There’s a reason New Year’s resolutions rarely succeed – quite simply, it’s because the resolutions themselves are all too often dependent on things entirely out of our control.
Resolved to losing five or 10 pounds in 2011? That’s great, but wishing you were a little less hefty doesn’t make your favorite pizza any less delicious or tempting. In fact, it’s been proven that denying ourselves what we crave (delicious pizza) only makes us want it more, thereby increasing the odds we’ll cave in and eat twice as much pizza before February rolls around.
The same thing holds true in business, of course.
On Dec. 31, 2007, we’re sure just about every bank in the country resolved to be more profitable in 2008. But a funny thing happened on the way to Fat Margin City – Lehman Bros. collapsed, AIG became essentially insolvent, and Fannie and Freddie limped into government conservatorship.
Soon, through no fault of their own and every well-meaning resolution aside, banks were left holding worthless paper and unable to access the capital that was and is the very lifeblood of their industry.
So instead of resolutions, we prefer to create wish lists. A wish list is precisely that – a list of those things that seem so unlikely it might take a miracle for them to happen. But wishes – unlike resolutions – do, occasionally, come true.
So here’s our wish list for 2011, in no particular order.
Tops on our list – a regulatory time out. Just look at the alphabet soup of new regulations and reforms introduced in the past few years: CFPB. TILA. RESPA. TARP. CPP. HAMP. Dodd-Frank. Given all that, it’s a wonder we can legally continue conducting business at all. And it seems certain there’s more to come.
So is it too much to ask, in 2011, for a little breathing room? Some time to digest what’s been thrown at us, weigh the impacts and determine an effective, and cost-effective, course of action – before we’re bombarded with still more rules, regulators and disclosures?
Next, how about someone invents an accurate risk calculator for us? The current environment has turned traditional risk calculation on its head.
Just when lenders thought they could trust a borrowers’ credit history as an accurate barometer of their risk, we run headlong into the phenomenon of otherwise prime borrowers nevertheless walking away from their irretrievably underwater homes, leaving banks holding the bag.
On the flip side, of course, are the hardworking and honest borrowers who just want a home of their own, denied by artificially strict underwriting guidelines or arbitrary rules dictating if and when they can choose to open new lines of credit.
It’s enough to make any self-respecting loan officer tear their hair out.
Finally, we’re adding to our list something that perhaps involves the most wishful thinking of all – sound policy that doesn’t pit one industry against the other, or sacrifice the public in the name of profits. The stigma of rental housing must be removed, at the same time as home affordability is maintained. These goals are not, and should not, be mutually exclusive.
The massive, policy-driven housing and homeownership expansions of decades past, while steeped in nostalgia, have proven to not be the solution in 21st Century America. Rather, a new policy is needed – policy that neither demonizes banks nor puts Joe Blow on a pedestal. It doesn’t need to originate from the left or the right, or appeal to our populist, elitist, libertarian or any other agenda. It simply needs to work.
These are our wishes for 2011. We understand they may be fanciful. But where’s the fun in a life without wishes? Who knows if they’ll come true, but here’s to hoping.
In the meantime, Happy New Year.
