AILSA CHANG, HOST:
Sheila Bair was a top banking regulator during the financial crisis. Now she writes children's books about how to avoid the scammers and predatory lenders that she encountered in her former work. Darian Woods and Wailin Wong from The Indicator tell us why Bair thinks financial literacy for kids can work.
DARIAN WOODS, BYLINE: Sheila Bair learned her first financial lesson pretty early on, when she visited the bank with her dad.
SHEILA BAIR: He was making his deposit. I noticed that the bank vault door was actually open. So I snuck away and peeked in, and I came running back and said, there's no money in the bank. There's no money in the bank.
WAILIN WONG, BYLINE: Oh, my goodness. So, I mean, we all have to learn at some point that banks aren't physically holding onto most of our deposits, and, you know, she learned it in a very visceral way.
WOODS: Yeah. And when Sheila Bair grew up and served at the Treasury, she began to notice that not every child was getting the same concrete financial education.
BAIR: And also, a big problem was the adults didn't understand it.
WOODS: And that's what drove Sheila Bair to publish her first kids' book. It was called "Rock, Brock And The Savings Shock."
WONG: (Laughter).
WOODS: It's about these two twins, Rock and Brock, and their grandpa offers each of them a kind of savings matching program for the summer. One ends up spending the money, and the other one saves and ends up with $512.
WONG: That's, like, compound interest at work.
WOODS: Yes, and that's the kind of lesson Sheila was trying to teach people, both through these kids' books but also in her day job. In 2006, Sheila was appointed chair of the Federal Deposit Insurance Corporation - FDIC.
WONG: Yeah. That's the government entity that insures people who save their money in the bank.
WOODS: Indeed. And Sheila was starting to notice that more and more adults were getting seriously stung by not understanding the interest on their loans. During that time, a lot of homeowners were being sold a particular type of loan. These salespeople would offer loans with a nice low interest rate to begin with, but that wouldn't last.
BAIR: They were just designed to force people to keep refinancing every couple of years. And it was shocking. It was frightening.
WOODS: So Sheila was trying to clean up the damage and enforce stronger rules around deceptive lending. But the other side of that deal is also the borrowers, and that's where financial literacy comes in. Maybe it's kids' books, or maybe it's a course added to a high-school curriculum.
WONG: I will say, though, that financial literacy as a genre also doesn't have the best reputation. There's also a ton of scams in those courses that you see advertised on the internet or whatever.
WOODS: Sheila herself says that a lot of financial literacy programs aren't teaching particularly useful concepts.
BAIR: So I do think we need to have a more careful assessment of what kind of content we're giving children to make sure they're learning to be skeptical, ask questions, be wary, know how to protect yourself.
WOODS: A few weeks ago, I went to Bryant Park in New York, and I sat at a table next to the carousel and read one of Sheila's books to a group of kids.
(Reading) Princess Persephone, glued to the phone...
Basically, it's about a princess who is taken in by a door-to-door salesman called Aluminum Jim.
WONG: (Laughter).
WOODS: Aluminum Jim lends her money at this exorbitant rate, and she ends up losing her castle. Spoiler alert, though - she does get it back at the end.
(Reading) Protecting the meek and the law-abiding from crooks like Jim and his cheap tin siding. The end.
UNIDENTIFIED CHILD #1: I really liked it.
WOODS: What lesson did you learn?
UNIDENTIFIED CHILD #1: That you have to read the papers.
WOODS: And what do you think of Aluminum Jim?
UNIDENTIFIED CHILD #2: I think he's a crook.
WOODS: He's a crook.
To be fair, Aluminum Jim is quoted as saying, I am not a crook.
(LAUGHTER)
WOODS: Darian Woods.
WONG: Wailin Wong, NPR News.
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