Well, you’re almost right… - Posted by Eric C
Posted by Eric C on September 12, 2000 at 23:54:42:
Hi Ed -
I agree with your most of your points, but I beg to differ about the level of distress banks may or may not suffer.
At one time, I made a majority of my income purchasing properties (and other things) from banks, S&L’s (remember, those?), and various other financial institutions. So, I can safely say that banks, along with the bankers who run them and the investor’s who purchased their stock, can indeed suffer stress in a major way.
True, in most cases, they are able to pass along the cost of their mistakes to the public in some fashion. But, more often that you would imagine there really is
a level of discomfort (and sometimes even pain).
All banks are built on image. The marble and granite you see everywhere is there for a reason. It’s designed to assure you that all is well, financially speaking, of course. But the reality is often quite different.
Stress? I’ve seen bankers lose careers and their banks close or sold off to a competitor. Or, on a more personal note, would you like to hear of the pain I felt standing in the over $100K line at an impromptu meeting of the local FDIC guys. (note- not all depositors are paid off – believe me, I know).
Currently, I’m dealing with a bank that made some mistakes over the past year. They were silly mistakes but the losses to the bank’s reputation and their cash reserves are real.
You should also know that this bank is not exactly going out of it’s way to tell everyone that they have a problem or two. They are embarrassed ; they are afraid of losing more credibility. However, they are not insolvent – not by a long shot.
But they are vulnerable to folks like me.
In any case, they think that they can still drive a hard bargain. It’s to my benefit (financially) to let them have their illusion. But let’s be honest here – it’s like taking candy from a baby.
The name of the game has always been to find motivated players ; that never changes. But sometimes banks or corporations can be just as motivated as any SFH “don’t wanter” you’ll ever see.
See you,
Eric C