With Friends Like These, Who Needs Loan Officers?
The great inflation of the late seventies sent banking--a business whose secrets to success had previously been common sense and good golf skills--into a tailspin. Depositors began deserting the banks in droves, embracing innovative investments like money market funds. By the early eighties, "deregulation and globalization" were the buzzwords of the banking industry; cutting the banks loose from the rules that used to protect them now looked like the only way to keep them alive. Wealthy customers demanded a supermarket of investment opportunities and competitive interest rates. The ultimate goal became the creation of huge regional banks linked to international financial centers. To keep up, banks begun gobbling each other like candy. Meanwhile, overhead costs were increasing: A first-rate computer system, for instance, cost $150 million per year. Small banks couldn't compete. The number of independent banks fell from 12,700 in 1980 to 9,800 by 1988. Bank owners, always prosperous, were suddenly becoming very, very rich indeed.The feds signed off on Hodges's goal. A 1980 OCC press releasel was headlined "Luther Hodges Plan[s] to Make a 21st Century Bank for the 21st Century Boom Town." It may sound nutty now, but as recently as three years ago Washington was being touted as the "next New York," a strange conceit for a one-industry town. Between 1980 and 1988, 22 cover or page-one stories appeared in the local press on the subject of the "New York-Washington-Los Angeles axis." "Mobil, MCI, and go-go real estate--where will it all end?" one 1987 lead babbled breathlessly."There are no young kids here or guys in a ponytail who say, 'Hi, I'm so and so,'" Cardenas remarked, adding that his elite service cadre is nonetheless inspected before each shift. "We check every fingernail, every shoe shine," he explained, citing elements of Cafe La Boheme's "guest-first" policy, "and people are coming back because of this."Observers describe the hospitality and service at Cafe La Boheme as being uncommonly personable, attentive and anticipatory -- unlike at some trendy flash-in-the-pan restaurants here that become too enamored of their own celebrity to remain focused on guests' needs.The tape is on the infamous Ladd-frith label, an indy house that specializes in electronic, industrial and abrasive rock. Their new sampler CD, Objeckt 4, contains highlights from some of their most interesting acts. Also newClearly, L.A.'s gourmets have demonstrated an insatiable yen for the meticulous artistry of Japanese culinarians.Hodges was originally recruited for the directorship of NBW by yet another friend, John Heimann, the comptroller of the currency, to rescue the bank from an earlier crisis. Back in 1980, the comptroller had taken over NBW and was investigating it for dubious director-related loans, undue influence from the UMW, and charges of director kickbacks. With his Harvard degree, a resume that included the chairmanship of the North Carolina National Bank, and a stint as Jimmy Carter's number-two man in the Commerce Department, Hodges looked like the right man to clean house. Furthermore, Hodges was a Democrat whose father, a North Carolina governor and self-made millionaire, had served as John Kennedy's commerce secretary--all of which appealed to the union, still the owner of NBW. Hodges appealed to the OCC and the Federal Reserve for a different reason: He shared the Reagan administration's vision of banking's future.But customers who assess the restaurant strictly on its intrinsic merits have registered approval. Chef Kikuchi and his sous chefs, Toshi Hakamada and Chad Hendrickson, make a popular first impression by offering several traditional Italian pizza and pasta dishes.After serving apprenticeships in France or Italy, many of Japan's best and brightest young chefs often aspire to cooking stints in Los Angeles, a city that has made culinary heroes of such chefs as Napa Valley's Hiro Sone, formerly of Spago; Nobuyuki Matsuhisa of Matsuhisa; Kazuto Matsusaka, the 8-year veteran of Chinois on Main veteran who left it recently to develop a new Santa Monica restaurant; and Susumi Fukui, who launched the seminal La Petite Chaya in Los Angeles more than a decade ago and this month decamped from Symphonie in Torrance to cook in Florence, Italy.The successful start-up of a European-flavored restaurant by management and chefs from Japan is not surprising in Los Angeles.Despite public resentment about Japan's restrictive markets, foreign investments and political rhetoric, diners here continue to embrace the talents of the country's culinary expatriates, who for years have taught Angelenos to expect more from a Japanese chef than just sushi.According to Cardenas -- who has managed both the Chaya Brasserie here and the 320-year-old Chaya group's famed Kihachi restaurant in Tokyo -- the 140-seat Cafe La Boheme has routinely averaged 200 dinner covers on week-nights and 300 dinners per weekend night.Today, the management of NBW is the subject of investigations by the FDIC, the Securities and Exchange Commission (SEC), the Office of the Comptroller of the Currency (OCC), and the FBI--not to mention numerous suits and counter-suits. At the center of this furor sits Luther Hodges, Jr., the bank's former CEO, ousted at the end of 1989 after the once-chubby directors--"They were my friends," Hodges emphasized in the course of several interviews--turned on each other like drowning cats in a burlap sack.
"When you look for a board of directors," he explains, "you look for statute, reliability, character, and connections. You need men who are part of the fabric of local business activity. In Houston, you pick men who drill oil, in Detroit, men who make cars, in Milwaukee, it would be beer. Here in Washington, it's not men who build or make things, it's lawyers and real estate developers. Even though they don't know much about banking, they can bring business to the bank through their place in the world."
Author: Lynda Edwards
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