3:30 P.M. EDT 
MODERATOR: Well, thanks, everyone for coming. We're going to be starting here in just a second, but I know there's a lot of news going on and so I didn't want to wait too much longer. But our U.S. Treasurer, Anna Escobedo Cabral, is going to be traveling to Central America and to Mexico to discuss a new initiative that the Treasury Department, the United States Government has with regard to financial initiatives in the hemisphere. And she's leaving tomorrow, bright and early. But before going on the trip, we wanted to just to give a chance to preview a little bit of her travels and the initiative. And so I'll just turn the mike over to you.
MS. CABRAL: Well, thank you. Thank you very much also for allowing us to gather here and helping us to bring folks together. It's good to see all of you this afternoon. And I'm actually thrilled to be able to spend a little bit of time explaining to you what it is we hope to accomplish over the next several weeks and months.
We, of course, are now embarking on something we've discussed and the Secretary announced I'd say about a month ago in Atlanta. It's one of the several elements of the Latin America initiative, but this, in particular, I think, I'm absolutely thrilled to be participating in and leading and serving as a spokesperson for the Department.
It's really about bringing basic financial services to the people who live in Latin America. And particularly in this trip and in the recent effort, we're focused on visiting the countries of El Salvador, of Honduras, Guatemala and Mexico. These are countries with whom we've had some conversations over the last year or so. Increasingly, those requested more assistance, more information about how to use some of the examples that we have tested and that seem to be working well in the United States in terms of providing greater information about financial literacy and a basic understanding of how financial services work and how they provide a tool for opportunity in the future, how they can do something similar.
We will, of course, be meeting, in these various trips, with members of the government, likely federal and state; members of the non-profit sector; members of the -- financial institutions, in particular, but the private sector entirely; so that we can find ways in which we can help Latin Americans take greater advantage of the financial services that exist, but also to create a -- or foster an environment where financial services can deepen and really be accessible in all parts of the country. Clearly, there are a number of places where they're not readily available.
And it -- I think it makes a real difference in terms of quality of life. If, for example, you looked at just what was occurring recently, we saw the World Bank tell us that in the vast majority of Latin America, essentially most of these folk living there are operating on a cash and barter economy. Nearly 70 percent of those individuals are operating outside of and don't use financial services. And I think that, for us, is a major challenge. And, in fact, across the developing world, more than a billion people lack access to formal financial services.
This matters because, of course, we take for granted we have an incredible array of tools here in the United States that are readily available. We can go to any corner of any street and find a bank that's willing to open an account for us to create a savings account, a checking account, to help us transact money to send it back home in the form a remittance. We certainly have the ability to invest in a variety of instruments and plan for the future; find ways to pay for college education; buy a home through a mortgage; readily access insurance services, which over the course help us protect against debt and unplanned and unforeseen catastrophes, a variety of other things.
Many of these services that we take for granted and, quite frankly, that we need to better -- do a better job of even educating our own public about, are not available in these other countries. And as a result, I think we dampen -- and it is clear that the report suggests that we dampen economic opportunities that exist there.
We think, also, about one of the tremendous resources -- there have been a lot of conversation and discussion about the role of remittances. And certainly, in these countries, in particular, you know, there's a tremendous amount of remittance dollars; $200 billion roughly in that area that are going on an annual basis. Latin American Caribbean countries, of course, received about 62 billion of those dollars. And if we can help individuals understand and access financial services, then they can find a way to translate those dollars beyond consumption, which is the natural and immediate force need. Let's make sure we've got a roof over heads, food on the table, whatever is required.
But the next step beyond that is to find ways in which you create greater opportunity for your family. So how do you do that? Well, you can only do that if you understand or you have readily available financial services that walk you through that process; that allow you to move your money out of the mattress and into an account that bears some interest and that rewards you; or that allows you to pool your money with other individuals to make investments, or to grow businesses; or to develop other kinds of instruments that allows you to participate in a system that provides for you access to insurance, if you decide that that's something you want to protect and offer for your family in terms of stability.
Another element that, of course, we're working on is the small business initiative that would make more capital readily available for growing small business. But this is not at all, in any way, distinct from that effort in the sense that many small businesses need to access smaller amounts of capital. Many need microloans and then grow into medium-sized firms that can continue to produce not only economic opportunities, but real jobs for people. And that's really what we're hoping to do.
So what we will spend the next few days doing is talk with our counterparts in Guatemala, Salvador, Honduras and Mexico City and lay the foundation for a workshop of sorts that we will host this fall here in Washington, D.C., where representatives of the government, the private sector, banking institutions -- all of the important players in that process -- will sit down together with the representatives of the United States and share literally the basics and discuss and share with one another what are some of the problems that exist.
In each country it's going to be somewhat different, but there are problems that exist in terms of regulation or institutions that are not readily available. In addition, there are some fantastic models about where you can -- the way that you can get the private sector working with community-based organizations and the public sector to really be a solution for some of these issues.
We've shared some of this work with these countries. They've been thrilled about the possibility. They've asked for some technical assistance, and we're going to make that happen this coming fall. And we expect that with that effort, there'll be increased opportunity in each of these countries. And I'm happy to take some questions if there are any.
MODERATOR: Okay, if you could just state your name and media organization, too, please.
QUESTION: Well, first, my name is Ruben Herrera. I'm with the Mexican news agency, Notimex. First of all, we're going to forget -- maybe I didn't understand quite what you said, but just for purpose of clarification, what -- I mean, when you talk about this initiative, and according to this release said that the purpose of this initiative is to provide Latin Americans with greater access to banks and other financial -- basic financial services, are we talking about U.S. banks or banks on those countries?
MS. CABRAL: We're talking about the wishes and interests of those countries, and many of them are, in fact, U.S. banks. I mean, banks from all over the world exist in each of these countries and so it's about making sure services are available; financial services are available throughout the country in every corner of the country. And that's clearly something that these individual governments are going to lay out a plan for, and it will meet, clearly, the priorities and interests of that nation and it will include foreign banks as well as local-owned banks.
QUESTION: And the other thing -- basically my question is -- I mean -- you are going to these countries to talk about the necessity to help people to get access to these financial -- you say, basic financial service. It seems to me like -- based on -- the basic idea that people on those countries doesn't know which basic financial service they can get access. And the concept -- it seems also that those countries are not doing a good job in order to educate their population about this issue. And you, you're going to explain it?
MS. CABRAL: The conversation we've been having together, and I'll tell you how it started, to give you a little bit of background. We spent a great deal of time traveling to some Latin American countries to talk about the changes to American currency. A year ago, we went on a campaign to talk about the revised $10 bill. These are countries that are, in fact, dealing very much in a cash and barter economy. So they are using financial instruments and the U.S. dollar is one of them. And we wanted to make sure that the public there is well educated to protect themselves against counterfeit bills.
So, in those conversations, what we found was that many of those countries said there's more that we could and should be doing. We know that you've been working very hard in the area of financial literacy, making sure that more of the U.S. population is aware of the services that are available and can make the use of those and improve, quite frankly, the quality of life, because if you think about it for a second, those people who live outside of the financial mainstream, and with many people, even in the United States who are doing so, but our percentages are much smaller, something around ten percent; whereas, in these Latin American countries, it could be upwards of 70 percent. So it's very different in terms of the size and scope of the problem.
But these people who live outside of the financial mainstream live a life that is full of additional costs. And I say this because I grew up in one of those families, I mean, where, you know, you have to stand in line to pay for the water bill before they turn it off. And when you're doing that, you know that you don't have enough money this month for the electric bill. And because you're standing in line and you're balancing and you're going from paycheck to paycheck, well, you've got all sorts of additional fees: late fees; if they've already turned it off, the reconnection fees; opportunity costs associated with having to stand in line to make sure that it gets done so that the electricity or the water gets turned back on.
The fact that many of these individuals lacking a relationship with a bank or a credit union have to pay a check-casher an additional percentage to be able to get cash from this piece of paper to the fact that when they finally do save enough money -- and these are people who are good at paying their bills and will eventually save enough money, even if it is under the mattress -- when they have enough to make their first down payment, they can't get a loan for that purchase because they have no credit history, they have no relationships. So they're now a couple of years behind in the process.
And, that, all those additional costs, which are really wasted costs, affect the ability to put a little more meat on the table, a little, you know -- plan for a college education, lots of potential impact or a waste of resources. I mean, we worked very hard, for example, in the area of remittances, starting in 2001, as part of the Partnership of Prosperity; worked hard to inject a little bit of competition in the marketplace. In addition to work in the Federal Reserve and the Central Bank of Mexico to reduce costs for remittances, we worked hard to make sure that we injected competition because the forerunner was only one player; and, as a result, they could charge whatever they wanted to.
Having reduced the cost of remittances means that more money either stays here with the individual who was sending the money off or arrives for the intended recipient. And the question is, what are people going to do with this wonderful opportunity? There's an incredible, powerful source of revenue and income for families in the various countries. And if they could have regular access to some of the same services that exist or, quite frankly, that need to be created those countries -- in many instances, they may not exist, but they need to -- then I think we're doing well.
These countries have said we want to learn more about what you're doing in the area of financial education. We want to do more to deepen the financial opportunities that exist -- the basic services that exist -- and we'd like to work together to learn from each other, to learn from you; we'd like you to hear a little bit about what we're doing. So it's really an opportunity to look at the details and get some technical assistance on the table for these countries so that they can, in fact, begin to deliver, improve financial services and information.
QUESTION: There, again, I mean, it sounds like you're going to do something that this government should do. I mean, because when you say that you're going to explain to these people, you know, what basic financial services they can get access, I mean the idea is that they don't know. So --
MS. CABRAL: Yeah, I think that the idea is that there are many services that could be available that people are not aware of, or they don't understand the benefit of the service. And that is true all over the world. This is not a unique, you know, concern for just people living in Latin America.
The reason it should be a concern to us is we're clearly interested in making sure that the Western Hemisphere is a stronger hemisphere, that it's vital and that it continues to move in the right direction; that economic opportunity is available for all, because in the end, these are important trading partners to us. If their families are surviving and doing well and moving forward and growing, and as they grow in prosperity, then they continue to buy U.S. products, and that's a very good thing. In addition, it creates good economic opportunity in those countries and therefore, many of their countrymen can stay home because there are jobs that only now are available to them, and that's a good thing. In the end, we all win through this process.
But the same is true in the United States. There are too many of our own citizens who aren't aware of some of these services or are frightened by them. They're unfamiliar with some of the benefits of these particular services, and we need to teach people. And so the President is as committed to initiatives in Latin America that will make a difference in terms of really raising awareness and deepening the financial services available as he is about doing so in the United States.
QUESTION: Espariz Gonzalo from DPA news agency, what is the role, the active role, that the private banks play in this whole initiative because -- well, number one, you said that some people in these countries don't have access. So the only way for them to have access would be for the bank to open a branch in the area, you know, and --
MS. CABRAL: Not only that, but to also look at what some of the barriers are that exist in terms of prohibiting banks that are operating in the area from making, you know, credit or money available to some of these families or with services generally.
I think clearly that banks are an important partner. They're not the only partner, but they're absolutely a critical partner in this process. So is the government, so are nonprofits, so are potentially, you know, individual families. There's a great many people that need to come to the table in the same way that we do so here in the United States.
And there are some tremendous models. There are associations, trade associations. The American Bankers' Association, for example, here in the United States, has a couple of fabulous programs, one called "Teach Children to Save Day," the other, "Get Smart about Credit". Both of them are aimed at teenagers and young school kids. These are programs that can be easily shared with the Latin American countries.
We've had wonderful calls from the equivalent or the counterpart of the American Bankers' Association in a couple of these countries who say, we love what you guys are doing; let us learn a little bit more about what we can do to model some similar programs. They obviously have to look at them carefully, make sure that they fit, that they are tailored to the home country. But these are examples in which financial institutions and, in particular, associations, nonprofits, can do more in terms of reaching the general public and make them aware of the benefits that exist if they can develop a relationship and take advantage of financial services that are available.
QUESTION: Could that be -- this problem is also focused not just on families and small entrepreneurs, but also on the banks? There's a business opportunity there for you?
MS. CABRAL: Well, there's always a business case that can be made, I think. And for the bank, it's about -- and the good news is that we've had very receptive meetings. I mean, in each of these countries where we've gone in, our agenda was really about currency changes. What we did is we sat down with a bank, who sat down with the central banks, who sat down with representatives of the equivalent of the Treasury, and there was enthusiasm and a great interest in doing this.
And, you know, the banks, many of them, have been doing similar things in other countries. For example, the U.S. banks are no strangers to the potential of partnering with community-based organizations and government to make financial literacy education available; to then find new and improved products that meets the unique needs of the citizens there. And they're clearly moving into these areas, knowing that there is opportunity. So they can be a tremendous partner in this process and they've indicated they're willing to be so. But we're going to take advantage of every opportunity.
QUESTION: Well, if -- may I, on the treasury?
MS. CABRAL: Yes.
QUESTION: Do you refer this study -- or I don't know -- a report, from the World Bank who say that 20 percent of those people in Latin America doesn't know what basic financial services they can get access. So the question is, I mean, in this -- I'm going to pose these questions to you -- I mean, why do you, or a few of you, know that there is -- this situation is because of lack of education, is because maybe mistrust from these people in the financial institutions, taking into account, you know, that not all of the banks in Latin America has a very good reputation? So how do you explain this situation?
MS. CABRAL: I think for each country it's going to be a little different. What the World Bank said was that in -- Latin American economy is -- about 70 percent of the people don't use basic financial services. And what I think you'll find is in each country, the rationale is going to be a little different. The history will be a little different. There are some probably regulatory barriers, institutional barriers that need to be addressed. We'll look at each country independently. And it's important to have that conversation for these institutions, these individuals that are responsible for creating greater opportunity to look at and examine what is it that's occurring and what isn't.
I'll give you a -- for instance, this is not necessarily true in every country, but something as simple as a credit bureau: in some of these countries it doesn't function, doesn't exist. And, you know, for us, sometimes the credit bureau is an institution that's an irritant, but nonetheless, believe it or not, it makes credit readily available to us because it's a neutral institution that's evaluating each and every one of us, tracks our interaction in the commercial marketplace and says this person pays their bills on time and this person doesn't. If that kind of institution doesn't exist in one of these countries, then it's very difficult for lenders who are interested in making money available to determine who is creditworthy and who isn't.
And as a result, they're going to take the easiest way out, which is what we find sometimes. They go to the larger customers base that are known extremely well. They won't lend to the smaller individual family household at that level because there is no way to interpret the data that exists on you. There is no data that exists on you. And so I'm not going to put my money at risk. Even though you could be a tremendously wonderful risk opportunity, your history, you know, your history is of paying the bills and paying them on time. But since nobody is collecting information on you, then there's no mechanism to facilitate that kind of transaction.
And those transactions are important, if you think about it. If you need a new washer machine, or you need a part for your, you know, a part suddenly for a small business and a piece of equipment has gone bad and you need it desperately to keep your business running but you can't get the credit to buy it, then it threatens your entire livelihood. So these are -- there are systems that need to exist. We have to examine each country independently and find solutions.
QUESTION: Do you feel that this is a matter of just education of these folks, a matter of --
MS. CABRAL: No, it's --
QUESTION: -- you know, an improvement on the quality of this financial service? It may be a more -- a better reputation from the financial institution.
MS. CABRAL: It is both. It's certainly about making sure we deepen the financial services that are available, improve the financial services that are available, look at systemic barriers that exits and eradicate those. But it's also, at the same time, in a country where you are now making mortgages readily available and credit cards readily available; in the same way that it's important to consumers here in the United States to understand and be able to evaluate those opportunities, to know how to manage your credit cards so that you don't over-indebt yourself or to understand how to save for the future or what retirement planning is all about. You'll have the same need for education in these countries. But especially, as more and more products, designed to meet the need, are made available and, in particular, credit opportunity.
Yeah.
QUESTION: Alejandra Rosas from the Voice of America. And, correct me if I'm wrong, you said that there will be workshops in order to procure these changes and to educate the people.
MS. CABRAL: We're going to meet here in the fall with these four countries and develop an agenda where we all sit down together. So all of our equivalent counterparts are going to go through -- piece by piece, detail by detail. Really, the focus here will be technical assistance in each of these areas: improving and deepening the financial sector and financial literacy, generally.
QUESTION: And then returning to the countries in order to --
MS. CABRAL: There'll be ongoing initiatives in those countries, right. And it's quite probable and possible some follow-up conferences or workshops, with additional countries being invited to come and participate as well.
QUESTION: Okay.
QUESTION: One very brief question. I guess this in the World Bank report. But are we talking mainly about rural -- people in rural areas or people also in cities and --
MS. CABRAL: All of the above. Make clear that the unique challenge is for people living in rural areas. But that doesn't mean that there isn't a need to address people who are living in cities and may still have an issue with access, with the right kinds of price being offered to them, with various still-existing or lack of information, causing them to not take advantage of those opportunities.
Yeah.
QUESTION: How will the people in those more rural areas be made aware of the changes that are being implemented and the new opportunities that arise?
MS. CABRAL: How will they be made aware?
QUESTION: Yeah.
MS. CABRAL: That's a great question, and I'm not sure that we have the answer yet. I mean, I think that there have been incremental changes and advances that have made, as you make different and unique kinds of services available. I think, for example, they've seen firsthand -- in Mexico, in particular, where we've had some great work in the area of remittances -- a change in remittance delivery systems available. I don't know what that will look like yet, but, you know, we will work very hard to support our fellow Latin Americans in terms of finding ways of making delivery of information relevant.
QUESTION: And -- the United States has given advice to these countries, but is there a similar situation here in the United States where the government and the banks could take the experience from -- to bring to all these countries? I mean, everybody -- not everybody, but most people know what a credit is. Most people operate cards in this country. Is there a similar experience here that you can bring into -- to Latin America; to these countries?
MS. CABRAL: You mean in terms of examples of things that have worked?
QUESTION: Exactly. I mean the whole purpose -- if I'm getting it right -- it's tried to explain how to reach the people.
MS. CABRAL: It's to share --
QUESTION: I should tell the people how to use it.
MS. CABRAL: It's to share how we have attempted it and what has worked and what has not, and to allow them to also share what they've attempted, what has worked and what has not; and to find where kinds of things that we need to have a conversation about.
For example, improving a recent immigrant's ability to understand how to manage the financial system that exists in the United States immediately delivers results at the other end of the spectrum for somebody who's receiving a remittance from that family on a regular basis. Education, I think, follows readily.
And so there's a lot that we can learn from each other. It's not about us telling anybody else this is the right way to do it. It's only about us sitting down, saying, these are some of the things that we've attempted. Some of them have worked; some of them have not. Help us think a little bit about what we could do differently and let us also learn about what your challenges are. And together we can begin to explore ways in which we improve and deepen financial services and financial literacy.
QUESTION: Exactly. What I meant exactly is, you want to tell you have attempted and what has worked?
MS. CABRAL: Yes. That's practice --
QUESTION: In what situations are we here -- have you attempted to tell a big community what the basic financial services are, when basically the planning always done are done over here?
MS. CABRAL: Well, what you --
QUESTION: I don't know if I'm explaining myself properly.
MS. CABRAL: I think so. Let me try to respond to that. Let's see -- there -- sometimes we're quick to assume that everybody understand them here in the United States. And yet we're faced with about 50 million people who have absolutely no relationship with any institution. There are various estimates, but that's the one that we refer to often. So that means that there's still a sizeable percentage in the United States who are not making use of, are not necessarily aware of, the benefits of having a relationship with a financial institution.
There are things that we have done to remove barriers in the past that have existed, that I think can help pave the way in terms of some of these countries understanding what some of those challenges were and what worked. There are examples even of these countries doing a very good job of reaching out to their own countrymen to help them understand the importance of having a relationship with the financial institution. And those are models that we can share with one another as well.
So we need to do more, quite frankly. There are too many, for example, people in the United States between the ages of 20 and 29 filing for bankruptcy, mostly because they didn't learn at home or at school how to manage credit cards very well. And when they went off to college or got their first job, they got 10 or 20 offers for a credit card in the mail and they said yes to every single one.
Now, you know, when I was that age, I got one offer for one credit card for a $300, you know, debt ceiling and couldn't get into too much trouble with that. I still got myself into trouble and I got myself out. But for some of these kids, that's very hard to do. So we have some challenges of our own in terms of making sure.
We also know we all live in a world that's becoming more and more complex relative to our finances; and, you know, managing our 401Ks and preparing for retirement; understanding how the, you know, it interfaces with social security or it doesn't; the challenges that exist for us in the future; making sure we have enough money to put our kids through college; to buy a home, to accumulate wealth, and pass it on for generations to make sure that our families have a better quality of life; are challenges that exist all over the world, absolutely all over the world.
QUESTION: If the World Bank says that, you know, this is a large problem, I mean, beside that there is not too much education among people in America about the financial service, why did you decide to go to these particular poor countries? And the next question is: Is there going to be more trips like this to other countries in the region?
MS. CABRAL: We're starting somewhere, and we've decided we want to keep this first effort small enough so that the conversation is detailed enough to make a different, that we can exchange and look at issues in an in-depth basis. It's our expectation and our hope that this will be as productive, or significantly productive, and therefore we should then enlarge the circle of individuals participating in the conversation. This seemed like a natural first step for us.
QUESTION: And you say that there are some good examples that, you know, how a good financial education can improve the opportunities of people. I wonder if you have any name in mind. I mean, if there is any particular country in Latin America who you feel is doing a good job in educating its people of the, you know, how can they get access to financial -- basic financial service.
MS. CABRAL: I think that there are probably a great number of examples, but I'm not sure that I'm in a position right now to share one particular example with you. But I'd love to follow up with you on that if, if you'd allow me to.
MODERATOR: Any final questions? Last call.
MS. CABRAL: thank you very much for coming here today. I appreciate it very much.
QUESTION: Thank you.
MODERATOR: Thank you.
