Keep Financial Education! CFPB and Mulvaney Hear As Comment Period Nears End
By Dan Kadlec
June 13, 2018
Less than a month remains for the public to comment on the Consumer Financial Protection Bureau’s financial education programs. Like just about everything else at the bureau, this aspect of its operations has been put up for formal review.
The interim director, Mick Mulvaney, is remaking the bureau from top to bottom. His stated intention is to remove much of the bureau’s autonomy and authority. Last week, he fired all 60 members of three advisory boards, including the Consumer Advisory Board. He has slashed funding and halted key consumer protection initiatives, and is trying to rebrand the bureau.
President Trump will nominate a permanent director soon, as early as next week. But the confirmation process ensures that Mulvaney will be running things a while longer, and it remains an open question what he (or his successor) will do with the bureau’s financial education arm.
It is not too late to be heard on this subject. The comments period ends July 9. Right About Money weighed in last week, joining 36 other interested parties (as of Wednesday) offering thoughts. Our comments are reprinted below, or you can find them and all other public comments here.
So far, comments have been mainly supportive of the bureau’s work. Most have been general in nature, even though the federal Request for Information asks for specific steps that would “improve the bureau’s existing programs and delivery mechanisms; better measure and evaluate the effectiveness of the bureau’s financial education work; and eliminate or minimize the duplication of the bureau’s financial education work with work performed by other entities.” You can find specific questions here.
Some may read the language in this request for information and conclude it is lip service, a necessary step in the legal defanging of the bureau. That concern prompted Right About Money to lean away from specifics and instead make a general plea for the bureau to not only maintain but redouble its financial education efforts and seize global leadership of an emerging front-burner issue.
Here are some highlights from the comments that Mulvaney or his staff will be reading.
In a point-by-point document, Don Milne, financial literacy manager at Zion’s Bank, says the bureau’s research and education should focus more on behavioral remedies. “Most people know what they need to do with money, they just don’t match behaviors that act on this knowledge,” he writes.
He’d also like to see a social media campaign that uses celebrities to promote financial awareness, similar to this air safety public service campaign in the U.K. Milne believes the bureau should consider offering scholarships to students for essays and videos that can be shared and promote financial literacy. He offers that the bureau should grade itself based on broad trends in consumer credit balances, payday loans, student debt and 401(k) participation rates.
In another point-by-point response, Ohio schoolteacher and Right About Money contributor Brian Page gives the bureau high marks for its current scope, focus and delivery of information, saying things should remain pretty much as they are. One way to evaluate the bureau’s return on investment, Page offers, is to calculate the dollar value of being a financially adept individual and then multiply that by the number of people the bureau’s education programs have touched. He concludes: “The work CFPB is doing in the financial education space is crucial.”
Christopher Meyers, a student at the University of Wisconsin-Madison La Follette School of Public Affairs, writes that he has studied the financial literacy movement and determined what it may need most is a central source of information to organize the world’s data on this subject. The bureau should assume that role.
In a combative note, Declan Sheehy, a vice president with the Florida JumpStart Coalition for Personal Financial Literacy, noted…
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…that since its founding the bureau has returned $12 billion to 30 million consumers that had been cheated by financial companies and in so doing curbed future financial abuse. “That is its mission,” he writes. “If current leadership wants to change that, then they should be replaced.”
In other comments, the bureau heard thanks from military personnel for programs geared at their specific needs and from homebuyers for the bureau’s mortgage educational materials. One comment thanks the bureau for its unbiased money guidelines, which give people an alternative to sales-oriented information from banks and marketers.
Some comments reflect a greater need for money programs aimed specifically at middle school students nearing their first discussions of credit cards and student loans. Others want more explainers on student loans, debt consolidation, collections and loan forgiveness. They also cite a need for plain English material on all aspects of retirement saving.
A loan originator writes that many of her clients can’t read a pay stub and don’t understand the deductions out of their gross pay. They can’t read or understand their tax returns. “I feel guilty putting someone into their largest debt knowing what little they know about all of this,” she writes. “This really needs to be a requirement to be taught in school.”
North Carolina elder law and estate planner Nicki Applefield Engel notes the high value of the bureau’s explainer on power of attorney and its “money smart for older adults” materials, which she regularly hands out to clients. A senior center worker in California notes that she relies on the bureau’s materials on fighting elder financial fraud.
Kim Savery, director of community programs for a rural health center, writes that her financial literacy training through the bureau has given her the tools to help many of the 3,000 people she counsels each year. She now leads such training, using bureau materials. Writes Savery: “This obvious need has informed our programming ever since.”
Lois M. Healy, CEO, Affordable Homeownership Foundation, writes that she personally has seen how financial education changes lives. “We go over in great detail wants vs. needs and how those choices affect a person’s ability to save for the future,” she writes. “We also go over no matter how much a person makes how to save part of their income and ways to get additional income by selling unwanted items.” Financial education works, she writes, “and we have proof.”
Perhaps summing up the comments so far, Carol O’Rourke, a financial planner, writes: “I welcome CFPB materials because they are objective vs. educational materials provided by corporate entities like banks and investment firms.”
Let the Consumer Financial Protection Bureau know how you feel. Mulvaney’s real goal is to limit the bureau’s ability to make rules and enforce them and make the bureau more accountable to Congress. Financial education is not in the crosshairs, other than being part of an office he wants to dismantle. Maybe he will listen and preserve the financial education effort that so many describe as effective.
Right About Money’s Response to Mulvaney Request
Our submission to the Consumer Financial Protection Bureau’s request for information on its financial education programs:
Financial literacy is a global concern. Dozens of countries, including the U.S., have formal strategies for educating the public about personal financial matters. Financial education is top of mind among many of the 50 state treasurers too. Conferences on the topic are held worldwide, and academics have produced at least 1,400 research papers looking at personal financial habits and how to improve them.
This is a broad but disparate effort, and the Consumer Financial Protection Bureau is uniquely situated to seize control of the issue and set the global agenda. The bureau has emerged as the leading financial literacy voice in the U.S., which is among the most energized nations on Earth as it relates to financial education. The bureau gathers information, offers learning materials and encourages and leads research. It is a trusted source of vetted financial advice. Pulling back now, as the issue gains traction, would be a mistake.
The current administration clearly has a different view than predecessors on consumer protection. That is fine. Lose the heavy hand on enforcement and rulemaking if you must. Let the free markets work. All the more reason to double down on financial literacy. This is not a political position. It is a clear need, especially in a free-market economy, and has been recognized as such on both sides of the aisle. Just about everyone agrees financial education can make a difference for individuals and, collectively, for the economy. There are no losers, political or otherwise, if the bureau remains empowered to lead this charge.
As the U.S. and others move further from private pensions and institutional financial security, personal financial knowledge and responsibility can fill the gaps. But this knowledge will not just happen. We need research, programs, campaigns, leadership, learning materials, and big ideas. The bureau is already there. Let it continue its important work in this area.