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VANCOUVER, B.C.-The alarming rate of spending and bankruptcies among young adults demonstrates the need for greater financial literacy efforts, NCUA Chairman JoAnn Johnson told participants in NAFCU’s 37th Annual Conference. Johnson said it may be the teacher in her, but “I’m making financial education a priority of my chairmanship.” She told the audience that Jump$tart had recently tested 4,000 high school students on their financial knowledge: 65% failed. But this was an improvement, Johnson noted, over 2003′s exam where 68% had failed. In the most recent testing, only 6% received a `C’ grade or higher. From serving on the Financial Literacy and Education Commission, Johnson was able to produce some staggering statistics. Teens spend an average of $104 a week. Eighty-three percent of college students have at least one credit card with average debt over $3,000. Making only the minimum payments, that would take 39 years to pay off and an additional $10,000 in interest, she said. Americans age 18 to 25 are the fastest growing group of bankruptcy filers. Additionally, professors are reporting that they lose more students to credit card debt than to academic failure, Johnson said. “The key is delivery of the program,” Johnson said, which is where credit unions step in. Credit unions need to get involved in financial literacy and reading programs in schools, she recommended. “They catch on very quickly and it’s fun to see that happen,” she said. “Financially secure individuals are better for your credit union, your community, and actually for your country,” Johnson stated. She related a story of how she did not get an allowance from her parents, but when she spent time raking hay over her summer vacations from school, her father would occasionally bring her to the ice cream store for a treat. “Hard work has its rewards and it’s one of the things we need to re-instill today,” Johnson said. Nearly half of Americans (40%) live beyond their means, she said. The nation has shrunk from a 24% savings rate during World War II to a 2% savings rate currently. More than half of Americans, Johnson said, are not saving enough to continue their lifestyle into retirement. Though financial knowledge may be lagging, homeownership, which accounts for the largest portion of most Americans’ wealth, is up. A full 68% of Americans own their own homes, Johnson said, while 51% of minorities own their homes. Increasing homeownership, particularly for the underserved and low-income communities, is a main goal of NCUA’s Access Across America. Additionally, credit union business services have played an important role in creating 1.5 million new jobs, Johnson said. NCUA has been working to streamline its business lending rules to get more credit unions involved. “My philosophy has been to be an effective rather than excessive regulator,” she explained. But the bankers’ are not happy with credit unions playing these roles. “They seem to say, `stand still-get out of the way while we move ahead,’” she said. While competitor complaining is “less than respected” by legislators, former Iowa State Senator Johnson said, the sheer volume of the bankers complaints is noteworthy. The banking lobby has been working hard to get credit unions taxed. Johnson pointed out, “There is no one tax structure that is one size fits all.” She said that they all serve a purpose and are justified. “You need to play one-on-one with your congressman,” Johnson suggested. Regarding House Ways and Means Committee Chairman Bill Thomas’ remarks that he is interested in looking at whether credit unions and other non-profits retain the societal value that gave them their tax-exempt status, Johnson said, “The credit union industry is as much in the public interest today as much as is was in 1934.” [email protected]

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