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Murray Speaks Out on Need to Make More Americans Financially Literate

Mar 19 2009

After introducing major, bi-partisan legislation to improve financial literacy, Murray speaks on the Senate floor to highlight how legislation could help avoid another economic crisis

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(Washington, D.C.) – Today, U.S. Senator Patty Murray (D-WA) spoke on the Senate floor after introducing the Financial and Economic Literacy Improvement Act of 2009. Murray’s bill, for the first time, makes the federal government a major supporter of providing financial literacy skills to Americans of all ages.

The following are Senator Murray’s remarks on the Senate floor today:

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 financial industry regulators, whose lax oversight failed to see the potential risks posed by the new, complex financial products Wall Street was selling.

And we can point the finger at those in the mortgage industry who ignored that all bubbles eventually burst, and that – in the case of the housing bubble – the American taxpayers would be left to clean up the mess.

But, Mr. President, we also need to look a little closer to home.  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 over-estimated their resources, didn’t read the fine print, and didn’t grasp the terms of their mortgage before signing on the dotted line.  In fact, Mr. President, we need to recognize that too many Americans – from college students to senior citizens – are “financially illiterate.” 

And the problem isn’t 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 three ‘R’s’ of school are “reading, writing, and arithmetic.”  Well, I think we need to add a fourth ‘R’ – “resource management.”

And that’s 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.

My Bill Will Make Sure Financial Literacy is Taught in School

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

This bi-partisan bill, which is co-sponsored by Senator Cochran, is aimed at helping people of all ages.  And 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 importantly, that we are taking steps to ensure that we don’t repeat the misguided and uniformed decisions that have contributed to the recession we find ourselves in today.

Mr. President, under our bill, the federal government would become a strong supporter of making financial literacy education a core part of a K-12 education.

I believe that focusing this effort on our young people is critical for two reasons.  One, if we are going to avoid another crisis like this one, we must begin by teaching the next generation to make smart financial decisions.  And two, because all signs point to another generation that is coming of age already saddled with debt – we need to help them before it’s too late.

The Federal Government has to Step Up

Mr. President, just this past Sunday, this article ran on the front page of The Olympian newspaper from my home state of Washington.  The article discusses this legislation – but it also discusses the financial path that the next generation is currently on.

The article points out that right now one-third of college students have four credit cards when they graduate, more than half of graduates have piled up $5,000 each in high-interest debt, and that the number of 18- to 24-year-olds who have declared bankruptcy has almost doubled in 10 years.

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

But with schools struggling to pay their teachers and maintain their current programs, many states and local governments can’t afford to ramp up financial literacy education right now.  And that is exactly why the federal government has to step up.

Mr. President, we can’t afford for our young people to not understand their own finances.

This bill would 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 would help make financial and economic literacy a part of core academic classes, develop financial literacy standards and testing benchmarks, and provide teacher training.  It will also help schools weave financial concepts into basic classes, like math and social studies.

And the training would not end in high school.

Our bill makes the same $125 million investment in teaching financial literacy in our 2- and 4-year colleges.  And that’s critical, Mr. President.  My constituents often write or tell me about the financial trouble they’re struggling with. 

Many of them are desperate for help – they got into situations they didn’t completely 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 me:

“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% and late fees could be exponential.” 

Mr. President, whether it’s skyrocketing interest rates on credit cards, an adjustable-rate mortgage they can no longer afford, or a retirement plan that they don’t understand, I often hear the same thing: “I wish they had taught this stuff in school.”

This bill would ensure that we are teaching it in school, and it would help people learn basic skills that will give them a leg up when dealing with their bankers.

An Era of Personal Responsibility

Mr. President, this crisis has cost us dearly.  Every weekend when I go home I hear about another business that is closing or another family who can’t pay the bills.  But we know that if we make changes and smart investments, we can move our country forward.  And this is one of those smart investments.

In January, after President Obama took the oath of office he called for an era of personal responsibility.  This bill helps Americans to usher in that era.