Statement of Sandra L. Thompson, Director,
Division of Supervision and Consumer Protection,
Federal Deposit Insurance Corporation
on the
Federal Government's Role in Empowering Americans
to Make Informed Financial Decisions
before the
Subcommittee on Oversight of Government Management,
the Federal Workforce, and the District of Columbia
Committee on Homeland Security and Governmental Affairs
United States Senate
Room 342, Dirksen Senate Office Building
July 15, 2010
Chairman Akaka, Senator Voinovich and members of the Committee, I appreciate the
opportunity to testify on behalf of the Federal Deposit Insurance Corporation (FDIC)
regarding the role of the federal government in empowering Americans to make
informed financial decisions.
As requested by the Subcommittee, our testimony will discuss a number of initiatives by
the FDIC to improve financial education and access. First, I will briefly address the
importance of this topic and highlight FDIC's recently released research into the
unbanked and underbanked. Next, I will overview the FDIC's financial education
resources available to the public and highlight some of the ways the FDIC is promoting
financial education in collaboration with the Financial Literacy and Education
Commission (the Commission) and other external partners. Finally, I will review several
of our initiatives to ensure that underserved consumers can access affordable credit
and transactional products at insured financial institutions.
Background
It is essential that people of all ages, at all income levels, and from all walks of life learn
to make informed and prudent financial decisions. As the recent financial crisis
demonstrated so clearly, it harms the entire economy – not just the individual consumer
– when people spend beyond their means by taking on debt they cannot afford to repay.
Access to an account at a federally insured institution provides households with an
important first step toward achieving financial security. Having an account can provide
the opportunity to conduct basic financial transactions, save for emergency and long-
term security needs, and access credit on affordable terms. For working families, a
savings cushion to fall back on might be the only thing that keeps them from bouncing a
check or turning to high-cost sources of credit.
Unfortunately, many consumers remain outside the financial mainstream. In December
2009, the FDIC released the findings of our National Survey of Unbanked and
Division of Supervision and Consumer Protection,
Federal Deposit Insurance Corporation
on the
Federal Government's Role in Empowering Americans
to Make Informed Financial Decisions
before the
Subcommittee on Oversight of Government Management,
the Federal Workforce, and the District of Columbia
Committee on Homeland Security and Governmental Affairs
United States Senate
Room 342, Dirksen Senate Office Building
July 15, 2010
Chairman Akaka, Senator Voinovich and members of the Committee, I appreciate the
opportunity to testify on behalf of the Federal Deposit Insurance Corporation (FDIC)
regarding the role of the federal government in empowering Americans to make
informed financial decisions.
As requested by the Subcommittee, our testimony will discuss a number of initiatives by
the FDIC to improve financial education and access. First, I will briefly address the
importance of this topic and highlight FDIC's recently released research into the
unbanked and underbanked. Next, I will overview the FDIC's financial education
resources available to the public and highlight some of the ways the FDIC is promoting
financial education in collaboration with the Financial Literacy and Education
Commission (the Commission) and other external partners. Finally, I will review several
of our initiatives to ensure that underserved consumers can access affordable credit
and transactional products at insured financial institutions.
Background
It is essential that people of all ages, at all income levels, and from all walks of life learn
to make informed and prudent financial decisions. As the recent financial crisis
demonstrated so clearly, it harms the entire economy – not just the individual consumer
– when people spend beyond their means by taking on debt they cannot afford to repay.
Access to an account at a federally insured institution provides households with an
important first step toward achieving financial security. Having an account can provide
the opportunity to conduct basic financial transactions, save for emergency and long-
term security needs, and access credit on affordable terms. For working families, a
savings cushion to fall back on might be the only thing that keeps them from bouncing a
check or turning to high-cost sources of credit.
Unfortunately, many consumers remain outside the financial mainstream. In December
2009, the FDIC released the findings of our National Survey of Unbanked and
Underbanked Households, which was a supplement to the Census Bureau's Current
Population Survey. The survey sought to estimate the size of the unbanked and
underbanked markets and to identify the factors that inhibit their participation in the
mainstream banking system.
The study, which we believe is the most comprehensive survey to date of the unbanked
and underbanked, estimated that 7.7 percent of U.S. households are unbanked, while
17.9 percent of U.S. households are underbanked. Taken together, at least 25.6
percent of U.S. households, close to 30 million, are either unbanked or underbanked.
In addition, the survey findings indicated that some racial and ethnic groups were more
heavily represented as underserved than the population as a whole. Almost 54 percent
of black households, 44.5 percent of American Indian/Alaskan households, and 43.3
percent of Hispanic households appeared underserved.
Additional data for the household survey is available in an interactive format on
www.economicinclusion.gov, a website established by the FDIC to highlight our efforts
to expand access to the financial mainstream. Also available through this website are
results of a nationwide survey of FDIC-insured depository institutions to assess their
efforts to serve unbanked and underbanked individuals and families.
FDIC's Financial Education Initiatives and Resources for the Public
Money Smart Program
Since its launch in 2001, the FDIC has reached over 2.5 million consumers with Money
Smart, our comprehensive financial education curriculum designed to help individuals
develop financial skills and positive banking relationships. The curriculum is available
free of charge in four primary formats:
• An instructor-led curriculum for adults on CD-ROM in seven languages (English,
Spanish, Chinese, Hmong, Korean, Russian, and Vietnamese) and large
print/Braille.
• An instructor-led version to teach young adults between the ages of 12-20 on a
CD-ROM, Money Smart for Young Adults. The curriculum has been aligned with
relevant state educational standards and endorsed by the National School
Boards Association. Since its launch in April of 2008, over 75,000 instructor-led
copies have been requested.
• An online self-paced Computer-Based Instruction (CBI) format for all ages in
English and Spanish.
• A portable audio (MP3) version, Money Smart Podcast Network, for all ages.
In addition to providing the Money Smart curriculum, the FDIC publishes the quarterly
Money Smart News to provide more than 40,000 financial educators and other
Population Survey. The survey sought to estimate the size of the unbanked and
underbanked markets and to identify the factors that inhibit their participation in the
mainstream banking system.
The study, which we believe is the most comprehensive survey to date of the unbanked
and underbanked, estimated that 7.7 percent of U.S. households are unbanked, while
17.9 percent of U.S. households are underbanked. Taken together, at least 25.6
percent of U.S. households, close to 30 million, are either unbanked or underbanked.
In addition, the survey findings indicated that some racial and ethnic groups were more
heavily represented as underserved than the population as a whole. Almost 54 percent
of black households, 44.5 percent of American Indian/Alaskan households, and 43.3
percent of Hispanic households appeared underserved.
Additional data for the household survey is available in an interactive format on
www.economicinclusion.gov, a website established by the FDIC to highlight our efforts
to expand access to the financial mainstream. Also available through this website are
results of a nationwide survey of FDIC-insured depository institutions to assess their
efforts to serve unbanked and underbanked individuals and families.
FDIC's Financial Education Initiatives and Resources for the Public
Money Smart Program
Since its launch in 2001, the FDIC has reached over 2.5 million consumers with Money
Smart, our comprehensive financial education curriculum designed to help individuals
develop financial skills and positive banking relationships. The curriculum is available
free of charge in four primary formats:
• An instructor-led curriculum for adults on CD-ROM in seven languages (English,
Spanish, Chinese, Hmong, Korean, Russian, and Vietnamese) and large
print/Braille.
• An instructor-led version to teach young adults between the ages of 12-20 on a
CD-ROM, Money Smart for Young Adults. The curriculum has been aligned with
relevant state educational standards and endorsed by the National School
Boards Association. Since its launch in April of 2008, over 75,000 instructor-led
copies have been requested.
• An online self-paced Computer-Based Instruction (CBI) format for all ages in
English and Spanish.
• A portable audio (MP3) version, Money Smart Podcast Network, for all ages.
In addition to providing the Money Smart curriculum, the FDIC publishes the quarterly
Money Smart News to provide more than 40,000 financial educators and other