Ho, hum. Another bank in trouble.
BULLETIN, 1/7/10.
High Desert Bank gets a "cease and desist" order, which "requires the bank to temporarily cease making any new commercial real estate...."
Right, O.
I continue reading.
The usual -- this "sounds a lot worse than it is..." from management. Check.
The bank is "...no danger of failing and remains 'well-capitalized' by regulatory standards."
Sure...that's why they sent you a "cease and desist" order.
No, says management, it's because the "...regulators are deathly afraid of this market and the commercial real estate market, and it's just got them extremely concerned...."
Gee, I wonder why? Cause, you know, nothing has happened lately to cause concern....
So I'm to believe the regulators are a bunch of panicked ninnies, and that we're just fine, move along, nothing to see here?
Except I have the opposite suspicion. Here's what I think is happening with regional banks:
My guess is that they're rolling up bad banks little by little so as to NOT cause a panic. That if they were closing the banks by the old standards, there would be a blood bath.
Anyway, the defense by management so far is what we've heard before from other local banks. All this is to be expected.
Then there is the next comment by management:
"Banks have had some problem loans and I'm not immune to that. I don't think we made poor decisions; they were very good decisions when we made the loans."
Whoa, Nelly. Let me repeat that priceless gem.
"I DON'T THINK WE MADE POOR DECISIONS; THEY WERE VERY GOOD DECISIONS WHEN WE MADE THE LOANS."
For god's sake! They were lousy decisions, as time and experience has confirmed. You're like the guy falling off the hundred story building that is asked at the fiftieth floor how it's going. "Everything's great so far!"
Here's what I'd do if I was managing one of these problem banks. I'd fess up, and tell everyone that I'm doing everything I can to correct the problem. Just that.
Because no one is going to believe you when you say, "We're just fine."
And no one is going to give you much credit for good judgment when you defend very poor decisions, by saying they weren't poor decisions at the time. Every decision that ends poorly was a 'bad' decision by definition. You aren't a politician hoping the public forgets what you said and did a couple years ago. You are a financial institution, and your financial decisions have consequences to you and your shareholders.
Your job as a banker is to manage risk. If you get the risk/reward ratio wrong, you get a "cease and desist" order.
Fess up.
I fear for this economy if -- when this is all over -- all the banks and thrifts and retail stores and politicians and economic professors and stock brokers attribute it all to Bad Luck and Bad Timing and Mysterious Forces and Who Could Have Known? and
"I DON'T THINK WE MADE BAD DECISIONS; THEY WERE VERY GOOD DECISIONS WHEN WE MADE THE LOANS."
BULLETIN, 1/7/10.
High Desert Bank gets a "cease and desist" order, which "requires the bank to temporarily cease making any new commercial real estate...."
Right, O.
I continue reading.
The usual -- this "sounds a lot worse than it is..." from management. Check.
The bank is "...no danger of failing and remains 'well-capitalized' by regulatory standards."
Sure...that's why they sent you a "cease and desist" order.
No, says management, it's because the "...regulators are deathly afraid of this market and the commercial real estate market, and it's just got them extremely concerned...."
Gee, I wonder why? Cause, you know, nothing has happened lately to cause concern....
So I'm to believe the regulators are a bunch of panicked ninnies, and that we're just fine, move along, nothing to see here?
Except I have the opposite suspicion. Here's what I think is happening with regional banks:
My guess is that they're rolling up bad banks little by little so as to NOT cause a panic. That if they were closing the banks by the old standards, there would be a blood bath.
Anyway, the defense by management so far is what we've heard before from other local banks. All this is to be expected.
Then there is the next comment by management:
"Banks have had some problem loans and I'm not immune to that. I don't think we made poor decisions; they were very good decisions when we made the loans."
Whoa, Nelly. Let me repeat that priceless gem.
"I DON'T THINK WE MADE POOR DECISIONS; THEY WERE VERY GOOD DECISIONS WHEN WE MADE THE LOANS."
For god's sake! They were lousy decisions, as time and experience has confirmed. You're like the guy falling off the hundred story building that is asked at the fiftieth floor how it's going. "Everything's great so far!"
Here's what I'd do if I was managing one of these problem banks. I'd fess up, and tell everyone that I'm doing everything I can to correct the problem. Just that.
Because no one is going to believe you when you say, "We're just fine."
And no one is going to give you much credit for good judgment when you defend very poor decisions, by saying they weren't poor decisions at the time. Every decision that ends poorly was a 'bad' decision by definition. You aren't a politician hoping the public forgets what you said and did a couple years ago. You are a financial institution, and your financial decisions have consequences to you and your shareholders.
Your job as a banker is to manage risk. If you get the risk/reward ratio wrong, you get a "cease and desist" order.
Fess up.
I fear for this economy if -- when this is all over -- all the banks and thrifts and retail stores and politicians and economic professors and stock brokers attribute it all to Bad Luck and Bad Timing and Mysterious Forces and Who Could Have Known? and
"I DON'T THINK WE MADE BAD DECISIONS; THEY WERE VERY GOOD DECISIONS WHEN WE MADE THE LOANS."