Dead Bank Walking

I have a must read for entrepreneurs and those who like books on what happens at the executive / board room level in billion dollar corporations called “Dead Bank Walking“.

Before I go into detail about this book I will note that I had never heard of Dead Bank Walking and it was not on my 2007 reading list. I found out about it when my wife and I took a few days off back in February to visit Central California and relax at a Bed & Breakfast.

This particular Bed & Breakfast we stayed at had a private guest house where we shared a common living area with another couple. During our visit it was raining quite a bit so we got to spend sometime getting to know the couple and as it turned out it was with Mr. Robert H. Smith, Former Chairman and CEO of Security Pacific Corporation.

For those who don’t know, Mr. Smith orchestrated the largest banking merger of its day; the merging of Security Pacific and Bank of America. About a week after our mini vacation, I received a FedEx package from Mr. Smith with a signed copy of “Dead Bank Walking”, a book he wrote recapping the events. I immediately placed this book on top of the 20 other books sitting on my nightstand to read next.

Starting off the book we are privy to conversations Mr. Smith had with a who’s who of names such as Warren Buffett, Donald Trump & Allen Greenspan. During the 80’s it seemed anybody who was involved in large real estate developments came to Security Pacific and met with Smith. This also included the likes of Charles Keating, who you may recall as the guy who caused the whole Savings & Loan scandal with Lincoln Savings.

We learn that Smith assisted Keating in acquiring Lincon Savings which then “triggered a chain reaction of legislation, regulatory crackdowns, and economic difficulties”.

At the time Smith took over as CEO of Security Pacific, the government cracked down on lending institutions such as Security Pacific and forced the banks to revalue all their real estate loans.

Basically, banks such as Security Pacific loaned money to developers such as Donald Trump based on the future values the properties would be worth upon completed development but due to the whole debacle with Charles Keating and folks like him who exploited loopholes in the law, the government was forced to crack down and institute a policy where all loans were no longer valued on their future valuations after development but marked at what one would get if they had to sell today.

Thus leaving Mr. Smith with a bank whose loan values on paper dwindled to a small percentage of what it was. At this same time (early 1990’s) California fell into a big recession thus causing other areas of the bank to bleed money left right and center.

Mr. Smith basically was handed the role of CEO of a bank that was heading down a path of despair. In addition to the government enforcing new laws on how banks value their real estate loans, it turned out one of Security Pacific’s big money making operations had inadvertently broken another law thus exposing themselves to a possible fine that could have toped over a billion dollars.

Mr. Smith recounts dozens of stories how under his command anything that could have gone wrong went wrong.

During the peak of crisis, Smith decides the best solution for the bank was to merge his bank with a larger institution. Two banks who became likely candidates were Wells Fargo & Bank of America.

What appeared to me as unbelievable determination & overcoming crisis and stress I could never imagine, Mr. Smith manages his way and overcomes everything that came their way.

As a reader we are taken into the boardrooms where seasoned banking executive face off and battle each other over numbers. We are taken into the executive offices where we get to hear the conversations over the largest banking merger to ever take place. We get to peak into the world of high finance and see for a moment what business is like at the highest levels of corporate banking.

Upon reading the book I placed a call to Mr. Smith. I mentioned how I was blown away with what seemed like unbelievable obstacles and how he overcame them. I said “You would think at some point you would just throw your hands up and say, screw it, I am out of here.

Smith mentioned to me that one of the main reasons for writing the book was to show how you can never give up and that you keep fighting even when things seem impossible. He also mentioned that there is a bit of luck with things and they got that bit of luck.

I mention entrepreneurs would like this book because while reading it you become privy to issues that seem impossible to overcome. But under the leadership of Bob Smith, he not only manages to clean up the mess that was thrown upon his bank due to new regulations and management oversights but he manages to merge his dieing bank for a tidy profit for its shareholders.

As an entrepreneur I read this book and could not believe how much stress one person could manage and overcome. If there is one thing I took from this book, it was to not let every detail overwhelm you. All you can do is to manage what is in front of you and deal with the facts as they come. Do not assume too much and do not get over emotional. All issues have a way of being resolved and it’s a matter of handling crisis’s one step at a time.

This entry was posted on Friday, April 13th, 2007 at 10:50 am and is filed under Cool Books. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.