Teaching Money Management to Students Offering Banks CRA Service Opportunity

July 01, 1999

How do you create a win-win situation? As a banker, one way is to participate in the Dollars & $ense program. Administered by the Missouri State Treasurer's office, the Dollars & $ense program links Missouri elementary schools and local banks. The banks open savings accounts for students at their partner schools, providing opportunities for students to learn and practice money-management skills. The program is open for grades three through five and features a curriculum that offers hands-on activities for teaching about personal finance. Students learn to set financial goals--from buying a candy bar to paying for college--and also develop an understanding about the banking world.

Everybody wins, right? The bank is establishing a customer base, and the students are learning about responsible personal finance. In this scenario, however, the bank wins twice.

Dollars & $ense and similar programs help banks meet their Community Reinvestment Act (CRA) obligations under the service test, one of three assessment tests for banks examined under the large bank examination procedures.

Under this service test, examiners evaluate a bank's record of helping meet the credit needs of its assessment area(s) for delivering retail banking services and the extent and innovativeness of its community development services. Community development service is defined by the CRA regulation as a service that:

  • has community development as its primary purpose;
  • is related to the provision of financial services; and
  • has not been considered in the evaluation of the bank's retail banking services.

To more fully understand what a community development service is, we must know how community development is defined in the CRA regulation. For purposes of CRA, community development is:

  • affordable housing (including multi-family rental housing) for LMI individuals;
  • community services targeted to LMI individuals;
  • activities that promote economic development by financing businesses or farms that meet the size eligibility standards or have gross revenues of $1 million or less; and
  • activities that revitalize or stabilize LMI geographies.

"Provision of financial services" often involves either informing community members about how to get or use credit or providing credit services or information to the community. For example, service on the board of directors of an organization that promotes credit availability or finances affordable housing is related to the provision of financial services.

Dollars & $ense is just one example of a program that provides an opportunity for banks to meet their obligations under the CRA service test. The Treasurer's Office is particularly interested in recruiting additional St. Louis banks to partner with city schools. To obtain a registration form, banks should contact the Office of the Missouri State Treasurer at (573) 751-2411.

Bridges is a regular review of regional community and economic development issues. Views expressed are not necessarily those of the St. Louis Fed or Federal Reserve System.

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