There is no doubt that we are in a major financial crisis: banks are failing, the stock market is back to where it was in 2003. But just how bad is the credit crisis?
We hear lots of stories — auto dealers that can’t sell cars because buyers can’t get loans, McDonald’s franchisees who are unable to upgrade equipment required for new products because lenders have cut back, Sonic cutting back on new stores because financing sources have dried up.
Evidence lags anecdote. The Federal Reserve Bank of Minneapolis just published a working paper that questioned whether bank lending to corporations and individuals has really declined. Adam Levitin, a Professor at Georgetown, raised similar questions in his blog.
Here’s what the Minneapolis Fed study claims:
- “We see no evidence that the financial crisis has affected lending to nonfinancial businesses …. and no evidence that the financial crisis has affected consumer lending.”
- All those stories that banks were scared to lend to other banks because of uncertainty about who would be a survivor? “Interbank lending is healthy”, and the claim “that the volume of interbank lending has fallen sharply is false”.
There’s no doubt that the economy is in trouble. But is the “credit crisis” really as bad as the Scary Stories on the nightly news? Perception? Reality? Not a crisis of credit but a shrinking of demand? Sensible caution based on shrinking home equity and impending recession, not a “freezing of the credit markets”?
Perhaps better to assume the worst rather than waiting to see if the lagging data proves the case.
I’ve read lots of analyses of the current economic crisis. While the Wall Street Journal, New York Times, Wharton Review and others have done commendable work, nevertheless I’ve always felt something was missing.
Here’s the best explanation I’ve seen: Subprime Math
A little humor, and some days a lot of Bourbon, will get us through!
We have been pleased to be a partner with the BAI in conferences and training programs over the years, and honored that they asked us to host a Retail Banking Strategies blog on this new website.
Please join this new community. It is a particularly worthwhile resource for banking professionals.
Artemis Strategy Group, a Washington, D.C. based communications strategy research firm, has some excellent insight on ways financial services brands can improve their position that we thought would be of interest to our readers.
How can financial services brands weather the current financial storm and emerge even stronger?
Events are moving critically fast in world financial markets today. Even with the latest government responses, the world is struggling with the twin impacts of a massive loss of liquidity and a commensurate loss of confidence on the part of investors, companies, the public, and even governments.
The loss of trust in the financial sector leads to one big question:
How does an organization build and maintain trust in its brand when their audiences are uncertain, preoccupied with financial uncertainty, and people are skeptical about whom they can trust?
We have four principles that take on even more importance in today’s rocky environment. Continue reading
Years ago, in his seminal book In Search of Excellence, Tom Peters espoused continuous improvement through “management by wandering around”. Too few of us practice the art of managing from the front, instead of pushing from behind. It’s so easy to get stuck in the office, or on the Executive Floor. “I wish I had more time to spend in the field, but there are too many other demands.”
Want to lead your bank to greater heights in service deliver? Here are a few thoughts. Continue reading
Sam Black, our expert on Call Centers and Customer Service Delivery, contributed this post. Comments or suggestions? Contact her.
In this increasingly difficult and worrisome economy, financial services organizations need to be even more in tune with Customer Service delivery. It is critical that banks and credit unions ensure that customer relationships are maintained and customer problems are handled professionally. Here’s a few tips for customer care in these turbulent times. Continue reading