If some members of Congress get their way, terms like "Sarbanes-Oxley," "securitization," and "liquidity" could soon become more entrenched in the American lexicon. A cross-governmental body, known as the Financial Literacy and Education Commission (FLEC), is pushing to place financial literacy alongside staples of education like reading, writing, and arithmetic.
It could take some time. While FLEC, a commission that cuts across 20 federal agencies including the Securities and Exchange Commission and the Federal Reserve, was established by Congress in 2003, it has kept a low profile until recently. In May, the Senate Committee on Banking, Housing, and Urban Affairs held hearings to discuss FLEC's agenda of boosting financial literacy in the United States, educating investors, encouraging "plain English" disclosures, and protecting the growing number of seniors from investment scams.
At the hearings, SEC chairman Christopher Cox noted that a growing population of retirees is being targeted by financial scam artists. He called for more education and scrutiny of "free lunch" investment seminars aimed at seniors. "Sadly, some industry professionals target seniors for inappropriate investments," Cox testified.
Sen. Daniel Akaka (D-Hawaii), a proponent of financial literacy, says progress is being made on promoting more-user-friendly investment resources. "I've noticed that the materials are becoming less complex," he says.
Colleen Cunningham, president and CEO of Financial Executives International, says regulators could benefit from simplification, too. She hopes FLEC's efforts will help reverse an increasingly complex regulatory environment. For example, she says many companies have struggled with FAS 133, the accounting standard on derivatives that runs more than 800 pages. "If the best and brightest have difficulty following the standards," she notes, "it's that much more difficult to explain them to investors."