Bring Back Bob the Banker

[Joanne98]

If you’re over 40 years old and didn’t grow up in the big city, you knew Bob.

Bob was a local banker. He lived in the same town where his bank was. He was a loan officer, probably a Vice President, and worked for the bank for years. Bob married his high school sweetheart, raised four or five kids in the town you lived in, belonged to the local optimist club, and attended a local church every Sunday. Bob showed up at most of the civic events in town. You saw him at many of the weddings, christenings, and funerals in town too. Bob knew everybody who was anybody in your town. He also knew a lot of nobody’s as well, but that didn’t matter to him – anybody or nobody, you were from his town and he was the banker.

Bob viewed himself as the guardian of the bank’s money, and the reputation of the bank in the local community was very important to him. When people needed money, they would come to Bob to apply for a loan. There was paperwork to fill out, but it usually wasn’t very extensive. Bob looked at the paperwork to be sure, but Bob knew you, he knew your parents, he knew where you worked, and he knew how much money you made. Most importantly, Bob had a pretty good idea what sound financial practices were and he cared about your financial well-being because it was tied to his bank’s reputation.

If you tried to borrow money to buy a house or a car you couldn’t afford, Bob would take you aside, puffing on his cigar, and say, “Son there’s no way I can loan you this money because you can’t pay it back. If I have to foreclose on you, my name will be mud in this town…”

Granted, not everything about the Bob’s of this world was good. His typical response to women (“Aw honey, why don’t you come back with your husband to apply for this loan?”), , single women (“can’t your father front you the money for this sweetheart??”), and minorities (“We don’t loan to people buying houses in that neighborhood…”) left a lot to be desired. But Bob (and more importantly, Bob’s bank) had several characteristics that were lost in our frenzy to deregulate the financial industry; (1)They knew who they were lending money to, and (2) Their financial well-being and professional reputations depended on making good loans that people could pay back.

In making presentations to elderly residents in retirement communities over the past few years, many of them knew Bob or used to be a “Bob” themselves. When they talk about debt, bankruptcy and financial burdens on families now, they don’t talk about overspending (“my kids think money grows on trees”), or lack of responsibility (“my grandkids are spoiled rotten!! They should get a job and work for living!”) they talk about the demise of Bob the Banker. There are no local bankers to help us with our loans, credit cards, or anything else. The entire concept of due diligence has been thrown completely out the window, leaving the consumer to fend for themselves. Many of these elderly residents lament the state consumers find themselves in but they admit that, back in the day, there was someone watching out for them.

Bob the Banker is gone to be sure. But at least some of the seeds of reform for the U.S. credit and debt system lie with the system Bob came from. Those who make loans should hold some of the risk. They should also evaluate whether the borrower can pay back the loan. The loan terms should make sense to both parties (not just the financial MBA who drew up the fine print). There should be financial and reputational penalties for issuing non-performing loans. Is that really too much to ask??

http://www.creditslips.org/creditslips/2009/07/bring-back-bob-the-banker.html#more