One of the most bracing changes for us baby boomers is not so much a recession -- this is technically our fourth -- but a crunch on credit, our first.
Pals of mine, who are age-appropriate -- let's say late 40s and leave it at that -- are bewildered at the sudden need to produce cash instead of producing plastic. For the generation of Americans who are younger than us boomers -- you tykes who were born in the reign of Reagan, for example -- this is an abrupt 180-degree turn that is more of a shock to the psyche than it is to the wallet.
Some brief background on those of us in the boomer generation is in order here. I was born in 1960 -- at the end of Eisenhower's era -- to parents who were raised during the Depression. This is quite common among boomers. If our parents weren't alive during the Great-Do-Without, then their parents were and they repeatedly ticked off a list of necessities that didn't quite make it into their open palms.
That being the case, most of our parents were determined that we have more than they had. For me, that meant a college education paid for on my parents' saved nickel, and a chance to advance to a greater level of comfort than they had. In truth, that's what all parents want for their kids, on top of how much happiness they can possibly muster.
The trouble, though -- and it's only become a problem recently -- is that while our parents were accustomed to living without credit, we quickly became accustomed to it. And, worse still, we quickly became comfortable with our buddies, the banks --
Bank of America
, just to name a few -- extending credit to us, without us even having to ask.
Is there a boomer among us who has not arrived home at one point in his adult life to find his mailbox stuffed with solicitations for more credit cards? Or how about that welcoming letter from a bank -- on satin-finished stationery, no less -- saying that we were already preapproved for a home-equity loan so we could buy ourselves a new kitchen? The financial services industry even told us how we could use this extra bounty.
You can't blame us -- boomers, that is -- for taking the financial industry's sudden turn on us with the same hurt and heartache as someone who has been publicly jilted by his or her lover. (I exaggerate not.) In the past several weeks, I've had baby boomer pals -- seeking solace from a kindred shocked soul, virtually cry into their Sam Adamses about the cold shoulder they have received from a bank, no longer our bud but a cold assemblage of bricks and mortar.
One friend, who is looking to buy a home, griped that virtually every bank she visited wanted her to shell out 25% as a down payment. What happened to the 10% down she had done before, without a loan officer even batting an eye? I thought, but didn't say, that perhaps 25% down wasn't such a bad idea, because it would lower her monthly mortgage payments. Where else can she productively put that cash anyway?
The banks' betrayal hit me personally, and I was angry and wounded. (Did you catch my jilted lover reference?) I had sold my house to a nice young couple, and the lad worked for
. As fate would have it, the Big G laid him off, and their lender threatened to yank their loan just days before my scheduled closing. My sale went through after the gallant couple produced an all-cash offer (yes, boomers, these things exist in the wild). But I was sleepless for three weeks, because I had already moved and had signed a new lease.
I had another, more embarrassing comeuppance. One pal had told me that
, the great purveyor of plastic, was tightening its credit allowances by reviewing some of its card members' accounts. Her brother, a businessman who apparently brought in and shelled out some big bucks, had his credit lowered. After a brief spat with Amex, he had it restored.
I thought, "Wow, what is this coming to?" and thought no more of it until I produced my Amex Platinum card one day and had it denied. I was livid. Isn't this the equivalent of being financially impotent? I rang Amex, and after some fumbling by the fellow on the phone, he told me that Amex had canceled me because I had only made my minimum payment for a few months and that my balance was fairly high. Excuse me, boomers, but isn't this what we are supposed to do to keep the banks happy? I missed the memo on that one.
I did what any other offended, jilted, ditched boomer would do and demanded to speak to a supervisor. This nice young lady came on the line, I'm sure she was from an East Egypt town in the Midwest, and explained in unaccented syllables that I had indeed been dropped by the Centurion and I could reapply if I liked. I admit (with some shame) that I yelled at the poor woman and slammed down the phone.
I calmed down, meaning I took my woes for a little barroom swim, and thought, "Yeah, American Express is doing a prudent thing here."
Boomers do have reckonings. One of the professions that we have made popular is psychiatry and all the drugs that go along with that. (Odd that any of the major drugmakers --
Johnson & Johnson
-- would ever fall on hard times while boomers still had health insurance.)
Don't get me wrong. I was plenty angry, the pride a little wounded. But I didn't self-medicate beyond a little trip to the bar.
As I reflected on the incident later on, I couldn't help but realize how disappointed my father would be, if he were alive, to find this out. He never owned a credit card, bought our house with cash, and wrote checks for all our college educations. Even when we traveled on vacation, he produced greenbacks.
Now, this is a little extreme, but the point is still there. Daddy-O always believed that cash was his trusted friend, something that he could always depend on when he needed it. Perhaps it isn't a bad thing that I -- and my tribe of boomers -- get reintroduced with actual bucks and that our pals in the financial services industry get more prudent in the amounts they loan out and whom they loan it to.
After I sold my house, I had a fair amount of cash to put into my savings account. And perhaps my generation's spat with the financial industry is thawing just a bit. When I handed the teller my deposit ticket, she beamed, and gave me a very wide-mouthed, "Thank you."
I walked out of my local Citibank thinking, "Well, the bank folks still can be nice. Who would have thought?"
Cash makes everybody happy nowadays.
David Morrow is editor-in-chief of TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, though he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. He appreciates your feedback;
to send him an email.