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Akaka questions Bernanke on improving economy

MEDIA RELEASE

U.S. Sen. Daniel K. Akaka questioned Federal Reserve Chairman Ben Bernanke on Tuesday at a hearing of the Senate Committee on Banking, Housing, and Urban Affairs on the Fed’s Semiannual Report to Congress.

Akaka noted Hawaii posted record tourism numbers in May and that spending by foreign visitors is rising. Bernanke agreed with Akaka that tourism has been “a bright spot” as the economy recovers.

“People may not appreciate that when a foreigner comes and visits Hawaii, that actually counts as a U.S. export because we’re exporting the tourism services,” Bernanke said. “And the export of tourism services has actually been growing very quickly, something like 14 percent last year, faster than other types of exports. And so it contributes to our trade balance, as well as to overall economic activity. So it is a positive.”

Bernanke suggested Congress could look at visa and tax policies to continue bolstering visitor spending.

Akaka also questioned Bernanke about improving financial literacy. Throughout his career in Congress, Akaka has worked passionately to empower consumers with the tools they need to improve their families’ futures.

A transcript from the hearing is copied below:

AKAKA: Let me add my welcome to Chairman Bernanke to the committee, and to thank you so much for your tireless leadership in these challenging times.

Recent economic events in Europe and China show us how dependent the United States is on the international markets when it comes to our economic recovery.

Despite concerns about the overall rate of recovery, some sectors are beginning to turn around, and we are beginning to see some bright spots, as indicated in your opening statement. Hawaii, for example, had record tourism numbers in May, and nationally we see spending by foreign travelers continue to rise, helping to reduce our deficit.

My questions are, how do you think that current policies and those regarding tourism and exports have affected the recovery? And also, do you have any suggestions on how to further encourage
growth in these areas?

BERNANKE: Well, first, Senator, tourism has been something of a bright spot. We’ve seen improvements in tourism, not just Hawaii, but a number of places around the country.

And you mentioned the international trade deficit. People may not appreciate that when a foreigner comes and visits Hawaii, that actually counts as a U.S. export because we’re exporting the tourism services. And the export of tourism services has actually been growing very quickly, something like 14 percent last year, faster than other types of exports. And so it contributes to our trade balance, as well as to overall economic activity. So it is a positive.

With respect to policies that address it, you know, I think there’s a lot of incentive. We see that individual states, for example, compete with each other to try to attract visitors. But we can consider issues like visa policies. We can, you know, look at any tax or other implications that might affect the cost of tourism.

So, it’s an area where I think there’s a lot of benefit, a lot of scope for economic benefit to Hawaii and the rest of the country. And it has so far been, as I said, a bright spot among the various service industries that we have.

AKAKA: Thank you. As you know, I am concerned with the well-being of consumers. During previous hearings you and I have discussed the importance of improving financial literacy, to empower consumers while we work to grow the economy.

So my question, what ways have you seen financial decision making by individual Americans improve during this recovery, and what more needs to be done, do you think?

BERNANKE: Well, there’s two sides to improving decision making. On the one hand there’s education, and that effort has continued. The Federal Reserve is continuing its efforts towards promoting literacy and economic education. I have an upcoming meeting with teachers across the country and I’ll be talking about financial literacy and answering their questions and talking about how to introduce students to these topics.

Some of the activities that we had have moved over to the CFPB, which some personnel and some functions went over there, but they are also engaged in those activities.

So education is one side. On the other side, it’s important that disclosures and the types of products that are offered are such that people have a reasonable chance of understanding what it is that they’re buying or investing in.

The Federal Reserve pioneered, a few years ago, it pioneered the use of consumer testing to improve disclosures for credit card statements and a variety of other types of disclosures, and we hope to see that type of activity continue.

I think in general that the experience of the crisis has made many people more aware of the need to be financially literate, schools more aware, and more cautious as well. But it’s an ongoing battle. It’s not something that we can, you know, declare — we can’t declare victory. We have to continue to work to try to make sure that both kids in school and also adults who are making financial decisions have access to good advice and good education.

AKAKA: Thank you very much for your responses, Mr. Chairman.

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