Three Things to Keep in Mind as Financial Literacy Month Ends
Before National Financial Literacy Month ends on Friday, it’s worth noting a few developments. The nation’s premier financial literacy organization, the
Jul 31, 202038.4K Shares785.2K Views
The nation’s premier financial literacy organization, the JumpStart Coalition for Personal Financial Literacy,which sponsored Financial Literacy Day on the Hill this week, still includes as a corporate partner the subprime lender CompuCredit.TWI last fall drewJumpStart’s attention to CompuCredit’s past problems, which include reaching a $114 million settlementwith the Federal Deposit Insurance Corporation and the Federal Trade Commission over chargesthat CompuCredit and two partner banks deceived hundreds of thousands of customers by failing to properly disclose upfront fees and credit limits on their cards, thereby sinking customers further in debt.
I checked with JumpStart Executive Director Laura Levine recently — and CompuCredit remains a partner, benefiting from the attention of National Financial Literacy Month. For now, JumpStart also continues to employ as a consultant retired Experian executive William Cheeks, who also consults for CompuCredit, Levine said.
Here’s Levine’s explanation: “Our governance committee has been working to develop partner criteria and some other policies, including conflict of interest. Our board was reluctant to take action on CompuCredit or any other partner without specific criteria to base it on. This was a discussion topic at our November board meeting and the board asked the committee to do some more work on it and bring it back. That’s really the progress update for now.”
Moving along… For those worried about subprime lenders from rent-to-own stores to payday lending operations sponsoring financial literacy efforts in communities — and gaining unearned respectabilityfor their efforts — the good news is that the latest research shows those education efforts don’t really work, according to several consumer finance experts I talked to. So while it may be frustrating to see rent-to-own stores sponsoringcomputer labs in schools, the positive spin is that the tactics aren’t effective. Teaching financial literacy as part of the curriculum beginning in elementary school goes much further.
That’s important, because the current and most popular model for financial literacy efforts now remains corporate partners kicking in for financial literacy events, a reality that has led some critics tocontendthat financial literacy is tainted overall — and that it’s nearly impossible for a confused consumer to find unbiased, professional guidance. For Financial Literacy Dayon Capitol Hill yesterday, just as an example, sponsors included Capital One, Experian and HSBC-North America.
All this matters because, as this CNBC segment points out, there’s still a belief out there among some that a lack of financial literacy, more so than predatory lending, fueled the housing crisis. Financial literacy — even when sponsored by a payday lender or a financial services firm that issues high-rate credit cards — becomes the answer, instead of regulation, in this view.
Just something to keep in mind as Congress continues fighting over financial regulatory reform and financial literacy month winds down.
Paula M. Graham
Reviewer
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