BLOG VIEW: I Hate To Say I Told You So, But…

Written by Phil Hall
on July 13, 2009 No Comments
Categories : Blog View

t week, I was reading a speech that Federal Reserve Governor Elizabeth A. Duke presented at the Minority Depository Institutions National Conference in Chicago.[/b] When I got to a certain point in the speech, I shook my head ruefully and mumbled to myself, ‘I hate to say I told you so!’ This is what set me off: ‘Overwhelmingly, the biggest concern I am hearing about these days is the public perception of banks and bankers,’ said Duke. ‘Clearly, the public is angry. They are angry at banks and, just as much, at bank regulators. They are angry about bailouts. They are angry about bad loans. They are angry about big salaries. They are angry because banks are not lending. And they are angry about high rates and fees.’ If you've been following what I've been saying in this column for the past several months, you will recall that I often circle back to problems with how the industry is communicating with the outside world. Or, as Duke succinctly notes, how it is failing to communicate. Financial services companies are not currently beloved, due, in large part, to a public perception that they are greedy, incompetent and reckless. Duke actually made additional comments about the rising wrath. ‘Community bankers are angry, too,’ she continued. ‘They are angry because they did not ask for or receive any bailouts. They did not make the subprime loans. They did not get the big bonuses. And they are still making every good loan they can find. But regardless of their innocence, they are paying the price for public anger at banks and are being vilified and stigmatized.’ You know something is wrong when the Fed finally gets around to acknowledging a problem is brewing. Even at this very late stage, the financial services industry in general – and mortgage banking in particular – is still losing the public relations war. This is not to say that all financial entities are doing a terrible job in their messaging. Community banks and credit unions have been leaders in keeping their customer base at ease, but that's because their small size gives them the ability to stay in touch directly with the people they serve. I have an article coming up in the August edition of [b][i]Secondary Marketing Executive[/i][/b] that details how the institutions within the Farm Credit System are achieving the same result – the existing bond between customer and the locally based lender is at a personal level, where it is easier to effectively communicate. The big banks that collapsed in the recession had lost that intimacy with their customers ages ago, and their bloated size made it impossible to achieve personal communications with bewildered customers. And even when they were in the spotlight, the leadership of these troubled behemoths came across as being defensive and evasive when they were pressed on what went wrong during their watch. Obviously, the answer to this problem is not to shrink the big banks down to a community bank level. Even if that unlikely scenario were to occur, Duke correctly pointed out that the smaller financial institutions are also receiving the negative public perception – even though that sector had nothing whatsoever to do with the current crisis. This is the ultimate lose-lose situation. So what is the answer? This goes back to what I have been complaining about for some time: The absence of a cogent and effective media and marketing push that wipes away public fears that mortgage bankers don't know what they're doing. The Mortgage Bankers Association's annual convention is three months away, and I sincerely hope that gathering will include conversations and sessions relating to marketing and communications. The industry needs to be more aggressive in assuring the public – not to mention the federal government and many state attorneys general – that it is ahead of the situation and not constantly playing catch-up to out-of-control circumstances. That has still not happened, and it is highly disturbing. I feel this issue is among the major concerns of the day, but it is not being properly addressed, and everyone in the industry is being hurt by this situation. I really hope there will be some movement on this issue. Truly, I would really hate to revisit the topic again and repeat myself in muttering, ‘I hate to say I told you so.’ – Phil Hall, editor, [b][i]Secondary Marketing Executive[/i][/b]. [i] (Please address all comments regarding this opinion column to hallp@sme-online.co

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