Business Insider Magazine Volume 4 Issue4 2011

8/6/2019 Business Insider Magazine Volume 4 Issue4 2011

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INSIDE THIS ISSUE: Understanding the ‘Buzz’ Around Online Social Media

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BUSINESS

Business Magazine and Blog or the Los Angeles South Bay • First Issue Issue 2011 • Volume 4, Issue 4 • www.BusinessInsider.us • Complimentary Co

Classic Wisdom Prevails for Local BankersBanking on the South Bay

Contrarian Economis

The “Prophets o Doo

Deliver Ho

A Real Estate Pro’s Perspect

Regulatory Roshambo: Overreaction CreaAbsurdity in Mortgage Lendi



SUBPRIME FALLOUT - CREDIT CRUNCH - MORTGAGE MELTDOWN!

The Rules Have Changed! Debt Structuring, Credit Management

And Tax Planning

Crucial in Real Estate Financing

In today’s real estate market environment, you can no longer aord to do business with anyone

who’s not a tried and true seasoned proessional. Do not trust one o your lie’s largest fnancial

transactions to someone that’s new, part-time or doing mortgages on the side. Likewise, make

sure you deal with a Realtor that is at the top o their game and experienced in how to thrive in ourcurrent environment. For you, it may well be the dierence between success and ailure. The game

has changed. Play to win!!

Ken Roberts CMPS, CLA

President

Certifed Mortgage Planning Specialist

Certifed Liabilities Advisor

30 Years in Real Estate

Call Now For a Free, No Obligation Consultation (310) 534-6200 AMERICAN RESIDENTIAL REAL ESTATE FINANCIAL, INC.

21250 Hawthorne Blvd. Ste 500, Torrance – www.kenrobertslending.com

The Lowest Rate on the Wrong Program is Very Expensive!

Thousands o homeowners are learning the hard

way how short-sighted mortgage opportunities can

devastate their fnancial situation. In the current volatilemortgage market, a mortgage is no longer just a mort-gage. It is a fnancial instrument that needs to be woven

into the abric o your short and long term fnancial plans.

As a Certifed Mortgage Planning Specialist and Certifed

Liabilities Advisor, I take a fnancial planning approach to

mortgage lending and debt management to eectivelymaximize tax advantage while structuring your fnancing

with saety and liquidity in mind.

South Bay Bankers Express

Unexpected Candor

Tis time around, we didn’t know whatto expect local bankers to say about thestate o the banking industry. In this“Banking on the South Bay” issue, weheard unexpected candor about theproblems acing the industry. However,as the cover theme suggests, key banksthat ollowed classic nancial wisdom

are surviving. Although, it would be astretch to say they are thriving, they ex-pect to remain viable or the oreseeableuture. Since local banking operates in aclosed-loop network with its ate sealedby monetary policy executed at higherlevels, the act they have successullymaneuvered around Wall Street mad-ness and central bank oversights on anunprecedented scale, speaks volumesindeed about their detness. Banks thatwere in a position to say something

meaningul without shooting themselvesin the oot have a ew things in common.Teir key mantra is “conservatism.” Allshunned ast trends that created unreal-istic expectations or years leading to lastyear’s catastrophic allout. Tey stayedcapitalized beyond legal requirements just in case. And, they made sure theyhooked up with solid companies, wholike themselves, are likely to be aroundwhen the dust settles. Although, they areearul the commercial real estate sectoris poised to initiate the next round o

allout, these institutions are diversiedenough to say they are condent theywill ride this out. In the past, “Bankingon the South Bay” was about lettingbusinesses know which banks were at with their company. Tese days, it’smore about a ight to quality and secu-rity. For years, businesses were obsessedwith making money via “leverage.” I thisnancial crisis has taught us anything,it’s the vital importance o understand-ing the nature o the money we both live

on and use to grow the economy. Tebanks that got this right will be here toserve you or the long haul.

Regards,

David Whitehead,Publisher

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Attention South Bay

Chamber of Commerce MembersEl Segundo Chamber of Commerce

Hermosa Beach Chamber of Commerce

Manhattan Beach Chamber of Commerce

Palos Verdes Chamber of Commerce

Learn About the Best

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Cover Story:

Banking on the South Bay

Classic Wisdom Prevails or Local Bankers ... 8

Publisher’s Perspective:

Contrarian Economists: The “prophets o Doom” deliver hope ... 16

A Real Estate Pro’s Perspective

Regulatory Roshambo: Overreaction Creates Absurdity

in Mortgage Lending ... 10

Technology Insider:

Understanding the ‘Buzz’ Around Social Media:

Finding the Right Social Media Mix ... 6

Business Broker Insider:

My Business is Worth What?:

Caliornia Association o Business Brokers says knowthe value o your business ... 22

Community Announcements:

Farmers & Merchants Bank Donates$11,000 to Long Beach Neighborhood Association ... 15

CitizensTrust Receives Recognition in Los Angeles Magazine

2011 Five Star Wealth Managers Publication ... 22

In This Issue. . .



BUSINESS insider MAGAZINE

The South Bay Los Angeles

Business-to-Business Magazine

Publisher & Editor

David Whitehead

Contributing Writers

Baltej Gill, Ken Roberts,

Brian Simon, David Whitehead

Graphic Design & Production

David Whitehead

Copy Editing & Proofng

Brian Simon, Darrel Lippman

Advertising Sales ManagerDavid Whitehead

Assistant to the Publisher

Alexandra C. Hart

All correspondence may

be emailed to:

[email protected] mailed to:

Business Insider Magazine

P.O. Box 1032Palos Verdes Estates, CA 90274

(310) 872-9732

www.BusinessInsider.us

BUSINESS insider MAGAZINE

Welcomes Input

From The Community:

Business Insider Magazine will con-

sider running articles and columns

rom qualied business proessionals

on topics o interest to the South Baybusiness community. Although many

editorial contributors advertise in Busi-

ness Insider Magazine, strict guidelines

are enorced to ensure topical editorialcontent, unless packaged as part o an

advertising supplement, is objective

and only includes topically relevant

perspectives. Editorial contributorsmay not directly promote themselves

or their companies except in their itali-

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not intended as a sales pitch or speci-ic products or services represented by

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ent relevant inormation local busi-ness proessionals can use to run their

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All Rights Reserved





S o u t h B a y B u S i n e S S i n S i d e r M a g a z i n e 7 1 S t i S S u e 2 0 1 1

In previous years, Web users would belimited to only reading inormation roma website. Websites were one-dimensionaland visitors needed to go back requentlyto see i anything had changed. But as theInternet started to grow, it opened the door

to other types o websites, like orums andnewsgroups, which allowed users to postquestions, share comments, conduct rat-ings and become part o a conversationonline. Soon we started hearing about Web2.0 and sites like Wikipedia that explodedbased on user-generated content. Websiteswere no longer just mere pages developedwithin the organization, but soon becameportals o public users generating contentor them. Ater that, all sorts o Web 2.0things emerged – like blogs, widgets andsocial networking sites, such as MySpace,Facebook, witter, and Youube. Busi-nesses no longer had to wait or visitors tocome to their website; they could now pushinormation directly to their customers,and in turn customers had the opportunityto contribute and share that inormationwith their network o riends online. Socialmedia opened the door or inormation tobe passed quickly and naturally – leavingthe opportunity or viral growth at the n-gertips or marketers. But as exciting as itsounds to have raving ans promoting your

business, what happens when a group o angry or rustrated customers decide toshare their experience online? Let’s take aurther look at some o the reasons why itis important to plunge into the social mediarealm.

Te Importance of Going SocialEMarketer predicts that 44.2% o US

Internet users will visit social networkingsites at least once a month in 2009, and thisnumber is projected to increase to 51.8% in2013.

Online businesses today need to look atother alternatives to get in ront o theircustomers, and having a website may notbe enough anymore.

Protecting Your BrandHave you ever searched or a company

name, brand name or product in a searchengine beore you made a purchase or de-cided to do business with that organiza-

tion? Your online brand is extremely im-portant to monitor and manage. Havingone negative listing in the top 10 results o a search engine could be enough to steerprospects away, panic your existing cus-tomers and damage your brand to the point

where business starts to go south.Let’s take a look at United Airlines, a ma-

jor United States airline that aced a publicrelations nightmare ater an angry passen-ger created a music video about his guitarbeing broken during a trip using the airline.Te passenger, Canadian musician DaveCarroll, spent a year trying to get compen-sation rom United Airlines. When he re-ceived no response, he proceeded to take hisown actions by creating a song about howUnited Airlines broke his guitar. Te music

video became an instant hit, and has almostsix million views on Youube today.Not only did this video go viral in nature,

but even doing a search in Google or Unit-ed Airlines shows the video on page oneo the search engine results page. So with5,752,254 views, 22,614 comments, 36,357ratings, 27,567 users adding this video totheir avorites, and 2,240,000 monthlysearches in Google or the term UnitedAirlines, you be the judge i this simpleour-minute, 36-second video clip did anydamage to the United Airlines brand.

Reserving Your BrandMuch like purchasing a branded domain

name, it is important that companies alsoregister their branded names on social chan-nels. Each social site has its own rules onregistering trademarks or branded names,but there are a number o companies that

have become victims o users stealing theirbranded channel because the companieswere not quick enough to act.

For example, Microsot does not ownhttp://www.youtube.com/Microsot, achannel that has almost 20,000 views. You

would think that McDonalds owns http://www.youtube.com/McDonalds, but it isanother victim o a company that had itschannel name taken. Te owner is in actusing the channel to promote its own lineo burgers.

Te Dangers of Social MediaAccording to a survey conducted by Mar-

ketingSherpa, lack o knowledge is thenumber one barrier to social media adop-tion. Tis means the organizations that dotry to play in the social media realm are atthe risk o creating an atmosphere that canbackre on their marketing strategy i doneincorrectly.

You might have heard starting a conversa-tion online is important – but listening towhat users are saying is not something thatshould be overlooked.

Social media is not one o those “set it andorget it” strategies. You need to monitor,listen to and participate in what users aresaying about your brand, product or ser-vice.

Te challenge or most organizations isnding the time to respond to every thread,every comment and every tweet. Te moresocial networks you are on, the more re-sources are required or tracking the activi-ty on those channels. A lot o organizationsear opening this channel o conversation

Continued on page 20

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8 S o u t h B a y B u S i n e S S i n S i d e r M a g a z i n e1 S t i S S u e 2 0 1 1

Classic Wisdom Prevails for Local Bankers

Banking on the South Bay

By David Whitehead and Brian Simon

Te last time Business Insider Magazine chatted with executives rom several small- to medium-sized nancial institutions in the area we

wanted to see how they were aring in light o what was described as the worst economic crisis since the Great Depression. We didn’t expect

the news to be all hunky dory. Te sub-prime collapse, subsequent real estate downturn and crippling credit crunch had already wreaked

havoc on the banking industry as a whole, spurring the shocking demise o more than a ew once seemingly invincible nancial giants. Allindicators suggested that more casualties and carnage were on the way.

So imagine our surprise to discover that the rms and agencies we approached were not only holding their own, but even proting as a

result o the ongoing woes. Part o the credit went to the South Bay itsel, thanks to its appealing location and economic diversity that shields

this region rom more severe impacts. But the rest o the kudos went to the institutions themselves, which managed to avoid the worst o

the crisis by engaging in smart lending practices and relationship-based service.

A year later much has changed, at least on the surace, with a new administration in power, economic stimulus monies owing into the

system, and Wall Street recovering nicely rom its earlier losses. Both President Obama and leading economists recently declared that therecession is over, though they admit it may take some time beore the ship is ully righted.

Given the recent uptick, one would expect even more rosy reports rom our roster o interviewees. Yet while they remained rmly upbeat

about their own prospects, they were decidedly less optimistic about the overall picture.

Citizens Business BankCitizens Business Bank CEO Chris Myers is cautiously optimistic about what’s ahead or the economy. “Hopeully, we’re bottoming out

and turning a corner,” Myers said. He expressed concerns about events in Europe but noted there are some goods things happening locally.

“Job layofs are starting to level of,” Myers said.

“What goes on in Greece does afect what we do in Caliornia in how it afects our trading partners,” Myers said, “I we can’t export as many

C O V E R F E A T U R E



S o u t h B a y B u S i n e S S i n S i d e r M a g a z i n e 9 1 S t i S S u e 2 0 1 1

was,” he added, noting that lower pricesare starting to drive opportunities or bothpersonal and business investors. Establishedbusinesses with stronger capital bases aredoing better, Myers noted. “Not many 50-year businesses are going out o business.”

“Necessity driven” products are doing

better, Myers said. Higher end businessesthat rely on discretionary income aren’tdoing as well, he added.

Tis is more o a cyclical problem, Myerssaid, pointing to correction in the real

estate market we experience every 10 to15


products it afectslocal companiesinvolved ini n t e r n a t i o n a ltrade,” Myers said

this causes localdecision-makersto see things asmore risky.“Businesses have

grown risk averse.” Myers said, “I hear voicestelling me money is tight. Businesses areunwilling to make substantial commitmentsor the uture.” Leases are becoming moreshort term, Myers noted, adding thatwith real estate prices down, negotiationsare being extended. However, Myers also

pointed out that as prices get cheap, it uelsentrepreneurs to start businesses. “I we canlease commercial property or nine monthsto a year, people are more inclined to start abusiness,” Myers said.

“Expect to see more ailed banks, butnot as many as originally predicted,”Myers said, adding the market will seemore consolidations that are constructive,but that will likely happen a ew quartersrom now. He does expect FDIC-backedmergers to become less signicant.

“Tere is a lot o money coming of the

sidelines making investments,” Myers said.“Te situation is improved rom what it

Chris Myers

“Businesses have grown

risk averse. I hear voices

telling me money is tight.

Businesses are unwilling

to make substantial

commitments or the

uture. “

Chris Myers, CEO,

Citizen’s Business Bank




By Ken Roberts

How many times do we have to hearabout how the pendulum hadswung too ar in the “loose lend-

ing” direction and now is moving too ar inthe “no lending” direction? It’s no secret thatbanks would rather not lend money in thesetough economic times. I you don’t lend any

money, you can’t lose any money! ake thebail-out unds and keep them on your balance sheet. Tat has beenthe mantra repeated in banking boardrooms o late. So real estatelending is more challenging now than at any time in my 32 years inthe South Bay real estate industry. Lenders are being overly vigi-lant in veriying every detail in a loan le. Absurd requests by loanunderwriters are the norm. And to make matters worse, lendingguidelines are dramatically diferent rom bank to bank.

It used to be that virtually all lenders would underwrite to FannieMae and Freddie Mac guidelines. Tey are the nationalized sec-ondary market or (buying) mortgages that are bundled togetherand purchased as mortgage-backed securities. Because there wasconormity in the underwriting o these mortgages, they are called

Conorming Loans. Te maximum Conorming Loan Limit was$417,000, but even Jumbo Loans up to several million dollars wereotentimes underwritten to Fannie and Freddie guidelines. So everyseasoned loan originator knew the guidelines and could tell a clientexactly what would y and what wouldn’t, of the top o their head,without making a phone call or looking it up.

Not so today. For Conventional and FHA loans we have radi-tional Conorming (up to $417,000) and High Balance Conorm-ing (up to $729,750 or lower based on county limits). We have Su-per Jumbo (loan amounts over $729,750). We have VA loans (upto $729,750 with no money down, and up to $1,094,625 with verylittle down). All these loans are sold in the secondary market and

yet all have diferent guidelines. We see every institutional lenderthat sells their loans placing more stringent overlays on top o Fan-nie and Freddie guidelines. For example, Fannie and Freddie mightapprove a middle credit score o 620 but a lender might increasetheir minimum credit score requirement to 660. I know one lenderthat won’t make any loans on condominiums! No matter how wellqualied the client, NO CONDOS!! Still other lenders won’t loanon investment properties or vacation homes. Te maximum loan-to-value ratios and minimum down payment requirements can bevery diferent rom bank to bank. And where most lenders oncehad the same types o loan product, we are now seeing wide vari-

A R E A L E S T A T E P R O ’ S P E R S P E C T I V E

ances in product type. Some have 3, 5, 7 and 10-year xed rate loanswhile others may have the 3, 5, and 7 but no 10-year. Others have30 yr, 25 yr, 20 yr, 15 yr and 10 yr xed while still others may onlyhave 30 yr and 15 yr xed.

So in this lending environment, where each bank has decided whattype o business it wants, and more importantly what it doesn’twant, the consumer is at the mercy o “Russian Roulette Lending!”You go to a big bank, ll out an application and depending on yourcircumstances, could easily be declined, even though you are well

qualied. Because o the economic climate, every borrower hascircumstances and challenges to overcome. I am constantly beingreerred clients who have been declined ater being assured theywould qualiy then given the run-around or months by a bank theythink they have a “relationship” with (such as the bank that has hadtheir checking and savings account or years, or by the bank theyhave had their current mortgage with). Tey are under the mistak-en assumption that their bank knows them or that their great pay-ment history and track record means something to the bank. Tesad truth is they are simply a number. You have relationships withpeople, not institutions – true loyalty exists only between people.You may have established a relationship with a branch manager, but

the minute you need something outside his or her department, therelationship ends. Tis is especially true in real estate lending. I you don’t t in the box, you don’t get the loan – that is the reality.But the good news is you may very well t in someone else’s box i only you knew where to look. In the marketplace, knowing whichbanks do which loans is critical.

And i that weren’t dicult enough, the mortgage industry isunder siege. Everyone and their brother is dead-set on fxing theproblems that they think led to the real estate bubble, the creditcrunch, the sub-prime meltdown, and predatory lending. I liken itto the American consumer being the patient with an illness. Tispatient has a number o doctors, each with their own specialty anddiagnosis o the problem, and each with their own prescription orthe cure. However, none o the doctors are talking to each other, orcomparing notes, and they have no idea what medication is beingprescribed by the others. Te combined medications could verywell KILL the patient! Tis year, between the new Home Valu-ation Code o Conduct (HVCC) appraisal guidelines, the Fed’snew ruth In Lending (IL) guidelines, the new Housing andEconomic Recovery Act (HERA), the new Good Faith Estimate(GFE), FHA, Fannie Mae, and Freddie Mac guideline changes, anda number o measures signed into law by Governor Schwarzeneg-ger, we could be regulated into oblivion!

Regulatory RoshamboOverreaction Creates Absurdity in Mortgage Lending



S o u t h B a y B u S i n e S S i n S i d e r M a g a z i n e 1 1 1 S t i S S u e 2 0 1 1

Some o the changes are very good. We have the ormation o a national registry o loan originators and corresponding licensingrequirements. It’s about time there was a master list o everyone inthe country, whether banker or broker, who is originating mortgageloans. Based on the passage o H.R. 1728, the Mortgage Reorm

and Anti-Predatory Lending Act o 2009, there is the creation o aduciary relationship between a mortgage originator and the con-sumer which causes the originator to do what is in the client’s bestinterest at all times, not their own. It’s about time there was a “nettangible benet” rule all mortgage originators must adhere to. Un-ortunately, there are some very troublesome changes that are verycostly to the consumer in both time and money that have some direunintended consequences.

My pet peeve amongst these is the HVCC guidelines. Surely ev-eryone knows what that is! Ater all, we voted or it during the lastelection….oh, that’s right….we didn’t get to vote on it. Well, cer-tainly it was legislated into existence by our elected ocials, you say.Alas….no. It seems Andrew Cuomo, the Attorney General or the

State o New York was investigating Fannie Mae and Freddie Mac.He decided to drop the investigation i they would adopt HIS ap-praisal guidelines. So we are burdened by “new and improved” ap-praisal guidelines that came about because o a plea bargain! Yousee Mr. Cuomo decided that the problem with the real estate mar-ket was aggressive loan ocers at banks and mortgage companies,who coerced the poor appraisers into inating property values. Imean, wasn’t it common practice or a loan originator to extract anappraisal rom the appraiser at gunpoint? “Hit the right number ordie” was certainly heard all over the land. And i not by gunpoint,certainly the appraiser’s wie and kids were routinely held hostageby an over zealous mortgage originator! Or at the very least the

threat o “Hit the number or you will lose my business to someonewho will!” And then there is always large scale raud perpetratedby a developer, a loan ocer, an appraiser and maybe a real estateagent to intentionally deraud a lender by overstating values, maybeusing “straw” or ake buyers to qualiy or an inated mortgage withthe sole purpose o making an illegal prot knowing ull well thatit would be at the expense o the lender. I make light o the ormer,but certainly the latter did happen on occasion. Te point is, nomatter how a property value got nudged higher than it should havebeen, I have two words or you: APPRAISAL REVIEW. Cer-tainly since the credit crunch o August 2007, just about every loanle submitted to a lender had a Review Appraisal perormed. Tatmeans a senior staf appraiser directly employed by the lender or avery senior (think 20-30 years experience) independent appraiseris hired, or the distinct purpose o reviewing that lender’s apprais-als. Tey would pull recent comparable sales and make sure theoriginal appraiser used properties that were the most recent sales,similar and closest to the subject property, and that the appraisermade reasonable adjustments or diferences in square ootage, lotsize, age, room count, location, view, etc. I the review appraiser eltthe value was pushed or exaggerated, he or she would cut the ap-praised value to whatever number he/she elt was a more accuratereection o air market value. Te point is, there were checks and

balances already in place.We know what the intention was behind the HVCC appraisal

rules – to put a rewall between the loan ocer and the appraiserso that there could be no undue inuence. So as o May 1st, 2009,no one who earns even $1 rom the unding o a mortgage loan canhave anything to do with choosing the appraiser, ordering an ap-praisal, or communicating with the appraiser whatsoever. Now, allappraisals have to be subcontracted with an Appraisal ManagementCompany (AMC). AMCs usually are a national company that hasan approved list o hundreds o independent appraisers. Free o the

originator’s collusion, the appraisers are no longer being pressuredand they can be objective. Sound good so ar? Let’s see how wellit’s working.

Te consumer starts a loan application with a bank or broker.Teir credit card number is given to their loan ocer who orwardsit to the banks appraisal department who in turn orders the ap-praisal rom the AMC. Te AMC may put out an e-mail blast toall the appraisers within 200 miles o the subject property and put itup or bid. In many cases, the appraiser who responds the quickestand the cheapest gets the job. So a $450 appraisal ee was paid andthe winning appraiser may do the job or $175. Who keeps the di-erence? Te AMC, o course! Te appraiser may be in San Diego

and come up to the South Bay to do the appraisal in orrance. Teydon’t know the Hollywood Riviera rom Seaside Ranchos. Teymay have been an appraiser or an hour-an-a-hal and have littlemore than a license, Tere is no one there to keep them honest orto even incent them to go beyond the minimum efort! Low value,high value, good job, bad job, it doesn’t matter... they get paid.

Does it matter to the poor consumer? I you are renancing inthis declining value market, being able to hit a particular value canmake or break your ability to renance. Get a low value and youhave spent $400-$600 or nothing. Your recourse? Play RussianRoulette again, roll the dice, pay another appraisal ee to anotherlender and try again. I it still comes in low, try again! And this issomehow better than the way we used to do it? I’d call my regularappraiser o 18 years, and ask “Can you hit this value?” He wouldcome back ater reviewing the recent sales and say it looks like thereis sucient data to support the number we need, in which case,I would let them make the appointment to do the appraisal andspend the client’s money. I he came back and said “Houston, wehave a problem,” I could cancel the appraisal and spare the clientthe expense.

In a purchase transaction, the appraiser may not be able to talkto the loan ocer, but at least gets a copy o the purchase contract.

So in this lending environment,

where each bank has decided what

type o business it wants, and more

importantly what it doesn’t want, the

consumer is at the mercy o “RussianRoulette Lending!”





B A N K I N G O N T H E S O U T H B A Y

years. “People stop building or a while andthen things catch up and it starts up again,”Myers explained.

CBB ocuses on relationship lending.“Is this an entity we want to do businesswith or the next 20 years?” is the questionMyers asks when evaluating a company ora loan. “Other banks did too many cyclical

transactional loans,” Myers asserted, noting

that some banks had as much as 40%

o their loans in construction. For long-

term stability, a bank needs to be properlydiversied and know their customers very

well. “Are they looking to grow step by

step?” Myers said, “I they do, that’s our

businesses.”

Farmers and Merchants BankHolding rmly to his principles o scal

conservatism, Farmers & Merchants BankCEO Henry Walker pulls no punches inplacing the blame or the banking crisissquarely where he thinks it belongs: Onthe government.

“We need business to have condenceand government isnot giving condence,”Walker asserted. Headded that althoughcondence has wanedsince the Obamaa d m i n i s t r a t i o nentered the White

House, the destructivepattern o theFederal Reserve dropping interest rates todrive lending occurred during the Bushadministration. He holds both parties toblame or the debacle.

“I’m not competing with banks, I’mcompeting with the government,” Walkersaid, explaining how government policyinterered with the ree market in a waythat gave Wall Street the ability to sell thetoxic securities that caused the problem.

“It was non-traditional lending that

caused the problem,” Walker said, addingthat a large volume o unsound lendingwas created when the Fed droppedinterest rates. Walker believes the layers o regulation being added to the system nowaren’t helpul, but prudent lending shouldbe enorced with existing laws.

“We have more than enough laws on thebooks,” Walked said, adding that more lawsand regulations are going to damage banks.

Continued rom page

Henry Walker

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“We need business to have confdence and

government is not giving confdence.”

Henry Walker, CEO, Farmers and Merchants Bank

Although Walker believes passing morelaws is not the answer, he did hold majorbanks accountable or pushing the limit

in a way that set a dangerous tone in theindustry.“I big banks are allowed the reedom to

do things that are reckless, it afects howthe banking industry operates,” he said,“For us to make a prot, it inuences ourdecisions, narrows our margins and afectseverything we do,”

But one thing the banking crisis has notdone is orce F&M to retreat rom its longheld position o saety and security. Walkerattributes his company’s success to stayingwell capitalized, knowing their customers

and also knowing the securities they arebuying. Walker explained that by beingwell capitalized, F&M doesn’t have to takerisks by pushing or high returns to satisytheir board. “It’s better to do the right thingand sleep at night,” he added.”

“Our customers are doing pretty good,”Walker said, “Conservative customers keepreserves. Te customer that doesn’t wantleverage comes here. Tat has been verybenecial or us.”

Walker said their prospective customer is

searching or a bank that is sae. “F&M isgrowing organically. In this market morepeople are concerned about saety,” headded.

Walker’s pessimistic outlook or theeconomy could be described as that o aninormed realist.

“echnically, economists will tell you therecession has ended,” Walker said, “Butthen you have to pull out the governmentsubsidies.” Walker expects to see the


LOS ANGE LES | SOUT H BAY | ORANG E COUN TY | SAN FE RNAND O VALLEY | I N L A N D E M P I R E

AMERICAN BUSINESS BANKM e m b e r F D I C

South Bay Regional Office

Patti A. Vollmer, Regional Vice President

Brian Ishida, V.P. | Tom Buescher, V.P.

310.808.1200

economy at or the long term.

“Te issue is not as much in the stability

o banking as it is in the stability o the

economy,” Walker said, adding that when jobs return and a condence in government

can be reestablished, businesses should

start moving again. Right now he sees them

in a holding pattern.

Te one bright note he mentioned was the

act rst quarter industry reports indicatethings are getting better as bad loans areworked out o the system. Although timewill tell when they can be replaced withnew loans, one thing is certain: F&M willcontinue to issue loans with the prudencethat has kept them in business or morethan a century.




American Business BankEighteen Months Ago, American Business Bank Regional Vice

President Patti Vollmer was pleased to report that her institutionhad picked up a slew o new customers directly as a result o thecredit crunch. “It’s all continued along that same route — it’s just

amazing,” she said. “Since we’re a specialty bank, it shouldn’t be toosurprising, but it still is. We’re continuing to grow this year.” ABB’srst quarter statistics prove that point, with 10 percent loan growth,21 percent deposit growth and 39 percent earnings growth over thesame period in 2009.

Despite the good news, Vollmer isn’tready to credit an improving economyas the primary reason or the prosperity— although she does eel things havestabilized. “A lot o banks are distracted bythe issues they are dealing with,” she said.“We don’t have those distractions, so that

allows us the ability to attract the kinds o companies that maybe aren’t being treatedtoo well.”With ve locations and a middle market

($5 million to $100 million in revenues) emphasis, ABB has neverveered rom its strict underwriting standards over its 11-yearhistory. As part o that process, it avoids real estate lending, withthe exception o owner-occupied and loans to their customers, andmaintains a low loan to deposit ratio. “We’re doing the same things

Continued rom page 13 we’ve always done, which is to look or good companies that are very

well managed,” Vollmer said. “Tey’re out there. We’ve always been

a bit on the conservative side, but so have our customers.”

Vollmer noted that she has heard “little bits and pieces o

improvement” rom her customers about the economy in areas such

as revenue growth and rehiring personnel. But caution still rules

the day. “I think we could see things being at in terms o things notgetting worse, but not much better either,” she said. “Our customers

have or the most part weathered some really dicult times and will

continue to work through these challenges, but the ear o another

drop-of-the-clif event is much less than it was.”

Like many o her peers, Vollmer shares concerns that a commercial

real estate downturn will hurt her industry and send some banks

packing in the near uture. “It could be pretty substantial i they

have loans maturing in the coming years that were extended our

or ve years ago and now the values have dropped,” she said. “Tey

may have diculty renancing unless the owner pays down the

loan. I see a lot o banks unable to lend right now or have changed

their underwriting criteria to become more conservative. I thinkwe will see some o those banks go away. It’s hard to predict what

diculties banks will have that we don’t know about yet.”

And while she sees South Bay businesses doing better than in

other regions, Vollmer said the retail sector here in particular is

struggling.n

Brian Simon is a reelance writer who lives in El Segundo. David

Whitehead is the publisher o Business Insider Magazine.

B A N K I N G O N T H E S O U T H B A Y

Patti Vollmer

Even then, we are seeing absurdly low values coming in that can killa sale or at the very least cause the buyer to have to change lenders,lose a great rate i you were locked, and have to start over! In mostcases, the problems stem rom inexperience, coming rom out o the area and not knowing the subtleties o the diferent neighbor-hoods. We are also seeing another cause o missed valuations: theunwillingness to go the extra mile to do the right thing, also knownas laziness. I they get paid peanuts, you get a monkey!

Suddenly, the AMCs have a monopoly. Te relationships loan

originators have developed with their appraisers over the last 10,20, even 30 years are gone. With senior, proessional appraisershaving to work or less than hal their normal ees with the sameoverhead, many are choosing to get out o the business. I theyleave, who’s let? Te young and inexperienced! And true to orm,HVCC has been a well-intentioned but miserable ailure. It wasonly implemented as o May 1, 2009 and already every loan origina-tor I know has enough HVCC horror stories to ll an anthology.

I recommend you write your Congressman and demand theHVCC rules be repealed. A recent study done by a scal watchdog

Continued rom page 11

“A lot o banks are distracted by the issues they are dealing with,” she said.

“We don’t have those distractions, so that allows us the ability to attract

the kinds o companies that maybe aren’t being treated too well.”

Patti Vollmer, Regional V.P., American Business Bank




organization said the HVCC rules will cost consumers up to $2.8Billion. All in the name o saving us!

Add to HVCC the MDIA which says i the Annual PercentageRate (APR) changes more than .125% up or down during the trans-action, the changes must be re-disclosed and the borrower mustwait three days beore signing loan documents. Imposing this threeday waiting period could be costly to the borrower and virtuallyeliminates the ability to close a purchase escrow in 30 days. Loanocers will have to lock loan or longer periods costing their cli-

ents more money. You have to allow or disclosures, re-disclosures,appraisals, re-appraisals and “cooling of periods” that are all butguaranteed! And i your closing costs change more than $100 romwhat you were originally quoted, (usually rom escrow or title), andyou’ve already signed loan documents, either reduce the ees or re-draw, re-disclose and re-sign the loan documents and maybe have

your rate lock expire! Am I the only one who right about now issaying “Please don’t save me anymore!”

So in the spirit o the season, I won’t spoil all your real estate -nancing surprises and will rerain rom telling about what a regula-tory “git” the new Good Faith Estimate is going to be! Let’s just saya lump o coal in your stocking is looking really good right aboutnow! Its mandatory use will begin January 1, 2010, and needlessto say, it is designed to SIMPLIFY things and SAVE you mon-ey! (Regulatory speak or “Prepare to be conused” and “Reach or

your wallet”). What I can say is the American consumer is get-ting ROSHAMBOED. And I’m not talking rock, paper, scissorshere…. nKen Roberts is a mortgage planner with over 30 years experience in

the South Bay real estate market. Ken can be reached at (310) 534-6200.

Farmers & Merchants Bank Donates $11,000 to Long Beach Neighborhood Association

Farmers & Merchants Bank, serving the South Bay communities with locations in orrance and Palos Verdes, recently donated$11,000 to the Willmore City Heritage Association (WCHA) in early February. When unds were scarce or the 7th and MaineBeautication Project, F&M Chie Executive Ocer Henry Walker stepped into und a large portion o the next phase. WilmoreCity is a historic district near Downtown Long Beach, a ew blocks rom where Farmers & Merchants Bank is headquartered.

“How do you thank somebody in a time o peril,” said Jim Danno, Community Outreach Coordinator o WCHA. “Trough hiskindness, he made our dream a reality.” Te donation was invested in removing a large expanse o asphalt and grading the project site.Tis step was critical to setting the oundation or the entire venture. Te original estimate or this portion o the undertaking wasvalued at $33,000. However, Walker reached out to his network base to reduce the cost to $11,000.

Te 7th and Maine Beautication Project is a community based program ocusing on cleaning up, landscaping and beautiying anabandoned area located directly north o the intersection o West 7th Street and Maine Avenue, at the northbound 710 Freeway on-ramp in Long Beach. Not only is this area seen by all who leave the City o Long Beach, it will also be a gateway to the Drake/ChavezPark expansion.

“Tis was a neglected area with abandoned shopping carts, tumbleweeds and a collection o trash & debris. Tis venture has beauti-ed our neighborhood and created a real sense o pride within the community,” said Danno.

In order to accomplish realistic goals, the WCHA volunteer committee divided the project into three phases. Phase 1 o the projectwas completed within ve months last May. Te dilapidated Maine Avenue barricades were replaced with 14 concrete planters lledwith colored succulents and a seating area, creating a visually appealing and unctional cul-de-sac or the residents o Maine Avenue.Te local community assisted with the cleanup and planting. Proud o their new garden, the neighbors have made certain that theplants are watered and maintained, and that the area is kept clean and grati ree.

With the generous donation rom Farmers & Merchants Bank, WCHA was able to commence Phase 2. Tere will be a new, lowwater use landscape installed with a state-o-the-art inline drip irrigation system. Blue Gecko Design is creating an urban gardenoasis rom the neglected and blighted exit rom the City.

WCHA is grateul or the signicant $11,000 Farmers & Merchants Bank donation and wonderul evidence o its commitment tothe Willmore City Historic District and the City o Long Beach. n




Economist Nouriel Roubini was dubbed the “prophet o doom” when he tried to warn the nancial community theywere building a house o cards with the Real Estate market.

He wasn’t taken seriously until 2007 when it became clear a mas-

sive asset bubble was about to cause catastrophic damage to theglobal economy. oday, he receives praise or his insights and is thevoice Wall Street calls on the most to explain what so many insidersclaimed to have missed.

However, Roubini was hardly the only notable economist pointingout that asset bubbles can be identied, tracked and their demisepredicted. Leading economists rom the Austrian School o Eco-nomics, who adhere to theories pioneered by the late Ludwig VonMises nearly a century ago, have espoused this premise or decades.In act, Von Mises and his protégés long ago developed solid theo-ries to explain the business cycle as articulately as Roubini whilegoing deeper to coherently identiy root causes.

Te Austrian School economists have the best track record on pre-dicting the cause and efect sequences o historical events like theGreat Depression. Te late proessor Murray Rothbard, a studento Von Mises, exposed an astounding number o misconceptionsabout the era in his 1963 book titled “America’s Great Depression.”Tis obscure economic historical classic shattered every myth I pre-viously believed about what caused the Great Depression. And theparallels to our current economic crisis are striking, i not sinister.

For example, it’s widely believed (and stated erroneously by me inprevious columns) the Great Depression was initiated by the Fed-eral Reserve jacking up interest rates causing the money supply tocrash. Although the Fed did jack up interest rates during this pe-riod, they never ceased in their attempt to inate the money supply.Tis is the key to identiying the historical myth and makes a strongargument or the case that history is literally repeating itsel.

Rothbard asserted it was the loss o condence in the banking sys-tem in 1932, which converted a large percentage o demand depos-its into cash that destroyed the banking system’s ability to maintaina stable money supply. Banks simply didn’t have enough reservesto issue the loans necessary to keep the economy going. And ontop o that, there were ew ruitul endeavors at the time worthyo meaningul investment. In those days there was no Federal De-posit Insurance Corporation to protect bank deposits, no “too big to

ail” bailouts or large-scale consumer credit available to cushion theshock. Tereore, the economy simply collapsed.

And it was interventions by the ederal government that prolongedthe malaise, interestingly enough rst by Republican President Her-

bert Hoover through his actions to collectivize agriculture, initiategrandiose public works projects and regulate wages. What Hooverstarted was then accentuated by Democratic President Franklin D.Roosevelt, who urther expanded these policies into what was laterdubbed and credited to him as “Te New Deal.” According to theAustrians, these interventionist actions prevented the necessarycorrections that would have ended the depression much sooner.Von Misses and his ollowers asserted the malaise lingered untilWorld War II largely because the government reused to let the reemarket correct the imbalances in the economy.

o prove the point, Rothbard noted that a similar inationary-incited depression righted itsel quickly in the early twenties largely

because then President Warren Harding and the Federal Reservechose to stand aside and let the misplaced assets clear rom ailedenterprises and reallocate to more ruitul ventures. By the mid-twenties, a new and grander asset bubble quickly ormed — thistime with the stock market. Unortunately, the roaring twentiesroared with inationary expansions o the money supply driven bymisguided Fed policy that led to the 1929 stock market crash. Itwas the same kind o asset bubble the nation experienced in recentyears with the dot coms and the Real Estate market. It’s an old les-son no one in the nancial community ever seems to learn. Or per-haps just an old scam the public never seems to pick up on.

Leading up to and ollowing the stock market crash, Rothbard’sanalysis ocused on the Fed’s open market operations, which inthose days involved massive purchases o acceptances connected tointernational trade that injected billions o dollars o inationarymoney into the economy at a time when the United States was ac-tually getting out o debt incited by its participation in World WarI.

Rothbard’s analysis also revealed that in the days leading up tothe Great Depression, the Federal Reserve actually expanded themoney supply more through its open market operations than itcontracted it by raising interest rates. Tere was actually a net gainin money supply until the banking system collapsed, causing a de-

By David Whitehead

Contrarian Economists:

The “Profts o Doom” Deliver Hope

P U B L I S H E R ’ S P E R S P E C T I V E




cade-long deationary cycle the likes o which the nation has neverexperienced.

As current Fed Chairman Ben Bernanke appears to be working

diligently to pull the nation out o recession by inating the moneysupply, so too did his predecessors during the years between the1929 stock market crash and the beginning o the Great Depres-sion in 1932.

Sound Money is Cast AsideBringing the nation out o the depression though inationary

monetary policy ailed miserably during the thirties and modernday Austrian School economists like Tomas Woods and LewRockwell, ounder o the Ludwig Von Mises Institute in AuburnAlabama, continue to preach it will ail again. However, despite theearned merits o their proven theories, the Austrian School econo-mists, although respected as academics, are kept distant rom centerstage on Wall Street.

Te reason is simple: Te Austrian School economists are opposedto ractional reserve banking and the issuance o currency whichis not ully backed by a reliable commodity, preerably bullion. Inshort, they believe the government should be separated rom themoney supply and the role o banks should be to issue notes basedon their actual bullion reserves.

I ractional reserve banking were to be allowed at all, “ree bank-ing,” as Rothbard describes it, Austrian School economists believethere should be no regulation or bailouts permitted, and most im-portantly, it must work rom a set money supply backed by a reli-able commodity. Tis would ensure the clear and present dangers o

running short on day to day banking operations would absolutelyminimize the issuance o currency not backed by real reserves, i noteliminate the practice entirely. In reality, no one in their right mindwould trust their deposit in a bank that practices ractional reservebanking to a signicant extent in a “ree banking” environment withno regulation or government bailouts possible and no mechanismsto inate the money supply.

In practice, Austrian School economists believe the strength o abank should be judged by its earned capital, not by a legally man-dated power to leverage the system and to prot rom it. Te Aus-trians hold to this rm moral standard which, to say the least, isnot popular on Wall Street, or or that matter, most o the businesscommunity indoctrinated to ollow the status quo. In act, Austri-ans use the term “moral hazard” to describe irresponsible practiceso the modern central banking system.

It’s the issuance o currency beyond actual reserves that is the basisor protability in modern banking as well as the availability o cap-ital or business enterprises. Teir opposition to standard practicedistanced the Austrian School economists rom the global nancialcommunity. For they believe the great nancial system that builtand supports the world as we know it will ultimately destroy econo-mies due to the inherent unsustainablity o the system both sanc-tioned and enorced by not just the U.S. Government, but by every

government and quasi-government-economic union connected tothe global economy.

Unortunately or a global economy that relies on the Keynesian

economic model, which espouses massive inusions o inationaryat money through a process controlled and regulated by centralbanks, the Austrians come across as heretics to the golden goosethey have worshiped since at least the time o the Napoleonic Wars(some would say ancient Samaria, but I will try to keep it simple).Unortunately, these are old habits that aren’t easily discarded.

Te sad truth is governments and businesses are addicted to creat-ing money out o nothing. Everyone knows this creates ination,which in the long run steals our wealth. But or decades businesspeople as well as consumers have accepted the declining value o their currencies as a necessary price or the capital they need to sup-port their liestyles today.

For some time now, it’s been a common belie the managed econo-my, operating completely out o sync with genuine ree market prin-ciples or actual productive output. is sustainable and the boom/bustcyclical process could continue indenitely. People took solace inknowing no matter how bad the allout, a new wave o prosperitywas waiting just around the corner.

However, the Austrians got it right nearly a century ago and theyappear to be getting it right today. Rather than concoct clever waysto seemingly yet erroneously manipulate the system to everyone’savor, the Austrians endeavor to learn how economies actually unc-tion — or ail to as the case may be. Like Roubini, they have theinsight to explain the basic dynamic, but unlike the seers courtingavor rom the establishment, they have mustered the courage to

publicly acknowledge the most unavorable o truths.What is seen as righteous transparency to some comes across as

indiscretion to others who believe it is more important to protectpowerul interests positioned to prot rom outcomes good or badrather than to protect the integrity o the nancial system we allrely upon.

However marginalized or relegated to the ringes contrarian econ-omists may be, they get it right most o the time. Roubini is contrar-ian, but not dissident in comparison to the Austrian School econo-mists and those who directly point to atal aws in the system itsel alluding to our sel-imposed nancial roller coaster ride rom hell.

Te Way Back to Sustainable Economics

One might ask, “I the damage we are doing to the nancial sys-tem is so clear, why not simply change course and correct it?” Somemight argue that too many powerul people prot rom the systemor meaningul change to be possible. And even or sincere critics o the system espousing change, it’s ar easier to spot the damage weare doing to ourselves than it is to envisage a constructive solutionto this economic quagmire that grows more intractable with eachpassing year.

exas Republican Congressman Ron Paul is among the optimists.





P U B L I S H E R ’ S P E R S P E C T I V E

A long-time advocate o Austrian School economics whose politicsare closer to pragmatic Libertarianism than contemporary Con-servatism, Paul believes it’s not too late or America to return tosound money and sustainable economics, asserting that any short-term pain we would have to endure is worth the price or restoring

America’s economic independence.“A system o capitalism presumes sound money, not at money

manipulated by a central bank. Capitalism cherishes voluntary con-tracts and interest rates that are determined by savings, not creditcreation by a central bank,” Paul wrote in a 2008 column publishedon mises.org.

Paul espouses abolishing the Federal Reserve and a return to thegold standard. He wants to disentangle the United States rom theglobal nancial order that keeps this nation perpetually intertwinedin this world’s most insurmountable problems. In short, he believeswe should x the economic undamentals so a genuine ree mar-ket can ourish, thereby expanding prosperity to a wider range o our society. Paul adheres to Austrian School principles that assertmany o the boom/boosts we experienced over the decades couldbe minimized or avoided all together.

Te Great Ideological Disconnect“Capitalism should not be condemned, since we haven’t had capi-

talism,” is another o Paul’s astute observations.I had to completely abandon the traditional let/right paradigm

altogether to understand what Libertarian minded people reallymean when they make these kinds o perplexing statements. Sincethe coming o Reaganomics, most people think we have had enor-mous helpings o ree market capitalism. And when there is a majorblowout, they vote Democratic in the mistaken belie we need to go

on a diet rom the ree market.What conused voters don’t understand is we never really had a

ree market in the rst place. Ater copious reading on the topic,I have come to the conclusion that contrarians, including Liber-tarians, inormed patriots and thoughtul pragmatic economistspushed to the ringes by the nancial establishment and the aca-demic community it supports through its endowments, are chroni-cally misunderstood. It’s largely because o the let/right politicalsmokescreen perpetuated in the popular press that the vast major-ity o Americans remain mystied at the daily news afecting theirlives.

Interestingly enough, the semantics conuse people more than thedynamic itsel. Most salient to the point is the act “collectivization”is a dynamic — not an ideology. Most people equate collectivizationwith ideological concepts like socialism and communism. Whatthey don’t realize is collectivization is the dynamic that makes botho these ideologies destructive.

Collectivization is also a major component o the corporatists ver-sion o capitalism which is at the root o the global economy o which the United States is the most powerul participant. It’s thecollectivist nature o the system that makes it both unsustainableand destructive. It is also the component that makes the system athreat to liberty and reedom. Letists, like author and radio talk

show host Tom Hartman do a marvelous job o pointing this out.However, the letist solution is a state managed economy, which willonly lead to an economic train wreck o another variety.

Libertarian-minded people on the other hand shun the politicallabels and attack the collectivist dynamic that prevents genuine reemarkets rom keeping economies properly balanced.

Since capitalists ostensibly abhor Socialism (meaning state con-trolled capital), it should logically ollow they should equally abhorcollectivization. But this is only true or entrepreneurs who dependon a diverse ree market to ensure their success.

Monopoly-driven capitalists see things diferently: When enter-prises reach a certain size, they nd it more benecial to cooperatethan to compete with their peers. Tey begin to see the ree mar-ket as something that makes things more expensive and dicultor them, so they use their power and position to attack the verysystem that put them in their exalted place.

Rothbard calls this process “cartelization.” Major banking groupsand the oil industries have consolidated to the point they qualiy ascartels. Starbucks actually tried to do it with cofee. Walmart hasnearly destroyed merchants on Main Street U.S.A. Major invest-ment banks press entrepreneurs to shit into “monopoly capitalism”mode when they go public. Small to medium sized banks can hardlybe called cartels and many, or good reason, ear their masters whocontrol and regulate them through the central banking process.Sadly, the entrepreneurial banks we need most continually risk be-ing swallowed up by major players in the cartel.

When competing businesses become cartels, production is no lon-ger determined by the wants, needs and desires o ree people. Teynot only use their nancial muscle to decide what consumers get.Tey cajole us to want what they provide. Tey can even inuencegovernment entities to protect their position, edge out competition

and mandate their policies. Te polite word or this process is “lob-bying.”

Tis is a corruption o the ree market that ultimately leads to thelarge scale misallocation o capital and resources. It’s identical to thedynamic that occurs in Communist countries that ultimately de-stroys their economies. Tis process leads to unsustainable boomsleading to inevitable busts that destroy the stability o markets.

Powerul interests, whether they are in the public or private sec-tors, all need to do one thing to cultivate and maintain power: theymust collectivize capital. Corporate monopolists do it in a way clos-er to the ascist model o collectivization while the “letist “politicalestablishment preers the state-controlled Socialist model. Sincethe dynamic o collectivization is an objective dynamic, occurringwith a consistency more like that o gravity, it tends to deliver thesame destructive outcome wherever it occurs.

Te ascist model always requires powerul private interests to usetheir inuence to enjoin governments to legitimize their monopolycontrol o key industries as they develop close relationships withgovernment enterprises that corrupt the ree market dynamic ona large scale. Remember, the NAZIS called themselves “NationalSocialists,” and this was exactly how they ran their economy. Teywere hard core collectivists as they were ervent anti-Communists.

Te term “ascist” is generally avoided because o its historical de-





i you nd it unny at all, consider it dark

humor. Tis is something that is real and

staring us right in the ace, yet we are en-

couraged to look away rom it. We eel

comorted by any short-term positive news

we can get about the economy even though

none o it can escape the broader reality.

For me, this is becoming surreal.

George Orwell prophesied in his mid-

20th Century uturistic novel “1984” that a

dystopian society could be convinced “war

is peace” and “reedom is slavery.” Most peo-

ple would nd it unimaginable or intelli-

gent beings to accept such absurdity. But

think about this or a moment: In our time,

we have been conditioned into accepting

the absurd notion that “debt is prosperity”

and “unlimited credit is power.” AlthoughOrwell’s dystopian nightmare o “1984” has

yet to see ruition, we are currently making

rapid progress in achieving this unortu-

nate end with a careully crated variety o

economic “newspeak” we dare not question

or risk being labeled as dangerous extrem-

ists.

Granted, we should be leery o people

who readily embrace extreme actions, but

we should always welcome extreme ques-

tions. I these questions are really absurd,open debate will discredit them. I they

are disturbingly relevant, they will teach us

who the extremist really are. Perhaps we’ve

been voting or them or years.n

David Whitehead is the publisher o Busi-

ness Insider Magazine.

monization, not because it isn’t practicedon a large scale in the Western world whilemasquerading as ree market capitalism.

Free Markets and Free PeopleRothbard believed the sole role o govern-

ment in this process is to serve as a “deenseagency” o the ree market, not as a regula-tor, service provider or protector o sanc-tioned cartels.

F.A. Hayek also asserted that since col-lectivism must be enorced by processesthat ree people would never practice ontheir own, it always leads to less reedomand ultimately tyrannical governmentalstructures. He elucidated on this topic bril-liantly in his economic philosophical classic“Te Road to Serdom,” which he wrote inLondon during World War II.

“Tat democratic socialism, the great uto-pia o the last ew generations, is not onlyunachievable, but that to strive or it pro-duces something so utterly diferent thatew o those who wish it would be preparedto accept the consequences,” Hayek noted.He astutely observed that socialists otenmust do what socialists don’t believe in.

So when you hear Libertarian-mindedpeople say: “Tere is no undamental di-erence between the two main politicalparties,” you now know why that’s the case

and can explain it. Te modern version o Liberals and Conservatives may have theirdiferences, but they are both hard core col-lectivists, both in the system they deendand the policies they promote.

No Easy AnswersI want to be a realist rather than an ideo-

logue or some kind o patriotic idealist. Agenuine ree market economy based on the“needs, wants and desires o people” is thecorrect answer or both moral and prag-matic reasons. However, reeing marketshijacked long ago by collectivists o boththe ascist and socialist variety is an ex-traordinary challenge.

I’m not convinced nancial insiders whodeend the nancial order have actual aithin the system. Tey are in a position wherethey have no choice but to believe centralbanks, global nancial institutions like theIMF, major nancial industries and gov-ernments can manage the processes so the

developed world can prot rom global eco-nomic activity. Tis is the underlying inter-nal struggle most people connected to thesystem choose to avoid. And because theAustrian School economists choose to takeon this issue directly, some would see them

as a threat, not because they exaggerate ordistort, but because they are too honest.

I want to emphasize that Austrian Schooleconomists are in no way conspiracy theo-rists. Tey don’t have to be. All they need todo is point to the actual cause and efect en-demic to the modern economic system thatleads directly to outcomes worse than mostconspiracy theories oating around the in-ternet. Conspiratorial or not, here is yourcurrent reality check: Te national debtreally is over $14 trillion as o this writing

(remember a trillion equals a million mil-lion). We really do owe other nations over$2 trillion. We really couldn’t aford to buyanything i China didn’t have workers toproduce consumer goods or pennies perhour in our money or i they stopped in-vesting in treasures so we have cash to paythem anything at all.

One in our borrowers really are upsidedown on their mortgages. Put another way,you can say that 25% o all U.S. mortgagesare bogus. Tis nation really does have over$110 trillion in ununded obligations on

the near horizon (yes, I did say “trillion”).Economists really are calculating withnumbers that only recently were the pri-mary domain o astronomers (I wouldn’tbe surprised i interest payments are goingto be calculated in light years beore long).

Tis isn’t science ction or antasy and

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310-541-1611 Fax: 310-317-7138

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609 Deep Valley Drive., Ste.350, Rolling Hills Estates, CA 90274

Angela L.H. Sayers, CPA, MBA An Accountancy Corporation

Certifed Public Accountant - Masters o Business Administration

AS




Channel, or blog that ocuses on the nega-tive experience with your brand.

Now most small- to medium-sized busi-nesses do not have to worry at such a largescale about brand protection, but remem-ber even one website, one video, one Face-

book page or one tweet can be enough todo some serious brand damage.

Don’t Believe Tese Five Social Media

MythsTere is a lot o inormation oating on-

line that raves just about everything romhow great social media is to how much o a waste o time it is. I have put together alist o common misconceptions around this

topic that I oten encounter when educat-ing businesses about social media.

1) Sites Like witter and Facebook arefor Kids

Fear: Businesses have a dicult timegrasping the concept that the same net-work their children use to gossip to theirriends about the party they went to overthe weekend is the same channel that isgoing to connect businesses with their cus-tomers.

Fact: Yes, it is true that there are a lot o teenagers and college students that are onsocial networking sites. However the ast-est growing demographics on Facebook arethose 35 years and older (Facebook). Onwitter, 45- to 54-year-olds make up thehighest indexing age group (eMetrics) andInternet users between the ages o 35-54now account or 40.6% o MySpace visitors(comScore). So, social media is not just orkids, but a way or organizations to reach

out and connect with the right people togrow their business.

2) Building Online Relationships is aWaste of ime

Fear: Tere is no point o networkingwith people you are never going to meet. Itis simply a waste o time as it will not driveme any more business.

Fact: Tis is ar rom true - social mediahas opened the doors where it is possible tonetwork with your customers, clients andprospects at ease. Not all o them are goingto turn into customers, but that does notmean you cannot collect valuable eedbackon your product or service. In addition,building your online an base is anotherway or you to promote your products andservices and help keep people inormedabout what is happening in your organiza-tion. Tere is no such thing as time being

also calls or opening a can o worms or

users to post their rustrations, complaints

and bad experiences. What most organiza-

tions ail to realize is i they do not start

that conversation in the rst place, wherethey do have control over what is being

said, that is not going to stop anyone rom

creating that Facebook Group, or Youube

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wasted when it comes to networking withyour target audience.

3) You Cannot Measure Social Media

Fear: It is not possible to measure a return

on investment (ROI) on social media.

Fact: Te very act that social media isInternet-based means it can be measured.When it comes to measuring social net-working, there are typically diferent KeyPerormance Indicators (KPIs) businesseslook at when determining ROI. For exam-ple, the goal o your website may be to mea-sure the number o completed downloads,the number o items added to the shoppingcart, or the number o newsletter sign-upsyou receive. However, on your social mediacampaign, you might look at the number o ans that increased over time, the numbero comments posted on your channel, thenumber o discussion threads on your o-rum, or the number o ratings your videoreceived. All these Key Perormance In-dicators can be measured and analyzed todetermine i the campaign was indeed suc-cessul.

Tere are several tools available that al-low you to measure the trac you receiverom social sites, and analytic sotware such

as Google Analytics can be used to deter-mine which social sites brought the mostconversions or your product /service. Soyes, considering all this, social media can bemeasured.

4) Social Media is Free

Fear: I can create my own Youube chan-nel, or LinkedIn page, or witter account.Tere is no cost or me to set up my net-work on those portals, so why am I beingtold it is going to cost me money to imple-ment a social media campaign?

Fact: A lot o the technology is ree, butsimply creating an account on Facebook orregistering your product name on witteris not a social media campaign. You need toask yoursel:

• How do I increase the number o ans Ihave on my Facebook page?

• How do I get users to subscribe to myYouube channel?

• How do I get people to re-tweet mymessage to their ollowers on witter?

• How do I get users to subscribe to myblog?

You still need the campaign, the creativeand the drive to get your social media planworking or you.

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5) Tis is Something I Can Probably DoIn-House

Fear: We have employees that use socialnetworking sites on a regular basis and they

are amiliar with the technology, so why notuse them to grow our business online?





Sacramento, CA — Te Caliornia Association o Business Bro-kers (CABB- a non prot trade organization) says i you are a smallbusiness owner looking to sell your business but are waiting or theeconomy to turn around, use this time to start preparing. One o

the most vital steps in this process is to understand what your busi-ness is worth.

Ron Hottes, president o CABB and o several Business eamBusiness Brokerages says that a business broker’s opinion o valuecan provide you with an objective view o what your business isworth and is an important piece in determining your asking price.“A business broker’s opinion o value gives you a realistic startingpoint to work rom and can give small business owners directionwhen determining the right time to sell.”

Beore thinking about selling your business, CABB says there aresome key things to consider:

ake an objective approach: Having a business broker’s opiniono value rom a CABB Certied Business Broker automaticallygives you the results and creditability you need. Having this neutralparty take a comprehensive look at your nancial records and thecurrent market is the best way to get an honest picture o the wortho your business.

Know what you need: Have an idea o what you need to make of the sale o the business so you can be as prepared as possible. I youare selling because o retirement, knowing what you can expect tomake rom the sale is an important component o your exit plan.

My Business is Worth What?California Association of Business Brokers says know the value of your business

Tis is the starting point: A business broker’s opinion o valueis only a starting point in selling a business. I the opinion o valuecomes back less than what you anticipated, you know you have timeto do things like improve sales and review operation processes to

make your business as streamlined and protable as possible.

“What is important or business owners to know is that a downeconomy is just one part o the cycle we are in and an upswing willoccur,” Hottes stated. “Tose small business owners who take thetime now to improve and prepare their businesses or sale will bethe ones who will see their business sold at the best price possible.”Get more inormation at www.cabb.org.n

Te Caliornia Association o Business Brokers (CABB) is a pro-

essional trade association dedicated to promoting the growth and pro- essionalism o the business brokerage community within Caliornia.CABB is the largest organization o business brokerage and mergerand acquisition specialists in the state, with more than 450 members.Founded in 1986, CABB was organized to recognize the proession o business broker, to oer advanced educational programs to all members,to create and maintain credentials, help educate the public on the ben-ets o using licensed business brokers and to establish a code o ethics or all members.

Use o the inormation rom the Caliornia Association o BusinessBrokers is solely or inormational purposes. Te opinions expressed inthis document do not constitute legal or nancial advice.

CVB Financial Corp. is proud to announce that Sean Kraus,Charted Financial Analyst rom Citizensrust, Citizens BusinessBank’s Wealth Management Group, was listed in Los AngelesMagazine’s 2011 Five Star Wealth Managers. Kraus is the SeniorVice President, Chie Investment Ocer or Citizensrust. On-tario-based Citizens Business Bank has a strong presence in theSouth Bay, with locations in El Segundo, Manhattan Beach andorrance.

Te list o the 2011 Wealth Managers is an elite group, represent-ing less than 2 percent o the wealth managers in the Los Angelesarea. Los Angeles Magazine ormed a partnership with CrescendoBusiness Services to nd which wealth managers scored highest inoverall satisaction.

Recipients representing 113,000 high-net worth households were

asked to evaluate only wealth managers whom they know throughpersonal experience and to evaluate them based upon nine criteria:

customer service, integrity, knowledge/expertise, communication,

value or ee charged, meeting o nancial objectives, post-sale ser-vice, quality o recommendations, and overall satisaction.

Citizensrust has approximately $2.0 billion in assets under ad-

ministration. Te rm incorporates proprietary asset management

with other best-in-class money managers to build comprehensive

portolios or their select list o private clients. With a history dating

back to 1912, Citizensrust has been helping Southern Caliornia

amilies manage their estates or nearly 100 years. Citizensrust

provides trust, investment and brokerage related services, as well as

nancial, estate and business succession planning.n

Citizensrust is a division o Citizens Business Bank, a $6.6 billion

nancial services company. Citizens Business Bank serves 42 cities with

43 business nancial centers, ve commercial banking centers and threerust ofces in Caliornia.

CitizensTrust Receives Recognition in Los Angeles Magazine

2011 Five Star Wealth Managers Publication




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Fact: In most cases, employees are using social media or personalreasons, and use it to connect with their riends, share photos andnd out what’s happening and where. But when it comes to leverag-ing and monetizing social media or business purposes, it is a com-pletely diferent ballgame. Tis is where creativity, campaign ideas,

and, o course, experience are key, and organizations need to turn tothe experts in this eld to help them put that plan in place. Tere isno predened process or social media. Depending on your targetaudience and your product or service, the networks you participatein, the message you decide to deliver and the way you deliver it arecrucial to the success o the overall campaign.

Finding the Right Social Media MixSocial media might be the question that is being discussed at the

meetings in your organization, but it is not always the answer. Youneed to look at what the objective o the campaign is, what you con-sider a success, and then determine i social media is a mechanismthat is going to help ulll that plan. Social media should not bea replacement or a marketing strategy you are implementing, butshould be part o the mix o activities you are executing.

wenty-six percent o Fortune 500 companies have already start-ed and eel that social media is an important aspect to their busi-ness strategy. So whether it is a large portion or small percentage o your overall campaign, success comes with testing, measuring and

analyzing results.

ConclusionSo where do businesses start? Should they create a page on Linke-

dIn or MySpace? Should they start a blog or start a witter cam-

paign? o answer these questions, it is important to understand

that diferent social networks attract diferent types o people – so

you need to match the users o your product and service to the net-work in which they are most likely to engage. For example, i you are

selling consumer goods, Facebook might be the better area to start

promoting as opposed to LinkedIn, which is a more B2B environ-

ment. Your local WSI Consultant can help put the pieces o the

social media puzzle together and recommend a plan that is right or

your business. Social media can be un, drive a lot o targeted tra-

c, increase visibility and generate more business, but without the

knowledge and experience o executing the campaign, your social

strategy is going to turn, well… very unsocial.n

Baltej Gill is the Search Engine Marketing Specialist at WSI. Grad-

uating rom a technical background in Computer Science, Baltej has

over ve oyears experience in training and educating consultants andorganizations on how to leverage Internet marketing in their businesses.

He has held several Internet marketing workshops internationally and

trained Internet marketing consultants on subjects such as search engine

optimization, conversion architecture, social media and Web analytics.

I you have any questions, please email [email protected].




Documents

Business Insider Magazine Volume 4 Issue4 2011