Why I work for America’s Most Convenient Bank

I have been seeking my dare-to-be great situation since I decided to leave a two-hundred (200) employee community bank last year in search of the Manhattan financial dream. It was promising; I had lined up four (4) interviews with international banks of varying size. The positions ranged from corporate finance, specialty financial vehicles, and shipping finance. But I failed to land a position after poor follow through demonstrated inexperience on my behalf. In hindsight it was for the best, because I was in a financial position which would make transitioning to a New York City resident difficult. I set out again to find a new position, expanding my search to Chicago, Atlanta, and any other city that would have me. I called in all of my connections including family, past companies that I had interviewed with, and my credit training instructor. I lined myself up with a barrage of interviews many of which were similar to my last position.

Headstrong not to make a horizontal move, I trudged on looking for the right opportunity. It came from Lisa Hall, a Human Resources recruiter for Commerce Bank who spoke with me for twenty-five (25) minutes on the phone, immediately following an unsuccessful interview. I went through a rigorous yet expedient interview process including a one (1) hour face-to-face interview with Lisa Hall, a three (3) hour interview with my soon-to-be manager Jim Nixon, and a quick meeting with his boss Roger Bomgardner. Even with Bank of America in New York City and Merrill Lynch in Chicago knocking on my door, I chose Commerce Bank because they made their decision to hire me within two (2) weeks of first contact.

Over the past year I have learned the importance of detail-oriented underwriting, seeing potential deals in the eyes of a risk manager, a salesman, and a customer, and how hard you must work when you are in a larger pond of employees. On Monday, my company Commerce Bank was acquired by TD Banknorth, a subsidiary of TD Bank Financial Group. For me and my colleagues, this is a tumultuous time because we must expediently adapt to new policies from a multinational corporation that avoided sub-prime mortgage exposure and enjoys helping the environment. With unemployment at 5.1% and growing, I am up for the challenge and feel fortunate to be working for a company in a position to weather this economic uncertainty.

Banking in an internet cafe

It’s a typical Saturday in Philadelphia and I once again find myself sitting in my local ING Direct Cafe (”the Cafe”), a retail bank masquerading as a coffee shop and internet cafe. The Cafe caters to the coworking generation with its shared office space, cafe culture, and double-agent barista-tellers offering sage savings advice with your purchase. The front of the Cafe is mixed with round tables and plush chairs, and is peppered with families, students, and professionals sipping the afternoon away people watching. I am at the four-person granite bar where the mood is like my corner pub, with NASCAR on the high definition television above me and a nervous home buyer named Sandy sitting next to me. Sandy is taking advantage of the free wifi to make the final decisions for her purchase, and isn’t shy to share her story with the non-threatening internet nerd sitting next to her. The other two seats are now empty, but serve as a revolving door for patient patrons waiting to take advantage of the Cafe’s eight internet terminals.

Per ING Direct’s website, their approach to banking is backed by ING, a Dutch-origin global financial institution that offers banking, insurance and asset management to sixty-million customers. The Cafe is an excellent complement to ING Direct’s no-frills retail model, passing the savings from a limited bricks and mortar presence onto its customers through higher-than-normal returns on their various demand and long-term savings products. Additionally, the Cafe offers added value to its customers by making the typically mundane experience of retail banking more enjoyable. But while I have been sitting here, I have noticed that customers typically come for the food, beverages, and internet, and shy away from talking about ING Direct’s financial services. There are several possible reasons for this including a hesitancy for potential customers to discuss their personal finances in public, current customers taking advantage of the ING Direct’s self-service nature and handling issues at home, or that customers simply want the Cafe’s ancillary services and aren’t interested in an online retail bank. In my humble opinion, the Cafe should offer a private room where the employees may discuss their products privately with potential customers.

Overall, the ING Direct Cafe is a unique alternative to the traditional retail banking model, and offers several needed services for the urban customers that they serve.

01.02 | my day job

01.02 | my day job
Lets talk about how I can offer a wide range of financial services to the web community and why I dropped off the grid for a few months.

Banking on the Theory of the Firm.

The other day, the undercover economist Tim Harford passed along Michael Munger’s lucid essay on the theory of the firm.

Then one day, in one firm, one manager, perhaps on a whim, outsources the computer services or janitorial services or the legal advice. Not to India or Ireland but simply to another company across town or across country. The boss signs a contract, after taking bids from several companies that provide similar services. These companies are forced by the scolding winds of market competition to provide excellent service at low cost. By looking at the different prices in the bids offered in this competition, the boss learns something. He learns how much the service costs to provide. And he learns how much money he saves by laying off the employees who used to provide the service in-house.

It’s hard to fire employees, particularly since most employees are smart enough to work hard enough to get acceptable performance reviews. The boss also has a hard time motivating the in-house staff, because watching each employee is expensive and tiresome. But it’s easy to fire contracted employees, because you just sign a new contract with a competitor. Why not let the market system do your motivation work? Let’s suppose that our outsourcing boss sees the company’s profits rise dramatically, and the stock price goes up 18% in six months. Life is good, for the boss.

Munger continues on to explain his thoughts on why too-little outsourcing will burden a firm with detrimental production costs and why too-much outsourcing will burden a firm with transactional costs that surpass cost savings from market pricing. In the Banking industry, any process that we outsource to an external service provider must fit into the firm’s operational risk framework because of the strict data privacy regulations that our firms face. An oversight by the risk management department’s auditing of the service provider, poses regulatory, legal, and reputation risks for the firm. This risk can be mitigated by paying a premium for service providers that are known for handling sensitive data and have a favorable working relationship with other risk management departments. But, it’s ultimately up to the firm’s policy makers to decide how much of that risk they are willing to take.

.info: economist

the dweezel info: how to create a budget

Every day that you open your mailbox, chances are there is at least one credit card offer waiting for you. Tempted by the gimmick of music, electronics, and air travel and we apply for the low interest rates and free balance transfers. We open up Pandora’s Box with the first swipe of the plastic.

debt dweezel info

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Fantasy Football Update

As of Week 12, the league was dead even.

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The three teams with 8-4 records clinched playoff berths and the three teams with 4-8 records were eliminated. The four teams with 6-6 records heading into Week 13 each had a 75% chance of making the playoffs. And Jelly lead the group of 6-6 teams with 1,464 points while dweezel brought up the rear with 1,207. The two teams that won their matches; based on points, would clinch spots four (4) and five (5) respectively and the two teams that lost their matches; based on points, would compete for the final spot.

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Banking in the United States - Why Regulation Works

I found this article through Netvibes and it ties in well to my series on Banking in the United States.

Online bank NetBank closed by U.S. regulators
FDIC to oversee customers’ access to insured funds
By Robert Schroeder, MarketWatch
Last Update: 6:11 PM ET Sep 28, 2007
WASHINGTON (MarketWatch) — U.S. banking regulators shut down a Georgia-based online bank on Friday due to high levels of mortgage-related losses.

The Office of Thrift Supervision closed down NetBank Inc. (NTBK) , a thrift with $2.5 billion in assets, and appointed the Federal Deposit Insurance Corp. as receiver.

The OTS said the bank experienced significant losses beginning in 2006 due to defaults on loans sold, weak underwriting, poor documentation, a lack of proper controls and failed business strategies.

It was only the second bank failure in the past three years.

It reminds me that we shouldn’t let new technology fuel our arrogance to reinvent the wheel. While the Banking system in the United States has flaws, the leadership in this country went through one humbling experience after another to get it right.

When the United States was still a colony, the financial system here was a complete mess. Unregulated, both the colonies and private institutions could issue paper money at will. Since there was absolutely no regulation, there was a likely chance that the institution would fail making your money worthless. Caught in the Revolutionary War without a way to finance it, the Continental Congress began printing its own currency. However, they saturated the market causing inflation; when too much money follows too few goods, making the money worth 1/100th of its face value.
Banking in the United States - Colonization to the Civil War

After the Civil War, it took nearly fifty years to create the Federal Reserve System — which is the dual control central Banking system that we have today. The National Banking Act was a step in the right direction, but it had its problems.

The National Banking Act was the seed that created the Federal Reserve System we have today, but the road was rocky. After The Civil War and up to World War I, 100 years of financial insolvency had severed the trust that that citizens had with their banks. This period of growth was tough because banks were still failing, the stock market was down, currency was disappearing, and people were panicking. The fear that financial institutions would fail became a self-fulfilling prophecy and for every step forward the country took two steps back.
Banking in the United States - The Civil War

The moral of the story is that before we consider sites such as Prosper and Lending Club as the saviour to central Banking, we need remember why we have this system in the first place. I read here that Lending Club is going to take on the United States banking system.

Lending Club also aims to be to the lenders rescue, positioning itself as offering investors “the ability to gain higher returns than those offered by CDs and savings accounts” while “benefiting from an asset class whose performance is more predicable than stocks and is not correlated to the stock market”

Without deposits, you lose stability and create a financial institution that has a greater chance of failing. The United States banking system has a deposit reserve in place that ensures its customers that if there is a widespread financial crisis, they won’t lose all of their money. While FDIC insurance only insures deposits up to $100,000, it is a start to rebuild your wealth.

The Banks will evolve and become net-friendlier, but will never be replaced by P2P lending.

School: commerce, drexel, economist

Banking in the United States - The Civil War

In the midst of the Civil War, banking in the United States was chaotic and unruly. With no central regulation by the states there were thousands of financial institutions and no confidence by Americans because they didn’t know if their Bank would be open the next day. In today’s financial market, it was the equivalent of banking with venture capitalists. In 1863, the National Banking Act privatized all national banks and created the Office of Comptroller of the Currency (OCC) for regulation. This created a check and balance system between private industry and the government to make the country’s money more secure. All the bank notes issued by these financial institutions were backed by an interest in the U.S. Treasury which created a transparent picture of the money supply in the country. Although State chartered banks remained, they were not a part of the U.S. Treasury and were more likely to fail than the national banks.

The National Banking Act was the seed that created the Federal Reserve System we have today, but the road was rocky. After The Civil War and up to World War I, 100 years of financial insolvency had severed the trust that that citizens had with their banks. This period of growth was tough because banks were still failing, the stock market was down, currency was disappearing, and people were panicking. The fear that financial institutions would fail became a self-fulfilling prophecy and for every step forward the country took two steps back.

School: commerce, drexel

Banking in the United States - Colonization to the Civil War

When the United States was still a colony, the financial system here was a complete mess. Unregulated, both the colonies and private institutions could issue paper money at will. Since there was absolutely no regulation, there was a likely chance that the institution would fail making your money worthless. Caught in the Revolutionary War without a way to finance it, the Continental Congress began printing its own currency. However, they saturated the market causing inflation; when too much money follows too few goods, making the money worth 1/100th of its face value.

To cure inflation, the First Central Bank of the United States was started in 1791 and was fully backed by the United States government. Any bank notes printed by the First Central Bank were redeemable in coin, which has tangible value. The bank was politically controversial and its charter (or authorization) was not renewed in 1811. Without a central bank, the states returned to authorizing their own bank notes and over-saturated the market again. With inflation running rampant, the Second Bank of the United States was started in 1816 to help finance the war of 1812. It faced the same political pressures as the First Central Bank and its charter wasn’t renewed when Andrew Jackson was elected president in 1832.

Through the civil war, the financial institutions in the united states were in a chaotic state. These banks were chartered and supervised by the states and were not heavily regulated. This created an opportunity for any institution that wanted to to print its own currency. At the peak, the United States had over 10,000+ variations of paper money making counterfeiting simple and hard to trace. As the Banks started to fail and consumer confidence dropped, the government needed a central system that worked.

School: drexel, commerce

Quick Tip: UCA Cash Flow Analysis

It is important to watch accounts receivable growth, because any increases to A/R from year to year are an immediate reduction to cash.

Links:
Cash’s effect on the balance sheet.
Traditional Cash Flow versus UCA Cash Flow