Lending Perspectives: The easiest and the hardest thing to do right now both have consequences
Does the economy have you considering tightening your lending criteria? Loosening them? Beware when taking either action.
As promised last month, I’ll mix in a little bit of storytelling to my articles for a while. I’ll be celebrating 40 years in lending in September and 35 years at the executive level in credit unions in November. I love storytelling, as people tend to remember stories a lot better than a lot of boring facts and figures.
The last three years really have been a challenge for credit unions and lenders, haven’t they? I’ve been joking (sadly, not a joke) that COVID-19 shortened my career by four years; that’s the difference between my planned retirement year pre-pandemic and when I plan to retire now.
And all joking aside, we’ve had a series of whipsaw events with rates and liquidity that have made maintaining a consistent lending strategy, including credit quality, just about impossible. On top of this, there seems to be a greater gap in income and economic well-being among consumers, literal “haves” and “have-nots.” As a result, your credit may be faced with some difficult decisions for which I offer some observations from my nearly 40 years in lending.
The easiest thing to do as a lending leader right now is ….
The easiest thing to do as a leader in lending right now is to tighten your lending criteria. And for many credit unions, that’s perhaps your biggest initiative now.
continue reading »
