The New Normal
by Mark G. Holbrook, ECCU President/CEO
(Originally published as a post within ECCU’s former e-publication, The Buzz.)
As people talk about how the current economic crisis is changing the financial landscape, the conversation usually gets around to the “new normal.” What will our financial system look like when the dust settles?
Of course that’s the $700 billion question. We’ll see a lot more shaking out before the bailout and other drastic measures finally provide an answer. Until then, however, we can identify some changes that are here to stay.
Vocabulary has changed. New terms have permanent homes in our everyday language. Can’t you already hear adolescents saying, “Oh, that’s like so subprime”? Besides SUVs, we now have SIVs (structured investment vehicles). And of course walkaway forever means more than the smart way to respond to a bully.
Banking has changed. The concept of “safe investments” has been redefined as we’ve learned that mortgage-backed securities aren’t very secure any more. And while leveraging a little is a good thing, we now know that leveraging too much can be bad, even catastrophic.
Even as the concrete is setting around these and other changes, we’re also being reminded that some things should never change. Like old-fashioned principles of sound banking, which remind us:
- Not to presume upon the future.
- That making good loans makes for a strong financial institution.
- That making reckless decisions with other people’s money can be disastrous.
Nobody likes to see the words “financial” and “crisis” in the same sentence. So as the “economic downturn” runs its course, we do well to make room for some old-fashioned banking in the new normal.
Many ministries are also facing new realities. You probably already noticed that two of the principles that should never change for banking also apply to ministry. These days, for example, presuming that giving will keep rising can be dangerous, especially if you make spending decisions based on that presumption.
Better to stick with the biblical principles for managing ministry funds that have been keeping ministries strong through one economic downturn after another.