the PRIVATE BANK of CALIFORNIA

David's Book of Why.

A Message from Our CEO

10.19.11

I have never read “The Jewish Book of Why”.  But I had been thinking about it a lot lately, especially as we approached the Jewish New Year and the High Holy Days. This acclaimed book presents an understanding of why we have some of the great Jewish customs and traditions.  It asks, and answers, such questions as:

-  Why does the woman light the candle on Friday night?                                                                                             

-  Why are flowers not often found at Jewish funerals?                                                                                                 

-  Why is the glass broken at the wedding feast?

There are some questions about gefilte fish, most of which remain unanswered (by even the wisest) to this day. But, alas.  I have not read and do not own the book (a Christmas present, perhaps?)  The mysteries remain.

In the meantime, there are a whole lot of crazy, dare I say meshugena, things going on in our economy and banking that I can’t begin to understand.  They make gefilte fish smell like Chanel No. 5. Oy!!!  I’d sure like to have an answer book for the things that are troubling me.

So, I am asking:

1) Why does Ben Bernanke want to be Alan Greenspan?

Or worse yet, Lawrence Welk or a kid’s bath soap?  You know, Mr. Bubbles?  Does the Fed really think that lowering long rates is going to make business and people any more confident in what is going on out there?  Or is the gismo du jour going to accomplish the same thing?  Why do we need ‘Operation Twist” (which is the name of the current gismo)?  Wouldn’t some certainty be more helpful? 

2) Why can’t DC truly help or at least get out of the way?

I am thinking that the latter is the recipe for the former.  Have you heard of the SAFE Act?  It is embedded in Dodd-Frank.  It makes loan officers that “sell” 6 or more mortgage or home equity loans register with the government, get a background check, get finger printed, etc.  That applies to people making loans to your average guy or to your Warren Buffets, which is basically what TPBOC does.  Or how about the strings that were imposed on TARP recipients?  Or how about the Small Business Lending Fund, which is designed to encourage banks to lend?  It requires that SBLF banks have their borrower’s attest that they aren’t child molesters.  I know one bank that declined to enter the program rather than subject their customers to this “process”.  Many of these ideas are noble but they aren’t going to foster growth.  And having banks enforce laws that are best left to regulators and the FBI, among others, is not only costly but very ineffective.  This says nothing about the other looming potential obstacles such as the rest of Dodd-Frank, the pending implementation of health care reform legislation, a tax code, etc.  A plethora of uncertainties.

3) Why do bankers, in general, get blamed for the things that investment banks and big banks did?

The housing crisis was caused by a lot of things—aggressive mortgage companies, lax regulatory standards, easy money (there are those pesky bubbles again), people biting off more than they can chew, the securitization of debt (where lenders and borrowers became disconnected), greed, Glass-Steagal on steroids, etc.  But painting community banks like TPBOC and our peers, who truly know and service their customers and try to do so with integrity, with the same brush is like blaming Vince Scully for the 2011 opening day atrocities of some ignorant fans.  Yet it happens every day in the press, through regulations, etc.

4) Why doesn’t the average Joe Citizen understand how we got into this mess?

We all borrowed too much money (and some unscrupulous lenders lent it) at a time when personal income was not growing.  You can look it up, but a couple of guys named Goldman and Sachs showed me the numbers.  So, we bought big houses, took fine trips, paid thousands of dollars for baseball camps - you name it.  All things that we weren’t earning the money to afford.  Guess what?  As Led Zeppelin says, “The piper’s calling you to join him” and you’ve got to pay-up.

That’s where we are.  There is no easy way out.  No new regulation is going to solve it. No QE 18. No 2,100-page bill.  No complex tax code revisions.  And the sooner everybody “gets it”, the sooner we may be able to get past the knee-jerk activities and get on with the long, hard task of getting back to business.

That is what we are going to do at The Private Bank of California.  We are going to service our clients, take care of our employees and our shareholders, and do what’s right for the community.  Our shared values are integrity, team work and excellence.  So when you ask us “why”, you will get a straight answer, from everybody, all the time.  And we will admit and correct our mistakes, unlike some of our brethren that have their hands on the tiller right now.  Or is it in the till?  Or is it both?  Scary, because this is not a political issue; it is a moral one.  Why is that?

As we ponder these ‘whys’, I hope all of our Jewish friends enjoyed the time with family, their matzo ball soup and brisket and, yes, even their gefilte fish.  And perhaps we could all benefit from picking up a copy of  “The Jewish Book of Why?”.  Regardless of faith preferences, it may help us appreciate the great gifts and traditions these people have given the world.  In these times, we could all learn from the values, morals and precepts they espouse.  It might even help solve our problems.  Why not?

To everyone, have a Happy, Healthy and Prosperous New Year.

(NOTE: Thomas Cahill wrote a book called “The Gifts of the Jews”. It is very, very good and will accomplish much the same, if not more, for its readers. This one I have read.)

David R. Misch

The Private Bank of California