Unlock the secrets of banking’s cutting-edge convenience and hidden hazards with expert Bill Tandy. Amid tales of the transformative 1980s banking crises and reflections on the “too big to fail” doctrine, Tandy delves into the digital trenches where money moves at the speed of light. He examines both the seductive ease of modern transactions and chilling risks that lurk behind every swipe, tap and click.
Tandy’s career as a seasoned banking professional also permits him to gaze into the crystal ball and make a prediction or two that might help with financial planning.
TRANSCRIPT
LANDESS:
The technical advances in personal banking are amazing: Depositing a check with a picture from your smartphone, transferring money with Zelle on a phone number. I’m UT Tyler Radio News Director Mike Landess. But is faster, really better? And, more importantly, is it safe for your money? To get a banking professional’s perspective, UT Tyler Radio Connects with Bill Tandy. What do you think, Bill? Is the bank really safer than putting cash under a mattress?
TANDY:
Well, if you’d asked me 5 years ago, Mike, my answer probably would be different than it is today. I, too, am sort of concerned that moving money through electronics and the ether and all that, I think that creates some issues and problems potentially not only in terms of its safety, necessarily, but really the ability for other people to potentially track it, depending on hacks and all kinds of stuff. So I’m not as, maybe I’m old school, but I still like having the ability to pay cash and the ability to write a check, although I don’t do much of that anymore myself, but I’m concerned that a lot of this is moving a lot faster than it should.
LANDESS:
I just recently listened to an audio book whose name slips my mind, but the essence of the story was that the zeros and ones that make up this technical aspect of money transferring electronically could be manipulated in such a way, and particularly, we just saw a story just recently about Chinese hackers getting into financial institutions and hospitals, and we hear about ransomware that comes along. It must be, maybe you’re glad you just retired recently. You may be glad to be out of this; are you?
TANDY:
Well, I’m always going to be in it, even if I’m out of it. But the digital currency and the discussions that go around that, I think, have much longer shadows. I mean, it’ll come out eventually as something that’s helpful and good for the American people, and people will maybe adopt it or maybe not. But there’s some long shadows potentially that go behind that that do concern me a little bit.
LANDESS:
It was once said that Americans, and probably true of most human beings, are so impatient that we microwave Minute Rice. Now the speed at which we can do the banking is gobsmacking. What are some of the pitfalls from your perspective?
TANDY:
Well, I think one of the things that I think we have less control of our money now, even though it seems like we have more control of it. Because, again, if we were to be hacked, if there were a ransomware situation, if China got into our financial system, it could take the whole thing down and then, all of a sudden, nobody has any money potentially. So that’s not meant to be a scary thing, it’s just, it’s out there, and it’s a fact. There’s a lot of single points of failure that exist now that never really existed before.
LANDESS:
How’s it being addressed, to your knowledge?
TANDY:
Well, I think there’s been more embracing of this, this new technology, because it is so fast, and it is so instantaneous and, as you point out, you know, we live in an Amazon world, and if you need to Google something or any question you have, you can Google it and get the answer, I guess. Or you can YouTube it or whatever. And all of this speed and instantaneous is thought of as a positive by most American people, but the reality is they’re losing more and more control of their life, I think. That’s, you know, an opinion from the sideline, I guess.
LANDESS:
You were working in the banking industry when banks were going bust, even working close to the FDIC to close some banks. For those who aren’t familiar with exactly what happened back then, what exactly happened back then?
TANDY:
Well, when I was with the FDIC was in the mid-’80s, and there was a bust in the oil business. Back then there was a real estate bust. There were several things that contributed to it. And the bankers back then actually contributed to their own demise to a certain extent. Because when the economy is hot, and when things are going well, and competition is whatever it is, we start cheating on our underwriting a little bit. Where 20% down was normal before, well, 15%. Well, the bank down the street’s doing 10% or whatever. And so one day, when the music stops, and all of a sudden you’ve got a lot of loans on the books, it probably should have never been there. Then all of a sudden, all the bankers go back to church and pray that they get out of this trouble.
LANDESS:
Yes, Jesus, take the wheel.
TANDY:
I promise, if you let me out of this, I promise I will.
LANDESS: Never do this again.
TANDY: I will marry my underwriting staff. We will never deviate from the norm, ever again. I promise, I promise.
LANDESS:
Gosh, there were so many versions of that, too. I was thinking about the 5-year ARMS, where people got to the 5 years, and suddenly they had a house that was not worth what they owed.
TANDY:
That’s exactly right.
LANDESS:
Big, big trouble there and they had a balloon note. Give us your take on the premise, “too big to fail.” Now, if Chase or Bank of America or Wells Fargo — I just happened to pick those out of the air — or whomever, gets into deep weeds, will the government step in to save them again, or are they on their own these days?
TANDY:
Well no, the big banks are too big to fail, as you point out. And I think that creates a moral risk of sorts, because if you’re the president of Chase or Wells Fargo, and you know that there’s nothing you can do that will allow yourself to fail as an organization or as a business, then you’re giving sort of free reign to them to make decisions that are otherwise probably not very good decisions. To me, when you separate actions and consequences, then you’re setting yourself up for a real problem down the road, potentially.
LANDESS:
I was thinking about Wells Fargo in particular, who is, they’ve had a number of missteps over the past 10 years that have been very, very widely reported across the world, and yet they still consent, they still can continue to operate, and they still and it’s not that I’m saying that they are bad people or it’s a bad institution, I’m just saying this is what they’ve done and as you point out, the consequences don’t seem to be there. I mean, maybe they’re, they lost some trust from some customers, but they’re still functioning at an extremely high level as one of the top, world’s top banks.
TANDY:
Well, you think back a few years ago, and we have, you know, they were big into derivatives, and they were big into subprime loans, and they were big into a whole bunch of things that weren’t necessarily good for them. If there isn’t a consequence for being there, and there’s, you know, there’s going to be a government assistance beyond the FDIC to help them through the problems, then, sort of like giving the teenager the keys to the house and the car and you’ll be gone for two weeks, I mean–
LANDESS: And unlock the liquor cabinet.
TANDY: Unlock the liquor cabinet.
LANDESS:
Unlock it, yeah. Let’s go back to the technology component. Even low tech, like credit card skimmers, cost millions in losses. Is tech security keeping up with that kind of thing?
TANDY:
They’re getting better. I mean, I think the the good guys are actually starting to win, but the way hackers are getting through now, and ransomware people are getting through now is actually through human beings, allowing them to either give them credentials to get inside the system or whatever. The people that do the IT stuff on both sides of the house, I think are getting better, and the good guys are staying with the bad guys and, in some cases, are better. It’s much harder, just to straight up, hack an institution now than it was 10 years ago. But there’s ways, through employees and people who are connected to it, to get into it by sending them, you know, phishing emails and that type of stuff.
LANDESS: An unwitting, being an unwitting accessory to it.
TANDY: That’s exactly right.
LANDESS:
Which means that all of us have to be a lot more aware of what it is that we’re doing, and maybe even look up a YouTube story on whatever the latest phishing tactics are.
TANDY:
That’s exactly right. You’ll get an email, for example, as an employee, that’s from your boss or from the CEO or somebody saying, “We need to do this immediately.” I need your password to do, we need to go in and get whatever it is, and they, you know, people, and it’s usually done under a, you know, a real short time frame. So there’s panic and fear, and so they do the wrong thing, thinking they’re doing the right thing.
LANDESS:
Yeah, it’s a real challenge to keep up with it all. How would you rate the overall health of the banking industry, the big guys and community banks included?
TANDY:
Well, that’s an interesting question because right now, I would say the banking industry in general is in reasonably good shape. I think the capital numbers are in pretty good shape, the earnings numbers are in good shape, but underneath that, you’ve got commercial real estate issues in a number of banks that are starting to surface. Past due numbers are going up at mainly all the banks now. And then you still have this whole issue of interest rates going up, and banks investing in treasuries and government bonds now that are way underwater on those. So there are some problems beneath the surface. I mean, if you look at the financial statements straight up today, they look fine. If you look at a time series or a historical look, you can see that, you know, there’s some problems creeping into the system.
LANDESS:
And how will those be addressed? I mean, will it have to happen before we do something about it, or is there anything that can be done proactively?
TANDY:
Well, that’s an interesting question. In as much as that it’s, the answer is kind of a multi-dimensional thing. First of all–
LANDESS: Go for it.
TANDY: Well, no, commercial real estate is going to continue to be problematic for it, because, particularly in the bigger cities, where you’ve got buildings that are just totally empty post-COVID, and now they’re facing not only the prospects of not having enough money to be able to make the debt service, but in a lot of cases, those loans are coming up for renewal, and they were used to paying 3 and 4% and now they’re looking down the barrel of 8, 9 and 10%. How’s that all going to wash out? And that’s yet to be seen. But I think you’ll start to see, maybe toward the middle end of this year, some more failures on the banking side. It won’t be a lot, it won’t be big names necessarily, but it’s coming. And then you know credit card debt. I guess the end of last year topped a trillion dollars for the first time. We’re seeing more and more and more debt being taken on by consumers, and more of that becoming past due, you know, the trajectory there is not particularly good. So I don’t think, it won’t be like 2008 in September, when it was just, the whole world fell in. It’ll be a gradual eroding of the system.
LANDESS:
This interview, I should say, is probably not, actually, it isn’t your first foray into a radio studio. You did a radio program, and you have a great voice, by the way.
TANDY: Thank you.
LANDESS: You did a radio program called, “Not just bankers.” What was its purpose? How did it work?
TANDY:
Well, it was really designed to give away information, good information, because in the world of dealing with customers, which banks do, one of the things that I think help people a lot is when you give them things, and there’s nothing in it for you. So the premise, and
LANDESS: You’re not just talking about toasters?
TANDY: No, no, no, no, no, no. But our thought behind “Not just bankers” back in the day was to give people information, to help them ask questions that they’re intimidated to ask bankers. They don’t get the opportunity to ask them and say here’s some things about the banking world, the finance world, credit card world. Here’s some things you ought to be nervous about. Keep your eyes open, for here’s why your banker probably said what they said or did what they did, just to get on the customer side of the desk and help them through those things.
LANDESS:
So how does a retired banker with a remarkable career behind him see his future? What do you want to do next? Public service? Politics? Cable knitting?
TANDY:
Well, I, you know, it’s one of those things once you retire, it’s funny how opportunities and suggestions and ideas just sort of all of a sudden flood through the woodwork. And so, you know, I’m right now, I’m just sort of hanging out with God and praying every day and just saying, OK, you know, I got an awful lot of things coming this way. Give me some ideas or guidance on how or what or which way this ought to go. And I’m going to take my time and listen and pray and think about that. So but, as you say, whether it’s politics or writing a book or podcasts or consulting or whatever, and so right now, honest to God, I’m really enjoying just getting up in the morning with my girl and going out on the porch and having a cup of coffee with her and petting the dogs and doing that kind of thing. For right now. That’s an awful lot of fun, and I’ve missed that, actually.
LANDESS:
So cable knitting is off the table?
TANDY: Well, for the moment, anyway.
LANDESS: Any final thoughts you’d like to share with our listeners?
TANDY:
Probably the only area that I would caution everybody in, right now, there’s the big discussion about interest rates, and which way they’re going to go. I think there’s a lot. The business media is kind of at war with itself right now because on the one hand, they keep predicting, and have been predicting since the end of ’22, that rates, that inflation is transitory, and it’s coming down. And the reality is low rates we saw at 1, 2, 3% are aberrations. And so you know we’ve now gone a year and a half, and rates have not done anything but go up or hang in there and stay steady. Now they’re calling for additional rate cuts this year. I’m, I would be so. I would not surprise me at all if we saw no rate cuts this year. In fact, we actually saw some rate increases. So I would, I would pay attention to that, I’d be thinking about that as you’re going along and as, as you would probably say, it’s always important to sort of read between the lines, do your own thinking, do your own research.
LANDESS:
Thanks for listening as UT Tyler Radio Connects with retired Tyler bank executive, Bill Tandy. To share, listen again or for a transcript of this interview, visit our website UTTylerRadio.org. To be notified about future episodes, subscribe to “UT Tyler Radio Connects” on your favorite podcast platform. For UT Tyler Radio News, I’m Mike Landess.
(Transcripts are automatically generated and may contain phonetic spellings and other spelling and punctuation errors. Grammar errors contained in the original recording are not typically corrected.)
