1. From A Stingy Spirit Lifts Airline’s Profit, on the success of low-budget flyer Spirit Airlines. Most Chief Executives want to own the market. You don’t often hear a Chief Executive who knows the value prop that his business delivers:
“If a corporation is buying your ticket, you’re not going to fly with us. We’re OK with that,” said Spirit Chief Executive Ben Baldanza.
Later he says:
“If you’re going to bring a lot of bags, fly Southwest.”
And, you know you work for a boss with a focus on the bottom line when he says:
“We buy pens when we have to,” Mr. Baldanza said. “But if you go to a conference and they give you a pen and a pad, absolutely bring that pen and pad back.”
Funny thing. The pens I use are freebies from conferences and such. Many of my co-workers order the finest pens and laugh at mine.
2. Holman Jenkins writing in Jamie Dimon Stubs Dodd-Frank’s Toe:
Banks that refrain from risk aren’t banks. And expecting regulators to distinguish good hedges from “risky bets,” as Volcker [rule] requires, is to expect regulators to be better bankers (for a lot less pay) than one of the best bankers, Mr. Dimon, has shown himself to be.
3. Good news from the home borrowing front in Lenders Want to Know Everything:
Borrowers who have recently applied for a mortgage know how thorough lenders are now in documenting a person’s finances and ability to repay.
A big reason lenders are being careful is that they fear they’ll have to buy back loans from Fannie Mae or Freddie Mac if proper underwriting standards aren’t adhered to and the loans go bad after being securitized by one of the government-sponsored enterprises…
As Russ Roberts says, “Capitalism is a profit and loss system. Profits encourage risk-taking. Losses encourage prudence.”Amazingly, when you put the incentive of losses back in the system, prudence increases.