Saturday Cup of Joe: a lending and tech(ish) newsletter

Friends & Colleagues,

SCOJ82. Week 82. An incredibly busy week here in Detroit. We returned from the vacation ready for action. Cyber Monday was the single most successful day in company history. It was exciting to be a part of that success. It doesn’t stop there. In a recent restructuring, I’ve begun working more with our new products, new sales channels and I’ve taken on an expanded leadership role. Shaping up to be a big year.

A recent sunset on Detroit’s Riverfront


Valuable lessons: After last week’s Cup of Joe, I had a few emails and communications about bitcoin. One popular refrain was “when will we know it’s for real?” One opinion was when you could buy something with bitcoin. Turns out there’s a variety of spots — coffee shops, pizza places and landlords — accepting it. Another opinion was that real estate is the ultimate exchange and once a house is sold then we’ll know bitcoin is for real. Turns out — a house in Dallas was sold for the sales price in bitcoin…and it’s for real. Doesn’t mean it’s properly valued; it just means people are buying real things with it.


Interesting find of the week — Thanks to my colleague Wally for this one. He found a website that analyzes voter registration data according to your first name. Clarity Campaigns found that “Jeremy,” to choose a name at random, is 51.6% GOP, 54.7% of Jeremys attend religious services and 53.9% of Jeremys have a college degree. Jeremy is the 145th most common name. Click here to run your own.


Just before finishing up this week’s Cup of Joe, I came across an article from this weekend’s New York Times about the housing policy of Berkeley, CA. As you can imagine, “The debate was easy to caricature, a textbook example of what housing advocates are talking about when they decry the not-in-my-backyard, or Nimby, attitude. Reality is more nuanced. As cities become magnets for high-paying jobs and corporate headquarters, there has been a backlash of anti-development sentiment and a push for protections like rent control.” In Berkeley, the ZIP code’s home price has doubled over the past five years to about $900,000.

My takeaway was just how complex housing policy can be. Diverse, dense neighborhoods mean a variety of different types of interests all competing for the same space. Even as communities try to deal with changing needs and trends, there is (apparently) no good answer. Complexity has never been our strong suit (see, politics). As housing becomes more difficult to navigate, it will only get more difficult for local governments and neighbors to figure out how to ensure/build diverse communities.


Included this week:

· Of Interest — The government regulation debate isn’t going anywhere.

· Walk the Talk — America’s cities are raising money but at what risk?

· NextBelt — Lending patterns and what we really know

· Millennial minute — People aren’t as different as we think

· Quirky Story — Detroit’s open spaces are going to the bees

· Today’s Thought, the Quote and bonus

Woodward Ave., Detroit, MI, USA

Of Interest: In some ways government regulation has been one of the top political issues for several decades. This is, in part, due to President Reagan, who moved it front-and-center as a key component to his platform. Reagan famously said, “Government is not the solution to our problem; government is the problem.” It seems we’ve made little progress in this regard since then. Government regulation remains a hot button issue in DC and around the country. On one hand, businesses struggle to grow under the burden of regulatory compliance, taxes and other reporting requirements. On the other hand, bad actors continue to manipulate entire markets, not to mention individual consumers.

I was reminded of all this again this week while reviewing a blog post about the pros and cons of the complex regulatory environment for financial services companies. The post describes in detail how many regulators exist and considers the balancing act of speed / innovation versus risk / safety. Highly recommended for anyone who is in financial services or cares about understanding this type of regulatory scheme in greater detail.

As if it were meant to be on my mind, I also came across two other thought-provoking pieces of journalism / advocacy this week. The WNYC podcast More Perfect is a smart, thoughtful deep dive into critical Supreme Court decisions and moments. The episode on Citizens United v. Federal Election Commission caught my attention and, I have to say, really made me stop and think about my own position on corporation-influenced speech. Indeed, I always come back to one basic question: Should we make laws for how we want citizens to behave (i.e. attempting to raise expectations) or how we believe citizens are going to behave (i.e. lowest common denominator protections)? It’s a discussion for another time, but the podcast does a good job describing those who support Citizens United as people who trust voters to evaluate the source of the information as well as the information itself and those who oppose Citizens United as people who view the likelihood of that happening and want to build protections assuming it will not happen. Is policy supposed to uphold the ideal or address the realities of a complex, modern society?

Asking that question in even more detail is Robert Reich, former Labor Secretary, in a new documentary called Saving Capitalism. I saw Saving Capitalism on Netflix. It was interesting, especially in the wake of having listened to the Citizens United podcast. Secretary Reich has the advantage of little to no self-doubt. The upside for the viewer is a film that demands consideration of our system and our policy choices. (If only voters were capable of connecting elections to policy choices.) Until then, it is still possible to test your own assumptions with challenging films like Saving Capitalism.

If the big picture doesn’t do it for you, government regulation made a not-so-discrete appearance on our radar this week as the CFPB’s legal battle of who is the new legitimate Director. The President’s nominee or the former Executive Director’s nominee? A federal judge determined the President’s nominee would be the Acting Director. Moving quickly, the new Acting Director froze all new regulatory actions and began reviewing existing regulations. Just like that government regulation is back, front and center, on our radar. If the CFPB asked your opinion of the regulatory balance, what would you recommend? Is there anything the new Director could do in the next 30 days that would dramatically change your business? What would you ask CFPB to change, if everything were on the table?


Walk the Talk: This problem struck me as one of the truly difficult problems that civic leaders contend with every day. Former DC Mayor Anthony Williams writing on highlighted the catch-22 of city philanthropy. Stay out of it and major gifts find their way to the city’s crown jewels. Think Central Park in New York City. Millennium Park in Chicago. City leaders that try to direct (or mandate) gifts to the city’s needier parks or programs risk funds “drying up” or shifting to other nonprofits. This American Life once did a podcast on the global “Giant Pool of Money” to describe the private capital constantly available and shifting around global markets searching for profitable investment opportunities. Conversely, on the philanthropic side, there is no shortage of available funds. $50 billion nationwide. The non-profit version of the giant pool of money. What seems clear is the money, like investments for profit, will find a home.

In response, many mayors have set up individual funds to support city assets. The Parks Fund. The Mayor’s Fund. Yet, nothing is that easy. The public sector has to constantly figure out how to fundraise for all city spaces without risking the steady endowment of the “special” places. This is not unlike how resources are prioritized in a thousand other ways, but it is exacerbated with the parks and city assets that affect everyone.


As seen on Twitter this week


Next Belt: One thing I work on during my day job is lending patterns. It was interesting to find an Urban Institute study that profiled Detroit as part of a 3-city study of lending patterns. My #NextBelt writing intersected with my actual job. Unfortunately, our data shows vastly differently results as compared to what the report published. I write “unfortunately,” but this is where the fun stuff happens.

Most people do not find methodology — data definitions and data analytics — “fun,” but it is truly how the message gets either distorted or properly reported. For instance, Detroit is split down the middle into two separate metropolitan statistical areas (MSAs), both of which include suburbs in the market area. This makes it difficult to determine the exact amount of loans in the city because public lending data uses MSAs to report loans. Second, the definition of a “black or African American borrower” or a “Hispanic borrower” is not always the same study to study. For example, some studies will only use a loan application where both applicants are African American or where a single applicant is reported African American. Some studies will classify the application as African American if any of the applicants identify as African American. Lastly, the data is only as good as the source. Many applicants prefer not to answer the race/ethnicity questions on their loan application. The question is required (to be asked) but answering it is optional. So public lending data is always good, not great.

What’s the real world impact? The study reports 8% of loans in 2016 to black borrowers in Detroit. In reality, the number was over 42% by mapping the census tracts, including applications with at least one African American applicant requesting residential lending. That’s a big difference and can significantly change the headline (and therefore the reaction).

The reality is lending data across different lenders is also difficult to compare. Under the law, lenders determine a specific definition of “loan application” according to whatever loan products the lender offers. Credit denials versus abandoned applications versus applications withdrawn by the consumer, while not at issue in the Detroit story above, are another area where public reporting of lending can be distorted based on methodology. Finally, given the complexity, many institutions, reporters and lenders give up, and the real story is never truly told. Next time you see any story about how a company is or isn’t serving a particular market, be sure to check the methodology to see what’s behind the claims.


Millennial Minute: Millennials are not homeowners until they are gainfully employed. What’s changing about that is how millennials feel about their jobs and by extension their employers. According to a nationwide survey, employees leave one company for another looking for a bigger challenge (40%), a change of pace (37%) and more compensation (52%). Whether or not you agree that these survey results mirror the workforce overall, one thing is undeniable: Changing trends in employee perspectives and behavior are critical to the success and long-term health of any organization. How do you stay in touch with your teams? Your leaders? Your company? Are you in touch with changes in your organization?

My sense of these “changes” in our workforce (in part, attributed to millennials) is that it boils down to paying attention and articulation. Millennials are not that different from anyone else. We want to be heard and we want to buy into a vision. We have expectations that create impatience. Impatience can be managed. It requires true allies and true mentors. It means staying in communication on the vision, on the purpose, on the potential. A vision of the future.

Baby Boomers: Waiting for your article? Well, we found it. Boomers are moving from homeownership and responsibility to renting and freedom. Flexibility and mobility are taking priority over stability. In some ways, the Boomer generation is simultaneously critical of Millennials and mimicking Millennials. There’s more that binds us than separates us, I guess.


Quirky Story: One way entrepreneurial Detroiters are making use of our empty lots is raising bees. This story profiles Detroit Hives, who purchased a lot for $340 and now gather honey to sell to local businesses.

Today’s Thought: No one is going to tap you on the shoulder and make you an offer. Determine what you want and articulate exactly how you will achieve it. No manager has ever been good enough to read his or her employees’ minds. If you know your career path, start tomorrow to be direct toward that goal.

Quote: “When we show our respect for other living things, they respond with respect for us.” — Arapaho proverb

Bonus Content: When recruiting or retaining talent on your team or in your organization, the biggest factor is candor. Are you being honest about the type of organization you run and is the “talent” being honest about who they are? In this post, the question is raised : “Are you a purist, a team player, a street fighter or a maneuverer?” “If you work for a super-conservative organization and you’re a street fighter, there’s some misalignment there, and that is not going to work, because you’re going to pound your head against the wall and they’re going to hate your guts.” Ask yourself if your organization matches your personality and preference. If not, what type of organization fits you best?

Happy Holidays

Continued success,

Thinker, curious leader, once an attorney…always trying to answer well.