In a variety of ways, bankers are firmly tied to America's educational structure.
Education below the college level is, of course, the place where our public expenditures are the greatest and where the results of education make the most difference to our communities.
As citizens and as bankers, doing something about our schools is vital. The importance to the general public of decent schools is obvious.
But less well recognized is the fact that poor schools lead to a poor economy. New business cannot be attracted, employers move out, and the resultant decline in economic activity hurts the banks as well as the businesses involved.
Specifically, one can think of Mutual Benefit Line, which admitted that it has had to use college graduates in Newark, N.J., to do the kind of work that high school grads perform in Kansas City. And First Data Resources picked Omaha for a major operation because of that city's pool of well-trained high school graduates.
Bankers find that when local schools are poor, their banks end up taking on the expensive job of teaching employees the basic skills they should have learned in school.
On the college level, too, bankers are deeply involved in education.
The College Problem
It is not only because bankers are public spirited that they play so important a role on college boards and fund-raising groups, but also because a solid college in town helps the overall community and thus the banks.
We can admit that no bank wants to have the closest branch to the campus, because that entails handling all the myriad problems that college students bring to their banks. But otherwise, a town whose college is in trouble hurts both the community and the banks in it.
In today's environment, moreover, keeping the local private college alive is no easy task. With tuition ranging to over $20,000 a year of after tax income per student, many schools are badly in need of students who can afford the freight.
So unless bankers and other community leaders help in important ways, we are bound to see a further decline in the number of private colleges, as people turn to public institutions whose costs are far lower.
Many a bank is sitting with loans to the local private college that bring the banker sleepless nights as he wonders about the viability of his creditor and the impact on his town that the school's demise would bring.
Even on the graduate level, bankers must be involved in education.
Graduate education is where we are expected to gain the skills that keep America competitive. But look at the technical fields and you see that a very high percentage of students are foreigners taking advantage of our facilities, with the benefits flowing to their countries.
Happily for us, great many foreign nationals don't go home after their American education but stay here, giving us the benefit of their training.
But to bankers, the most immediate educational area that merits concern is our business schools. They should be at the front of the pipeline providing our nation with new bankers.
The weight of a master's degree in business has changed over the past few years. Gone are the cocky MBAs who not only were paid $100,00 their first year but, more important, felt they were worth it.
Now, however, many banks and other businesses are reverting to the view that the cost of hiring an MBA is just not worth it when a bright person with a bachelor's degree can be obtained far more cheaply.
The MBA who is worth hiring must have gained skills -- marketing, computer literacy, analysis of financial statements.
Don't Forget the Real World
Sometimes I wonder whether our business schools are so anxious to build status that they forget their basic goals. How often has a banker's interviews of an MBA turned sour as the graduate reveals an understanding of math and models but no concept of the real world?
As a professor of finance I am horrified when finance professors give papers that offer exciting ways to save money or increase returns, only to have them say after an hour of presentation, "Of course this only works if transaction costs are neglected."
That is as valuable as saying that if only I were 100 pounds lighter, I would be thin. And all too often, as business school teachers push for tenure in the only way most schools recognize today -- arcane research -- I think of the sad truism "No act of good teaching in our business schools today goes unpunished."
But in a world in which graduate students are told that courses in financial institutions are irrelevant and should be replaced by a second sequence in econometrics, my warning to bankers is: Before you hire someone, know what he understands and how much he's interested in a profit-making organization.
The Dazzling Degree
Don't just rely on the label of the school issuing the degree.
Motivation and an entrepreneurial spirit should mean more than a degree with such prestige that the grad feels he or she should be placed not in a training program but rather in pre-presidential orientation.
Education thus affects the bank and the banker all up and down the line.
And as we analyze what is capital, we find that the most important aspect is not new plant and equipment but rather the educated brain power of a society. Mr. Nadler is a contributing editor of American Banker and professor of finance at the Rutgers University Graduate School of Management.