Friday, August 19, 2005

Changing My Life

I've told others this: If you don't like your life, change it.

It's mostly attitude. You can't make changes if you don't believe improvement is both possible and permitted. So very many people seem to feel they don't deserve a happier life.

Of course, some things aren't in our control. I can't make the rain stop or make the sun shine. I can't change past events that damaged me in various ways.

But, as they say, I can control my response to those things.

I can control how I interact with the events that I can't control.

And I've been living life on an emergency basis for several years now, and I don't like it. So as far as I can, I'm going to change that.

The work I used to do before I got disabled was emergency type work. We liquidated the banks and S&L's that failed in the banking crises of the 1980's and early 1990's.

Here's a general description of how that works.

A bank's loans are its most significant assets. When enough people and businesses stop making loan payments, the bank fails. In come the regulators to shut the bank down. Those are bankbusters, in our vernacular. Formally, they're usually called something like Closing Specialists when they do it full time.

But on closing day itself, anyone and everyone may be called upon to pitch in. It's an extraordinary event, often involving the FBI and subpoenas and handcuffs and forcible lockings of vaults. You'll have crime scene or evidence seal tape all over the ATM machines and drive-through tubes and night deposit box. Police may be posted all around the outside of the bank, since past scenes included bankers sneaking out the window with seriously incriminating files in hand. The tension in the air - as bank managers, employees, bankbusters, and law enforcement stand around listening to the bank seizure subpoenas being read off - is unbelievably thick.

The insured deposits and other healthy parts of the bank are usually transferred to another bank. The non-performing assets, mostly delinquent loans, are slowly liquidated by Liquidators, and the proceeds repaid to whatever entities covered such liabilities as insured deposits - say the bank insurer, the FDIC. The remaining accounting niceties, often just entries on paper, are generally credited or debited to zero and formally closed by Terminators.

These formal job titles make company softball contests especially fun.

I was a Liquidator, assigned to Major Assets. Our task was to recover everything we could on non-performing assets like delinquent mortgages, notes, and REO (Real Estate Owned, already foreclosed upon but not yet sold). Essentially, I did fancy collections on big commercial loans, usually commercial real estate mortgages. A wonderful variety of collateral secured the mortgages: office buildings, apartment complexes, hotels, shopping centers, restaurants, medical centers, failed real estate developments, oil and gas interests, churches, raw land; plus, odder bits like a funeral home or radio station or monogramming machine. Over six years my portfolio totaled about $243,000,000 to $350,000,000, depending on how you measure it. Say a quarter billion dollars.

It was extraordinary work, fraught with great troubles and scary events. Assets burning, bomb threats, delinquent borrowers committing suicide, and others who said they would. There was a terrible sense of a profound economic collapse under way, and we just tiny figures trying to plug up the holes in the huge cracking leaking dam looming over us all.

Add on a government who laughed, dismissive, derisive, at our efforts. Who thought funding was unnecessary, or organization, or efficiency. Reason, sense.

Not to mention, having the IRS or other superior lienholders foreclose your interest out unexpectedly, because your files were incomplete and/or the other guys didn't have the liquidation teams' new address.

We were way overburdened. Especially at the beginning, the size of our portfolios far exceeded guidelines. It was simply physically impossible to stay on top of your accounts. We'd work killer hours, seven days a week, usually 80-90 hours a week. But for months on end, it wouldn't be enough. You'd never lose that uneasy sense that something awful was about to blow up in your portfolio. And often enough, it really did.

This added up to a lot of stress.

Sometimes new liquidators, usually seasoned and professional bankers, would hire on by mistake: they were technically qualified, but couldn't handle it emotionally. After all of one or two days they'd quit. But they wouldn't tell anyone. Instead they'd just disappear into the sunset, abandoning their desks and their stuff, never saying where they went, never even picking up their first and last little paycheck.

Me? I loved it.

I loved creating order out of that extreme chaos. I loved how multidisciplinary it was: real estate, finance, economics, business, commercial loans, bank and other fraud, bankruptcy law, title issues, marketing, appraisal issues, significant property management, tax deeds, rehab, on and on. Analysis and disposition of real estate and business assets. Criminal referrals to the FBI. Foreclosures. Workouts galore.

Ha! Psychology. Wheeling and dealing. Healing financial illness. Morgue humor. A sense of family, of being on the front lines with other liquidators in a way that binds you tight forever and ever. A sense of destiny. Of history. Being square in the midst of events of true significance, of lasting importance.

We were firemen, putting out fires. And the best and highest achievement, to me, wasn't that final asset disposition. Instead, it was when my portfolio became non-emergency.

My peers would ask how I could do that so fast. It was particularly startling because it was my nature and my strength to handle the worst of the worst: the messiest loans, say with different human and partnership and corporate entities as borrowers, multiple pieces of collateral including movables like machines or oilfield pipes, participation loans with other banks.

Then toss in environmental issues, like your collateral property contains a mysterious bulging 55-gallon barrel of who-knows-what and how-much-will-it-cost-to-find-out-what-it-is and then what-do-we-do-with The Bulging Thing. Or you have a seriously contaminated site, with a negative appraised value. That means it costs more to clean it up than the property is worth. (Disposition Directive #1: DO NOT FORECLOSE!)

Since most asset managers in their right minds would avoid such accounts - they take all your time, and give you big headaches but little recovery, making you look bad in your performance statistics - anyway, since I liked them and was good at them, I usually got 'em.

So: How to stop playing fireman and become an orderly asset manager?

Simple. Just douse only the immediate fires, then sit down and treat it like any other account. Prepare for anything that might happen.

There was a standard approach that would cover almost everything. You list all the pertinent factors: amount, owners, guarantors, collateral. You order title searches and borrower asset searches and appraisals. Those things take time to come back, so now that it's in process, you go on to the next account.

Don't wait. That's a common unwise asset management decision. You don't need to learn all the details of the account to know you must have a current appraisal on your collateral. So take what legal description you've got, and order the thing. Sure, maybe you're missing another piece of property. But if so, you can catch up on that later. Meantime, you have at least one of the valuations you'll need.

You prioritize. If one loan comprises two entire filing cabinets, needing about a week to read, you flip through the basic stuff first, order your info, and leave the filing cabinets until the end, after all your other fires are banked. But then - do go through those files. That's another way a lot of asset managers screw up. So often, that careful diligence turns up a whole another avenue of collection. Another piece of collateral, another guarantor, an avenue for civil recovery from fraudulent acts.

The difference is approach. Are you being reactive or proactive? Any reasonable person would see that reactive was perfectly understandable in those circumstances. Necessary, too. But in the end, you need to get control, for the best disposition of the asset. And that means going proactive. You really can work toward both at once.

Now, all these years later, I can see that I've let my life turn towards the reactive.

And I don't like that.

I don't want to be a fireman.

I want to sit down and calmly toast my dinner around glowing coals.

Is this possible, in the presence of strange unpredictable health emergencies, and hurricanes, and such?


If I could do it under those failed bank conditions, I certainly can do it in my current life.

I could, and should, have done it before. But I can't change the past.

What I can change is my actions in the present.

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