Every company wants to grow, but how you plan for growth can be a key differentiator for your company. At ConnectOne, we account for growth during our strategic planning and operate with the 3X principal. It’s important to think about whether today’s decisions, processes and strategies will be sustainable if you are three times the size. See more of my thoughts on growth and the 3X principal in the most recent segment of my Inc. Magazine Playback Series.
Posts Tagged ‘bank’
Today’s post-crisis world is sprinkled with glimmers of economic hope as we witness positive upticks in the auto, retail and construction industries. Economic confidence is on the rise and consumer spending and borrowing are increasing. While this is all good news, small business owners need to be disciplined when developing a growth strategy. In my recent Forbes post, I discuss why common sense is key when planning for future growth. Click below to read my full post.
Basel III, a global regulatory standard being applied to all financial institutions, is scheduled to roll out its first phase in 2015. The regulation has sparked much heated conversation amongst industry leaders since it sets one capital standard for institutions of all sizes and complexities. In my latest Forbes post, I discussed Why “One Size Fits All” Capital Rules Will Not Prevent Bank Failures, and will ultimately affect the small business owner. Implementing increased capital requirements and higher capital costs across the board will result in unintended consequences. What would be most beneficial is regulation with varying standards based on complexity and risk in order to develop a level playing field. You can also watch my thoughts on Basel III & Capital standards in my latest interview on Bloomberg TV’s “Bottom Line” below.
Recently, on Fox Business, I discussed the state of the housing market, which has been under scrutiny over the past few years. The media frenzy surrounding the housing market has left potential buyers in fear of failure in the housing market when, in fact, there are many attractive opportunities available to qualified buyers. In my latest Forbes post, I examine the four reasons the housing market is on the consumer’s side: interest rates, prices, consumer confidence, and supply/demand. You can read the full article at the link below. As always, I look forward to hearing your thoughts.
This week I had the opportunity to speak to PBS News’ Suzanne Pratt in our Englewood Cliff’s headquarters about the challenges facing the mortgage industry. She also spoke with our client Dr. Farnaz Safi, who came to us a few weeks ago after struggling with big banks. While Dr. Safi talked about her experience working with NJCB after her disappointment with a big bank, I shared my views on mortgage and credit policies and why North Jersey Community Bank is a “Better Place to Be.” You can view the full video below. I look forward to hearing your thoughts…
While everyone is calculating the real potential cost of failure to lift the debt ceiling, and a potential US debt downgrade, few are keeping their ear to the rail and listening to those reactions that are occurring not on Wall Street, but on Main Street.
Confidence, that key ingredient in any recovery, is where the destruction is really occurring. The phone calls received in our offices telegraph this issue… Should I keep more money in a liquid account? Should I withdraw cash if the ATM’s don’t work? Should I cancel the contract on the purchase of my new home? Should I stretch out my payables? Will my credit line be available?
While none of these concerns should materialize, our leaders in Washington should not be happy that their constituents are asking these questions. They have consciously put their partisan bickering and ideology in front of the need to act responsibly and do what is right to heal economy and the nation. The damage to the confidence of the small business owner and entrepreneur is immeasurable…
While everyone is focused on whether the Govt will be able to make it’s payments or not, it is the damage to the economy’s engine of growth that can not be simply fixed by a legislative act or agreement. The damage will be somewhat permanent, and will take years to undo.
Fundamentally, I find the entire process flawed with previous spending being potentially constrained by a cap voted on in the future. The fact that our legislators would use this flaw to hold the nation hostage is appalling.
In the end, I am confident that we will come to a compromise, but at what cost to our fragile economy.
Millions of Americans are struggling to stay afloat as they deal with mortgages that are technically underwater. What is missing here is a relatively easy solution that would help boost the economy and provide a life jacket to these homeowners through the use of the government’s balance sheet!
Approximately one in four homeowners in the United States currently hold mortgages that are technically underwater where the amount they owe on their loan is actually more than their home is worth now, even though the ability to pay is not impaired.
Without much fuss and possibly without any cost to the Treasury, owners with mortgages that cannot be refinanced because the loan to value on their home has dropped to levels below that which a bank can legally refinance, would now be able to take advantage of the lower rates available.
If the government provided a guarantee and the policy necessary to allow for such a program, many homeowners who currently are making their payments would be now free to refinance and in some cases reduce their monthly payments by 25 to over 50 percent. The program should not permit a government paydown or a cramdown of the loan balance; just the use of its balance sheet to allow the rate to be reset without triggering a now required principal reduction. All the government would be providing is the guarantee on the portion of the loan that is above the normal Loan-To-Value. In the event of a sale, the owner would still be responsible for any shortfall, and the government could add a warrant that if in the future the home is sold for a profit, then the government would share in the profit to cover its exposure.
That release of free monthly cash flow would benefit the economy in many ways. It would allow for:
- More spending
- More saving
- And probably most importantly, an increase in confidence.
Banks, likewise, who participate in this program could be given tax free interest income on these type of loans to incent them to seek out and make every effort to find homeowners that qualify. Those incentives should only be provided to those banks that retain the mortgages on their balance sheets in order to give the incentives to the issuing bank, and not some class of disinterested investor. The program could also include State Tax incentives that would reward banks headquartered in the respective state in order to keep all the ancillary benefits that would accrue in the work required to re-underwrite all these mortgages locally.
Banks would hire staff, lawyers would get more work, title companies, appraisers, would all benefit, and local economies would rebound. The additional pressure of contemplating strategic default would be eliminated, and home prices would stabilize.
Removing this amount of uncertainty would greatly improve the economy, and could establish a working framework on which to build the structure of resolving all the defaulted mortgages in foreclosure…The government holds a life jacket, it just needs to use it before more homeowners drown.