The news these days is filled with concern that banks may not be lending enough, as if it is the banks responsibility to seek out and discover new lending opportunities whether they are needed or not. While it is true that lending plays a very important part of our economic fabric, prudent lending has become passé to some…
In fact, some of our customers at North Jersey Community Bank would tell you that we have consistently been a conservative, prudent, but understanding lender, and in many cases counseled them to borrow less, by demonstrating that their ability to repay should determine the level of indebtedness, which may have been one of the reasons for their survival in these financially strained times. Some learned that “the best transaction may have been, the one they didn’t do.” Others appreciated the fact that they could rely on us even through these times, as it is better to have a smaller line of credit that can be counted on, as opposed to having a much bigger line of credit which would ultimately and indiscriminately, be pulled because you should not have received it in the first place, or discontinue funding a project because the bank needs to shrink its balance sheet without regard for you the customer, as some of our competitors have done.
Equally as compelling is the number of potential customers who chose to go to other banks and financial institutions because the lending was cheaper, looser, without advise, and truly created “a be careful for what you wish for” scenario that has jeopardized their businesses, and may ultimately be the reason for their demise. It is these same individuals who now return to seek our counsel on how to unwind the onerous debt position that they have created.
Both of these groups now understand that part of their banker’s job is to be the “trusted advisor” that we so proudly advertise. We look not just to complete banking transactions, but to create long lasting customer relationships, and as in any good relationship, that sometimes means saying no…
This is a lesson that I believe everyone needs to understand… We have just come though a time when “no” was not an accepted alternative.. People bought houses they couldn’t afford, bought TV’s on credit, went on vacation on their credit cards, dined at restaurants too expensive because they could charge it, and for the most part, spent more than they could ever afford.
Banks, borrowers, and the economy in general, will benefit much more with a sustainable amount of debt supplied to the economy. It is the responsibility of the banks, all banks, to understand the role that they must play in order to support the economy, and businesses or consumers should seek out banks that look to share, and have a vested interest, in their growth and success…
Both will be much better off…
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