Libertarian Social Democrat

A.D. Freudenheim, The Editor

This recent political cartoon is a nutshell description of how and why I find myself drawn towards two conflicting approaches to government and governance these days. The Democratic and Republican parties are corrupt, cynical, and out of touch in equal measure, and it seems increasingly clear to me that this pathetic gridlock is unlikely to change for the better in the 2010 or even 2012 elections. The parties are too entrenched, the politicians too self-serving, and problems too vast. Here, then, are my two opposing perspectives on what must be done.

“Option A”: I call this approach the “Double-down on Obama, and embrace the hardcore, European-style Social Democrat approach of which the president’s critics are so afraid.” To anyone willing to listen, I am happy complain about the impact of current tax law on my household finances—not to mention the lack of affordable health insurance, the challenge of finding good public (i.e., free) schools in New York City, or the likelihood that Social Security will not be solvent should I ever need it. Nonetheless, I cannot help but wonder whether our society would be better off if we imposed the type of pervasive, all-encompassing “Nordic model” tax regime common in places like Denmark or Sweden. There, national income tax rates are upwards of 32% across the board, and there is a significant Value Added Tax on most purchases, a tax that typically rises for luxury goods. This hefty source of government revenue makes possible a generous network of social services, while also providing a slight leveling-out of wealth: the super-rich are slightly less so, while the poor can lead more stable lives with better government support where needed.

It isn't that I have a great need for more taxes, but the neither-here-nor-there nature of the current US tax plan is not working. The US Treasury, along with state government taxes, brings in enough revenue to sustain programs like Medicare and Social Security in the very near term—while much else has to be paid for with debt that will come due later. This tax revenue will diminish as Baby Boomers retire and government expenditures go up, making our future choices about programs and services even more complicated, and the population available to pay for them more diminished. As much as the wars in Iraq and Afghanistan are a drain on our resources, this situation—the demographic shift and its associated costs—existed before we went to war.

It is this absurd scenario that leads me to ponder the possibilities of giving the government 20% more money, in order to get better services out to a wider portion of the population while investing in and stabilizing some of the long-term programs that might otherwise run out of funding. Hell, witness Glenn Beck extolling the virtues of his local (taxpayer-subsidized) public library, and you can see all over again what could be accomplished with even more resources for these and other programs.

Not to mention that the more I have to listen to the self-serving, completely absurd Republican rationales for why national health care is effectively subsidizing the sick at the cost of the healthy, the more I think the “Nordic model”—heck, even the British model—is appealing. After all, this cross-subsidizing of resources and needs is one of the foundation stones of modern, Western civilization: taxpayers pay for police and fire services, even if most people never have their homes burgled or catch fire. Taxpayers pay for roads throughout their community, city, or state, even if the roads they drive on 90% of the time are the same 25 miles from home to school to work and back again. It takes a lunatic (like Glenn Beck) to think that eliminating (let’s say) the federal government, or even just federal income tax, would change this dynamic for the better. It would not diminish our needs, only the resources to address them.

And yet... there is my “Option B”: This one is summarized as “Learn from the Tea Baggers and the Libertarians—not to mention the founders of our nation, who revolted against an oppressive, self-serving regime.” Putting the terrorism-endorsing elements of the Tea Baggers, faux-Tea Baggers, and their GOP friends aside, it seems fairly clear that our governments actually are failing. From New York in the east to California in the west, the mixture of budget deficits, political gridlock, corruption, and pre-determined spending needs are making effective representative government harder and harder to find. (I know: Indiana is in great shape. Sorta.)

The thing is that the federal, state, and even New York City taxes I pay take a significant portion of my income—while the scope and quality of the services I receive in return continue to diminish, and the additional costs grow, too. At the same time, the sectors in which the federal government has been extremely focused for the last two years—such as banking and global finance—have become even more adept at taking advantage of a taxpayer-funded opportunity to soak the poor and middle-classes in favor of the already rich. Locally, one starts to wonder why Mayor Bloomberg’s city government can find the wherewithal to condemn private property in favor of billionaire developers when there are more basic needs left undone and while so many of the goals outlined in Bloomberg's PlaNYC remain unaccomplished. And meanwhile the optimistic, principled, values-driven “Yes, we can” president we elected seems to be either overwhelmed by actually having to govern or overwhelmed by the scope of the problems left him by the corrupt, sadistic, and politically twisted administration of Bush and Cheney. Heck, you know things are in bad shape when the ACLU is offering up a comparison between Obama and Bush!

No matter how noble the intentions or potentially good the outcomes of any new government initiative, skepticism and cynicism are easy to come by. Just look, for instance, at the convoluted health care bills that have passed both chambers of Congress: it’s easy to say that not every plan for reform is a good one—based on the impact of these two proposals in terms of taxes, costs, and access to medical care. Perhaps more government involvement in health care is not the benefit for which many of us were hoping, relative to a desire for lowered insurance premiums. Yet simple initiatives like the one proposed by Representative Alan Grayson, to allow people to buy into Medicare directly, probably have little hope of success.

Power corrupts, and government offices seem to fuel this even more than the power that comes from wealth and prestige. Given that, it seems like the the best way to tackle our present problems is not through greater and more vigorous government engagement. Instead, we need vigorous government disengagement—a winnowing and pulling back, especially at the Federal level—combined with a steep reduction in our Federal tax burden.

Ultimately, this should be combined with a series of national “conversations” about some of the key issues we face as a nation and state by state. From guns to, well, health care, we don’t know what we want. Our politicians, and the parties that support them, are too scared to help—too scared to move away from the ease of lobbyist-driven corruption, lest they make an unpopular move and wind up out of office and out of power. The platform of domestic policy goals I outlined in August 2007 remains as relevant now as it was then. The question is: who is going to help us get there—or when and how will we help ourselves?

Our Mortgaged Future

A.D. Freudenheim, The Editor

An article (“Recovery begins at home”) from last week’s issue of The Economist, about Shaun Donovan, the new Secretary of the Department of Housing and Urban Development (HUD) caught my attention—not for the analysis of Donovan’s early assertion of leadership, but because of the statistics included about the continuing problem of home foreclosures. The Economist reports that “foreclosure filings last month increased by 32% over April 2008; one in every 374 housing units received a filing.” The article also noted that HUD “announced that a $8,000 tax credit for first-time homebuyers could be used as down-payment on a mortgage…” and that “it would provide $2 billion in stimulus funds to stabilise neighbourhoods hit by foreclosure.”

Reading this article reminded me of how adrift we are in the middle of this vast sea of foreclosed homes, and that we cannot seem to find the dry land beyond the horizon. The collapse of our economy has been spurred on in large part by our collective capacity to over-borrow, and our collective desire to over-inflate the value of our homes. While the cracks in the broader economy are more complicated—the housing asset bubble is only one factor—this problem of over-mortgaged homes with over-inflated values is probably the thing most average people are able to focus on. The housing bubble was aided by the robust market in “sub-Prime” mortgages, and part of the problem with these mortgages was their inherent short-termism: banks loved the fees associated with mortgage creation, and the near-term monthly payments, without caring about the long-term impact of the potential failure of the housing market. If the goal was to maximize near-term profits, all of this made sense.

But there was always a logical inconsistency in the sub-Prime mortgage market, waiting for someone to notice it: it is difficult to make money over the long-term with loans you can almost guarantee that no one will be able to afford to pay off. If you know the borrower won’t be able to pay up over the life of the loan, then your short-term profits will ultimately be undermined by the long-term collapse. No amount of mortgage insurance will cover this potential deficit. It’s like building the George Washington bridge out of cardboard: it’s only structurally sound until the first rainfall, and coating it in plastic wrap is not long-term protection from the rain.

News that HUD is offering a credit to first-time homebuyers is great, but helps none of the people who currently have mortgages with unreasonable interest rates or already face foreclosure proceedings. And $2 billion to “stabilize” neighborhoods is all well and good, but it’s hard to know what impact it will have on affected homeowners. These initiatives are part of what the department is calling its “Homeowner Affordability and Stability Plan.” It seems to me that the best way to achieve this would be to encourage mortgage lenders to make loans more affordable, in order to bring stability to the turbulent world of home ownership. All of this led me to ask a different question: is the solution to the failed investment in mortgages ... more investment in mortgages?

Here’s how this investment program might work, as a formal process implemented with government backing, and in lieu of the purchasing of “distressed debt” mortgages by external vultures. Instead of foreclosing on a property, or simply refinancing the mortgage on more favorable terms, banks would refinance while also taking an additional equity stake in these homes. The bank’s investment might be 20-25% of the total value of the mortgage. The mortgage interest rates offered by the banks for these new loans would be fixed within a small range corresponding to the Federally set prime rate; some higher rates would be permitted, but only by one or two percentage points. All mortgages would be fixed rate loans on a 15, 20, or 30 year schedule.

The payoff (so to speak) of this process would be three-fold:

First, it would shift the process of dealing with many of these problem mortgages from a challenge over impending foreclosure back to focus on continued ownership. As with the bursting of many asset bubbles, part of the problem with the collapse of the market is the glut of houses available at reduced prices, which depresses the value of the newly foreclosed assets even further. This is not good for banks looking to recover from the sale of these assets, and it doesn’t help homeowners with legitimate (that is to say, normal) reasons for wanting to sell. Therefore, removing some homes from the market by keeping them owner-occupied would help return some stability to the market.

Second, this refinancing structure would reduce the monthly mortgage payments owed by the homeowners, by refinancing at a rate that owner-occupants can actually afford, on a schedule that makes rational economic sense (which most adjustable rate and sub-Prime mortgages do not, except on a short-term basis). What is the bank’s incentive to refinance this way? That leads to the third point...

By refinancing at a reasonable rate, banks enable homeowners to invest in their properties—keeping their homes and neighborhoods cleaner and more desirable—while the bank still, even at 6 or 7%, makes money. Well-kept homes in cleaner neighborhoods will likely have better resale values over the long-term.

The biggest benefit of this new process will be that it creates a mutual incentive for long-term success, for both the owner-occupant and the bank: the owner's incentive is the opportunity to stay in their house at a monthly payment rate they can afford. The bank will recoup its additional costs over time by taking that addition 20% equity stake, thus giving them 20% of the profit when the home is eventually sold. Since part of the allure of sub-prime mortgages was the higher interest rates being charged, and thus the higher rate of return to those who invested in these mortgages, this equity based approach will also help address the loss of profit that will result from bringing a 14% mortgage interest rate down to 7%.

Why should these homeowners accept this 20% reduction of their equity in their own homes? Well, for one thing, this new bank stake would reduce the amount the borrower owes by the same percentage, in effect reassessing the near-term value of the home. Given the inflated market in which many people purchased their homes, such a readjustment might be welcome. But the long-term rationale is even stronger: a 20% reduction in one’s investment is almost always better than a 100% loss of both equity and one’s actual home. For homeowners, choosing between 80% and 0% should not be so hard—and as banks might be starting to learn for themselves, 100% ownership of many, many houses may not be a good investment for their own shareholders.

E Pluribus Omnibus

A.D. Freudenheim, The Editor

Out of many, one piece of legislation.

One bill to slay all problems. One bill to stimulate all unstimulated areas of our economy. One bill, to tickle the fancy of those yearning for the good ol' days of the New Deal (most of whom, actuarially speaking, were not around to live through the original New Deal itself). As The Economist put it, one bill “larded with spending determined more by Democrat lawmakers’ pet projects than by the efficiency with which the economy will be boosted.”

One bill because multiple pieces of legislation—developed systematically, to address specific aspects of our economy that need help, and with all necessary due diligence and deliberation for each—would, obviously, be terrible. Genuine debate and analysis, obviously, would be a time-consuming abrogation of legislative responsibility, which would do nothing but slow down the momentum of the executive branch of government. Such an effort would be akin to voting to approve a war concocted (by the executive branch) under false pretenses. Or something like that.

***

One bill that has been passed by Congress, and which President Barack Obama again defended in his address to a joint session of Congress this past week as the first of many new measures.

I started writing this column two weeks ago. The idea came to me as my 20 month old daughter played with her little wallet and the dollar in it, and I had a chance to look again at the dollar itself in some detail. She has been folding it, wrinkling it, putting it in and taking it out of her wallet, and I thought that it was perhaps odd that we had given her an actual dollar as a toy. What does that say about its value? And what would she learn from playing with a real dollar that (at 20 months) she couldn’t get from a fake one?

At his inaugural address, President Barack Obama said "Our economy is badly weakened, a consequence of greed and irresponsibility on the part of some but also our collective failure to make hard choices and prepare the nation for a new age." I loved that line. It was concise and eloquent, but also accurate and honest. It was representative of the person I wanted Obama to be as president.

That Obama is a person and a president whom we as a nation have not yet seen. Doling out federal dollars—as any Republican can tell you, after eight years of practice in Congress and the White House—is more or less the opposite of making hard choices. It's easy because, much like playing Monopoly, it doesn't feel like real money. Real money is what poor and middle class people lose when the GOP-led process of bank deregulation allows financial institutions to spiral out of control. Real money is what a father gives his daughter, not because it is a toy, but because—as an alert young person, learning about the world around her—she should know what it is, how to handle it, to hang on to it, and over time, understand its value. She will have to make hard choices with what to do with that dollar, so learning what it means, what kind of attachment to have to it and what its existence represents, is itself meaningful.

***

Congress and the Executive branch, as everyone knows, do not handle real money. They handle theoretical money that may (or may not) exist in the future, and that someone other than themselves will have to earn years later. If our government understood real dollars, then it would (for one thing) have started closing the absurd gap that our Social Security and Medicare systems will have, between the money coming in and the money going out. The President and Congress might have acknowledged that if it's OK to have government-managed health care programs for the elderly (and the poor), it's not really such a leap to consider creating a government-run system for the rest of us. Government might start moving more actively to draw down our troops in Iraq, and begin saving money on some of these absurd foreign adventures. Heck, an intellectually honest government would recognize the pointlessness of the so-called “War on Drugs,” and move to start taxing drug use instead of trying fruitlessly to eradicate it.

Or Congress and the Executive branch could wake up to the reality that investing billions of dollars to help people who cheerfully and greedily screwed up—while making essentially meaningless gestures in the direction of the hard working people who did not over-extend themselves as a result of greed—is unlikely either to solve many economic problems or to win over long-term voters.

Any of those things, just from that very small list, represent hard choices. They might also have served as economic stimulus components in their own right, by focusing on our long-term health and alleviating future debt or averting future disaster. But those are just a few of the hard choices that need to be made, and our nation has made none of them so far. No hard choices, on virtually any subject.

President Obama, in his address to Congress this week, again laid out a picture of the damage that has been done, and the hard choices we face. He was as elegant and as eloquent as usual when he said “Now, if we're honest with ourselves, we'll admit that for too long we have not always met these responsibilities, as a government or as a people. I say this not to lay blame or to look backwards, but because it is only by understanding how we arrived at this moment that we'll be able to lift ourselves out of this predicament.” But at some point, the continued acknowledgment of the problem needs to shift into an actual moment of making hard choices. Granted, he has been in office for only 39 days. There are many more to go. I just wish that the stimulus bill—if it is representative of Obama’s approach—was representative of more clarity and restraint, and was a leading indicator of how problems will be tackled beyond throwing money at them.

Sadly, this was not really an omnibus stimulus bill that our Congress passed and our President signed. Instead, it was more like the world's biggest birthday cake: a cake created by 535 bakers and their assistants, for themselves, by raiding everyone else's kitchen for the necessary ingredients, and on which those same bakers and their helpers subsequently gorged themselves.

If we, as a nation, are to continue on the path that E Pluribus Unum implies—if we are to continue to be a united, strong one rising from the contributions of many—then the many need to see The One start confronting that "collective failure to make hard choices." Obama needs to start living up to his words, and fast.

Frank Rich, My Mother, & Me

A.D. Freudenheim, The Editor

I don't think that my mother and The New York Times' Frank Rich are actually talking about politics and the bailout (aka "stimulus"), but sometimes I wonder. There are certain parallels in their sense that the stimulus is mis-focused and the situation a bit off the rails. There are also some obvious differences in terms of how far each goes in criticizing the Obama administration directly.

At the same time, both seem to hold dear an assumption that President Barack Obama's entire governing plan would be different and, thus, that the bailout would be different than it had been under George W. Bush. Obama himself famously said that he feels like a "blank screen on which people of vastly different political stripes project their own views." We are now seeing the impact of that, in terms of the peoples' shattered perceptions.

Ever the cynic, I voted for Obama - but outside of an immediate sense of post-November 4 euphoria, tried to keep my expectations low.

If there was any single indicator of how not-different Obama would be from past attempts at American government, it was his ring-kissing episode with the American Israel Public Affairs Committee (AIPAC) in March 2007. Perhaps, one might argue, such obeisance was crucial for getting elected. Perhaps not, might one argue, once they've looked at what portion of the American population is Jewish (4%). Obama's margin of victory was greater than 4%. He might have won even if he'd been more honest about the mess that is Israel / occupied Palestine / the Middle East, and about what America's role in fixing it should, nay must, be.

What does this have to do with the economic stimulus package? Well, my mother has been focused like a laser on how off-track the bailout is, wondering why it's OK to dump billions of dollars on banks and bankers, but not on the people who have lost their homes, their livelihoods, their retirement savings, etc. She's not wrong.

Meanwhile, Frank Rich has been focused like a laser on the way that the Obama administration has - already, in just a few short weeks - danced around the ethical guidelines it once said it would hew to so closely.

Both have a right to be upset because - so far - the Obama administration has given us only a new version of politics-as-usual. The rise of the left on November 4th has not brought us clarity or a new vision, but rather exactly what the rise of the opposition always brings after they've been in opposition: revenge. In this case, it's been a more polite, mildly more accommodating form of revenge - but the results of those accommodations are additional goodies for the Republicans (e.g., more corporate tax cuts) rather than a realistic compromising of positions and dollars, or a genuine refocusing of priorities. Instead, almost everything counts as a priority, adding up to nearly $800 billion.

Rich said this weekend that Obama "is not Jesus," and he's right. Obama isn't Jesus, but it's also an irrelevant comparison because even Jesus couldn't sort out this mess.

Amen.

Land Grab

A.D. Freudenheim, The Editor

Here’s a thought: maybe the recession—and the corresponding impact on commercial real estate prices—will benefit existing and new small and boutique shops in New York City. It’s a situation calling out for a better and more creative approach to business development.

***

The debate over the proliferation of “big box” retailers (and big box banks) in New York is longstanding. I am a proud Costco member-shopper, and patronize Fairway, a big box grocery if ever there was one. While there has been much angst over fair pay and union practices at some of these kinds of stores, including over whether WalMart has a place in New York City, they also often offer legitimate value in terms of job creation and cheap(er) goods. (For two good articles on this issue, see John Tierney’s piece in The New York Times from July 21, 2000, and Virginia Postrel’s article in the December 2006 issue of The Atlantic, “In Praise of Chain Stores.”)

At the same time, small shops and “boutique” brand stores offer an equally valuable shopping experience. Generally, the appeal of both rests less on price point than on the intimate knowledge that owners and employees usually have of the products on sale. And for both, it is (in part) a matter of scale: the larger a store’s stock, the less likely it is that the store’s employees will have great knowledge of each of their products. Likewise, the exceedingly wide range of products available in large stores often precludes stocking the more eccentric, low-sales-volume merchandise some customers may desire.

For example: it seems completely natural to me that the appliance and technology chain Circuit City is now bankrupt. While I am sorry for 30,000 employees who will lose their jobs, three separate instances of terrible service at two Manhattan stores was enough to convince me that this was not a good place to shop. Even if the prices were reasonable, the sales staff was generally not: they lacked in-depth knowledge about all but the most high-volume products, and were indifferent to basic customer service. Confidence-deflating salespeople make for depressed sales numbers.

Contrast the Circuit City approach with that of the average Apple store where you get what you pay for: great products with great service. Everything about the experience—including being able to book a “personal shopper” in advance—indicates that Apple understands that its customers deserve to be treated not only respectfully but with respect for their intelligence. This is, in part, a matter of hiring smart staff and training them properly, but it is also a function of the focus involved in Apple’s product line. A manageable range of products means it is possible for staff to learn in great detail about the items they sell.

The same can be said of other kinds of products and stores. Innovation Luggage, another chain store, has a perfectly fine selection of mass-produced, mass-product bags for the mass market. I have shopped there once or twice myself. But if you want a bag that is more creatively designed, something customized to different kinds of styles and purposes, you have to look elsewhere—like Peter Hermann, in New York, which sells smaller, harder to find brands. My favorite shoulder bag, by Mandarina Duck, cannot be found at most big chains, while the terrific computer tote we bought for my wife a few years ago is a true original: a product of the innovative and artistic Schlepp Berlin.

Let’s not forget bookstores, about which I wrote a few years ago. The closing, in 2006, of the fraternal twin book stores Murder Ink and Ivy’s Books and Curiosities was a terrible day for my Upper West Side neighborhood. Even worse—or perhaps just ironic—is the fact that the store fronts that housed those shops have sat empty since December 31, 2006. Only now, more than two years later, is one of them seeing a new tenant (yet another mobile phone chain). Jay Pearsall, who owned the book stores, would have every right to be angry, and also to revel in schadenfreude at a landlord whose rising rents put Pearsall out of business but also kept the spaces unrented for another two years.

***

My dream of a series of new boutiques and small stores is probably just that, given the state of the credit markets. But commercial real estate vacancy rates are high and rising, not just in Manhattan. If landlords changed, ever so slightly, their perspective on what makes a successful tenant, they might find themselves able to reverse the drain. Landlords could, for example, become limited business partners with their tenants for renewable terms; lease payments could be made based on the success of the business, which would make the success of the business in the best interests of the landlords themselves. If that sounds like a money-losing proposition, ask yourself what sounds better: unrented storefronts for the duration of the recession—or renting out that space, generating some (initially modest) income, and aspiring to achieve higher rents while also contributing to the success and stability of a given neighborhood?

This is not a foolproof strategy, as the closing of the Oscar Wilde Bookshop shows; not every business can be saved, and not every business will succeed. That is not the point. A strategy of seeking to maximize profits by looking exclusively for the largest commercial retail partner is not sustainable; there will never be enough big box partners to satisfy every available rental space. In urban and suburban communities alike, retail diversity is important—there is value to be found in many stores beyond the savings of dollars and cents—and landlords would do well to figure this out, and take advantage of it. In fact, we would all benefit.

Brand Death

A.D. Freudenheim, The Editor

I can admit this: I love my bank. And so it’s a shame that it’s probably going to die soon, a casualty of both corporate greed and a fundamental failure to understand customer service.

For security reasons, I can’t tell you the bank’s name. I can tell you that it began as a small bank focused on high-quality service—a boutique bank. My bank was so successful with this boutique strategy that it was acquired by a much larger investment company, which saw the opportunity represented by a return to personalized service rather than a perpetual attempt to dominate so-called “retail” banking. Fortunately, it survived the take-over, because the new parent company understood the value of the high-quality mantra.

Unfortunately, the parent company was not as successful in its own right. It fell prey to the lure of poorly rated and over-leveraged investments, the kind that have been the self-created scourge of Wall Street. My bank was just fine; it apparently avoided making many bad loans or sacrificing banking principles for fast transactional cash. But it was now under the umbrella of a dangerously sick company. And that company was itself acquired a couple of months ago, amidst the furious flurry of collapsing card houses, by one of the biggest and most ubiquitous banks in the country.

***

“Brand equity” is hard to build and easy to destroy. Just look at General Motors, which last week printed a letter apologizing for having disappointed customer. Apparently four decades later isn’t too late to say you’re sorry.

In the banking world, brand equity was once seen as important. It was right up there with “presence,” which seemed to result in an attempt at global domination of the world’s real estate markets by any bank worth its depositors’ salt. “BankLand,” I called, it back in 2006. Commerce Bank, for instance, was “presence” pioneer, promoting the idea of bank hours that were useful for customers, not just banks. Commerce built a tremendously successful brand around this: so successful that it was attractive to bank robbers and, eventually, to Toronto-Dominion Bank, otherwise known as TD Bank. TD took over, did nothing for a little while, and then in a matter of days, rebranded their entire New York and Jew Jersey area branches. Some folks didn’t like it. And I cannot say that I blame them.

It isn’t that TD Bank is bad, or that Commerce Bank was good; I don’t know either of them, except for occasionally using the ATM machine. But I sympathize with the customer who wonders where his bank went. People grow attached to things—and after all, it’s that human attachment that makes branding and marketing work. That’s why press releases announcing such mergers, which describe the research involved in developing a new brand is, to be blunt, a load of crap.

None of this is about, or driven by, customer service—or even the slightest and most basic business school understanding of brand equity ,or value, or whatever jargon you’d like to use. All of these acquisitions and subsequent re-brandings are driven by a desire to create a business that looks appealing enough that some bigger, richer corporation, with its own set of faux-aspirations for its shareholders, will want to buy it. Buy it in a takeover that, at a minimum, rewards the “C-class” executives who will be credited and duly compensated for engineering the merger. Customers be damned; shareholders, too.

***

Despite the credit crisis we are suffering through, the flood of junk mail from banks continues to flow to my mailbox unabated. The banks must think that one day I’ll wake up and decide I desperately want a credit card that will earn me mileage points on an airline that in a few months may not exist. Talk about optimism! No thanks, folks.

In their corporate ivory towers, they don’t get it—and don’t care. What I’m looking for in a bank is not so hard to achieve: good service rather than national presence; a banker who knows who I am when I call, because their employees take their jobs seriously and stick around long enough to get to know me, and to know me not just as customer service agents but as bankers. I want, in short, a neighborhood bank, even if it’s not literally in my neighborhood.

But most corporate bankers today don’t seem to get it. Customers may not care whether their bank has a parent company, and whether that parent company has other banks with other names. We want what customers have always wanted from the banks: solidity, consistency, and good service. Does the name matter? Not really—except that when it changes all the time it undermines any sense of solidity or consistency, and invariably winds up substituting big-corporate “service” for the trusted employees we know.

So, when my bank was acquired by a new company, “Shit!” was my immediate (and eminently self-interested) response. Eventually, much like the old Shel Silverstein poem, I feared that this new, boa-like swallowing bank will reach the head and it’ll all be over. Jobs will be lost, branches will close, my banker will be gone, my account will be rolled into this new bank’s system … and the odds are that within six months I’ll go looking for another small bank to be my financial helpmate. C’est la vie.