Article by Roger Schlueter, MBA
You would think in this day and age that Prejudice and Racism would not exist. They are alive and well but not open and direct but hidden and subdued. Usually a borrower will encounter this attitude of Prejudice and Racism in smaller institutions. Most of the bank boards of smaller banks are made up of White Males and they meet in closed meetings. These are not public instituions and as such are not required to have any openness in their meetings. The attitudes they express may have some basis in their experiences in their past experience. These meetings are Loan Board Meetings and they can have varied personell depending on the bank and the amount of the loan.
DISCLAMER – MOST BANKS, SMALL AND LARGE ARE MOTIVATED BY THE COLOR OF MONEY. THEY MAKE LOANS TO MAKE PROFITS AND COULD CARE LESS IF THE BORROWER WAS PURPLE OR ORANGE, ALIEN OR CREATURE. THEY ARE DRIVEN BY THE FIRST AND SECOND WAY TO GET PAID OUT ON A LOAN. THE FIRST WAY IS TO GET PAID OFF FROM TIMELY PAYMENTS OF PRINCIPLAL AND INTEREST AND THE SECOND WAY OUT IS TO SELL THE COLLATERAL AND PAY OFF THE LOAN. MOST BANKS AND FINANCIAL INSTITUTIONS ARE NUETRAL TO ANY DIFFERENCES IN THE TYPE OF BORROWER, THEY JUST WANT TO GET THEIR MONEY BACK WITH INTEREST IN A TIMELY MANOR.
I an going to give you two examples of Prejudice or Racism that I have incountered in my career working with several banks in the midwest area of the country. These examples are not neccessarily indicative of the ongoing decisions made by these banks but is an indication of thinking that should not be brought up, even in joking or good natured humor.
Example Number One: IS HE CANADIAN ?
I was in a Loan Board Meeting and I had a Loan Proposal that was a Single Family Home that was being Bought for the Purpose of Renovating and Reselling. I was new to this bank and was nervous because I had only been with the bank a short time. This project was in the North County / North City area of the St. Louis Region. St. Louis has the mississippy river on the east side and the city ends its boundarys at that point. The core city is on the east side next to the river, so if you talk about areas of the city, you need only to look at the West, North, and South side of the city. The West and South of the city are predoninately white and the north side of the city and county are predominately black.
I presented my loan for an individual that I did not know well. I knew his cousin and was going by that cousins recomendation. The home was a single family in the north side of St. Louis. The loan was not a “Slam Dunk” and I was literally talking the Loan Board into lending to the borrower.
One of the Board Members asked if he was Canadian. How the hell should I know, I knew he was a Citizen and I was sure he wasn’t a Canadian. I may be naive, but I really did not know WHAT THE HELL THEY WERE TALKING ABOUT !!! I even started thinking about Hockey. They all knew what was going on but I did not. I must have looked horribly confused! Then one of them asked if he was from North St. Louis, You Know Canadian !!!
I finally realized they were asking if he were black. I did not feel real comfortable and stated that he was and also stated other attributes, like I knew his cousin. We did finance the project and the project did have some problems but it had to do with the market in 2008 not the racial makup of the borrower.
I actually went home and told people the story of the Canadian because I could not beleive a goup of men all successful in their fields would joke like that in a Board Loan Meeting. In retrospect I think it was not mean spirited but just a Mean Joke that can be funny but for all the wong reasons.
Example Number Two: “THERE ARE ONLY TWO KINDS OF INDIANANS, WHICH ONE IS HE?”
This example comes from a loan meeting that I was presenting a Motel Loan for an Indian (India the country). The Senior Vice President that stated the statement is now the President of that bank.
The Senior Vice President told me, ” There are only two kinds of indians, ones that don’t do the upkeep on their properties and sell them down the road after they have used them up and not done the upkeep – the properties are left worhtless and then we have the Indians that are good business men and work hard to keep up their properties – WHICH ONE IS HE ?”
Needless to say you could say that about anyone but you don’t. You only say it about Indians from India. This Senior V.P. had problems in the past with a customer who was Indian but if you are in the business for any length of time you could say that about any type of customer. This Senior V.P. had a real problem with Indians and was pretty blatent about that fact. It really would not bother me so much but this Senior V.P. is now the president of that institution. I’m sure that feeling is radianting out though the banks lenders and they will avoid any loans from Indians form India for many years to come.
WHAT CAN YOU LEARN FROM THESE TWO EXAMPLES. THE FIRST LESSON IS THAT MANY BANKS STILL HAVE PREJUDICES OF SOME SORT OR ANOTHER. IF I WAS NOT A WHITE MALE, I WOULD LOOK AT SEVERAL BANKS NOT JUST ONE. I WOULD ALSO LOOK AT LARGE AND SMALL BANKS OR FINANCIAL INSTITUTIONS WHEN SHOPPING FOR A COMMMERCIAL BUSINESS LOAN. I WOULD ALSO ASK THE LOAN OFFICERS AND OTHER PEOPLE AT THE BANK WHAT THE BANK FEELS OF CERTAIN CHARACTORISTICS OF BORROWERS. YOU WILL BE SUPPRISED WHAT GOOD, REGULAR PEOPLE WILL TELL YOU IN A ” OFF THE RECORD” CONVERSATION. IF YOU ARE TALKING TO A COMMUNITY BANK, ASK PEOPLE IN THE COMMUNITY ABOUT WHAT THEY THINK OF THE BANK. USUALLY THESE THINGS TEND TO BECOME PART OF THE BANKS HISTORY.
Please also see my website at www.schlueterfinancial.com for contact information or further information.