The end of Signature Bank was five years in the making.

In April 2018, I wrote an article here titled, “Signature Bank earnings down. That may not be so bad.” It was a response to an Aaron Elstein article that appeared in Crain’s New York Business: Signature Bank earnings down $100 million thanks to dud taxi loans. In my article, I went on to explain what I meant by my statement.

It used to be that there were companies, who wanted to make money, and customers, who wanted to spend less (and get more). There was an old saying, “the customer is always right,” or “the customer is king.” Companies did what they could to attract and retain customers. Without the customers, they knew that they had nothing.

Now, enter stockholders. Suddenly these companies have a new source of revenue, and a new set of deliverables, that has nothing to do with whatever it is that they “look like” they do. It’s just a return-on-investment scenario. Companies are favored that are making the most money. Investors naturally think it’s a great thing if companies they have a stake in are making a lot of money. But so too do people who don’t own the stock. They get confused, and all up in the hype. Random people think it’s great for these companies to be making huge profits. They think it’s a sign of healthy economy if companies are making a lot of money.

If a company is making a lot of money, though, the customers are getting less, and paying more. There are no two ways about it. Everybody behaves as if they own shares in X Company, even if they don’t, and they all get super excited when the stock performance numbers are good. But those shareholders, or wannabe-shareholders, are the exact same people who, when wearing their consumer hats instead of their shareholder hats, will complain about the prices, or that they aren’t getting enough for their money…

So yeah, Signature Bank’s earnings are down. This is a bank that said yes to the medallion loans when other said no. This is a bank that said yes to the company I work for (disclosure), and gave the most favorable rates for business expansion. This is the bank that will open a branch office on the 12th floor of an office building at $50 a foot rather than using street-level retail spaces at $250+ per square foot. From a customer’s perspective, this is a great bank (as banks go). Perhaps from a stock-ownership perspective, it’s not.

I can’t help but wonder which of the several factors influencing the course of Signature Bank had the most impact on bringing it down. Many have pointed to its status as one of the “cryptocurrency banks.” More on this in a moment. But in addition, the time that I wrote about them in 2018 also marks the time that the bank started its expansion outside of the New York area, going against the earlier philosophy of Mr. DePaolo.

From a 2011 article in Banking New York, a trade publication (footnoted in Wikipedia as: Goodspeed, Linda (December 29, 2011). “Signature Bank: Relationships Matter”. Banking New York. Archived from the original on June 4, 2016. Retrieved November 15, 2018), some of the key points:

• “Everyone talks about relationship banking,” DePaolo said. “What sets us apart is that we actually do it, not talk about it.”
• “We built the bank for depositors, then lend to clients,” DePaolo said. “We think deposit first, not loan first. We live by that.”
• He said a “deposit first” strategy means keeping higher than required capital ratios, something Signature has done from the beginning.
• The bank targets privately owned businesses, their owners and senior management in the New York metropolitan area, a market DePaolo believed was underserved by the mega banks. Signature goes after this market by going after experienced teams of bankers who serve them.
• We can’t compete with brand,” DePaolo said. “But we believe personal relationships trump brand.”
• “Current cash flow in these sectors is key for us,” DePaolo said. “We lend based on current cash flow. We don’t give credit for what could happen. We also hired expertise in those areas. We look for bankers with experience and deep personal relationships with clients. We lift out those teams. It’s better than buying a bank.”

Some time between that article’s publication and 2018, Mr. DePaolo migrated toward a position where he was ready to consider geographic expansion outside the core NYC market area. In addition, the move toward crypto meant a move toward a less relationship-oriented transaction. Almost by definition, there’s a certain anonymity behind cryptocurrency banking; it’s very transactional, rather than relational.

I think these two factors are two sides of the same coin. The actual thing that happened was that Mr. DePaolo left his gut feelings by the wayside, and followed the “expert advice” of those around him, no doubt looking to make more money. In today’s digital world, relationships are old-fashioned. Transactions rule. And this is the result.

Chogyam Trungpa Rinphoche, Tibetan meditation master and the founder of the Naropa Institute in Boulder, Colorado, believed in the concept of “First thought, best thought.” To put some more meat on these bones, his student, Dr Jeremy Hayward, put it this way: “First thought is best thought because it has not yet got covered over by all our opinions and interpretations, our hopes and fears, our likes and dislikes. It is direct perception of the world as it is.” [https://tricycle.org/magazine/first-thought/] To go with our first thoughts requires trust. In Rinpoche’s words, “To be trusting means you are fundamentally free from doubt about your goodness and about the goodness of others.” It is not something you have to think about.

It seems to me that Mr. DePaolo began to question his first thoughts. Or yielded to the pressure of others, questioning his first thoughts. Perhaps he – or they – thought they had a good thing going. They thought they knew what it was, the secret to their success. They thought it was something that they could package up, take their show on the road.

But the real secret of their success was the relationships. Mr. DePaolo’s first thoughts. Once the questions and the justifications and doubts and discussions and opinions started to insert their color over the pure framework of that first thought, the ending was crafted. It would simply take another five years for that ending to play out. 

Support African youth to support his family

One of the most important things I’ve done in my life, and one that makes me most proud, is helping someone to stay in school or to start a business. I’ve been doing this on a small and personal scale for over a decade, but have recently started to expand my funding efforts to a broader base, to achieve broader results.
In that vein, I’ve just launched a new GoFundMe campaign to help a young man named Bai Cham, in The Gambia, West Africa, to buy a car to start a taxi service. It is a great opportunity for him to generate the income needed to help support his parents and his brothers and sisters.

Bai Cham hopes to become a taxi driver in The Gambia, West Africa

Tourism is an important and growing part of the Gambian economy. And public transportation is virtually non-existent. Taxis are in high demand, both for tourists and for the locals.
Bai has the motive and the opportunity to help lift his family out of a situation that is worsening due to climate change and global inflation. What he lacks is the means to carry out his plan.

With this GoFundMe campaign, I aim to help him come up with the means to do it.
I am confident that we will succeed in raising the money Bai needs for this project. The question is: how much of the success will be due to your help?
Please contribute what you can. Time is of the essence.
https://gofund.me/9af00573

Ahhh, Afghanistan.

Yesterday, I listened to Rep. Jason Crow (D-CO), a former Army Ranger with four tours of duty in Afghanistan, and current member of the House Armed Services Committee, say on CNN, “Nobody anticipated the speed of the collapse of the Afghan army and defense forces; I certainly didn’t. I knew that this would be a very difficult time as we ended our combat operations. I certainly didn’t anticipate the speed that we’re seeing right now. There’s going to be a lot of questions on a post-mortem that will have to be done to understand why that happened.”

Meanwhile, on the PBS NewsHour earlier the same day, Thomas Gibbons-Neff, NY Times correspondent in Kabul, said, “At its core, the Afghan military was built in the American military’s image, and that means complex logistics systems, different levels of integration, this expectation tha the Afghan military would kind of operate like the American military. But the American military has its own issues, and exporting that and expecting it to look the exact same without the litany of issues… it’s unrealistic. Not to mention, how long does it take for a military to become a military? Officers, generals, experienced non-commissioned officers, that’s not there. And then, couple that with poor leadership, widespread corruption, and other factors that have kind of led to this moment where soldiers and police on the front line have no faith in their government, they don’t trust their leaders, it’s just all dissolved as the Americans, who have provided air support for so long, and as soon as they kind of eased up on the gas, things started to come apart at the seams. And you know, that’s left the Afghan Air Force, which is a small but professional force, and capable, but not nearly big enough to cover the geographic spread of Afghanistan. And the commando units which have been well-trained, well-equipped, can fight moderately well, because they have core leadership that motivates other rank-and-file; again, it’s not big enough to handle what the Taliban have managed to throw at them.”

So… it seems to me that there are those who could have, and most likely did, anticipate the speed with which Afghanistan’s government would come tumbling down in the face of the relentless onslaught of the Taliban.

I wonder whether those who did piece two and two together were somehow excluded from the highest level discussions surrounding the US pullout from Afghanistan, or whether their concerns were given air, but nevertheless did not sway the argument against further endangering American lives in pursuit of an unattainable goal?

I wonder if we will ever quite understand the dynamics of these decisions.

Today’s tragedy – just one of those things…

It’s so exhausting, the news. I just don’t know where to go with it any more.

What is one to take away from these details?

“As wildfires have become hotter, more intense and more destructive in recent years liberals and conservatives have been locked in a debate over the reasons. During a visit to California in September, Mr. Trump said, ‘I don’t think science knows what is happening,’ when the state’s secretary for natural resources pressed him on the changing climate.”

“‘One camp is saying it’s all climate change driven, and the other is saying it’s all forest management,’ said Malcolm North, a forest ecologist at the University of California, Davis. ‘The reality is that it’s both. I get kind of frustrated at this all-or-nothing type of approach.’”

And:

“And wildfire experts say Mr. Trump’s analysis of the causes of the blazes [he’s in the ‘forest management’ camp] is problematic because most of California’s forests are on land owned by the federal government and their maintenance largely falls under the responsibility of his administration.”

Reminder: this is the 21st century. We were supposed to have flying cars that fold up into a suitcase. And robotic maids to clean up after us. (Ok, that’s from The Jetsons, but still, it’s the image of the future that I grew up with.)

Flames from the LNU Lightning Complex fires burn in unincorporated Napa County, Calif., on Tuesday, Aug. 18, 2020. (AP Photo/Noah Berger)

We can’t even put our finger on how to measure the size of the problem. Acres? Dollars? Lives? If lives, are we talking about only human lives, or animals too? Remember in Australia, millions of animals were killed, some losing their entire habitats. And among the human lives, do we differentiate between firefighters and civilians? Between Democrats and Republicans? Is one kind of loss worse than another?

If we’re talking about acres, are they federal, state, or private acres? Same question with dollars. In statements like “Infrastructure damage estimates from the fires had exceeded $229 million, Mr. Newsom said,” what is being included here? This figure seems equivalent to the value of, what, maybe 100 homes. 200? Or is it one bridge and seven utility towers?

Whatever it is, it’s terrible. But is that a national emergency? A federal disaster? Why was this single, solitary, cost figure placed in the article, when it confuses more than it explains?

Between the actual things that are happening in the world, and the sometimes amazing responses to them (I don’t mean that in a good way), from the people who are supposed to respond to them, it’s easy to come away from it all with a feeling of doom. Not impending doom, like something is about to happen. But immediate doom, watching it happen, right now, and we’re in it, in front of it, under it.

And the California fires represent just one of those things. What about the teacher in the Parisian suburbs who was beheaded – beheaded! – in the street – in the street! – for having shown the recently republished cartoons of the Prophet Muhammad to his students? What about the coronavirus? Or the election meddling?

I’m having difficulty wrapping up this article. Tying it all together; drawing some kind of pithy conclusion. Except to share these words from my mother (and yours, I hope): “Tomorrow is another day.” As bad as the American Civil War was, there was a day after. A week, a year, a decade after. As bad as WWII was, there was a time after. As bad as Covid-19 is (and the loss of American lives to this virus are well into the range of deaths from those other two events), there will be a time after. A post-Covid era. A post-Trump era.

A post-climate-disaster era? Maybe not. But an era in which we at least look at it together, and take steps together, each giving a little, and demanding a little too, but none so much that there are winners and losers, as it feels today… This, I think, is an outcome that we can legitimately hope for. And that hope may be just enough to get us through this day, ready to face another.

The truth is out there

Finally! Jeez, it took this double Manhattan for me to even slightly feel it. I’d been thinking I’d become numb to the effects. I don’t like that. But for my own self-preservation in the current situation, I’ve had to shield myself. Things that in the past would make me recoil, now make me simply inhale for an extra beat. I’ve learned that defense mechanism. To breathe.

But, man. I’m watching the DNC convention. I’ve watched most of it this week, uncharacteristically for me. I’ve seen and heard so many Americans, people that I thought defined America, talking, sharing their stories, their hardships, their hopes. I relate to them; they move me.

And yet, I know that next week, there will be a whole different crew of people, who will be presenting themselves as representative of this nation, with whom I don’t expect to have any connection. I’m dazed and confused.

One thing I’m not confused about, though, is this. The people that we’ve grown to know and respect and trust over the past 20 or 30 years of our lives, are still the people we can trust. They’re not suddenly wrong, or untrustworthy, or fake news. We can’t dismiss a whole life’s worth or experiences to suddenly embrace the world as described by Donald Trump. The world is simply not the way he describes it. We can trust our gut on this. He is the Adversary, and I do use this word in the biblical sense.

I think we all recognize the truth. We know what it looks like; we know what it smells like. We can’t afford to surrender all sense and sensibility to a buffoon who tells us that left is right, and right is left. We know what’s what. We need to remember everything we’ve learned, everything we know, and get ourselves back on the right track.

With our heads glued on straight, we need to vote for Joe Biden for president. It’s not the end of our responsibility. It’s not a magic bullet. It’s the first step of many. But without taking that step, we are like tumbleweeds, swept along by the hot air of Donald Trump.

I, for one, would rather chart my own course.

Digital subscription rates are too high

An Open Letter to the subscription-based publishing community:

For the record, I’ve written essentially this same message to two or three digital content providers of note, to no discernible effect. But I believe I’m right, and I ask you to hear me out, so I’m putting extra effort into it this time.

In this day and age, online meccas like Twitter, Facebook, Apple News and other news aggregators, etc., have the power to place your digital content immediately at the fingertips of people around the globe on a story-by-story basis, or even a quote-by-quote or paragraph-by-paragraph basis, depending on their own messaging and perspective.

This is a very different scenario from that of a typical journal, magazine or newspaper, in which you are providing a wide array of subject matter, packaged with a viewpoint that your subscribers endorse and follow. You are curating their experience of these subject areas. In such a framework, your typical subscription rates are reasonable.

In the former case, however, you are not the curators. You are an “also click here” content provider. A respected one, yes. But there are many! Foreign Affairs, New York Times, Washington Post, Financial Times, Wall Street Journal, Crain’s, the Economist; even Rolling Stone, Harper’s, the New Yorker, the Atlantic, the Times of London… the list goes on.

Is it truly your expectation that in order to be well-informed, a person should have to pay the standard subscription rates for each of these publications, to access the a la carte content they seek?

The music recording industry, I think, has done a better job of grappling with these issues. The concept of the “album equivalent unit” is their solution. (For more on this, see for example https://en.wikipedia.org/wiki/Album-equivalent_unit.) The industry realized that as album sales continued to decline, in favor of downloadable content and streaming services, they needed to completely revise their business model. This, I think, is what the publishing industry needs to do as well.

It’s fine that you offer several articles per month for free. But the next rung up the ladder is a $120 – $200 per year commitment for a subscription. That’s much too high. A great number of people are simply not going to be able to afford that, if they need to cough that up for every publication they wish to explore. So we’re stuck with our 3 articles per month, and the rest, we fill in with either junk content, or content of highly suspect provenance, or we just let it go entirely.

There has to be a middle ground. There has to be a subscription level for those, like me, who most typically arrive at your content’s doorway by reference from other sources, and who may or may not choose to click on yours based on whether we’ve used up our free article count, whether similar content is available elsewhere, etc. I think $2 to $5 per month for 10-25 articles, would be sustainable for a typical online consumer. If I could read that many articles, in each of the publications I mentioned, say, for a combined outlay of $20-$30 per month, then that is clearly something I would consider, and could afford.

As it stands, I will continue to grouse about the lack of access, and I’ll maintain the couple of subscriptions that I do have. But you have to see that the “information age” we all imagined at its inception was clearly not where we have actually landed in its implementation today. I think we can do much better, and I think you, the publishers, can help a great deal by making your content more reasonably available to those who wish to see it.

 

Thank you.

Keith Gardner
New York City

The path chosen

This news article, and the reality that it’s describing, fills me with an almost overwhelming sense of frustration.

[Scott Morrison rejects calls for more bushfire help]

Two others do the same.

One, regarding the unimaginable shitshow taking place in Iraq right now – the attack on the U.S. embassy complex, and the just-announced killing of Iran’s most revered military leader in an air strike. [Air strike kills Iran’s most revered military leader] The future doesn’t bode well for peace, there or here. With (our) military rhetoric using words like: now the administration’s “aim is to deter further Iranian bad behavior that has been going on now for over 40 years.” Tensions between Iran and the U.S. have been building, and our President keeps squirting lighter fluid into the red-hot situation.

“The game has changed,” [Defense Secretary Mark T.] Esper said. “And we’re prepared to do what is necessary to defend our personnel and our interests and our partners in the region.”

He said that could include military action to preempt militia attacks if U.S. officials learn about them ahead of time.

And if U.S. officials don’t learn about them ahead of time, where will those attacks be felt? In Iraq? Washington D.C.? New York?

The final enormously frustrating and deeply discouraging news story for today [NYPD Arrests Man for Beating Bronx Man to Death Over $1] is about the gay couple in the Bronx who were attacked in what appeared to be a brutal robbery attempt which netted the muggers $1.00, and resulted in the death of Juan Fresnada, nicknamed “Cuba,” after his country of origin, as he tried to protect his partner from harm. The 60-year-old was left lying in the street, and multiple people, cars and even a bus didn’t stop to help him before his partner could come back.

I am Juan Fresnada. Juan Fresnada is me. He did what I would do. He is dead. I would be too.

People can speak glibly about having “leaders” or, shall we say, “people in positions of authority,” who are outsiders, who are “not afraid to speak their mind,” who are bucking the system, turning it on its head. What we end up with is this. All of it. All of this is what happens when you don’t have a plan and you don’t have a clue. When you thumb your nose at the “experts” and go your own way. When the only counsel you keep is your own.

If this course continues, we are simply going down. We’re going to fall. We may have the best words and the best weapons, but they may not protect us from a thug wielding a garbage can at our heads, or from fires or floods destroying our world, our habitat, as we have grown to know it and love it, or from a missile fired at the embassy in Iraq or a suicide bomber in Grand Central Station at rush hour.

To pull a term from too many calculus textbooks: “it is obvious to the most casual observer” that we are going down the wrong path. Going faster and harder down that same wrong path will not make it the right path. In the end, paths don’t bend to our will. They take us to their logical conclusion. We need to change paths if we’re going to survive. We are, right now, in 2020, at the point of inflection, where we must decide what that path is going to be. With the U.S. built as high on the hill as it is at this point in history, the fall is going to be that much more severe, and harsh, progressing with ever-mounting momentum… until we reach the bottom, and it stops. That’s where our current path will end.

There, what was once “the greatest nation on earth,” now lying in a great heap at the bottom of the hill, all the Republicans and all the Democrats; all the liberals and all the conservatives; all the king’s horses and all the king’s men, will not be able to put this particular Humpty together again.

Jury service: A slippery slope

The first time – and the only time – that I served on a criminal jury, we, the jury, found the guy guilty. It was a police buy and bust operation. Should be illegal for the police to do it – it borders on entrapment – but because “we’re only getting him to do for us what he would have been doing anyway,” it’s not considered that.

Add to that, the guy, the defendant, had previously been a CI. A Confidential Informant. He was on the street, but working with the cops. Apparently he, like many, had decided he was working with the cops so he was gonna do some work on his own, and was thinking he was gonna get extra credit. Running his own little (unauthorized) sting operation to get the goods on somebody. But instead, he got himself arrested, and ended up in a trial, with me on the jury.

After testimony, we went to our chambers and discussed. I couldn’t believe how it went. We were so quickly unanimously in favor of conviction… except for one of us. Me.

It was then that the jury politics came in. The self-appointed head of the jury was Walter Cronkite’s Chief-of-Staff. She was someone unfamiliar with not getting her way. She wanted to go to lunch. She had important things to do. Everyone looked at me when I started asking questions. They made good points. But they couldn’t explain the fact that his cop-handler should have been there, and wasn’t there. I wanted to at least hear what he had to say. It seemed like he was hanging his guy out to dry. I wanted to know the back-story before making up my mind. No one else did. I resisted for a while, but on a second poll, I caved.

Now, over 20 years later, I still feel guilty about it. Ms. Adler probably doesn’t even remember doing jury duty. She is now the head of some nonprofit, doing good work, I’m sure, for Syrian refugees. That’s all well and good. But I remember how she ran roughshod over that jury, and how she persuaded me, a reasonable person, to behave in an unreasonable way.

To those whose lives were most affected by our “collective” decision, I am sorry.

The Republican Party Now Must be Banned

I’ve always felt that we need to have at least two strong and healthy political parties to make our system “work.” But based on this week’s events alone – Trump’s statements regarding his “trust” in Kim Jong-Un, the Michael Cohen testimony, and the Republicans’ lack of preparedness for same and refusal to ask meaningful questions – not to mention the tragic and despicable events of the other hundred-some weeks we’ve suffered through under this regime – I am starting to be of the mind that one of them should not be the Republican Party.

When the Democrats take control of the Senate in 2020, I would like to see the Republican Party, as it exists today, banned. Made illegal. A hate group. A terrorist organization.

There are various international standards for political parties to be banned. “The standard of proof for banning political parties, mandated by the European Court of Human Rights in Strasbourg [for example], is high. In societies that value free speech and association, it is not enough to prove even the worst motivation; a party must also have a ‘real potential’ to make good on evil designs.”

[Germany’s supreme court decides not to ban the neo-Nazi party]

While Germany’s NDP party was not banned, even though it bears in principle a startling resemblance to the National Socialist (Nazi) Party, the reason it was not banned was that it failed this critical test. Its numbers had shrunk to a level that could not deliver on its promise.

The US Republican Party is fundamentally different, however. It can deliver on its promise, and is in the process of doing so, to the nation’s deep and possibly irrecoverable detriment. The Republican Party, it seems, does pass this test, and so must be banned.

This will not be easy. It will be a wrenching process. But it is a process we must be willing to go through if, in the words of Elijah Cummings, we feel any obligation to “keep our democracy intact.” If we don’t care about that, then forgive this intrusion. If however we do feel this obligation, to ourselves, to our peers, to our children, then our path is laid before us. It is only for us to walk it, and not to simply cease our journey over its arduousness or inconvenience.

The purpose of this article – more of a note, really; a marker – is not to demonstrate my case. Clearly I have not done so. The purpose is to draw that line in the sand. A spade has been called a spade. Add your own examples. The point is, either we look at where we are, or we don’t. If we do, it’s hard to miss the precipice ahead. We can either turn aside now, while enough of us still have our wits about us, and some level of influence over outcomes, or we can join the mass of those crying out as we go over the cliff.

If you think it’s beyond us to resolve, and instead are looking to God, hoping or praying that He will protect us and fix all of this, or wondering instead why He doesn’t send help, someone to take care of this situation, consider this:

He did send help. He sent you.

Babies born with missing limbs – do we know why?

In today’s news, a BBC story emerges: French Ain babies: Missing limb births prompt national inquiry.

This is so sad! And it’s a story that we need to follow carefully here in the U.S. as well, on its own merit.

But now I’m going to go off on a bent.

Reid Hoffman. Founder of LinkedIn. Famously made the statement (which I’ve railed against at every opportunity): “If you are not embarrassed by the first version of your product, you’ve launched too late.”

For years, I’ve been saying that the problem with this statement, this philosophy, obvious to the most casual observer, is that it is infective. It’s contagious. Why just the first version of the product? Why not the second one too? You still have to beat your competitors on the development curve, don’t you? You have to get those new features into the market, or they will.

Problem: you don’t have time to fix what’s wrong with release 1 before release 2 comes out. You don’t have time to fix either release 1 or release 2 problems before release 3 comes out.

In short, you have these products with the same problems dating all the way back to their initial launch, that sometimes do not get resolved (obviously they may not be show-stoppers, so much as frustrations, limitations, things that require workarounds or corollary products to address the deficiencies), maybe ever.

I’ve watched this trend in Microsoft Office, in QuickBooks, in Gmail, and others.

But I never considered that it may be applicable to life sciences as well. Medicine. Drugs. Implants. Testing and/or therapeutic equipment. I’m forced to wonder, in the context of the above article, whether this is one of those cases. Obviously the cause of these birth defects is not yet known. Or rather, not yet publicly known. My guess is that there is someone who knows. Someone who might have known that this could happen, but chose not to or was told not to or was not in a position to be able to release that information. The truth will out.

Meanwhile: One-Third Of New Drugs Had Safety Problems After FDA Approval. After! One-third! These products have been withdrawn from the market, or warnings or new usage guidelines have been issued, or they have been revised or reformulated, etc.

So as that old saying goes, “Why is there always time to do it over, but never enough time to do it right?”

Maybe – now that we could be talking about babies, and not just computer programs – maybe people will stop and take that time to do it right the first time. There are no re-do’s in life.