Deputy Assistant Secretary Michelle Greene
Remarks for Financial Literacy and Education Summit
Monday, April 19, 2010

Transcript by Michelle Greene

I am honored to be here today to talk with you, and I want to thank the Federal Reserve Bank of Chicago and Visa for hosting this summit and bringing attention to the critical topic of financial literacy. There has never been a more important time for us to get financial education right. In the wake of the worst financial crisis in modern history, the Administration is committed to making lasting, sustainable changes that leave all Americans on sounder financial footing. A critical part of those changes is already under way as the Administration works with Congress to enact sweeping financial reforms that will create a safer, more stable financial system and provide better protection for consumers and investors and the necessary tools to fight crises early. Yet those efforts alone are not enough. The Administration also believes that individual Americans need better financial education and access to critical resources in order to make smarter financial decisions. Personal responsibility and increased knowledge, skills and access are critical to minimizing the risky financial behavior that contributed to this past economic crisis.

The good news is that in the wake of the crisis, many Americans are more focused than ever before on these issues. As Secretary Geithner has said, "There is no greater education than experience and the searing lessons of this crisis are already affecting the financial behavior of an entire generation, as Americans start to save more and borrow less." We need to make sure that we do not let this focus fade as our economy improves, but rather that we use this moment to truly change behaviors and change lives.

This Administration is committed to building a country in which more and more families have the knowledge, skills, and financial access to make good financial choices and build brighter financial futures. Earlier this month, President Obama issued a proclamation in recognition of Financial Literacy Month, stressing that we must "recommit to teaching ourselves and our children about the basics of financial education." In January he issued an Executive Order creating the President's Advisory Council on Financial Capability to enlist a diverse group of leaders from the private, non-profit, and academic sectors to advise him on these critical issues.

It is called the President's Advisory Council on Financial Capability to illustrate a belief that I know we all share. That belief is that we must not stop at financial literacy (knowledge) because what all of this is really about is changing behaviors and thereby changing lives. So, we are working not just to improve financial literacy - that is a critical first step - but also to make sure that people have the access to the safe and appropriate financial services and products they need to act on that knowledge.

What I would like to do today is tell you about the five key strategic priorities guiding our financial capability work in this Administration.

To improve people's behaviors and economic futures, we need to know what is effective. Thus our first principle is to do what works and adopt evidence-based policies and initiatives. This also requires us to measure our results in rigorous, meaningful ways. So, we don't want to count brochures distributed, but rather behaviors changed. And not only do we want to do this ourselves, we want to help the entire financial capability field begin to move further in this direction as well. Proving the impact of our efforts through data and results will make this field both more rigorous and more effective.

Of course, measuring results requires appropriate metrics, but this can prove challenging in the world of financial capability. One of the common frustrations we hear about is a lack of definition regarding what it is that we collectively, as a field, should be trying to achieve and trying to measure. How do we know how we are doing if we lack a common definition of our shared goals? To address that challenge, we are in the process of creating a set of core competencies - that basic baseline set of knowledges and actions that everyone should know. The analogy we like to use here is the food pyramid. Everyone knows what they are supposed to eat. Now, that may not mean they always do it, but in this field it would be an enormous step forward if everyone knew what they are supposed to know and do. We brought together an expert group to identify these core competencies. We are in the process of putting their findings into more accessible language - and then we will be putting it out for public comment because we want these to be not our core competencies, but everyone's. So we encourage you to provide us with feedback on the draft version and ultimately to help us spread the word about the final version.

We also are using those core competencies to develop metrics that will help in evaluation of financial literacy programs. We hope that these tools will allow for more "apples-to-apples" comparisons and foster increased evaluation of programs.

Evidence-based policy requires not just evaluations, but also research. Thus, we are seeking to increase and promote the base of policy-relevant research in the financial capability field. For example, in December at the Department of the Treasury, the FINRA Investor Education Foundation released their National Financial Capability Survey. We were involved in a consultative capacity with the study from the beginning, and we believe that the information in it is very useful in helping assess what Americans know and do about their finances, what particular challenges are facing different communities and demographic groups, and how best to target our efforts to change behaviors in a positive direction.

Moving to our second strategic priority, we are focused on putting financial education wherever it will be most effective. On the federal level, we are encouraging agencies throughout the federal government to consider ways in which financial capability might enhance their programs and further their own strategic missions. So many agencies of the federal government are touching people at times in their lives when financial information would be highly relevant and could be a real help. And we believe the federal government should be thinking broadly about what this means. Treasury leads the Federal Literacy and Education Commission - a commission comprised of 21 agencies and bureaus of the federal government, which coordinates federal financial literacy efforts. The membership of this Commission illustrates the broad array of places in which financial literacy is relevant. So, for example, the Department of Defense does some great work in this area because they see it as enhancing force readiness. HHS incorporates family financial empowerment in some Head Start programs because financially empowering a family can make an enormous difference in the life of a young child. And I sit as the Treasury representative to the White House's Interagency Working Group on Domestic Violence -the first time the Treasury Department has been a part of such efforts - and of course we should be. Helping victims of domestic abuse gain a sense of financial capability helps to keep them away from their abusers. Similarly, for those of you in this field and beyond, we urge you to think broadly about financial capability and places where you might incorporate it into seemingly "non-financial" programs in your own community where it might have an impact and improve lives.

Our third strategic priority involves focusing our efforts and resources where they are needed most. As the FINRA survey I just discussed, as well as the recent FDIC survey on unbanked and underbanked make clear, certain communities are disproportionately disadvantaged when it comes to financial capability. We intend to focus our efforts particularly on such communities. In addition, we are working closely with the Department of Education in focusing on youth so the next generation can start their careers with the skills and knowledge they need. Secretary Duncan, whom many of you may know from his days here in Chicago, is a true leader in this effort, with first-hand knowledge of these issues from his involvement with Chicago's own Ariel Academy. One example of a partnership between Treasury and Education is our recently-concluded National Financial Capability Challenge. This program was designed to encourage the integration of financial topics in the teaching of high school-aged students. We created a teacher toolkit to assist educators, and the voluntary online exam that was part of the program was administered earlier this month. We are tabulating the results now, but I can tell you that we had a record number of participants, representing all 50 states. This is a good but small start, and there is much work to be done in ensuring that the next generation is well-prepared for the complex financial world they will live in.

One of the most critical areas where such focus is needed is in our unbanked and underbanked communities - which leads to our fourth strategic priority, increasing financial access. That FDIC survey I mentioned found that one of every four American households is unbanked (meaning they do not have any type of account) or underbanked (meaning that although they may have an account, the mainstream financial system is not meeting their needs, and they are turning to alternative financial services providers). In practice, what this means is that, too often, those who can least afford it are paying the most for basic financial services - like cashing a paycheck or paying bills. The fees that our unbanked and underbanked families are paying for alternative financial services could be going instead to saving for a child's education, purchasing a home, or planning for retirement. Providing all Americans with access to fair, affordable accounts and safe, appropriate financial products and services will help them more effectively pay their bills, begin saving for short-term and long term needs, and find better alternatives to high-priced credit. Without that foot in the door, families, and ultimately communities will remain outside of the mainstream economy.

The President's budget for next year includes funding to develop a new initiative - Bank On USA - that would help to increase the number of Americans who have access to such financial products and services, as well as the knowledge they need to use them effectively. Bank on USA would build on and enhance local efforts, under the Bank On name and others, already going on around the country. We recognize that different communities face different challenges in making the financial system work better for them, and we know that the solutions in this space must be community-based. But we also have heard loud and clear from so many communities that the federal government can make a big difference and has many roles to play in these efforts. We intend to provide that needed federal leadership and assistance. We are already working collaboratively on this effort with state and local governments, non-profits, and financial institutions around the country.

Which is a good example of our final strategic priority - partnerships. As the Bank On programs illustrate, financial capability is not a problem that can be addressed by the federal government alone. People talk about money and learn about money from those they trust - the people in their communities. Just looking around this room provides a strong illustration of the many different types of organizations from every possible sector that must be part of the solution.

Over the past several months, we have been working with the FLEC, that interagency commission I mentioned earlier, on developing a new national strategy for financial capability. This new national strategy is meant to articulate shared strategic goals for this whole field. Many of you here were involved in the development of the strategy, as the inclusive process involved seeking input from over 150 interested stakeholders. We will be putting the new national strategy out for comment soon, and we hope you will let us know what we got right and what we didn't. More importantly, when it is finalized, we hope that you will all see how your own organizations can play a role in implementing this shared set of goals. While no single sector alone will be able to get there, by working together, collaboratively and in partnership, we can make enormous progress.

We appreciate the work that so many of you do in your own communities and throughout the nation to improve financial literacy and financial capability. Let me close with words that President Obama used in his recent Proclamation:

"Our Nation's future prosperity depends on the financial security of all Americans. This month, let us each take time to improve our own financial knowledge and share that knowledge with our children. Together, we can prevent another crisis and rebuild our economy on a stronger, more balanced foundation."

Thank you