Where Have All the Bankers Gone?
(Chicago Daily Observer 4.2009)
Thirty years ago, banking was a respected profession. Back then, polls measuring integrity found that bankers were ahead of used-car salesmen and miles ahead of politicians. But not these days. How did bankers fall from their pedestal to become scolded schoolboys cowering before Barney Frank’s preening sarcasm?
Like most institutions, banks evolved to adapt. So did I. I started in banking in the late ’60s, just ahead of the boomers who would reorder institutions to accommodate their urgencies. By the mid ’70s, banking began to modernize itself about the same time as the fashion industry sprang polyester leisure suits on us. While fashions settled down, banking didn’t. In the late ’70s, I was a loan officer at a bank that had been sold, and I left to become a marketing officer at a bank that soon would be bought. Still, despite my functional title change, I had a lending limit and attended credit seminars that enhanced my ability to structure loans. But it was not to last.
In the early ’80s, I joined a new bank and encountered an outright sales culture where sell or perish was the unrelenting mantra. My annual goals included 300 sales calls and $100 million of new loans. I didn’t have a lending limit; none of the people I reported to had limits, and my input as to loan quality didn’t matter. Credit decisions were made up the line, and I was there to put up the numbers: in other words, generate loans — full stop. Instead of credit seminars, I attended sales workshops.
Workshops included: interpreting body language, the silent close, and “empathy,” which I learned means getting into the prospect’s head. Role-playing was required and performances were graded. Afterwards we were encouraged to “share” over cocktails. Egos inflated in direct proportion to the alcohol consumed. After a few more pops, we were encouraged to sell ourselves to one another — demeaning but kind of funny with everyone speaking in the first-person. Tedious as the training was, for the first time I was paid an annual bonus, even though real-time money for originating long-term loans didn’t make sense. Conflicted though I was, I took the money while realizing that the bank’s calling me a banker was a marketing ploy and no longer a reality.
Salesmen are often a company’s most highly paid employees — they should be, as they generate the lifeblood that sustains the business. Uber-salesmen are born, not trained; they hone their innate skills with precious experiences they keep mostly to themselves. Natural salesmen are too busy doing deals to attend workshops. The bank’s workshop-spawned salespeople weren’t naturals; and, to convince themselves that they were, they resorted to a testosterone-driven bluster common to bars and locker rooms. Language coarsened. New York glib-speak was hip, manners disappeared, and the women became macho caricatures. The ensuing swagger was best illuminated one evening by the bank’s senior sales maven who, after far too many cocktails, searched his memory banks for an epigram that capsulated selling. Coming up empty, he burst into song: “Don’t try to understand’em, just rope, and tie and brand’em.” It was a line from Rawhide. I laughed; no one else did. I wasn’t fitting in.
Bank management was tempted into the mergers of the ’80s and ’90s by the tenuous prospect of enhanced earnings and buoyant stock prices. However, the merger’s immediate reality was a crushing cost structure that called into question management’s assumptions and their judgment. Expenses had to be beaten down. First to go was credit training; then the loan approval process was purged and centralized. But the relentless post-merger business strategy demanded even more: increase market share at all costs. So credit principles were subordinated to sales goals. In doing so, banks transformed themselves into marketing machines selling “sure things” — just yesterday it was sub-prime loans; eighty years ago it was margined stock loans.
Why didn’t veteran bankers object to making loans beyond a borrower’s capacity to pay? Why didn’t the gray-heads stand up and say, “This Is Outrageous Lending”? Simple. There weren’t any. Older bankers had been canned, sacrificed on the altars of higher expectations. With them went generations of experience that had kept banking on the rails, and the impending regulations from Washington cannot fill the void they left.
As for the salesmen who replaced them, putting up the numbers is the new paradigm. As for the businessman looking for credit: if he wants what the bank is selling, he’ll probably get it; if not, good luck finding a banker.
_____________________________________________
Stephen E. Jordan’s professional experience includes international, retail and corporate banking. He is currently credit manager for a manufacturing company in this Chicago area. In his spare time, he writes short stories and novels based on his background in banking and finance — including observations about living overseas.
