Don’t Hate Your Banker

Suzanna de Baca -- Expert Business Source, 11/3/2008 8:43:00 AM

The farm crisis hit when I was a teenager and bank were foreclosing on farms right and left. Not surprisingly, bankers were not very popular during those times; in fact, many community bankers who had long been friends of those in their communities were reviled and ostracized. Yes, they were “just doing their job,” people may have reasoned, but still, it felt personal. Very personal.

In today’s economic climate, unfortunately, many good bankers are suffering from the misdeeds and bad judgment of others in their field. They are certainly hurting from a business standpoint but are also being lumped into a category that is loathed by many at the moment. I am not a banker, but as I look around I see that many in the field have just been doing their job, playing by traditional credit rules, and are now having to clean up the messes that others created. Frankly, the fine bankers who maintained high-quality credit practices in their loan portfolios are getting a bad rap.

Right now, bankers are not very popular. The big banks are being held responsible for playing a large part in our fiscal meltdown.  By all accounts it seems that they did, indeed, play irresponsible and damaging games with loose credit and leverage and deeply damaged our national economic health. Regional banks and mortgage banks are being charged with extending loans to those who could not really afford them, contributing to the credit crisis that led to the downward spiral of our economy. 

As they foreclose on mortgages and small businesses, clamp down on delinquencies, and refuse many loans that they would have approved in the past, the banker can seem like the bad guy.  In a world where they’re already disliked by association with their Wall Street contemporaries, making them the enemy is not too hard of a stretch. Whether or not you could afford your mortgage, or whether or not you were persuaded to accept a questionable loan, when someone forecloses on your house or shuts down your small business, it feels personal. Very personal.

So right now, for many, it’s the easy thing to do to hate your banker. To blame your banker and all bankers everywhere! To curse all banks! But that isn’t really the right answer, nor is it fair.

Your hometown banker, whether that person is associated with a large, regional or community bank, is likely a good person and a fair banker. Frankly, your community bank probably did not have the leeway to extend crazy loans. They have to stay in business just like you do and most are very careful about their business practices.

Bankers have a job to do and that is to extend loans so that they can earn interest. They have little desire to actually foreclose on your home, because then the interest payments – their revenue – stops. They don’t want your small business. If you can’t make your loan payment, their business is also in jeopardy. Whether the public believes it or not, most banks want you to succeed because when you succeed, they succeed.

But a bunch of banks screwed that up. That some of the big banks are failing is justice for making bad loans. If they conducted business badly, they should suffer the consequences.

But the majority of bankers out there were just doing their jobs.  Playing by the rules. And now, they’re suffering the consequences of reckless dealings undertaken by others and their reputations are also being sullied. It’s a bad year for bankers. So, before you make a blanket judgment, look at your banker objectively. Is he or she really the bad guy? Or are they one of the good ones? Your banker still might deserve an invitation to your holiday party.

Suzanna de Baca is president of Private Capital Solutions Group. Securities offered through Broker Dealer Financial Services Corp. Member FINRA & SIPC. Investment Advisor Representative of Investment Advisors Corp., A Registered Investment Advisor.  Material discussed is meant for general illustration and/or informational purposes only and it is not to be construed as tax, legal or investment advice. Although the information has been gathered from sources believed reliable, please note that individual situations can vary, therefore the information should be relied upon when coordinated with individual professional advice.