Take a moment and do an internet search on “arrogance in the marketplace.” It will become easy to see arrogance in others but perhaps not so easy to see it in ourselves.

Early in my career as a director of a public private nonprofit partnership, we adopted a market approach stating that the Private Sector has access to resources, talent and connections that are typically outside of the reach of the Public Sector.  Blind to our own arrogance, we needed friends to point out that the Public Sector has access to resources that are typically outside the realm of the Private Sector.

Early in my retail entrepreneurial lending career, our small staff constantly adjusted to the regulatory environment established by multiple revisions of RESPA (Real Estate Settlement and Procedures Act.) RESPA defined APR as an “easy” way for consumers to understand and compare (and lenders to mislead) the true cost of financing with a form with 4 annoying boxes on the top. It also turned “Good Faith” into a noun when added to with the word “Estimate”, describing a document that often was neither.  Savings and Loans and Commercial banks quick to comply, added a line item to the GFE for non-refundable application fees.

Entrepreneurial mortgage bankers and brokers, with less overhead were reluctant to add the line item and sold the absence of the fee as a competitive pricing advantage.  As entrepreneurial market share increased most added the line item but were careful to keep the arbitrary cost below that of the traditional lenders. As time went on additional line items such as processing, underwriting and doc prep fees were added and became to be known collectively as “junk fees.”

Early on, the entrepreneur’s success was based on customer service reflected in adopting non-banking hours (early mornings, nights, and weekends,) returned phone calls and a focus on referrals from happy customers with closed loans. As the industry matured managers realized that “X” amount of ‘Y” nonrefundable fees could offset the expense of overhead. Focus shifted from happy customers (closing ratios), to numbers of applications submitted.  As traditional lenders increased the number and amounts for “junk fees” the entrepreneurs followed suit and managers would defend the increases with a sense of entitlement. Revenue producing loan officers would be inclined to focus on the number of applications submitted, rather than the quality of the risk. Closing ratios suffered, customer service declined, (no applicant wants to hear that they never qualified in the first place.) The entrepreneurial culture suffered, all through the lens of arrogance rather than the lens of “the cost of doing business.