A common theme throughout the daylong event was that financial literacy is not about individuals becoming experts in investment banking or real estate, but in assisting them in how to open and maintain bank accounts, how to avoid predatory lenders and helping them make sound financial decisions.
â€œCash management, debt management, savings and investment planning, insurance planning and estate planning are the core competencies of financial literacy,â€ said Carrie Schwab-Pomerantz, president of Charles Schwab Foundation, who was one of the more than 50 speakers who participated in the summitâ€™s seven plenary sessions.
Many people make significant financial decisions while lacking vital information, Schwab-Pomerantz added, often leading to tragic outcomes like home foreclosures, poor credit and inadequate retirement savings.
John Hope Bryant, Founder/CEO, Operation HOPE: â€œFor the sake of our shared future global security, we should empower everyone with â€˜silver right,â€™ â€“ financial literacy.â€ Photo by Lafayette Barnes IVâ€œSo anxious are we to have that dream house, that we didnâ€™t seek the proper advice, because we didnâ€™t know to seek the proper advice,â€ said U.S. Rep. Elijah E. Cummings (D-Md.). â€œBut, if we had financial literacy, we couldâ€™ve asked the better questions.â€
Both in the public policy arena and in the financial services industry, steps are being taken to equip individuals with a strong financial acumen.
In March, Cummingsâ€™ colleague Rep. Sheila Jackson-Lee (D-Texas) introduced an amendment to the Higher Education Act of 1965, requiring colleges and universities to provide financial literacy counseling for students accepting college loans. The amendment, which is now before the House Education and Labor Committee, requires that the counseling include information on banking, budgeting, credit cards and ratings, loans, grants, education tax credits, and scholarships, renting and housing and investing.
During his speech, Bernanke stressed the importance of community development financial institutions, banks, credit unions and venture funds, that offer affordable financial services.
â€œEconomic recovery, like economic development, is a bottom-up as well as top-down process,â€ Bernanke said.
The summit included a Web cast announcement from the White House in which President Obama outlined what he called the â€œmost sweeping overhaul of the financial regulatory system since the Great Depression.â€
Obamaâ€™s plan will impose supervision and regulation on financial institutions; increase market discipline and transparency; create the Consumer Financial Protection Agency to protect consumers in the credit, savings and payment markets; provide the government with tools to better manage financial crises; and raise international regulatory standards and coordination.
â€œThese sweeping reforms to Americaâ€™s regulatory agencies enable us to aggressively respond to the historic economic crisis we find ourselves in,â€ Jarrett said. â€œThe plan and each of our actions are driven by the presidentâ€™s vision for a new foundation for sustained economic growth with good jobs and rising incomes.â€
The summit concluded with a civil rights conversation among Bryant; former United Nations Ambassador and Operation HOPE global spokesman Andrew Young; Dr. Dorothy Height, chair and president emeritus, National Council of Negro Women; Hilary O. Shelton, director, NAACP Washington Bureau, and David White, CEO, The Childrenâ€™s Mutual in the United Kingdom.
D.C. Councilmember Marion Barry (D-Ward 8) (l) listens to former United Nations Ambassador and Operation HOPE global spokesman Andrew Young (r) share his perspective during the civil rights conversation with John Hope Bryant (c). Photos by Lafayette Barnes IVâ€œThis makes us more equipped to play the game,â€ said Mary N. Elliott Esq., an attorney and marketing specialist in the University of the District of Columbiaâ€™s Office of Community Outreach and Extension Services. â€œIâ€™ve found that, in the minority community, theyâ€™ll use any information made available to them. But, they canâ€™t become financially literate if they donâ€™t know.â€
Elliott added that this type of information enables individuals to better manage the financial â€œjigsaw puzzleâ€ of paying for their childrenâ€™s college education or planning for retirement.
â€œPeople I come across in my outreach might say, â€˜I didnâ€™t know how they compute credit scores,â€™ or â€˜I didnâ€™t know about a 529 savings plan for college,â€™ or â€˜I didnâ€™t know the importance of teaching my small kids about saving money,â€™â€ Elliott said. â€œSo, [the summit] has major, major practical applications.â€
Ben S. Bernanke, Federal Reserve System: â€œEconomic recover, like economic development, is a bottom-up as well as top-down process.â€ Courtesy Photo
Valerie B. Jarrett, Senior White House Advisor: â€œThese sweeping reformsâ€¦enable us to aggressively respond to the historic economic crisis we find ourselves in.â€ Courtesy Photo