Nancy Bush

NAB Research, LLC, is a Georgia-based consulting firm specializing in providing strategic advice and market intelligence to financial industry participants. NAB is not a registered investment advisor and is not affiliated with any brokerage firm or hedge fund.
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Bank Statements

Damage

I must admit that-for the first time in my life that I can remember-it's tough for me to contemplate the future of America. I don't remember feeling this way during the Vietnam War (perhaps because I was too young to really understand it), or during the Carter presidency and the shameful Iran hostage crisis, or in the days immediately following September 11, 2001, when my pride in my country immediately overwhelmed my grief and numbness at the loss of friends and the destruction of a part of my life. I have always felt that my country was the best place to be, that we would always continue to move forward in our actions and attitudes, and that somehow Americans would always manage to come together for the good of our beloved nation.

I don't feel that way any more. While it would be easy to say that this horrific Presidential campaign has led to the feeling of dread that I and many others feel each morning-when we all hesitate to turn on the news due to our concerns over what may have happened overnight-I really don't think that it's that simple. The sleaziness and vulgarity of Donald Trump and the mendacity and duplicity of Hillary Clinton are not sufficient to explain the national mood that has existed for some time now and the sudden realization by many that our nation is being irreparably harmed. The two candidates for the presidency may have their part in confirming this mood of national broken-ness, but I see their obvious shortcomings as symptoms, rather than causes, of our state of seemingly perpetual anger and defeatism.

Is it simply the issue of income inequality that has brought us here? There is no denying that the growing differential between the incomes of the middle class and that of the upper end of the income spectrum-a condition that is not new but has been increasingly evident over the last three decades, at least-is playing a large part in this national division. And the degree to which the rewards have gone to the "coastal elites" and have ebbed away from those in rural areas and in the nation's former centers of manufacturing has produced a country with real economic ghettos. The Financial Crisis only exacerbated trends that had been ongoing, and in my opinion, the response of the Federal Reserve to the crisis-i.e., ever-lower interest rates and QE-has made a bad situation even worse by devaluing the assets of small savers and enabling asset bubbles yet once again.

Could anything have headed off today's dreary state of affairs? Obviously, it would have been good to have had national leaders who were sufficiently enlightened a couple of decades ago to have foreseen that the forces of globalization would bring about huge changes in American competitiveness. It would have been good to have been able to forecast the decline of the manufacturing sector and the gutting out of the nation's industrial heartland, and the loss of jobs that would come with it. The rise of the tech sector and the skills that are required for proficiency there-mathematics, coding, design, etc.-should have been emphasized from elementary school onward. All this we now know--how sad that it has taken so much anguish to get us to this realization, and how awful it is to be this far behind the curve.

It has become evident to me-especially in these last days, as Donald Trump has continued to poison the well with his ominous warnings of a "rigged" election-that the next four years will be tough ones indeed, both for individuals and for our society generally. The assumption of the Presidency by Hillary Clinton will simply revive the animus that took hold during her husband's term, and I'm not sure that she can do much about that. I would hope that she would move quickly and decisively to try to negotiate a few key deals with the Paul Ryan-led House-such as a deal on corporate taxes-and would quickly clarify her somewhat ambiguous stance on large outstanding trade pacts, like the much-maligned but critically important Trans-Pacific Partnership. While neither the far left or the far right will be mollified by these moves, the vast middle segment of American voters--and corporate America, certainly--would welcome some concrete signs of progress in governance.

It would be great if the American financial sector could play a part in healing America, but it looks like that is not to be, at least for the immediate future. The growing scandal at Wells Fargo has shown to the American public-yet once again-that the nation's large banks cannot be trusted to be stewards of their depositors' money or to tell the truth to their customers. As a result of the massive fraud that occurred at what was thought to be one of the nation's best banks, the regulators will now begin to include "culture" as one of the criteria upon which they base regulatory exams and CAMELS ratings. (I cannot over-emphasize how dangerous the inclusion of this amorphous and subjective topic into banking regulation may turn out to be.)

Richard Davis, the CEO of U.S. Bancorp--widely regarded as one of the nation's best and most-trusted bankers--gave a full-throated defense of the banking industry's (and his company's) ability to project a message of hope to the American public at USB's Investor Day on September 15. Well, good-bye to all that. Mr. Davis' defense of banks' ability to do well by doing good is now officially blown out of the water, and every banker with whom I have spoken in recent days (from banks both large and small) has conceded that the industry will now need to go through another long period of reputation-building-or rebuilding, depending on your perspective-even as the damning revelations from Wells Fargo continue to spew forth.

Damage, indeed--there are now no institutions left in this country in which the public may wholeheartedly trust and believe. Not the government, not the financial system, and certainly not the media. Religious institutions and the military remain high in the regard of Americans, but those two things are not a sufficient foundation upon which to rebuild a nation. For that we need a functioning Congress, an Executive who sees the mental health and wellness of the nation as a priority and is willing to set aside immediate partisan considerations in order to achieve that goal, and a popular press that is willing to rise above the mob mentality and to truthfully and fully report the news without adding its own unnecessary spin. As I said earlier--good luck with all that.

And as for the financial system generally and the banks specifically--I barely know where to start. I think that the first imperative for all banks should be to look intently at their sales methods, and that if they are running their banks on a "product-push" basis (in the words of Jim Cherry, CEO of Park Sterling) then they should rethink that strategy, and fast. I also strongly recommend that every bank compose a "statement of purpose" that outlines--with as many specifics as possible--its reason to be, both for retail and commercial customers alike. Such a statement should present tangible ways in which the bank can help customers of all stripes, and each bank's senior managers should be tasked with putting forth these plans at every opportunity. And expanded community outreach is a must, with expanded services to lower income and minority segments that go well beyond the CRA guidelines.

As for all of us citizens--well, we're on our own, for the immediate and medium term at least. For me, that means that I keep my financial affairs in order and that I emphasize the safety and security of my home and family. I think that it also means that I must take a realistic look at my community, see what (and who) needs help, and make sure that my time, energy, and money are being spent for the maximum benefit of those who need it most. In short, we all need to relearn the lessons of citizenship--including modesty and integrity--and perhaps from these little acorns, a mighty oak can (once again) flourish.