Congressional Panel

MS. KENNEDY: I'm tickled to be here to facilitate a session with these three distinguished Members of Congress. What I like to say about the issue of mainstreaming the unbanked is that it's one of the few issues in Washington, I think, where everything seems counter intuitive.

In other words, every time I'm asked to do something, brief someone on the issue of mainstreaming the unbanked, what hits me between the eyes is that the issue defies the stereotypes. For example, it brings out the creativity in bankers, seriously. The National Association of Affordable Housing Lenders are America's leaders in bringing private capital to low and moderate income communities. About half of them are bankers. And, of course, ShoreBank has been in the forefront for decades of trying to mainstream the unbanked.

It's come more recently to some other institutions. But, for example, imagine Bank of America taking that wonderful Money Smart product and saying, you know, we could sweeten this up a little. It's a great product, but they hand it out with candy. And a spoonful of sugar from Bank of America makes people take the product easier.

I'm particularly impressed by the video that I've seen and you probably have too trying in a sort of a Sesame Street for Adults way, to make people feel at ease at the beginning of a financial literacy session, where nobody really wants to talk about their own money, and how badly they've managed it. I know I don't. And the video sort of gives everybody something to laugh about and talk about.

I'm particularly impressed at new partnerships. For example, Bank One, working with employers to send that check cashing truck away on Fridays, finding a new truck from a bank that's not that intimidating lobby. My favorite, Washington Mutual with materials that speak to Native Americans in their own lingo. And now you see financial literacy products in Farsi, Russian, Bosnian, so creativeness in bankers is something that I think this issue brings out.

I also think that this issue is curiously bipartisan. I could say that the gentlemen up here give partisanship a bad name, because they have approached this issue in such a consistent work together way. I don't want to ruin your reputation, Chairman Bachus, but Barney Frank says great things about your bills. And so, if you read the biographies of these gentlemen, these are lawyers and CEOs of businesses who are preoccupied with helping consumers. And you see it in the work of Chairman Bachus's subcommittee. You see it today when the subcommittee will be working with the housing subcommittee on solutions to predatory lending. So enjoy with me today the fact that this issue defies stereotypes, it crosses partisan bounds.

Senator Sarbanes had a hearing on this issue about a year ago. And the other senator who was there listening to Michael Barr and ShoreBank, and other people who knew this issue well, was Senator Crapo of Idaho, whose influx of Vietnamese immigrants has created a huge unbanked problem that that state never saw.

So I want to hear what these gentlemen have to offer, and then we'll be glad to take questions about what the future holds. With that, I guess, Chairman Bachus, would you like to lead off.

REP. BACHUS: I appreciate those kind words, Ms. Kennedy. I'm tempted to lapse into talking about football and go back to what Chairman Powell did, but although that debate is real tempting, I'm going to focus on today's subject.

First of all, let me say that having Congressman Hinojosa and Congressman Scott on this panel I think is very fitting. We have worked together, we've had hearings together. They are two of the members who have really both requested a hearing we had earlier on serving the under served, and many of you all in the room I know were at that hearing. And I think it was a very good hearing.

Congressman Hinojosa has legislation which you can discuss. Congressman Scott and Congresswoman Biggert have introduced legislation which will establish a Financial Literacy Commission. I think that's important legislation.

The three of us have all co sponsored legislation that Congressman Dreier introduced providing funding to develop a program at the Treasury Department, a national ad campaign on Financial Literacy.

When you look at the unbanked, and I appreciate what other speakers before me said, it's not a simple issue. Many of the unbanked, half of them at one time had a bank account. I think that's one thing we shouldn't forget. And for one reason or another, they choose not to maintain a bank account. They go to check cashers, they go to payday lenders, and more often than not, they go not once, but they continue to go. So this, at least, indicates they're making a choice. And I don't think we ought to look down on people and say well, they just don't know any better. In fact, I think Jerry Hawke, in his testimony in Baltimore and I think we need to lay all the cards out on the table he actually said that for many people it made economic sense to go to check cashers.

Now I can tell you that as a practicing attorney, and I have been Assistant Attorney General in the State of Alabama, I've been on the prosecution side and the defense side, some of the people that needed the most help were people that had a bank account, and had basically gotten in trouble criminally because they had written bad checks, and had gone to jail simply because they were not able to maintain a balance in that bank account. They got in trouble in that bank account, so at times opening a bank account can actually if you don't have financial literacy to go with it, if there's not some mechanisms in place it can lead to some serious problems. And it's an issue that I think all your bank regulators are concerned about. I think Freddie and Fannie are concerned about it.

That's two names you're maybe not supposed to mention in the last two or three months, but at least I can tell you that in our state, they have participated in a lot of programs which reached out to people that needed banking services. The consumer groups, I think have been the forefront of advocating that we need to include people.

Let me just close by saying something, and this is very fundamental. But I think that as Americans, we need to be committed to the dream of America. And if you look at our Constitution, you might think, if you just looked at it, that when the Constitution started, that everybody participated. But you'd be very wrong if you thought that. It was only a small segment. And then we had Amendments to the Constitution, which said that no matter what race, what gender, what national origin, they participated.

But the biggest change since I've been in Congress is the number of women in Congress. You know, I don't know if it was 1917 or 1920, that an amendment gave women the right to vote in the United States. That's less than 100 years ago. And our history, thank goodness, has been saying that everyone is included. Everyone has an opportunity, and everyone has a level playing field. And we've only realized that I think, with the inclusion of women's right to vote, have we actually had a constitutional basis for that.

And even when I got to Congress 10 years ago, the first three new women in Congress were all there because of one thing. I don't know if you all recall what that was their husbands died in office, and they were put in. And it took about 80 years, or 70 years, or 60 years for people at first, women had the right to vote, but they didn't serve. And it took 50 and 60 years before people began to say it doesn't matter what your sex is, that's not the basis. And we still have people that economically are not participating. They have the right to participate.

And I want to commend Chairman Powell. I think that he has recognized that there are different solutions for different people. And one thing we do in America, is we don't use our own opinions to tell people that they can't do something. If something is labeled, we found out during Prohibition that a lot of people felt like you shouldn't drink. Well, we found out that didn't work that you can't make the rules for everybody else. What we can do is we can have legal businesses. We can see that they're regulated, and see that there are controls in place.

I can tell you that in Alabama, there have always been payday lenders in Alabama. They didn't have a store front, and at times they were the sheriff of the county. At times, the probate judge operated the business. There were times when they were standing at the gate on payday, and I could tell you that their methods of collecting debts were a whole lot more severe than your check cashers or your payday lenders today. So I, for one, believe as long as a business is legitimate, as long as it's legal, and as long as people are choosing to use that business, that that's the American system. It's also the American system for us to address abuses.

We're going to have a hearing in a few minutes. It's going to start in about, I guess, an hour on predatory lending and sub prime lending. Now there's a difference. There are a lot of people that can't get a loan to buy a house or to finance a house at a prime rate. That's just a fact, so there is sub prime lending. A lot of people have financed things using sub prime lending. But at the same time, there are a lot of predatory practices. The practices shouldn't go on, we shouldn't tolerate them.

But a lot of people, when I talk to them, they equate all sub prime lending is bad. And that's simply not true. It's an opportunity for some people, but we have to regulate and make sure that the abuses and the predatory lending stop. And I appreciate the invitation here today. Thank you.

REP. HINOJOSA: Good morning. Chairman Powell and Director Zamorski, I want to thank you for inviting me here today to give you my views on how we can tap into the unbanked market, or as I call it "bank the unbanked."

Chairman Powell, I want you to know how much I enjoyed our personal meeting in my office earlier this year to discuss the FDIC's Money Smart financial literacy program. I applaud the FDIC for creating and disseminating in multiple languages such an effective adult financial literacy program. It has been widely disseminated throughout my district and appears to be having a very positive effect.

The Money Smart program is but one of several financial literacy programs available to the general public, and that is the problem. So many financial literacy programs have been created by both the public and private sector that Congress needs to form a Commission to review all of these programs and make formal recommendations as to which program to recommend for all life stages that the states and localities should adopt.

To address this situation, Congresswoman Judy Biggert (R-IL), my colleague here David Scott (D-AL) and I introduced the "CENTS" Act that will create a National Commission on Financial Education and Literacy. The Commission will recommend how to integrate finance education and financial literacy into primary, secondary and postsecondary curricula. It will identify and recommend best practices for the teaching of economics and personal finance. It will also recommend how to better coordinate Federal, State, local and private sector efforts to develop financial literacy.

All three of us are more than willing to consider altering the Commission's charter and to create subdivisions within the Commission to increase the scope of the bill to include economic and financial literacy education to teach individuals how to avoid credit card scams, predatory lenders, and how to move into the mainstream financial services system. We would also consider expanding the scope of the bill to include economic and financial literacy education for all life stages, including K-12, college, young adult, adult and senior citizen.

Once I started researching the various financial literacy programs that have been created and are offered across the United States, I became acutely aware of the amount of time, money and effort the private and public sectors have put into creating their individual financial literacy programs. I commend them for all their efforts. Consequently, I want to ensure that everyone is given the opportunity to provide their opinion and present their programs on this important topic.

The CENTS Act would give these groups the access and input they need into the financial literacy program the Commission will recommend to Congress. For these reasons, I hope that the financial literacy commission that is ultimately adopted by Congress acknowledges the time and effort that the public and private sector have put into creating financial literacy programs in both English and in Spanish, and, in some cases, multiple languages.

Too often access to traditional financial literacy programs is limited by scarce government resources. Consequently, taking advantage of partnerships using community groups and private industry can be a tremendous advantage. For example, in my district in South Texas, and nationwide, at tax time H&R Block provides their clients with free, actionable advice on savings, tax planning, and referrals to government benefit programs like children's health insurance.

In the non-profit sector, local community groups across the country provide targeted education for people about to buy their first home.

Our overall financial literacy strategy should combine coordinated government efforts, like those I am advocating on the Financial Services Committee, with the best of these targeted non-government programs to provide a continuum of education that starts in the schools, but continues into adult life as people's financial needs change.

I come from a family of Mexican immigrants. I am a first generation college graduate, first of seven brothers to graduate, and eighth of eleven children. My father and mother came to the United States when they were children at the turn of the 20th Century, right after the beginning of the Mexican Revolution in 1910.

They came as children. My mother was five, and my father was nine years old. And they settled on the border of Texas, and that's where they grew up one in McAllen, and the other one in Penitas. And my dad grew up learning how to farm, and how to become a young entrepreneur.

They met when my dad was 28, and they married, had eleven children. And they taught us good work ethics. They taught us how to be respectful, they taught us the importance of education, and that if we worked hard, that we could enjoy a better quality of life.

I came to Congress. I was elected in 1996, and I had been the President of a food processing company that processes Whopper Hamburgers for the Burger King Corporation. And it supplies other large companies like Walmart, and HEB, and others. And I came to Congress because I couldn't quite understand in that part of the region that I grew up, why we were so neglected, and why, as a Hispanic, oftentimes I felt that I was not accepted, even though I worked as hard as some of my counterparts, Anglo businessmen with whom I dealt with.

I came to Congress and found that the problem was not just in South Texas, it's all over the United States. So to look into this room of so many people of so many different colors, I'm pleased to be able to talk to you the way I'm talking to you, because banking is something that is very important to the Hispanic community.

I have an area that I represent that is one of the fastest growing regions in the country. It's the third fastest growing region, and it's 88 percent Hispanic. In the classrooms, Region I Education Service Center represents and serves 350,000 children, of which 97 percent are Hispanic. Twenty years ago, I think that number was like 75 percent.

So there's no doubt that the Hispanic community is a very fast growing, dynamic group of people. And why is it that so many are unbanked? Why is it that they don't trust the federal government?

All of this to say that the same thing was happening throughout the area that I represent. And so helping the unbanked is something that is very easy for me, because I know who many of the working persons are who do not bank. They carry a wad of money to go make their payments, and they pay in cash. And they carry a wad of money to be sure that they don't miss paying their rent. Or if they're lucky enough to own a home, that they don't miss the monthly payment.

Just two days ago, I was listening to some of the folks who help us in making microloans through SBA programs or SBA sponsored programs, and it's interesting that in my area, two thirds of the new businesses created in an area that for 35 years was a double digit unemployment rate. I'm not talking about 10 and 11 percent, I'm talking of 21 percent. And why was it so neglected? That's why I ran for Congress, that's why I came here to find out why the federal government had neglected an area like ours, where there's so much potential.

We are the door to Mexico, where my parents were born. We are the front door. We have more trade going with Mexico, that soon we will overpass Canada. We've already passed Japan. We have thousands of 18 wheelers crossing across Laredo, and McAllen, Far, Brownsville, so there is a lot of money exchanging hands. And why is it that we still have so many of my people unbanked?

Well, you could list probably 10 or 15 reasons, and it's people like Bank of America that in Fortune Magazine just a few months ago, I remember reading an article where they have the Hispanic Initiative, because they have gotten smart. And they know that if they could reach and tap into just 25 percent of the unbanked, they could probably be tapping $10 billion a month that is unbanked. And that just like Chairman Powell was saying, that they go and they exchange their check, or they send their remittances back to their families, and don't care that they have to pay the $6 to exchange the check. Or maybe in some cases pay $25 and $50 to send a Western Union remittance to their family, because they don't ask questions. And there is no intimidation, there is no possible way that they're going to be reported because they are here working to try to help the families back home.

These are the most courageous people. I'll bet you that half of you would not leave your home, and leave your support system to go to another country to work, and send back as much of that money as you could to your relatives. These folks that are coming across from different countries, be it Central America, or Mexico, or South America, are, indeed, probably the most hardworking and courageous people to be able to do that.

Look at the U.S. Census of 2000, and try to guess how many were not counted because they didn't want to fill out the application, and they simply did not trust the federal government.

Earlier this year, I introduced legislation to help Mexican nationals access the U.S. Banking System. H.R. 773, the "21st Century Access to Banking Act" would allow Mexican nationals with specialized identification, otherwise known as matricula consulars, issued by Mexican Consulates to gain access to U.S. financial institutions for the purposes of opening accounts.

Opening a bank account is often impossible for Mexican nationals who lack the generally required 2 forms of identification. As a consequence, Mexican nationals are often forced to use expensive check-cashing services to cash payroll checks and wire services to send money to relatives in Mexico. In addition, these same "unbanked" Mexican nationals have had to carry large sums of cash, which has increasingly made them targets of crime.

The matricula consular is a water-sealed photo identification card issued by the Government of Mexico to Mexican nationals who complete an application form in person at any of the 47 consulate offices of the Government of Mexico within the United States. These cards are over 130 years old and have been accepted in the United States for quite some time.

And so, by introducing my legislation and by promoting financial literacy, I want to help all working families, especially the low income working persons. I know how to reach them. I know how to earn their trust, and I know how to help them become bank customers. And so would you, if you just spend a little bit of time listening to those of us who represent women and minorities in areas that are like the regions that I represent.

Again, thank you for inviting me to appear here today.

REP SCOTT: Thank you very much. It is, indeed, a pleasure for me to be here in this very prestigious room, National Press Club. I wish my grandmother from back on the farm in Anyor, South Carolina could see me now. But it is, indeed, an honor to be here, and on this most worthy of issues.

You know the great Prophet Isaiah said once that, "A people without vision will surely perish." And I hope that with this symposium, that we in this room unite with a vision. And that is a vision of America that is a financially literate America. We need that. We don't have that now. And on the bleached bones of many, many great civilizations, are written those prophetic words, "Too late." We could be too late.

This country is changing rapidly. This country is changing very rapidly from being an overwhelmingly majority white country, to becoming gradually a very balanced white black Asian Hispanic country. I daresay that your two most rapidly growing groups are Hispanic and African Americans. So when I make that statement about on the bleached bones of many civilizations, there is those prophetic words of "Too Late", it could be.

We were very fortunate as a country to have a great many very bright people come together at a particular time between 1776 and 1783, and we called them our Founding Fathers. Two of those Founding Fathers, Thomas Jefferson and Alexander Hamilton, had some of the most monumental intellectual debates, and many people referred to them as intellectual shouting matches.

I think because of that energy, we are where we are today free democracy, and a free enterprise system. One of the great arguments that happened between Hamilton and Jefferson was, this urgency with Hamilton to have a centralized financial system for this country not 13 or 14 different individual states, different individual currencies, different other things.

And in exasperation one time, Hamilton said, "We will never survive as an illiterate backward country when it comes to the function and the commerce of our money." And we're still grasping that. And I think that I would like for that to sort of set the tone for what I have to say today, because I find myself in a very unique position.

As a member of Congress, as a member of the Financial Service Committee, who also has an MBA from the Wharton School of Finance, I have learned and I believe that there are three essential steps that Americans can take to gain access to the financial mainstream.

First, fundamental financial literacy. Without that, without knowing about money, handling money, how can we even move to the next step. Financial literacy is the first important step. It is important in order to increase basic saving rates, and improve access to good credit.

The second step is access to homeownership. That is the centerpiece, which is often itself based on good credit. And third, investing money to build wealth, and also for retirement security.

About half of a typical family's wealth is in home equity, yet many communities are clearly missing out on one of the basic assets of wealth building. And my distinguished colleague, Congressman Hinojosa, very well articulated the point in terms of the Hispanic community, and the African American community.

From 1998 to 2002, African American homeownership rates rose only from 45.6 percent to 47.3 percent, compared with the average for whites, which increased from 72.6 percent to 74.5 percent. And the Hispanics were lower than that. And as a matter of fact, in this last year alone, the homeownership rate of African Americans has actually decreased. So I believe that we must push even harder to help increase minority homeownership rates through programs that provide downpayment assistance, and affordable housing incentives.

And we must also bring home our buyer education directly to communities to help stop predatory lending practices. There's no greater need for us to understand the urgency of financial literacy, and financial education programs than this monster called "predatory lending". This is a targeted effort that's going after our very weakness of not providing financial literacy programs.

There are industries out there, there are groups of people out there who are taking advantage of our inability to understand this vision that I talked about a little earlier for financial literacy, and they're going right to it.

When I served in the Georgia legislature some years back as a State Senator, I served on the Banks and Banking Committee there. We had a very, very significant case of predatory lending from a group called "Fleet Finance." I hope there's nobody from Fleet Finance, and maybe there is but I assume they've been bought up with the merger. But some of you may remember that in Georgia. And Fleet Finance came down into Georgia. We had no financial literacy program, no financial education program. As a matter of fact, we were wide open, and they came in and took advantage of usury laws. And our usury law had a interest rate of 5 percent on the unpaid balance per month, which comes to 60 percent. And they started putting on second home mortgages for 60 percent per year, targeting people, people having second agents, going into African American communities where there were senior, older folks living on fixed incomes. They know them. They knew exactly where to go. And they would go by, and particularly picking rainy weather, and size out whose roof was leaking. Anyway, they would go in and they would cut a deal to fix their leaky roof. And before they knew it, they had their home.

You all know the story there. So I learned early, we put a massive amount of legislation out. We put out legislation that would outlaw balloon payments, high loans values, loan flipping, loan steering, a whole lot of things, but we began to understand two important things. We had to do a balance, because if you move too much, if you move too aggressive, you're going to dry up credit for folks that need that credit very severely.

And secondly, the people that you're trying to help, didn't know in the first place. They wouldn't know balloon payments or loan flipping from the man in the moon. So I began to grasp the need for how can we really go at this? What is the foremost thing? And my mind flipped back to that shouting match between Alexander Hamilton and Thomas Jefferson. We will never make it as long as our people are financially illiterate. So I began developing some ideas on how to approach this as one approach. You have loan flipping, balloon payments, all of these things that we have come to know and identify as predatory lending practice should be abolished. We should make sure. But if we follow the existing laws we have on the books right now, there would be no really predatory lending if everybody, you know.

It's sort of like murder is illegal, but folks are still killing people. Stealing from banks is illegal, but they still steal. So how do you really go at it as a beginning area? And I believe you go at it by using the old adage, that you prepare for the storm before the hurricane is raging. And an ounce of prevention is certainly worth a pound of cure. Education.

And so with that experience and that background, in coming up to Congress and working with folks like Chairman Bachus, and Chairman Oxley, and Chairman Ney and Ranking Member Frank and Kanjorski, and my good friend here, Congressman Hinojosa, I've come to realize that we can put forward a bill that can really make a difference here. And we've come up with a bill, and I'd like to share the parts of this bill with you.

We call this bill "The Prevention of Predatory Lending Through Education Act". It's H.R. 1865. And it would work to prevent predatory lending by building greater awareness of such practices through better coordination and delivery of consumer education counseling.

There are four basic components of this bill. And let me say at the outset, that I don't see this bill as a cure all. There's so much we need to do. This bill, I think, has four components of four specific things that we need to do, and we need to do right away.

One, provide grants to the states. They're the ones on the front lines, to the local levels, and to non profit agencies. They're the ones that are there on the grassroots, on the battlefields, dealing day to day with predatory lending, your AARPS, your community action groups, your NAACPs, all of these folks are out there, senior citizens groups, many of our local banks, and companies, and firms that deal with that. But these would be grants for programs that educate consumers, especially low income borrowers and senior citizens about lending laws, counseling programs for homeowners, and prospective homeowners regarding unscrupulous lending practices, and referral services for homeowners and prospective homeowners. That's the first thing getting some grants, getting some resources down to the grassroots folks so that they can work with developing these education programs, and setting up this counseling.

And then the second thing, which I think is the kernel of this bill create a nationwide toll free number to receive consumer complaints regarding predatory lending, to provide information about unscrupulous lending practices, refer victims to help, to consumer protection agencies or organizations, and create a database of information for consumers. This 1 800 number, I think, as I said, is the cornerstone of this bill, because it is the Help Line. And to get grants down, these grants would also help to market this number.

You have ministers that can say it from the pulpit, that these senior citizens and others who are targeted folks for predatory lending, can say hey, before you sign on the dotted line, just call this number. We put money in this program for billboards, for targeted radio advertisements. When in doubt, call this number. Before you sign on the dotted line, call this number. You're dealing with a targeted group without the literacy. They're not going to come to you and me. They're going to go to those undereducated people who don't understand the language, people that may not have had the education, the lower income, on fixed incomes. That's why they call it predatory lending. It is targeted to these folks. And if we get this 1 800 number and target it to the targeted communities, and put something in the hands of these grassroots communities, then we've got a Help Line out there. And that's why I feel so strongly about the toll free number.

The other two points that it would do, it would coordinate government agencies and non profit organizations that provide education and counseling to consumers who have been victims of predatory lending practices. And fourthly, it would establish a Predatory Lending Advisory Council under the Department of Housing and Urban Development, comprised of community based groups, homeowners, government officials and private industry. And the council will advise the HUD Secretary, and conduct studies on the root causes of default and foreclosure of home loans.

So we set up an ongoing infrastructure in targeted states where this is going on. There's some states that don't have this problem, as other states. We know the states that have this problem are states where you have a lot of minorities, where you have older people on fixed incomes, and I think we can give them this help.

Where are we now? I'm working with Chairman Bob Ney to pass the legislation. I understand I'm a freshman and I'm a Democrat on this Committee, and I know that this bill isn't going to pass because David Scott wants this bill to pass. I'm a freshman. I realize that. I understand that.

So I went to Chairman Ney, and I said, "Chairman Ney, you're working on housing bill." He said, "You're working on this". He said, "David, I like what you're doing." And I said, "Well, look, can we ride along together on this in a good old bipartisan way?" And Ney said, "Yes", and so this bill that I've just outlined for you has been incorporated as a part of Chairman Ney's bill. And in about an hour from now, or less than that, it will be discussed before the Financial Services Committee, and I know you all know a lot of the people on that Committee. We've got something here, I think, that we can at least grab our hands around and move forward on.

Also, I have come to recognize the importance of integrating economics and personal finance in the K 12 curriculum. And Congresswoman Biggert has a good bill. We are going to set up a Commission with her bill and I'm a co sponsor on it, and certainly Chairman Bachus is on, all of us are working to get literacy programs age specific to K 12 to start our children early. Thank you.

It can have an impact on millions of future investors. Remember the vision, remember what Alexander Hamilton said we will not survive if we're not financially literate. Our way of life, our whole free enterprise system, the whole nine yards, is based upon having a financially literate generation to come. By having a good understanding of finances, Americans can help prevent identity theft, protect themselves from being victims of predatory lending.

The House has passed legislation that will allow also any American to receive a free copy of their credit report. I think the free credit report, that's one of the great things we did in the Fair Credit Reporting Act that we passed. This tool will help consumers give their credit a checkup before they apply for the loan.

Understanding finances also helps consumers know how to start saving money for retirement and for education, and that's why I, of course, have joined with Congressman Drier, another of my Republican friends, to introduce H.R. 3294, the Financial Literacy Enhancement Act. This measure directs the Secretary of the Treasury to implement a national public service multimedia campaign to highlight the importance of financial literacy for all Americans.

We need to provide fundamental knowledge for tomorrow's investors that will allow them to make sound investment decisions in a variety of market and economic conditions. And the best way to prevent future economic scandals and predatory lending is to create a smarter group of investors and a more literate country.

On July 10th, I introduced a Financial Literacy Program, as I said, with Congresswoman Judy Biggert, which was successfully amended into H.R. 2179 in Subcommittee. And the Biggert Scott Amendment encourages the creation of a $5 million grant program to be directed through grants to non profit organizations involved with K 12 economics education, using the Security Exchange Commission's $80 million Global Research Analyst Settlement. H.R. 2179 passed out of the Subcommittee by a vote of 28 to 24 with the Biggert Scott language attached. The legislation must now be considered by the Full Financial Services Committee.

And then finally, any effort to reach the unbanked market must balance the need to expand access to credit with the need to protect consumers. And the FDIC has done exactly this in its recent guidance to examiners on payday lending. The agency was able to strike a difficult but appropriate balance in expanding access to small denomination short term credit, while protecting consumers from unscrupulous lending practice.

In summary and in conclusion, we in Congress must continue to help expand financial awareness in consumers from K 12 students, to adults who want to buy a house. And we must raise awareness about predatory lending practices, and explain the importance of credit scores and provide investor protection. And we must work with the financial industry to open the doors to financial security and independence.

In short, this is our vision, and we must reach out and grab this vision, and bring true those haunting words, and answer the warning of Alexander Hamilton. And that is, we must not fail in this vision to have a very literate, financially literate America. Thank you very much.

MS. KENNEDY: Well, you can see why these great minds think alike, and why there is much more bipartisanship on these issues than I think most people read about outside the beltway.

These leaders have a lot of information to share with us, and I'm afraid they've got to get to a hearing on Solutions to Predatory Lending, so just join me again in thanking this distinguished group, and support them.

DR. SMITH: As the Members of Congress leave, we once again thank them not only for what they said today, but we thank them for all they do behind the scenes to make it work.

You'll notice this panel dealt with the thought, the feeling, some of the comments of folks who are in Congress what they felt. The next panel is going to go to a different approach to this issue. The next panel is going to say how in the world do we develop, and what have we developed that are successful roots to resolving these issues not just what's been thought about, but what are we actually doing in banks and with community organizations? What are the issues that have been accomplished?

Let me bring to the podium a person who was the Assistant Secretary of the Treasury at Treasury, who has worked astutely and creatively for consumer protection, and also for making sure we have terrorism insurance for our security. She now is the Dean's Professor for Financial Regulatory Policy at the University of Massachusetts at Amherst. Let me bring to you Sheila Bair as the moderator.

Next page: Panel I