The View from the Cheap Seats

by Scott Vandeventer, ECCU Chief Operating Officer
(Originally published as a post within ECCU’s former e-publication, The Buzz.)

Shakespeare’s plays are a perennially popular phenomenon for many reasons, particularly when presented in the style of the Elizabethan period—theatre and all. And not just because of the stage.

Look out at the audience. You see people with front-row seats, box seats, first balcony, second balcony. And then that most aerobic of theatrical viewer travails—the standing-room section—the seats so cheap there are no seats. See the play but do it on your feet and you get the Bard’s wit for a fraction of the cost.

All this, of course, leads to the question of how much you have to pay for the best in financial theatre—The Bailout of 2008. I believe the gross receipts in this production are presently $700 billion and, for the big banks, throw in your first-born child. BofA, Wells, and seven other of the nation’s elite banks got front-row seats last week (along with a deal sheet and an unblinking ultimatum—sign here!).

But, how’s the view for those financial institutions (FI) humble and thrifty enough to be relegated to Standing Room Only (SRO)? During intermission this week, I had a phone call with just such a group of community bankers and credit union executives from around the country. When asked how they were enjoying the show, I heard: “A lot’s been going on” and ”We’re all impressed by what we are seeing.”

“You guys OK?” I asked. To everyone’s surprise, all said, “Well, actually, we are!” Each one expressed “why” differently, but at the core we were sharing a common spirit. We’re spectators watching events unfold with the major players in the financial markets. Our institutions, while aware of and in tangible ways impacted by events, simply are not experiencing the kind of woes we’ve been watching on the stage or in those front-row seats.

SRO can be an insulating place—some of us kind of like it there. You’re out of the main field of view, less affected by the stage, actor spit, and flying swords….engaged but at a comfortable distance. More objective.

So how come smaller institutions are less affected by this mess? Simply put, we didn’t deviate from our core competencies. We stayed within the bounds of what we understood to work for our institutions, and we let others play in the rarified air of subprime home loans and their derivative investments. And though we’d all acknowledge that some of our SRO brethren cheated and snuck into the better seats, they are now paying the price. A few—very few—are even failing.

The vast majority of us are simply going along, making the kind of adjustments that good management makes when things change (shifting your feet and not locking your legs). We still have a mission. We are still trying to serve our customers well in the face of these changing circumstances.

And now we have a real-life lesson that affirms the wisdom of sticking with what we know and understand. None of us ever wants to be given that front-row seat, even if it’s offered. “We’ll stand, thank you very much!”

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