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maximizing short-term profits & no vision of the long.. Posted by MattWiltse [Email]  (#263) [Profile/Gallery]
(more from MattWiltse) on Fri, 25 Dec 2009 18:03:34
In Reply to: That is preposterous., AlS, Fri, 25 Dec 2009 15:33:09 Members do not see ads below this line. - Help Keep This Site Online - Signup |
I USED to work in banking, selling "fixed-Rate" mortgages, at a time when the market was clamoring for ARM's (there's an acronymn you wish you could forget the meaning of, 'eh?). The mortgage brokers loved harms (oops, Freudian slip) because they'd take 'em, bundle up garbage loans (lots of subprime customers, with a handful of quality ones) and sell (securitize) these "traunches" on to investors (gone were the days of the Bailey Savings & Loan investing in individuals.... what counted was the VOLUME of loans in the traunch, because historic defaults levels never exceeded a very small percent).
Therefore, what counted was not quality loans, but quantity. Providers in the end had reduced the "underwriting guidelines" the bank used to determine satisfactory credit risk (even my very conservative bank did so, in fact we were threatened with our existence, when the aggressive subprime arm posted growth from the low '20's largest US lender up to #14, or so. Build your market share at their rate, or we'll roll your operation into theirs, since they are obviously so much better run).
In fact, my little division (small, but consistently profitable faced law suits accusing us of "cherry picking" loans, only writing them to customers who were almost certain to repay. (Isn't that what a good broker does? But it's just not that simple- you're accused of "redlining" loans in this-or-that neighborhood, or being racist/sexist/anti-religious in your decision making. Your irresponsible competitors climb aboard, saying that you are evil, while they are "making the American dream come true for families"! YES, this actually happened.)
My point is this... once you allow other criteria to drift into decisions that are "intangibles", it becomes like one of those cars at the fair, where you can turn any way you like, but the car just darts off any direction it wants.
Ask yourself everyday why you are here, at your office. Focus on that mission with all your heart. Entertain other "projects" as they arise, but do not become distracted by them, and do not ever allow them to eclipse the primary purpose.
GM has lost it's focus long ago. Do one thing & do it well? More like do a lot, and none of it very well in deed. As a result of my old employers phenomenal growth was followed by a huge crash. Even my division which never wrote ARMs was largely elliminated. Tens of thousands of consumers lose thier homes, the collapse takes the jobs of others.
I now sell commercial pest control, for about 1/3 what I used to make, and future opportunities in finance are bleak (hey, you got any bugs, buddy?). My old bosses, the ones that just about "sunk the corporate ship" continues in their positions, earning million-dollar bonuses, and the even the executives that devised this marketing strategy were all given severance packages of many hundreds of thousands of dollars.
It seems to be a genuinely different set of rules for those inside the boardroom, those rarefied few who's farts smell only of Lavender. Lack of vision, even bankrupting a company is not necessarily grounds for termination.
Fascinating. Isn't it. It's good to be king, or at least THE GENERAL! =-)
Matt
'88 c900 Turbo 'vert auto 119k "Taz"
, Fri, 25 Dec 2009 12:05:33
, Fri, 25 Dec 2009 16:25:01, Fri, 25 Dec 2009 18:03:34 <-- Viewing This Message
, Sun, 27 Dec 2009 15:17:34
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