Congress Begins to Focus on Financial Literacy as a National Problem
By Rich Anderson
March 15, 2004
Duties and Responsibilities of the Financial Literacy and Education Commission
The Commission is directed to help consumers...
- create household budgets
- initiate savings plans
- make strategic investment decisions for education, retirement, home ownership, wealth building, or other savings goals
- manage spending, credit, and debt, including credit card debt
- increase awareness of the availability and significance of credit reports and credit scores in obtaining credit, the importance of their accuracy, and their effect on credit terms
- the impact of common credit decisions on credit scores
- ascertain fair and favorable credit terms
- avoid abusive, predatory, or deceptive credit offers and financial products
- understand, evaluate, and compare financial products, services and opportunities
- understand resources that inform and educate investors as to their rights and recourse
- increase awareness of the particular financial needs and financial transactions of consumers who are targeted in multilingual financial literacy and education materials
- promote bringing individuals who lack basic banking services into the financial mainstream by opening and maintaining an account with a financial institution
Between 1980 and 2002, the number of personal bankruptcy filings in the United States increased over 535 percent. Late in 2003, Congress acted to help reverse that number by creating the Financial Literacy and Education Commission to improve the financial literacy and education of citizens through the development of a national strategy to promote financial literacy education. Dovetailing onto the Commission's project, the United States Conference of Mayors- Council for the New American City will announce in April its own Mayors National Campaign for Financial Empowerment. The Mayors campaign is designed to enhance the work of the Committee by developing local intiatives. "These ambitious efforts to improve the state of financial literacy by the Federal government as well as cities are vital to the health of our communities," said Detroit Mayor Kwame M. Kilpatrick, Chair of the Council.
The Commission, created by an amendment to the Fair Credit and Reporting Act, will authorize $3 million each year for fiscal years 2004, 2005, and 2006. Additionally, the law calls upon the participation of all major federal agencies and departments to contribute towards the Commission's success.
The general duties of the Commission are to "…streamline, improve, or augment the financial literacy and education programs, grants, and materials of the Federal Government, including curricula for all Americans." The Commission will emphasize "how-to" training and education on financial issues and decisions that span the full spectrum of life stages. These states include: obtaining and using credit cards; housing and home buying decisions; college financing; marriage and divorce; health care insurance; and, retirement planning.
Congress has encouraged the Commission to reach out in to local communities and call upon other federal agencies, state and local government, consumer and community groups, financial services institutions and nonprofit financial literacy education organizations for information and input. Part of that local outreach effort will be a pilot national public service multimedia campaign on financial literacy. The Commission will also use the multimedia campaign to promote their toll-free hotline and website with additional financial literacy information. Both the hotline and the website are still currently in the planning stages.
The Commission has held one meeting this year, and will hold more meetings in the coming months. By mid-2005, the Commission will submit report to Congress entitled: SAFE- Strategy for Assuring Financial Empowerment. Council for the New American City member Rebecca Stiehl, President of the InCharge Institute Education Foundation said, "We look forward to working with the Commission, and to helping to bring its messages to the local level."
The Commission will be chaired by the Secretary of the Treasury, and will also include Cabinet and Administrative heads from federal agencies and departments. The Secretary of the Treasury is designated as the Chairperson of the Commission. Some of the other federal agencies involved include: The head of each of the Federal banking agencies as defined in the Federal Deposit Insurance Act; the National Credit Union Administration; the Securities and Exchange Commission; the Departments of Education, Agriculture, Defense, Health and Human Services, Housing and Urban Development, Labor, Veterans Affairs; the Federal Trade Commission; the General Services Administration; the Small Business Administration; the Social Security Administration; the Commodity Futures Trading Commission; and the Office of Personnel Management.