BankThink

You've heard the philosophical question: If a tree falls in the woods and no one is there to hear it, does it make a sound?

Receiving Wide Coverage ...Customer Service: The Times’ “Corner Office” Sunday column on management styles featured a Q&A with Russell Goldsmith, the CEO of City National Bank in Los Angeles. He describes a motivational companywide storytelling competition, in which employees are invited to share examples of how they or their colleagues “helped a client by going the extra mile.” The winning storytellers get iPads and the protagonists who actually went that extra mile get cash bonuses. Another story in the Sunday Times doesn’t mention banks but may be of interest to bankers concerned about customer service. This front-page article profiles Disney’s growing consulting arm, which advises various companies on how to adapt the entertainment conglomerate’s famously chipper customer-service culture for their own businesses. One trick of the trade for bank branch concierges: when employees at Disney parks give visitors directions, they point with two fingers instead of one (“it’s more polite”).

Should there be an NCUSIF and a separate "NCUSIF Junior?" That question provokes some thought as credit unions get closer than ever to at least a vote in Congress on expanded member business lending.

Nine-million dollars is a lot of money. Few of us volunteer board members or credit union staff members ever will receive that much money either in our paychecks or our retirement.

It's easy to get lost in the hype and extremes of rising student debt when, in reality, 72% of borrowers owe less than $25,000 and fewer than 5% owe more than $75,000.

The economic downturn combined with continued regulatory overhead and uncertainty, have rendered many lending products potentially obsolete for large portions of a portfolio. This in turn reduces the amount of capital a credit union is willing to invest in a product line for loan growth.

A quick read of a recent New York Times story could suggest a tidal move back into subprime lending. But a closer look reveals a major exception: before the crisis, consumers with weak credit were warmly invited to borrow on unsecured bank credit cards. No more.

With the CFPB looking broadly at third-party relationships, lenders need to know the qualifications of anyone handling an account for them. Giving carte blanche to middlemen to hire car repossession agents may no longer be an option.

Few managers manage costs. Instead, they manage the elements around cost, such as headcount. That never illuminates how work can be done differently to create permanent operating efficiencies.

Receiving Wide Coverage ...(Investment) Bank of America: A common thread in the coverage of Bank of America's first-quarter earnings was the growing contribution from trading revenues, particularly fixed income, in contrast to weakening profits on the retail side. The report "underscores how dependent on Wall Street the bank has become," the Times says. The FT notes prominently that Bank of America lost money in the mortgage business, unlike peers that benefited from the government's refinancing program for underwater borrowers; litigation, loan putbacks and intensive asset servicing remain salient themes for B of A in home loans. (Another FT story also notes that bond trading was also a bright spot for most of the investment banks and diversified financials.) Still, if you strip away a big accounting hit, revenues and earnings were better than expected (even though revenues dropped significantly, another contrast to the rival megabanks). … But should you strip out that accounting adjustment? Peter Eavis of the Times notes that B of A flagged the item prominently in its press release — "asking analysts and investors to effectively ignore that loss" — but didn't go to such lengths in its third-quarter report last year, when the debt valuation adjustment went the other way and added $1.7 billion. Moreover, the DVA loss this time around could theoretically be seen as good news, since it means the value of B of A's debt is rising because investors see the bank as more creditworthy, and its chief financial officer certainly talked up this interpretation in the press release. The rub, according to Eavis, is that the adjustment is based partly on pricing in the credit default swap market, whose reliability as a gauge of broad investor sentiment has been hotly debated for years. In the actual long-term debt markets, the columnist notes, B of A has been paying more to borrow money — a development the company did not go out of its way to highlight. (OK, to be fair to B of A, the CFO's quote specifically mentioned tightening credit spreads, a term which can refer to pricing on CDS or on bonds, and bond spreads can improve, from the borrower's perspective, even when absolute rates on debt worsen — if the benchmark rates rise. Did they? We'd look it up but we've spent too much time on this DVA stuff already.)