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<\/a><\/p>\nTo Our Clients, Colleagues and Friends,<\/p>\n
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- From a client who\u2019s a very senior officer at a community bank:\u00a0 \u201cExaminers are hammering everyone about loans with ridiculous standards, i.e. if it is weak it is bad, if it is OK it is bad, if it is good we must be missing something because it has to be bad.\u00a0 If you don’t have an appraisal that was done one week ago, it is too old and they discount it.\u00a0 If you have a current appraisal, it must be based on unrealistic comps.\u201d The banker who wrote this is very smart, very experienced, and very much on target.<\/li>\n
- We just finished Jesus of Nazareth<\/em>,\u00a0 a 1925 book by Jewish scholar Joseph Klaussner. Toward the end, he writes \u201cIf we omitted the miracles and preserved only the moral precepts and parables, the Gospels would count as one of the most wonderful collections of ethical teachings in the world. If ever a day should come and this mythical code be stripped of its wrappings of miracles and mysticism, the Book of the Ethics of Jesus will be one of the choicest treasures in the literature of Israel for all time.\u201d\u00a0 We agree.\u00a0 But what Klaussner apparently didn\u2019t know is that Thomas Jefferson had already done it.\u00a0 We read Jefferson\u2019s Bible a few months back and Jefferson had done precisely what Klaussner wrote about 125 years later.<\/li>\n<\/ul>\n
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- We\u2019ve been critical of Boards of Directors for approving management plans to go into subprime lending, but we\u2019d like to make one thing clear.\u00a0\u00a0 We don\u2019t really fault these Directors for deciding to allow management to move into subprime lending.\u00a0 Directors are human, and people often make decisions that look foolish only in hindsight.\u00a0 So we don\u2019t fault them for the decision per se.<\/em>\u00a0 What we\u2019re concerned about is whether they did proper due diligence and analysis before<\/em> making the decision.\u00a0 We\u2019re less concerned with bad decisions and more concerned with how<\/em> they made that decision. Bad decisions can be excused, but not bad decision-making practices.\u00a0\u00a0 Does that make sense?<\/li>\n<\/ul>\n
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- With all the discussion about doing away with or merging regulatory bodies, how about this:\u00a0 Instead of one regulator for national banks, one for state banks and one for thrifts, how about three regulatory bodies based on the size of the bank?\u00a0 It doesn\u2019t make sense for the OCC to regulate $2 trillion Bank of America as well as a $200 million community bank, just because the smaller one happens to have a national bank charter.\u00a0 How about one regulator for all banks under $500 million in size, a second regulator for all banks between $500 million and $5 billion, and a third regulator for all banks over $5 billion?<\/li>\n<\/ul>\n
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- Do you like Neil Young\u2019s music? One scientist liked him so much that when he discovered a new species of spider recently, he named it Myrmekiaphila neilyoungi<\/em>.<\/li>\n<\/ul>\n
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- What\u2019s a sudden<\/em>?\u00a0 When someone says, \u201cAll of a sudden, the Examiner-in-Charge decided to give us a Cease and Desist\u201d we know generally what he means, but do we really know what that noun sudden<\/em>\u00a0 means?\u00a0 Isn\u2019t all of a sudden<\/em> kind of a weird phrase?\u00a0 What\u2019s wrong with just saying \u201cSuddenly, the Examiner-in-Charge decided to give us a Cease & Desist\u201d?\u00a0\u00a0 Actually, the proper English is \u201cAll of a sudden, the sunuvabitch decided to give us a Cease & Desist.\u201d<\/li>\n<\/ul>\n
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- There\u2019s a proposal in California to re-write the state\u2019s unwieldy constitution, and one of the many components of the plan is to require drug testing for all members of the state legislature.\u00a0 Isn\u2019t that hilarious?\u00a0 Don\u2019t you love it when hypocrites can be uncovered.<\/li>\n
- Speaking of\u00a0 California , prison guards here can retire at 50 with a pension equal to 90% of their final years pay. There are hundreds of prison guards who make well over $100,000 a year, many who make over $150,000 with overtime. We wrote Arnold and asked how many made six figures, but we never heard back.<\/li>\n
- We just read that Mary Travers of Peter, Paul and Mary died sometime last year. If you\u2019re seeing this for the first time, doesn\u2019t it kind of make you feel like a part of an era has passed?<\/li>\n<\/ul>\n
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- Cal professor Jack Gallant can literally read your mind.\u00a0 He shows thousands of images to people while they\u2019re in an MRI machine that reads brain patterns, and he measures and records the brains response to each image.\u00a0 Later, he can ask you to think of something, and by measuring your brain waves through MRI\u2019s, he can know with complete accuracy what you\u2019re thinking about by matching brain wave patterns. While fascinating, it\u2019s also scary.\u00a0 You can only imagine what this could be used for 10-20 years from now.\u00a0 On the other hand, you don\u2019t need all this hi-tech science if you have teen aged boys. You already know what they\u2019re thinking about, or you can at least narrow it down to 2-3 things. Maybe 1-2.<\/li>\n
- Remember we quoted Fred Jackson that \u201cIf you get your deposit pricing right, you\u2019ll find lots of good loans to make\u201d?\u201d meaning you won\u2019t have to chase higher risk loans for their yield.\u00a0 At the old Chino Valley Bank in Southern California , now CVB Financial, the cost of their deposits was 53 basis points last quarter. When your deposits only cost you 53 bps, you can make lots of money making only the safest loans.<\/li>\n<\/ul>\n
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- For all of you who are starting to plan for your June wedding, yes, getting married on a beach in Hawaii sounds romantic, but as the photograph shows, you might want to consider a church.
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<\/a><\/li>\n<\/ul>\nOn the other hand, getting married in a Church doesn\u2019t necessarily mean that everything will be perfect.\u00a0 See http:\/\/www.youtube.com\/watch?v=BLUYo-Nc4zg&feature=related<\/a> It\u2019s short and funny.\u00b7 The photo above is interesting. The bride looks full of hope and love, but what\u2019s going through his<\/em> mind? (1) He might have just spotted the topless person to his\u00a0 right and is wondering if it\u2019s a he or a she, (2) he\u2019s wondering when his wife will discover that his FICO score is on the wrong side of 500, (3) he\u2019s a bank CEO who\u2019s wondering how he\u2019ll tell his Board he just got a CAMELS-5 or (4) he could be looking at his wife\u2019s sister in the front row, wondering what she looks like naked.\u00a0\u00b7 Plans for our East Coast Client Appreciation Dinner are coming along. We\u2019re looking at locations in Washington D.C. and Baltimore.\u00a0 We\u2019ll keep you posted.\u00a0\u00b7 And can we talk about John Edward\u2019s love child for a moment? Was it the New York<\/em> Times<\/em> that broke the story? The Washington<\/em> Post<\/em>?\u00a0 Heck no.\u00a0 The National Enquirer<\/em> has been writing abut this for months, and if you think newspapers are no longer relevant, look no further than this.\u00a0 No industry that could break a story of such national importance will ever die.\u00a0 Put another way, is this a great country, or what?<\/p>\n
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- To prove that\u00a0 we\u2019re serious lads here at Garrett, Watts , we\u00a0 list the names of some famous people \u2013 and what their names were before they changed them.<\/li>\n<\/ul>\n
- For all of you who are starting to plan for your June wedding, yes, getting married on a beach in Hawaii sounds romantic, but as the photograph shows, you might want to consider a church.
- What\u2019s a sudden<\/em>?\u00a0 When someone says, \u201cAll of a sudden, the Examiner-in-Charge decided to give us a Cease and Desist\u201d we know generally what he means, but do we really know what that noun sudden<\/em>\u00a0 means?\u00a0 Isn\u2019t all of a sudden<\/em> kind of a weird phrase?\u00a0 What\u2019s wrong with just saying \u201cSuddenly, the Examiner-in-Charge decided to give us a Cease & Desist\u201d?\u00a0\u00a0 Actually, the proper English is \u201cAll of a sudden, the sunuvabitch decided to give us a Cease & Desist.\u201d<\/li>\n<\/ul>\n
- Do you like Neil Young\u2019s music? One scientist liked him so much that when he discovered a new species of spider recently, he named it Myrmekiaphila neilyoungi<\/em>.<\/li>\n<\/ul>\n
- With all the discussion about doing away with or merging regulatory bodies, how about this:\u00a0 Instead of one regulator for national banks, one for state banks and one for thrifts, how about three regulatory bodies based on the size of the bank?\u00a0 It doesn\u2019t make sense for the OCC to regulate $2 trillion Bank of America as well as a $200 million community bank, just because the smaller one happens to have a national bank charter.\u00a0 How about one regulator for all banks under $500 million in size, a second regulator for all banks between $500 million and $5 billion, and a third regulator for all banks over $5 billion?<\/li>\n<\/ul>\n
- We\u2019ve been critical of Boards of Directors for approving management plans to go into subprime lending, but we\u2019d like to make one thing clear.\u00a0\u00a0 We don\u2019t really fault these Directors for deciding to allow management to move into subprime lending.\u00a0 Directors are human, and people often make decisions that look foolish only in hindsight.\u00a0 So we don\u2019t fault them for the decision per se.<\/em>\u00a0 What we\u2019re concerned about is whether they did proper due diligence and analysis before<\/em> making the decision.\u00a0 We\u2019re less concerned with bad decisions and more concerned with how<\/em> they made that decision. Bad decisions can be excused, but not bad decision-making practices.\u00a0\u00a0 Does that make sense?<\/li>\n<\/ul>\n