Sunday, September 19, 2010

Wanted: A Few Good Bankers

Banking is under assault by lawmakers, regulators, and the public. What started as the mortgage crisis, advanced to a Wall Street crisis, and has devolved into what is known as a banking crisis. As consumers began defaulting on loans, the stereotypical media reaction demonized those "bankers" forcing people from their homes. Nary a word seemed to be said about people borrowing money from the banks and promising to pay it back while at the closing table. As the economic dominoes fell, so did banks, failing in numbers not seen since the 1989-91 S&L crisis. The end result, a black eye for our industry that brands us all in a not-so-attractive light.

Because banks take collateral, primarily real estate, as security for loans we are always in a position to foreclose on that collateral if the borrower fails to pay us back. It is far easier for the person that defaults to paint the bank as the bad actor rather than the bank defending itself by saying "we lent them money, they promised to pay us back, and they failed to do so". We don't defend ourselves because we don't want to discuss personal details about our customers. This is a good thing. But the public relations beating we are taking is beyond the pale.

One negative impact is to paint the banking profession with the same broad brush as the bad players during the financial crisis. My firm specializes in working for community banks. Every week I am with management teams discussing strategy and profitability. Frequently, bankers lament how difficult it is to find top talent in key managerial posts. As I look across the table, it is less than common to see younger faces. Why does it seem young up and comers eschew banking?

One answer is branding. Bankers have always been painted in a negative light in pop culture. Think Mr. Drysdale and Miss Hathaway (pictured) in The Beverly Hillbillies or Mr. Potter in It's a Wonderful Life. But banking is mostly a noble profession with many benefits. I note a few here:

  1. Mr. or Miss Community: If you love where you live, enjoy the people and interacting with them, banking is a great profession. A key part of your job is to get to know customers and prospective customers and meet and greet them at community events. If you enjoy this type of interaction, banking could be for you.

  2. Home most nights: Jeff Opdyke's writes a Love & Money Op-Ed every week for the Weekend Wall Street Journal. He is a financial reporter covering Asia in his day job. In his latest Op-Ed piece he mentioned he will spend fully 3-4 months of the year on the road. Bankers, on the other hand, spend most of their time at or near home. This allows them to watch their children grow and attend their events, and make time commitments to various charitable organizations or personal hobbies. I, as a consultant, don't have these luxuries because it is variable week by week when I will be in town or not.

  3. Important to community advancement: This goes beyond (1) above. Bankers could play a significant role in helping businesses get off of their feet and thrive by providing sound advice, financial products,  and, in many cases, financing for local businesses. Currently, there is no better place to obtain business financing than the local bank. P to P lending, the federal government, and other intermediaries are lessening our role in small business formation and financing, but have yet to trump us. If you want to help your community build a sustainable economic future, banking is a profession like no other.
I have mentioned in previous posts that banking is changing at a pace unlike any other in my lifetime. Critical to community banking thriving in this new and emerging environment will be new, fresh faces bringing new ideas to key management positions to carry us forward. If you value the above, consider banking as a profession.

- Jeff

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