Source: www.benhambrothers.com
The on-again, off-again relationships between SunTrust Banks,, (STI) and the Benham Brothers Real Estate Group is on again, as the Atlanta-based banking institution first decided to sever ties with the brothers' Benham REO Group, and then reinstate the relationship – all in the same day.
"Agenda to silence"
David and Jason Benham, twin brothers who founded the real estate company that became a mover and shaker in the southern U.S. foreclosure and real estate-owned market, told The Daily Caller last Friday morning that SunTrust had retracted all of its bank-owned properties it had listed with their company.
Although the bank did not specify its motives for the action, the Benham brothers told TheDC that they felt that the move was due to their faith, noting an "agenda to silence" was behind both SunTrust's delisting with Benham Brothers REO Group, as well as the loss of their planned reality show with Home and Garden TV.
Earlier this month, the cable channel announced that it would not be hosting the brothers' show, Flip It Forward, because of David Benham's views on gay issues and abortion.
Source: www.benhambrothers.com
For banks, consumer attitudes matter
SunTrust did a swift about-face, however, after a powerful backlash from conservative customers. Shortly after 5:00 p.m. on Friday, TheDC published an article noting that SunTrust had relisted its REO properties with Benham, saying that the bank had "clarified" its policy with a third-party vendor.
This is not the first time a large bank has changed its plans because of consumer outcry. Even Bank of America (BAC -0.13%) famously reversed its planned $5 per month debit card fee back in 2011, bowing to immense pressure over a four-week period. Though it took a month to prod the big bank to back off of the planned monthly charge, more than 300,000 people signed an online petition against the fee, a groundswell that Bank of America could not ignore. In a prepared statement, the bank noted that "We have listened to our customers" – something the bank has been criticized for not doing in the aftermath of the financial crisis.
Interestingly, other banks saw what happened to Bank of America, and learned: several others, including SunTrust, scuttled their own planned debit charges on the news that B of A had knuckled under.
The takeaway for investors is clear: what consumers want matters quite a lot to banks. It may take a tsunami of outrage to prompt them to make a change in their business model, but they will do so – even if the canned venture was, or could have been, lucrative.
Obviously, SunTrust could see that sticking to its original decision would have been damaging to its business. Banks, like investors, tend to make decisions based upon profit or loss, whereas consumers often add a big dose of emotion, as well. For investors, keeping a finger on the pulse of consumer sentiment can be just as important as scrutinizing balance sheets.
Being in the middle of a firestorm is not good for any business, including banking. Following the debit card fee debacle, Bank of America experienced an accelerated rate of account closings in that same quarter. How SunTrust handles its own crisis – including any protests it may now engender from the other side of the issue – will doubtless be instructive for other banks, as well as their investors.
