Banks Support Financial Education Effort
GRAND RAPIDS — It has become clear in the wake of the subprime crisis and mounting foreclosures that a number of Americans signed on for mortgage products that they probably, in hindsight, should not have locked into. How can such a crisis be avoided in the future? By promoting financial literacy, says Art Johnson, chairman of United Bank of Michigan and current president of the American Bankers Association.
“I think we’d all be better off if there were a higher degree of financial education out there,” Johnson said. “Frankly, at our bank we like dealing with smart customers. We think we can make our case about creating value in a relationship with a smart, well-educated customer who understands their needs and their own personal situation.”
Financial literacy is a hot topic among ABA members these days. The ABA Education Foundation develops programs and materials that help bankers provide financial education in their communities. The foundation’s signature programs are National Teach Children to Save Day and Get Smart About Credit Day.
“We’ve reached an awful lot of kids across the country this past year through the efforts of a lot of banks, including ours,” Johnson observed.
As Johnson sees it, saving is something every child can be made to understand regardless of age, and he believes that if everyone were equipped with some financial fundamentals they would make better credit and savings decisions. There are even professional people who could use some financial education, he said.
The ABA credit education program is geared toward upper level high school students and college students — those old enough to enter into a legal agreement for a credit card, said ABA Education Foundation Director Laura Fisher. The foundation is affiliated with the ABA but not funded by it, she noted.
Around the country, National Teach Children to Save Day is held in April and Get Smart About Credit Day is held in October. Fisher said banks are essential to the delivery of the programs to local communities. Banks volunteer to put on the programs and round up their own volunteers to carry them out. This year, 12,871 bankers from 1,471 banks participated in the Teach Children to Save Day program and collectively taught 498,135 students.
Fisher anticipates that the credit education program in October will include the participation of about 6,000 to 7,000 bankers.
“A lot of banks have pre-existing relationships with schools in their community,” Fisher said. “They’re so involved in the schools that we can depend on them to initiate the lessons.”
Bankers buy financial literacy materials and resource kits from the ABA Education Foundation for use in the programs, so essentially they help fund the foundation. Half of the foundation’s funding comes from the sale of educational materials to banks, and half comes from the interest it gathers from an endowment, Fisher said.
Since 1997, some 67,280 bankers have participated in the two programs and delivered financial education lessons to more than 3.11 million students, Fisher noted.
“Every year, participation among bankers goes up 10 to 20 percent,” she said, noting that word of the programs most often spreads by word of mouth. “Once a banker participates and talks to another banker about it, we see participation increase. We do a lot to communicate with bankers, tell them about the events and explain the value of participating in financial education.”
The ABA Educational Foundation also produces a free newsletter called “Money Talks,” which bankers can download from its Web site, and the organization also has available an inexpensive personal finance booklet series that bankers can purchase to provide financial education in the community, Fisher noted.