Not long ago you had to look your banker in the eye while he probed the depth of your character. We discarded that system to make it more uniform, fair and to minimize risks. Today’s mess is the face of progress.
When I bought my first new car, I sat across from a man that asked me how I was going to pay back the loan, should he deem to give me one. Forms were filled out and boxes were checked, but what he really did was take a measure of my character. Was I someone that could be counted upon to pay back this loan regardless of future circumstances?
Years later (1991), when I purchased my first home, I sat across from a banker. His name was Mark. He was the vice president of lending. There were many more forms, but his main agenda was sizing me up as someone that could be trusted with money from his depositers. After all, he knew many of his customers and he actually lived in the community. His level of responsibility and accountability ran deep.
These days are indeed gone forever. Before anyone pulls out a grandpa sticker, let me say that I realize we cannot go back to that model of lending. Thousands of small institutions have morphed into a few large money center banks. For all but the most wealthy or traditional individuals, the face of your banker is now an ATM machine, an online account, and an occasional visit to an actual edifice – though I doubt you know anyone there personally.
We can no longer afford the cost of the old one-to-one relationship and potential biases that were possible when charcter counted. I borrowed three times as much money to buy my current home yet never spoke to anyone but a paper pusher and had only the sketchiest of probes into my ability to pay. Is this progress? Those holding now worthless investment paper — or families living in a home they cannot afford may have a different answer now.
Still, I wonder where we would be today if each person that signed that dotted line had to look a vested party in the eyes and explain how they could afford this commitment and would honor it for the next 30 years. We may not be going back there – but you can bet we will change.
– Carl / Blogvious
