Financial Literacy Council Too Little, Too Late?
It's no secret that America's in a bit of a financial pickle right now. Between the collapse of the subprime market, skyrocketing foreclosure rates and increasing bankruptcy filings, it's no wonder that some economists are predicting a recession for the U.S. of A.
While some lawmakers and activists are taking helpful steps toward fixing some of the mistakes we've made, others are addressing America's financial issues on a more superficial, less meaningful level.
Last week, President Bush established the President's Advisory Council for Financial Literacy, a group that seems to fall into the latter category. The council, to which Bush named 16 members, will research financial issues and advise the President about what actions to take.
The members of the council include professors, workers from financial organizations and CEOs of major companies; in fact, Charles Schwab himself has been named chairman of the council, according to Business Wire.
The reported purpose for this committee is to improve financial education for Americans: whether the committee suggests bolstering education efforts in the classroom or adding learning opportunities to the workplace, it's in charge of making sure we as a nation understand our money better.
While this is certainly a badly needed measure, it comes several years too late.
Bush has apparently noted that the reason so many Americans fell into the subprime trap was because we as a nation have very little financial savvy. This makes sense: the high rates of reported mortgage fraud in the past few years indicate that some deception played a role in the purchase of many homes.
But let's take a step back here.
Yes, many Americans are now caught in loans they'll likely never be able to repay. Yes, credit card debt is at an all-time high and bankruptcy filing rates are creeping upward. Yes, many Americans are financially illiterate.
But who made those subprime loans available to people? Who lobbied to change the filing bankruptcy law so that credit card debt is harder to discharge?
The point is, financial experts like the ones sitting on the Financial Advisory Council should have known better from the start.
They were part of the industry that developed "innovative" lending strategies like pooling mortgages and using "stated income" on loan applications.
Financial whiz kids, the guys working on Wall Street and discovering new ways to make money at the expense of the poor and less-educated, ought to have realized that no housing boom comes without a bust. Poverty is not new.
Notice that there was no subprime housing crisis until there were "innovative" ways of granting subprime loans.
The Council's efforts to improve American financial literacy could well better the overall decision-making ability of many U.S. citizens.
Unfortunately, this council would have been infinitely more valuable about seven years ago.