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October 29, 2007


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Prof. Samuel D. Bornstein

Everyone is overlooking a very important factor in this crisis. Nothing will work unless the present subprime borrower and future borrower get some vital knowledge on how to manage spending and credit card debt. Clearly, there were abuses by some lenders, but they should not be the only ones who should get the blame. All of the talk of loan modification and refinancing is useless because the borrower will still be like a boat without a paddle when is comes to managing his/her money. I believe that any legislation should also hold the borrower responsible to seek financial literacy guidance before he/she is given any loan. Without this guidance , we will go through this crisis again, even with the protections expressed in the proposed legislation. I must also add, that traditional financial literacy education is not working. The current form of FL education is "memorized, regurgitated , and forgotten"... We need a new and innovative FL delivery system that will help guide everyone as to how to manage their spending, saving, and credit card use.


Professor Bornstein, I assume, based upon your comments to the Federal Reserve Board last June that you think that my "Sam Kinison" approach of hiring the homeless to scream "RUN, RUN" at borrowers during a closing is not the FL deliver system of choice, and that something more sophisticated, along the lines of what you've suggested, should be attempted. I'll defer to you.

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