Monday, October 20, 2008

As banks go ‘bank’rupt, here’s something you can bank on!

(I have received many enquiries about a blog on the collapse of banks since I work closely with the investment banking community. But I felt that enough has been written on the topic that I chose to write on banks in general)

A banker is a fellow who lends you his umbrella when the sun is shining and wants it back the minute it begins to rain - Mark Twain

The impression of a banker, for me, was that of a risk-averse, pin-stripe suited guy. Well, if I were to consider the way banks are falling like nine pins on Wall Street (they are planning to rename it as Fall Street!), it is time I created exactly the opposite impression. I feel the phrase bankrupt has become ironic; shouldn’t bank mean ‘bank'rupt now? By the way, the safest bank these days seems to be the Piggy Bank. But I am not that worried about all these banks closing down. If the banks are closed, I just use the ATM.

Banks are intermediaries who take one person’s money (in the form of deposits) and lend to another (in the form of loans). Banks charge you high interest to borrow your neighbour’s money which you could have borrowed directly at much lesser interest rates, if you had not thrown stones at his dog or shouted at his children when they stole fruits from your garden. As per traditional theory there are three rules to become a successful banker - First, don't lend money to those who don't have any; second, don't lend money to those who need it; and third, don't lend your own money.

Lending is the main activity of banks, because that is how they make money. You have to prove to the bank to ‘its satisfaction’ that you would be able to repay the loan. Practically what it means is that you will have to prove that you actually don’t need the money. I never knew why banks called the loan I took a ‘personal loan’ till I missed couple of my payments. And boy, did they get personal! But you may want to be careful with those calendars banks give you to help you keep track of your payments; some have more than 12 months on them! A word of caution for borrowers - you may be turned down a loan if you are good friends with many collection agencies.

When I learned that I could borrow against assets, I approached my bank to lend me money to buy a car against my intellectual property and knowledge assets. And that is when I learned their true worth! Of course, my job also reminds me of it often. After influencing higher ups of my bank, they finally offered a loan of $10,000 to buy a car that was worth $20,000, after ensuring that I have income to repay a $100,000 loan, against the guarantee of two people who have assets worth $250,000 each. That is when I realized that there is more truth than humour in the joke “if I owed the bank $10,000, it is my problem; but if I owed the bank $1 million, then it is the bank's problem”.

Banks, like trees, have branches but no leaves grow on them. Before the internet revolution, a bank’s worth was directly proportional to the number of branches; but today it is proportional to the number of online frauds. As a kid whenever I asked for an expensive toy I was always told that money doesn’t grow on trees. But if money doesn't grow on trees then why do banks have branches?

A bank teller is the person who tells (tales) why he can’t do things that you expect him to do. But I found that most of the time tellers don’t tell much. Last time I tried to encash my cheque, the teller told me that I had forgotten to dot the "i" in Salil. I asked him, "Can't you do that for me?" The teller replied, "Sorry sir. It must be in the same handwriting." Another time the teller asked me to identify myself. I immediately looked into the mirror and confirmed that it was me who was at the bank. And the teller was satisfied! Also if bankers could count, why do they always have ten windows and two tellers?

Swiss banks, known for their privacy and safety, are where people hoard their ‘black’ money (see, I told you there is racism among the rich!). Woody Allen once remarked “If only God would give me some clear sign! Like making a large deposit in my name in a Swiss bank”. I wonder where the bankers store all the money, with the way it is multiplying exponentially across the world. That makes me want to start a Swiss bank. My readers are all welcome to invest their hard(ly)-earned money in it.

Luther George Simjian once asked for money from his friend through a window. This gave him the idea of creating a hole-in-the-wall machine that would allow customers to make financial transactions, which eventually led to the invention of ATM machine. But whenever I have tried to check my account balance at the ATM, instead of printing out the receipt, the machine laughs out loud, gives a message ‘Not worth wasting paper’ and ejects the card.

Call centers are inventions of banks to check if you really have a problem. If you can call 13 times and wait for 45 minutes each, listening to the bank’s vision and mission statements, before you get through to a human, who of course is not in a position to help you, then it could be that you have a problem. Else, you are person with a complaining nature. I am not saying that the customer service in my bank is bad, but when I went in the other day and asked the clerk to check my balance ... she leaned over and pushed me.

Science has been working for long to develop neutron bomb that destroys people and leaves buildings intact. However, banks beat them to it by inventing mortgages. There were 5-year rest loans, interest-only loans, 30-year loans, you name it. The way things were going, I was looking for the day when banks would start giving 100 year loans to buy a house.

Meanwhile my online bank seems to have gone offline… with my account!

Friday, October 3, 2008

Keep your head down and spread your legs a bit more..

Golf and sex are about the only things you can enjoy without being good at. And no matter how bad you are, it is always possible to get worse.

Mark Twain is one of my most-respected writers and most of the respect he gets from me is because of his famous quote ‘Golf is a good walk spoiled’. With due respect, he has a lot of other reasons to be respected. But ever since I heard that, I respect my walks a lot more, which incidentally have never been on a Golf course. See how much of respect I have used in this paragraph. I told you, I am a respectable fellow.

Golf is a game where you put a very small ball into an even smaller hole. Research shows that the average age of a golf player is 51 years (my research; but remember, my blog). I guess that explains why golf is such a thrilling game keeping you at the edge of your seat always. Any more excitement and the percentage of elders in the population will drastically reduce.

What is it with senior management and Golf? Golf is 20 percent talent and 80 percent management. Again my research suggests that the favourite game of 94% of senior management is Golf. There are so many better games and you are pardoned if you thought that the law of averages should suggest that those games might also be popular among the senior management. But alas, that is not the case. By the way, do you know the ideal score for a senior management golfer? It is 90. If he is better than that, he is neglecting his company. And if he is worse, he is neglecting his Golf.

Talking about golf and senior management reminds me of this joke:
The game of choice for junior employees is basketball.
The game of choice for frontline employees is football.
The game of choice for middle management is tennis.
The game of choice for CEOs and executives is golf.
Conclusion: Higher up the corporate ladder you are, smaller your balls are.

But I am still not sure if one takes up Golf after becoming senior management or if one takes up Golf to become senior management. If the sample of one of my senior colleague, who recently moved up to senior management, is only considered, it would suggest the former.

A senior colleague of mine explained his liking for Golf as thus, “You are not only playing with other players, but with yourself too. There are natural complexities also that you encounter which makes the game very interesting.” I found that explanation puzzling since it was no different in other sports too. My confusion was resolved when I learned later that Golf is the only sport he plays.

I asked a friend of mine, who is learning the game, how his game was shaping up. His reply was, “It has improved a lot. I am hitting fewer trees now.” A senior executive of our company has all the gadgets to play golf better; he now just needs to learn to play the game. Golf sure is a mysterious game that raises so many conundrums. He makes me wonder ‘do you buy the gadgets to improve the game or do you improve your game and then make use of the gadgets?’

Another colleague in senior management died for the cause, sorry, died on the course. But we weren’t surprised; he was so fanatic about the game. He got a hole in one before he even learned the game. There is another fanatic follower of the game in our senior management, who beats everybody so miserably that if he collected a dollar for every win, he would have been richer than Bill Gates by now.

I have not taken to the game due to its obvious lack of excitement over an eighteen-hole marathon walk of close to four hours. The other problem is that it takes you so far away from the clubhouse unlike other games. H G Wells once remarked that the uglier a man's legs are, the better he plays golf. By that logic, I should actually be a great golf player. Cricket builds character, soccer reveals it and golf exposes it; and that is another reason I keep away from up the game. My only handicap in Golf is the grass, woods and irons - I don’t know about them!

How can any write-up on golf not mention Tiger Woods? If fifty years ago, 100 white men chasing one black man across a field was called the Ku Klux Klan. Today it's called the PGA Tour.

If golf is all about putting things into holes, caroms, anyone?