Why Banks Fail

I spent six years working at a credit union so I've got a pretty good sense of the basics on how financial institutions are run. At least on a micro level - I don't have much experience with reverse repurchases and making loans to Brazil and Donald Trump, but then again, given their track record the banks don't seem to be very good at it either. But that's not the point.

I was in a US Bank today to get something out of my safety deposit box and my wife asked one of the loan officers/member service reps/non-tellers for a rate sheet to show CD rates. We have a CD that's getting ready to roll and we wanted to see what options they had. You would think that providing a list of deposit rates would be a fairly innocuous process. Either they have the things pre-printed or they can print you a copy right away. Not there -- it took about five minutes to get a copy, but that's not why US Bank failed today.

They failed because the loan officer gave us the sheet and said "Have a nice day" and then it was goodbye. Which was nice and polite and all, but it didn't do anything for the US Bank bottom line. Now I don't like being marketed to and I don't like sales, but I imagine that the bank's stockholders do. I'm not one of those people making tons of money writing books on how to sell things, but I don't think I'm going out on a limb here and saying they missed an opportunity today.

The person who sits in the branch and opens new accounts, etc., generally has some type of sales incentive program or commission built into their compensation. So you want to be pushing product and you want to do it in a smart way. The person who is opening an EBT account solely to get their SSI benefits probably is not going to be interested in your tiered money market rates. However, someone who is actively asking you about CD rates probably has more than just an academic motive for doing so. It's an easy sale and when you have money riding on your sales performance, you should actually make more of an effort than handing someone a piece of paper and saying goodbye.

It's not just a US Bank problem either. When my grandmother passed away in 2008, she left each of the grandkids some money that was in CDs at Wachovia. So I went to Wachovia to get my money and they gave it to me and that was it. Goodbye again. While I appreciate the promptness of service, what the Hell were they thinking?

It wasn't a huge amount of money, but is your bank really doing so well that you can let a sizable CD walk out the door and not even try to keep it? I mean, I was pretty flexible about the whole thing and if they had made me a good - a decent offer I was amenable to keeping the money there. But they didn't even try and US Bank was the (perhaps undeserving) beneficiary of their laziness.

When I canceled my AOL account back in 2002 I had to run a gamut of account reps begging me not to leave the wonderful world of dial-up. I still get e-mails from the Book of the Month Club asking me to come back. When I go to Sonic or Einstein's, the cashiers are trying to sell me extra cheddar peppers and coffee and they probably don't even have some type of incentive stake in the matter. But some entities are proactive and some are, well some are banks. And that's one of the reasons that banks fail.

Token Holiday Post

Ho, ho, ho. Christmas posts are required for any blog, but I don't have any really appropriate writing I've done and most people don't want to read about a zombie throwing it's head like a Nolan Ryan fastball on yuletide. Thus, I'm going to digress a bit. A quick post on football, genius and media hypocrisy all of which interest me.

There's been a theme going around lately about the "Maddenization" of the NFL. The great website www.profootballtalk.com and the Sports Guy have both taken coaches to task for unorthodox and somewhat reckless decisions in recent weeks. The sort of thing a kid playing Madden 2010 would do. Of course we're talking about the infamous 4th and 2 that Bill Belichick went for against the Colts earlier this year and Mike Tomlin's surprise onside kick last week in the Steelers - Packers game. You can add to this another surprise onside kick Josh McDaniel ordered for the Broncos against the Chargers back in November. All of these moves went against the conventional wisdom and all were routinely condemned. Why? Because they all failed.

The Patriots didn't get the first down and Peyton Manning quickly drove the Colts to score on the short field. The Steelers gave the Pack the ball in great field position and had to rally to win on the game's final play, which spared Tomlin the 24/7 media crucifixion that Belichick endured. McDaniel's decision came with Denver trailing 13-3 early in the third quarter. The ball skipped through one of the Broncos hands and the Chargers ending up scoring a touchdown that put the game away, although with a 32-3 final it's hard to see how much the decision really mattered. Coach McHoodie flew under the radar nationally, but he took it pretty hard locally from the legion of Denver Post columnists.

In all three cases, the proper or safe play would have been to kick away. Defeat still could have been the result, but it would have been an impersonal loss that really was no one person's fault. Baseball managers have known for years to go by the book -- if you bring in the lefty to face Ryan Howard or David Ortiz, you can't be criticized. If you leave the righty in to face the left-handed power hitter and he gets taken deep, it's all over the papers, the blogs and talk radio. Going by the book leads to safety for the head man because if the move blows up, it isn't his fault. It's the player's fault for not getting the job done when he was put in a position to succeed by his boss. If either of the three coaches above had just kicked away, no one would have said boo.

Which is ironic, because the sports media likes to pretend that it celebrates genius and risk-taking. Bill Cowher pulled a surprise onside kick in Super Bowl XXX that got the Steelers back in the game. Andy Reid did it against the Cowboys back in 2001 and set the tone for a successful season. Both were celebrated as moments of genius, high-stakes gambles that paid off in spades. Both were celebrated because they succeeded.

Pro football tends to be criticized for being conservative and its coaches are castigated as Birchers, the NFL embodiment of George Wallace or Pat Buchanan. Media types (whose jobs used to be much safer before most daily papers started circling the drain) scoffed at guys who coached to save their jobs and protect the status quo. Field goals were derided, running the ball was derided and the XFL actually banned fair catches on punts and started each game with two guys wrestling for the ball, rather than a coin toss. You would think that anyone who actually rolled the dice and gambled would be celebrated, but that's not the case. Not if the gamble doesn't pay off which happens frequently because, you know, that's kind of the definition of a gamble.

So I guess that's my point. I don't deny going for a 4th and 2 on your own 28 is pretty risky and that I'm not sure if I would even do it in a game of Madden. But if you are going to sing hosannas if the move works, then you need to heap similar praise on the gamble if it fails. The act itself is what matters and while the outcome is important in the context of the game, none of these guys take the risk planning to fail. If it's a good move if it works, it's still a good move even if it doesn't work. Sometimes you have to roll the dice but whether they hit a seven or snake-eyes shouldn't change the evaluation of the event itself since the same person threw the damn things to begin with.

Welcome to JRC Writing

So this is my first shot at having my own blog and I kind of feel bad that I don't fit the mainstream media profile of a blogger. I have a job and I don't live in my parents' basement. Actually, I've never lived in a basement because I'm kind of afraid of them. I mean, my grandmother's basement always terrified me as a kid and still gives me the creeps as an adult. Even during the year when I lived with her after college, I stayed upstairs in my old room rather than have the whole basement to myself. It was sort of retro and cool during the day, but I had no intention of being there when the lights went out. The thought of trying to sleep down there was horrifying. When I was a little kid I had a nightmare where the Frankenstein monster and other nasty looking things came after me out of the boxes in one of the back bedrooms. I have a hard time remembering the names of people I met a week ago, but I still remember that dream.

That's either dark, weird or embarassing depending on your point of view, but it indicates the general vein of my writing which is horror or fantasy. I like traditional horror and things that go bump in the night like vampires, werewolves, ghosts, the living dead, animated corpses sitting next to your bed when you wake up, that sort of thing. Maybe it doesn't make me sophisticated and maybe I'm heretical, but I like plot more than I like characters. You have to have both, but the most interesting characters in the world don't matter if your story is about them sitting in a cafe and eating. Unless you're trying for something artsy that would impress your creative writing professor.

(A brief aside, but I actually really liked the prof who taught my creative writing class in college. We had to write two stories during the semester and for the first one, it seemed like half of the class wrote about some mundane childhood incident like riding in the backseat of their parents' car. Most of them were boring as hell and he pointed out that since it was a creative writing class they might want to be, you know, actually creative. Of course, there was the redneck guy who was working on the novel about the Vietcong taking over south Texas and the local citizens having to resist. He should have called it "Yellow Dawn". I thought that was pretty creative in a John Birch Society kind of way, but the prof didn't agree.)

Anyway, this is my blog and it's here to give me a platform for my writing and stories and to force me to write more. I'll post at least weekly and I will post some of the stories I've gotten published in the past. I'm always interested in feedback, even if it is to tell me how dumb I am so for the one's of fans I have, comment away.

Thanks,

JC