The Garrett, Watts Report (July 3, 2009)

To Our Clients, Colleagues and Friends, 

• Next week you’ll be coming to the Western Secondary Marketing Conference in San Francisco, our cool, gray City of Love, so here are a few suggestions: (1) Never go out at night without a sweater, and be prepared for afternoon coolness and fog on even the warmest of days, (2) skip the high heels as the city is just too hilly, and (3) take a cable car at least once.  It’s the only National Monument that moves. 
• As for our hills, Robert Louis Stevenson wrote that “When you get tired of walking in San Francisco , you can always lean against it.”  A funny guy.
• And Mark Twain famously wrote that “The coldest winter I ever spent was one Summer in San Francisco .”  It’s true, especially in the late afternoon when the winds pick up and the fog rolls in.  For us, 70-75 degrees is a hot day.
• As for our idea about bank lotteries, Ellen Wilson of Corridor Mortgage in Maryland wrote that her bank does monthly drawings all the time!  “The drawings are for deposits or just for signing up for whatever it is they happen to be promoting. The prizes are correlated to the size of the investment, like maybe $500 cash for little things or a vacation for large-deposit savings accounts.”  And friend Ardythe Brandon of Prospect Mortgage wrote that “Every month in their monthly news letter, my bank has an account number hidden, and if it’s yours, you win $50.  Funny thing, I read the news letter from front to back looking for my account number.  Funnier still is that in reading through the news letter, I actually learn a lot about my bank and their commitment to my community.”
• A friend in Canada tells us that The Bank of Montreal has been having lotteries for years.  And someone wrote that Guaranty Bank also has them.
• We don’t care one way or the other, but do you use your credit card at shops specializing in secondhand clothing, retread tires, bail bond services, massage parlors, or casinos? Do you buy generics rather than brand name products?  Your credit card issuer may be taking note and making decisions about your creditworthiness based on your buying behavior. Their theory is that buying used clothing or retread tires may be an indication of financial distress and a precursor to missed credit card payments or defaults.  Kind of Big Brother-ish, isn’t it?
• Retired General Tommy Franks was paid $127,000 last year to be on the Bank of America’s Board of Directors.  The Bank also had a retired Navy Admiral on their Board, and he too just resigned.  We’re sure they’re good guys and great leaders, but did they really understand the many subtleties of banking issues, Pay Option Arms, and asset-liability management?
• And what about the California Budget Crisis?  The State has run short of money and is issuing IOUs.  The Bank of America has agreed to accept them as deposits for the next ten days, and we’ll hopefully have a budget by then.  Arnold is having no fun in Sacramento and he’d probably rather be starring in Terminator IV.
• First quarter numbers are in, and Wells Fargo originated 23% of all mortgages.  That’s real market share, almost one out of four.  Congratulations to all you People of the Stagecoach.
• We got blasted by tons of you for daring to say that Chuck Berry was more significant than Michael Jackson.  But some agreed, and here’s one from Rich B. at HomeStreet Bank:  “You’re right about Chuck Berry,  but you left out what I believe was his most significant contribution to high culture, which is his large and really great catalogue of music — Johnny B. Goode, Roll Over Beethoven, Maybelline, Carol, Little Queenie, Rock and Roll Music, etc., etc.  It’s a long list.  And think of his influence on other artists, including the Beatles, and especially the Rolling Stones. Michael Jackson was anything but original, and I doubt that he had much influence on anybody.”
• We’ve been doing more and more FOCIS-plus Reviews.  What exactly is FOCIS-plus?  It’s a full-blown FOCIS Risk Audit, the kind your warehouse lender might order, but on top of that, we overlay our basic Profitability Review.  We do the FOCIS Audit, but on top of analyzing your areas of risk, we make concrete suggestions throughout the Report on ways to increase revenues, better control costs, and manage your risk.  We’re in dozens and dozens of shops, we see what works and what doesn’t, and we point out to you ways the top-performers generate superior returns so that you can use the same techniques.  It’s actually pretty cool.
• Chuck Berry wrote “Up in the morning and off to school, the teacher is teaching the Golden Rule, American History and practical math….” Or how about “Sweet little sixteen, she’s got the grown-up blues, tight dresses and lipstick, she’s sportin’ high heal shoes, oh, but tomorrow morning, he’ll have to change her trend, and be sweet sixteen, and back in class again…”  And finally “You know my temperature’s risin’, and the jukebox’s blowin’ a fuse; my hearts beatin’ a rhythm, and my soul keeps singing the blues, so Roll over Beethoven, And tell Tchaikovsky the news.” Now imagine these sung to a driving, pounding and danceable beat!   But the lyrics to the opening song on Michael Jackson’s Thriller album?  “Still they hate you, you’re a vegetable, You’re just a buffet, you’re a vegetable.”  Is there any comparison?  Chuck Berry was the poet laureate of the 1950’s and teenagers everywhere.
• We were in Mountlake Terrace yesterday and will be in Ann Arbor , Salt Lake City , and Kansas in the next few weeks.  Mountlake Terrace is just barely north of Seattle , and the weather was 1000% spectacular.  At the airport, the TSA person told us “We hope you enjoyed the weather here, but tell all your friends it rained all day.”  We guess they don’t want too many tourists descending on them.

See you in a few days at the Conference, and can you imagine being a Warehouse Lender there next week?  You’d almost want to wear Groucho glasses or some other disguise so you don’t get inundated with requests for new lines.  “You don’t know me but…”  And while we’re at it, yes, Chinatown is just a few blocks away from the Conference, but if you want non-tourist Chinese food, the real thing, take an 8-9 minute BART ride to Oakland’s 12^th Street station and walk one block to Oakland’s Chinatown.  Much more authentic.  If you need a Chinese food fix and want to stay in San Francisco , try Yank Sing, truly incredible Dim Sum.  There are two of them, both a 10-15 minute walk or a $4 cab ride away.

And while we’re at it, Happy Birthday, America .  We have our problems like any country, but this is still the birthplace of self-rule and a beacon of hope to people everywhere.

See you next week, hopefully at the Conference. 

Garrett, Watts & Co.  -  Joe Garrett    (510-469-8633)  -  Corky Watts    (408-497-3135)

“Helping mortgage lenders increase revenues, control costs, and better manage risk.”