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Bankers and the Covid-19 Pandemic VS the 2008 Subprime Crisis

An Open Letter to Banking Professionals Comparing the Corona Virus Pandemic of 2020 and the Subprime Crisis of 2008.

From Tim Scholten,
President of Visible Progress, LLC.

The Corona Virus Pandemic has delivered the fastest and deepest economic shock in history.  The good news is that most banks are in a much stronger capital position than in 2008. There has been significant work done over the last decade by bankers and regulators to better understand and measure risk  embedded in balance sheets and internal operations.  In 2008 large banks received TARP Loans to bolster capital.  Smaller banks were just out of luck.

Regulatory bodies were disconnected and often provided conflicting recommendations or guidance about regulations.  Since 2008 significant progress has been made in integrating disparate supervision.

In 2008 many banks stopped lending, which further harmed customers and the economy, but even worse, in an effort to mitigate concentration risk, some banks called loans for customers that never had delinquency or cash flow issues, causing forced liquidations.  Since then, banks have made substantial investments in measuring and monitoring risk and have incorporated them into daily operations to avoid the same risk and customer challenges.

For over a decade, banks have included planning for a pandemic as part of their disaster readiness planning and testing. While a real event always presents different challenges than what has been planned, being able to dust off pandemic plans and jump into action was a real testament to the benefits of disaster planning and testing.

The most significant difference I see is one of attitude.  Government policy makers, regulators and bankers alike appear to be demonstrating real empathy for people and businesses impacted by this pandemic.  We are seeing service charges, late fees, and
account fees of all types for businesses and consumers alike, waived during shutdown of much of our country.  Many banks have pulled out all the stops to help customers weather this crisis in hopes that it is a short term challenge.

The amount of human acts of kindness during this crisis is noteworthy.  We hear stories every day of people doing extraordinary things to help others, neighbor helping neighbor, and individuals and businesses selflessly donating to help people in real need.  We have seen human resilience and toughness like never before while people are quarantined at home, isolated from friends, family and business associates.

We have seen teams learn to work differently and collaboratively in isolation overnight, with leaders leading them well through a world changing event.   While this crisis may have hit us faster and deeper than ever before, the positive way in which people have responded leaves me with the hope that the road to recovery will be much faster and brighter than in 2008.  We are counting on all you bankers to lead the way through to recovery!

After decades of leading innovation in banking in sales culture, streamlining operations, process and technology advancements
inside banks, Tim founded Visible Progress in 2008 to help community banks transform and innovate during one of their
most challenging times in recent history. He is known for his customer-centric approach for guiding banking clients through
crisis and transformation of all kinds.

Tim Scholten, President
Visible Progress LLC

2008 Mortgage Crisis 2020 Covid-19 Pandemic
Impact – World wide Impact – World wide
Rapid increase in unemployment Fastest increase in unemployment in history
Property Values – country-wide collapse Property Values – TBD
Massive loan defaults Loan defaults – still to be determined
Failures of household names: Lehman Brothers, Merrill Lynch, AIG, Freddie Mac, Fannie Mae, Washington Mutual, Royal Bank of Scotland, and Countrywide Mortgage Failures: TBD
FED Response:

  • Interest rate cuts
  • Quantitative Easing (large scale asset purchases
  • Forward rate guidance
FED Response:

  • Interest rate cuts
  • Quantitative Easing (large scale asset purchases
  • Forward rate guidance
Government Response:

  • $700 Billion Stimulus
  • Increased regulation (Dodd Frank)
  • Increased bank leverage ratios
  • Mortgage relief
  • Bank & Corporate bailouts – TARP
Government Response:

  • $2 Trillion Stimulus, to date
  • Easing of regulation (delay CECL)
  • Easing of bank leverage ratios
  • Relief for all types of borrowers
  • Equal opportunity to participate (Cares Act)
Bank’s Response:

  • Reactive communication
  • Slow to respond and innovate
  • Loan Modifications
  • Increased fees to bus and cons
  • Reduce staff
  • Bottomline focus
Bank’s Response:

  • Proactive communication
  • Faster to respond and innovate
  • Interest only (short term)
  • Waive fees and charges to bus & cons
  • Retain staff
  • Customer focus

At Visible Progress, we’re here to help smart banking leaders create winning financial institutions…

Schedule your free strategy session today!

For Business Owners     

Create Your Financial Institution’s
Complete COVID-19 Pivot Plan.

I will help your financial institution create and launch your
complete crisis pivot plan in 
30 minutes without
losing customer confidence 
or harming your reputation.

Create your complete crisis pivot and recovery plan

Maximize team unity and customer communication

Grow bank stability and customer loyalty for the long haul

What is it costing you and your customers to not take action today?

The world is mostly frozen in place due to the Coronavirus.  Banks that create a complete Bank Pivot Plan and implement a customer retention strategy without delay are much more likely to survive.  Because of that, Visible Progress is making possible something we’ve never made possible before.  For the first time ever, Tim Scholten is doing a free 30 minute Bank Pivot Strategy Call so you can be sure your plan and ability to execute is bullet-proof… all from your home or office! In 30 minutes, Tim will draw upon his 30+ years in banking and business leadership, and his experience guiding dozens of banks and credit unions to thrive through the 2008 housing market crash, to make sure that you’re not missing a beat.  Don’t be the bank that customers leave and never return to because of 1 simple oversight.

Seize this once-in-a-lifetime opportunity to be the bank that everyone remembers and trusts.

Get outside expertise to help you discover vital things you are not able to see.

Leave no room for doubt with your board, your team and your customers.

Be the financial institution that everyone remembers as guiding them to safe harbors during difficult times.




Create your Pivot Plan.  Retain customer loyalty while protecting your valuable reputation.  Move forward confidently while the rest of the world is in “pause mode”.

How is Visible Progress different?

If you are like so many other financial institutions that we work with, you are doing everything you can to make your customers and shareholders feel like they are your most valued asset during these challenging times.  With every client we have talked to, however, almost every single one has overlooked a handful of vital questions, blind-spots and strategies simply because they are so familiar with their customers and processes that they inevitably miss some of the vital “trees for the forest”.  When this crisis begins to lift and we help our communities climb out of the coming recession, will your customers and community remember you as the bright lighthouse that guided them through troubled waters to safer harbors, or will they remember you for missing the mark based on preventable oversight?  At Visible Progress, we’re here to make sure you don’t drop a single ball.

During the housing market crash of 2008, we helped guide dozens of financial institutions from struggling and failure to steady growth and thriving.  Today, those same financial institutions are rock-solid, fully-prepared and making visible, daily progress during uncertain times.

With over 45+ combined years helping banks, credit unions and financial institutions to create and implement strategies that bring daily, visible results, we can help you be the safe harbor that all of your customers are seeking.

About Visible Progress

Tim Scholten is a veteran banking executive and founder of Visible Progress.

During the 2008 housing market crash, Tim led dozens of banks and credit unions through insurmountable challenges to ensure that they not only survived the crisis, but thrived once our country came through the crisis.

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