Today we hold our second hearing on the state of financial literacy and education in the United States. We are pleased to have such a distinguished panel of witnesses, all with significant expertise on this subject.
We began our exploration of this issue yesterday, when we heard from Treasury Secretary O'Neill, Federal Reserve Board Chairman Greenspan, and SEC Chairman Pitt. Their testimony underscored the urgent need for improved financial education in America. Yesterday, one witness observed in response to the Committee's questions, the problem of financial illiteracy in this country is one of "epidemic proportions." Each of their agencies is actively engaged in efforts to improve Americans' financial understanding, and I commend each of them for their commitment to this issue.
Of course, as I said yesterday, financial literacy is not a magical solution that will solve all the problems consumers face in making financial decisions. We obviously need a framework in which this takes place that also includes strong legal protections, vigorous enforcement, and best practices in the industry in providing responsible credit alternatives.
Nonetheless, financial education can go a long way toward preparing consumers to make decisions that will be in their long-term financial interest. AS was noted yesterday, the costly consequences that inadequate financial education can have, include such difficulties as:
I indicated yesterday that I think we need a national strategy to bring the public and private sectors together to address the problem of financial illiteracy. The commitment of yesterday's witnesses to improving financial education gives me some confidence that we can undertake increased coordination and cooperation on this issue at the very highest levels of the Federal government.
Today, we will hear from representatives of the private and nonprofit sectors, as well as from a representative of state government. We had far more requests to testify than we could accommodate, and frankly, I am gratified that there are so many organizations and groups working on this issue; it is a testament to the growing awareness of the important role financial literacy plays in helping people make the financial choices necessary to give them the opportunity to succeed in our society.
Our panel today covers the broad spectrum of issues related to financial literacy and education, from school-aged children to young people who are handling credit for the first time, first-time mortgage borrowers, and those who are trying to save enough for retirement. I believe the testimony we will receive this morning will help to inform our development of a national strategy to address this critical issue, and I look forward to continuing to work with each of them as we move forward.