A simple understanding of history can prepare you for events and happens because history truly does repeat itself. It may not be on the exact same time-line or span the same days and years, but it does repeat. In the current economy, big banks need to take a history lesson.
The United States has had 39 recessions in its history. Some of those recessions were mild, and some of them were deep and entered into depressions or panics. The recession of 1907, and the recession of 1910-1912, led to widespread panics and ultimately resulted in the creation of the Fed.
The recession of 1920-1921 led into depression and then prosperity and the roaring 20s. The recession of 1929 spawned the Great Depression of 1929-1933. The recession of 1953 was followed by one of biggest building booms in US history. The recession of 1973-1975 led to stagflation until a second dip into recession followed in 1980-1982. Ironically, one of the greatest financial booms in US history followed that recession.
There is a great lesson in the aftermath of these recessions. For those of us who work with banks on a regular basis we've learned a few things through these times. Banks need to learn the same lessons.
- No bank is too big to fail, but many are too big to succeed.
- If you treat your clients poorly during a recession they will remember that during THE NEXT BOOM! That guy that you harassed and hounded day in and day out will buy another house one day. He might even be the next Bill Gates. He will need a place to park his money. It won't be you, and he will make sure his friends know how you treated him during the hard times. He might even be a blogger with a global audience.
- Every recession is eventually followed by a period of growth and upward mobility. During those periods of upward mobility people will ask their friends where they bank and how they feel about their bank. Those who were beat up by their bank during the recession will become your biggest adversaries during the boom years. It will be their turn to be in the power seat.
- If you worked well with your clients during the down-times, your clients who struggled during the recession will be your greatest ally during the boom.
- If you treat people well during all economic cycles, you will always have plenty of business.
- If you don't treat people well during all economic cycles, no one will shed a tear if you fail.
- The realty is, recessions don't last forever, and if you want to be in business during the next boom, remember it's your customers who make you successful. Without their money you are nothing.
This recession is likely to be behind us in 2013 or 2014. Will you also be behind us? It really is your choice. Banks, you need to study history. A new day is coming . . .