Of Banks and Over Taxed Regulators

Banks, who needs them?  A quick question and a quick answer:  a thriving, prospering banking system is essential for a thriving, prospering modern economy.  Banks bring together the resources of savers and the needs of borrowers, particularly borrowers who seek funds to establish or expand businesses or families and individuals who use occasional borrowing to smooth out their income (good banking principles penalize people who would borrow in order to live beyond their means, but more on that at another time). 

Banks also created and maintain the payments system, the means by which money is transferred quickly and accurately throughout the nation and even internationally.  Bank services include as well a variety of wealth management tools by which individuals, families, businesses, and governments can store, grow, and make best use of their financial wealth. 

Without banks, almost none of these services would be available.  Many non-banks provide bank-like services, but they all come to find the need to rest their own services at some point on a bank.

Banking in the United States has grown with the nation, from very simple institutions in the eighteenth and early nineteenth centuries, to a wide variety of bank types, charters, and business models, as diverse as the financial demands of the customers of the largest and most diverse economy in the world.  I once presented at a meeting in Chicago a list of about two-dozen different types of banks in the United States.  We have national banks, state chartered banks, small community banks, larger regional banks, and very large banks with extensive national and international business products and services.  All of these operate and compete together, with a body of customers behind each one who think that their bank offers the best available choice of services that they want.  No other nation in the world has a banking industry like ours.

The recent recession and financial panic—and the inevitable politicizing of finance that came in its wake—have thrown much into confusion and imposed upon sound and prudent bank supervision harmful ideas born of reckless sloganeering and hubristic financial engineering.  The complexity of banking—no more complex than information technology, communications systems, or modern manufacturing—has been superseded by even more complex bank regulation. 

The rules governing banking are too much and too many to function reasonably.  They have become more than the very human people in the multitude of bank regulatory agencies can manage.  The disciplining role of markets and the valuable service of banker judgment have in large measure been replaced by bureaucratic procedures and the judgments of government officials.  These officials have had little if any practical experience making loans, taking deposits and putting them to work, building financial wealth, or otherwise providing products to customers.  Government officials cannot run businesses.  Now, their government jobs have become so demanding and complex, that they will not be able to do their own jobs, either.  Too much has been placed upon them.

Those most harmed by all of this are bank customers.  For the moment, bank profits are up, but that is because their losses are down as they recover from the recession, not because services to customers are expanding.  As a result of government interest rate policies, depositors earn almost nothing on the money that they place in banks.  The expanding oversight involvement of bank regulators makes it dangerous for banks to offer new services to customers; the risk of breaking any of thousands of pages of regulations has become too great.  It takes almost half an hour to open a new bank account, something that used to take minutes.  Fewer credit-worthy borrowers today qualify for mortgages than just a year ago, before new regulations went into effect.  The number of banks has been declining in recent years, dropping at the rate of nearly one for every business day, week in and week out.  Only one new bank has been opened since 2010.  We have fewer banks today than the nation had in 1893.  A stagnant industry is less able to evolve to meet changing customer needs and preferences.

For the good of all of us who rely upon banking services, and for the sanity of financial regulators, we need to return to the principles of good banking.  We need to restore a system of supervision that is measured, not by how much banker judgment it takes over, but by how it adds value to the ability of banks to serve customers.  Government agencies—and the laws that they administer—that are derived from a founding document that begins with the words, “We the People,” should do nothing less, and nothing more.

On another day I would like to share some thoughts about how banks are being goaded to become their own enemies.

Of Holidays and Recreation

The holidays are fast upon us. The store displays are relentless clues (even if they rush things a bit). While growing up I looked forward to Hallowe’en, in part for the costume and candy celebration itself, but in no small part as the gateway to a series of rich and usually joyful holidays. October ended with Hallowe’en, and then Thanksgiving was observed a few weeks later. Right after Thanksgiving we were into the Christmas holidays. Quickly after Christmas came New Year, followed in February by Valentine’s Day, and at varying intervals Easter arrived amidst the celebration of Spring and new life.

I have a generous treasury of enchanting memories from those holidays. I recall one magical Hallowe’en as a young boy in a neighborhood full of children. The early evening’s streets and sidewalks were filled with costumed colleagues, all busily canvassing the ready houses, milling about, comparing each other’s sweetened haul, each house ready to greet you with a smile or perhaps an expression of wonder while adding to the bulging bag of treats.

Thanksgiving, perhaps the warmest and kindest of holidays, is rich in tradition, from the family and friends who gather, foods that are prepared, the china and silverware that are used, to the preview of coming cold weather. For me and mine, Thanksgiving has been a busily gentle holiday, crowded with activity and effort, but calm and purposeful. Rambunctious noise seems foreign to the day, even with a morning pick-up football game among Church members included. Thanksgiving speaks a time of Christ-like peace in my memory. If there were exceptions, they are forgotten. A prayer, a toast, and a feast that symbolizes the riches bestowed on us by God. In later years, with my own family (my wife and our children), the evening has witnessed the first lighting of the outdoor Christmas lights. Thanksgiving has brought on the Christmas season at our home.

Christmas for us has always been a season, with many holidays. The Advent holidays lead us inexorably to Christmas Eve. In those weeks there are many celebrations, ours and others, traditional and new. We began a new tradition last year that we anticipate repeating this season. Christmas Day itself has been a time when all ordinary activity seems to stop, a Sabbath of Sabbaths. We take an emotional breather, we contact family members not spending the day with us. We enjoy time together and some time occupied alone. For us, we then let the Christmas festivities wind down of themselves to their conclusion at Epiphany, the day we quietly finish the celebration until we near the end of the new year just begun.

Speaking of which, New Years’ Eves in my life have varied widely in observance. Maybe most memorable are an evening spent with my best friend shooting a basketball at the new hoop above my garage door, and another evening as a missionary in the Canary Islands, reflecting on the arrival of 1980, musing on what the end of the twentieth century would mean two decades later. That evening, those decades appeared to be rushing at me.

Then there are Valentine’s Day and Easter arising in steady succession. Each has its own traditions, each creating its own imprint in life’s recollections.

These have stocked my treasury of marvelous memories. I am rich with them. Yet I have more observances to come. To these I look forward.

Here is what I believe about these riches. I can take them out of the treasury each year and seek to recreate them, to work to experience them all over again. If I do, I have but relived and re-experienced what I already have. I add little new to the treasury. Many people celebrate this way. It seems to me a squandered opportunity and probably dangerous. I doubt that the previous charm can be revived, that the wondrous experience of the past can be recaptured. I fear that the joyful and rich memory might even be harmed by the failed effort. Worse, much can be consumed, much exertion expended, and still frustration and misery—for myself and others—may result in the trying.

I believe that a better approach would be to create new magnificent memories. These can build upon the past and work from valuable traditions. The good of the past can be drawn upon to create something greater. The effort is to make a new experience, not vainly recall to life a treasured memory. Not every holiday experience will produce equal joy and beauty, but if allowed to live for its own sake each will add to the fullness of life and the value of our storehouse of life’s treasures. Each will have the chance to be the most marvelous experience yet.

I am not prepared to concede that the best of my life has been lived or that the finest that I can do is recreate only what has happened before. I fancy to live life on the rise. I see no loss in trying.

Bring on the holidays. I plan to observe them each as never before.

Of Wars and Rumors of Wars

The Lord Jesus Christ declared the hearing of wars and rumors of wars to be significant among the signs of the latter days preceding His personal return to the earth in glory, to rule and reign.  This from Matthew, in the New Testament:

And ye shall hear of wars and rumours of wars . . . For nation shall rise against nation, and kingdom against kingdom:  and there shall be famines, and pestilences, and earthquakes, in divers places.  (Matthew 24:6, 7)

This from Mark:

And when ye shall hear of wars and rumours of wars, be ye not troubled . . . For nation shall rise against nation, and kingdom against kingdom:  and there shall be earthquakes in divers places, and there shall be famines and troubles . . .  (Mark 13:7, 8)

And this from the Lord through a modern prophet:

And in that day shall be heard of wars and rumors of wars, and the whole earth shall be in commotion . . .  (Doctrine and Covenants 45:26)

As well as I can recall, I have always thought—from my young childhood—that I was living in the latter days, shortly before the return of the Savior to the earth.  I cannot remember a time when I did not suspect that to be true.  Perhaps many in many ages have had similar thoughts. 

My study of the scriptures, ancient and modern, and the words of the prophets, dead and living, matched against what I have witnessed in my life have confirmed my belief that the day of the return of Jesus Christ, to live and dwell among men as the resurrected Lord, is near.  I do not predict precisely how near.  It may not happen in my lifetime.  The Lord said that the Father has not confided the precise day even to the angels of heaven (Matthew 24:36).  But if I do not live to see that day, I do not expect that the Savior’s return will occur long after I die, in which case I hope to come with Him together with many who lived and died faithful to the testimony of Christ.

Until recently I had considered these prophecies of wars and disasters to be a sign of something new.  Yet wars of men and convulsions of the earth are found throughout the annals of history.  Perhaps the prophecies refer to an increase in frequency and intensity.  Maybe that is so.  Looking back on the recent twentieth century it is hard to find a year without war raging one place or another, and I cannot identify another century in which so many tens of millions were destroyed at the hands of their brothers and sisters.  The Middle Ages and on into the Renaissance, if not many other ages, were also racked with constant conflict and mayhem.  Their numerous wars seemed interminable, including a Thirty Years War and even a Hundred Years War.

I have come to suspect that in reading these prophecies I misdirected my focus.  For something to be a sign, it must be new or different.  What was the Lord saying here that would be different, different enough so that we might notice?  Perhaps it was not the wars and physical upheavals themselves, as those have been with us since man and woman left Eden.  What is very much new and different about today is our ability to hear of the wars, rumors of wars, and the natural disasters. The evils of men and the destruction of nature may be increasing in frequency—and the case for intensity of human mayhem is not tough to make—but what really is new is our ability to hear of them. 

Nothing in the entire history of the world can compare with the very recent ability of mankind, anywhere and everywhere, to hear of what is happening anywhere at any time on the planet.  That is especially true of “rumors.”  Internet communications, and the many evolving formats of social media, make the spreading of rumor—always known to travel on wings—electrifyingly quick and amazingly ubiquitous.  Every day we do hear of wars and rumors of wars and the whole world in commotion.  It is hard to avoid.

As the dashed expectations held by many at the time of the Savior’s mortal ministry blinded them to the reality of the fulfillment of prophecy, holding too tightly to one’s opinion of how prophecy might be fulfilled is a risky business.  The Lord expects us, however, to think about it, else why would He make the prophecies and repeat them?  I offer these thoughts for pondering, even while we observe the mighty work of God unfold in our own lifetime, as He told the prophets it would.  

What have you heard today?