Against the tide

(Note to readers: This article is intended solely to provide readers of WORLD an example of fiscal responsibility in these otherwise irresponsible times. The author has not analyzed Hudson for investment purposes, and this article is in no way an investment recommendation or solicitation.)

Martin Luther made famous the image of a drunken peasant who, according to Luther, "climbed up on one side of the horse only to fall off of it on the other." The point the famed reformer was making is that it does us no good to move from one extreme if we are only going to land on another.

In evaluating the current credit crisis, some believe the entire mess is the fault of Washington, D.C., and some see it entirely as the fault of Wall Street. The truth is probably found right on the "top of the horse," where a fair amount of blame can be applied to Wall Street (greed and incompetence), as well as to our civic leaders (poor regulation, excessive encouragement of irresponsible lending practices, and a monetary policy from the Federal Reserve that served to really saturate this whole mess). Many people have individual responsibility as well: no default on Wall Street, and no credit crunch, if some individuals did not default in obligations they voluntarily took on.

Yes, there is a lot of blame to go around, but some are not culpable in the financial mess we're struggling through. Look, for example, at Hudson City Savings Bank of Paramus, N.J. As bank after bank closed its doors or saw its stock plunge by 50 percent or more, Hudson City Savings Bank announced record earnings of $110.7 million for the third quarter, and an increase of the quarterly cash dividend to $0.12 per share.

Hudson is the second-largest thrift in the United States. Forbes magazine recently named its chairman and CEO, Ronald E. Hermance Jr., one of America's Best Performing Bosses. Mr. Hermance was among 10 top CEOs in America featured for "having given shareholders the biggest bang for the buck." And how did Hudson go about generating these results? By creating a culture of responsibility with their employees and shareholders; in short, by acting as bankers used to act.

Instead of encouraging people to take on debt far beyond their means, Hudson refused to do those loans despite the forfeiture of commissions and fees that such a refusal created. American Banker, the premiere newspaper for the banking industry, named Hudson City Savings Bank the most efficient bank in the nation in lending and underwriting standards. This honor comes right on the heels of being listed among the top 500 companies in America by Forbes as well as earning a No. 1 rating in the nation for asset quality among top banks.

Hermance states on the company's website, "We are emphasizing values in all shades of the word's meaning: economic value to our shareholders and customers, the social values reflected in our commitment to the communities that we serve, and the value of personal worthiness that we support in our employees."

There has not been much room for talk about "values" in recent times. Banks, brokers, politicians, and even individuals operated with a complete lack of values, which led to a financial malaise that we are still suffering through. But it is nice to say that at least some models of responsibility and value are out there.