LOS ANGELES - April 30, 2007 - On the eve of national Financial Literacy Month, Operation HOPE commends U.S. President George W. Bush for providing the essential Presidential leadership necessary to make financial literacy a true mainstream priority in 21st century American life.
Having educated more than 220,000 low-wealth youth in financial literacy in more than 700 inner-city schools, in 25 U.S. cities, with more than 6,000 professional HOPE Corps volunteers through its award winning Banking on Our Future Program, Operation HOPE has been a leader in advocating the need for a massive focus on practical financial literacy education amongst our youth for years now. But it was in recent conversations and communications with the President and the White House that the President took the initiative, calling for our nation’s first ever meeting with financial literacy experts with the President, held last Wednesday, April 25th, 2007, in the Roosevelt Room of the White House, during Financial Literacy Month.
Joining John Hope Bryant, founder, chairman and CEO of Operation HOPE, and other outside experts with President George W. Bush was Treasury Secretary Hank Paulson, Education Secretary Margaret Spellings, HUD Secretary Alphonso Jackson, U.S. Treasurer Anna Cabral, the President’s chief of staff Joshua Bolton, deputy chief of staff Karl Rove, and a host of other senior Administration and White House staffers. Coming out of this more than hour long meeting, the President called on Treasury Secretary Paulson to chair a new Presidential working group charged with delivering a report on potential Administration actions around financial literacy, working in partnership and cooperation with leaders in the private sector, community and faith, within 45 days.
And action is precisely what is needed inasmuch as financial illiteracy is a national crisis.
- The number one cause for divorce in Americais money.
- In 2002, more individuals filed for bankruptcy than graduated from college.
- Until recently the largest group of bankruptcy filers were youth between 18-24 years of age*; today senior citizens make up the largest group of bankruptcy filers in America.
- According to the Federal Reserve, more than 70% of all Americans are living from paycheck to paycheck, irrespective of race or geographic location.
- More than 70% of our nation’s economic activity is driven by the consumer.
- Amongst blacks in college, it is money, not grades, that represents the single largest barrier to completing their college education.
- More than 50 million American households have no bank account in this, the richest country in the world.
- No one is teaching our children life 101; the basics of checking, savings, credit, budget and investment, in this the largest economy in the world.
Making the Case
In its response to Hurricane Katrina, Operation HOPE witnessed Katrina victims who could not receive a FEMA payment because they did not have a bank account. “The average Katrina victim was in an economic disaster before the physical disaster called Katrina ever hit,” said John Hope Bryant, the founder of Operation HOPE.
In America’s inner-city communities where Operation HOPE does the majority of its work, black America represents more a $600 billion annual consumer spending force, and likewise Latinos represent an approximate $600 billion in additional annual consumer spending, or a total of $1.2 trillion combined consumer spending power nationwide. This is an enormous untapped, under-served, emerging market in America, and far too little of this trillion dollar spending power is being intelligently directed towards ownership of the homes and businesses in these communities, by and for those living in these same communities. This is not only an opportunity for black and brown America, this is an opportunity for America itself; from the private sector looking for new markets, to our nation’s treasury, looking for the next generation of tax payers and the future emerging middle class. “With the power of financial literacy we have witnessed what happens when you convert a check cashing customer into bank customers, a renter into a homeowner , a small business dreamer into a small business owner or entrepreneur. We know what happens when you help someone help themselves; everyone wins,” Bryant said.
On education amongst low-wealth youth Bryant said “in some inner city communities the drop out rate amongst young black and brown youth is 50-70%. This is absolutely unacceptable, and it equates to a de-facto economic death sentence, in a democracy rooted in capitalism.” Continuing Bryant said, “in the 21st century, education is the ultimate poverty eradication tool, because when you know better you tend to do better. I believe that many kids are dropping out of high school because they don’t see education as relevant to their future. Linking and leveraging financial literacy and opportunity, and bringing in role models and mentors as volunteers from the private sector to teach it, can change all that.”
Operation HOPE believes that financial illiteracy can even be found at the root of the current national sub-prime mortgage lending crisis. Credible sources have estimated that this crisis will impact well over 2 million low-wealth and middle-class homeowners nationwide. “This is a situation where even middle class Americans simply purchased ‘too much home,’ asking the wrong question; ‘what’s the payment’ versus ‘what’s the interest rate.’ Financial literacy would have given borrowers greater resources, tools and individual capacity to push back on both the overly aggressive marketers of exotic sub prime products and predatory lending products alike” Bryant said.
Operation HOPE applauds President Bush for making financial literacy a mainstream priority for the future of America. Completing this mandate will provide dignity for millions of low-wealth Americans, and ethnic minorities, who feel shut out and left behind by capitalism and the free enterprise system.
Quoting Ambassador Andrew Young, the global spokesman for Operation HOPE, “the last piece of unfinished business in America is to make capitalism and free enterprise relevant to the poor; to finally work for the poor. That is the work of Operation HOPE and financial literacy. They call it silver rights.”
* Statistics provided by Jump$tart Coalition