By John Hope Bryant
Chairman, Founder and CEO, Operation HOPE, Inc.
Vice Chairman, U.S. President’s Advisory Council on Financial Literacy

Rainbows, after storms. It is a scientific fact that you cannot have a rainbow, without a storm first. The storm clouds are indeed ominous, but help and hope is on the way.

The storm was reflected in a long run up in consumer debt over the last decade, to more than $13 trillion, up from $6 trillion in 1999; the vast majority of it in mortgages and home equity lines according to Fed data.

The storm was reflected in the countless warnings; the fact that our kids routinely and regularly flunk the national financial literacy evaluation administered by our friends at the Jump$tart Coalition, the fact that money remains the number one cause for divorce in America, and the fact that seniors and college age students alike continue to top groups of bankruptcy filers.

Storms also came in levels of severity, for when mainstream America has a head cold, minority America often catches pneumonia in the process. The principle reason why brilliant black and Latino young adults drop out of college is not academics, but money. I also believe that the 50% plus high school dropout rate across the nation in urban communities is tied to youth who, for whatever reason, do not believe that education is relevant to their future. Should this continue this represents an economic death sentence for our urban and inner-city communities, and a direct charge against our nation’s future prosperity, as these young people represent our future work force, and hoped for contributors to Social Security. Contributors, I might add, that will be needed to take care of the aging Baby Boom generation; meaning you, and soon thereafter me, and my generation too. Well, one way to make education “relevant” is to show youth how to get! rich in America, legally. That is the power of financial literacy in action, or what we here at Operation HOPE call the “silver rights” movement; making free enterprise and capitalism relevant to the poor, and ultimately making free enterprise and capitalism work for the poor.

The state of financial literacy in America is surely at the heart of what started as a sub-prime mortgage crisis, which has now increasingly engulfed prime borrowers as well. Recent reports show that 45% of current foreclosures are prime borrowers, not subprime borrowers.

The heart of this subprime mortgage crisis, beyond those who took advantage of individuals through fraud and misrepresentation and speculators, was massive levels of financial illiteracy. Individuals who either “bought too much house,” or individuals who asked what the payment was, but not what the real interest rate was. And you never ask what the payment is when there is an interest rate attached. Individuals who bought a home like far too many of us purchase automobiles, and we shouldn’t purchase automobiles that way.

If you purchase a $400 iPod on credit and make only minimum payments, it stands to cost you more than $4,000 over time. Imagine what happens when you add six zeroes to this purchase price and call it a 30 year mortgage — you have the equivalent of an economic tsunami on your hands.

The storm was reflected in the countless Katrina victims, who could not receive a FEMA payment because they had no bank account to wire it into. More than 30 million Americans have no bank account in the richest country in the world.

Or the financial predators who take advantage of our inner city communities, which together represent a more than $1 trillion annual consumer spending force amongst blacks and Latinos alone. In a recent Wall Street Journal Op-Ed piece by President Bill Clinton and California Governor Arnold Schwarzenegger it was noted that minorities spend $8 billion to $10 billion annually on everything from unscrupulous check cashers, to payday lenders, to rent to own stores in the inner city. $10 billion is approximately the same amount that Wall Street earns on merger and acquisition fees. They also noted that stopping these abusive practices and empowering low wealth individuals and communities with financial literacy education, a bank account (dignity) and choice, is something that Democrats and Republicans alike should find ways to work together on. Meaning that the issue is clearly non-partisan. It’s as American as the right to vote, in a demo! cracy rooted in capitalism and free enterprise. What’s needed here is not the Republican Party answer, nor the Democratic Party answer, but the Get It Done Party answer.

In short, this issue impacts and effects all of us, and at bottom, this speaks to massive levels of financial illiteracy in America.

As the Los Angeles Times noted in its January 24th, 2008 Op-Ed entitled Increasing Financial Literacy, What You Don’t Know Can Hurt You, “in the not-so-distant past, redlining — the practice of denying financial services to people based solely on their race, sex, surname or address — deprived many Americans of the opportunity to build a prosperous life. Today many of us still suffer financially. But this time around, we’re limited by too many choices rather than too few.”

Rainbows, after storms….

And so, it was President George W. Bush and Treasury Secretary Hank Paulson who on January 22nd, 2008, marshaled the political will to finally do something about this national crisis of financial illiteracy in America, crafting and creating the first ever U.S. President’s Advisory Council on Financial Literacy, and signing it into law. With President Bush signing the Executive Order which created the President’s Council, he also made financial literacy the policy of the federal government. I repeat, as of January 22nd, 2008, financial literacy is now the policy of the federal government. This silver rights agenda is the new civil
rights cause. Teaching poor people the language of money.

This Executive Order is historic for sure, but even more important, it is an opportunity to create sustainable and measurable change for all Americans, and for future generations to come. From black to white, from the poor to the working class to the middle class, and from the urban to the rural – it really is a one America agenda. Because at the end of the day, someone trapped in a predatory adjustable rate subprime mortgage doesn’t really care whether you are black, white, red, brown or yellow, they just want some more green. We are all in this together.

In signing this historic Executive Order in the Oval Office, and making financial literacy the policy of our federal government, the President also sent a message that he was serious about this;

• By appointing financial guru Charles Schwab, chairman and CEO of Charles Schwab Corporation, as chairman of the President’s Council on Financial Literacy.

• By appointing 19 members, from all walks of life, but all of them incredibly qualified, to serve on the Council.

• By giving us a 2-year term, which means we will serve two sitting U.S. presidents and until 2010.

• By charging us to increase financial literacy in schools and in the workplace.

• By charging us to increase the mainstream financial access for the unbanked and underserved.

• By charging us to help insure that individuals understand the financial transactions they enter into.

• By charging us to do the in depth research and to understand the state of financial literacy for all Americans.

• By charging us to increase the level of private/public partnerships.

• By charging us to help insure American competitiveness.

The President also surprised me, honoring my life’s work, as I soon learned that the President wanted me to serve as vice chairman of the U.S. President’s Advisory Council on Financial Literacy. Well, it does not get much better than that, particularly given that I would be vice chairman to a chairman that I greatly respect and admire, none other than the legendary financial guru Charles Schwab. Simply perfect.

And so, now we are off to “do the work;” the work of empowering our nation’s amazing people, of engaging private enterprise and our educational leaders, of unleashing our communities creativity, passion and innovation, of building bridges and inspiring partnerships, of helping to make our government — from the local level to the state level to the federal level — work for the people who pay for it. People who, disappointments aside, still believe in the government’s noble calling to “serve others.”

Well, the Members of the President’s Advisory Council on Financial Literacy reflect that value better than most any group I have had the pleasure of working with. They include…

Members of our President’s Council, namely Laura Levine of Jump$tart Coalition and Dr. Robert Duvall of NCEE, working closely with the U.S. Treasury Office of Financial Education, who have already designed and launched a U.S. Treasury endorsed middle school curriculum for every middle school and child in the nation, and it’s called “MoneyMath.” MoneyMath is free to everyone and can be downloaded today at http://www.treasury.gov/offices/domestic-finance/financial-institution/fin-education/council/index.shtml/. It can help.

Both Duvall and President’s Council Member Ted Beck, CEO of the National Endowment for Financial Education, are innovative geniuses when it comes to economic education and financial literacy curriculum, from K-12 through higher education, and have an unparalleled track record in this space which will prove of invaluable benefit going forward. They can help.

Chairman Charles Schwab has personally decided to lead the effort around workplace financial literacy education, and President’s Council Member Janet Parker, chair of the Society of Human Resource Management is passionate about the same thing; and with 250,000 human resource members, she can help.

Together, President’s Council Member Jack Kosakowski of Junior Achievement USA and I, with Operation HOPE’s Banking on Our Future program, and our HOPE Banking Center Network, cover a good part of the nation with two powerful and highly respected financial literacy empowerment organizations and on-the-ground distribution channels. We can help.

President’s Council Member Mary Schapiro from the Financial Industry Regulatory Authority has agreed to help take the lead on an ambitious national financial literacy research initiative. She can help.

President’s Council Member Sharon Lechter, CEO of Lechter Development Group, who co-authored the international best selling Rich Dad, Poor Dad book series with Richard Kiyosaki is pioneering a series of empowerment programs for children and families, lending her vast creativity and talent to us. She can help.

President’s Council Member Ted Daniels of the Society for Financial Education and Professional Development is working on several minority college campuses, as is Operation HOPE, to make sure we reach black and brown college age students before the predators do. We can help.

President’s Council Member Ignacio Salazar of SER-Jobs for Progress National, Inc. is a pioneer in workforce development, particularly in Latino communities nationwide, and will prove a powerful voice in insuring that the one language we all understand is the Language of Money. He can help.

President’s Council Member Don McGrath, chairman of Bank of the West, has already hosted a Financial Literacy Town Hall meeting with U.S. Secretary Hank Paulson, U.S. Treasurer Anna Cabral, Oakland Mayor Ron Dellums, and a dialogue with San Francisco Mayor Gavin Newsom, and will serve as a bridge to the financial services community. He can help.

President’s Council Member Rev. Robert Lee of Fresh Ministries will help us cover the vitally important faith waterfront, and Member Dr. Tahira Hira of Iowa State University and Mr. David Mancl who runs the Office of Financial Literacy of the Wisconsin Department of Financial Institutions will keep us connected to the academic community and to the interests of the States, respectively. Mancl actually pioneered the first state office of financial literacy in the nation. They can help.

President’s Council Member Vice Admiral (retired) Cutler Dawson, CEO of Navy Federal Credit Union, the largest credit union in the nation, will make sure that the credit union community is engaged, as well as linked to our nation’s men and women in uniform. He can help.

And just last week I worked closely with the White House USA Freedom Corps office as they launched their Financial Literacy Volunteer Initiative, which will become the nation’s one-stop shop for financial literacy volunteerism, from youth in school, to adults in the workplace, to individuals dealing with the subprime crisis and are in need of expert counseling. I want to help.

Available right now at http://www.volunteer.gov/ , this powerful initiative, which I call the Financial Literacy Corps, speaks to the best of America’s values and will be taken under formal consideration for adoption at the next scheduled meeting of the President’s Advisory Council on Financial Literacy. By logging onto http://www.volunteer.gov/ , you can help.

Information on the U.S. President’s Advisory Council on Financial Literacy and its members is available at http://www.treasury.gov/offices/domestic-finance/financial-institution/fin-education/council/index.shtml.   

Taking our communities back begins with the power of education, because when we know better, we do better. But it also begins with the power of you. One person can change the world. Make a decision to be that one person, and let’s do it together.

Let’s all start increasing our financial IQ as adults, beginning now, which will make us less attractive victims in the future. Even better, let’s insure that our children have a basic understanding about money and how it works imbedded into their little DNA’s from the very earliest age, so they don’t never become victims to begin with.

This we can do.

This is what I call creating rainbows, after storms.

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