It's Not Confusing; It's Confucius!

‘Reviewing what you have learned and learning anew, you are fit to be a teacher.’

May 1, 2012

I was recently asked, “What do you do as librarian at CUNA?”

I could reply with my “to do” list. Or perhaps I could wax poetic about information exchange theories, knowledge management practices, and competitive intelligence goals.

But the simple answer I prefer is, “I facilitate learning and discovery.”

Lora Kloth is a research librarian at CUNA.
Lora Bray is research librarian at CUNA.

I like to help people find not only answers to specific questions but also to provide information “springboards” for further consideration in the decision-making process as we examine topics and issues together. Proactivity is key.

Confucius said, “Study without reflection is a waste of time; reflection without study is dangerous.”

Let’s study up on this week’s findings and together reflect upon the truth, validity, and usefulness of the data to our daily work.

Federal budgets and financial markets

“He that would perfect his work must first sharpen his tools,” Confucius observed. Sharpen your approach with a look at a few offerings on the overall state of the federal budget and financial markets.

Fannie Mae’s and Freddie Mac’s Financial Problems” by the Congressional Research Service examines the current financial status of these entities, a glimpse at risks they face—and create—and an examination of their future role: “The continuing conservatorship of Fannie Mae and Freddie Mac at a time of uncertainty in the housing, mortgage, and financial markets has raised doubts about the future of these enterprises…Housing, mortgage, and even general financial markets remain in an unprecedented situation.”

To continue in this vein, “An Updated Federal Budget Outlook: No News Is Bad News,” Brookings postulates. “Although the official budget figures have improved relative to a year ago…realistic budget projections show that the medium-term outlook remains troublesome and the long-term outlook remains unsustainable.”

The culprits? Tax and spending policies and the response to health care spending legislation.

The “Federal Reserve Beige Book” presents a somewhat more positive view. “The economy continued to expand at a modest to moderate pace from mid-February through late March… and hiring was steady or showed a modest increase.”

With specific regard to financial institutions, “Banking conditions remained stable, with modest improvements in demand for lending.”

Another high note: “Several Districts reported increased credit quality, as delinquencies have continued to decline and few problem loans have been reported.”

How does your greater understanding of the national economic climate affect services you provide to members?

On the go

“Wheresoever you go, go with all your heart,” said Confucius. Perhaps this observation on the importance of commitment and dedication can perform double duty as we on the “go, go, go” consider the effects of current transportation trends on the financial services industry.

A New Economic Analysis of Infrastructure Investment,” prepared by the Department of the Treasury in conjunction with the Council of Economic Advisers, claims that investment in our nation’s infrastructure would have long-term economic benefits. These benefits would include job creation, lower transportation costs, additional infrastructure capacity, and “large private sector productivity gains from public infrastructure investments, in many cases with higher returns than private capital investment.”

Consider demographic driving trends and their implications on your business. In “Transportation and the New Generation: Why Young People Are Driving Less and What It Means for Transportation Policy,” the Frontier Group and U.S. PIRG Education Fund learn that “The trend away from driving has been led by young people. From 2001 to 2009, the average annual number of vehicle miles driven by young people…decreased from 10,300 miles to 7,900 miles per capita—a drop of 23 percent. The trend away from steady growth in driving is likely to be long lasting—even once the economy recovers.”

Older people have their wheels in motion as “Nearly Half of Senior Drivers Worry About No Longer Driving, AAA Survey Reveals.”

“Concerned by a loss of mobility, nearly 90 percent of senior drivers indicate that the inability to drive would be a problem, with almost half claiming it a serious problem.”

How do these trends impact your auto loan portfolio? Is there any segment of your membership that would be affected by infrastructure investments?

Mortgages: Imparting what you know

Sharing knowledge is an important facet of learning, too. Said Confucius, “Reviewing what you have learned and learning anew, you are fit to be a teacher.”

Consider the consumer perspective as presented in “Consumer Financial Protection Bureau Outlines Borrower-Friendly Approach to Mortgage Servicing.”

Practices the agency advises mortgage servicers to adopt include:

  • Provision of clear monthly mortgage statements;
  • Advance notice of interest-rate changes on adjustable-rate mortgages’
  • Options for avoiding costly “force-placed” insurance; and
  • Good-faith attempts to provide early notice and options to avoid foreclosure.

Also on mortgages, the Federal Reserve Bank of Atlanta’s study “Debunking a Popular Myth about Mortgage Lending”examines the history and evolution of balloon products: “A major and economically interesting change did occur during the 1930s, but it wasn’t the switch from balloon mortgages to fully amortizing loans. Rather, it was a change in the way that amortization was done. In the 19th century, the typical B&L [building and loan] mortgage, known as a ‘share-accumulation’ contract, was a combination of a perpetual interest-only loan and a forced-saving scheme.

“When the accumulated forced saving equaled the balance of the loan, the savings were used to pay off the loan. To the borrower, the share-accumulation contract appeared much like a fully amortized mortgage today…There was a difference, however, because the forced saving was not explicitly used to pay down the loan, but rather was invested in shares in the B&L.”

What can we learn from history? How can we improve upon mortgage servicing practices to make things easier for the member?

A final note from Confucius: “I hear and I forget. I see and I remember. I do and I understand.”

 It’s in the experiencing of an event that we know it, comprehend, and empathize. Is this not the epitome of excellent member service? Let’s make our knowledge actionable!

LORA BRAY is a research librarian in CUNA's business-to-business publishing department.