When I worked in banking, I learned something that has stayed with me my entire life, and it is this: I really, really don’t like having guns stuck in my face.
It was the late 1970s, and I was working as a loan collector for Pioneer Bank, a small institution with just three offices in Greenfield and Northampton. I thought I was so cool. I was 19 years old, and I had my own office. Well, since it was a part-time job, it was an office I shared with another young guy, but only one of us used it at a time. So whenever I was there, it was my office.
I was too naïve to realize that the VPs were sitting out on the floor, and I was sitting in an office for only one reason: You do not want customers to hear you haranguing deadbeats to pay the loan. It goes against the warm, community-spirited image the bank has built so carefully.
Community Collections
This year, the nation’s biggest banks came under fire for sloppy, even shameful, debt collection practices. American Banker, a trade publication, had an outstanding three-part series on bank credit card collection practices, after which JP Morgan Chase said it would change the way it went after bad credit card debt.
The big banks, it turns out, do a lot wrong when it comes to collecting on bad loans, whether they’re for mortgages or Mastercard. A big reason for that, I suspect, is because of the sheer volume of debt they’re dealing with. They often outsource collections to companies that aren’t equipped to handle the sheer mass of work. And frequently, it turns out, the big banks don’t have their own files in order, so they give the collectors shoddy information to work with.
A couple of weeks ago, the Consumer Financial Protection Bureau (CFPB) disclosed that consumer credit reporting agencies are beholden not just to credit card information, but specifically to information supplied by the biggest banks.
“Most information contained in credit files comes from a small number of large banks and other financial institutions,” the CFPB said on Dec. 13. “In fact, the top 10 data furnishers provide 57 percent of the trade lines coming into the credit reporting companies. The top 50 furnishers provide 72 percent. And the top 100 furnishers provide 76 percent.”
When consumers complain about credit reports being wrong, or about collection tactics being heavy handed, they’re talking about the biggest banks in the country. They’re not talking about community banks.
Community banks do need to be more careful about their collection tactics, because people talk to each other in communities. Just as Pioneer Bank didn’t want me out for the community to see, local banks don’t want a bad reputation for how they collect delinquent loans.
Being a loan collector is a tough job. You’ve got to get the person on the phone, and you’ve got to persuade them to start ponying up the money. Reaching people who don’t want to be reached is an art form. Just like the violinist who took out a $600 personal loan to buy his instrument to play notes ever so sweet, I was also an artist in stringing him ever so lightly to pay back the notes he’d signed.
If consumers feel stressed getting collection letters and calls, stop for a moment and consider the bill collector. These are not sadistic people who get up each morning anxious to squeeze a little green out of someone who doesn’t have any. They are merely folks trying to find the most expeditious way of settling outstanding debt.
Sometimes, though, that comes down to having to go in person and re-possess a piece of collateral. I had the unenviable task of taking back a few cars, but the last one I attempted was the end of my car repossession work. It was a summer day, and there was a dirt driveway leading to a small house in Montague. It was a classic white farmhouse, with a small front porch and a wooden screen door. I knocked on the door with my partner, only to have it kicked out in front of me, with a shotgun put to my face, and the gun owner telling us we were not going to be taking his truck that day.
We politely and quickly excused ourselves, and he kept the gun trained on us until we were out of sight. Then we drove to the police station, and they took it from there.
We did get the car that day after all. And an appreciation for the rigors of debt collectors at community banks.
No one likes being on the end of a phone call from someone trying to collect a debt. But those folks who owe the money? They can be pretty scary, too.
Vincent Michael Valvo is CEO of Agility Resources Group LLC. He can be reached at vvalvo@agilityresourcesgroup.com
