Category Archives: History

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A Letter Regarding Financial Faith

Dear Financial Community:

The failure of Silicon Valley Bank is enormously troubling. Call it an isolated circumstance all you want, but it has further stressed our nation’s dialogue. An echo of other bank failures has followed SVB down the drain. Long lines of anxious customers waiting outside banks are never something we want to see. This was unnecessary. This was bad form.

As dependability in our institutions continues to fray, I worry increasingly about where we’re headed. As divided as we are in this nation, can we withstand a true crisis of faith in our banking system? What understandable assurances are in evidence that wider contagion is not possible, that limits can be maintained on the ramifications of remarkably poor judgment?

Where does resilience meet its match and cause us to lose faith in the basics of our grand experiment in economic expansion?

Our economy works on a number of elusive factors in concert with tangible reporting. One of those is faith. If we lose faith in our banking system, the notion of ongoing growth and innovation at scale seems to go out the window. The economic miracle we have created together freezes solid and then melts into the ordinary.

Ample credit fuels dreams. Intelligently borrowed capital brings to market hopeful new companies and bolsters the expansion of existing businesses. Financial institutions, mostly banks, have to lend money for ideas to become enterprises.

Lending money as its own business only works if there is leverage in lending. We understand the rules of engagement: a bank keeps some cash on reserve and lends more than it has at any given time. This works fine as long as there are no unaddressable runs on banks.

Should redemptions exceed liquidity, banks are forced to liquidate assets at any price to return cash to depositors. Trust in the banking system and the FDIC is required of depositors to prevent runs from melting down banks. Trust is a reflection of faith. Lose all faith, lose all trust, we all lose.

Here’s ground zero: If we lose faith that banks can get our money for us whenever we ask for it, deposits cease. If there are no deposits, there can be no lending. That’s the endgame you are teasing when you fail to do your job and cautiously manage risk. Kill deposits, kill lending — that’s a death spiral in the making.

Faith is increasingly becoming a conflicted proposition. Reckless financial engineers test us every decade. The savings and loan crisis. Long-Term Capital Management. Sub-prime mortgages. Washington Mutual. Collateralized debt obligations. Lehman Brothers. One day the combined impact of these attacks on faith may succeed in fully undermining the little faith we have left.

Then the thinning ice cracks for good.

Don’t tell me this time it’s about rising interest rates that weakened your balance sheet. You’re smarter than that. You know history. You knew interest rates had to rise. Nearly free money is never forever. You’ve been making loans as long as you’ve existed. You understand liquidity. You understand it so well that you spend millions lobbying against the very regulations you need to stay in business.

There are no excuses. You take bonuses for being clever. When you’re too clever, the damage has the potential to become systemic. When faith in the system evaporates, apologies are meaningless.

A brand is a promise. When a bank’s brand fails that promise, the entire concept of for-profit banking is soiled. We are only human. Serial violations of trust reveal fragile faults in what we’re repeatedly told is a robust system. We can only experience so many failures before trust is gone.

If we come to believe that U.S. Treasuries are the only safe place to park our money, what happens to commercial lending? If commercial lending retreats, how do the entrepreneurial efforts of the next hundred years replicate the last hundred years?

Do we really want to depend on government to keep righting the wrongs of irresponsible, conniving executives? Government’s role is to referee where self-regulation has proven farcical. Regulate, yes. Adjudicate, yes. Underwrite exponential losses, unsustainable.

If government must guarantee every deposit regardless of the amount in order to maintain faith in those deposits, how can bank executives ever be trusted to take risk seriously?

There’s a lot at stake, more than many of us may yet realize. We’re shell-shocked, but we’re supposed to maintain faith. Each day it’s harder. Each day we put our own historical investment paradigm at risk.

In simplest terms: Please stop putting our nation’s future at risk and punting your unnecessary failures to manufacture compensation you haven’t earned and don’t deserve.

Seek to restore our faith. You need deposits. We need loans. Keep our money safe to put it to work properly. We’ll pay our installments. That’s the contract. It’s a virtuous circle. We all have to abide by the rules, not wait to get caught if enough oversight is available.

Please make the rules work to all our advantage and believe in something more than your own benefit. Prosperity hangs in the balance. You’re toying with breaking everything. Let’s look to another hundred years of wise lending and liquidity to continue investing in positive outcomes we can’t even yet imagine.

Yours in faith,

A dissatisfied lifelong banking customer

_______________

Photo: Pixabay

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Ten Bad Reasons Not to Vote

It’s easy to convince yourself not to vote. While the 2020 presidential election had a record high turnout for the 21st century, that still represented just 66.8% of citizens 18 years and older who participated. Midterm elections tend to yield significantly fewer voters. In many other nations around the globe, people still die for the right to play a role in free and fair elections. If you’ve managed to convince yourself that you needn’t exercise your right to vote, here is a laundry list of bad excuses that might talk you off the bench.

1) My single vote is just that; it hardly matters in a nation of millions.

Well, maybe, but what if the millions feel the same as you? There go the millions. Have a look at how close some of the vote counts have been in a number of highly contested races and you are likely to change your mind. Your vote matters.

2) I’m really busy and I don’t have the time to vote.

Well, maybe, but think about something you could trade for the time that you won’t miss, perhaps an hour of social media scrolling, television reality shows, or arguing with others about their poor election choices.

3) Voting is so inconvenient.

Well, maybe, but if going to a physical voting booth is not your thing, in almost every state there is some form of a mail-in ballot you can fill out anywhere and drop in a mailbox. If you need assistance getting to the polls, there are free or reduced-cost transportation resources available in many municipalities.

4) Most of the candidates fall into two parties and I don’t like either of them.

Well, maybe, but no rule says you have to vote strictly along party lines. Vote for the individual who best aligns with your needs, choices, and values.

5) Those ballot initiatives are too complicated and are meant to trick people.

Well, maybe, but there are plain language summaries of every initiative published online, in local newspapers, and in widely distributed brochures that can help you cut through the foggy language.

6) I don’t trust the election establishment and think fraud is deeply embedded in the system.

Well, maybe, but if you study the research, there is scant evidence of widespread election fraud, and the best way to overcome the possibility of fraud is for elections to be won decisively with huge turnouts.

7) I like identifying as being outside the system and not part of corruption.

Well, maybe, but if you live in the same nation as those who vote and you choose not to vote, the same laws apply to you. Your outsider status doesn’t exclude you from compliance with the laws others make. Letting those who vote elect officials to make laws for those who don’t vote seems like an awful concession. Where voter intimidation is in play, standing up for your right to vote seems more consequential than ever.

8) The candidates are idiots and I don’t want to endorse idiots.

Well, maybe, but even if the candidates aren’t up to your standards, you still might want to offer a stack ranking. Your opinion of relative competence can only be included in outcomes if you submit a ballot.

9) Campaign commercials, lawn signs, and debates are just icky, meaningless rhetoric.

Well, maybe, but choosing not to vote when you’re offended doesn’t give voice to your offense, it just rewards those behind the ickiness by silencing your repulsion.

10) I just don’t feel valued as a voter and don’t think elections matter to my everyday life.

Well, maybe, but if that kind of apathy becomes widespread, it becomes much easier for autocrats to seize control and take away the choices you may someday regret losing.

The right to vote should never be taken for granted. Wars have been fought and lives sacrificed to protect this sacred right. You will be compelled to pay taxes, but you won’t be compelled to vote. They sort of go together, so don’t give up your right willingly. Those who allocate your financial resources will still send you a tax bill whether or not you like how they spend your money.

Voting may seem bothersome, abstract, or elusive in representing your point of view, but it always matters and can never be surrendered. Rational and heartfelt thinking are the main hopes we have for transforming bad behavior into good behavior. Listening and learning are all part of the process of bringing positive change. Sitting on the sidelines doesn’t make a statement, it avoids one. If it doesn’t go your way this time around, there’s always next time, and the time after that, and the time after that.

Never give up hope. Protect your right by exercising it every time you can. Please, get out the vote.

_______________

Photo: Pexels

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Finding Firmer Ground

As our nation approaches another birthday, I find myself like many Americans feeling unsteady, shaken, and increasingly uncomfortable in holding onto a sense of connection to beliefs I never thought could be at risk. Shared values are essential to me, as is the ability to build consensus on difficult issues and a fundamental acceptance of diversity. A few critical points at the moment are eating away at me.

Respecting Secular Differences

The separation of church and state is something I have always believed cannot be denied in our nation. If this pillar falls, the rest crumbles with it. Of course, I know not everyone believes this, but I always thought the majority would never abandon it. Now I worry it might only take a cleverly constructed minority for it to no longer matter. That would forever undo the nation my family chose as a place to immigrate to several generations ago and call home. Is it possible today we would not be welcome here?

Thinking Through Laws

Originalism, or the notion that our Constitution can only be applied to the literal text of its authorship some two and a half centuries ago, seems impossibly flawed as an idea. This is a document that from its inception has encompassed the notion of revision as a core tenet of its foundation. It also has been amended multiple times in its existence to correct the injustices it has allowed, unintentionally or in ambiguity. Peeling back complex nuance is as critical to an argument as referencing precedent. Judges and lawyers cite case law to examine the relevancy and consistency of prior rulings, where opinions are molded into outcomes through rigorous thinking. If the U.S. Constitution does not require interpretation in its application on the endless topics it does not specifically reference—including innovations that couldn’t possibly have been contemplated in prior times—what is the purpose of higher courts?

Growing with Technology

Technology continues to advance exponentially at a rate that consistently outpaces our ability to understand its implications and effects. Without a nimble, advanced, multifaceted framework to consider legislation around innovations that previous generations could never have imagined, we will find ourselves acted upon by invention rather than fostering wise guidelines for incorporating discovery into our everyday lives. Think ahead another hundred years and try to envision what’s coming. Now try to envision how we will create daily norms around incorporating scientific and engineering achievements so far beyond our current imagination we have no concept of how we will be impacted. If we continue to apply yesterday’s rules to tomorrow’s frontier, we will fail much worse at finding common ground than we are now.

Winning and Losing

My sense is that the heightened divineness so many of us are experiencing is becoming increasingly debilitating. If our notion of winning and losing with each other does not evolve into a more palatable interchange of conflicting concepts, our inability to work through our differences could undermine this great experiment we call democracy. There are always individuals who benefit from pouring fuel on a fire and turning otherwise kind people against each other. We cannot let agendas we don’t share take precedence over the communities we cherish.

As we celebrate Independence Day in the midst of so much turmoil and dissonance, perhaps we should reflect on how blessed we could be if we rediscovered a broader sense of shared values, or at least could approach consensus on addressing our disagreements without knocking each other to the ground in the name of unnecessary polemics.

We can do better. We can be better. The alternative is staying where we are currently stuck, and that does not seem to be leading us to improvement. Commit to clearer logic, expanded empathy, and enthusiastic compassion. Let that be our muse this Fourth of July.

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Photo: Pixabay

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5 Brief Quotes That Keep Me Thinking

Are we turning the corner on a new day of reinvention and reinvigoration, or are we swapping one set of enormously complicated challenges for another?

I’ve been thinking about that a lot as Covid-19 vaccinations are welcomed by increasingly more people and the doors to a rejuvenated nation continue to open at an encouraging pace. Still, it’s hard to ignore that much of the conflict that existed in the pre-Covid world remains in the post-Covid world.

The economy is rebounding with optimism in investment, yet income inequality is as deeply embedded in our interactions as it has ever been. High profile convictions for the abuse of power have been handed down, yet racial injustice remains in the daily headlines. International travel is resuming, yet lives are being lost in battles across and within borders.

We remain too often divided and find little in the way of broad consensus that will adequately address sustainable remedies. Has the world learned anything from Covid-19, or are we picking up where we left off?

On days that are difficult to explain, I find myself looking to tiny bits of wisdom that keep me inspired and focused in good times, bad times, and when I can’t tell the difference. Here are five fragments I keep top of mind that I hope you will find perennial and inexhaustible.

“A life is not important except in the impact it has on other lives.” — Jackie Robinson

Jackie Robinson broke the color barrier in Major League Baseball. He had every reason to be a pessimist given the treatment he endured, yet he was a fighter of the most noble order and seems to me a true optimist. He had a gift that he transformed into a cause. He led by example. He teaches me there is no other way to lead than by example.

“It’s kind of fun to do the impossible.” — Walt Disney

Walt Disney was another optimist, but in a different way. He focused on pushing the imagination to unimaginable bounds. He knew beyond all financial gain that our aspirations live in our dreams, and that our stories are mirrors of our souls. He teaches me there is creativity in all of us, and nurturing that expression is essential to our fulfillment.

“All we are saying is give peace a chance.” — John Lennon

John Lennon expressed this in lyrics, so when I hear it, it is more music than words. Is it pointlessly naïve to think after centuries of combat, conquering, and attack we can make the active choice to seek peace as he suggests? To think less seems to me impossibly cynical. He teaches me that hope is at the root of getting past the seduction of old ways, and those old ways find a terrible way of repeatedly deceiving us.

“How wonderful it is that nobody need wait a single moment before starting to improve the world.” — Anne Frank

Anne Frank left the world much too soon and in the unfairest of ways, yet it is the majesty of her child’s voice that reminds us initiative to improve is always within our grasp. Her courage holds the uplifting power to bypass the contaminants of cruelty in favor of a bias toward action. She teaches me that no matter the debilitating obstacles confronting our values, we must remain true to a commitment to heal the world.

“One voice can change a room.” — Barack Obama

Barack Obama is the one person quoted here who is still alive, tirelessly active in his advocacy for our shared wellness. He remains a controversial figure and his impact on our world will be debated long after his poetic voice passes into history. He often cites another of my favorite quotes around the arc of the moral universe. He teaches me there is intrinsic reward in tackling audacious goals, and that where progress may appear thin, there is ever more necessity in maintaining navigation toward a North Star.

That’s a lot to invoke in relatively few words. I have another batch of these I may share at a later date, and of course I would love to hear the words that inspire you in these ambivalent times. The concise wisdom of others is often enough to help us make a better decision, sculpt a bad choice into an improved choice, or just fire up our engines when fuel is hidden from our view. As I get older, I seldom see the obvious clarity I once anticipated would always reveal itself.

Sometimes you have to Think Different. Sometimes you have to think harder. Sometimes a little listening helps us discover the path beyond the noise.

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Photo: Pixabay