Okay, here’s one I didn’t see coming from my college students: A Depression survivor’s mentality on hiding money like a squirrel storing nuts.

I walk around in life working off the general assumption that my students are bored into rigor mortis when I start talking about the economy, and what to do with their money. I’m not being insecure. This is what they look like when I start talking about financial matters:

First, the Pavlovian response of eyes going immediately half-mast. Next, fingers inching toward either the open Doritos bag next to them, or the keyboard in front of them (as if I will magically not notice they’re checking email in class).

So you can imagine my surprise when I overheard students discussing not trusting their banks and wanting to take their money out, because they’re not earning any interest anyway. Unable not to sound eager, I jumped in and asked how they expected to establish credit, save money, invest, and function in the society. They weren’t against the idea, just angry that banks had gotten so much bailout money and from what they could tell, weren’t helping people with mortgage foreclosures, and were still firing employees.

I almost cried. And not because I’m a good person and they touched me with their concern for their fellow man. It was better than that—they had actually been listening in class and digested what we discussed about the economy. I’m sorry for sounding callous, but for any teachers out there, you understand these gratifying moments are all we have. You know it’s not the enormous paycheck.

Anyway, their vehemence led us, in our final days before summer, to a discussion about how to choose a financial institution. We made a list of 3 criteria that makes a good financial institution:

1. It must offer all the products: Debit cards, credit cards, mortgages, other loans, investment vehicles.

2. It must be local. I was pleasantly surprised by this. It was so citizen oriented. They compared it to buying produce from local farms sold at a nearby farmer’s market. If they know where the food comes from, and the farm is visible, the farmers and grocers couldn’t really do anything awful, like use killer chemicals, without people knowing.

In the same vein, a local financial institution, without a big national name, means they can walk into a branch and get personal service, get someone to answer questions and have a human being take responsibility if something goes wrong.

One more key reason they wanted local: They grasp that financial institutions invest in real estate, so they want the investments to be local. When I asked if they meant like in It’s a Wonderful Life, their eyes opened. I do believe I saw their synapses making connections. The Building & Loan, minus Jimmy Stewart’s drunk uncle who lost the deposit—that’s what they wanted.

This age group, probably thanks in large part to the blogosphere, does not trust an institution that isn’t authentic and accessible. Besides, they claim that bankers treat them like second-class citizens.

3. Proof that the financial institution isn’t run by crooks. You can’t march into a national bank and demand to see how things are run.

After we made the list, they sat back, collective arms folded, challenging me to present them with such an institution, knowing nothing of the kind exists.

Then I asked if they knew the difference between a credit union and a bank. Not one of them did. (Actually, two professors I stopped later that day had a vague idea, but didn’t really ring the bell either.)

A general definition to tell your kids: Credit unions are not-for-profit financial coops that conduct business for the mutual benefit and welfare of member-owners. Only members can bank at a credit union, and every member has an equal vote. Banks are for-profit financial corporations that conduct business to maximize the profit for its stockholders. Those with more stock have greater say.

Here’s how credit unions and banks each rank for the students’ 3 criteria.

1. Must offer all the products. Credit unions and banks are generally the same. They both offer everything. But only members of a credit union can do business there. Anyone can open a bank account at a bank; you don’t have to be a stockholder. There are certain tradeoffs:

In some cases, banks have slightly better interest rates, but credit unions generally have more reasonable lending rates and non-punitive lending policies.

The news is full of stories about banks slapping higher interest rates on someone’s account for just one late payment, among other things. They’re also imposing fees for being over the limit, charging higher fees for cash advances and ATM surcharges, and reducing credit limits, to make up for their previous poor lending decisions.

Also, credit unions have lower fees for certain services. The FDIC and NCUA, which is the credit union insurer, are both government insurance for deposits up to $250,000.

2. It must be local. Credit unions, by nature, are local entities. Banks aren’t, with the exception of community banks, which can still have board members that aren’t local because majority stockholders elect bank Board members, which are paid. The Board of Directors at a credit union must be members, which means they’re local, and it’s a volunteer job. Board members are elected by other members.(The kids loved that they’d get to vote for the people who run their financial institution.) All investments a credit union makes are local. Not true for even community banks.

3. Proof that they aren’t crooks. Now, there’s no way to prove that a bank Board member is more likely to be a crook than a credit union Board member, or vice versa. But credit unions, with the egalitarian voting system, got the nod from my students. They cited the following, while tears of joy glistened in my eyes, because they used this phrase correctly in a sentence: Credit unions have a check and balance system.

So, they agreed to find a credit union and check it out. I’d love to hear what the kids in your life think about the comparison.

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