Chapter 6: The Law of Unintended Consequences and the Power of Contrarian Thinking

Standing in front of a room of seasoned commercial bankers, business leaders and bank board members, the newly appointed bank CEO was prepared to lay out his strategy for moving his company, and bank, forward. Hired and on the job for 6 weeks, he had assembled his management team, made up of a new CFO, chief banking officer, chief credit officer and a chief operating officer. He had demanded a review of all operations of the bank, assembly of a budget, and identification of efficiency opportunities across the franchise. With this knowledge under his belt, he began his presentation: “Now that our team is in place, we are committed to producing an annual 15% compounded growth rate and a 20% return on average equity.” His new CFO went on to say, “If this team can’t produce these types of results we won’t be here long.” These commitments, hubris aside, made in late 1999, actually would not have sounded particularly remarkable. It was the late nineties, and this kind of performance was fairly normal for multi-billion-dollar banks coming out of one greatest banking booms of the last century. Frankly, it would have been unusual for any of the executives on this CEO’s management team to even be fazed by these commitments—the super-regional banks had been performing at these levels for nearly a decade.