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The Garrett, Watts Report (Sept. 25, 2009)

September 25th, 2009 · 1 Comment

the-garrett-watts-report-sept-25-2009
    To Our Clients, Colleagues and Friends, 
  • Remember Western Sunrise Mortgage and its President, Cindy Sample? Cindy has been working on a novel, and she told us that she just sold it to a publisher in Texas .  The book Dying for a Date will be out in mid-2010.  It’s a murder mystery, and she writes “Aren’t you dying to know what scurrilous mortgage stuff is also in there?”
  • Meetings can be a whole lot more effective if you keep notes that are distributed to everyone who attended.  The key here is to (1) list action items, (2) name the person responsible for each one, and (3) have the date by which that action will be completed.  The minutes should be pretty short, but they do create a sense of accountability.  And they become much of the agenda of the following meeting.
  • Despite remote deposit capture, online banking and ATMs, branches still matter when it comes to gathering deposits. Here’s how many the top banks have in the U.S.

6,668  Wells Fargo

1,851   BB&T

6,109   Bank of America

1,682   Suntrust

5,203   J.P. Morgan

1,306   Fifth Third

2,850   U.S. Bancorp

1,001   Citigroup

2.606   PNC

  993   KeyCorp
      While Citi is ranked #9, they have three times as many branches outside the U.S.      as domestically.
  • Here’s one of those weird baseball items that probably has no meaning.  In 2002-2005, players had been ejected from games an average of 113 times per season.  With the season almost over, only 62 players have been tossed out this year.  Have baseball players really become that much more polite and genteel?  We doubt it.
  • We read an interesting theory that tries to explain the origins of the concept of paying interest.  In the ancient days, someone might leave his herd of sheep with someone for safekeeping while he went away for awhile.  It was expected that when he’d retrieve his herd, there’d be a natural increase from births, with this increase being the first concept of interest.  Sounds logical. 
  • And speaking of interest, bankers and mortgage bankers would have had a tough time in 1180.  We just read that in 1179 the Third Lantern Council of the Catholic Church decreed that all people who lent money at interest would be ex-communicated.  The Council of Vienna in 1311 said that to even argue that money lending wasn’t a sin would be punishable by the Church.
  • We once had a small restaurant owner as a customer at our bank.   You wouldn’t believe the number of NSF charges he’d have, and the poor guy was always borrowing money from a local loan shark to cover his bounced checks.  We’ll call him “John” to protect his identity, even though his real name was John without the quotation marks.  Anyway, “John” told us once that this guy charged him 25% a week.  He’d borrow $100 and pay back $125 in a week. One of our tellers did the math, and it was something like 11 million percent per year!
  • Okay, so Sheila Bair gets the banks to make loans to the FDIC.  How do we know that the Bank Examiners won't come in at the next exam and classify them as watch list or substandard?  Wouldn’t that be the ultimate in irony!
  • In baseball a .300 hitter is considered a star, while a .275 hitter is considered just okay. Over the course of a season with 500 at bats, the difference between hitting .300 and hitting .275 is only twelve (12) hits. That’s just two extra hits every month.    We always liked this example in motivating employees and explaining why that little extra effort matters, and why it could help them be star employees and not just so-so employees.
  • Heavyweight boxer Mike Tyson once said that “everybody has a plan until they get hit.” A very perceptive statement there, Mike.  A good plan must also have a Plan B.   However things are going in your business, things can go wrong and you need an alternative Plan.  Take it from Iron Mike, who knows what he’s talking about.
  • Hey, good news on securitizations.  Lloyds Bank plans to sell a mortgage backed security in the U.K. , the first one in 16 months. Volkswagen is selling a $698 million in debt securities backed by auto leases. And last week we saw that Citigroup was doing a $500 million securitization of credit card receivables.  Bit by bit, the world is returning to normal, isn’t it?  Jumbo securitizations can’t be that far behind.
  • More good news:  GM is going to round-the-clock shifts (24 hour operations) in three factories, in Kansas , Michigan , and Indiana . They also plan to add a second shift at a 4th assembly plant.  Just one more sign that things are starting to turn around.
  • While we’re on the subject, how about cancelling the rest of the $700 billion bail-out bill passed earlier this year?  Most of the projects haven’t been started, and it looks like the economy is righting itself without it.  The Fed seems to have opened up the markets that had shut down last year, and maybe we can just save the $600-billion that hasn’t yet been spent. 
  • Cancelling this $600 billion will, of course, never happen. Ronald Reagan once said that ‘”he closest thing to eternal life we’ll ever see is a government program.”
  • Here’s something we ran a few years ago, trying to show who has survived and who had not.  It lists the then-fifty biggest banks from the mid 80’s. The banks highlighted in red are the only ones we can think of that are still independent.  And don’t be fooled.  The Bank of America is not highlighted, meaning it is gone, and don't forget that they got bought by Nations Bank, which simply took over their name.  The same with Wells Fargo.  Although the name is unchanged, it was Norwest that bought Wells, and not vice versa. Also, we show Chemical as survivor and not Chase since we think Chemical took the Chase name but was really the surviving entity.  We probably got a bunch of these wrong, but you get the picture.

Citigroup                           

Bank of New England               

Bank of America                     

First Wachovia                       

Chase M anhattan                       

First City                                

Manufacturers Hanover         

NBD Bancorp                           

J,P. M organ                             

First Union                             

Chemical Bank                       

Republic NY                            

Security Pacific Bank            

Barnett Banks                          

Bankers Trust                       

Citizens & Southern                

First Interstate                   

First Fidelity                          

First Chicago                         

National City                          

Mellon Bank                            

CoreStates Financials            

Continental Illinois                  

Southeast Banking                 

Wells Fargo                            

Bank One                               

Bank of Boston                        

Midlantic Banks                      

First Bank Systems               

Allied Bancshares                  

Republic Bank                         

Valley National                      

MCorp                                     

Comerica                                  

Interfirst                              

Sovran                                     

Irving Bank                            

Norstar                                   

Norwest Bank                         

Society Bank for Savings        

Texas Commerce                   

U.S. Bancorp                           

NCNB                                    

Rainier Bancorp                      

Suntrust Bank                       

Hartford National                  

NC Financial                          

United Virginia                        

Bank of  New York                  

Shawmut National   

      Losing NBD Bancorp was sad. The initials stood for National Bank of Detroit, but we   loved calling them Nice But Dull.· Ever wonder why we have a Designated Hitter rule in baseball?  In 1962 Milwaukee Braves pitcher Bob Buhl set the record by coming to the plate 70 times without getting a single hit.  We remember suffering through Giants pitcher Ron Herbel who was 0-for-47 in 1964.  We used to joke that he was 0-for-1964.
  • A client of ours is in some entrepreneurs group that’s having an evening at the Playboy Mansion , and he sent us the promotional brochure.  “Members who sponsor a Playboy Playmate will have their company name and/or logo on a sash worn by the Playboy Playmate throughout the evening.   The cost is $2,000 per Playmate.   Members can also have their logo painted on the body of one of the topless models that will be at the event.  The cost to have your logo on the topless painted model starts at $500 and goes up to $5,000 depending on the location, coverage, and complexity of your logo.” Is this hilarious, or what? 
  • Can you imagine a Mortgage Bankers Association night at the Playboy Mansion , with a bunch of topless women wandering around with Bank of America or Wells Fargo logos painted on them?  You can’t?
  • We just read Undaunted Courage  on the Lewis & Clark Expedition.  What a sad end to Meriwether Lewis, a giant of a man and an American hero.  He became an alcoholic and an opium addict after the expedition was over, suffered financial setbacks and severe depression and ultimately killed himself. All his men caught venereal diseases from sleeping with Indians along the way, and one theory is that his madness was the result of end-stage syphilis. 
  • Boy, did we get attacked for saying that USC will probably beat Cal again.  We got tons of letters accusing us of actually rooting for SC.  No way, Jose.  We were just acknowledging that year after year they have an incredibly great team. We even got one from Justin Vedder of the Prieston Group, with Justin having been Cal ’s starting Quarterback a few years ago.  But, people, we still want to beat them, so enough with the e-mails already!!  By the way, the cartoon below is from the 1930’s, so the sense that USC stood for the University for Spoiled Children was around even then.
Maybe the most important item in this newsletter is the one about meetings. We’ve just sat in on too many meeting where good decisions were made, but where no one was assigned the task of carrying out that decisions and/or when a deadline was set.  We’ve also seen ones where at the next meeting, no one really could remember who had been assigned the task or when it was due.  Assign people to each task.  Set deadlines.  And take notes that show these things.  It can make a big difference in getting things done. Take care and we’ll see you late next week when we get back from Missouri . Ten Keys in Tough Times                                                              *     *Garrett, Watts & Co.  -  Joe Garrett (510-469-8633)  -  Corky Watts (408-395-5504)“Helping mortgage lenders increase revenues, control costs, and better manage risk.”



Tags: Commentary · Garrett Watts · Mortgage Market

1 response so far ↓

  • 1 Frances Hunter // Oct 2, 2009 at 6:28 am

    What an interesting roundup of events, comments, and thoughts from all over. Thank you for posting, and especially for noting the upcoming 200th anniversary of the death of Meriwether Lewis.

    The truth of the last days of this great American might never be fully understood. We have a Lewis & Clark blog (American Heroes) and will be blogging the anniversary of Lewis’s death next week on a daily basis, with stories and book excerpts. We would like to invite anyone who is interested to follow along at http://www.franceshunter.wordpress.com.

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