The lesson we learned was not an operational change, but instead an important reminder. We need to keep in mind there will always be lenders that push beyond the outer limits of good sense simply to increase volume and/or yield. In turn, those actions create the "me, too syndrome," where some competitors figure it is time to jump on the bandwagon so they do not get left out.

CEOs need to always remember they must be the risk-management gatekeepers, and not allow underwriting standards or other quality factors to be loosened simply for volume, yield or ego.

When others are asking, "how come we can't do what a competitor is advertising?" it is time to belly up and remind the management team and board that prudent decisions are made at the organizational level based on each institution's risk factors-not based on what anyone else has deemed to be "appropriate."

Reality is, the need for consistently prudent lending never goes away and thinking "this time will be different" is a prelude to disaster.

Teresa Halleck
President and CEO
San Diego County CU, San Diego

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