Top U.S. Official: Financial Literacy Important in ‘Virtually Everything’

WASHINGTON, D.C.—As Ohio attorney general seven years ago Richard Cordray collected a state record $411,000 in delinquent taxes, fines and fees. In the process he learned a valuable lesson: The offenders were not necessarily deadbeats. A great many had fallen ill, lost a job, or stumbled on to hard times in other ways. Poor money decisions made their problems much worse than they might have been.

This experience informs Cordray’s mission today. As director of the Consumer Financial Protection Bureau, he wants financial education “integrated with virtually everything,” he said last week at the annual awards gathering of partners of the JumpStart Coalition for Financial Literacy.

“In every aspect of our lives, the more information you have the better decisions you make,” Cordray told the gathering. Because personal finance is so important, it makes sense that it be taught in every school and reinforced in the workplace, he said.

Cordray would like financial concepts embedded in math problems and English readings and essays in grades K-12. He wants every high school student to take a stand-alone course in personal finance. He wants employers to make financial wellness programs a staple. Companies are already deeply involved with workers’ healthcare and retirement planning. Why not “fill out the suite of tools” with guidance on debt management, budgeting, saving and investing?

Cordray says that when he explains the broad need for people to have a higher financial IQ whoever is listening gets it “within a minute.” So it is frustrating that more is not being done to “muscle up” individuals in the area of money—and that critics still see financial education as a futile effort.

In the next few years, the bureau will focus on research that proves the value of financial education, put it out for review, and then conduct further research until the benefits are clear and private- and public-sector decision makers embrace lifelong financial education. “Nothing substitutes for hard evidence,” he said.

It remains to be seen if Cordray will be around long enough to realize this vision. A long-time Democrat, he and the bureau have been in the crosshairs of the new Republican administration. In a daylong hearing last week, Cordray came under withering attack from Republicans who charged among other things that he was “asleep at the wheel” in the recent Wells Fargo phony-accounts scandal.

Most saw that as a purely political attack designed to give President Trump grounds for removing him. Yet Cordray told the gathering that the bureau’s work is in no immediate peril. Financial literacy is a bi-partisan issue, having been embraced by both George W. Bush and Barack Obama.

There have been signals that Donald Trump will embrace the cause as well, though he may order subtle shifts in direction—perhaps emphasizing personal responsibility and ownership concepts above the issues that Obama championed including access and guidance for low-income households.

Time will tell on that front. In the meantime, Cordray, a tireless champion for financial literacy, will be thinking about those hard-luck debtors back in Ohio nearly a decade ago. Through his efforts to promote financial education, he will be working to ease the financial strain of others in that situation.

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Posted in Policy & Government on April, 2017