Statements on Introduced Bills and Joint Resolutions

Floor Speech

STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS -- (Senate - March 19, 2009)

By Mrs. MURRAY (for herself, Mr. Cochran, and Mr. Kaufman):

S. 638. A bill to provide grants to promote financial and economic literacy; to the Committee on Health, Education, Labor, and Pensions.

Mrs. MURRAY. Mr. President, there are a number of factors that caused the economic recession we are faced with today. All of us know that.

We can blame executives on Wall Street, who made reckless choices and ignored long-term consequences to make a quick profit.

We can blame the financial industry regulators, whose lax oversight failed to see the potential risks posed by the new, complex financial products that Wall Street was selling, and we can point a finger at those in the mortgage industry, who ignored that all bubbles eventually burst and that--in the case of housing bubble--the American taxpayers would be left to clean up the mess.

But we also need to look a little closer to home as well. The reality is that one of the contributing causes of this recession is the fact that too many Americans made poor and very often uninformed financial choices when they bought homes in the last several years.

Too many overestimated their own resources, didn't read the fine print, and didn't grasp the terms of their mortgages before signing on the dotted line.

In fact, we need to recognize that too many Americans, from college students to senior citizens, are financially illiterate.

The problem is not limited to mortgage holders. Too many Americans don't know how to budget their household expenses, manage their credit card debt, or even pay their bills on time.

We need to ensure that we don't get into this situation again, by giving all Americans the skills to make sound financial decisions.

We used to say the 3 R's of school are reading, writing, and arithmetic. Well, I think we need to add a fourth R--resource management.

That is why today I am introducing legislation that will help ensure that all Americans get the skills they need to make financial decisions that will protect them and their families.

The Financial and Economic Literacy Improvement Act of 2009 will require the Federal Government to step to the plate and become a real partner in helping Americans manage their finances and make good decisions about housing, employment, and education.

This bipartisan bill, which is cosponsored by Senator Cochran, is aimed at helping people of all ages. Our goal is to ensure that high school and college students know the pitfalls of signing up for credit cards and can make informed decisions about student loans.

All young people understand the importance of saving and making smart decisions to ensure a comfortable and dignified retirement and, most important, that we are taking steps to ensure we do not repeat the misguided and uninformed decisions that have contributed to the recession that we find ourselves in today.

Under our bill, the Federal Government will become a strong supporter of making financial literacy education a core part of K-12 education.

I believe that focusing this effort on young people is critical for two reasons:

One, if we are going to avoid another crisis such as this one, we must begin by teaching the next generation to make smart financial decisions; two, because all signs point to another generation that is coming of age already saddled with debt, and we need to help them before it is too late.

This past Sunday, this article ran on the front page of the Olympian newspaper from my State of Washington. I ask unanimous consent to have this article printed in the Record.

There being no objection, the material was ordered to be printed in the RECORD, as follows:

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Mrs. MURRAY. Mr. President, the article discusses the legislation I am introducing today. It also talks about the financial path that the next generation is currently on. The article pointed out that, right now, one-third of our college students have four credit cards when they graduate. More than half of our graduates have piled up $5,000 each in high interest debt. The number of 18 to 24-year-olds who have declared bankruptcy has almost doubled in 10 years.

That article also points out that many of our young people are financially illiterate. They understand very little about concepts such as interest or minimum payments or credit reports and the financial reality of having to pay off their student loans for years to come.

Today, with many of our schools struggling to pay teachers and maintain their current programs, a lot of our State and local governments cannot afford to ramp up financial literacy education right now. That is exactly where I believe the Federal Government needs to step up. We cannot afford for our young people to not understand their own finances.

Our bill will authorize $125 million annually to go to State and local education agencies and their partnerships with organizations experienced in providing high-quality financial literacy and economic instruction.

This funding we will provide will help make financial and economic literacy a part of core academic classes, develop financial literacy standards and testing benchmarks, and provide critical teacher training.

This bill will also help schools weave financial concepts into basic classes, such as math and social studies.

Importantly, this training will not end in high school. Our bill makes the same $125 million investment in teaching financial literacy in our 2- and 4-year colleges.

That is critical. My constituents often write or tell me about the financial trouble they are struggling with. A lot of them are very desperate for help. They got into situations they didn't understand, and they don't have the resources to fix.

For example, one woman from Olympia, who put off credit card bills to pay her mortgage, wrote to me and said:

I am educated, but was unaware that by being late on a payment or by skipping a payment and trying to make it up, my interest rate could skyrocket to over 26 percent, and late fees could be exponential.

Whether it is skyrocketing interest rates or credit cards or an adjustable rate mortgage that somebody can no longer afford or a retirement plan that they don't understand, I often hear the same thing from people: I wish someone had taught this to me in high school.

This bill we are introducing ensures that we are teaching it in our schools, and it will help people learn the basic skills that will give them a leg up when they are dealing with their bankers.

This crisis we are in cost us dearly. Every weekend when I go home I hear about another business that is closing or another family who cannot pay their bills. But we know if we make changes and smart investments, we can move our country forward. I believe this is one of those smart investments. In January, after President Obama took office, he called for an era of personal responsibility. I believe our bill helps Americans to usher in that era.

I encourage my colleagues to take a look at the bill and cosponsor it and help us move it forward so we can make sure that we have a financially literate country.

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