At the peak of my banking career I worked in the collections area of the loan department. That’s right; I was a repo man.
This segment of my career was very educational. I quickly realized that most loans that were seriously in arrears had been high risk loans in the first place. We collectors had data available that made it clear that loan officers had often allowed other factors to cloud their judgment when approving loans that obviously had a high risk of default. But they kept making these loans because, oddly enough, many high-risk debtors regularly made their payments either on time or less than 45 days late — at least for a period of time.
It was never fun when a loan got to the point of default. We would do just about anything to keep a loan from defaulting. The bank would go through all kinds of contortions to try to work things out. The last thing we wanted was to repossess the collateral, because this was usually the most expensive and least profitable course of action.
The main reason loans went into default is that debtors that got behind on their payments would avoid us and refuse to talk with us. If they would talk with us, we would work with them and try to find some way for them to keep the collateral and pay the bank. Sometimes debtors could see that they had stuff they couldn’t afford, so they would sell the collateral and pay down or pay off the loan.
Usually when we had to repossess collateral, it had been trashed. Sometimes loan officers had insufficiently collateralized the loan, so that even if the collateral was in good shape, we could only recoup a fraction of the outstanding loan balance by disposing of the property. Rarely did we repossess collateral (cars, trucks, motorcycles, boats, snowmobiles, pianos, construction equipment, houses, etc.) that had been kept in good shape. People that handled their finances in a trashy manner treated their property the same way.
It was frequently a heart rending experience to repossess collateral. I once had to go to a restaurant to repossess the car of a waitress that was married to a guy with whom I had graduated high school. I still remember her tear-stained face as she cried that she didn’t know how she was going to pick up her baby from day care after work that day.
A guy once came after us with a hammer when two of us went to talk to him about being behind on his truck payments. We had to hire a private cop to help us repossess the truck. As luck would have it, the guy was in the driveway and was about ready to pull out when we arrived. This was an unusual case because the truck was in cherry condition. It had lots of cool add-ons.
Our private investigator pulled his vehicle in behind the truck and boxed the guy in. As the PI walked up to the driver’s window, I could tell that he was ready to use his weapon if necessary. He talked with the guy for a long time — maybe 10 minutes. The guy sat there emotionless, staring straight forward, only speaking occasionally. Finally the guy got out of the truck, leaving his keys in the ignition, and walked back into the house. We could see through the kitchen window as he sat down at the table and bawled like a little baby with his wife at his side. The neighbors could hear the commotion half a block away. We were able to sell the truck for more than the outstanding loan balance, an unusual occurrence.
I believe that this man spent money on truck accessories rather than on his truck payment, because it was a way to bolster his ego and hide from his personal insecurities. It had become an obsession for him. Our repossession of his truck effectively emasculated the guy, because his self image was based in the flimsy junk of this world. Spending money on “that which cannot satisfy” ill serves any of us. Such a course of action causes problems for individuals and for governments.
Going into debt to fund current wants — buying today’s whims (that we often foolishly think of as needs) with tomorrow’s income — is also a serious source of problems for individuals and for governments. Only it’s even worse for governments because individuals usually can’t pass their debts onto future generations, as do governments.
Next segment in this series: Our First House
Past posts in this series:
YM and OPM