Dilemma of RM Bank (RMB)

RMB is a community banking institution based in El Paso, on the Texas and New Mexico
border. RMB has over fifteen branches in both states. RMB has been in operation for sixty
years. Its assets reached $ 800 million in the mid - 1990s, but dropped back to $ 650 million in
2007. The President, Antonio Rudiger, attributed the decline in assets to a nationwide cooling
off of the mortgage banking business. Rudiger is feeling the pressure to identify and penetrate
new markets.

The number of illegal immigrants in both Texas and New Mexico has increased
significantly over the last decade. Most illegal immigrants live in the dilapidated parts of town
where middle-class families used to live before the loss of the many manufacturing operations.
The new Latino population that has grown dilapidated parts of town where middle - class
families used to live before the low up around El Paso has brought with it Latino folk music,
statues of Our Lady of Guadalupe and marisco stands

To reverse RMB's declining financial position, Antonio Rudiger plans to offer a new
mort.gage product that will be marketed to illegal immigrants. The Federal Deposit Insurance
Commission (FDIC) has maintained there is no federal law requiring banks to verify immigration
status of foreign account holders.

Rudiger realizes that offering mortgage products to illegal immigrants will draw fire from
critics. On the other hand it will fulfill the unmet banking needs of a new market and generate a
new revenue stream. He believes that offering mortgages to the Latino population and
increasing the ownership of homes will result in an improvement in the housing market for all
the residents of El Paso.

Rudiger is preparing to present his strategy to the board of directors for approval. He
needs their support to introduce this new innovative policy across the branches of RMB. He
hopes to convince the directors of the manifold benefits of his strategy. Entry into the market
would give RMB a competitive advantage and a new revenue stream. It would help revitalize
parts of El Paso and would grow RMB's balance sheet.

Discussion questions:

1. List the new realities in this case that Antonio Rudiger is dealing with.

a. Its assets reached $ 800 million in the mid - 1990s, but dropped back to $ 650 million in 2007

b. the decline in assets to a nationwide cooling off of the mortgage banking business

to illegal immigrants.
c. Rudiger realizes that offering mortgage products to illegal immigrants will draw fire from
critics.

d. Rudiger is preparing to present his strategy to the board of directors and convince them for
approval

2. Identify the stakeholders affected by Rudiger's initiative and identify their value tensions.

middle - class families

illegal immigrants

board of directors

Critics

The Federal Deposit Insurance Commission (FDIC)

Branch employees

all the residents of El Paso

3. What would you advocate if you were on RMB's board of directors? What are your reasons?

a. Rudiger should have identify the new revenue streams from existing legal residents instead of
illegal immigrants as they can be deported by law enforcement agencies and giving them loan
will be risky business.

b. Currently The Federal Deposit Insurance Commission (FDIC) has maintained there is no
federal law requiring banks to verify immigration status of foreign account holders but in future,
FDIS can verify the immigration status of foreign account holders and which may results in
negative impact of the RMB’ balance sheet.