ABA Banking Journal - June 2008 - (Page 12)

briefing one [company] is more highly valued than another. It’s about what you do well, and where you add value.” “The only thing I would add to that,” Cassidy chimed in, “is, if the buyer of a proprietary shop thought that after the purchase it would switch over to open architecture, that may make them less valuable because the transition period for doing that is not easy.” LETTERS There was a bailout To the Editor: I enjoyed your column in the April ABA Banking Journal (“Wisdom of markets. Really?”), and agree that given the circumstances, Fed measures were preferable to hesitation. I think you would agree, however, that while the Bear Stearns resolution was not necessarily a bailout for shareholders, it assuredly was a bailout for its creditors. And therein lies the moral hazard accompanying this particular episode. The Fed bailed out institutional creditors who mindlessly lent to Bear Stearns. Hmmmm The next time an overly aggressive small bank fails, will the FDIC treat the underinsured widow in the same manner as the Fed did the Bear Stearns creditors? That is truly moral hazard here. — John Madden, president, First National Bank of LaGrange, LaGrange, Ill. Organic: better but harder In response to an audience question about creating value when price competition is so intense, Cassidy acknowledged that it is a challenge to grow organically. The companies that have managed to do it the best, he said, are those whose clients use more than one product. “You know how challenging it is to win new customers,” added Cassidy. He pointed to the old U.S. Trust (now part of Bank of America) as one of the most successful of the fee-based banks at creating value using a “multiple hook” strategy—essentially, cross-selling. Over time, he said, the bank would line up an array of products for a given customer— estate planning, tax planning, investments, etc.—so that the bank was not FEE-BASED BANKS continued on page 60 12 JUNE 2008/ABA BANKING JOURNAL Subscribe at www.ababj.com http://www.captiveindoormedia.com http://www.ababj.com

Table of Contents Feed for the Digital Edition of ABA Banking Journal - June 2008

ABA Banking Journal - June 2008 Contents Editor’s Column Do Fee-based Services Have an Edge? Snapshot: Net Interest Margins Vary Sharply with Size 100th Anniversary: Then & Now Letters ABA Resources ABA Chairman’s Position "What? No Annual Surprise Bonus?" Pass the Aspirin Cover Story: Top Community Banks: How They Did... ...And How They Did It Charter Bank First East Side Savings Bank Mackinac Financial Corp. The Peoples Bank Managing the E-mail Monster In Brief Handling PEPs in the Age of "L'affaire Spitzer" Mailbox Banker’s Mart To Advertise/Index of Advertisers The Economy

ABA Banking Journal - June 2008

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