in loans to the bank, prompting the banker to be a ‘‘salesman’’ of loans and
to encourage prospects to rent money at a ‘‘lower’’ interest rate. In fact, in
many cases the salesman mentality prompts many bankers to practice what
is known in the banking business as ‘‘bait and switch,’’ in which the loan
officer quotes a very low interest rate but intentionally does not talk about
details such as fees, administration costs, loan origination fees, and other
expenses. The customer thinks thathe/she has gotten a low rate, only to
discover at the time of signing the loan documents that the implied interest
rate of the loan is much higher than promised. This is because Regulation Z
requires that all loan costs and fees be added to that interest rate. That is
why we always ask our community members and clients to insist that they
get these offers in writing, so that they can read all the fine print in these
loan proposals.
Many of these loan officers carry expensive brief cases, wear designer
suits and expensive watches, and drive expensive cars; they carry inflated
banking titles with no meaning, like ‘‘Senior Vice President—Loans,’’ ‘‘Sen-
ior Vice President—Business Development,’’ or ‘‘Senior Vice President—
Loan Adviser.’’ They use these ‘‘attractive’’ interest rates as sales and bar-
gaining tools to meet the weekly target production expected by manage-
ment. In their pursuit to meet the bank’s targets, many families end up in a
deeper hole of debt which they cannot serve. The subprime mortgage loan
crisis in America is a case in point! While some banks de-emphasize the
value of providing highly trained account officers who are supposed to serve
and guide honest and hard-working families and business owners, RF bank-
ers choose a different course of action. In addition, while many banks
replaced their ‘‘loan’’ officers with computerized credit scoring, Internet-
based operations officers, and a retail (mass production) approach to corpo-
rate banking, RF bankers chose an opposite course of action.
At the RF-operated Bank of Whittier, N.A., we took the basic ap-
proach: we determined what our customer base wanted, and we simply
gave it to them in an RF format. We promoted and delivered concepts such
as the idea that ‘‘we do not rent money—we invest in our customers,’’ hon-
esty, caring, service, family feeling,family values, the comfort of talking
with a sincere and concerned advisor, local decision-making authority, tai-
lor-made business banking services, and professionalism. It was thought
that separating the lending/underwriting decision from the banking services
and advisory responsibility would be a more efficient, credible, and prudent
way of delivering true RF banking. This separation helps isolate the emo-
tional attachment of the loan officer to the customer, an attachment that
may lead to reaching the wrong credit decision. That is why we have intro-
duced two new important but complementary activities at the RF bank.
These are theRF private bankerand theRF credit analyst.
Operating an RF Bank in the United States 325