As everyone is aware who knows me through my 25 years in the credit union movement–and during my tenure as chairman of the Credit Union National Association–I say what I mean. I strongly believe that credit unions play a unique role in the financial services market and that our way of doing business–our philosophy, our goals–benefit all consumers, members and nonmembers alike. We lead, others follow, sometimes reluctantly.
One of the most important areas that calls out for credit union leadership is the field of financial education for all Americans. We are at the forefront now, as evidenced by CUNA's recent financial literacy summit bringing together key players to share their expertise in this area. We want to stay there.
Financial education promotes financial independence. I say it in our report on our summit, I say it to groups of credit unions–I can't say this simple and meaningful sentence often enough or to enough people. What more can we want for our members than this? Young, old, rich, poor, highly educated or not, and everyone in between. Each person deserves to have the tools at hand that can provide financial independence.
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This isn't a slogan; I'm not a fan of pretty-sounding-but-empty rhetoric. When a person has the skills to make sound financial judgments they gain the power and freedom to use all available financial tools to the best of their ability and, equally important, avoid traps and pitfalls that can carve away at personal wealth.
Our young adults are often turned out in the world to make their ways in a complex financial market with little more information than that supplied by TV ads and sales pitches. Research shows that only about half of American parents surveyed feel confident of their ability to teach even just the personal finance basics. Half acknowledge that they do not set a good example in handling money. And fewer than a third of children ranging from ages 9 to 12–a prime learning time–report that parents even talk to them at all about money.
That is not necessarily an indictment against parents. We must look at how our families are struggling to make sense of the complex opportunities and challenges that face them at every turn. And we hear far too many stories about people getting trapped and ruined by questionable practices– even predatory ones, because they didn't have enough information, and therefore savvy, to avoid such mistakes.
So where do credit unions fit in? We credit unions are here to serve our members. We have no ulterior motives. We have to answer to our owners who, uniquely in the financial services sector, are our members. Banks offer products and services to customers to make money for their stockholders. That is their structure; it is their reason for operating. Credit unions offer products and services directly to their owners–their members. The relationship, at its core, is so very different. It's why we have taken the lead on this issue and must continue to do so.
We look forward to forging a partnership where possible with the banking industry in this area of consumer concern, but we will need to continue to take the lead to ensure consumers get what they deserve.
One of our biggest challenges in financial education is also one of the biggest ironies of the field. To put it in simple terms–people don't know what they don't know. And the effect of that truism is that there is not a huge audience out there clamoring at our doors, begging us for our expertise, demanding our instruction, welling up in gratitude as we instruct them how to achieve their financial goals and avoid financial landmines. So be it.
These are the realities: Our national savings levels have been at historic lows–until recently languishing at a negative rate since the second quarter of 2005; credit card debt is flirting with the incomprehensible figure of a trillion dollars; nonbusiness bankruptcies reached 1.7 million in 2005 alone; most people have grossly inadequate personal savings for retirement; and Social Security benefits are in questions for post-baby boomers.
Our people need help. Credit unions can do the job. The movement already has a wealth of terrific programs out there. It was the motivating thought behind my bringing parties together for the 2006 CUNA summit on the subject.
The National Financial Literacy Summit drew 60 participants from all parts of the credit union systems and such notable speakers as Rep. Judy Biggert (R-Ill.) co-chair of the Congressional Financial Literacy and Economic Caucus, and U.S. Treasury Deputy Assistant Secretary for Financial Education Dan Iannicola Jr. It resulted in a 41-page trove of information.
The summit focused on education for three major demographic groups: adult CU members, the youth market and the underserved. The full report is available on www.cuna.org and if you haven't taken a look yet, I urge you to read it, think about it and discuss it with your colleagues.
The summit participants' discussion of youth needs, for instance, resulted in naming 15 principles of youth education under the general headings of needs, messages/channels, tools and resources, and measurement of results. For underserved Americans, the summit identified 10 goals and objectives every credit union should consider to help build financial skills. And for the general adult market, summit participants took on the issue of how to encourage savings and outlined first steps and broad goals for addressing the problem. I don't suggest that all the answers lie between the covers of the summit report. But there is fuel there to feed further discussions that perhaps in turn may lead to more innovations and opportunities for collaboration. The summit and resulting report were the first step toward one of its key recommendations: establishing a national clearinghouse of information. I urge credit unions to continue this effort not only on the national level, but also within states and communities. I encourage you to build on each other's efforts, learn from each other, and support each other's initiatives. Credit unions shine here. We were acknowledged and praised as an integral part of the national strategy on financial literacy when the Financial Literacy and Education Commission, headed by the U.S Treasury Department, released its 139-page blueprint in April 2006 for a national strategy. For the good of our nation and our people, we must continue to shine.
Financial literacy for all Americans is a goal that is fully compatible with credit union traditions and historical record. Educating people is an obvious offshoot of our desire to promote thrift that was and is the foundation of the credit union movement.
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