2005 Economic & Financial Literacy Conference

Aloha. Welcome to this year's Economic and Financial Literacy Conference. It's the first one I am missing because the Senate remains in session. I regret that I cannot be with you today but look forward to hearing the results of your work. Rest assured that I am doing my part in our Nation's Capitol to help the cause you are championing today.

I have been especially busy working to expose and target those who take advantage of the economic and financial illiteracy of others. Only a few weeks ago, the Senate passed my measure to study a predatory product aggressively marketed every tax season, the Refund Anticipation Loan, or RAL. Many individuals targeted for RAL use are recipients of a successful anti-poverty tax program known as the Earned Income Tax Credit, and thus, the effectiveness of the tax credit is being eroded.

RALs typically carry triple-digit interest rates for very short-term loans with very low risk. My provision requires the IRS and the National Taxpayer Advocate to study and report on the impacts of the Debt Indicator, which lets tax preparers know whether a tax filer's refund will be paid or intercepted for government debts, usually without the filer's knowledge. The study will also look at the debt collection offset practice and ways to speed up the delivery of tax refunds to filers. I hope the study will expose the Debt Indicator for its role in facilitating the approval of RALs, and recommend ways to ensure that tax filers are no longer bilked by fees that well exceed the principal amount borrowed.

Other products where high fees catch consumers in a pernicious web, particularly because of economic and financial illiteracy, are predatory loans. We see abusive predatory lenders in many places, but especially around military bases. They lure uninformed families, notably those that already have bad credit, into storefronts with promises of easy credit and quick cash. What they don't tell these families about are the exorbitant fees. For example, interest rates for a typical two-week payday loan can be up to 800 percent. Some borrowers dig themselves deeper in debt by securing cash to pay off these fees. This means that they may never get their heads above water and often need to file bankruptcy.

Predatory financial products such as RALs and payday loans are just a few of the many reasons why I want to make sure that my constituents understand basic economics and personal money management. I again thank the National Association of Securities Dealers, the Council, and the Department of Commerce and Consumer affairs for joining me in cosponsoring investor education events in August. Some of you were at the events where we helped more than 14-hundred people improve their investing knowledge and gave them tools to learn more about their mutual funds, bond funds, and the people to whom they entrust their money.

Of course, if we learned about such things when we were much younger, it would be harder for unscrupulous lenders to take advantage of us. This is why I commend your efforts today toward improving economic and financial literacy in our schools. Many of our keiki have already benefitted through activities like the Stock Market Simulation and Economics Challenge. In fact, the growing economics proficiency of Hawaii's teachers and students is being recognized on the national level. I am pleased to provide some assistance toward related K-through-12 efforts through my Excellence in Economic Education Act, and I hope we will be successful yet again in funding the Act in the current appropriations process.

Other hopeful progress in education, this time for older, college-age students, is that provisions in my bill, the College LIFE, or Literacy in Finance and Economics, Act, have been included in Higher Education Act reauthorizations pending in Congress. Among other things, College LIFE provisions would increase the emphasis on economic and financial education and counseling in existing programs, such as TRIO – Upward Bound and Talent Search, GEAR-UP, and minority-serving institution programs.

My colleagues and I also continue to look for the release of a national strategy from the Financial Literacy and Education Commission. The Commission is made up of several federal agencies such as the Treasury and Education Departments, Federal Reserve, and Securities and Exchange Commission, and is working to coordinate efforts to promote the best use of federal resources to reduce financial illiteracy in our country.

Once again, I thank the Council – Jeanne, Kristine, Gail, Elina, and others – for their keen commitment and dedication. I also thank the sponsors for their support, today's exhibitors, and all other participants for being here today. May this be a most productive conference. Mahalo and aloha.