The collapse of major financial houses, the loss of retirement savings, and the ripple effects to come (increased unemployment, higher taxes, fewer “programs” to calm the surley, personal bankruptcy, unpaid bills, alcoholism, divorce, suicides, crime…) causes me to wonder; who played the market right?
I had cause to call my bank the other day. I forgot the password on an account and I needed a reset. The woman on the phone was extremely friendly. As she was doing the reset we had a little chit-chat. She noted that she had been busy. The topics came around to the current “crisis.” She quickly reassured me of the bank’s capitalization and soundness. I agreed with her.
Don’t get me wrong, I haven’t done an analysis of the bank’s financial statements, or an assessment of the credit risks they have taken, but I know this much – they are local.
These are the sorts of banks who still say no to people. They make folks jump through hoops to prove themselves before they hand out money. Tony and Anna couldn’t get the interest only mortgage, or any mortgage, if they didn’t have money down and a sufficient income to make the payments. Most of the little, hometown, homegrown banks and credit unions do it that way. They reduce unwarranted risk by sticking to models that work. They act in a principled and disciplined manner even if they could have eked out a 20% profit boost.
I also had pause to consider the fraternals, like the Polish National Union (Spójnia). These fraternals are so much more than insurance companies. Fraternals like the PNU provide insurance of course, but that provision is made based on sound business principals — principals that protect members in life and their families in times of grief. Beyond insurance, organizations like the PNUA have branched out into other lines like credit unions – again, focused on serving the members. Our PNUA serves its members in many ways, beyond the business model, that is, at a human level. They step in whenever necessary. For instance, the PNUA will grant charity to members when they are faced with a catastrophic event. They encourage education through college stipends, and underwrite youth focused programs through their charitable arm. Did AIG or Merrill do that? HSBC, Bear Stearns, BOA, or Chase…?
The local banks, the fraternals, the mom and pop companies that many felt were too small, too backward, too unsophisticated, are the ones who built upon solid principals (Matthew 7:24-29). They put the interest of their members (the insureds, the account holders) first. They will be the ones who are left standing.
Perhaps we need to recognize the fact that glamor, bright lights, and derivatives are just a faí§ade (2 Timothy 4:3). Perhaps we need to walk down to the corner, deposit slip in hand, PNU policy in hand, and reconnect with those who say yes when they mean yes and say no when they mean no (Matthew 5:37).
It really isn’t too late. Those who live by sound principals will be the ones who prosper.