The Commonwealth Bank practices “cradle-to-grave banking”.

Those were the words of financial councillor, Pam Mutton, in a 2015 Senate inquiry into credit card interest rates.

In the same inquiry, financial columnist and best-selling author of The Barefoot Investor, Scott Pape, famously likened the presence of the CBA in Australian schools to having Ronald McDonald teaching Australian children about nutrition.

The presence of banks in our schools is older than Federation itself. The Public School Savings Bank was introduced in 1887, wherein schools managed students’ accounts. Administration of the scheme was handed over in 1925 to the Government Savings Bank of NSW and by 1955, the Commonwealth Bank’s School Banking program was running in over four thousand schools across Australia, Papua New Guinea and the Solomon Islands Protectorate.

It may be a quixotic assumption that those initial schemes must have had good intentions. The 1880s, while turbulent in the US, were a period of significant growth in Australia and the government probably saw the US as a reason to focus efforts on increasing financial literacy in schools. Yet, the big kids had their own problems. Australia experienced a recession in the 1890s that some argue as being more damaging to the country than the Great Depression forty years later.

What prescient factors led to the recession of the 1890s? Funnily enough the same sorts of economic red flags that sparked the 2015 Senate inquiry.

Research done by the now Senior Manager of International Finance at the RBA, Chay Fisher, found that during the 1880s Australia saw a significant rise in building activity, property market speculation, rapid credit growth and an increase in risk-taking behaviour by banks. Any of this seem familiar?

What Mr Fisher does not make mention of in his research is one more parallel between the decade prior to the 1890s collapse and our current economic landscape: financial illiteracy. It seems that many people today don’t know how to read the writing on their home loan contracts, let alone the writing on the walls of their first home. With this financial illiteracy comes a misplaced reliance on debt, or ‘credit’ as it is marketed to children today.

It’s hard to say just when the presence of the banks in our schools crossed the lines from education to manipulation. With little knowledge of what children were taught in the 1880s under the Government scheme, apart from being taught to hand their money over to the teachers, it could be fair to say the relationship was never quite symbiotic.

Things certainly became conflated when the Commonwealth Bank started offering money to schools for each student they signed up to their school banking programs. In an attempt to save face, the CBA recently announced their intention to revisit this payment structure, which in 2016 saw them pay schools $2.3 million in commission payments. They haven’t promised to stop paying schools, however.

A school’s stake in signing kids up to a bank is one thing but it was probably the introduction of “Cred” that broke the camel’s back.

Cred’s a “Dollarmite”, a cute mascot for the bank who made himself known to Australian schoolchildren earlier this year.

“Cred’s a cool dude,” the bank tells children. “He’s also a total techno geek – but we don’t hold that against him.” The reason why tech enthusiasts are to be scorned isn’t quite clear. What is clear is that Cred has an unusual name. A name that when the bank invites an 18-year-old the opportunity to apply for a CREDit account in ten years time, something will tick over in that teenager’s mind, accompanied by a warm fuzzy feeling.

Just seeing an image of the 1990s Dollarmites (they used to be actual mites, an idea with which some marketer must have literally laughed to the bank) is enough to recall a warm and fuzzy emotion for those who grew up on that particular manifestation of the scheme. It’s called emotional recall and companies who target children, such as McDonalds, rely on it. They don’t have to do anything particularly clever, just consistently be there in children’s lives.

It is easy to understand then just how powerful getting in early is for the Commonwealth Bank’s ability to create future customers – much like sleeper cells.

But what skills are children being given, besides handing over their parents’ spare change to the teacher each week? Are they taught about Stamp Duty? Council rates? Maintenance costs for a home? Interest-only loans vs principal loans? Lender’s Mortgage Insurance? How about effectively managing their income to avoid spending more than they earn?

The key skill children seem to acquire is earning tokens to be redeemed for rewards, much like those rewards we receive by using our credit cards. What seems likely as being fostered is not financial literacy in young Australians but a relationship with debt. This relationship is why one third of Australian homeowners are highly exposed to economic downturn, changes in their income, or changes to the RBA interest rate.

This is the key reason why Australia faces the very real possibility of an economic downturn as homeowners begin to suffer from the smallprint of their contracts.

Interest-only loans usually start requiring homeowners to start paying their principal, as well as interest, after five years, while those who sign fixed-rate mortgages under this system are also susceptible to these mortgages turning over to variable rates once that five year mark comes to pass. This leaves them further susceptible to changes in interest rates.

Mix this with the proclivity for first home buyers to take out Lenders Mortgage Insurance (insurance for the bank, not the buyer) due to the fact that they can’t drum up the $223,000, plus costs, for a 20% deposit on the median house price in Sydney and there is little wonder why things are looking a little dicey out there.

Unfortunately, it is time to turn to the adults in our democratic system, the government, to demand effective financial literacy programs in our schools, rather than relying on a bastardised system of education driven by a bank’s interest in creating life-long customers and a school’s interest in receiving commission.