Why this former banking regulator is writing kids books

Summary

Summary of "Why this former banking regulator is writing kids books" The Indicator from Planet Money
Release Date: November 12, 2024
Host/Author: NPR

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Introduction

In the November 12, 2024 episode of The Indicator from Planet Money, NPR delves into an intriguing crossover between financial regulation and children's literature. The episode, titled "Why this former banking regulator is writing kids books," explores how Sheila Baer, the 19th chair of the Federal Deposit Insurance Corporation (FDIC), leverages storytelling to enhance financial literacy among young generations.

Sheila Baer: From Financial Regulator to Children's Author

Sheila Baer is renowned for her pivotal role during the 2008 financial crisis, where she worked tirelessly to stabilize the financial system. However, beyond her regulatory accomplishments, Baer embarked on a unique mission: writing children's books aimed at instilling financial wisdom from an early age.

Quote:
Sheila Baer (00:39): "Sheila Baer, yes. The towering figure who was working to keep the financial system running during the great financial crisis around 2008."

Early Lessons in Finances

Baer's journey into financial literacy began in her childhood. A formative experience at a bank visit with her father left a lasting impression.

Quote:
Sheila Baer (01:42): "There's no money in the bank."

This early revelation taught her that banks do not physically hold all deposited funds, sparking a lifelong interest in understanding and educating others about the intricacies of money management.

Identifying the Gap in Financial Education

During her tenure at the Treasury and later at the FDIC, Baer observed a significant gap in financial education for children. She noted that existing resources were either geared towards older students or were insufficiently comprehensive for younger audiences. Additionally, she recognized that many adults themselves lacked a solid understanding of financial principles, hindering their ability to teach their children effectively.

Quote:
Sheila Baer (02:23): "There isn't that much information for elementary school children... and also a big problem was the adults didn't understand it."

The Power of Storytelling in Financial Education

Motivated by her own experiences as a parent, Baer turned to picture books as an effective medium to convey financial concepts. She believed that engaging stories could impart essential lessons not only to children but also to their parents who read alongside them.

Quote:
Sheila Baer (02:50): "And I thought what a wonderful medium to impart financial information to the children, but the parents as well, because the parents read those books with the kids."

"Rock, Brock and the Savings Shock": A Case Study

Baer's first book, "Rock, Brock and the Savings Shock," serves as an exemplary model of her educational approach. The narrative follows twin brothers, Rock and Brock, who receive a savings matching program from their grandfather. While Rock opts to spend his money, Brock chooses to save, ultimately amassing $512. This story highlights the benefits of saving and the power of compound interest.

Quote:
Waylon (03:31): "It can be brutal. And that's the kind of lesson Sheila was trying to teach people, both through these kids books, but also in her day job."

Addressing Predatory Lending Practices

Baer's regulatory work at the FDIC involved confronting predatory lending practices that disproportionately affected low-income and minority communities. She exposed how certain loan products were designed to trap borrowers into cycles of refinancing with escalating payments, contributing to the subprime mortgage crisis.

Quote:
Sheila Baer (04:55): "We helped a lot of people keep their homes. We did. So I don't want to say it was all for naught, but there were millions more who lost their home, who I think with a more concerted effort could have been saved."

The Ineffectiveness of Traditional Financial Literacy Programs

Baer acknowledges the challenges faced by conventional financial literacy initiatives, which often fail to leave a lasting impact. Studies indicate that such programs do not significantly improve financial behaviors, primarily because the information is not retained effectively.

Quote:
Darian (05:46): "Like, people don't retain the information. Right."

Baer's Approach to Sustainable Financial Education

To overcome the shortcomings of traditional methods, Baer emphasizes the importance of repetitive and engaging content that children can revisit multiple times. She argues that well-crafted picture books can reinforce fundamental financial principles, such as the benefits of saving and the dangers of impulsive spending.

Quote:
Sheila Baer (06:03): "I think one of the reasons I like picture books is because my experience with my own children... a child, when they're young, will read it over and over and over again."

"Princess Persephone Loses the Castle": Teaching Skepticism

Another of Baer's notable works, "Princess Persephone Loses the Castle," exemplifies her focus on cultivating a healthy sense of skepticism. The story narrates how Princess Persephone is deceived by a door-to-door salesman, Aluminum Jim, who offers a loan with deceptive terms. Through this narrative, Baer teaches children to critically evaluate financial offers and recognize red flags associated with predatory practices.

Quote:
Waylon (07:30): "Knowing when to have a healthy sense of skepticism is the theme of another one of Sheila's kids books, Princess Persephone Loses the Castle."

Engaging the Next Generation

Baer's innovative approach combines her regulatory expertise with creative storytelling to empower children with the knowledge to navigate complex financial landscapes. By embedding essential financial lessons within engaging narratives, she ensures that these crucial concepts resonate with young minds and are retained over time.

Quote:
Sheila Baer (06:42): "Students should be learning about how just saving $10 a month... that's the kinds of lessons they should be learning."

Conclusion: A Multifaceted Impact

Sheila Baer's transition from a high-ranking financial regulator to a children's author underscores the multifaceted strategies required to address financial illiteracy. Through her books, she not only imparts critical financial knowledge to children but also indirectly educates parents, fostering a more financially savvy future generation.

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Produced by Angel Carreras with engineering by Gilly Moon. Fact-checked by Sarah Juarez. Edited by Paddy Hirsch and Kate Concaden. The Indicator is a production of NPR.

Transcript

[Sheila Baer]

Npr.

[Waylon]

Hello there, Waylon.

[Darian]

Hi, Darian.

[Waylon]

And listeners, dear. I have a story. One you should hear.

[Darian]

Ooh, I am intrigued. Darian, you're rhyming. You're rhyming Today.

[Waylon]

Today's show for the Indicator are financial fables for kids. Progenitor.

[Darian]

Are we talking about kids books about money? That was kind of a tortured rhyme, but you know what? I respect it.

[Waylon]

You must be thinking, who could it be? She was a member of the FDIC, to be quite specific, the 19th chair. Her name, the singular, Sheila Baer. Sheila Baer, yes. The towering figure who was working to keep the financial system running during the great financial crisis around 2008. And what I learned is that this whole time actually had this side quest, which is writing kids books to help them avoid scammers and predatory lenders.

[Darian]

I mean, financial literacy and financial savviness is a really big issue. And, like, kids and adults actually could stand to know more about it.

[Waylon]

Today on the show, what Sheila Baer has learned about American capitalism as one of its top regulators and how she's trying, one book at a time, to help new generations from falling into its traps through rhyme. Waylon, if you ins one more time.

[Darian]

Ah.

[Waylon]

Yay.

[Darian]

Best story time ever.

[Waylon]

Sheila Baer learned her first financial lesson pretty early on when she visited the bank with her dad.

[Sheila Baer]

Now, he's always fascinated by the bank vault. The door was usually closed, and so I went in with him. He was making his deposit, and 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.

[Waylon]

There's no money in the bank.

[Darian]

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.

[Waylon]

Yeah. And when Sheila Bear grew up and served at the treasury, she began to notice that not every child was getting the same concrete financial education.

[Sheila Baer]

And one thing that concerned me. Well, a couple of things became apparent. One is, there isn't that much information for elementary school children. There was really, to the extent there was information, it was more for the older kids. And also a big problem was the adults didn't understand it.

[Darian]

Well, I mean, that seems to be the biggest problem. Right. Like, how are you expecting children to learn about loans or saving for retirement if parents are themselves in the dark about this? Teachers, too.

[Sheila Baer]

At the same time, I had young children of my own and my husband and I every night would read picture books to them. And I thought what a wonderful medium to impart financial information to the children, but the parents as well, because the parents read those books with the kids.

[Waylon]

And that's what drove Sheila Baer to publish her first kids book. It was called Rock, Brock and the Savings Shock. 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.

[Darian]

That's like compound interest at work.

[Waylon]

Yes, it's a wonderful force when you're saving.

[Darian]

Not so much when you're borrowing though.

[Waylon]

It can be brutal. 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. The fdic?

[Darian]

Yeah. That's the government entity that insures people who save their money in the bank.

[Waylon]

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 already.

[Sheila Baer]

Then we could see they were being push marketed into low income, minority neighborhoods. It was really despicable. People would go in, they would troll for people who already owned a home and had a nice safe 30 year fixed rate mortgage with equity. They come knocking on the door, hey, would you like to get some cash out of your house? You know, vacation, new roof, whatever.

[Waylon]

These salespeople would offer loans with a nice low interest rate to begin with, but that wouldn't last.

[Sheila Baer]

They were just designed to force people to keep refinancing every couple years with steep payment increases. And it was shocking, it was frightening.

[Waylon]

Sheila Baer raised the alarm in Washington trying to force higher standards onto these lenders. But she had arrived at the FDIC in 2006. It was too late for many households in what would become known as the subprime mortgage crisis.

[Sheila Baer]

We helped a lot of people keep their homes. We did. So I don't want to say it was all for naught, but there were millions more who lost their home, who I think with a more concerted effort could have been saved.

[Darian]

This is really bringing me back to all of those awful stories we heard during the great financial crisis. And a lot of those stories had this thing in common where there were predatory loans that were sold to people who couldn't afford them. And the people doing the lending knew.

[Waylon]

That 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.

[Darian]

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.

[Waylon]

And academics have studied financial literacy programs for a long time, and they haven't found them as a whole to be particularly effective.

[Darian]

Right. Like, people don't retain the information. Right.

[Waylon]

Do you have any concerns that maybe the lessons may be fun, but they won't have that stickability but don't stick?

[Sheila Baer]

Yeah, yeah, no, it's a real issue. I think one of the reasons I like picture books is because my experience with my own children, and I think there's a lot of literature that backs this up. Is that a good story, a good picture book? A child, when they're young, will read it over and over and over again.

[Waylon]

I'm an uncle of six. I get a lot of this experience.

[Sheila Baer]

You know what I'm talking about?

[Waylon]

Sheila herself says that a lot of financial literacy programs aren't teaching particularly useful concepts. Sheila says they might be teaching the ins and outs of the stock market and different types of exotic trades you can do, but they don't necessarily underscore those financial basics.

[Sheila Baer]

Students should be learning about how just saving $10 a month, even at their age, is going to turn into a lot of money if they just leave it there until they retire. Those are the kinds of lessons they should be learning. And, you know, don't click on that buy now, pay later link. When you see something fancy, you know, gadget that you think you want, you haven't really thought about, those are the kinds of things we need to be emphasizing with kids about money when they're teenagers, not active stock market trading. So I do think we need to have a more careful assessment of what kind of content or giving children to make sure they're learning to be skeptical, ask questions, be worried, know how to protect yourself. That's really what's important.

[Waylon]

Knowing when to have a healthy sense of skepticism is the theme of another one of Sheila's kids books, Princess Persephone Loses the Castle. And a few weeks ago, I went to Bryant park in New York, and I sat at a table next to the carousel, and I asked some kids if they wanted to learn about Protecting themselves from unscrupulous slanders. Very enticing. This one is about a princess who loses her castle. I read it out to three kids, Grayson Sloane and Freyia. Princess Persephone, glued to the phone talking all day to her friend Mary Joan. Basically it's about a princess who is taken in by a door to door salesman called Aluminum 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. Protecting the meek and the law abiding from crooks like Jim and his cheap tin siding. That end. I really liked it. What lesson did you learn? That you have to read the papers. And what do you think of Aluminum Jim? I think he's a crook. He's a crook.

[Darian]

Amazing. Well, the kids were really listening.

[Waylon]

To be fair, Aluminum Gym is quoted as saying, I am not a crook.

[Darian]

Do the kids know that reference?

[Waylon]

We'll see if it sticks when they grow up and are sold their first credit cards or loans. This episode was produced by Angel Carreras with engineering by Gilly Moon. It was fact checked by Sarah Juarez. Paddy Hirsch edited this episode and Kate Concaden edits the show. The indicator is a production of NPR.