BAY AREA BANK FAILS AS A PARABLE OF OUR FINANCIAL RUIN
Before Pacific National Bank suffered the ignominy of being a victim of financial hubris, it was a stable, family-owned community bank called California Savings Bank. The failure of the 100 year old institution illustrates how lenders, once the bedrock of trust became bloodthirsty vipers in a psychotic rampage for greed and power and nearly knocked the country off its hinges.
I worked for California Savings Bank for the last four years of its existence before the Symon family uprooted its century long interest in the bank and sold it to the First Bank of Oak Park (FBOP) in 2004. It's easy to describe California Savings today. Think of the 1960s drama "Mad Men" and delete the image of men in pomade-slicked hairstyles. The main office on Fourth and Market in San Francisco, which I worked and is now a Diesel store, still had garish orange carpet and the wallpaper still reeked of smoke from a bygone era when workers smoked at their desk at ate lunch leftovers straight out of the Betty Crocker cookbook. The decor of the office had not change since the Johnson administration, but its attention to financial fairness rooted in good business acumen and a foothold in the success of the community had also not changed.Today this anachronism speaks to how Wall Street bankers become godless purveyors of excessive usury and reckless financial motives nearly ruined the American Dream for a generation.
When the Symon family announced its attention to sell the bank to the Illinois-based FBOP in 2004, there was a palpable belief extensive change was about to occur. Many of the office workers had been with the company for decades. The company did not dabble on the investment side of banking beginning to thrive thanks to the repeal of the Glass-Steagall Act in 1999, which tore down the regulatory wall between retail banking and investments that would eventually spew toxins all over the world of finance. At times, people in the loan department were amazed anyone could survive the bank's stringent lending standards. They didn't even make construction loans.
FBOP, which had been slowly increasing its presence in the lucrative California market by purchasing small banks in Southern California looked at California Savings and its then-22 branches in Northern California as a potential asset ready to pour money like a broken ATM machine. The 21st century hit California Savings hard one day in early 2004, when a president of FBOP visited his newly-conquered inhabitants. Stern and cocky, but a bit undersized, the executive openly mocked the former owners for how they operated the bank. "Did they not want to make money," he said in a nicely-tailored suit and shiny black loafers that starkly contrasted the ubiquitous orange carpet. "There was a job here for everybody," he said, "if you wanted to work for it." The sentence was ominous. In time, those deemed "dead wood" were slowly laid off. Gone were worker with over 30 years invested in the bank. In hindsight, workers due to be let go were given little to do while being told they were not working hard enough.
California Savings moved its San Leandro branch from Bayfair shortly after to new digs on Parrott and E. 14th and renamed itself Pacific National Bank. Reports say regulators had been looking at the failing bank for over two months. The cause, the Treasury Department, says was a load of poor investments in the nearly worthless Fannie Mae. The true cause is symptomatic of everything that is wrong with banking, the morality of Wall Street and the predicament we have been placed where unemployment sits in double-digits and the poor get poorer and, if you're Goldman Sachs, the excessively rich get obscenely rich.
There was a time when being a neighborhood banker was viewed as a friendly face. The fate of the bank was intertwined with your own. Bankers were not out to put your livelihood at risk. If you could not pay back a loan you were not given it to begin with. The banks were still a business with an eye on the bottom line, but its aim was not to strip mine the community of all its money to impress their managers and pad their own personal portfolios. "Did this bank want to make money?" is the problem. Undoubtedly, FBOP made millions from transforming California Savings into a "modern" institution, but in the end, like Bernie Madoff, AIG, Bear Stearn, Lehman Brothers and millions of displaced former homeowners, we all paid in the end.
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