Kansas University graduate and FDIC Chairwoman Sheila Bair offered her insights on money and financial responsibility in her speech Monday at the Lied Center. The event was part of the Anderson Chandler Lecture Series organized by Kansas University’s School of Business.

Financial responsibility

“Students in particular have to understand that when you overdraft your account to buy a $5 latte, you may well get hit with $30 overdraft fee … That would be like paying an annual percentage rate of 7,200 percent, assuming you replenish your checking account within 30 days. That’s a pretty high interest rate.”

The subprime turmoil

“I strongly believe that much of the pain that we’re now seeing could have been avoided if we’d been smarter about the new, exotic credit products that were used to finance so much of this lending. And this goes for all the actors – the regulators, the investors, the lenders and the borrowers. All of us could have used a refresher in Personal Finance 101. Even Alan Greenspan on ’60 Minutes’ admitted that he didn’t see it coming.”

Mortgage responsibility

“The trick now is to try to fix the problem without unduly drying up credit. … Lenders need to verify credit information. They need to properly evaluate underlying collateral for a loan, and they need to determine whether a buyer can truly afford to repay the mortgage over its long term, not just over the short-term teaser rate. Investors need to do more their own analysis. … Regulators need to make sure that borrowers have what they need to fully understand the terms of the loan. And borrowers need to make sure that they fully understand the loan before they sign on the dotted line.”

Being money wise

“You need to be self-reliant about your money. Learn how 21st-century financial markets work. Even if you’re not interested in finance you need to learn. Get the skills to make wise decisions about your money and build a healthy financial future for yourselves and, eventually, for your families.”