Wednesday, January 14, 2009 by Bill WhiteI can remember as a small child sitting at the dinner table as my aunt & uncle discussed a distant family member who had filed for bankruptcy.
My aunt and uncle were appalled at the thought of someone in the family doing such a thing. I can still hear them talking about how that bankruptcy would bring shame on our entire family.
I guess the days are gone when families took pride in doing the right thing and they banded together to make sure nobody in the family failed to meet an obligation.
I got my first bank loan when I was 18 years old. I had no job and no income. However, my aunt worked at Wal-Mart and always talked about how their stock was constantly going up.
I decided I needed to buy some stock in Wal-Mart.
I went to our local bank, applied for a loan, and got my money a day or so later. Fortunately for me, the stock doubled in value in the next six months and I sold it.
Years later, after I got into banking, I bumped into the loan officer who approved that first loan for me. I asked him why he approved that loan.
I had always wondered how he justified lending me any money. He told me that he knew my family, they had always banked with him, and he knew that if I didn’t pay they would. He said It was a character loan.
You know something, he was right. There is no way my family would have ever allowed me not to repay that loan or any other.
It’s a shame we have migrated so far away from the days when character still mattered when it came to financial affairs. When I first entered the banking field, some of the more experienced bankers I met talked fondly of the days of character lending.
I suspect that if more people raised their kids the way my aunt and uncle raised me, you could still get a character loan, it would be paid back as agreed, and the world would be a better place.
On another note, just for fun, I looked at what the stock I originally bought in Wal-Mart for $1,500 would be worth today had I held on and not sold. It would be worth more than $330,000.
I used the money I made on that investment to pay for my first semester of college. In hindsight, I think I made the right choice.