Page 35 of The Moneychangers

"Profit is giving service to our shareholders," Heyward said. "That's the kind of service I put first."

The bank's money policy committee was in session in an executive conference room. The committee, which had four members, met every other Monday morning with Roscoe Heyward as chairman. The other members were Alex and two senior vice-president Straughan and Orville Young.

The committee's purpose was to decide the uses to which bank funds would be put. Major decisions were referred afterward to the board of directors for confirmation, though the board rarely changed what the committee recommended.

Individual sums discussed here were seldom less than in the tens of millions.

The president of the bank sat in, ex-officio, at the committee's more important meetings, voting only if it became necessary to break a tie. Jerome Patterton was here today, though so far he had not contributed to the discussion.

Being debated now was Roscoe Heyward's proposal for a drastic cut in Forum East financing.

Within the next few months, if Forum East was to continue as programmed, new construction loans and mortgage funds would be required. First Mercantile American's expected share of this financing was fifty million dollars. Heyward had proposed a reduction of that amount by half.

He had pointed out already, "We will make clear to all concerned that we are not opting out of Forum East, nor do we intend to. The explanation we will give is simply that in light of other commitments, we have adjusted the flow of funds. The project will not be halted. It will simply proceed more slowly than was planned."

"If you look at it in terms of need," Alex had protested, "progress is already slower than it should be. Retarding it still further is the worst thing we can do in every way."

"I am looking at it in terms of need," Heyward said 'the bank's need."

The riposte was uncharacteristically flip, perhaps, Alex thought, because Heyward was confident that today's decision would go the way he wanted. Alex was sure that Tom Straughan would join him in opposing Heyward. Straughan was the bank's chief economist young, studious, but with a broad spectrum of interests whom Alex had personally promoted over the heads of others.

But Orville Young, treasurer of First Mercantile American, was Heyward's man and would undoubtedly vote with him.

In FMA, as in any major bank, the true lines of power were seldom reflected in organizational charts. Real authority flowed sideways or in detours, depending on loyalties of individuals to other individuals, so that those who chose not to join in power struggles were bypassed or marooned in backwaters.

The power struggle between Alex Vandervoort and Roscoe Heyward was already well known. Because of it, some FMA executives had chosen sides, pinning their hopes for advancement on the victory of one adversary or the other. The split was also evident in the lineup of the money policy committee.

Ale, argued, "Our profit last year was thirteen percent. That's damned good for any business, as all of us know. This year the prospect's even better a fifteen percent return on investment, maybe sixteen. But should we strain for more?' - The treasurer, Orville Young, asked, "Why not?"

'I already answered that," Straughan shot back. "It's shortsighted."

"Let's remind ourselves of one thing," Alex urged. "In banking it's not hard to make large profits, and any bank that doesn't is manned by simpletons. In plenty of ways the cards are stacked in our favor. We've opportunists, using our own experience, and reasonable banking laws. The last is probably the most important. But the laws won't always be as reasonable that is, if we go on abusing the situation and abdicating community responsibility."

"I fail to see how staying in Forum East is abdicating," Roscoe Heyward said. "Even after the reduction I'm proposing, we'd still be committed substantially."

"Substantially, my foot. It would be minimal, just as the social contribution of American banks has always been minimal. In financing of low-income housing alone the record of this bank and every other is dismal. Why fool ourselves? For generations banking has ignored public problems. Even now we do the minimum we can get away with."

The chief economist, Straughan, shuffling papers, consulted some handwritten notes. "I intended to bring up the subject of home mortgages, Roscoe. Now Alex has, I'd like to point out that only twenty-five percent of our savings deposits are currently in mortgage loans. That's low. We could increase it to fifty percent of deposits without harming our liquidity position. I believe we should."

"I'll second that," Alex said. "Our branch managers are pleading for mortgage money. The return on investment is fair. We know from experience the downside risk on mortgages is negligible."

Orville Young objected, "It ties up money for long term, money on which we can earn substantially higher rates elsewhere."

Alex slammed the flat of his hand impatiently on the conference table. "Once in a while we've a public obligation to accept lower rates. That's the point I'm making. It's why I object to weaseling out of Forum East."

'There's one more reason," Tom Straughan added. "Alex touched on it legislation. Already there are rumblings in Congress. A good many there would like to see a law similar to Mexico's requiring a fixed percentage of bank deposits to be used for financing low-income housing."

Heyward scoffed, "We'd never let it happen. The banking lobby is the strongest in Washington."

The chief economist shook his head. "I wouldn't count on that."

"Tom," Roscoe Heyward said, "I'll make a promise. A year from now we'll take a fresh look at mortgages; maybe we'll do what you advocate; maybe we'll reopen Forum East. But not this year. I want this to be a bumper profit year." He glanced toward the bank president who had still not joined in the discussion. "And so does Jerome."

Por the first time Alex perceived the shape of Heyward's strategy. A year of exceptional profit for the bank would make Jerome Patterton, as president, a hero to its shareholders and directors. All Patterton had was a one year reign at the end of a so-so career, but he would go into retirement with glory and the sound of trumpets. And Patterton was human. Therefore it was understandable the idea would appeal to him. The scenario afterward was equally easy to guess.

Jerome Patterton, grateful to Roscoe Heyward, would promote the idea of Heyward as his successor. And, because of the profitable year, Patterton would be in a strong position to make his wishes work.

It was a neatly ingenious sequence, devised by Heyward, which Alex would find hard to break.

"There's something else I haven't mentioned," Heyward said. "Not even to you, Jerome. It could have a bearing on our decision today." The others regarded him with fresh curiosity.

"I'm hopeful, in fact the probability is strong, that we shall shortly enjoy substantial business with Supranational Corporation. It's another reason I'm reluctant to commit funds elsewhere." "That's fantastic news," Orville Young said. Even Tom Straughan reacted with surprised approval

Supranational or SuNatCo, as identified by its familiar worldwide logo was a multinational giant, the General Motors of global communications. As well, SuNatCo owned or controlled dozens of other companies, related and unrelated to its main purpose. Its prodigious influence with governments of all stripes, from democracies through dictatorships, was reportedly greater than that of any other business complex in history. Observers sometimes said that SuNatCo had more real power than most of the sovereign states in which it operated.

Until now SuNatCo had confined its U.S. banking activity to the big three Bank of America, First National City, and Chase Manhattan. To be added to this exclusive trio would boost immeasurably the status of First Mercantile American. "That's an exciting prospect, Roscoe," Patterton said.

"I expect to have more details for our next money policy meeting," Heyward added. "It appears likely that Supranational will want us to open a substantial line of credit."

It was Tom Straughan who reminded them, "We still need a vote on Forum East."

"So we do," Heyward acknowledged. He was smiling confidently, pleased at the reaction to his announcement and certain of the way the Forum East decision would go.

Predictably, they divided two by two Alex Vandervoort and Tom Straughan opposed to the cutback of funds, Roscoe Heyward and Orville Young in favor of it.

Heads swung to Jerome Patterton who had the decisive vote.

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