Die Another Day

“ I have decided to be a Banker” my son suddenly exploded as I was reading the news of recession and Bank bailouts. I was aghast to conclude that at his age he was not reading even the headlines and choosing an industry which was retrenching people. He justified himself saying, “Even the hospitality industry, airlines, textiles … all are in the process of retrenchment. The recession will be over someday & we shall see corpses of companies of various industries lying about but no Banks.” I looked at the newspaper again and realized, ‘Are you are referring to the Government support that one Bank has received?’ ‘Naturally’ he replied, ‘which other industry has received it so far? Even the textile industry which has thousands of workers who will starve without work will have to leave all in the name of recession. Banks seem to be the favorite children of all Governments’.

‘I am amazed at the calculations the geniuses may have made to determine the amount required to keep the Bank afloat without even knowing which of the borrowers will file application under Chapter 11 in the near future due to the recession affecting the loan portfolio of the Bank’ my son said excitedly, as he was just learning statistical techniques and perhaps the precise chapter on probability. ‘I hate to disappoint you son’ I had to bare the facts, ‘I do not think any sophisticated models of forecasting were used. Most probably, the last recorded position; say end of quarter or month was most likely used for calculation for the GASP’. For a change, instead of my son, I decided to coin a new term of Get Above Sinking Point.

Frowning in puzzlement he asked, ‘do you mean to say that no-one has calculated the domino effect the recession will have on the business of the borrowers of the Bank leading to further losses?’ I smiled and pointed to the headline, “…Bank Lives another day”. His quip was fast. ‘Since no economist or finance pandit has forecasted the recession to be less than 2 years, borrowers of the Bank folding up is imminent and thus the demise of the Bank. The headline would have been more appropriate if it was DIE ANOTHER DAY’. I couldn’t agree more.

‘In school we were taught that unless we were rapped on our knuckles we would never learn to avoid the same mistake’ was the innocent remark of my son. ‘Will the Bank’s management recognize its mistakes and avoid them in the future?’ I could not answer this question. ‘Perhaps the main reason is to protect the poor innocent depositors’ I blurted a propaganda statement. ‘Sure’he said, ‘remember the time we walked in to open our accounts and we were turned down on the grounds that our average balance was to be 10 lacs and above. These poor depositors could have been hurt real bad even at an average level’.

‘There are people working in the Banks but persons more than those employed are affected’ I lectured. ‘Oh yes’ he said brightly, ‘The Indian CEO who studied his basics in India and post qualification in the States would have to change his lifestyle. His absence at the golf course would affect the caddy & the club income. Then his entertainment would go down affecting the income of various 5 star restaurants & their waiters due to the lack of tips.’ Now I joined in, ‘apart from employment, the general attitude of major company CEOs would change as they would then have to talk of currency swaps in antiseptic aluminum framed cabins of Indian Bank Manager instead of gargling a negotiation over champagne.’

I began to muse, why I should also not join such Banks where one need not have to pay the price for our mistakes while in Indian counterparts we pay for other people’s mistakes. Besides, I have yet to gargle in champagne.