body.
Mr. Posey. Thank you, Mr. Chairman. I see my time has
expired. But I want to thank you for one of the best panels we
have had in here yet.
Thank you all for what you do.
Mr. Luetkemeyer. Thank you.
Mr. Scott from Georgia for 5 minutes.
Mr. Scott. Thank you, Mr. Chairman. This is, indeed, a
fascinating hearing.
I have been involved in financial literacy for a long, long
time, so welcome, everybody.
I just want to share a little incident. When I was in
elementary school--I went to elementary school up in Scarsdale,
New York, and our class project in the 6th grade was for all of
us--
Mr. Meeks. I knew you were a New Yorker.
Mr. Scott. Absolutely, my friend.
And so, our first class project in 6th grade was to go out,
earn our own money--shoveling snow, raking leaves, doing
everything we can--and then do our research to determine what
stock we would buy. Then the whole class went down to the New
York Stock Exchange and bought the stock.
I never will forget that. It was one of the most profound
moments of my life. I had my picture taken down there with
Alexander Hamilton on Wall Street.
And I have been on that trajectory and have had a piece of
stock ever since. I got 75 shares of RCA. And if you go back at
that time, RCA was a big deal.
I mention that because that is the key. All we have to do
is engage these kids, give them something.
And that is why I was so excited with you, Mr. Kehoe, when
you came to my office and sat down--I don't know if you shared
that story, but he has an extraordinary game of, I think it is
football, where you actually do it. Will you tell us a little
bit about that?
Mr. Kehoe. Gladly. Financial Football essentially is a game
in which you pick your favorite NFL team that you want to play,
and your ability to advance down the field to get a touchdown,
whether it is a throw or a run, is determined by whether or not
you correctly answer a question related to financial education.
And so, you see kids playing this game who are so into the
objective of getting the touchdown that they almost forget the
fact that they are answering questions along the way. And of
course, the harder the question, the longer the throw or the
longer the run.
We have found this to be an incredibly engaging way to get
kids. And we also have, you won't be surprised to learn, a
Financial Soccer game, as well, that is pretty much the same
tool.
Mr. Scott. I certainly commend you for that. And that is
the kind of thing I am talking about.
Now, Ms. Lamb, we have to get our education in our schools.
I mentioned that story about me at the beginning, and that was
a long time ago--but again, not too long ago. But what more can
we do of that kind of activity? Because kids' minds are
expansive. They are ready to learn.
Why can't we require in the academic pursuits in our
elementary school that a requirement would be just to go and
have a youngster set up--go to the bank, set them up a savings
account, set up a checking account, or, as in my case, maybe
make a trip down to the exchange and buy stock?
If we engage them in things, it makes an impact when you
are very young and it sets a pattern. What more can we do to do
that?
Ms. Lamb. I hear it from parents, ``Why isn't it in
schools?'' We can't wait for that to happen.
Teachers report that they are overburdened already, that
they are not experts in a subject that they are being mandated
to teach. And when they do teach it, often it is only one
subject, and then they have to go back to all the other
mandates that they are required to teach so that their class
can perform well on the State regents, for example. So, that is
not a priority. And then the teachers, actually, just feel
really intimidated by having to teach a subject in which they
are not experts.
Our organization represents about 200 different schools,
where parents send their children to us, doing everything that
you--we have opened and closed the NASDAQ Stock Exchange 4
times--
Mr. Scott. Yes.
Ms. Lamb. Yes. We have done that. And we start at age 7
where children are opening mutual funds and having
conversations and reducing the financial discussion, in terms
of the chaotic discussion, in the household.
So yes, it would be wonderful if it was in all the schools,
but we can't wait for someone else to do something that we see
that we can provide another solution.
Mr. Scott. So what do you think we here in Congress can do?
Our reach for education is more getting resources down to the
States; it is up to them to do it.
But do you think as a part of our literacy effort, that in
our appropriations and assistance down to the State, some kind
of way we can put resources in there? It might not be the
burden of the teacher to do it, but there are some
extraordinary organizations like yourselves out there who could
take these kids on field trips, who could take them to the
exchanges, who could take them to the banks.
Unless we do that and show them the greatness of it, and
simplify it early in their lives, we are not going to win this
battle.
Ms. Lamb. We have requests from 14 different cities and two
countries that want WorldofMoney to open up affiliates there.
We welcome the support and obviously the funding from Congress,
but Congress really needs to recognize, yes, this is a
financial issue in terms of discussing opening stocks, and
compound interest, and dividends, and so forth, but we have to
really teach Americans that they can trust that they are worthy
of having this discussion. And it is all a trust issue that we
are all having a conversation about, and if they don't feel
that--
Mr. Scott. Thank you.
Ms. Lamb. --they are worthy of having a discussion, of
accessing Visa or Mint, they are not going there because they
feel that experience should be for someone else, and they are
going to fill the emptiness in their souls by putting someone
else's name on their body until you can teach them otherwise.
It has to be a holistic approach.
Chairwoman Capito. Excuse me. Yes, time is--
Mr. Scott. Well-stated.
Chairwoman Capito. Time has expired.
Mr. Scott. Thank you.
Chairwoman Capito. Sorry about that.
Mr. Scott. No, thank you for the extra time.
Chairwoman Capito. Mr. Green for 5 minutes.
Mr. Green. Thank you very much, Madam Chairwoman.
And because the lady was very excited about her answer, I
will yield some additional time for her to complete her answer.
Ms. Lamb. It has become an absolute epidemic, Congressman,
regarding this subject, and our children really do see the
power of money in their households. They see their parents
fighting and screaming and manipulating money and maybe not
answering the phone when the credit card companies are calling.
They see maybe their parents signing documents that the parents
admit that they don't understand, signing away or agreeing to
high interest rates, agreeing to subprime mortgages or what
have you, because they don't feel the power to question
anything.
The access of the manipulation of money, the transferring
of all these resources of--even if it is a dollar, it is
feeling that you have the ability to question it, to say, ``I
am not ready to sign this until I speak to my financial
adviser,'' or, ``I am just not ready to sign it.'' And there
are millions of Americans in all of your districts who are
signing away or agreeing to legal contracts who don't feel the
worthiness of their ability to question anything. And in order
for us to really address this subject, we have to do so
holistically.
Mr. Green. Thank you very much.
I am going to continue that in just a moment, but before I
do, I would like for you to reiterate what you said about board
members--I believe you have two board members here with you?
Ms. Lamb. Yes. Dante Stewart, who is--
Mr. Green. Would you please raise your hand, Dante, so that
people will see that--
Ms. Lamb. Dante Stewart and Ciana Montero. They started
attending WorldofMoney when they were 11 years old, and have
attended every year for the last 4 years. They have created
businesses; they have changed the conversation in the
household. And they represent thousands of children who have
attended WorldofMoney who are really doing the same thing.
Mr. Green. Now, let's return to the previous conversation
or statements that you were making about how people find
themselves contracting in ways that are not beneficial. I have
some intelligence which connotes that about 66 percent of
unbanked households use nonbank money orders and nonbank check-
cashing.
I am sure we can see how that doesn't adhere to their
benefit when you are buying money orders to pay your bills, you
are also using these check-cashing places so that you end up
getting money but it costs you. They use pawn shops. They use
payday loans. They use rent-to-own agreements. You never really
ever own it, by the way.
Ms. Lamb. Right.
Mr. Green. You just rent forever, with the hope that one
day the product that is in your home may become yours.
They use refund anticipation. If you are going to get a tax
refund, that becomes a means by which you quickly go out and
acquire that refund, but at a cost.
So they live in a world where it costs them to do things
that we take for granted--things that probably most of the
people in this room, save a few, would not pay a penny to have,
and that is very unfortunate.
So the question for us ultimately is--and I think we are
embracing it with the committee today and I salute my colleague
who said that this has been a good hearing--how do we
communicate this message to persons who believe they have no
reason to bank because they have little money? Little money, no
reason; much money, many reasons. How do you communicate the
message to them that they have a stake in their own future by
simply becoming a part of the banked community?
Ms. Lamb. You can draw a comparison or an equation with the
cost of purchasing those money orders with doing a free
transaction with a bank. Congressman Meeks asked earlier what
is the power of in-person instruction, well, that is what in-
person can do. When you draw those parallels, those equations,
and when--we have done it at our institute and our parents and
our children say, ``Really? It is free to do these same
transactions at the bank?''
Mr. Green. My time has also expired.
Thank you, Madam Chairwoman.
Chairwoman Capito. Thank you.
Mr. Barr?
I apologize to Mr. Barr. I should have gone to him first.
But anyway, I am coming to you now, Mr. Barr.
Mr. Barr. Thank you, Madam Chairwoman, and no problem
whatsoever. I appreciate your leadership in holding this
important hearing.
I would like to direct my first question to Ms. Cackley and
the GAO's work on the overlap of financial literacy programs
across the government. And I note in your testimony here today
that a while back in 2012, the GAO identified 16 financial
literacy programs among 14 Federal agencies. I think as of
April of this year, three of those financial literacy programs
and one housing counseling program no longer existed, or no
longer received funding. But there are still, needless to say,
a number of Federal financial literacy programs across the
government.
One of the conclusions from your report appears to be that
further progress is still needed to help ensure effective
allocation of resources and to avoid unnecessary overlap. So
where are those places where we still see duplication and waste
in these Federal programs? And in particular, I would like for
you to address not just the improvements that the CFPB has made
in eliminating duplication, but also places where the CFPB can
still improve in terms of enhanced coordination.
Ms. Cackley. Certainly. First of all, what we have
identified could best be described as fragmentation across the
Federal Government. We did not find any instances where the
exact same people were getting the same benefits from different
agencies. So I just wanted to make the point that fragmentation
is a problem if it leads to inefficiencies, and what our
recommendations really spoke to was making sure that you are
allocating scarce Federal resources in the most efficient way
by putting the money where the most effective programs are.
What we also, therefore, recommended was that the agencies
need to know which are the efficient programs, which are the
effective programs, and that is work that there is some
information about effectiveness but not enough, and that is
part of our recommendation is to do more--learn more and
understand more. Each agency needs to know and to be able to
show how effective their program is, and then that allows the
Commission to make recommendations about where the resources
should be allocated.
Mr. Barr. And with respect to the CFPB's progress on
coordination?
Ms. Cackley. The CFPB's progress on coordination, they have
certainly done more in terms of--through the Financial Literacy
and Education Commission (FLEC), there have been partnerships
created, there have--they have worked to--partly the programs
that are no longer being funded I--or where resources have been
consolidated, within the Office of Treasury, their Office of
Financial Education, which we pointed out as being probably the
closest example of an overlap, has been subsumed and the CFPB
has taken on more of the principal thing that we identified.
Mr. Barr. Here is perhaps maybe what--let's just get to the
crux of the matter, which is that in 1960 the personal savings
rate in America, the share of people's after-tax income that
they actually saved was 11 percent. In 2013, it was just over 4
percent.
Now clearly, the economy has a lot to do with that: Three
out of four Americans are living paycheck to paycheck; over
half of Americans couldn't come up with $2,000 in a short
matter of time if they had to.
So with all of these programs that taxpayers are investing
in, are we really actually making any progress?
Ms. Cackley. It is a very good question. Part of the
statistic about the savings rate is that it actually was much
lower before the crisis. Americans' savings rate was, I think,
closer to 1 percent. So 4 percent is actually an improvement in
the recent past.
But it is certainly a good question, and we haven't--it
would be hard to assign any particular program as being able to
turn around the savings rate for the whole country--
Mr. Barr. I have just a little bit of time left, so let me
just direct this final question to Mr. Kehoe.
I applaud Visa's work in financial literacy, and my
question to you is, would you all see consolidation with the
government programs to maybe grants to some of your more
successful efforts to be a more productive use of taxpayer
dollars?
Mr. Kehoe. I don't know if I can comment on the best use of
taxpayers' dollars to do this. I think our focus really is, at
its core is, let's produce materials which we know work with
school kids, college graduates, everybody, and then work with
the public sector to get it into the hands of people to do it.
I think that is where we place our emphasis and that is really
what we will continue to do.
Chairwoman Capito. The gentleman's time has expired.
Mr. Barr. Thank you.
Chairwoman Capito. Mr. Ellison?
Mr. Ellison. Thank you, Madam Chairwoman.
And thank you, ranking member.
I appreciate this very important hearing.
One thing I just want to ask all of you quickly is, just to
get this idea out there on the record, financial literacy--do
you see it as a supplement to good consumer protection or as a
replacement for it?
Would anybody care to comment on that? Please feel free,
anybody.
Ms. Lamb. I would say it is absolutely a replacement for
and is consumer protection generationally.
Mr. Ellison. So are you submitting that we don't need
consumer protection if we--
Ms. Lamb. By having a financially educated American family
who is also protected, and having the information to protect
themselves, and having the information to make the proper
choices that--
Mr. Ellison. I hear you.
Ms. Lamb. Okay.
Mr. Ellison. Let me ask you this, though. What I am trying
to get at is this idea--I just looked up American math
proficiency, and if you look at industrialized countries around
the world, we are actually pretty low compared to a lot of
countries in math proficiency. So I might argue that ideally,
sure, everybody understands all this stuff, no problem. In a
country of 317 million who have a significantly diminished math
capacity, where there are also high-pressure sale tactics and
tricks, I might submit to you that we do need very active
consumer protection and we also need active consumer education.
Ms. Lamb. Sure.
Mr. Ellison. We need both. So that is why I said,
``supplement to'' or ``replacement for.''
Ms. Lamb. I see.
Mr. Ellison. So would you agree with me, Ms. Lamb, that we
need both?
Ms. Lamb. Absolutely.
Mr. Ellison. Yes.
Ms. Lamb. We need all the help we can get.
Mr. Ellison. Right.
Ms. Lamb. And all the information we can get, yes.
Mr. Ellison. Yes.
And another thing too, is we were talking about how to make
Americans more financially self-reliant and able to protect
themselves more. One of the things that has come up quite a bit
is the issue of a fiduciary duty. I strongly favor rules that
require financial advisers to have a fiduciary duty to their
clients, and what improvements do you recommend--and by you, I
mean the collective you--to better protect consumers from
hidden Commissions, high fees, and kickbacks that cost them
money?
Any thoughts on this issue?
Mr. Krajicek. I think that one thought would be for
Americans to be encouraged to bank locally with local community
banks and credit unions. These are guys who don't want to take
advantage of their customers.
I will tell you a quick story. One of the first times I met
a community banker, it was a guy named James Mark, in a small
town in Taylor, Texas--City National Bank in Taylor, Texas.
He was about 30 minutes late for our meeting and I peered
through his office window and saw him sitting there with an
elderly lady and receipts all over his desk. When I finally got
to go in and talk to him I said, ``What kept you so long?'' He
said, ``That is Ms. So-and-so. She overdrew her account a few
months ago and she has been coming in here every week and I
help her and let her know exactly where to budget her finances,
what she can buy and what she can't.''
That is the head of operations at a community bank. And
someone who gives that kind of support is not the kind of
person who would try to hide a fee.
Mr. Ellison. Got it. And let me just say, I think that is a
very lovely story, and it is great that the lady has the access
that way. But America has 317 million people.
Mr. Krajicek. And we have 13,500 community banks and credit
unions.
Mr. Ellison. I know. I am not trying to debate you, sir. I
am just trying to point out that while I think it is great that
lovely story was told and that woman is getting help, we
actually need to approach this situation on a systemic level.
I agree with Ms. Lamb. We need to educate people. We need
good Samaritans like the individuals you were talking about,
but we actually need really active consumer protection, too.
And I guess my question is and remains, what is the proper
proportion and mix? Do you all agree with the strategy to
protect consumers--all education?
How about you, Ms. Cackley?
Ms. Cackley. We certainly think that financial literacy is
important, but it is not the only solution, partly because
there are just limitations to what you can do even if you are
financially literate--
Mr. Ellison. Sure.
Ms. Cackley. --and partly because there are some people who
just aren't going to be able to learn everything that they
should learn, and those people need to be protected, too. So it
is certainly a ``yes, and'' as opposed to an ``either, or.''
Mr. Ellison. I see the red light, and I want to thank the
chairlady and the panel. Thank you.
Chairwoman Capito. Thank you.
Mr. Pearce?
Mr. Pearce. Thank you, Madam Chairwoman. I appreciate it.
And I appreciate the testimony each of you have given.
We have probably done 50 financial literacy workshops
ourselves. We see the need for it every day, especially in a
poor State like New Mexico.
Even my own family--Dad would never go into the banks. He
just wouldn't do that. So, we always were struggling for
housing. And Mom was the one who would sometimes go into the
banks. But anyway, I am very, very familiar with it.
Ms. Cackley, I was going to ask, you saw the testimony that
Ms. Lamb had, and on page two she is talking about the
predatory lenders' and fringe financial service providers'
aggressive disproportionate targeting of communities of color.
In your oversight of and in your looking at the different
programs, are any of the programs helping people to understand
what is going on out there and identifying the institutions
which are doing this?
If we are going to get financial literacy, we start with
the problems first, tell you, ``These people here are here to
take your money.'' And so, that is my question.
Ms. Cackley. I don't have in-depth knowledge of each of the
different programs and what all of their curriculums cover, but
it is certainly true that a lot of different programs are
available. There are a lot of different ways that information
is provided to the public in terms of financial literacy,
depending on which agency it is coming from and what their
purpose is, whether it is Social Security talking to retirees,
or somebody else talking to young kids, or just adults in
general.
But there are--
Mr. Pearce. Let me ask this, and you have more knowledge
than me. You have talked to more of the agencies than I have.
If you haven't seen the programs themselves, have you ever seen
an agency that is out there to try to tell people, ``This
institution is doing these things?'' I don't see that myself,
and I wonder why.
What we are trying to do is we try to set up things for
government to where they don't ever offend anybody and they try
to get their objective across by enforcement on everybody, and
not everybody is doing the things. Not every bank is--or not
every payday lender is doing predatory things. They actually
provide a pretty good service.
But what we are going to do is we are going to kill all of
them because a few are doing things wrong, and I just wonder
why agencies don't ever go after the people who are doing it
wrong and just advertise for them.
Ms. Cackley. Certainly, the regulatory agencies who have a
role in consumer protection do go after bad actors as they
identify them. What I can't say specifically is whether or how
they name them and get that information out to the public.
Mr. Pearce. I want to take issue with you, because
yesterday we were sitting in a hearing where we had Mr. Madoff
turned in for 8 years by one guy saying he can't be correct,
and so the regulatory agencies actually set it off on the side.
But I am asking as much about those institutions you are saying
that we--and I agree with you.
I am out there trying to give financial literacy myself,
but if our financial literacy is not going to include those
difficult-to-talk-about things about the people who are doing
stuff that is hurting consumers in a bad way, then we end up
saying to the regulators, ``You have to regulate everybody else
who is not doing anything bad.'' And what that winds up with
are anomalies in our whole regulatory system that are affecting
everybody who is following the rules.
Community bankers did not cause the financial crisis, but
Dodd-Frank basically goes after community bankers. And so, I
just came from upstairs right now talking to a bunch of bankers
who say, ``We could not make a loan to the best customer in
this one town we have had forever because of the new rules,''
and that is what we get forced into this trying to correct
problems with people who are not causing them and we don't go
after the ones who are causing them.
So my question is, you as a professional, so we get this
layering on, we get multiple agencies doing the same thing, but
none of them want to take on the problems that Ms. Lamb was
talking about, and so we all kind of skirt around these things
because they are very uncomfortable when we start talking about
people directly who are doing things that are unproductive. I
just wonder, again, if you think it is even possible for an
agency ever to get into that realm--one of the educational
agencies that you looked at. Can we get them into that realm?
Ms. Cackley. I certainly think it is possible. I just don't
know, of my own knowledge, whether it is being done already.
Mr. Pearce. I had a lot of questions, but I got kind of
bogged down, so the rest of you escaped cleanly today. Sorry.
Chairwoman Capito. I would like to ask unanimous consent to
submit the following statements for the record: the Credit
Union National Association; the Center for American Racial
Equality; and the Property Casualty Insurers Association of
America.
I now recognize Mrs. Maloney for 5 minutes.
Mrs. Maloney. Okay. Thank you very much. I regret, Madam
Chairwoman, that I had a conflict with the Joint Economic
Committee, at which I had to be ranking member.
I would like to ask Stephen Kehoe, in your written
testimony you note that in order for financial literacy
technology to be effective, it has to be appealing to the
audience that it is being geared toward. Can you talk about
some of the challenges that you are confronting involved in
making this financial literacy technology appealing, and how
has Visa tried to make their programs appealing to different
groups? Do you have a different strategy for different groups,
and how are you making it appealing?
Mr. Kehoe. Congresswoman, thank you for the question. Yes.
Yes, we do.
So, our tools, our products in the area of financial
literacy, as I said in the statement, are very much geared
toward using entertainment as much as possible to engage. This
can be a very dry subject, let's face it, for many, many
people, and I think the challenge is you can engage with
somebody once; the question is whether they will return to the
same tool and use it again and again.
So it has to be productive--there has to be an outcome that
they get from it. For instance, they get some information which
enables them to think more easily about retirement. Or it has
to be fun, and they actually get something out of a game, which
enables them to kind of go back.
We have a range of tools which are available on mobile
phone devices that really appeal to everybody from elementary
to middle to high school and to college students to sort of do
that. And really, technology is very much geared towards those
age groups because, as you will appreciate, they are very tech-
savvy. They know how to use it and they want to engage with
these devices.
I think more of the challenge, then, is people at the other
end of the spectrum--retirees. How do you engage with them most
effectively? But I think that is something we are still
learning how to do.
Mrs. Maloney. Okay.
And, Ms. Lamb, in your view, can technology fully replace
what we think of as a more traditional one-to-one personal
education that is what we have now?
Ms. Lamb. Not fully, Congresswoman, because it has to
overcome tremendous layers of distrust that many communities
feel with regard to this issue and are--almost refused for
decades to even have a conversation about it. It can add to the
activity, but I don't believe it should be a full replacement
for one-on-one or classroom style instruction.
Mrs. Maloney. Ms. Cackley, is the governance structure of
the Financial Literacy and Education Commission adequate to
ensure that real progress is made in fulfilling the goals
outlined in the national strategy? And do you think the
agencies are targeting the right constituencies in their
financial literacy programs?
Ms. Cackley. The governance structure of the Commission is
that the Secretary of the Treasury is the Chair of the
Commission and the CFPB Director is the Vice Chair, and then
there are 22 agency members. There is no authority within the
Commission to compel any particular agency to take actions or
to allocate resources, and that makes it challenging for the
Commission to achieve some goals. We don't think it makes it
impossible because the Commission can still make
recommendations both to Congress and to the agencies, and that
is useful information that you can then take and use to make
policy.
Could you actually repeat the second question, because--
Mrs. Maloney. Do you think the agencies are targeting the
right constituencies in their financial literacy programs?
Ms. Cackley. Different agencies very much target different
constituencies, and they have a very deep experience with
certain constituencies, so Social Security has been
communicating with retirees for a very long time and they know
well how to do that. And similarly with the Department of
Education and others.
There are other agencies that look more broadly and provide
information across a number of populations but the subjects
that they cover can be very different. They might be specific
to home mortgages, or they may be specific to something else
targeted.
We didn't recommend any specific consolidation within one
agency, but we did see that the coordination across the
agencies needed to be good in order for there not to be overlap
and duplication. And we have seen some progress, but there is
always room for improvement in terms of coordination, and that
is certainly what we would recommend that they continue.
Mrs. Maloney. Thank you. Are any constituencies left out
that should have been targeted that you know of?
Chairwoman Capito. The gentlelady's time has expired.
Mr. Stivers for 5 minutes.
Mr. Stivers. Thank you, Madam Chairwoman, for allowing me
to be involved in this hearing. As the co-chair of the
Financial Literacy Caucus, I know how important financial
literacy is to our future. There was an article in USA Today
about 2 weeks ago, on April 8th--3 weeks ago--by Hadley Malcolm
that I would like to ask unanimous consent to submit for the
record, which shows that financial literacy education works.
Chairwoman Capito. Without objection, it is so ordered.
Mr. Stivers. And I do have some questions for the
witnesses. My first question is for Ms. Cackley.
The new GAO report looked at all the financial literacy
programs, and you list 16, but you say there may only be 13
currently funded. Can you talk a little bit about the
evaluations that those programs use to determine how effective
they are and their lack of evaluation tools? I know the CFPB is
moving toward creating an evaluation tool, but really, we don't
know what we are getting for the money we are spending or what
the outcomes are and what the engagement rates are, do we?
Ms. Cackley. Different programs have done different levels
of evaluation. We generally like to see something where there
is good measurement of outcomes, and some programs have done
that. I think certainly the National Foreclosure Mitigation
Counseling Program had studies done on it; the Army's personal
financial management training; Money Smart--those are some of
the programs that we had identified as having had measurement
and effectiveness studies done.
But there are certainly others where they may be measuring
outputs but not necessarily outcomes, so effectiveness hasn't
necessarily been measured. Sometimes that is because the
program isn't really geared to being able to measure an
outcome, but in other cases it may just not have been done. And
so certainly, more evaluation would be useful.
Mr. Stivers. Thank you. And I noted that three of the other
witnesses, in their written testimony, mentioned the need to
either have ``edutainment'' or engage people in some meaningful
way so that they will come back and not just go to a site once
and be bored out of their mind.
Ms. Lamb, you are shaking your head, and I know it was in
your testimony about how important it is to actually engage
people.
Can anybody who wants to--and I will start with Ms. Lamb--
talk about how important that is, because we have to actually
get people's attention before we can actually share
information?
Ms. Lamb. Right. It is a lot of great information, great
online experiences that our witnesses represent, and if we
can--if we have a community or millions of Americans who refuse
to go there, but blend into their natural habitats or
discussion or destinations online, we can educate them without
them even making a conscious effort to log on to any of these
amazing experiences, because they are just not going to go for
a variety of reasons. But if we can just plant seeds--say,
``Learn, earn, save, invest, donate,'' and--throughout wherever
they are, on Instagram it just pops up, paying a bill, then
perhaps they will determine to move towards a more robust
financial education.
Mr. Stivers. Thanks.
Mr. Kehoe, you are at Visa, a major card platform. Tell me
why Visa believes in financial literacy, and what they would
like to see in their customers who have Visa cards as far as
being financially literate and how that benefits Visa and our
broader economy.
Mr. Kehoe. Quite simply, a better informed, better educated
consumer is simply a wiser spender. They manage their money
more wisely, and that has a knock-on effect for the broader
economy.
So I think we look at the nature of the challenge and we
are happy to sort of participate in pulling together the
materials and the tools that will do this. And yes, we have a
vested interest in making sure that everybody who carries a
Visa card in their pocket knows what that product can do and
how to use it wisely.
Mr. Stivers. I am running out of time so the one last
question I want to ask is, does anybody--just raise your hand
if you agree with the statement that a better informed consumer
through financial literacy is a better protected consumer.
I will note that everyone raised their hand.
I would like to--I am working on a bill that would get the
CFPB much more engaged. They are engaged in specific target
populations, but what we really need them engaged in is
educating America because it is the best form of consumer
protection.
Rather than having some agency looking at transactions
after they occur, getting consumers informed before
transactions occur to make sure they are not taken advantage of
is the best consumer protection. I see a shaking of heads
across the board there, and I want to make sure we get the
Consumer Financial Protection Bureau much more engaged in that
effort of educating not just target populations.
I am sorry I ran over. I apologize, and I yield back my
time.
Chairwoman Capito. All right.
Mr. Heck?
Mr. Heck. Thank you, Madam Chairwoman.
I really appreciated, actually, Mr. Posey's reference to
his constituent who repeatedly reminds him about the importance
of financial literacy. After I spent so much incredible time
and effort trying to get myself on this committee and went back
home and shared that news with my family, my older brother
Jerry, who retired after a successful career in the financial
services sector, immediately responded with, ``Now, here is
what your highest priority ought to be--financial literacy.''
And he has reminded me of that multiple times since, and I
happen to agree with him.
I would like to ask any of you, each of you, all of you, if
you have any particular programs/tools/approaches that have as
their particular focus members of the U.S. military. And the
reason I ask that is I happen to have the privilege to
represent a very large military installation, but also because
it is pretty clear that young men and women in uniform tend to
be kind of vulnerable, at times, to getting themselves in
circumstances, some of them that a heightened degree of
financial literacy would at least impede or mitigate.
Any of you have any particular focus, programs, tools,
outreach in that regard?
Mr. Saik. Intuit is proud to support the U.S. military. We
have a program through our TurboTax group where we provide
TurboTax for free to help our military members prepare and file
their taxes.
Mr. Heck. Thank you for that.
But in terms of an educational program to heighten
financial literacy, do any of you have--
Ms. Lamb. At WorldofMoney, many military families enroll
their children in our institute every year, from Fort Dix to
McGuire Air Force Base, and they travel to New York City to
access or to attend the institute.
Mr. Kehoe. Congressman, we have no specific products geared
towards or specifically to servicemen and servicewomen.
However, financial planners who are on the military bases
across the country are one of our most frequent requesters of
material that we send through. So that is something that we at
least engage in the distribution of our material to military
bases.
Ms. Cackley. I am not aware of specific programs, but I am
certainly aware that there is an Office of Servicemember
Affairs within the Consumer Financial Protection Bureau which
works and coordinates with the financial planners to whom Mr.
Kehoe just referred.
Mr. Heck. There certainly is, headed very capably by Holly
Petraeus. I would encourage each of you to give a little bit of
thought to what it is you might do in that regard.
I want to go back to the issue of evaluation.
And, Ms. Cackley, I am going to ask you to stand down in my
first volley here.
It is just not clear to me how you will know you are
successful in a meaningful way. And by that I mean, the
anecdotes are helpful. Some of the metrics like, ``Our product
or our tool gets referred to other people,'' that is helpful.
But at the end of the day, it seems to me the only metric
that we are really after here is changing behavior in a way
that makes the consumer more financially protected, secure, and
smart, and I am asking, are any of you engaged in any
evaluation efforts that would give us that information?
Ultimately, that is the goal.
Mr. Kehoe. I can kick it off by saying that I certainly
agree that evaluation is absolutely critical. And there are a
number of studies that we are engaged in which look at control
groups and then educated people afterwards, and these do show
that education has results.
One thing that we look at in particular along a number of
metrics is how many people keep a revolving balance on their--
Mr. Heck. Keep what?
Mr. Kehoe. --credit card account--a revolving balance on
their credit card account. And in fact, one of the things we
say that even the most--we have found is even the most basic of
training means that we see around about a 20 percent reduction
in the number of people who maintain a revolving balance. And
actually, on things like having late fees on their accounts of
paying, that was reduced by around about 23 percent.
So yes, there are some studies out there which we are
involved in that show that it is having an impact.
Mr. Heck. I am nearly out of time. I would just conclude--I
was actually hoping to plumb this a little with you, Ms.
Cackley. You had indicated more evaluation would be useful.
I would encourage--and it seems to me most appropriately
you, but I may be wrong--advocacy for longitudinal evaluation
with control groups, specifically geared to what works and what
doesn't work. Because the truth of the matter is, everybody
sitting at that table wins, everybody in America wins if we are
able to accomplish that which you are engaged in, for which I
commend you.
I thank you for being here today very much.
Thank you, Madam Chairwoman.
Chairwoman Capito. Thank you.
I think that concludes our hearing.
I would like to thank all of our witnesses today. I think
it has been very informative, and I appreciate the efforts that
you are making in the area of financial literacy. I think if we
all work together, we will keep moving forward. There is still
lots of work to be done.
Thank you so much.
The Chair notes that some Members may have additional
questions for this panel, which they may wish to submit in
writing. Without objection, the hearing record will remain open
for 5 legislative days for Members to submit written questions
to these witnesses and to place their responses in the record.
Also, without objection, Members will have 5 legislative days
to submit extraneous materials to the Chair for inclusion in
the record.
Without objection, the hearing is adjourned.
[Whereupon, at 12:04 p.m., the hearing was adjourned.]
A P P E N D I X
April 30, 2014
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