Remarks by
Vice Chairman John Reich
Federal Deposit Insurance Corporation
at the
Introduction of the Chinese-language Version of Money Smart
Chicago, Illinois
March 28, 2003
Good morning. I'm very pleased to be with you today for the official rollout of the
Chinese-language version of the FDIC's financial education curriculum, Money Smart.
President Abraham Lincoln once said that education is "the most important subject
which we, as a people, can be engaged in."
At the FDIC, we couldn't agree more. And the same is true for financial education, which
is why we developed the Money Smart curriculum and introduced it nearly two years
ago.
We developed Money Smart in response to growing national concern over predatory
lending practices and the increasing incidence of consumers being taken advantage of
in the handling of their personal finances.
At the FDIC, we are in the business of insuring deposits at the nation's banks and
savings associations. We are also in the business of promoting the safety and
soundness of these institutions.
What does this have to do with financial education?
More than you think.
A couple of years ago the FDIC held forums on predatory lending in seven locations
nationwide. These meetings included bankers, community leaders, city and state
officials, and local residents. Participants identified problems in their particular area and
recommended solutions, which ranged from more legislation to better enforcement of
existing regulations.
But there was one recommended solution that remained constant no matter where we
went or who we talked to. That recommendation was consumer education - equipping
the consumer to help himself.
Federal Reserve Bank studies show that 10 percent of all American families have no
bank account. This includes 25 percent of African-American and Hispanic households, a
quarter of all families with incomes under $20,000, and nearly half of all families moving
from welfare to work. And the median value of all assets held by unbanked families in
1998 was just $2,300, compared with $136,000 for all banked families.
Vice Chairman John Reich
Federal Deposit Insurance Corporation
at the
Introduction of the Chinese-language Version of Money Smart
Chicago, Illinois
March 28, 2003
Good morning. I'm very pleased to be with you today for the official rollout of the
Chinese-language version of the FDIC's financial education curriculum, Money Smart.
President Abraham Lincoln once said that education is "the most important subject
which we, as a people, can be engaged in."
At the FDIC, we couldn't agree more. And the same is true for financial education, which
is why we developed the Money Smart curriculum and introduced it nearly two years
ago.
We developed Money Smart in response to growing national concern over predatory
lending practices and the increasing incidence of consumers being taken advantage of
in the handling of their personal finances.
At the FDIC, we are in the business of insuring deposits at the nation's banks and
savings associations. We are also in the business of promoting the safety and
soundness of these institutions.
What does this have to do with financial education?
More than you think.
A couple of years ago the FDIC held forums on predatory lending in seven locations
nationwide. These meetings included bankers, community leaders, city and state
officials, and local residents. Participants identified problems in their particular area and
recommended solutions, which ranged from more legislation to better enforcement of
existing regulations.
But there was one recommended solution that remained constant no matter where we
went or who we talked to. That recommendation was consumer education - equipping
the consumer to help himself.
Federal Reserve Bank studies show that 10 percent of all American families have no
bank account. This includes 25 percent of African-American and Hispanic households, a
quarter of all families with incomes under $20,000, and nearly half of all families moving
from welfare to work. And the median value of all assets held by unbanked families in
1998 was just $2,300, compared with $136,000 for all banked families.
It's clear there is a problem, and it's a problem not just for the unbanked, but for all of
us.
I believe that the best way for individuals and families to achieve long-term self-
sufficiency and take part in the American dream is to build assets, reduce debt, and live
in economic freedom.
But no one is born being smart about money. That's something you learn. And that's
why the FDIC has developed Money Smart, available in English, Spanish, and -- now,
today – in Chinese.
I think of Money Smart as a tool kit to help folks begin building a more secure financial
future for themselves. Financial education can be the building block to establishing
banking relationships, opening a checking account, managing and saving money,
owning a home, building wealth, and increasing assets.
This is especially important in large urban areas, where surveys show that between 20
to 40 percent of people who do not have traditional banking relationships pay fees to
cash their paychecks, many of them at commercial check-cashing outlets. Most of these
check-cashing outlets charge between 2 and 3 percent of the face value of a check to
cash it, which means that a family with $18,000 in take-home pay could spend more
than $400 a year simply to cash their paychecks. That's a whole lot more than a
traditional financial institution charges.
And, in times of emergencies – the kind we all encounter -- families without access to
mainstream sources of credit have to turn to informal sources of credit or to pawnshops,
car-title lenders, payday lenders, and small-loan companies where the annualized
interest rates are almost always over 100 percent and often as high as 500 percent.
People who utilize services such as these are going to find it very difficult – if not
impossible – to escape from the insecurity and stress of living paycheck to paycheck.
That's where Money Smart is helping. Since we introduced Money Smart nearly two
years ago, the FDIC has partnered with more than 18,000 financial institutions, faith-
based and community organizations, and government agencies to teach financial
education in cities and towns across the nation. Money Smart is being taught in
community colleges, in church basements, on Indian reservations and military
installations, in pre-marriage counseling classes, in welfare-to-work programs, in
prisons and in schools.
Now Money Smart is readily available to another important segment of our population:
our Chinese-speaking citizens. And later this year, it will be available in Korean and
Vietnamese as well.
us.
I believe that the best way for individuals and families to achieve long-term self-
sufficiency and take part in the American dream is to build assets, reduce debt, and live
in economic freedom.
But no one is born being smart about money. That's something you learn. And that's
why the FDIC has developed Money Smart, available in English, Spanish, and -- now,
today – in Chinese.
I think of Money Smart as a tool kit to help folks begin building a more secure financial
future for themselves. Financial education can be the building block to establishing
banking relationships, opening a checking account, managing and saving money,
owning a home, building wealth, and increasing assets.
This is especially important in large urban areas, where surveys show that between 20
to 40 percent of people who do not have traditional banking relationships pay fees to
cash their paychecks, many of them at commercial check-cashing outlets. Most of these
check-cashing outlets charge between 2 and 3 percent of the face value of a check to
cash it, which means that a family with $18,000 in take-home pay could spend more
than $400 a year simply to cash their paychecks. That's a whole lot more than a
traditional financial institution charges.
And, in times of emergencies – the kind we all encounter -- families without access to
mainstream sources of credit have to turn to informal sources of credit or to pawnshops,
car-title lenders, payday lenders, and small-loan companies where the annualized
interest rates are almost always over 100 percent and often as high as 500 percent.
People who utilize services such as these are going to find it very difficult – if not
impossible – to escape from the insecurity and stress of living paycheck to paycheck.
That's where Money Smart is helping. Since we introduced Money Smart nearly two
years ago, the FDIC has partnered with more than 18,000 financial institutions, faith-
based and community organizations, and government agencies to teach financial
education in cities and towns across the nation. Money Smart is being taught in
community colleges, in church basements, on Indian reservations and military
installations, in pre-marriage counseling classes, in welfare-to-work programs, in
prisons and in schools.
Now Money Smart is readily available to another important segment of our population:
our Chinese-speaking citizens. And later this year, it will be available in Korean and
Vietnamese as well.