I Hate Banks (But Not All Bankers)

While I wasn't alive during the Great Depression, my grandparents were and my father was born a few months before all hell broke loose in 1929.  My grandparents didn't trust banks much and mostly dealt in cash, rare was the occasion where you would get a check in the mail from them.  The institutional distrust of banking was strong in that generation and they told me things like, "Save your pennies."  My parents, slightly less influenced by the Great Depression, used banks as the times dictated and as their business required.  They didn't necessarily trust banks, they trusted their banker.  My parents would say things like, "Save your quarters."  They had a relationship with the bank through a real person whom they could go to when they needed to borrow money, open a savings account, or get advice on business matters.  A relationship with your banker is a relic like plastic covers on flowered davenports and doilies on all your tables. 

I went to a bank on purpose today, I mean actually INSIDE the bank.  I never do this.  I loathe banks so much that I am a drive through girl all the way and if I don't want to even see the drive through person, I use the ATM for most transactions.  Unfortunately, today I had to open a new account which cannot be done in the drive through.

As I am waiting in the lobby, I am experiencing symptoms of a panic attack.  I feel out of breath and my hands are shaking, meanwhile a wave of nausea passes over me.  So hideous was my time at the Bank of Hell that I cannot even sit in a bank and function like a normal human being.  I imagine that this is what an Ex-Con would feel like if they went back to visit a friend and were on the free side of the glass.  After a small wait, the Branch Manager comes out to help me.   I am going into (deep breath) a banker's office.

She is incredibly pleasant and is only helping me because her business bankers are working with other clients.  She keeps apologizing for the time it is taking her which is making me paranoid that federal agents are lurking outside and she is stalling.  I'm hoping my disdain for banks is not readily apparent and that she won't be alarmed by shiftiness and fidgeting or infer that it means I'm about to try and rob her vault.  When she discovers that I am an economist and former loan officer she wants to chat about all the nuances of the industry.  The worst thing she cites about her time as a loan officer are some adjustable rate mortgages she did and how customers would sometimes call her on the weekend.  I bite my tongue because the stuff I could tell her would shock the shit out of her.  I did tons of ARMS, pay options, liar's loans, and my customers called me virtually 24 hours a day.  While she mentions she didn't like the competitiveness of the mortgage side I refrain from having complete diarrhea of the mouth and unloading stories of the Mortgage Devil on her.

She was so pleasant and nice that I felt it necessary to point out here that I don't hate all bankers, even though I will throw a bank under the boss in virtually every blog.  I now have a neighbor who is a banker who appears normal and a number of friends who work in the banking and mortgage industry that seem like the kind of people to perform a random act of kindness.  What I don't like though are what happens in the collective of a bank and how the industry has evolved to the point where we don't have relationships with our banks and are increasingly dependent on a small number of banks for an ever increasing number of services.  Consolidation of power in that degree scares the crap out of me.

When I worked in the industry my arch rival (outside of my own boss) was Wells Fargo and its loan officers.  I detested Wells Fargo because it was our biggest competition and their refugee loan officers who became my colleagues described unfavorable working conditions.  Ironically, I now live 20 minutes from their headquarters and know a lot of their employees and I still refuse to bank there.

I have never understood Wells Fargo's apparent resiliency to this crisis and therefore, I have never bought it.  In fact, for years now I have been waiting for their controversy and their day in the Horrors of Banking Annals.  My theory is that they are the Enron of the industry now that Countrywide is defunct and by that I mean that I think their accounting practices must be similar to those of Enron.  I read articles where Wells Fargo's lack of exposure in the crisis is because of their conservative nature.  I don't recall this.  In fact, they had 125% equity lines, loan products for people without credit scores, and they underwrote a ton of Alt-A.  They were a major player in a lot of urban markets where predatory lending, fraud, and discrimination were rampant.  They were a major player west of the Mississippi where a ton of homeowners are underwater.  They were one of the biggest players in all of the loan products we have been told destroyed our economy.  How can they come out relatively unscathed?

Last week, a former Wells Fargo loan officer who got me into the business received a letter from the Department of Justice requesting her insight as they investigated the lending practices of Wells Fargo.  The next day, Wells Fargo announced that it was taking the ax to Wells Fargo Financial and cutting 3,800 jobs and closing down those branches.  They cited overlap ensuing from their forced merger with Wachovia.  I'm not buying it.  Wells Fargo Financial did personal loans, 9 months same as cash financing, and subprime loans.  How has his not impacted their larger financial picture before now?

Another "non-risky" lending practice affiliated with Wells Fargo is the lending of money to payday loan firms.  Wells Fargo is one of the largest players in this industry associated with predatory lending, discrimination, and oh yeah, risk. 

I have to wonder if we are going to find out that the Cinderella of the mortgage industry is really the ugly stepsister of Countrywide.  While I hope its not true for friends who work for the company, it is baffling to me that my biggest competitor while I was at two different huge companies has not had its equal share of distress.  TARP money they claimed they didn't need was given to them for a reason...

So, I do hate most Banks, especially the big ones, even though I recognize the purpose they serve and I have to admit, not all bankers are bad.  The runaway growth in bank size and services is dangerous for the economy and for the consumer.  The new regulations do nothing to solve this problem and like any government regulation, will create unintended consequences that make us vulnerable for another crisis.

Perhaps, my Grandparents had it right.  Save your money in a jar and don't buy anything you can't pay cash for.  Only sign up for an account because you really are blown away by the free toaster.