He sounds like a real scumbag to me. He signs a contract with the bank, then backs out leaving them taking the loss. I'm sure it calculates for him, but not the type of person I'd ever want to do business with.
Actually, I don't disagree -- not completely, anyway. I do think, however, that banks brought this sort of thing upon themselves by their own conduct.
Some years ago, before I sold my consulting business, I got three telltale envelopes from my bank in one week. I could tell from the envelopes that they were notices that my clients' checks had bounced. Getting three in one week, however, was unheard of. Furthermore, all three bad checks were from long-time clients who had become friends over the years, making the bounced checks all the more surprising.
All three clients were in seasonal businesses; all three had, for many years, tapped into their credit lines to carry them through the slow months; and all three had accounts with the same bank, which happens to be named after a continent that's mistakenly considered to be synonymous with one of the nations on that continent.
And that bank had executed "emergency" terminations all three of their credit lines -- without bothering to notify them until a month later. They were not behind in their payments, and certainly not in default. They merely used their credit lines, as they had for years and years prior. But the bank, nonetheless, no longer considered them credit-worthy, and so they canceled their lines. That was perfectly legal. It was in the contract.
Where was the bank's sense of responsibility, obligation to the spirit of its contract (credit lines, by their nature, tend to be used when cash flow is tight), and concern for the effects of their decision? They thought it quite acceptable to unilaterally terminate three of their customers' lines of credit despite the customers being in compliance with the terms, and to leave their customers (and me) on the hook.
It was all legal, after all, because of the fine print in the contract that said the bank could terminate the businesses' lines for any reason or no reason at all, at any time, based upon their evaluation of their customers' creditworthiness, economic conditions, the phases of the moon, or the meteorological conditions on Ganymede. It was all perfectly legal. The contract said so.
Neither did the bank shed any tears when one of the businesses -- a landscaper with about 25 employees during the season and five kids year-round -- was unable to purchase supplies nor hire back his men for the season, effectively putting him out of business and his family on the street. Nothing in the contract required that they give a rat's about things like that.
Nor did the bank care that I was left on the hook for thousands of dollars worth of equipment I'd sold to one of the clients, that the client paid for in good faith, using the credit line that had been terminated without his knowledge. That was my problem, not the bank's. It was all legal. The contract said so.
Neither did they care very much that had it not been for the inverse relation between my busy season and my clients', the checks I wrote to my own employees would have bounced; nor were they concerned in the least that the three bounced checks plus the penalties left my own account close to empty. That was not their concern. What they did was all legal. The contract said so.
Two of the clients were able to cover the checks from their own personal assets, and did so. The third -- the landscaper with five kids -- could not. He was about to lose his business, his house, and everything else he
thought he owned, as were all of his employees. The bank didn't care. Those things were not their concern. What they did was all legal. The contract said so.
Help came from a source he hadn't known existed: One of his own wealthy customers put a good word in for him with a large, Long Island-based credit union, which assembled an emergecy
ad hoc committee to review my client's situation. A day later, they granted my client a credit line with the proviso that he also accept free counseling from a member of that committee, who was a retired landscape business owner.
That was one of the reasons that I started looking at credit unions. I'd been vaguely aware that they existed, but I really hadn't known how completely different they were from banks. And over the next year or so, as more and more of my clients -- hard working, good, and decent men and women -- were effectively put out of business by the crisis created by the banking industry, I decided that I wanted nothing to do with it; and I swore off banks forever.
You can make an ethical argument that people should not walk away from their mortgage or other obligations, and I will agree with you. But at the same time, there's a limit to how much ethical consideration is due to an industry that relentlessly pursues its own interests, to the complete exclusion of any concern for the well-being of its customers, its nation, or for that matter the entire world economy.
As far as I'm concerned, GBW's biggest mistake while in office was bailing out the banking industry. I would have let the banks fail. I can't think of a single reason why we need them anymore when a better alternative already exists.
So no, I don't shed crocodile tears when banks lose money because of their own stupid, greed-motivated lending decisions; nor do I blame consumers for saying, "Eff the bank," and pursuing whatever course of action is in
their own best interest. Call it karma or whatever you like, but what goes around, comes around.
-Rich
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