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Financial Education:
Is It Making a Difference?
The savings rate in our country is low. Bankruptcy and foreclosure rates are
high. Predatory lending and unscrupulous check-cashing practices are
victimizing low- to moderate-income individuals, including the elderly. And
our young people are being lured into the debt cycle as society encourages a
“get it now, pay for it later” mentality. Are our financial education programs
strong enough to turn the tide?


4th District Profile


Compliance Corner

In My Opinion

Cleveland Fed Promotes
Financial Education Efforts
in the 4th District

Financial Education and CRA:
How Examiners Make the

Mayor Donald L. Plusquellic
Building Financial Literacy
City by City








ew would argue that
the time is ripe for financial
education in America. Financial
products and services are
growing in diversity and complexity, the retirement paradigm
is shifting, and far too many
individuals and families are
struggling to make ends meet,
often turning to “payday”
loans and other high-cost
funding alternatives. Low- to
moderate-income populations
are feeling the worst sting, but
financial literacy is an issue
among all income levels and
age groups.
And so, financial institutions,
nonprofits, government agencies,
corporations, and other concerned entities have taken on
the responsibility of creating
and implementing financial
education programs. Programs
exist to cover everything from
basic money management
skills – budgeting, banking,
saving, credit – to small business development, investing,
retirement planning, and estate
planning. The challenge is
ensuring that these programs
are reaching the right people
at the right time and effecting
positive financial behaviors.
Financial institutions look
for positive behavior changes
in the low- to moderate-income
segment to include establishing
banking relationships. Bruce
Murphy, president of Community Development Banking
for KeyBank, explains: “The
exponential growth of the
check-cashing industry
indicates that there is great

How do practitioners
determine appropriate content
and delivery methods for the
audiences they intend to serve?
opportunity to link people in
this segment with legitimate
products and services … to
turn largely unbanked populations into knowledgeable,
mainstream banking customers.”
KeyBank is backing this belief
with its own financial education center, which opened
about a year ago.
Getting the Right Program
to the Right Audience
While every American needs
to make life decisions about
finances, the degree to which
each person needs to be
informed about particular
issues varies widely. For
example, programs might teach
the basic values of saving and
budgeting to children, retirement planning and investing
to middle-age consumers, and
retirement spending to seniors.
Low- to moderate-income and
immigrant populations might
require help in a variety of areas:
budgeting, buying a home,
establishing credit, avoiding
predatory loan practices,
accumulating assets, etc.


any have found
individual assessments to be
helpful. The Urban League of
Pittsburgh, for example, does
intake counseling with every
person who enters its program
to identify areas of concern.
Other organizations view the
community their programs
serve as a whole, consulting
with affiliated organizations
to determine the types of
educational efforts likely to
have the most positive impact.
Alexis Afzal, executive director of Alex CDC in Cleveland,
Ohio, also assesses need by
examining generational trends.
“We need to look at the ‘why’
behind people’s lack of money
management skills,” she says,
“and then apply a variety of
education and counseling
methods.” Alexis ensures that
she incorporates a financial
literacy component into every
program her organization
David Dewberry agrees
with that approach. Vice
president of the Community

“As financial institutions, we need to
give low- to moderate-income individuals
more than knowledge; we need to give
them options to use that knowledge –
products and services that can help them
reach their financial goals.”
– Bruce Murphy, President of Community Development Banking, KeyBank

Thank you to the following individuals,
who generously contributed their
insights for this issue:
Alexis Afzal
Executive Director
Alex CDC
Cleveland, Ohio
George Barany
Director of Financial Education
Consumer Federation of America
and Executive Director of WECO Fund, Inc.
Cleveland, Ohio
David Dewberry
Vice President
Community Reinvestment Institute Alumni
Dayton, Ohio
Lee Hipps
Chief Operating Officer
Urban League of Pittsburgh
Pittsburgh, Pennsylvania
Jeanne Hogarth
Program Manager
Division of Consumer and Community Affairs
Federal Reserve System Board of Governors
Washington, D.C.
Bruce Murphy
President of Community Development Banking
Marvin M. Smith, Ph.D.
Economic Education Specialist
Community Affairs Department
Federal Reserve Bank of Philadelphia
Philadelphia, Pennsylvania
Melea Wachtman
Vice President of Communications
Ohio Bankers League
Columbus, Ohio

expected in July from this
study, which will involve indepth interviews of 60 corporate
leaders and phone interviews
with 500 savers.
The Federal Reserve System
is engaged in research as well.
The Board of Governors in
Washington, D.C., has begun
a three-year study to trace
the financial behaviors of two
groups of young men and
women enlisted in the Army.
One group attended a two-day
financial course; the other
did not.
Another Fed effort, being
launched by the Philadelphia
Bank, is a five-year longitudinal
study tracking the effectiveness
of homeownership education
and counseling among low- to
moderate-income consumers.
The treatment group will
participate in a homeownership
education and counseling
program provided uniformly by
a single nonprofit organization.
The control group will not
participate in the program. The
Fed’s intent is to reveal more
relevant data about program
effectiveness through the longterm tracking than has been
achieved by past studies
offering more of a “snapshot”

What Can We Do Better?
Even before research results
start pouring in, the people
most closely involved in
financial education have some
very tangible ideas of how they
would like to improve efforts.


eorge Barany, director
of financial education for
the Consumer Federation of
America and executive director
of WECO Fund, Inc., in
Cleveland, Ohio, proposes that
the basic concept of saving be
at the root of all financial
education efforts. “The financial
action model, as promoted
through America Saves,
Cleveland Saves, and other
related programs, is the perfect
backdrop for education efforts.
Once you’ve motivated people
to act – to begin saving – they
will be more strongly inclined
to take advantage of specific
financial education programs.”

Practitioners will also tell
you we need to integrate
financial education into school
curricula, to encourage good
financial habits early on and
help our nation’s youth build a
solid foundation for the future.
(Refer to the Resources section
of “Of Interest” on page 8.)
Additionally, many suggest
that financial education be
incorporated into communitybased programs of all types –
parent headstart, housing
counseling, and welfare-towork programs, for example –
and that employers consider
offering workers time off to
participate in programs.
Jeanne Hogarth, a program
manager at the Division of
Consumer and Community
Affairs at the Board of
Governors of the Federal
Reserve System, concludes,
“The key to our success with
financial education is to find
ways to integrate it seamlessly
into people’s lives so it’s not
another task they have to put
effort into but more of a
mindset … something they’re
conscious of that becomes part
and parcel of the way they


How Are We Doing?
One of the realities of financial
education is that funding often
falls short of the post-program
research level. While most
organizations strive to follow
up, evidence to support
financial education effectiveness has to date been far more
anecdotal than empirical.
Organizations are beginning
to take the plunge into research,
however. Cleveland Saves is
working with a research team
at the University of Vermont to
determine the effectiveness of
its program and to guide
improvements. Results are

– Alexis Afzal, Executive Director, Alex CDC


Reinvestment Institute Alumni
Association in Dayton, Ohio,
David stresses the importance
of taking a comprehensive
approach. “We need to offer
complete programs that
address every aspect of the
individual’s situation,” he says.
“And just as importantly, we
need to make these programs
convenient – take them to the
people – and then back them
up with a support network.”
Support often takes the form
of coaching, wherein program
participants can call or meet
with a counselor one-on-one to
reinforce the skills he or she
has learned and to ensure that
behaviors align with intent. In
addition to coaching, programs
include classroom sessions,
workshops, printed materials,
and Internet-based self-paced
learning programs. The
objective is to make courses as
accessible as possible, offering
participants the opportunity to
learn in their own particular
comfort zone.

“If we look at the histories – the generational trends –
of various populations, we can identify the underlying situations
that have led to their financial challenges. It’s not enough
to treat symptoms; we need to dig to root causes
and integrate a variety of types of counseling to effect
long-term behavioral changes.”


4th district
Cleveland Fed Promotes Financial
Education Efforts in the 4th District





Backed by the steadfast conviction
that financial education helps
sustain a strong national economy,
the Federal Reserve Bank of
Cleveland supports financial
education. The Community Affairs
Office conducts research, provides
technical support, and organizes
consortia to address the financial
education needs of our

institutions, government agencies,
and community-based nonprofits
joined the Fed to discuss ideas for
improving delivery of financial
education programs and tools
throughout our district. The
Community Affairs Office then
organized and coordinated the
following consortia, which created
a network for providers to share
best practices and address the need
for impact measures.

“Once you’ve motivated people to act –
to begin saving – they will be more
strongly inclined to take advantage of
specific financial education programs.”, provides information
about organizations that offer
financial counseling, training, and
information; a glossary; and a
resource section providing links to
related websites.
Looking forward, the Cleveland
Consortium plans to continue
development and marketing of the
directory and to approach large
employers and universities to
discuss new financial education
For more information, contact
Senior Advisor Maria J. Thompson
at 216-579-2903 or

– George Barany, Director of Financial Education for the Consumer Federation
of America and Executive Director of WECO Fund, Inc.

These efforts are in large part
the result of roundtable meetings
the Cleveland Fed hosted in 2003,
in response to a variety of financial
challenges consumers face: the
growing complexity of financial
services, predatory lending practices,
a high incidence of bankruptcy, etc.
Representatives from financial

to develop and promote an Internetbased directory of financial
education providers.
Introduced in February 2005
through a community and media
event, the Financial Education
Directory of Northern and Central
Ohio, www.ohiofinancialeducation

Financial Education Partnership
of Northern & Central Ohio
This consortium of nonprofit agencies,
financial institutions, academic
organizations, and government
offices and agencies determined
that financial education programs
in northern and central Ohio were
being underutilized due to the
marketing constraints of individual
providers, so they initiated efforts

Financial Education Consortium
of Southwestern Pennsylvania
More than 125 individuals
representing a diverse group of
organizations in Southwestern
Pennsylvania have joined efforts as
the Financial Education Consortium,
a group that meets quarterly to
share insights and develop strategies
related to financial literacy.

Among its accomplishments of
2004, this consortium developed
a directory of financial education
providers, released in hard copy
and electronic format (pdf) in March
2005 and distributed through
banks, credit counseling agencies,
and social service organizations. The
directory was publicized on March
22 during a consortium-sponsored
event titled “Take Control of Your
The Pittsburgh branch of the
Federal Reserve Bank of Cleveland
serves as coordinating agency
for this consortium.
For more information, contact
Senior Advisor Dan Holland
at 412-261-7947 or
The Greater Cincinnati
Financial Education Partnership
This partnership has accomplished
a number of objectives in 2004,
including introducing “Get
Checking,” a program designed
to help financial institutions reach
new customers or established
customers who have experienced
problems managing their accounts;

developing handouts explaining
the Earned Income Credit and the
Fair and Accurate Credit Transactions
(FACT) Act; helping to update
financial education resources and
referral services provided by the
United Way’s 211 Hotline; and
establishing a list server through
which practitioners can communicate,
seek answers, and share experiences
and concerns about financial
In the coming year, this
consortium plans to strengthen
financial education marketing
efforts, produce a “How to Read a
Credit Report” handout, enhance
financial education opportunities for
seniors, identify financial education
needs in schools, and address
issues related to check-cashing
establishments and the large
number of foreclosures in Ohio.
For more information, contact
Community Affairs Advisor
Candis Smith at 513-455-4350 or

Financial Education Partnership
of the Miami Valley
Representatives from 30 organizations have come together with
the objectives of identifying financial
literacy needs, developing financial
education resources, sharing best
practices, and building partnerships
for educating consumers and
providers in Dayton and the nine
surrounding counties of the Greater
Miami Valley.
Like the Cincinnati consortium,
the Miami Valley group has
established a list server. Plans for

2005 include developing and
hosting a web-based financial
education directory that will also
be available in electronic format
(pdf) for users who would like to
print hard copies. Consortium
members also intend to meet for
a “curriculum blitz” in 2005 to
compare programs and work toward
the most effective content.
For more information, contact
Candis Smith at 513-455-4350 or

For more information about the consortia actively engaged in financial education in the 4th District, visit
To read the CR Report on Financial Education, Spring 2003, go to



Financial Education and CRA:
How Examiners Make the Connection
“Regulators, consumer advocates,
and policymakers all agree that
consumer education is essential in
the quest to stem the occurrence
of abusive, and at times illegal,
lending practices. An informed
borrower is simply less vulnerable
to fraud and abuse.”
– Federal Reserve Bank Chairman
Alan Greenspan

As our chairman indicates, a
financially literate consumer is
better equipped to avoid abusive
products and services. Even more
importantly, he or she, by becoming
informed, builds the foundation
for economic success.
While nearly every community
has public schools and adult
education programs that provide
opportunities for building computer
and other technical skills, few
offer financial education programs
targeted toward building critical
financial savvy related to budgeting,
saving, and the cost of credit.

Many bankers, however, are
eager to offer financial or technical
support to programs such as these.
In many communities, bankers
teach financial education classes
or provide grants to organizations
offering financial literacy programs.
Often, bankers will serve on the
boards of such entities or in crucial
roles in organizing and developing
the curricula. These bankers
recognize that their participation
can help build stronger communities
and ultimately pay off in future
consumers of deposit and loan
products. In addition, the grants
and services bankers provide may
qualify under investment and service
tests for Community Reinvestment
Act (CRA) evaluations.
As part of those evaluations,
examiners review the grants and
investments as well as the other
support and services the institution
provides to promote and provide
credit to low- and moderate-income
consumers within the bank’s
assessment area. The bank’s efforts
directed toward this target audience
are factored into our analysis. For
example, if the bank provided

Paul E. Kaboth
Assistant Vice President
Federal Reserve Bank of Cleveland

financial grants or its staff participated in an educational program
for first-time homebuyers targeted
to low- and moderate-income
individuals, the amount of the grant
and the staff participation would
be included in the examiner’s
analysis of the bank’s performance
under these tests. The key is the
target audience, which, for CRA
purposes, is low- and moderateincome individuals.
In the end, the efforts of banks
in providing and supporting
financial education often create
a win-win situation, as those
consumers who most need to build
financial knowledge are the same
individuals who can become longterm, profitable bank customers.
Banks also win when the resources
they invest in financial education
are recognized by their supervisory
agencies as being instrumental in
community development.

in my

We welcome your comments, suggestions,
and requests for additional copies. Send them
to Also feel
free to contact the following members of the
Community Affairs staff if you have questions.

Dollar Wi$e:
Building Financial Literacy
City by City

Ruth Clevenger
Vice President
and Community Affairs Officer

Maria J. Thompson
Senior Advisor
Paula Warren
Administrative Assistant

Jeff Gatica
Senior Advisor
Candis Smith
Community Affairs Advisor

Dan Holland
Senior Advisor
Visit us on the World Wide Web
The views stated in Community Reinvestment
Forum are those of the individual authors and
are not necessarily those of the Federal Reserve
Bank of Cleveland or of the Board of Governors
of the Federal Reserve System.
Materials may be reprinted provided the source
is credited. Please send copies of reprinted
materials to Community Affairs, Federal Reserve
Bank of Cleveland, P.O. Box 6387, Cleveland,
Ohio 44101-1387.


Cassandra McConnell
Community Affairs Manager

B Y M AY O R D O N A L D L . P L U S Q U E L L I C
Mayor of Akron, Ohio
President of The United States Conference of Mayors


Maria J. Thompson, Senior Advisor
& Managing Editor
Dan Holland, Senior Advisor
& Contributor
Candis Smith, Community Affairs Advisor
& Contributor

As America’s financial landscape
changes, holding each of us
increasingly responsible for our own
financial well-being, the need for
financial literacy grows.
Proposed changes to the
Administration of Social Security are a
timely example of the changing role
Americans will have to play in their
personal financial matters. Corporate
pension plans and other benefits the
American worker once enjoyed are
scarcer, leaving us to do our own
homework on saving and investing.
Additionally, the number and
complexity of consumer credit
opportunities seem to grow each
day. Many citizens are making poor
choices – choices that can damage
their financial stability, going so far
as to push them into bankruptcy or
foreclosure. It is clear that Americans
need to be more knowledgeable and
strategic as we make decisions for
our personal financial futures.
Recognizing this pressing need
for financial literacy, The United States
Conference of Mayors (USCM), in
tandem with its Council for the New

American City, launched the Mayors’
National Dollar Wise Campaign
last summer. This program urges
mayors and cities to collaborate on
customized financial literacy programs
that address the specific needs of
their constituents.
The Council for the New American
City is a coalition of nonprofit groups,
corporations and businesses that
share a common goal of increasing
investment in American cities. Dollar
Wise provides them with the
opportunity to further strengthen our
cities, ultimately helping to attract
new business and investments.
Under the Dollar Wise Campaign,
mayors organize and implement
financial literacy programs in their
communities using materials provided
by Council members. Along with the
Mortgage Bankers Association, the
USCM encourages cities to launch
financial literacy programs that help
individuals and families maintain
good credit, increase savings, and
become educated borrowers. Further,
USCM recommends that mayors
begin by focusing on one core group
– homebuyers/homeowners, the
unbanked community, students, the
elderly, retirees, or immigrants, for

example – and customizing a
financial education program to their
needs. As that program becomes
effective, they should consider
expansion opportunities.
I thank the mayors and corporate
leaders who are driving the success
of this program by working together
to develop fresh, creative, relevant
ideas in their communities. Thanks,
too, to the Federal Reserve Board
for partnering with us to promote
awareness of the program.
Thirty-eight cities are now
participating in our 2005 campaign,
and we expect many more. Those
that are involved report very positive
results. Clearly, our nation is thirsty
for this kind of education just as
our cities are thirsty for economic
strength. Dollar Wise is a tool to
help our mayors face their economic
challenges head-on and fix some
of what is wrong. I encourage every
mayor and community leader to
promote and become actively
involved in Dollar Wise.


Federal Reserve Bank of Cleveland

2005 Community
Development Policy
June 22-23, 2005
Cleveland, Ohio

Financial Education Directory of Northern and Central Ohio –

October 6, 2005
Columbus, Ohio

Financial Education Directory of Southwestern Pennsylvania –
Contact Dan Holland, senior advisor: 412-261-7947;

Regulatory Roundtables
Fair Lending &
Public Data Collection
Pittsburgh, Pennsylvania
September 13, 2005
Cincinnati, Ohio
October 2005
Details on 2005 planned
programs and workshops are
posted regularly to the Community
Affairs Office web page:

Please take a moment to help us
update our mailing list. Below is
the information currently on file.
Please confirm, correct and/or add
new contact information to ensure
that publications, conference
notifications, invitations, and other
mailings of interest are sent to the
attention of the right person(s)
at your organization.
To complete by email, go to
to find the Word document.
Detach, complete, and email back

4th District Regional Research and Data
You’ll want to bookmark the Federal Reserve Bank of Cleveland’s
new Regional Research and Data web pages: www.clevelandfed.
org/regional. There you’ll find analysis, commentary, and data on
issues that concern the residents and businesses of the states
that lie within the 4th Federal Reserve District: Ohio, Kentucky,
Pennsylvania, and West Virginia. Employment, education, and
economic growth are just some of the topics covered on the site,
where you’ll also find the latest regional economic indicators.
Federal Reserve System Resources
• Financial Education Research Center – From Federal Reserve
Bank of Chicago:
• Building Wealth: A Beginner’s Guide to Securing Your Financial
Future – From Federal Reserve Bank of Dallas:
• Guide to Financial Literacy Resources – From Federal Reserve
Bank of San Francisco:
• Fed 101, Teacher’s Resources and Personal Financial Education –
From Federal Reserve Board of Governors:
Also be sure to check out:
• Cleveland Saves and other America Saves initiatives:
• Jumpstart as a resource for high school students:
The Latest Word on HMDA
If you have questions about the new reporting regulations of the
Home Mortgage Disclosure Act (HMDA), try these sources:
The Federal Reserve Bank of Cleveland’s 2004 Annual Report is now
available online at

P. O . B O X 6 3 8 7


CLEVELAND, OHIO 44101-1387



Plan to attend the third annual
Community Development Policy
Summit and learn how proposed
changes in the funding and
administration of federal programs
could impact wealth creation in
low- and moderate-income
This one-and-a-half day
conference will examine the
changing roles and expectations
of community development
practioners at banks, nonprofit
organizations, and government
agencies as they strive to meet
the challenge of creating an
ownership society. National and
regional policy experts will look at
the reality behind the rhetoric.
Special breakout sessions will
include a legislative and regulatory
update on CRA and HMDA by
senior staff from the Federal
Reserve, Office of the Comptroller
of the Currency (OCC), Federal
Deposit Insurance Corporation
(FDIC) and Office of Thrift
Supervision (OTS).
For more information and
the latest conference agenda,

2005 Financial
Education Conference


Conferences + Workshops

of interest