Stanley Marcus

By Bill Cherry

            Enjoying lunch with my wife in December at Neiman-Marcus’s Zodiac Room, with the store decorated for Christmas, I smiled and thought about the world anomaly Stanley Marcus.  Jewish by birth, agnostic by philosophy, and whose wife was a Gentile, no one enjoyed or celebrated the Christmas season with greater bravura than Mr. Marcus. 

            As my thanksgiving for the memory of Mr. Marcus, I want to share this story with you.

            When Mr. and Mrs. Raymond Nasher opened Dallas’ NorthPark Center about 1965, Neiman-Marcus ran an ad in “Dallas Morning News” offering Gant button down blue oxford cloth shirts for $6.00 each at its new NorthPark store. 

I was a graduate student at the University of North Texas and on a tight budget, so up until then, I had not been able to justify buying a Gant shirt.  One might just as well have been a Rolex watch.  But for six bucks, I decided I could have one.

            So after class my girlfriend and I drove over to Dallas from Denton to buy that one Gant shirt.  In pre-celebration, we stopped at the all you can eat buffet restaurant that was on the Circle called the Southern Kitchen.  Then we went to Neiman’s at NorthPark to buy the shirt.

            We located the men’s haberdashery and found the showcase with the Gant shirts. I told the saleslady that I wanted one Gant blue oxford cloth shirt. 

“We only sell them by the box of ten.” 

“Your ad in the Morning News advertises one for $6.00.” 

“Nope, you’ll have to buy a box.”

            We left and found the store’s office because I wanted to check to make sure the saleslady was right.  A fellow came out and introduced himself to us as Stanley Marcus, and he asked what he could do to help us.  I told him the story, and he said, “Do you have a few more minutes?”  We went downstairs to the haberdashery and he said to the saleslady, “Mrs. Golden, my friends Mr. Cherry and Miss Hubbard were just telling me that they couldn’t buy one of the Gant shirts that we have on sale.” 

            “That’s right, Mr. Stanley, we only sell them by the box.”

            “No, we sell single shirts.”

“You’re mistaken, Mr. Stanley.”

            “Mrs. Golden, our store is named Neiman-Marcus, not Neiman-Marcus-Golden.  Please sell Mr. Cherry the Gant shirt he wants.”  (I’ll never forget that line.)

            Move time forward 20 years.  I was visiting my business partner and his wife in Santa Fe.  They had just put their elaborate home on the market.  Their Realtor called and said that Mr. Marcus was in town and interested in seeing it.  When he arrived, as soon as he walked in and saw me, he extended his hand to me and said, “Mr. Cherry, so good to see you again,” and then he told everyone the Gant shirt story.  I went into total shock.

            Move the timeframe forward another few years.  I was sitting at a table at the atrium of the old Saks Center in Houston waiting for Café Express to call my number for my lunch.  I looked across the room.  There was Mr. Marcus sitting with another well-dressed man. 

Then Mr. Marcus’ order number was called, and he got up to get it.  As he turned around, he spotted me, walked across the room tray in hand, and said, “Mr. Cherry, I’m so glad to see you.  Are you eating alone?”  I told him I was, he then asked me to join him and his friend.

            As soon as he introduced me to his friend, he went right into the story about the Gant shirt, and then elaborated about how important it is to make sure employees are always properly representing the store. 

            Those three times were the only three times Mr. Marcus and I ever saw each other.  I had gone from a 25-year old to at least a 45, probably a 50-year old.  Not only had I changed in appearance, but Mr. Marcus had seen and met probably thousands in the meantime, and he had gone from about a 65-year old to a 90-year old.

So when someone says to me that Stanley Marcus was one of a kind, I don’t argue.

            I am convinced there are some people who just aren’t like the rest of us, and no amount of work on our part will ever bring us to their level.  Mr. Marcus was one of them. 

.

Copyright 2007 – William S. Cherry

All rights reserved

Bill Cherry, a Dallas Realtor and free lance writer was a longtime columnist for “The Galveston County Daily News,” and an on-camera feature writer for News-24 Houston.  His book, Bill Cherry’s Galveston Memories, has sold thousands, and is still available at Barnes and Noble and Amazon.com and other bookstores.

It has long been the contention of a substantial percentage of professional real estate people that if something isn't selling, it's time to lower the price. 

Homeowners should seriously question this recommendation from their agent.

I have found that more often than not, that this is an incorrect conclusion and, therefore, a disservice to the client.  In other words, price is not the problem.

If we assume that a well-compiled market analysis was done, using current and pertinent data when the home was entered into the marketplace, then it is illogical to conclude that the property hasn't sold because it is priced too high.

What if, in fact, it is priced too low and isn't selling?  Does that still mean the price needs to be cut further, or could it mean that because of the too low price, the property is perceived by the market to be substandard?

Rather than thinker with price, a far better and more just approach is to analyze the appearance of the property and compare that to its competitors.  The listing agent and his client should actually go preview competitors, even if it's no more than for curb appeal.

And then do two things. 

First, prepare another Comparable Market Analysis to see if things have changed.  If they have, make adjustments accordingly. 

But more importantly, work to make the home comparable in curb appeal and interior appeal to its competition.  When possible, make it look better.

When you get through, you may find that you can raise the listing price!  I've actually done that many times, especially when I've taken over another agent's expired listing.  We've made some visual changes, and within a short period, the previously unsellable house has sold!

If you or your neighbor has their Dallas area home listed and it hasn't sold, call me.  Let's see what the problem is. 

Copyright 2008 - William S. Cherry

Bill Cherry has been marketing real estate since 1964.  He has sold thousands of homes, apartments and commercial properties.  Bill Cherry's Bio

Dallas Homes Highland Park Homes Galveston Historical Homes

Webb and Yankee Had Different Solutions to the Bank's Move

By Dallas Realtor Bill Cherry

It may be common place today, but 40 years ago when Galveston, Texas' Moody National Bank wanted to move into a modern facility, it was considered almost an act of heresy to leave the building where a bank had been founded for new quarters.

Something about the bank not looking stable to the customers.

So trying to find executives and labor and law enforcement who had ever moved a bank wasn't an easy task, even if the move was to be no more than a block away.  This one was to take place on a Friday night after the bank closed, president Carey Mayfield reasoning that the bank in its new facilities could certainly be up and running by the following Monday morning.

"Good lord, we're only moving around the corner," he kept reminding the skeptics.  "And all of the office furniture is new and it's already over there, so we won't have to move any of that from the old bank," he would then add, almost like he was giving himself some needed logic and assurance to hold on to.

It turned out Mayfield was right about everything except the moving of the enormous banks of safe deposit boxes that were recessed into the wall of the vault.  And that was forgivable, for after all the accrual of all of the weight in those things was unmeasurable by staring at them. 

And you certainly couldn't expect the customers to line up and let you see inside of their boxes so the weight could be estimated.  So it was difficult to know how to prepare.

Mayfield liked to steer bank business to customers.  When the move planning was going on, Don Webb was in to make a deposit one day.  He owned a wrecker service, locksmith shop, and vehicle repair business out on what we called S Road in those days.

Mayfield came out of his office and said, "Don, got any idea how we might move those safe deposit box vaults to the new building?"

"No problem," Webb said right away, "I'll take care of it and send you the bill.  You know I'll treat you right.  Leave it 100% up to me."  So Webb was hired on the spot.

But as the day of the move approached, Mayfield started to get concerned that Webb might not be able to deliver on his promise.  So the Friday morning before the move, Mayfield called a safe company in Houston, explained the problem and the dilemma, and they said they'd take care of it.

Now how to tell Webb that he was un-hired.  Mayfield came up with an ingenious plan.  He made Webb a temporary "vice president" of the bank, and immediately promoted him to being the bank officer in charge of the move, and he not only called and told Webb of his good fortune, but also reminded him that bank officers were required to wear suits.  He needed to come in his coat and tie, Mayfield said.

So all day Friday, Don Webb was walking around the bank surveying the situation, giving advise here, and instructions there.  And then about 5:30 P.M. the safe movers from Houston showed up.  Webb told the fellows he was in charge, and asked them how they planned to get the huge banks of safe deposit boxes out of the vault wall, across the lobby, down the stairs, into the huge moving truck, over to the new bank building and into the wall of the new vault.

The superintendent  gave him some cockamamie story. 

Webb responded, "Have you ever done this in your entire life?"  He assured Webb that he had.  Webb defaulted to his own intuition and he began hovering over them like a vulture in his Sunday church suit.

They removed the trim pieces of the safe deposit vaults, then started to try to pry them out with long pry bars.  They wouldn't budge. 

Webb said, "OK, here's what we're going to do.  I'm going to back my wrecker up to the front door.  We'll add some lengths to the wrecker's cable, and we'll bring it across the bank lobby's floor, and thread it around the back of the safe deposit vault.  Then I'll go turn on the wrecker's winch, and we'll ease them out.  Then we'll manhandle them onto dollies and then we'll be all set."

What a plan, they thought.  Webb went into Mayfield's office and asked for permission to take off his coat and tie for this procedure.  He explained to Mayfield, "Wreckers are like Harleys.  You just don't get any where around them in a coat and tie."  Mayfield gave in.

Webb backed his wrecker up to the steps, unhitched the long cable, and attached another couple of lengths.  About then the superintendent from the safe company came up to Webb and said that he was taking over.  "We need my experience here,"  he told Webb, in a condescending manner.

Webb went to the restroom, put back on his tie and coat and combed his hair and came back to supervise.  When he came into the lobby, the big cable was about five feet off of the floor and taut.  It was wrapped  around one of the big banks of safe deposit boxes in the wall, and the superintendent was standing beside Webb's wrecker getting ready to engage the winch.

"Are you sure you want to do that, Yankee?" Webb shouted.  Webb always called people from the north side of the Galveston causeway, Yankee.

"Stand back," Yankee ordered Webb, and then he revved up the wrecker's engine and pushed the winch handle forward.

Out of the recessed wall flew the bank of safe deposit boxes.  For a moment they actually looked like they were flying, and then they realized that they were nothing more than massive dead weight, so they crashed on the lobby's floor with a noise that would rival any reasonably size explosion.  Everyone in the building fell to the floor, too.

Webb yelled, "Good job, Yankee.  Hope you've got insurance,"and then he and Mayfield went across the street to the Turf Grill for coffee and chit chat.

Copyright 2006 - William S. Cherry

Dallas Homes Highland Park Homes Galveston Historical Homes 

I wrote a piece about today's banks.  I used Wells Fargo's practices as an example.  But frankly, it could have been any of them.

Here are some of the comments.  I'm posting this as a separate blog with the hopes that some of the mega-bank senior officers, board members and major stockholders will stumble on it. 

I think it's what their customers really think about their bank, and maybe it will be helpful to them to know.

****************************************************************************

Bill -

You hit the nail on the head in your post.  We still have some small local banks in southeastern CT.

They may have some faults but you can still talk to the president of the bank and you see them around town just like a regular person. 

Happy New Year.  Let's see if we can start changing some of this nonsense. 

PHIL

Bill,

We deal with 3 banks in our area.  I don't like having all the accounts in one place - guess that's my grandfather's paranoia handed down.  

The largest bank is one that will process the checks first, then does the deposits.  It drives me crazy!!!  I have not bounced a check, but that is only sheer luck when you look at their policieis.  The second one is purely a savings account so there is little danger there.

The third bank is where we have our business accounts. 

This is a small chain of banks, but they operate like a neighborhood bank and they treat you like a important customer.  The tellers and officers will know your name after the first visit, they will call you on occasion to ask if you have any questions about your accounts, etc. 

And I can go in the bank, fill out a small sticky note type of form and hand it to the Personal Banker for a mortgage pre approval.  By the time I'm done with the teller and my deposit I have an answer.  

The customer service levels at these banks are truly SO different. Makes ya wonder. 

Carol

Bill,

When I was studying for my undergraduate degree in Finance, many of my instructors were BANKERS. That's in all caps because that is how they thought of themselves. It really put me off. I still don't like bankers very much. Arrogance is hard to take, especially when it isn't justified.

My worst experience was with US Bank. They bought my small town bank. i had a $1000 over-draft protection. I had need of using it. I over-drafted my account by about $10. My credit card processor debited my account for charges for my acceptance of credit cards periodically.

They sent these charges through ACH individually, some as low as 5 cents. About $50 worth of these charges caused me to be assessed over $1000 in over-draft fees. This happened exactly for the reason you stated.

Bill R.

Phil--

Thanks for your note.

Until a few years ago, the only place I lived where I had to deal with a bank with a zillion branches was New Orleans.  Most if not all of the banks there had zillions of branches all over Louisiana.  It was the worse experience of my life because I could never find anyone who could make a decision or had the authority to handle a problem.  The branch I banked with burned down.  They claimed that that branch's records went up in flames, too.  I don't know if that was true or not, but for about a week, they returned checks.

The huge banks in St. Louis didn't have branches, and there were plenty of neighborhood banks there, too.  In fact I worked for one -- a bank in Clayton.  All of them, big or small, operated like a bank should.

Houston and Galveston's banks were customer driven.  I loved banking in both places.

And then out of the blue the regulations changed, and bank holding companies appeared and like Pac Man they gobbled up the small banks and before we knew it, banking for the ordinary man on the street became and remains a disaster.

I'm glad you've still got options in Connecticut.

Bill Cherry

Miss Carol--

Anytime you hear "we want to self-police," you can bet that those being self-policed are getting ready to rationalize bad behavior.  Banks, stock brokerage houses, doctors and especially attorneys.  To all of them it's been my experience that self-policing is an oxymoron.

I honestly don't see how your bank can debit checks before it credits deposits.  That's not even good bookkeeping, for goodness sakes.

Bill Cherry

___________________________________________________________________________

Bill R -

You and I have walked so many of the same roads that I hope some day we meet in person.  I really do.

Bill Cherry

Bill -

I have to tell you this was written with me in mind, either that we have the same thoughts and frustrations with the same banks! Wells Fargo has been my main bank for years, I have other accounts but for some reason I want to hang on to WF and after a few run ins with them, I find I always am heading out the door in amazement that they can stay alive! T

hey can nickel and dime you to death on fees, it's amazing! Every time I go into the bank, they are constantly wanting to change up my bank accounts, I get so frustrated that when it works for them for me to modify my account they are super eager to assist, yet on times when I need their assistance they just don't have the time or answer! What gives?

I don't like to dwell on this and I do use them out of convenience and for traveling, but man oh man....I sure do miss the days when I was a kid and the banks really cared... What would it be like to go back in time and appreciate a customer?  You definitely hit a nerve with me..I hope if you are experiencing this issues it gets resolved soon!  Happy New Year!!

Candace

Bill,

Thank you for the truth blog.  I sure miss the good old banking days when you could write a check for whatever investment you wanted to buy and then go see your banker.  I could expand on this but that time has long been gone.

Don  

Candace & Don-

I'm so appreciative you took the time to tell us your experiences.

The amazing thing about the true mega-banks is that they became mega-banks by doing leveraged buyouts of smaller banks.  By far, the majority of their customers didn't show up at their door step wanting to be their customers...and that's because they had nothing whatsoever to offer them.

No one on the planet, unless he's a masochist, has ever wanted to have to apply for a loan through a 22-year old banking star gazer whose job it is to pass a filled-out form on to people he's never seen and doesn't know, so they can feed your answers into a non-human model to see if the bank is going to give you a "yes."

Banks were originally designed for the purpose of serving the financial growth-needs of the community they served.  I deposit my dollars in my savings account, and the bank lends it to you so you can buy the Christmas inventory for your store..the store that's two doors from the bank...the store that's owned by a guy I see at the Little League games with his son.

That, for all practical purposes, has been totally removed because it is no longer one of the requirements for a bank charter.  And that's why your bank doesn't care about you.  It doesn't feel it needs to.

When I was a college student, sometimes I would inadvertently overdraw my checking account at the bank in Galveston.  Dear Mrs. Grant, who had been my Sunday school teacher,  would call me at school, tell me I was overdrawn, and ask me if I wanted her to transfer some money from my savings account. 

I would thank her, ask her to make the transfer, and all of this was done without a pin number, a finger print, a picture ID, and the 14-people-committee to give the approval.  

And further, it took nothing in writing from me.  My voice was good enough because Mrs. Grant knew my voice. 

And, by the way, that bank didn't service charge college students' bank accounts for anything.  Their idea was to build lifetime relationships with the new generation of adults.

God bless Mrs. Grant and God Bless the old W.L. Moody & Co., Bankers, the bank -- one of many -- that served its community and customers well.

Bill Cherry

                TORT LAWYER FEES -- NO LIMITED WARRANTY GIVEN
                                        By Dallas Realtor Bill Cherry

Most goods and services come with some sort of guarantee to the purchaser.  And while as many as thirty years back they began calling them “limited warranties” rather than just plain  “warranties,” whichever the title, they all seem to assure that what you’ve bought will work.

I often muse that the most expensive services most of us buy come with no written or implied warranty at all.  And the public puts up with it.

Two of those are medical treatment and attorney services.  And neither of those comes cheap.

Tort lawyers throughout Texas have managed to escalate their hourly fees to $250 or more, and frankly the fee has nothing to do with their success ratio.  One told me, “I raised my fee when I found out ‘everyone’ else had raised his.”

But what is a profound bit of sociology is that attorneys expect the same fee whether the outcome of their client’s case is win, lose or draw.  Yet, when they lose your case, their representation to you was worth zero. 

A homeless man on the street could have represented you just as well.  Unfortunately he doesn’t have a law license. 

So it makes me wonder if there shouldn’t be two fees.  The fee you pay if your attorney wins, and the fee you pay if he loses.  I’ll bet we’d get far better representation.  I'll bet there'd be far fewer attorneys.

Copyright 2007 – William S. Cherry

All rights reserved

He Became the Magnificent Montague When He Got Off of the Boat in Galveston

                                              By Dallas Realtor Bill Cherry 

            In the early ‘50s, white people were listening to an NBC radio weekly comedy called, “The Magnificent Montague,” that starred Monty Wooley.  But the Magnificent Montague I want to talk about isn’t fictional, and he’s not white, he’s black, and he’s probably one of the most important contributors to American black culture that has ever lived.  Someone you should know about.

            His real name is Nathaniel Montague, but probably less than a handful of people know his given name.  To the public, he’s always been known as The Magnificent Montague.  He was born in New Jersey, left there before he graduated from a black military school to travel the seas as a merchant marine.  And he got off of his ship in Galveston because he heard there was a disc jockey position open at a Beaumont radio station.  He wanted to play music.  It was 1954.

            Montague got the job, and like all of the other black disc jockeys, he played rhythm and blues records – B.B. King, Muddy Waters, Howlin’ Wolf, Bobby Bland and Little Junior Parker, but he added a new twist.  Montague used poetry, sometimes that of a great poet, sometimes that he had written himself, to connect the music together.  And he did it with a low and mellow voice, and sometimes a piercing, rapid falsetto one.   Even though I’ve had fifty years to think about it, to me his style remains indescribable.

            He learned when the Ku Klux Klan showed up at that Beaumont station to run him out of town, that more white housewives were listening to him every day than black.  The Klan thought he was causing that on purpose.  Fortunately, another disc jockey at the station, a well-respected white fellow named J.P. Richardson, was there, and he convinced the Klan members it wasn’t Montague’s purpose at all.  J.P. Richardson, by the way, later became known as the Big Bopper (“Chantilly Lace”).

            Somewhere along the way, Montague married one of his Beaumont station’s listeners, a Louisiana girl who was white.  Her name is Rose, and they’ve been married for nearly 60 years.

            Montague moved from the Beaumont station to Houston’s KCOH, and that’s where I heard him for the first time. I was 14, and every boy I knew was listening after school to the Magnificent Montague.  Magnificent Montague in the afternoon followed by Rascal McCaskill at night.   It was impossible for there to be a music diet of too much rhythm and blues.  For me, there still isn’t.

            And then one day a friend and I left Carl’s Drive-in in his black ‘47 Ford with the fender skirts and the mellow rumbling of the Smitty mufflers, and turned down 53^rd Street from Broadway.  There was a new brick building on the east side of the street that had just popped up, and on the front was a big poster with Montague’s picture, letting all who passed by know that he would be the opening personality for the new tavern.  We had to see him, and we did. 

            The Magnificent Montague was a skinny, short man, impeccably dressed.  And we watched and listened as he entertained – just like he did on KCOH – a packed house of black men and women and two underage white boys.

            Shortly thereafter, Montague moved from Houston to Texas City’s KTLW, and then almost as quickly, he vanished from Texas, going from radio station to radio station across the United States, following the chain letter that would take him to and through the big time – Chicago, New York, Los Angeles.  And he made big money because his influence on what rhythm and blues tunes became hits was phenomenal.   

            But what makes this story a story and what really makes Montague legitimately magnificent is that he came on this earth with a big brain.  He began reading and studying everything he could about American black heritage.  But what he did that was the most unique was that he began searching every garage and estate sale, every used bookstore and every art gallery, and bought every first edition book, original art piece, and historical artifact that told and validated the history of black America.  Most of the vendors didn’t know their worth.  Those that did, Montague raised the money and paid their price.  Why weren’t museums doing that?  Where was the Smithsonian? Would there have ever been a substantive collection of the works of black authors, musicians, scholars and artists had there not been a Magnificent Montague?

            Today, at 78, the Magnificent Montague has some 6,000 pieces in his collection, all catalogued, and its value is now reported to be some $5 million.  The Magnificent Montague and Rose live in Las Vegas.

            His autobiography, “Burn Baby, Burn,” was written with the help of famed Los Angeles Times reporter, Bob Baker.  It was published by the University of Illinois Press in 2003.  It is an extremely well-written chronicle of that culture, as seen and experienced by Montague.  And it offers empirical evidence to those who are unfamiliar with Nathaniel Montague as to why the name Magnificent rightly belongs only to him.   

Copyright 2007 - William S. Cherry

In parts 1and 2 of this three part series on sub-prime rate mortgages, I drew a somewhat interesting, albeit loose, parallel between the current situation and what is known as the Panic of 1907.

Further, I outlined the plan of Treasury Secretary Henry Paulson's that he hopes will bring relief to borrowers who are unprepared for the contractual rate escalation, and to the mortgage paper holders who are on the brink of being flooded with tens of thousands of borrowers in default.

While Mr. Paulson's plan shows how the federal government can influence the financial markets without passing as much as one law or one new banking regulation, this time we will see how weak the intervention will turn out.

Mortgage lenders and the media as well have been following the lead of real estate agents and brokers, as they place the entire home market bust on sub-prime loans.  And while this is certainly a significant part of the problem, it isn't the one that is making times the toughest for the market in general.

Extending the teaser rates on sub-prime loans, whether in just the one category suggested by Mr. Paulson, or all three of them is nothing more than a duct tape solution, a solution whose general benefits to the economy will hardly be noticed.

It's too late to recant the real problem:  Entirely too many people borrowed too much money to purchase homes that were way over-priced, and now they can't sell them for what they owe on them.
 

The proposed interest rate freeze won't change that.

You see, until the credit market returns to a sensible method of evaluating risk and learns how to properly value mortgage paper and the collateral backing it, there's little the Henry Paulsons and J.P. Morgans of the world can do to make things significantly better.

But in the final analysis, builders, real estate brokers and real estate sales people must equally share with the borrowers and lenders, the blame for this mess.  There's no way around it.

Copyright 2007 - William S. Cherry

Dallas Homes Highland Park Homes

It's a spectacular afternoon in the park this Sunday.  The Dallas sky is a clear almost New Mexico sort of blue, and it's a dry forty-eight degrees.  Church bells are chiming in the distance.

Thanks for stopping by for our weekly visit. 

This year it became apparent to me that those who do not celebrate Christmas and are offended that anyone else does, are winning their hopes that it will eventually be erased from their view.

For years it was a tradition for most if not all situation comedies and variety shows to script and produce a Christmas show. 

The tradition began in radio and followed the audience into television programming.  And interestingly, many of the stars of those programs were not Christians.   

This year, while there may have been some, Patty and I didn't find one of the current sitcoms with a Christmas script.

One of the most famous of the radio programs, "Amos ‘n Andy." did a broadcast in 1940 that became an annual tradition, a tradition that followed the program into TV.  And it was performed word for word every year until 1954. 

Here's the serious part of the script that Americans heard.

Amos' daughter Arbadella: What does the Lord's Prayer mean, Daddy?

Amos: Well, it means an awful lot. And with the world like it is now, darlin', it seems to have a bigger meaning than ever before.

Now you lie down and listen. The first line of the Lord's Prayer is this, "Our Father, which art in Heaven." That means, Father of all that is good where no wrong can dwell.

And the next line is, "Hallowed be thy name." That means, darlin', that we should love and respect all that is good.

"Thy Kingdom come, thy will be done, in Earth as it is in Heaven." That means darlin' as we clean our hearts of all hate and selfishness and fill our hearts with love, the good the true and the beautiful, then this earth will be exactly like Heaven.

Arbadella: Oh, that would be wonderful, Daddy.

Amos: Then it says, "Give us this day our daily bread." Now that means to feed our hearts with kindness, love and courage, which will make us strong for our daily tasks.

And then it says, "And forgive us our debts as we forgive our debtors"' Do you remember the Golden Rule?

Arbadella: Oh, yes, sir.

Amos: Well, that means we must keep the Golden Rule and do unto others as we would want them to do unto us.

And then it says, "And Lead us not into temptation, but deliver us from evil." That means, my darlin,' to ask God to help us do and see and think right so that we will neither be led or tempted by anything that is bad."

Arbadella: Uh, huh.

Amos: And then it says, "For thine is the kingdom, the power and the glory forever. Amen." That means, darlin,' that all of the world and everything that's in it belongs to God's kingdom. Everything. Mommy, your daddy, your little brother, your grandma, you and everybody. And as we know that, and act as if we know that, my darlin' - that is the real spirit of Christmas."

So my question to everyone who thinks otherwise, how can the message that Amos gave Arbadella and their entire radio/TV audience been anything but worthy of the broadcast?  I'd love to hear the reasons.  In the meantime....

Happy New Year!  I hope you'll drop by for a visit next Sunday.

GOD Blesses!

Bill Cherry, Realtors

Bill in the Park Pen and Ink Drawing by Galveston Artist Carlotta Barker

            In October, 1907, a bank-owner named F.A. Heinze made a major speculation in the stock market, and it failed.  When the news got it, it caused a run on his bank by depositors who were worried that his financial problems may end up being theirs as well.

             It's known as the Panic of 1907.

            In Part One of this series, we related the story of how financier J.P. Morgan dreamed up and promoted a plan that quickly solved the Panic of 1907, and how it now looks as though U.S. Treasury Secretary Henry Paulson is trying a Morgan-esque scenario to resolve the latest panic, the one 100-years later that's being caused by the sub-prime loan meltdown.

             Sub-prime loans are hybrid instruments.  The format was not only dreamed up for the first time in recent years, but the loans were issued and sold in startling numbers, especially when you consider there was no experience history.  And to the naked eye, they looked like a formula for trouble.

            The problem we are now facing is that a huge number of the sub-prime mortgage loans were not only made to people whose credit and assets would not normally sustain the loan approval of a lender, but the loans were made with so-called teaser rates.

            Teaser rates are interest rates that start out artificially below the market, but within a short time become significantly higher, leaving to question, will the borrower be able to pay the new, adjusted payment amount when it occurs?

            In 2008, more than $350,000,000,000 (that's three hundred, fifty billion) of sub-prime loans will adjust to the higher rate.  And that means that several hundred thousand borrowers will see their mortgage payments rise by hundreds of dollars a month.

            Left as they are, most of the sub-prime borrowers won't be able to salvage their homes.  Refinancing will bring no relief, even if it is available to them, because the current rates are similar to the rates their sub-prime loan is scheduled to adjust to.

            And because there are so many of them scrambling on top of a housing market that cheap money drove to become overbuilt, we are seeing sharp declines in home prices, and that will continue for awhile.  So they won't be able to sell them for what they owe on them. much less when commissions and closing costs are added.

            So Secretary Paulson's idea sets up a system that puts these sub-prime borrowers into three categories:  those whose credit confirms that they will be able to sustain the higher monthly payments when the rates reset; those who can continue to pay the current teaser payment, but won't be able to when the rates adjust to the higher amount; and finally, those who can't afford the teaser payment amount much less the planned adjusted rate.

            Only those in the second group can expect help, and that's only if their sub-prime loan rate is set to rise on or after January 1, 2008.

            The Paulson plan is quite simple.  It will give those borrowers (the ones in the second group) five years more at the teaser rate with the hopes that by then the housing market will have recovered so that those borrowers will be able to squirm out of the obligations.

            The question many professionals as well as the man on the street asks is why did the lenders need Secretary Paulson to come up with what is such an obvious plan?   After all, lenders know that their chances of losing money is far less when they renegotiate a workable plan with an in-trouble borrower than it is when they foreclosed the borrower's house.  And the guy on the street has reasoned this out himself.

            Here are the three most important ones:

• There are so many of these loans that are in trouble that the companies servicing them don't have the personnel resources to work them on a case by case basis.

• Unlike what most think, the majority of the sub-prime loans are collateral that's backing securities that were sold to investors - individuals, partnerships, trusts and companies - and many of those are domiciledoutside of the U.S.  Finding which of them is holding a particular loan would be a nightmare.

• And finally, and of utmost importance, banks working together without the umbrella of the government would bring lawsuit after lawsuit charging collusion, and collusion is illegal.

            In the final part of this three part series, that will be here tomorrow for you to read, I'll tell you what I've concluded and why.

Copyright 2007 - William S. Cherry

All rights reserved

            It was in October, 1907, that the U.S. financial system was within moments of collapse, and there was no mechanism in the wings to resolve the issues other than some weak "Scotch tape it together" ideas that the Treasury Department had.

            This all started because a guy named F.A. Heinze had done some rather significant speculation in the stock market, and he'd lost his shirt.  The problem was that Heinze was a bank owner.

            Depositors in his bank as well as the banks that did business with his bank were unsure what this was going to mean to them.  Was money Heinze had used for his stock market speculations money that he had borrowed from his own bank?  If it was and he couldn't pay it back, would that mean that his bank would collapse and the depositors would lose their savings?

           Well, J.P. Morgan was a well respected financier, and he knew that the only thing that the Treasury Department could do was to move treasury deposits to the weak banks with the hopes that the banks would then be able to cover depositor withdrawals until the run on the banks was over, and confidence had been rebuilt.

            Morgan unilaterally took matters into his hands.  He talked - quite frankly, pressured -- solvent banks into bailing out their brother and sister banks by funneling money to them so that they could cover withdrawals.  And he even made it clear to ministers that they'd best start preaching sermons aimed at restoring confidence.

            It didn't take but a month or so for Morgan's plan to restore confidence in the system, and what is called the Panic of 1907 was short-lived with only Heinze being a loser of significance.

            One hundred years later, there is a new crisis.  Again investors have speculated where they shouldn't have - in sub-prime loans.  Treasury Secretary Henry Paulson is trying his hand at putting into place a J.P. Morgan scenario with the hopes that his will be as successful as Morgan's was a hundred years ago.

            Will it be?  I'll offer some thoughts on that tomorrow.

Copyright 2007-William S. Cherry - All Rights Reserved

Part 2 - HOW THIS TRANSLATES TO A PROBLEM THAT HAS NO CLEAR SOLUTION.  (Tomorrow's Post)          

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