By Robert H. Halleck
In my 35 plus years in the financial services industry, I learned some things the hard way and made more than a few mistakes more than once. I'd like to share some things that made an impression on me during my career. None of them is new and a fairly common reaction is, "I know that." So do I, but given the tenor of the times it doesn't hurt to discuss them again.
Some of my truths may not even be true all the time. As your general counsel is likely to say, "It all depends."
Finally, a word of caution. Some of these many comments may go against what you have long felt is right or wrong. Why not just let my thoughts slide into the back of your mind. You may find some change coming in your beliefs. It has always proved useful to me not to judge too quickly.
And now … Lesson 1:
Your First Loss Is Your Best Loss
You've heard this one before. Sure it's a cliché. Sayings become clichés because they are so often true. I know you did not go into the credit union industry to manage real estate or sell used cars. So, don't. Even good loans go bad after you have made them. Believe me, you want to get out sooner rather than later even if the collateral is expected to recover.
I took back an office condo from a duff construction loan. A speculator offered us $.70 on the dollar the day we foreclosed. My executive vice president said to wait because things would get better soon. Seven years later, we sold the last unit for a quarter of the original loan balance.
And then there was the crack house in downtown Washington, D.C., we thought we could refurbish rather than accept the ridiculously low offer. We ended up bulldozing the place and donating the lot to Habitat for Humanity.
In all candor, my experience tells me to dump repossessed homes and get on with life. That goes double for automobiles. In today's world they are underwater from day one.
Years ago repossessed cars weren't any better. My second bank employer ran the largest used car lot in northern Virginia with cars we had taken back. We would have been so much better off selling them at auction all the time. We even had one borrower steal his car off the lot using his duplicate keys. He sure loved the car but I guess not enough to make the payments.
Robert H. Halleck, who retired in 2002 from a 35-year financial services career, remains vicariously involved in the industry through his wife, a credit union CEO.
Read Lesson 2
