What despots can teach us about student branching

by: Henry Meier

Say what you want about your most successful despots and dictators they are almost all keen observers of the human condition.  Take for instance Lenin who once explained that, “Give me four years to teach the children and the seed I have sown will never be uprooted.”

He is onto something that should serve as a reminder wake-up-call   to your credit union about the importance of engaging kids in the financial system.  It’s good for the kids and good for business.  It’s good for the kids because the sooner people start learning that money doesn’t magically grow in Daddy’s wallet but almost as magically via compound interest the better off they  will be.  It’s good for business because brand loyalty starts to develop early.  Today’s seven year old with his two dollar deposit may very well be the erstwhile member, who turns to the credit union for her first mortgage twenty years from now.

So I was happy to see that the NCUA joined with other financial regulators in issuing a joint guidance on school branching.  I’ve always been a little surprised by how little legal guidance is actually available on the topic so anything is a step in the right direction The Guidance does a good job of explaining how federal laws can be complied with in a school setting. That being said NCUA could have done a much better job in the Guidance of answering some of the basic questions as well as highlighting its own resources.

For instance where exactly do federal credit unions  get the right to conduct banking activities on school grounds anyway?  According to the Guidance the development of financial literacy programs is consistent with the mission of credit unions to promote thrift.  It explains that   “Applicable state law and the appropriate state supervisory authority determine branch application requirements, if any, for state-chartered credit unions.”  It is odd to me that NCUA didn’t also reference that federal credit unions have the right, but not the obligation, to accept minors as members.