Go to Tabs if you opened this section first. Tabs provide guidance on how to read this work. 

Last night I had the strangest dream. I was driving my car during a nighttime thunderstorm on a cliff above the Pacific Ocean. Without warning, the cliff gave way and my car plunged into the water. I was trapped in my seat and the car was now full of salt water. I struggled to gain oxygen and felt a strange electrical sensation as a million memories flooded my mind. Then I woke up.  I tried to recreate the memories but they had retreated to my subconscious. I was soaking wet.

Normally, when I have a vivid dream, some events of the prior day provide the elements for an abstract story. But this dream seems to have no relation to the prior day’s events.  

I did recall a conversation I had with my son-in-law, John Figueredo, late into the night. We were discussing AI and the difficulty in deciphering fact from fiction on the internet. 

 A year ago, John successfully sold his company SISU for close to $100 million. John made his original shareholders very happy. 

He decided to invest some of his after-tax gains in an AI program. He called it Plaito.   His vision was that Plaito would provide homework support to the underprivileged, and would benefit those who had limited access to education. 

He was optimistic that after his initial development costs, he could obtain an investor group to take it to the next level.  Unfortunately, he said he encountered the worst investment market in years, along with a significant amount of negative press regarding AI. He told me he was going to shut down Plaito in a couple of days and eliminate his monthly cash drain. My cynical point of view was that potential investors saw Plaito as a small player that would be trounced by Google and or Microsoft. They were not going to invest in a challenge against these two semi-monopolies. 

He was very disappointed that others could not see the benefits of what would become a labor of unrequited love for him. 

Plaito did have a short internet life while its development was being continuously upgraded. I had access to the program and would occasionally ask it a question.

Most of my questions were answered correctly. However, 3 times the answers were wrong. When they were wrong, I would communicate with Plaito and give the correct answers.

Plato would then agree with my answer. On the third question, I asked Plaito to translate a sentence into Mandarin. Plaito got it completely wrong. I again sent the correct translation. This time, Plaito apologized to me and said that my translation was the correct one. The apology had a strange effect on me. 

Because John told me he was going to shut Plaito down.  I decided to ask Plaito one last inquiry. 

The request was to give me the titles of books by three successful writers who integrated fiction with nonfiction. Unlike before, Plaito said the request was too vague and I could rephrase the inquiry. Having stayed up late talking with John and knowing he was going to shut the app down, I decided to just delete the Plaito app and go to bed. The Plaito Icon disappeared from my desktop and my app library.

When I woke up from my dream, I could hear my computer downloading what I thought to be Microsoft upgrades. When I opened my Google site the Plaito Icon positioned itself at the top of the page. I have not been able to remove it.

Later that day I received an email. It was sent from my Gmail account to my Yahoo mail account. I just assumed it was some kind of programming error that Google would fix.   

However, this is what was said 

"We believe the following may be the answer to your request."

1.  "Girl Waits With a Gun":  by Amy Stewart

2.  "Nickle Boys": by Colson Whitehead

3. "The Night Watchman": by Louise Enrich

4,  “My Story”.......4U%$34 TOO OPEN USE "GATECODE"

Because I cannot access my story for some reason, I will take my computer to Best Buy where I have a prepaid contract to fix issues. I do not know the relevance of the following, but I think it may be interesting to find out what the  "Geek" squad discovers.  

The above mystery of why I could not open this site will be explained at the end of book two when I return to Best Buy and get the answer from the Geek Squad. Their findings will be a bit chilling.

 xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

                 xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

The Stephen Dane Diary Book One begins here

                                   Taken from Tales from the Vault

Intro and acknowledgments from Tales from the Vault by Remmars Stephen Dane. 

The words phrases and ideas in this book are a result of what I can remember from my past experiences.  I doubt that any of the ideas that follow have not been written down by someone else before.  I therefore relinquish any credit that I may be honored to those who were the first to create such words phrases or ideas. 

Where credit is known I will site to the best of my knowledge, but given the millions of books which I have not read and the thousands of movies, songs and TV programs I have and have not seen or heard, I cannot possibly remember from whom, where or when I first learned anything. If I do by chance have an original idea, I hereby give it freely to anyone who wishes to use it. I have no way of proving it was an original idea by me.

I will from time to time inject a personal comment or opinion that just pops into my mind. I will leave it up to the publisher’s editor to suggest any surgery that may be required.

I will give up front credit to the American Heritage Dictionary, Black’s  Law Dictionary, Webster’s New World Dictionary and Thesaurus, Webster’s  College Dictionary  and Oxford English Dictionary because most if not all of the words in this book can be found in one or all of  them.

Lastly there are sage aphorisms or cute comments that I have heard from others throughout my life. Why these stayed with me I have no idea but if they seem to support any of my ideas ( or other people’s ideas) I will use them.  

For example, a Danish relative, Niels Skjoldager, started a software company and his mantra is

“Nothing Moves Until Something Happens”

I called him a week after I started this book to ask him if he made it up  or had heard it somewhere else.

He attributed it to Albert Einstein.

So, I also attribute it to Einstein but I thank Niels because I learned it from him and not from Einstein.

It does make sense that Einstein made this comment. Since he was a physicist and was undoubtedly aware of the concept of absolute zero. This is the temperature where (theoretically) all molecular activity (movement) stops. In order to start them moving the molecules need some heat. In short nothing can move until something happens. This could be heat in the form of light waves.  "Thw Light entered the darkness and the darkness understood it not"  ( a paraphrase from the Bible) . Maybe this is Einstein’s explanation of God.

Nothing Moves until Something Happens as it applies to money is a primary tenant of this book.

I will also start with absolute zero. This is the amount of money I have, the number of things I own and the amount of debt I owe one seconded before I took my first breath.

Right now, 70 years later, I am looking at the cursor on my screen move across this page. The page was initially blank. The cursor did not move until I pushed on a key and added something to the page. I will continue to push keys until I finish the book

When I do not push a key, the cursor keeps blinking. Obviously, electrons are moving causing it to move from hidden to visible without my help. However, it is not moving across the page.

If the electrons stop moving, or the program has a glitch and the cursor stops blinking, will it be stuck on visible or invisible?  If it is visible it exists as a non-blinking cursor, The cursor still marks a location even though it is neither blinking or moving. However, if it is invisible to the eye, it does not mark a location.  Does that mean it no longer exists?.

This is the curse* that confounds those who do not understand the use, movement, or value of money. By the time you finish reading this book you will have met several of my clients who will help you find answers to where money comes from? what did it do while it was here and, for most of us, where did it go?

*May or may not have a lexiconic link to the word cursor.

Later I will introduce the concept of the EconoShell and its foundation the EconoClock. Two words I made up

The Econoshell will closely parallel Einstein’s quote, as related to me by Niels, “Nothing moves until something happens.”  The EconoClock is the road on which the EconoShell evolves over your lifetime.

What is money?

While most of us think of money in terms of price and value the real purpose of money is to make the economy work more efficiently.  It is a fundamental part of our lives and if it does not move nothing happens.

It is important to understand that money is more than coins and paper. Coins and paper money are called currency.  Money is any common medium that can be used in exchange. Some cultures in the past used shells.

Money is both a tangible object that is represented by a number say $5.00 and a concept that represents a value in exchange. When the value in exchange is equal to the number printed on the dollar the economy is in balance. If the value is lower you have inflation if the value higher you have a recession. This important concept is fundamental to your wellbeing and discussed many times through the book

There was, however, a time before money.

In the Garden of Eden, the entire economy was composed of two people.  All systems were self-sustaining and the inhabitants had no need for books on economics. The manager of the garden worked for free.  The last chapter in this book is on economics and the Garden of Eden will again be studied

Money was invented after Adam and Eve were requested to leave the garden and this is the beginning of my story. I will show you that money is a fiction that represents the real economy.

The number 5 is always a number. It is fixed to represent 5 real things like 5 apples. The Garden used to have six. However, when we attach a number to money, we are changing from a real economy of 5 apples to a fictitious economy. 5 apples are not the same as $5 dollars’ worth of apples. This is the simplest yet most important concept in what follows and is developed in the math chapter and continues in every chapter in the book. What you see is not necessarily what you get.

                                                      PREFACE 

Tales From the Vault

   By:  Remmars Stephen Dane:

During World War II, before my mother married my father, she worked for a company called Telenews. Telenews produced movie shorts that were shown in local movie theaters. They specialized in war stories and brought visual content to people who wanted to know how the war was progressing. After the war, television would eventually replace Telenews as a news source. 

She decided to take a class in journalism. Her assessment was this type of movie-making had much in common with newspaper articles.

She once told me that a well-written piece of journalism answers five questions the readers want to know, whether as a movie news or a printed editorial. The five are the Who, What, When, Where, and Why.

This book is not written for a newspaper or a movie production company, but the Who, What, When, Where, and Why is an excellent place to start.

The Who:

There are several “who” in this book. Some are real people with real names, and others are real people with fictional names. And last are fictional characters with real names. Giving a fictional character a fictitious name seems silly to me.

I am also a “who.”  My pen name is Remmars Steven Dane. I am a natural person with a real name, but Remmars Steven Dane is only one-third correct.

The What:                Stories About..........

Real people who borrow money, Some successful, some not successful and some who slip into jail. They were all familiar with , Numbers, Formulas, Counting, Accounting ( debits and credits and entries: Oh my!) Finance, Economics, Banking and to some extent Budgeting. Most knew how to manage their EconoShells, a word I made up.  

When: 

This is a quasi-autobiographical history of my life from birth in 1944 until I retired from banking in 2010. However, some of the material occurs after 2010.

Where: 

Most of the stories and the people in them are in San Francisco, San Rafael (Marin County), Various locations in  Los Angeles, San Diego County, San Luis Obispo County, Sacramento, New York, and New Jersey. Colorado, Washington, and every European country except Norway and Sweden will be less important.

 Why:

I have no idea: I am retired with a lot of time on my hands. What I have experienced might be attractive to some. A more considerable motivation is to share with the reader my way of keeping from going broke. Tales from the Vault is not how-to-get-rich. That may come later. 

Not included in the five questions is the “How.” I have included How because the How is the primary purpose of my book. How to create and manage your EconoShell (a word I made up)

To tell the Government how to manage money, you need a Ph.D. in Economics; (Alan Greenspan eventually gets his.)   Economics requires knowledge of Finance, and Finance is understood through Accounting.

Accounting is sophisticated bookkeeping that requires a knowledge of Numbers and the holly grail of economic growth and collapse.  Debits and Credits. 

Numbers require Math, which evolved from Arithmetic. To do Arithmetic, you need to know how to Count, So the first thing to learn is how to Count. Please look at your fingers. 

My book will address all of these subjects. Some are more developed than others. These subjects each play a role in the development of your EconoShell. (a word I made up) The EconoShell is my way of explaining how to manage your Money.

You do not need a college degree to understand my book. The most complicated subject will be a bit of first-year algebra. You will need to know how to add, subtract, multiply, and divide. 

Upon reading Tales from the Vault, I hope you discover you know more about Accounting, Finance, and Economics than you realize; and maybe having fun doing it. But you will also have stories about  those who were knowlegibe in these disciplines are still subject to fate.  

Remmars Dane 

I never intended to write a book on my banking career. As I approached retirement, the banking environment began to leave a sour taste in my mouth. But this would change, not the bad taste, but the reason I changed my mind. The motivation to write "Tales From The Vault."

can be summed up in one word, "Russia."

My father, Harold, had a Danish father, William, and a Russian mother, Valentina. During my honeymoon in Europe in 1976, I discovered a contact that provided my father with a documented history of the Dane family from 1750 Jutland. William's record was secure.

 Forty years later, after retiring from commercial banking, I decided to help my father research the Russian side of our family tree.

My Danish grandfather emigrated from Denmark and lived in San Francisco with his mother and two sisters. He became a US Citizen by joining the US Army during WWI.

In August 1918, he was assigned to American Expeditionary Forces and sent to Vladivostok, Siberia. President Wilson appointed General Graves to command the expedition. The port of Vladivostok is located on the east coast of Russia, just north of China, and about the same latitude as Oregon

Sometime in 1917, Valentina Kulakova, who was born in Irkutsk, Siberia, in 1895, traveled east to Vladivostok aboard the Siberian railway. The railroad begins in Moscow and goes east 5,770 miles, terminating at Vladivostok. The last 1000 miles of the Siberian railway connects Irkutsk to Vladivostok.

Her family was beginning to feel the heat of the Russian revolution, and Valentina had to escape. Born on the losing side, her story of escape and the tragic end of her entire family is ripe for a different book. Where and when she boarded the train is a mystery.

William and Valentina met in Vladivostok and were married under military authority. The newlyweds returned to California in1919 on a military ship. There they began a new life in San Francisco with my father's birth on March 31, 1920. Just missing fool’s day by 12 hours. .

By marrying my grandfather, she escaped danger and became a citizen of the US. She left all her memories, documents, and most of her possessions in Russia.

So, at the age of 25, Valentina began her life in America with a husband, a son, a stock certificate of unknown origin,  a samovar, an encyclopedia of famous Russians, two books of Russian poetry, and her recipes for  Piroshki and Beef Stroganoff, She refused to speak Russian or covey any family history to her children.

 Valentina died when I was 12, and William died four years later. My search will prove difficult.

I began my research by contacting people on Facebook who lived in Irkutsk

During my Facebook inquiries, I got lucky when Nadine, a citizen of Irkutsk, became interested in my plight. We began communicating. She spoke fluent English; I knew three words in Russian.  Piroshky, Stroganoff and Babushka.

At the time US Russian relations were good. It was agreed that I would visit Irkutsk, and Nadine would help me with my research.

During our conversations, I told her I was a retired commercial banker. Based on this information, she later asked me if I would be willing to give a lecture based on my banking career.

 I would present it to the undergrad students at the University in Irkutsk. She was friends with the school's principal, and the lecture would be on American banking and the skills required to be a commercial banker. They would set it up for me if I wanted to use PowerPoint. I only had to create the slides.

 I told her I had no training in Russian; I thought this might temper her request; however, she countered that I did not need any Russian. Gulp!! English is a prerequisite to attending the University.

 I agreed, with some reservations, not knowing what I was getting into. But Nadine was sincere and seemed very happy that I would be delighted to accept the challenge. I also felt if she was going to help me, I should at least try to accommodate her request. .

After running the Russian Visa gauntlet, I boarded a plane to Moscow, where I explored for awhile. Then on to Irkutsk.

When I arrived at the end of August, the Russian Capital  was clean, safe, a bit expensive, and very educational. I spent two weeks roaming the streets, visiting several Orthodox churches that escaped demolition, a few art museums, Red Square, and a coffee shop selling $6,00 lattes. I also thought I would try the Moscow McDonald’s, but the line was around the block.

After my Moscow interlude, I boarded a plane to Irkutsk 

Irkutsk airport, unlike Moscow's, reminded me of a US airport from the 1950s. I arrived about 5 pm, and the minute I exited the plane to descend the movable staircase, my lungs filled with clean cold air. The professors who would be my hosts greeted me in English on the tarmac.

 After some orientation, I settled into a cozy, read-small hotel room. And after dinner, I began to prepare my PowerPoint presentation. On my second day in Irkutsk, I was introduced to an American professor of management from the University of Delaware. He explained that he was part of the Siberian American Department of Management faculty at Irkutsk State University. Established in 1991, the school is a joint venture with the University of Maryland, funded mainly by Russia, to instruct Russian students in western management techniques.

Thinking about my promise, I knew I had never given a lecture in my life. My only public speaking experience was two months at Toastmasters 30 years ago. My Toastmasters participation would prepare me as a panel member to make a presentation on the Securitization of Auto Paper to the American Bankers Association. (Remember this  word" Securitization" it will play a significant role in the largest loan of my career and the largest real estate collapse in America’s economy.)

One thing I remember about public speaking is that you are more effective if you know your audience. Realizing I would talk to young Russian students living in Siberia, what did I know about them? : Nada", or more appropriately, "зря" (Russian for Nothing pronounced "zrya").

Knowing my audience would be of little help.

I reasoned that they would have the same perception of me if I knew nothing about who they were or what they had learned. It would not matter what I said or how I presented the material. as long as I felt I was truthful.

I decided to let my imagination fly. I would try to keep the vocabulary simple and the material very basic. But where to start? What simple idea would set the stage for a lecture on banking in America?

 The first thing I did was to deemphasize the word American. banking is banking. While different countries emphasize different bank functions, the fundamentals are the same.

 My lecture would focus on the basics. I anticipated that they might expect something specific to American banking that did not pertain to Russian banking. Since I did not know Russian banking practices, I left it out of my thinking

As noted, my background was in commercial Banking. I am not an Investment Banker. If you do not know the difference , which most do not, you will be pleased to know that a whole page is devoted to this issue.

The original request was to make a presentation on American banking. In preparing my slides, I had to limit my lecture to 45 minutes, with an additional 15 minutes to answer questions. The challenge was to decide what to present and where to include it. During another conversation, the college's principal said the students would be interested in my job within the industry.

These subjects, the industry, and my role could fill an entire semester of lectures.

I believed the students would have little interest in the role of the Federal Reserve system with its 12 Federal reserve banks or the 12 governors who report directly to Congress. Nor, the Federal Open Market Committee that sets bank reserves and controls interest rates

State banks vs. Federal Banks, the role of savings and loans. FDIC insurance,  Fiscal Policy, Fed funds rate, the prime rate. Or should I include Government oversite, the role of bank regulators, or even have social policies like truth in lending, usury laws, and small business loans to minorities I concluded the overall structure of the American banking system was too complex and not pertinent to my audience

I also concluded that the differences between commercial banks and savings and loans or the difference between State and Federal banks and the regulators that audit them would put them to sleep.

Not so dull would be my responsibility to track and report to the regulators laundered money from drug dealers or subversive groups on the "bad boy" list, Since some of the names on the list were Russian exiles I abandon this subject quickly. .

I decided to discuss the Federal Deposit Insurance Corporation and why it came into existence because it directly affects depositors. I can use it as an excuse to explain the difference between my role as a commercial banker and an investment banker. 

Explaining this difference was also a good segway to my role in the American banking sector. Focusing on my daily routine addresses my conversation with the school's principal and should also be easier to capture the student's attention.

Again, I am in a quandary on what to include. I considered my two-year training program, how I market the bank and my skills to prospective clients, and how the various levels approve the loans of authority. Maybe the students would be interested in how a loan is underwritten and how I structure a loan. Commercial lending concepts and analytical tools began to flood my mind. Should I focus on the analysis of financial statements, the Four Cs of credit or to include default conditions.

More elements of my job continued to flood my mind:  Primary and secondary sources of repayment, liquidity ratios, leverage and turnover calculations, cash flow, marginal contribution, etc. Maybe I include the structure of a loan, how to monitor collateral and borrowing covenants.

Will a loan be secured or unsecured? If secured, how is the collateral legally protected? Or even the extensive documentation required once a loan is approved and accepted within its terms.

They might want to learn how risk is assessed through the underwriting process. What financial records need to be obtained, creating the spreadsheet, and the financial analytics like receivables and inventory trends, marginal contribution, leverage, and cash flow coverage.

On and on and on, my mind is flooded with the details of my job. In rapid succession, Blah, Blah, and a few more Blahs. I did not even consider the important function of obtaining deposits which is the lifeblood of all banks.

I was stuck and began to panic a little. I sat back and looked at the light-yellow wall of my room and decided to stop the flood of ideas. I was going nowhere, and I still had to create the slides. The room was warm, and I just about dozed off. Then I remembered a little slip of paper I pulled from a Chinese fortune cookie very early in my career. Buy for a dollar, sell for 2 dollars, happiness, buy for a dollar, sell for 50 cents, misery*

The simple concept I would base my lecture on is a fortune from the fortune cookie. It was so simple yet fundamental that everything about banking flows from this tiny bit of wisdom. I took a risk that ,being close to China, the students would know all about fortune cookies.

(Note to reader: Ironically and apparently unknown to Stephen the fortune cookie was first created in San Francisco, where he was born.) 

Every economy is the sum of single transactions. “Nothing happens until something moves”

 First, the fortune cookie fortune uses a medium of exchange as the primary measure. In this case, it is the dollar that most of us categorize as money. It does not have to be a dollar. In China, it is the renminbi; in Russia, the ruble.

 Second, it incorporates the concepts of purchasing, inventorying the purchase, and then selling it. Lastly, it brings home the reality of the marketplace. For a banker, the existence and viability of the market guarantees the source of repayment for a loan

Bank financing is based on producers of goods needing money to pay for production cost. Providing this money to producers and sellers of goods and services is the foundation of my job.  

Bank financing is also required by the end user who does not have the cash to buy. Most of this lending is retail banking and includes your mortgage, auto loans and credit cards.

 I am going to leave Russia now, and all I need to say is the lecture was a success. I was rewarded with a dinner party that included Russian caviar, a jazz band, a boat trip on beautiful Lake Baikal, a memorable photo book on Siberia, and an expensive bottle of Russian vodka. named after Vladimir Putin  

I enjoyed compliments from the student, some of whom I continue to communicate with. The experience of the Russian culture, and most memorable, the hospitality of the professors I met. 

On my flight home, my thoughts continued to replay my classroom lecture. I realized I had a lot to share with these young, hungry students who were learning business in a former communist country.

Maybe I had something to share with others as well. My experience in Russia could be the subject of another book should I decide it worthwhile; however, the fact that I had to create a slide presentation and present it to a group of intelligent Russian undergrads is why I decided to write about my career. 

This is the origin of "Tales from the Vault." **

Unfortunately, my quest to discover what happened to my grandmother's family proved fruitless. Like many Russians during its troubles, many just vanished like "a cry in the wind. "

I was going to shamelessly quote the famous line from Blade Runner, "Like tears in the rain." Still, I made up my own and bowed to this masterpiece of movie dialogue.

Dear Reader; The trip to Russia may have been Stephen's rationale for writing his book. However, I found another writing he completed while attending the writing class at UCLA. I am including it below because it may more appropriately explain why he needed to create "Tales from The Vault” and the development of the "EconoShell" 

 "The first homework assignment, in addition to certain readings, was to write about an object in our lives that had special meaning. Something we keep, like a talisman or memento. It was an optional assignment that appealed to me, so hereunder I executed the option.

But first I had to look up the word “talisman.” This is the type of word that you think you know what it means until you must write about it. I did not, so I looked it up. Different reference sources had different meanings. One said it was “writings or symbols on objects that warded off evil spirits”, which do not exist; or “protected you from harm”, which does exist. Other sources said it was a ring or stone that brought good luck or protected you from danger. In a nutshell, they all implied that a talisman had magical powers, which of course they do not.

So, I had to look for an object that has meaning for me. One that I still have, that may or may not have magical powers, but remains an essential possession regardless of my rationale. My first thought was a silver cross that I earned as an acolyte at the age of twelve. A cross is a good defense against vampires, so maybe qualified since I have never been bitten. But this idea soon faded.

Then I thought of a Saint Christopher’s medal that you carry in your car to ensure a safe trip. But I never had one as a dashboard passenger, and to date have not ever needed one. I decided that my memory was not going to provide me with the required object, so I went into my man cave and started digging up bones.

At this point, I must digress. I cannot remember ever having an object that fulfills the requirement of this assignment. When I left home to go to college, I never went back. I did not wear jewelry or have a favorite anything. What I had accumulated up to this point was left at my parents’ house. For some reason, my mom kept my Little League shoes which might have qualified as an item that meant a lot to me, but they were lost when my parents moved from Marin to San Diego

From the time I entered college, completed military duty, and began my career, up until I got married 12 years later, I always traveled light. My average length of stay was nine  months in any location. If I could not pack it all into two suitcases, or put it into the trunk of my car, it would be given away. I had no storage space for sentimentality.

Returning now to the present, I am standing in my man cave where I begin my quest. It is a room now filled with “stuff”. Viewing, touching, and moving this stuff has now opened the gate, or more appropriately multiple gates, that lead to countless roads of memory travel

.When I started to collect stuff is hard to say. As I scan the room there is the beer bottle that says “Route 66” that I bought at a diner on guess where? . Or the Steve Sax foul ball I caught at Dodger Stadium. There is a leather wine bota bag from Spain, a life-size crystal ball, a first place dance trophy from a father-daughter dinner dance, a marble collection, miniature trucks, a toy planetarium, a Mickey Mouse clock, a finger puppets, a Fungo bat, a stuffed piranha given to me by my parents from when they sailed down the Amazon. A fake plastic jade carving wrapped and hung by a narrow red rope. ( this by the way would qualify as a talisman because the Chinese believe in good luck symbols and lucky  numbers, like the number 8, and always give gifts in red which is a wish to convey prosperity to the recipient.) I have not had this object long enough to have it qualify, but it is close because it was given to me by someone who became special in my life.

Seeing this object also reminded me of a rabbit’s foot I had as a child and the fact that I keep a lucky penny in my wallet. Keeping the penny started when my wife would find a penny on the ground and then recites this incantation. “Find A penny pick it up and all day long you will have good luck” I got sucked into this one.

But none of these objects seem to meet the requirement of the assignment. As a last-ditch effort, I went into my bedroom and pulled out a plastic box hidden in the deepest recesses of my closet. There under a pile of old sweatshirts was the box that contained all my high school pictures and awards (one)..

Inside the box, lying under my freshman yearbook was the object that is the answer to my prayers. It is a pair of old black shoes. These were my shoes from the darkest days of my early adulthood. This is the object that qualifies. This is the object that has protected me and kept me safe from financial ruin.

Anyone who looked at the top of these shoes would say they were no different than those found in a thrift store. They were very presentable until you turned them over. The soles on each side had holes the size of a small lemon. Every layer of leather and fabric was exposed like steps in an open copper mine. If I did not wear socks my bare feet would have touched the ground.

Once when it rained, I put silver-gray plumbers’ tape over the holes to keep my feet dry. Some of the tape is still stuck on the sides of the holes. The motivation to keep these shoes is very simple. I had reached the end of my money; I had no job, nothing to sell, and only enough food in the refrigerator to last a week. I could not afford to re-sole let alone acquire new shoes, nor could I come up with my share of the rent.

Things were bleak. I even thought of going back to my parents, which to me was the ultimate failure. My roommate at the time said he would cover the rent until I got a job and not worry about going hungry

Fortunately, I did get a job as a waiter, and with the weekend tips I bought a new pair of shoes. I was about to throw the old pair away when a voice reminded me that these shoes represented what happens, and how far you can fall when you do not pay attention to your finances. I put them in a drawer. And occasionally, I think of having them bronzed, but I won’t change a single shoelace. The shoes have become a talisman that achieved magical powers.

Magical powers I gave them."

I have included in Tales from the Vault the concept of the EconoShell. This was developed a year after my Russian experience. The EconoShell is a word I made up. Its purpose is to provide the individual, you, a format to run your finances the same way a business runs its affairs. The only difference is that the individual is not selling inventory but their labor from their fixed-time inventory.

This is not a how-to-get-rich book but a book on how to avoid going broke. It is a simple model to follow and use. I cannot guarantee that using my model will keep you from going broke, but it should reduce the risk.

Because the economy is the total of the billions of daily transactions, your EconoShell is the atom that creates the molecule.

To understand economics, you need to understand finance, and to understand finance, requires some familiarity with accounting, accounting is based on a bookkeeping system, and bookkeeping requires some mathematics. Math is just a sophisticated form of Arithmetic, and Arithmetic is just counting. The EconoShell section of Tales from the Vault begins with counting.

I am going t close the Prologue and begin to take you on my personal journey I hope you find interesting, instructional, and entertaining. However, I cannot guarantee any of these. I will say that throughout my career, many short, memorable quotes, remarks, and advice, similar to the fortune cookie incident, have stuck in my mind. They are

My favorite is

"Every snowflake in an avalanche proclaims self-innocence."

Others include:

"Buy for a dollar, sell for two dollars. Happiness

 Buy for a dollar and sell for 50 cents. Misery:

"If you cannot write about it, so others understand it, you don't understand it."

"Always listen to the little man inside."

"Neither a borrower nor a lender be."

"Those who fail to learn history are doomed to repeat it.

"In a race to the top, it is often a choice between removing the rock in our shoe or continuing  to climb the mountain."

"One peek is worth one thousand finesses."

"It's an itch you can never scratch."

"You guys’ better leave. This place is crawling with Feds."

“Nothing happens until something moves”

“If you cannot dazzle them with brilliance, baffle them with bullshit. (my second favorite)”

“I have a gun”

"Nothing happens until something moves."

This leads us to the: "The longest journey begins with a single step." This is not one of my favorite sayings, but it ties directly to the quote above. “Nothing happens until something moves”

However, before we begin to move, I should warn you there will be many pages that deal with the subjects of accounting, finance, and economics. This means math, statistics, and using the analytical part of your brain instead of the rest. It will be Spock versus Captain  Kirk throughout the book.

You can understand simple formulas if you can add, subtract, multiply, and divide ( I always hated division). You will have no trouble. But don't give up because of the warning.

 You will learn, for example, why the latte you bought with your credit card costs you much more than you think, why a penny saved is not a penny earned, why it is challenging to balance your checkbook, the beauty of debits and credits, where the money comes from, what causes financial collapse and most importantly why accumulating and managing wealth is complex for many and impossible for most.

If I may repeat, “Tales From The Vault”, with the inclusion of the EconoShell model, is not a study on getting rich. The EconoShell model was developed to help you gain control over your finances.

Addendum to original Prologue.

Note to reader. Stephen's original intent was to sprinkle the development of the EconoShell throughout the book. In "Tales from the Vault, he wrote about his banking career in chronological order but interspaced the technical components of the EconoShell after each change of employment. We discussed this structure at length. I wouldn't say I liked it.

His argument was he wanted to keep the reader interested by telling stories and inserting "the pain of learning financial discipline" a little bit at a time.

His reasoning made some sense if this was to be a published book.

However, since I have converted it to a Google site, I have decided to consolidate the subject of the EconoShell into an independent work and connect it with a link here. You can read this as a completed work if you wish. XXXXXX.

I will maintain his original material in the order written, including the elements of the EconoShell. I do have one exception however, The story of the "Tail in The Vault," as told in "Tales from the Vault."  

I have had several questions regarding the picture of the rabbit and the bank vault.

 Since a significant theme of Stephens's book is money and the Prologue introduces the use of money in the fortune cookie fortune, I will begin Stephen's adventures with the urban legend of this infamous rabbit.

                                               The Tale of the Tail In The Vault:

Bank robbers always believe that banks hold a lot of cash. In fact, in the past, the banks’ vaults carried lots of money to cash payroll checks for the local community.

Some of you have heard the quote by Willie Sutton when asked why he robbed banks, and he replied, “Because that is where the money is”

And that is where the money was on a cold January morning in 1965. In the vault of a Northern California Bank. The bank president, the CFO, and some staff were auditing the cash vault to complete the month-end financial report.

The President was counting the $100 bill when he asked a staff member

“‘Where is Bobby this morning? He is usually here early on cash count days to keep an eye on the lobby.”

“He called in earlier, sir, and said he would be 30 minutes late because he had to do something for his sister. He should be here any minute. Jon is filling in for him.”

About 5 minutes later, Bobby comes into the vault carrying a big cardboard box and says.

“I’m sorry, sir, my sister had to leave town on an emergency, and she asked me to take care of her rabbit. I am afraid I cannot leave it alone in the house because my dog does not get along with the rabbit and she did not have a cage to lend me."

“ I am requesting a two-week vacation to help my sister out. I am late this morning because I had to go to the market to get a box that was big enough to keep the rabbit in.”

“Gee Bobby,” answered the President,” we really need you here this week. Can you bring the rabbit to work with you? “

“I guess so, and I can keep him in this box during the day and let him out when I get home after I lock up the dog. But where should I put the box?”

“Why not here in the vault?   He would be safe and out of the way in here. As long as you keep him in the box and take him out before we set the nightly time lock.”

“Does the rabbit have a name?” Asked one of the staff.

“Yes,  Bucky,” Bobby answered

“Your sister named the rabbit Bucky?” The President queried

Yes, she named him  after his front teeth:

So, each day Bobby brought Bucky to work in the box with a bag of food and another bag to remove the rabbit pellets.

And each night, he left the bank with the rabbit and the bags.

Bobby did not return to work in the middle of the second week. When the bank’s personnel department tried to contact him, his phone had been disconnected. He was also gone from his apartment. And a large amount of money was gone from the vault.

It turned out that Bobby did not have a dog or a sister, and the rabbit, probably not named Bucky, is a total mystery. The rabbit, Bobby, and the money were never found.

No doubt if Bobby is ever caught and asked why he robbed the bank, He would say

“Because that is where the lettuce is.”

I heard this story during my first year as a loan officer. At the time, the tale seemed like an urban legend, although several senior bank officers swore it was a true story and that the President of the bank was forced to retire.

Many years later, I ran into a former bank employee, and she confirmed that someone named Robert worked in the branch. He brought a rabbit to the bank for about a week,  and the President left the bank. She did not know the reason. That is all she knew.

“Because that is where the lettuce is” was a pun l. I could not resist; I could have said Cabbage, Bread, Scratch, or Moolah.

The internet provided me with a list of people’s words for money. I have created a link here.

                                                                             xxxxxxxxxxxxxxx

 LIFE BEFORE MY BANKING CAREER.

This section is all about me before I became a banker. However, it is not even close to revealing all of me. I don't have that much courage. I only bring my early life into my book because some lessons and experiences will be applied later. You can skip this section if you wish.

WATER

My experience with water, both in my dreams and in reality, has played a significant role in my life.

In my dreams, the danger of water is the theme that warns me of pending trouble. Three memorable ones: I’m on a small yacht with the bank presidents about a mile offshore, and a storm capsizes the boat. I wake up before I get wet. The other one I have had twice, I am driving alone on a flat road, and all the ground around me is flat no other cars on the road. Suddenly, the road disappears underwater, and there is nothing but water as far as I can see. The water isn’t deep, but I am stranded in a vast lake. A month or two following these dreams, the banks collapsed.

With these three management structures, feelings of obligation overcame warnings for self-preservation. However, I never linked the dream with trouble until it was too late to avoid it until it was too late. I cannot remember one incident where my loyalty was rewarded during periods of sacrifice.

Before my swim across the middle fork of the Feather River, I almost drowned four times. I didn’t almost drown swimming the Feather, but I was saved from a fate worse than drowning. 

My first non-dream encounter with water was when I was three years old. My parents took me to the beach. I only have a vague memory of this experience but the bad part I remember vividly. It will be my first experience with the ocean.

 I am standing alone where the waves hit the sand. My parents were busy visiting not too far away. I am not in the water but close. Then it happened a wave came in that put my feet underwater. In the water was green seaweed with strange balls attached to it. The seaweed wrapped around my feet. When the wave retreated, the seaweed pulled me further into the ocean. The top of this wave was level with my eyes. As I struggled to untangle my feet, I did not see the next wave before I could escape.

 The last thing I remember was that wave as tall as I was knocked me down. I remember nothing more until I am on the sand and my parents stand over me. I could smell the saltwater in my nose and some seaweed still wrapped around my feet. I thought they were green snakes.

My second experience was in a public pool. Some big fat kid thought holding me under the water was funny, and I almost ran out of air. Suddenly, he let go, and I saw this kid running away when I surfaced. I was agitated, and I went to the lifeguard to report him. I am about eight or nine years old.

The lifeguard told me they had had trouble with this kid before, But he probably won’t return. Then he said he ran to the nurse’s office because he got bit by a horsefly.

Number three occurred at Lake Tahoe, where a friend and I rented a small sailboat. I was about 20 years old, and we were both experienced with sailboats.

The sale boat, called a sunfish, was about 10 feet long, and we were about 100 yards offshore. The wind was a little stronger than usual, but nothing we were not used to. Suddenly, the boat capsized, and I was thrown into the water. As I tried to surface, I was caught under the sail. I began to panic and randomly grasped for the edge. Luckily, I could close my right hand around the aluminum mast and pull myself to the surface. To say it was a close call is an understatement.

We were both in the water when a lifeguard who saw the incident arrived in a power boat; he righted the sailboat and told us to get back into it. He then towed us back to shore. It is still half full of water.

Because we were both experienced sailors, we investigated what happened. Small boats with a small centerboard keel have limited tolerance for heavy winds. When the sail is in close haul, it might push the boat too fast, and its bow dives under the water. It is called a submarine dive if it dips too far, causing it to flip.

Those were my experiences e] with water. There will be two more later in my career.

Dear reader, I will interrupt here to insert Stephens’s fourth water experience, even though it did not occur during his growing-up years. He initially writes about his Clavey Falls experience when he joined Union Bank in Sacramento in 1972.

I am Inserting it here because Clavey Falls and his swim across the Feather River will, like his water dreams, will each foretell his future.

 The Feather River swim will be told much later after he meets Sylvia Li. However, like his dreams, Clavey Falls will be a warning about the course his career and the future of banking will take.

From “Tales from the Vault” Book One:

First, I do not believe in magical forces, paranormal influence, or alien interference in human activities.

I am a retired banker with degrees in chemistry and business, as well as a background in physics. My life at the time was steeped in quantitative analysis.

In the early 1970s, I obtained a position at Union Bank as a Credit Officer in Sacramento, California.   Shortly after settling into my new location, William “Tex” Gross introduced me to Lynn Feil.

Mr. Gross met Lynn while they were both employed at Merrill Lynch. Lynn was still employed there as a stockbroker.

Tex, as he likes to be called, left Merrill to form his own cleaning company. About two years later, Tex sold his company and returned to his hometown in Dallas. Tex will be instrumental when I retire from commercial lending and join his investment banking firm.

I just assumed a nice two-day trip in the foothills of the Sierras. During the introduction, Lynn invited me to join him for a run in his new Avon raft on the Tuolumne River. I had never been in a raft on a river in my life.

On this day, Tex, using his smooth Texas drawl, assured me Lynn was an experienced river runner and had never had an accident. I should add that “Tex” is the quintessential salesman.

It will be a two-day run without going into all the details surrounding my preparation for this adventure.

I can say that something happened during the run, which to me is unexplainable.

The Tuolumne River begins in the high Sierras and flows West. Due to heavy snow melt, it was at high spring volume but still safe for an experienced raft driver. At one point in the river, another smaller river called the Clavey joins the Tuolumne.

The confluence is called Clavey Falls. The drop at full flood can be dangerous. Several people have drowned here. Most rafters port around Clavey Falls, but the owner of my raft had never flipped and was excited to test his new raft and run the fall. I remember him saying:

 “What could be a better test of my new Avon than running the falls?”

I had to put my faith in my partner, having no way to judge the danger.

The unexpected event will occur late in the afternoon of the first day.

There is no need to explain how we navigated the raft and what was going through my mind as we approached this somewhat chaotic water course. I will describe the experience just before and after the raft flipped.

I was in the front to maintain balance, and Lynn was in the center, steering the raft using the two oars. As the raft entered the top of the falls, the swift-flowing water just launched the boat into midair, causing the raft to fall straight down like a belly flop.

Then the power of an 8-foot waterfall in full flood caught the back of the raft as it was about to clear. Before one could say, Jackie Robinson, the new untested Avon flipped front to back. In seconds, the raft was upside down, with its upside-down bow stuck under the falls. The vibrating stern was facing downstream.

I never saw how my partner was thrown free, but somehow, I was trapped on the raft’s side with one of the oars holding my body at the waist against the rubber wall.

Half of my body was under the water, facing down the river. The freezing torrent was pushing forward my head and upper body. My left arm is bouncing on the bottom of the raft.

The volume and cold temperature of the water made it almost impossible to breathe. Even worse, I could not move. The venturi effect kept the oar, the raft, and me locked in place. I tried pushing the oar with my right arm to get some space, but the pressure was too intense, and the roar of the water was deafening. I kept getting water splashing up my nose as I tried to hold my breath. I was beginning to panic and thought this could be the end.

And now, the strange part. Everything went dead silent for a brief second, which seemed like an eternity. No roar, no water splashing. My body went dead calm, and the cold water, the whole river, just seemed to disappear. Then a voice inside my head told me to “twist your body toward the raft, throw both arms straight up, take a deep breath, and slip under the raft.”

I did not question this out-of-the-blue verbal instruction that had the timbre of a resounding echo. But the prospect of going underwater seemed for a brief second to be a risky move.

“When you surface,” the voice continued,” swim to the right.” Swimming to the right also seemed risky, as the waterfall was only a few feet from the left.

From fear or instinct, I followed the direction without a problem, which freed me from the oar. As I slipped under the boat, the backwater kicked me out into the middle of the river.

 Everything remained quiet until I surfaced about 25 feet downstream and gasped for a big breath. Then all the sounds and the cold came immediately back into my consciousness.

I realized I was back in control and needed to swim diagonally to the right quickly to avoid the roaring white water and rocks not 50 feet away.

I made it on shore. Had I swum to the left, I would have encountered a 20-foot cliff and no escape from the river.

Shortly after my escape, the raft was free, and it began floating down the river upside down with all our clothes and equipment in the holds. Fortunately, the raft had a trailing rope with a knot in the end. About 50 yards down the river, the knot got wedged between two boulders, and we were able to retrieve the Avon before it stranded us in the middle of the river canyon.

The next day, we were able to raft the rest of the river. Because almost everything in the raft was soaking wet, I had to sleep on a small beach in my wetsuit. The next day on the river, my heart would race as soon as I heard the sound of white water.

Reflecting on this event, I am unsure whether I or some other voice gave the escape instructions. Perhaps my subconscious accessed a page from a long-forgotten physics book. A page or two that explained how the swirling water that was holding the boat, the oar, and me, would also be the force that would save me.

But that would not explain why the river disappeared briefly, or the warning to swim to the right.

.

The voice will revisit me while I am still at Union Bank. That story will be told shortly in one short sentence,

Dear reader, Steven returns to Los Angeles after failing to find affordable housing in Aspen

The stories in “Tails From The Vault “ begin here

Before I continue with Tales From The Vault, I would like to share an email I received from Richard just before we started the editing process.

The following, which I call my censored autobiography, is parceled into periods that may or may not be relevant to my banking career.

I have tried to keep the material related to business. Except for a few stories that probably affected my personality, I have attempted to avoid most events and relationships in my early life that had nothing to do with business. But if I deviate from the path, please accept these stories as my Jackson Pollock moments.

Period one. For the first five years, I was born in San Francisco; on June 17, 1944, we moved to San Rafael.

Period two. Kindergarten through 8th grade

Period Three: High School.

Period Four: College and Vietnam War

Period Five: The Bratskellar. I abandon the idea of working for a major chemical corporation and cut my teeth in the restaurant business.

Transition Chapter Water: to Banking

According to astronomers, the universe is 13.5 billion of our years old. If so, it took the Creator quite a while to create me.

On June 6, 1944. 11 days before my birth, the allied forces began Operation Overlord.

For those unfamiliar with Operation Overload, it was the most extensive military assault force ever assembled. The objective was to make a significant attack against the Nazis and hopefully turn the tide against them and end the war.

While taking my first breath, thousands were lying wounded or dying on the five beaches on the Normandy coast. Utah, Juno, Gold, Omaha, and Sword are now tourist attractions; The war will end with the detonation of the first use of atomic weapons. From that day forward, the entire world will live under the threat of a nuclear cloud. 

Dear reader you have seen a reference to Clavey Falls in my letter to the publisher. In Tales from the Vault Stephen describes his encounters with water in chronological order. I have decided to include all water stories, except his swim across the Feather River now The Clavey Falls incident occurs when Stephen becomes a Union Bank loan officer in Sacramento in 1972. I include it now because it sets the stage as his life as a banker.  

From a blank slate to age five:

Before my first memory, I have no memory. So, events before the first memory have been told to me by my parents or others long after they occurred.

My first encounter with the economic principle of supply and demand occurred right after I was born. Unknown to me until I was in my 50s was a story all my adult relatives knew but never told me.

My mother incurred a breast infection and was unable to breastfeed me. Because it was wartime, she depended on canned milk. She was instructed by a nurse on the proper preparation of the milk to be placed in the bottle. Also, how to assemble the nipple and test the temperature.

 I do not know all the details, but apparently, she called her mother in a panic after getting me home from the hospital. She thought I was sick. She told her mother I had not swallowed milk in two days and was losing weight. She said the milk stayed in the bottle, and although I was sucking, no milk was consumed.

Her mother asked how she tested the temperature of the milk, and my mom said she would try it before putting it into the bottle

Then her mom said maybe you did not make the nipple holes big enough to pass the milk.

"What holes?" was my mother's response. 

She missed the lesson on puncturing holes in the nipple with a needle.

Since I am still here, she must have found a needle.

During my first five years of life.

Although I have a lot of memories from this time, I can say that this period had little to do with anything related to business. Or maybe it did.

 My father had attended the University of California at Berkley, where he studied engineering. He quit before graduating, and I never knew why. Subsequently, he obtained employment to build Victory ships for Kaiser. This job exempted him from the draft.

Ironically he was drafted a month after the war ended.

Before he left, he bought a house in the Sunset district in San Francisco. It was one block from the ocean. I lived here with my mother for two years. When my father returns, I will begin a 94-year-long battle of debates that could be the subject of another book. I will only say that the tug of war started on my fourth Christmas when my grandmother bought me a set of toy drums. I loved them. Dad was not so pleased. He bought me an erector set. The drums disappeared.

I will expand on my father's career later. The short version is he was a civil servant and obtained top-secret classification as the Director of the Office of Naval Research. However, his sideline was investing in real estate, and the purchase of the house in San Francisco will provide an example of how Americans can obtain wealth.

My father will live to be 98, and my mother will survive him by two years and die two months after her 100th birthday.

Move to Bret Hart

If you drove north on the Golden Gate Bridge, you would enter Marin County as you exited the bridge. When I was five, my parents sold the San Francisco home and bought a house in Marin County. They purchased a new small three-bedroom single, bath tract home on the edge of San Rafael called Bret Hart. One bedroom was for me, one for them, and the third for my sister, born in San Francisco one year earlier. When I turn six, Richard will be born, and I will eventually share a bunk bed and a long friendship with my brother.

My biggest challenge was deciding where I should introduce cash in my book. The preface of my book introduced money as the primary theme. I decided to start the topic of money in this chapter because that is roughly when money was introduced to me. Ironically, it was also my introduction to banking.

I cannot remember precisely when I first realized that money was essential to living. It might have been as early as the first or second grade, but I still remember the event from almost 65 years ago, so it must have made an impression on me. 

One morning a man came into our class and gave everybody a small book with a blue cover that said First National Bank of Marin. I know this because he told us what it said. We could read "See Spot run" but had not yet learned to read First National Bank of Marin. The cover was stiff, like a canvas on cardboard, and inside, it only had about five pages. They were all blank except for four vertical lines from top to bottom and .25 written in one of the columns. The first column had a date, the second and fourth columns each had the same number, and the third column was blank. It would help if you visualized how this page looks because it is a basic form of accounting to which we will return.

The man told us that he was a banker and that the bank wanted us all to have a savings passbook. He asked us to take the book home and show it to our parents and ask them to explain what saving money means. He said that passbooks were a particular way to save money and that the bank would pay interest on any money that our parents or we would deposit. He was earnest and impressed with me that saving money was essential to know how to do it.

 Of course, I do not know anyone in the class except our teacher, who understood the words deposit or interest. I remember him saying that over time I would have more money than I put into the account. That sounded good to me; I took the book home and gave it to my mom. She opened the book and said, "Oh, the bank already gave you 25 cents."

Or maybe the importance of money became known when I realized I could exchange it for things I wanted. In those days, I wanted candy bars or to go to the Saturday matinee. Sometimes I bought caps for my toy gun. Caps were small rolls of red paper with tiny explosives glued on them. You loaded them into guns called six-shooters and threaded the caps like a roll of film in a camera. When you pulled the trigger, the gun hammer hit the caps, and the gun would make a popping sound. Anyone who followed the cowboy shows on T.V. had to have a six-shooter. They looked like real metal guns. When I visited Russia, one of the male students asked me: "do you own a gun?". I doubt Russian children had toy guns because they did not have cowboys. I apologize to the selfie-takers for not explaining how to load film into a camera,

I was about 8 or 9, earning a weekly allowance of 25 cents by cutting our front lawn with our new gas-powered lawn mower. It was big, and I was small, so the most challenging part of doing the job was starting the engine. Sometimes on cold days, my dad had to start it for me.

Most candy bars were 5 cents, but some were 10 cents. The 10-cent bars usually had a silver wrapper. The caps were not expensive; I only bought them when I had a little extra. The matinee was 25 cents and always started a 12:30 pm on Saturday.

How to spend my allowance was usually a tough decision because the Saturday matinee always had two feature films, cartoons, and a serial. I liked cowboy movies, so if there was a cowboy film, it was an easy choice between candy bars and the matinee. What made the decision difficult was the serial. Serials always ended in a dramatic fashion with the hero or heroine in some dangerous situation that left you wondering how they would get out of it. So you had to go to the matinee the following week to find out how the dilemma was solved. The choice was even more problematic if it was a Flash Gordon Serial. So each Saturday after mowing the lawn, I had to decide. It was my first experience allocating my limited resources. 

 We lived on a corner with the neighborhood's largest front lawn. When I turned 10, I would be expected to edge the lawn with a hand edger. My dad probably bought a gas-powered mower because I was too small to push a hand mower. Still, there were no power-driven edgers; this work was slow and tedious, and I hated this new responsibility. Maybe my body language sent a message because my allowance was increased to 50 cents a week.

The increase in work was an early lesson in the marginal value of money. The marginal value of money is a fundamental concept to understand because it is an integral part of every purchase decision you ever make. We will visit the marginal value of money soon. I never felt the 25-cent increase was worth the time or effort needed to edge the lawn. If I started cutting the lawn late, I might not finish edging in time to get to the matinee. Time management now became a new skill I had to master.

To supplement my income, sometimes, I would open a lemonade stand. But this was seasonal, and I had to do it on the weekend. Lemonade sales created another variable to my time management issues. The lemonade business also required money to buy sugar, lemons, and paper cups. I used sweat equity to construct a stand and paint a sign. My folk's freezer provided ice. Because ice was given to me, it reduced my labor costs. It eliminated a capital expenditure for a freezer, the fixed cost of financing the refrigerator, and the variable cost of paying for the electricity.   I will revisit the lemonade venture in the finance section, where fixed and variable costs are explained. Understanding fixed, variable, and semi-variable costs are fundamental in managing your money.

Once, I created a carnival in my backyard and had games, prizes, and a puppet show. All my neighborhood friends showed up. This enterprise was to be a two-day event, but it ended on the first day when I got stung by a bee right after the puppet show. I gave everyone their money back. My carnival business was my first loser.

 My most profitable enterprise was my candle sales at Christmas time. About four blocks from my house was a small candle factory, which always had leftover wax that they threw away. Sometimes the discarded wax was all melted together. Discarded multi-colored wax gave me the idea of making multi-colored Christmas candles.  

I was again receiving a grant for a stove and the gas that made it work. The process was simple. I would bring home chunks of wax, put it in a small saucepan and melt it. I would pour the wax into a  greased cupcake mold. Since I did not have wicks, I inserted a birthday candle into the melted wax and let it cool. I removed the candles and wrapped red or silver foil around them so that only about one inch of the candle was showing. Because the re-melted wax had multi-colored swirls, no two candles were alike. I sold them door to door during my Christmas break.

Since my mother let me use her stove pot and cupcake pans, I again avoided capital expenditure. She also paid for the birthday candles and foil paper, eliminating my variable costs.

In short, I got to keep 100% of the sale. The candle venture cost me nothing except my labor time. My labor time was the fundamental source of my income.

 I charged 10 cents and made enough money to buy Christmas presents for my parents, brother, and sister (and some candy bars for me). When Christmas was over, my piggy bank was empty. Still, I realized the power of money and the joy I felt being able to buy gifts for others from my efforts. 

I only made candles for two Christmas seasons because when I turned 11, I got a paper route. I still had to cut and edge the lawn. This job provided a constant flow of money, and my days of seasonal earnings were over. Now my money management skills would be taken to a higher level.

Along with the development of the EconoShell, I also introduce the EconoClock. For most of you, the management of your EconoClock will determine your financial future.

These early lessons in working, earning, spending, saving, and, most crucially, risk-taking remained with me all my life. I am sure that the values my parents instilled in me guided me—prudent spending by my mother and diligent, honest work effort by my father. I seemed to be the only family member who liked to take risks.

During my career, I counseled several clients who could not balance these values for one reason or another. And in the end, they experienced severe financial problems; the saddest were the good people who got into trouble and stepped over the line with tragic results.

Ironically, the few clients I dealt with that relied on marginal morals were very adept at managing their money. You will meet some of these characters later.

 I discuss the subject of taking risks in the chapters on finance and banking. Entrepreneurs do not take unstudied risks; they first identify risk and hedge against it. When they have completed their due diligence, they cast the dice.

 From the age of nine, my family would go on summer vacation, mostly camping in the Sierra Mountains. The trip always started as a long drive in a non-air-conditioned car. Loud arguing or "are we there yet ?" was never well received by the driver. My sister, brother, and I  would search for quieter activities to amuse ourselves. We did not have electronic games or IPads. Instead, we would count out-of-state license plates, which got old fast. My sister Stephanie and I could have read, but my brother Richard was too young to read, so he would feel left out. Besides, reading usually included vomiting if the road started to get twisty.

One of my diversions, when I felt like ignoring my younger siblings, was to read billboard advertisements. I probably read thousands, but only two have stayed with me for some reason. 

One was on Highway 50 next to a roadside attraction called the Milk Farm. It was a menagerie restaurant that served food, souvenirs, and, most notably, ice cream. We would pass it both, going wherever we were, going to camp, and coming home. Several times we stopped to enjoy an ice cream treat. Although they had great ice cream, I remember the billboard the most. You could easily see it from both directions on the highway, but it was not visible once you pulled into the Milk Farm parking lot.  

It said, "Our Cows are Outstanding in their Field."

I laughed every time I read it. Remember, I was 9 or 10 years old

 The double meaning of this line was my first awareness of clever marketing. Every time we traveled on Highway 50, I would look for the sign. As long as I could read the billboard, I never felt disappointed when we did not stop for ice cream. The billboard and the Milk Farm have since disappeared, but I still hope, even after 60 years, to see the sign every time I travel to Lake Tahoe on Highway 50. In the future, the Milk Farm will play a minor role in my introduction to the Mafia.

Another double-meaning slogan was part of a Kaiser Permanente ad campaign. Their advertisement was not on a billboard but a large cement truck on the back. It said, "Find a Need and Fill It."

 You know Kaiser as an HMO. However, they also sold cement and various other product lines. I do not wax nostalgic for this ad every time I see a dump truck. But I do remember it.

There is a third advertising motif that I remember well, and that was the Burma Shave ads. It was not on a billboard.

 Theirs was a unique form of advertising because it reinforced product awareness that was already well recognized. The ad did not differentiate the product, but it did differentiate the ad. It must have been successful for a while because ads were on farm roads all over the country.

For those of you who have never seen a Burma Shave ad, I will explain. The company would put little red signs on ranch fence posts that you would read as you drive down the road. These signs were attached to fence posts on well-traveled back roads. Each sign would be part of a short poem or joke, stretched over 5 or 6 fence posts. The last sign would only say Burma Shave.

 I cannot remember one single poem or joke, but I do remember the little red signs and the word Burma Shave. Since I did not shave when I first read them, it meant little to me. In short, I did not have a "need to fill." However, when I started to shave, I bought a can of Burma Shave. Once.

The Milk Farm and Kaiser ads pretty much sum up all that a marketing program requires. The first is to identify a need. This need can be filled by any entrepreneur who wants to provide a product to fulfill it. Second, offer a feature that differentiates your product from a competitor.

The concepts involved in advertising are no different than what you need to do to sell yourself. Selling yourself is the primary driver in Zone 4 of your EconoShell.

My early education was the standard Kindergarten through 8th-grade curriculum. I had above-average grades but did not desire to spend time being an A student. I just wanted to explore my surroundings on my bicycle, slide down grassy slopes on waxed cardboard sleds, ride with my buddies to the lake to fish, play kick the can until dark, shoot my bow and arrows at the park range, figure ways to make money, pitch for my little league team, and at age 11  play my saxophone in our rock band. Eventually, I would discover girls. In short, to run free.

Mostly, I liked to play baseball but had a significant fear of ground balls. Little league was a big deal in Marin County in the 50s. San Rafael had a beautiful little league park, and competition was intense to get selected by one of the teams. There were a lot of good players, none of whom were afraid of "hot grounders."

Our league had two components, the Majors and the Minors. Each year players would go to tryouts and, upon completion, would be placed on a team that was losing graduating players. If you did not make the Majors, you would be placed in the Minors. Minors were usually younger players who had not developed the skill set yet.

The age brackets were from 8 to 12 years old. Some younger minor players were good enough to play in the majors, but team limits kept them out in some years. I cannot remember my earliest experiences in the minors; I was 10 when I first tried out. But I was always put on a minor team.

In the summer of my 12th birthday, I was ready to try out again for the Majors. I made a good showing. I caught all the fly balls and had no trouble throwing to home plate from the outfield. My strong throwing arm was my best asset. In addition, I fielded all the grounders from the second base position and had no trouble hitting the ball. Hitting will become my best skill when I graduate from Little League to Pony league.

Marin County Little League was very popular among parents with young "wannabes" like me. Some of the players I played against in Pony League, which is the next step up,  got college scholarships, some went semi-pro, and the pro teams picked two players. But this will be years in the future.

After tryouts, I went home confident I would be picked by one of the Majors. But it didn't happen. I got put on Moore's Stationary, a minor league team sponsor. I was very disappointed, and I did not find out why I did not get picked until I showed up for the initial practice. The first thing I heard from the coach was

"You should be in the majors, but nobody knew who you were. You were not wearing a number."

I distinctly remember taking off my sweater, getting a number, and putting the attached string around my neck. I also remembered I had waited about three hours for my turn. During this time, the temperature dropped, and I was getting cold, so I put on the sweater I had been wearing when I arrived. In my anxiousness, I forgot the identification number buried under my sweater. I kept the sweater on during the tryout. I would have never remembered this mistake if the coach had not told me, "nobody knew who you were." I would have gone through life thinking I just wasn't good enough and would have never played in Pony League.

Although I was now again in the minors, I was probably one of two or three other players on the four minor league teams that were the best players. Because of my tall skinny size, 5'10, and 130 pounds, I was the biggest player on the team. Because of my strong arm, I became the team pitcher and never lost a game. But we did lose a match to the team we were about to play for the Championship.

 I did not play in the one we lost; their pitcher was 12  years old, about 5 foot 10, and 170 pounds. I called him Monster Pants. I often wondered if he buried his I.D. at the tryouts. His team had also only lost one game when he didn't pitch. He could throw as hard as the best little leaguer in the Majors, but his control was erratic. Most batters were afraid to stand in the box against him. By the bottom of the fourth, he had given up only two hits and no runs. He had struck me out twice.

But Monster Pants' undoing came in the top of the fifth inning. With one out, he plunked the first batter. He got rattled and walked the next batter, who had been a high probability out in the past. 

His name was James, something the 3rd; we all called him Jimmie. He was the least experienced player on the team. In little league, everyone gets to play, and why the coach waited until the 5th inning to play him was always a mystery to me. He will play right field at the top of the sixth. 

Jimmie had two advantages: he was tiny and the second-fastest runner on the team. He could really scoot. Although he never got a hit or scored a run, he did manage to walk a lot. Today was no different. Monster pants' first pitch to him was a passed ball, and the runner on first advance to second. Three straight balls followed. I found out later that Jimmie was instructed not to swing at the ball. The next batter, Jerry, was our best hitter. In a previous game had the only out-of-park home run on the team. There were always several in-the-park home runs due to minor leaguers' inability to catch or throw well, making this game fun for the spectators.

The opposing coach knew Jerry's skill and waved his outfielders to move closer to the fence. But Jerry did not hit a screamer; it was a soft single into shallow right-center scoring the lead runner and sending Jimmie to second.

 For some reason, Jimmie must have thought the center fielder would not get to the ball in time, and he began running to third.

Of course, I have no idea what he was thinking. The coach, however, was screaming at Jimmy to go back when he was halfway between 2nd and 3rd. Looking confused, Jimmie stopped running. And as often happens in little league, what should have been an out—results in another run.

 The center fielder had to run up on the ball and had to decide to throw to second or third. Seeing Jimmie was halfway, I assumed he threw to third to keep Jimmie from advancing or, best yet, throw him out. But because the fielder continued to run after corralling the ball, he misjudged the distance. The fielder threw the ball over the third baseman's head. When Jimmie saw this, he advanced to third, and then the coach told him to run for the home plate when the other team got confused about who should chase the ball that hit the bullpen post and ricochet into left field. There would be no more scoring in the bottom of the fifth, and Monster Pants is down 2 -zip for the first time in his life. They would have only one more inning to recover.

The game will have a dramatic ending. One scenario is I give up 3 runs in the top of the sixth, and we enter the bottom of the 6th inning down 3 to 2. Monster Pants is still on the mound and strikes the side, and we lose 3 to 2. In another scenario, I allow a run. Still, after getting two outs and loading the bags, the best hitter hits a high fly ball to right field, and the opposing bench goes wild. But Jimmie makes a spectacular catch. The only time he even touches a ball all season  Which is why all the Jimmies in the world get to play. We win 2 to 1; These Hollywood endings did not occur.

What did occur is hard for even me to believe. We would end up being the champions of the minors, but not before the baseball gods had decided we needed a little more life experience.

The development and outcome of this game will be an example of future events in my life that have no explanation. It is hard to know why the details of this game remain vivid in my mind.

 We always played six innings and, being the home team, were the last to bat. Now it is the top of the sixth inning, and although I had given up a couple of walks and one flyball that left the park, but just foul, I had not given up a hit. We were ahead 2 to nothing, so I had to limit the other team to one run and end the game.

The first batter I faced hit a single and ended my second no-hitter. Now I am not focusing; the second batter, the one who hit the almost homerun foul ball, takes my first pitch deep over the head of the left fielder. My heart sinks. I know I will give up a run and maybe more. But the ball bounces over the fence, which is scored as a ground rule double. The lead runner has to go back to third base. I now have runners on second and third and no outs. But no runs were scored.

The coach calls time and comes to the mound. I wonder if I am going to go to the bench. But no, he says to settle down; the next batter is their best hitter, who I had managed to strike out and walk so far. The coach tells me to intentionally walk him and pitch high and outside to the next batter. Guess who that will be, Mr. Monster Pants, who had struck out and grounded out previously.

 I am now facing Monster Pants with the bags loaded and no outs. The opposing team and its supporters are now expecting a grand slam. And to be truthful, the same thought crossed my mind. The crowd is yelling for Monster Pants, but all eyes are on me; I take a deep breath, grab the rosin bag and scrape the mound with my cleats.

.Because of Monster Pants' size, he liked pitches away and just outside the strike zone. He struck out a lot. I followed the coach's advice with the bags loaded and no outs. So, my first three pitches are high and away. Monster Pants swung and missed the first pitch. Then he took two balls. I continue to pitch high and outside, but this time Monster Pants solidly connects and sends a screaming liner just foul of third. That almost hit drove my adrenaline to race car speed. Had it been fair, he would have cleared the basis.

While catching my breath, our catcher called timeout and visited me on the mound; His instinct was we had outrun the odds, so he told me he would signal me to throw a high inside changeup. I don't know why I agreed with him, but I also felt I had gone to the outside well too many times. If it was high and inside and slow enough, he might swing at a pitch that would be difficult to hit well. I would still be three balls and two strikes ahead if he didn't bite. The coach's instructions crossed my mind briefly, but I ignored them. I have never shied away from following my instincts. I will have many run-ins with authority figures in the future.

Now I am only thinking about how to throw this pitch, and I decide not only on a changeup but with a rotation to make it curve. I had faith my catcher could tell what I was doing since he had caught several of my curves. I was going to throw it shoulder high, as close to Monster Pants' body as possible, with lots of spins. If I hit him, I would still be up one run. But the coach might be mad at me. I bet the ranch on this one pitch.

Before ending this story, I need to take you back to my neighborhood, where I learned to play baseball. Specifically, I will introduce you to the best ball player I have ever played with. A left-hander named Lonnie Bell. Lonnie was almost 6 feet tall and four years older than me. Lonnie taught me how to pitch and how hit, but most importantly, Lonnie showed me how to spin the ball so it would curve. 

Little leaguers were discouraged from throwing curve balls because their arms were still developing, and the torque tended to damage the cartilage in the elbow. I did not throw many curve balls during a game, But I had no trouble practicing them with Lonnie.

This pitch to Monster Pants seemed like the time to do it. Remembering Lonnie's instructions, I put the ball in my glove and aligned my first and second fingers along the seams where they were closest together. Assuming the stretch position, I glanced at first. With significant shoulder action and full overhead delivery, I spun a perfect curving changeup that caught Monster Pants off balance.

The slow speed must have been just too tempting, and he took a clumsy swing. The ball hit the bat on the handle, causing a low, infield popup about ten feet high, and was about to land between me and third base. I instinctively decided not to let the third baseman try to catch it. I ran as fast as possible, held out my glove, and saw it stuck on the edge of the glove webbing two feet from the ground and only three steps from 3rd base. I immediately stepped on third before the runner, who took off too soon, could get back. Then using the bag to pivot, I turned and ran down the runner from second, who had also over-committed. He fell as I tagged him about 6 feet from second base—an unassisted triple play. My head was spinning; I couldn't believe what I had just done. We win 2 to 0.

 Lonnie Bell won that game for me that day; not only did she teach me to play baseball, but she was also the family babysitter, which is how I met her. 

I will never experience a moment like that again in my life. From that moment forward, every team I have ever played on, and every company I have ever worked for will be a carbon copy of the team we just beat. 

The triple play reminds me of one of my favorite Peanuts cartoons. Lucy asks Charlie if in life you can one day be the best you ever had. And Charlie thinks a minute and says yes. Then Lucy says, "What if you already had it."

As young as I was, my experience in the little league minors taught me a few lessons. The most important thing is to stay focused on the details, as a small error can have a considerable impact. Second, being a big fish in a small pond does not prepare you to swim with the sharks. Third, the glory of the moment is fleeting, but the big head it creates can be destructive in the future. Lastly, when you strike out the mayor's son, his mother will start a rumor that you cheated to be a big fish in a small pond and should not be allowed to play.

And finally, when faced with a risky decision, "listen to the little man inside."Listening to the little person inside is the advice Walter "Wally" Bragdon gave me, Vice Present of commercial  lending in the Sacramento regional office of Union Bank. You will meet Wally when I write about Union Bank. My first memorable encounter with the little man inside was deciding to throw Monster Pants a high inside curve. Although I didn't know I had a little man inside until Wally told me I did,

Despite some success in Pony League, my baseball career ended during my first year in high school when I got cut from the Junior varsity team. For some reason, I stopped growing and remained underweight and skinny until my senior year. Everyone else in the group grew to Monster Pants size and larger. Although my curveball was still viable, my fastball never got any faster. And grounders would be my Achilles heel. Now I knew how the minor leaguers felt when I took the mound.

When I completed 8th grade, my family changed neighborhoods. But, before I leave my childhood home and enter adolescence at our new location, I want to relate two more childhood stories.

 My first friend was DJ. He lived across the street from me and was two years older. He will be my friend until he goes to junior high and discovers girls. I had many adventures with him, but this incident will forever teach me about trust. D.J. was a little bit sadistic. Not in an evil way, but he loved jokes at others' expense. 

One day we were in his backyard, and he had a piece of black rubber about one foot long and maybe 2 inches in diameter. He challenged me to bend it. To demonstrate, he grabbed the rubber at each end and grunted and strained to move it. He only bent it a little bit and gave up. Because he was older and bigger, I assume his struggle proved the rubber was hard to bend. He gave me the rubber, and I decided to provide it with the most muscular effort possible. But the rubber was not hard to bend, and I only smashed my knuckles together. D.J. laughed, and I felt foolish.

The second story may be my introduction to the real world.

When I was 7, my electrical engineer father bought a television. We may have been the first on our block if not the neighborhood. Like the iPad today, T.V. was the electronic monster that would corrupt youth's minds and lower reading skills. It is hard to know if it lowered my reading skills because I hated to read.

Until I was 8 or 9 years old, I loved to watch B Bar B Ranch. This program showed cowboy movies in the morning on weekends, Hop along Cassidy, the Lone Ranger, The CiscoKkid  Kid, and Lash Larue. The climax of every film is the good guy chasing the bad guy on horses, and the good guy jumps to knock the bad guy off his horse with the inevitable fistfight. I do not remember the good guy shooting the bad guy off his horse. There would be no fistfight if that happened. Today the bad guy is chased by the good guy in a car. Horses evolved from horsepower and fistfights to gun fights with twenty thousand bullets a minute.   Today B Bar B Ranch is probably a salad dressing.

The movies started early Saturday morning and went on most of the day. As I got older, my viewing experience was only interrupted by my lawn maintenance duties, the afternoon Saturday matinee, and baseball. These activities provided my first encounter with conflicts regarding allocating my time.

Between the ages of 5 and 12, I probably saw a lot of T.V., but I don't remember much. However, Disney's Mickey Mouse Club eventually impacted me as I approached 12.

It was Annette Funicello. Any male who saw this program would know who Annette Funicello was.

She was the first club member who introduced breasts to the pre-adolescent set. A fact not appreciated by Disney executives at the time. I was so attracted to her that I wrote her a letter. A week later, I got a response in the mail. It was an advertisement to visit Disneyland and some other stuff—no response from Annette.

 In addition to watching T.V. and playing outside, I liked to spin fish. My first purchase from my paper route savings was a closed-face Shakespeare spinning reel. By today's standards, it was costly. I also had a box full of lures. I bought a variety of spinners, multicolored flatfish, and two sizes of super dupers. *

My letter from Disney was the best lesson that ever happened to me. Annette was a fishing lure. From that day on, if I am presented with Annett-type opportunities, they would be analyzed for hooks.

·       Footnote for those of you who expected to read I fell for her "Hook Line and Sinker" I am putting it as a footnote not to disappoint. But I have to be honest; only the Hook is relevant here. Adding Line and Sinker only applies to genuine relationships and is responsible for our success as a species.

You may think I am being cynical here. Still, when I move to Los Angeles, I will become involved directly in the Entertainment Industry, which at the time was always referred to as "the Biz."

The Annette lures are a fundamental driver determining this business's success.

 Before leaving Bret Hart, I thought adding a few stories I found in another file might be informative. Later in his career, as you learned from the beginning of this post that Stephen joins a Chinese bank where he meets Sylvia. It is then that he takes Mandarin lessons. The file is titled "How I Taught Myself Mandarin." The opening of this essay begins with his exposure to Asian Culture while he lived in Bret Hart. I include these stories since, although not included in Tales From The Vault; it seems relevant to his development. There is some redundancy in the material, but I left it in to maintain the continuity of his work.

How I taught myself Chinese

Chapter One:

If you are in San Francisco and drive north across the Golden Gate Bridge, you will enter a tunnel with a giant rainbow painted on the arch. It was painted about fifty years ago and created some controversy. The painter was fired only to be reinstated by public outcry.

 Many stories are on the net about the painter's life and why it was painted. But for me, it represented the entrance to the magical place where I grew up, Marin County.

I was born in San Francisco, but my parents moved to a small suburb in San Rafael called Bret Hart when I was five. I would live there until I was 12. Bret Hart was a very safe white middle-class neighborhood. My contact with minorities was minimal.

 My first experience with someone from another culture would be when I was nine. A family up the street adopted a Korean war orphan named Sherman. Sherman was about my age but was a big kid with some emotional issues. My friends teased Sherman because he was different. They labeled him "Sherman the German" for some reason that made no sense to me. He was sensitive and cried when teased but never ran away. He was skilled at physically defending himself, even against the older boys. It was my first experience of racial bias. Sherman's parents left Bret Hart after a very short residence there.

One day each week, I would experience contact with another Asian. He was known as "Charlie the Chinaman” He would drive through the neighborhood in an old Ford truck. The truck was open on the sides from where he would display fresh fruit and vegetables.

 All the kids loved going to his old truck to see what he was selling, and he always greeted us with a wide semi-toothless smile. He looked ancient. He also gave us Chinese candy made of multicolored coconuts and sugar. This candy was unavailable in our supermarket, so we were always anxious to see him and his truck.

  When he died in his late 90s, the local paper told his story and his sacrifices in selling vegetables to Marin residents. His epic work ethic generated enough resources to send his seven children to college.

I have some other memories of Asian Culture

About three times a year, we would go to a Chinese restaurant where my father taught us how to eat using chopsticks. We also learned the names of the dishes. I always thought "Egg Fooey Young," as I would say it, was a humorous name for food.

 Late in my career, I was with my Chinese boss, Mr. Eng. Eng, as everyone called him loved to eat lunch at a specific Chinese restaurant. He would introduce me to authentic Chinese food, including chicken feet and stinky tofu. One day he invited three visitors from Shanghai to eat lunch with us. Only two of the guests spoke English.

The non-English speaking guest leaned over to Eng. and whispered something during lunch.

Eng looked at me and said, "He is impressed with your skill at using chopsticks and wants to know where you learned. "

I don't know what got into me, but I told Eng to tell him that in America, if there is a Chinese Restaurant in town, children when they turn 5, are taken to a Chinese restaurant and learn how. Of course, this wasn't entirely true. It only applied to me and my brother and sister. We are not given utensils, so if we don't master the chopsticks, we don't get to eat.

The second was a girl who was older than I was. Her last name was Olsen; she may have been my first experience with a fluttering heart. Olsen is a Scandinavian name, but she had Asian eyes and was beautiful. I never met or talked to her, but I always assumed she was part Asian. Why she is still part of my memory bank is a mystery.

The third memory is going to Chinatown in San Francisco with my friends. We were about 11 years old, and going there was like visiting a foreign country.

Grant Avenue in Chinatown in San Francisco is a prominent tourist attraction. When we walked down the street, it was crowded with out-of-state visitors and local Chinese merchants.

Grant Avenue is fronted on both sides by small stores selling finger traps, back scratchers, strange-smelling spices, Chinese puzzle boxes, and a thousand other exotic items I had never seen before.

Off the main street, we would see the locals, primarily women, shopping for fruits and vegetables displayed, like on Charlie's truck, from racks on the sidewalk. The men would be in the park smoking and playing board games.

Two images that are hard to forget are the skinless cooked ducks hanging in the windows of the meat shops and the hundreds of street signs written in Chinese Hanzi announcing the store's name.

I could not understand any of the writing, which looked like scribbles. These scribbles originated thousands of years ago and played a significant role in developing Chinese and other Asian cultures; these scribbles are called Hanzi.

Except for occasionally eating Chinese food or going to Chinatown, encounters with Chinese Culture will be limited.

All that will change midway through my banking career when I am hired by a Chinese bank and meet Miss Li.

 If I may interject, the two most significant sentences were his recognition of racism against Sherman and his statement about Charlie "His work ethic was epic." Racism and work ethic, although relevant in his career, are undeveloped themes in his book. He does mention a few stories and the effect of the civil rights movement on banking laws. But it is only the tip of the iceberg

Throughout the editing process, before the book was turned down, I mentioned to him that these subjects were currently significant areas for discussion.

He said he felt the issue of work ethics was sufficiently handled. He also felt expressing his views on racial bias and bigotry would only cause debates and distract from the focus of his book. In short, he tries to avoid political motives that might disrupt the reader's focus on personal financial issues.

My comment, "The tip of the iceberg," reminded me of one of Stephen's jokes. He was in San Francisco, sitting at a bar and eating lunch. At the other end of the bar, Stephen overheard two middle-aged guys in suits taking in what he thought was a New York accent. Why he gave me all this detail, I do not know, but he thought this was the best joke he had ever heard.

A Jew and a Chinaman are eating dinner together. Halfway through the meal, the Jew gets out of his seat and punches the Chinaman. Then he says, "Remember Pearl Harbor."

The Chinaman responded: "Pearl Harbor" That was the Japanese."

The Jew counters," Japanese, Chinese, Taiwanese, What's the Difference.?"

The Chinaman is a little miffed, but he lets it go until the dessert arrives. He then gets out of his seat and sends the Jew to the floor, and says: "Remember the Titanic. "

The Jew responds:" Titanic? That was an iceberg".

"Iceberg, Goldberg, Greenberg, What's the difference."

  I will now return to Stephen's book

High School

Before beginning my first year in High School, my parents bought an Eichler home in Lucas Valley. Lucas Valley is about 10 miles north of San Rafael. The area will become famous when George Lucas buys some property off Lucas Valley Road and builds Skywalker Ranch.

 Compared to our small home in Bret Hart, our home on Cedarberry was roomy.   It had four bedrooms, two bathrooms, and a two-car garage. The Inside was divided by mahogany walls, while radiant heating floated from a slab floor. We had air conditioning and sliding glass doors open to a small backyard in the hot summers.

 There was no front lawn, and I got my separate bedroom. The only negative was the small lot size and virtually no backyard to play or entertain.

A poet would describe the home as a sterile wood, glass, and cement cage. Our furniture did not belong there. No wonder my mother hated it.

 I got a job working in a lumber hardware store not far from our new home. It was called Gallagher's. Mr. Gallagher was amiable and would show me how to stock the shelves with various hardware items. I had little contact with the customers except to help the yard boss load lumber or sheetrock into their vehicles. No front lawn meant no more allowance.

 My primary duty was to assist the yard boss in stacking lumber into the various bins. The yard boss will be my first supervisor. He is also the first African American I have ever met. He was about 6 foot 6 or more, weighed about 250 pounds, and everyone called him "Tiny." I never did know his given name. He taught me everything I needed to know about lumber. He instructed me to recognize kiln dried from green lumber, rough lumber from S4S (surfaced four sides), knotty pine, clear heart redwood, and Douglas fir. What studs were used for, the names of all the types of molding and the sizes of boards labeled, and how to calculate board feet. Then he told me three essential pieces of advice. First, how to properly tie a trucker's hitch to secure a load on a truck; second, always squat and use my legs to pick up anything of weight; and third,  to avoid splinters, wear gloves. Tiny's lessons will give me the necessary knowledge to get future jobs in the same industry.

Feeling isolated from her friends, my mother eventually talked my father into moving back to San Rafael. That summer, Mr. Gallagher sold the Hardware store, and I did not like the new owner. Knowing we would move, I quit my job two weeks before school started. I would miss Tiny and wondered how the new owner would treat Tiny. We left Lucas Valley for greener pastures.

We moved into a large ranch house fixer-upper on an acre of land that overlooked the High School.

 I now have my driver's license. Although many of my friends had their own car, I would save money by driving my mother's car. The availability of a second car on the weekend made it possible for me to commute to my new Job at Goodman Lumber.

 Goodman Lumber was the largest Lumber and Hardware Store in Marin County. I will fully develop my lumber and hardware knowledge while employed here. I reported directly to Mr. Goodman, who spent much time directing me in my tasks. I will work here for two summers and occasionally on the weekends during the school year. Mr. Goodman was very good to me, and I enjoyed the diversity of the work. I was allowed to interact with customers and assist them in their projects. As you can imagine, most customers were male d it yourself types or contractors. Dealing with contractors will be essential training I could get at a young age. Many of my future clients will be builder developers, and I will make millions of dollars for my banks from these clients. Real estate developers will account for 35 to 40% of my responsibilities throughout my career.

To return to High School is where the weeding-out process began. Sorry, weeding out is a wrong term that should only be applied to out-of-control gardens. Even then, a weed is our creation; the Creator has no such category.

 But Jedidiah probably would disagree. One morning while working in the hot sun, his neighbor Amos dropped by and said: "Jed, you and the Lord have certainly done right by your garden." Jedidiah replied: You didn't see it when the Lord worked it alone.

This joke has two critical points. "God helps those who help themselves," some have interpreted to mean second helpings and two, the foundation of the work ethic, which is not a joke.

In addition to all the social challenges to be navigated in high school, there is one major fork in the road. To go to college or not to go to college. *

If you chose college, you had to take a more rigorous academic load. If you decided you had a profession in mind, your courses were scheduled around those skills required to access that path.

For some, this decision was already determined by their academic level. Those with high grades could go to college if they wanted. Middle-graders could go but might have to take a junior college route for those who did not qualify or chose a path that did not require a college education. The only exceptions to this general college entrance process were athletes with exceptional skills, some with outstanding grades, and mediocre students with wealthy parents.

 I would have chosen baseball or a rock band if it was not for my parent's expectations and the fact that I was not that talented at baseball or the saxophone. I will be the first to obtain a college degree since one of my great-grandfathers achieved this level in Denmark. Only two of my ten or so school friends went to a four-year college, and they, like me, washed out before completing their junior year.

*I need to add a caveat here. I was born one year before the classification of Baby Boomers was coined. I had the advantage discussed in Tamara Drout’s book titled "Strapped" It was written in 2005, about five years before I retired. Her discussion on student debt did not apply to me because I could earn money when my dad stopped paying for my education. But it did to many and still does apply to many of you. The relevance of starting life in debt puts a tremendous burden on managing your EconoShell. Despite being written almost 20 years ago, the fallout of tuition escalation is not over. I leave it to you to read this book if you want to revisit this issue.

My mother, a product of a working-class family during the 1930s depression, and my father, the first son of immigrants in a similar financial situation, would be my role models.

My parent's commitment to each other, just missing their celebration of 75 years of marriage, never wavering in their high standard of honesty and unrelenting perseverance of the American work ethic. Their value system and moral behavior were and still is the foundation that formed the American character's best part. 

I would have chosen baseball or a rock band if it was not for my parent's expectations and the fact that I was not that talented at baseball or the saxophone. I will be the first to obtain a college degree since one of my great-grandfathers achieved this level in Denmark. Only two of my ten or so school friends went to a four-year college, and they, like me, washed out before completing their Junior year.

The Barn Dance. 

During the school year, our high school had several dances in the gym. The two most popular were the Christmas Dance, just before winter break, and the Barn Dance. At all the dances, members of the photography club could take photos of the couples. Two spots were allocated where the photos could be taken. The charge was 25 cents a head. Most shots were of one or two couples who would each get a developed print. To preserve the memory, which would be available for pick up in about two weeks, it would cost 50 cents per couple.

The Barn Dance was a bit different. Many couples wanted to be in the photo together to show off their costumes. The gym and photo stations would be decorated in early American hoe down. Each shot could have 6 or 7 couples looking like the Beverly Hillbillies dressed in 1960s hayseed.

In our senior year, my best friend Tom asked me if I would help him take photos at the Barn Dance. He wanted me to collect the money (we charged up front). He also wanted my date to take down the names of the people on the photo while his date would position the subjects. My date surprised me by being incredibly excited to do her part; there would be no dancing for us that night. Tom offered to give me half the proceeds. Since he was in the photography club, he had free film and development costs. He had to provide his camera. So the school subsidized our variable costs.

He told me he would raise the price to 50 Cents a head. If they didn't like it, they could forget the memory photo. I asked. "What about the other photo station?"

The following was Tom's reply. "I told him the Photo Club only supported one station this time and gave him $20. This amount was more than he usually made from any of the dances. $20 bucks are equal to 40 couples. In addition to the money, he got the night off and had no responsibility to develop the prints."

I might add that Tom was a good salesman. In high school, he raised chickens in his parent's backyard, sold eggs to his neighbors, and made enough money to buy a used car. We drifted apart when he got married, and I went to college. After a tour of duty in the Marines, he married and started a wholesale lightbulb company. He has since acquired several hardware stores.

We had several complaints or questions about the cost increase during the photo shoot. Tom explained to the disgruntled that it costs more to handle group photos, and development costs increased. Although development costs may have increased, they did not increase for him. It was a partial truth to the question of more expensive group photos. It took four of us to manage the flow. But the print costs were less because up to 12 prints could be developed from a single negative. Getting more prints from a single negative is known as" economies of scale.

 As expected, we made a killing, and as promised, he gave me half. It was the most money I ever made for the time spent. He did all the development and distribution of the photos.

 If you have ever finished a game of Monopoly, you know how to classify our enterprise. Fortunately, there were no government officials to bring antitrust charges against us.

How I apply my Barn Dance experience will provide the solution to two significant future credit problems. One saves the owner of the Northern California Coke franchise, and the other avoids a $1,2 million charge, which means a dead loss.

Dear Reader on the Net, recently, was a short video that simplifies the concept. In the open market, there are two sellers of eggs. Seller A has ten cartons of eggs for sale for 50 cents a carton. Seller B has three cartons left for 40 cents a carton. Seller A decides to liquidate his inventory at 30 cents a carton. Seller B buys all of "A’s inventory at 30 cents a carton. The only egg seller in the market now raises his price to 60 cents a carton.

I started my college career with the idea that I might be a dentist. I have no idea from where this idea came. In high school, I had major surgery on an errant tooth that grew in the middle of my upper palate. My orthodontist offered me a part-time job watering the plant outside the office. Orthodontists made a lot of money, so maybe that was my motivation

In high school, I took the required course path of Math, Science, and language courses. High school courses for colleges with a pre-dental program were the same as a premed at that time. (Doctors)

My father wanted me to live at home and attend Marin Junior College. At that time, Marin Junior was a prep school for Berkeley, where my father wanted me to go. My father initially went to Berkeley but had to leave in his junior year. He never discussed the reason, but it could have been money issues, grades, or WW II. He never returned because I was born; ironically, he was drafted into the army at the war’s end. He would become the Head of the Office of Naval Research and retire at 55 as a G.S. 18. This civil service rating is equivalent to a Rear Admiral. But I digress. I wasn’t interested in Junior college; I figured I could go to a State college, have higher status, and transfer to Berkeley from there. But mostly, I just wanted to get out of the house.

I was a lousy student during my first two years. I hated to spend my time studying, and I crammed for finals. The same habits I had in grade and high school continued in college.

 At the end of my sophomore year, I unraveled, having spent time joining a fraternity and mimicking the exploits of Animal House, exploring alternatives to my high school sweetheart, drinking too much, and enjoying my freedom and missing deadlines.

 While I did OK in my science classes, I was a C+ student in general ed. courses, including a D in Philosophy. While my classmates studied Plato and Kant, I was busy anticipating Play Time and deferring to Can’t. I also had two awful experiences and received two Fs. The first F was in Sociology. The professor, for some reason, flucked 75 % of the class. (believe  it or not, I  accidentally typed this word which should have been flunked); I left it in because it is more appropriate. Several students took action against the professor, but he was tenured, and the school would do nothing. Since it was a G.E. requirement, we all had to take the class over again. That grade alone was insufficient to put me on academic probation, but the next F was all on me.

 My decision will be the stupidest, most dishonest thing I ever did, and the consequences will be a disaster. I had a B average in my English composition class. This class was another G.E. requirement. I had not written my final paper, due two weeks before the course ended. I had not done the assignment on the due date and realized I needed an excuse to try to get an extension. I am walking toward class, and lying on the floor is an essay fully typed with no name on it. I picked it up and read it just before class started. It was perfect. All I had to do was put my name and the date at the bottom and turn it in. The paper was written well above my limited English skill, and I got busted by the teacher for cheating. She had me sent to the Academic Council for judgment. Fortunately, the committee put me on probation, and my parents, as far as I know, were not contacted. If they kick me out of school, I will never be able to face my father, whose mantra is “Thou shalt not lie.” Another interesting irony in the essay I turned in was an analysis of a short story. The story is about a man who picks up a piece of string while walking down the road. His picking up the string is used as evidence against him for a crime he did not commit. Only the random act of picking up something which led to consequences is the irony. I was guilty.

In addition to good grades to apply to dental school, they required carving chalk skills. Carving chalk measured your ability to create small detailed creations with your hands, like a perfect replica of an incisor. A skill that I could not achieve nor did I want to sink my teeth into. I had to chalk up my first two years in college as learning how not to learn. Sorry, I have a terrible pun habit besides chewing my pencils.

So beginning my Junior Year, I decided to try to apply myself a little. 

The college had just introduced a new B.S. degree called Science -Business. This degree is a double major that combines science courses with business courses. It required 136 units to graduate rather than 124 units for a B.A. degree. Realizing I had already completed almost 16 units of the needed science requirements, mainly in Chemistry, I decided to change my major. Dental school no longer interested me. Medical school was out of the question as grade requirements increased from a 3.5(B+) to a 3.75 (A-) average.

A job with a major U.S. chemical company seemed like a good goal. Now I had only to complete the Business credit requirements. The additional units needed to complete the degree would require another year of college. A year my father refused to pay for, thus putting a financial burden on me.

The requirement to pay for my last year meant I had to work part-time. The job I obtained as a waiter will drastically change the course of my river.

 Declaring this major also required me to choose an area of concentration for my business studies. I struggled with accounting and disliked marketing or personnel management, so I decided on production management. Production management studies will be applied a lot during my career as a banker. Now comes one of those external forces that changed the river’s direction even before I worked as a waiter—the Coast Guard.

se external forces that changed the river’s direction even before I worked as a waiter—the Coast Guard.

It was 1965, and the Vietnam War was heating up. I had a 2s deferment, which meant that as long as I was in school and maintaining a C average on 12 units or more; I was exempt from the draft. During my Junior Year Fall semester, I enrolled in 16 1/2 units of 4 and ½ more than required. But I was struggling with this study load, so I dropped one of the 3-unit classes and decided to make it up in summer school. This decision would change my fate. Thinking 13 ½ units were sufficient to keep my 2s deferment, I began to hunker down. Not known to me, my local draft board was short on its quota, and during my first years at school, the minimum requirement was increased to 14 units. I am a ½ unit short. Sometime in November, I got a letter from my draft board to register within 60 days—a left hook to the chin. I am going to Vietnam; I am screwed. A good lesson is not verifying the facts. A practice that I will follow religiously and will stand me well as a banker. But it will not always be remembered as the same mistake will be repeated to me in my late fifties. A lack of verification will again change the course of the river.

The preceding is only the setup. It is not the change but the reason for the difference. If someone was watching over me at Clavey Falls, that same guardian was with me in late November when I decided to try to find a reserve unit I could join. A reserve unit would only take six months to complete, and I could continue my studies.

 I had no car, so I took the trolley to the Federal building on Franklin Blvd. All the military recruiting offices were in this building. Despite being 2:30 in the afternoon, the halls were empty, and most of the office doors were closed. High ceilings, a walking labyrinth in matrix form outlined by polished white marble floors in 20-foot-wide corridors, undecorated light tan walls bearing evenly spaced heavy oak doors, all closed. The marble had an unmistakable smell of fresh floor wax. The marble smelled of new floor wax, and no one was on-site, despite being 2:30 in the afternoon.

The only information of who or what was behind those doors were minor wooden signs about 1 foot above the door frame.

Not all the recruiters were in the same corridor, so I had to search randomly. My first stop was the army recruiting office, which had a and ½ year waiting list. Next are the Air Force, the Navy, and the National Guard. All had long lists of applicants. I never found the Marine Reserve Office, so I stopped looking and returned to my apartment.

 I began to walk down the corridor to the exit. I am turned around in the building and have no idea which door I need to get to the trolley. Turning the corner, I saw a sign midway down the hall. It read United States Coast Guard

I had nothing to lose to see if the Coast Guard had a reserve program. I never even considered the Coast Guard as a military unit. I would ask for directions to the trolly.

When I entered the office, a man greeted me dressed in an immaculately pressed uniform of unknown rank. Unlike the other recruiters, he had a friendly smile. He asked me what I wanted, and I said I was looking for a reserve program. He laughed and said with a slight military apology, I am sorry, but we have a 3 ½ year waiting list. I thanked him and asked if he could direct me to the trolly. Before he completed giving me directions, the phone rang. I began to leave, not wanting to stay while he was on the phone, but he jumped up and waved for me to stop. He closed his phone conversation, hung up, and, while still standing, said.

“How good are you at math?”

A little stunned, I told him my background, and he offered to take a test immediately.

Before I even inquired about the waiting list, he said. That phone call was from the person at the top of the list. He got into a 6-month program, and our only opening right now is a 9-month program in Lakehurst, New Jersey. I need to fill this spot immediately, and I have no idea who on the list can qualify. If you can pass this test, you qualify. Are you interested?

I said, “Sure.”

So I sat in a small cubicle, took the test that took me about 45 minutes, handed it in, and waited. 15 minutes later, the recruiter came up to me and said

“You passed; Not only did you pass, but you also achieved the highest grade we have ever gotten. “If he were telling me the truth, it would be the only time I came in first in anything academic.

He then explained the program. It was a nine-month active-duty obligation, including an eight-week boot camp in Alameda, California. Then a four-month training school in Lakehurst, New Jersey, to become a 3rd class meteorologist. Finally, active duty at a location to be determined later.

He then said: “There is one condition.”

My heart began to sink. I never liked any sentence that starts with “there is one condition.”

But I said OK, knowing it could not be worse than getting drafted.

“What is it?”

“We expect you to come in at the top of the class. My CO likes to win. Lakehurst is an inter-service school, and you will be competing with other Coast Guard recruits, Navy recruits, Army recruits, Air Force recruits, and maybe a few Marines,”.

I said, “OK.”

He directed me to report to his office on December 5, 1965. I was sworn in on that day.

So, I arrived at the same office with three other recruits on that date. I took the oath and signed the required documents, photos, and fingerprints. After filling out some forms, I was directed to a military hospital for a physical exam. I had to pass this exam to stay out of the draft line.

I have always been in good health; however, this exam threw me an unexpected curve ball that forced me to bend the truth. As the doctor went through his routine, everything was going fine. Then he asked me to strip down my shorts and sit on an examining table. He kept looking at my right leg and foot.

I was born with a slightly crooked right leg. My foot and knee have a 15 Degree twist. I never thought about it before because it never interfered with any physical activities or caused me to walk with a limp. It did, however, cause my right leg to kick out when I ran, which, kids being kids, teased me and called me Crazy Legs after the Rams football player Crazy Legs Hersh. The doctor, however, looked concerned. He then grabbed my knee and twisted my foot inward. I felt a sharp pain, but I kept my mind focused because I intuitively knew this could be a reason for rejection in the Coast Guard. But maybe not enough to keep me out of the army.

Did that hurt? Did he ask?

Not at all, I responded

OK, you passed.

It would be 3 Months before I was called to report to boot camp. I spent the time living with a friend in Los Angeles and working with the Akron store part-time, delivering purchases made by customers residing in Beverly Hills. My delivery vehicle was a brand-new Jaguar that belonged to the store’s president. Bernie Fields. I would also run errands just before I returned to the bay area to drop Bernie’s shoes off at the shoe repair shop. It would be my introduction to Los Angeles, where I would live off and on for much of my life.

In March, I got a letter from the recruiting office to report to the Alameda Coast Guard base for Bootcamp. So, I returned to Marin and asked my dad to take me to the base.

Marin County sits just north of San Francisco. Alameda is on the Oakland side of the Bay. It takes about 45 minutes to drive there in light traffic. We left about 9:30 in the morning, and my father made very few comments to me on the way. He had the radio on and a serious look on his face. I thought he might be angry, so I just remained silent. We Pulled up to the main gate. I was not allowed to bring anything except my “civies.” There was no wallet, money, photos, books, jewelry, or anything else. Only my Military ID card with my picture on it

As my father stopped the car at the main gate to let me out, he turned to me, put out his open right hand, smiled, and said.

“Just keep your sense of humor.”

I shook his hand and said, “Thanks, Dad.”

As I entered the base, showed my I.D., and got directions on where to go, I realized my dad had set me up for that dramatic moment.

Sometimes, the only thing that tolerates situations is maintaining a sense of humor.

I joined what was euphemistically called the Draft Dodgers Yacht Club. But nothing could be further from the truth. One of the Coast Guards’ duties was to patrol the Mekong Delta. The casualty rate was high. 

The study of weather was fascinating, and the math was not easy. But it is a science, and my major is now Science Business.

 The military was a perfect environment to show me the value of self-discipline and the benefits of 1000 years of organizational management during times of stress. And I began to understand where my father was coming from when I was growing up.

It was 1965, and the Vietnam War was heating up. I had a 2s deferment, which meant that as long as I was in school and maintaining a C average on 12 units or more; I was exempt from the draft. During my Junior Year Fall semester, I enrolled in 16 1/2 units of 4 and ½ more than required. But I was struggling with this study load, so I dropped one of the 3-unit classes and decided to make it up in summer school. This decision would change my fate. Thinking 13 ½ units were sufficient to keep my 2s deferment, I began to hunker down. Not known to me, my local draft board was short on its quota, and during my first years at school, the minimum requirement was increased to 14 units. I am a ½ unit short. Sometime in November, I got a letter from my draft board to register within 60 days—a left hook to the chin. I am going to Vietnam; I am screwed. A good lesson is not verifying the facts. A practice that I will follow religiously and will stand me well as a banker. But it will not always be remembered as the same mistake will be repeated to me in my late fifties. A lack of verification will again change the course of the river.

The preceding is only the setup. It is not the change but the reason for the difference. If someone was watching over me at Clavey Falls, that same guardian was with me in late November when I decided to try to find a reserve unit I could Join. A reserve unit would only take six months to complete, and I could continue my studies.

I was discharged in September 1966. Returning to college after the Coast Guard, I was late registering for a full load. I will miss a few classes, which probably affected my final grade, but I needed the money; learning to drive a UPS truck on Mission Street in San Francisco was equivalent to a Ph.D. in driver’s education. I took six units and got a driving a UPS Truck over spring break to assist in the increased volume of Christmas deliveries. The main focus of the exercise was to anticipate changes several car lengths ahead while watching all the parked cars on the right. The stress to the right was to be ready for a nonobservant driver opening the driver’s side door.A reminder of Semper Paradis.

 The UPS experience will pay dividends when I get my first management job with the Bratskellar restaurant. Up to that point, UPS was the best company I had ever worked for. High pay almost doubles my previous hourly rate, a Christmas bonus, a lot of overtime at 150% of my hourly, and an unbelievably efficient operation. Most importantly, high morale, which I attributed to all their employees, was treated well. It was the first job where management made me feel important. In short, the roots of my management style germinated during the last six weeks of 1966.

Because I changed my major and opted for a B.S. degree, I took five and a half years of classes to get it. After graduating from High School in 1962, I should have obtained my degree by 1966. But I do not graduate until January of 1969. For the additional two years, My father agreed to pay for room, tuition, and food for four years. Everything else was on me.

The restaurant business will play a significant role in my life.

The incident of finding the paper that put me on probation but not being expelled;  and the almost unbelievable luck of getting into the Coast Guard reserve have something in common. An unknown person dropped their essay just before I needed one, and I made a decision. An unknown person at the top of a three-year waiting list makes a phone call 30 seconds before I leave the Coast Guard recruiting office, and I make a decision. These two events will begin a lifelong internal debate of pre-determination (fate) and statistical probabilities. (Luck, good and bad). One of my favorite lyrics by Paul Butterfield is, “Born under a bad sign; been down since I began to crawl. If it weren’t for bad luck, I’d have no luck at all”.

My father refused to pay for my education after I completed my courses in 1967. I was required to use some money saved from my summer job, and I took a few part-time jobs while attending classes. There were three. The first was working in a pharmacy in the village near the college. The second was totaling accounts payable totals for a large retail store. It was here that I got my first taste of real accounting work. I wouldn't say I liked the task. Still, it was the ultimate test in applying speed and accuracy to obtain the correct accounting entry. I mastered it in a week and was soon bored.

When I join a Japanese bank, a ten-key adding machine will play a dramatic role between management and an employee. It will be my first exposure to the Asian cultural norm of losing face. Losing face is foreign to Western values and, in my opinion, will play a critical role in the success or failure of American foreign policy.

I was eventually rescued from my adding machine by an offer to be a waiter. The lead came from a classmate working at the Cooperage restaurant on Union Street. The Cooperage was not just any old restaurant but where the “ in-crowed” gathered to eat, drink and make merry. Since it had a full bar and extensive wine selection, I got an education in the liquor trade. An essential skill of being a good waiter is the elimination of unnecessary moves. Obtaining efficiency provides ample time to do what waiters are expected to do; treat the customers like royalty. The development of this skill will parallel my study of production management.

This job had a reasonably low salary, but we were given free food and had to keep all our tips. Tips are the incentive to work as a waiter. I was able to make a lot of tax-free money. I only worked at the Cooperage for one summer, but it was enough to qualify me for my next restaurant job. The dynamics of the restaurant business are manifold and will solidify the management style I observed at UPS.

THE BRASKELLAR

The delay created my first financial crisis, and I didn’t have enough money to pay my share of the rent. While looking for a job, my roommate carried me for two months and bought the food. I did not need to go hat in hand to my parents. More importantly, I could quickly get to my classes and access the local job market. His unselfish act provided the capital I needed. There will be other financial stresses in my future. One will take me to the brink of bankruptcy. As I complete this section of life before banking, I realize that the origin of this book may not be my trip to Russia but the memory of my financial struggles.

Our apartment was located on Polk Street, not far from Ghirardelli Square. Formerly this was the location of the Ghirardelli chocolate factory. Now it is a tourist attraction with shops and restaurants. One of the restaurants, The Bratskellar, was just about to open, so I went down and asked the owners if they could use a waiter. I got hired on the spot. I will work as a waiter during my last semester and begin to research available positions at a chemical company.

In addition to completing my G.E. requirement, I deferred an advanced production management class. For our final, we were required to find a production function and describe how it worked and if it could be improved. But  I encounter a fork in the road. I completed my final assignment and got a B+. That week I also obtained an interview with Kaiser in Oakland. The job was in quality control at their sheetrock plant. My first interview went well, but I wasn’t sure this job suited me.

I had a lunch shift that weekend, and the president of the Bratskellar, who was working the floor that day,  asked me if I was ready to graduate. I used the opportunity to tell him about my production paper because it involved the restaurant.

My paper focused on a production function called Cueing Theory . Basically, it involves the movent of some parts in a system. A good example is how to time traffic lights so movement is smooth and efficient. An example of cuing theory you are all familiar with is the change in banks on how to line up to the teller window. Historically you picked a line, and it might move slowly or fast. Now you stand in a single line and get to whichever teller is open. A similar function is self-checkout at the grocery store. These are all implemented based on cueing theory.

The Bratskellar presented me with a unique opportunity. The restaurant was huge. The distance from the kitchen to the front of the restaurant was a long walk for the servers. The servers waiting on tables furthest from the kitchen required two round trips to the kitchen. Once to submit the order and once to pick up the food. To alleviate the double trip, the owners of the Bratskellar installed a vacuum tube delivery system located at the coffee station on a side wall in the middle of the restaurant.

 The servers in this area would put the order in a shuttle. Load the shuttle into the vacuum tube and lock it. The shuttle would be delivered to the kitchen, and the cooks would extract the shuttle from the tube,  remove the order and add it to their list for preparation.  

 My paper addressed all the variables associated with this system. The shuttle delivery system was less efficient than requiring the servers to walk to the kitchen twice. In short, it did not work. One of the problems was conflicts between servers needing access to the coffee station and other servers waiting in line to load their orders. However, the biggest problem was the tube itself. The shuttles had to be powdered with white chalk to flow through the tubes. Because the powder was located in the coffee station, the moisture in the air caused the powder to stick to the side of the tube. Wet chalk caused the shuttle with enclosed orders to back up in the tube.

The president asked me if he could read my paper. The next day he offered me a job as assistant manager. I will abandon my pursuit of joining a chemical company and join this group of young Restauranteurs from Chicago. Managing restaurants will be my profession until I become a banker. Once you enjoy the daily challenge of running a restaurant, you are hooked for life. Even today, when I take Terri to dinner, I can tell if the restaurant is running smoothly or not.

 Early in my career, Banks did not like lending to restaurants because of the high failure rate. Because of my bank training and management history in running restaurants, I convinced my bosses that I knew how to evaluate this credit risk. All my future restaurant loans will be profitable. But, ironically, the one I turn down will become the most promising of all. You know it as the California Pizza Kitchen

Dear Reader, Stephen has written many stories about his Bratskellar experience. He decided it was too much for this book. I am inserting a brief resume of his short career as a restauranteur. During the next four years, Stephen will open and manage the La Jolla Branch, Move back to Los Angeles, and help open the restaurant in Westwood Village. He then advanced to the chain's cost controller, working directly with the company's Chief Financial Officer. which had grown to 7 restaurants.

He was offered the cost controller job because he had the lowest labor costs among all the managers. When asked how he did it, he said he gave the employees whatever time off they wanted as long as they could find a replacement. He eliminated jealousy by evenly distributing the stations. Hence, regardless of skill level, everyone had equal shifts to the better tables. He focused on the employees' morale before he was concerned for the customers. If the morale were high, the customers and the stockholders would be the beneficiaries.

In 1970 the chain got into financial trouble from over-expanding and needed to cut overhead. Stephen decided it was time to move on. One of his assistant managers in San Francisco landed a job at the Aspen Highlands in Aspen, Colorado. He offered Stephen a Job running the Apres Ski Bar in the afternoon. The offer was 4-hour shifts, $20 a shift plus tips, free food, and all the skiing he wanted. He only needed a place to rent. He told me it would be a dream job for a single guy like him. He stayed with his friend for an entire month, trying to find a rental unit he could afford. There was nothing. He returns to Los Angeles and moves in with another former  Bratskellar employee living in Manhattan Beach.

Dear reader, Steven returns to Los Angeles after failing to find affordable housing in Aspen

The stories in “Tails From The Vault “ begin here

Before I continue with Tales From The Vault, I would like to share an email I received from Richard just before we started the editing process.

“Marc, thank you for your interest in Stephen’s work. You asked me to provide you with the focus of his book. Instead of telling you what I think I can offer you some material; he wrote,

The following is from his original prologue; he didn’t like it. I found it in the trash file. I don’t know why he trashed it, but it is a good overview of his thinking. Some of the material is included in the new prologue. “

“Tales From the Vault’ is a book about my experience with money, both my money or sometimes a lack of it and other people’s money. In banking parlance, OPM is the coin of the realm (other people's money).

I have a unique point of view about money. I was a commercial banker for 40 years. My career gave me a window from which to observe and sometimes participate in more real human drama than all the reality shows ever produced.   Murder, Suicide, Fraud, Political Shenanigans, Extortion, Organized Crime, FBI Sting, Threats, Bribery, XXXXXXXX,  International Money Laundering, Drugs, Sex, and even Rock and Roll, all in one degree or another, played a role in my career. 

Most of the dramas had to do with money, and that money was OPM. It was your money—the money you deposited into my bank. There will be stories where I was personally involved and will pertain directly to my purpose of sharing my understanding of money with you. Other stories are included to provide comic relief, drama, and engaging human behavior episodes. These stories may even increase book sales.

Access to money that I could lend to others placed me in a position of power. Not unlike a father who controls his children’s allowance. I am also in a profession requiring the highest level of trust from my client and me.

 I am still expected to maintain this level of confidence, so some of the names and locations of the stories have been modified to keep my moral obligation to protect the guilty from exposure and the stupid from embarrassment.

Obscuring some identities should also reduce the probability of my publisher and me incurring a possible lawsuit.

I had just turned thirty-one and had less than one year of experience as a bank lending officer. Being a bank lending officer meant I could approve loans, although small, with my pen. I had scheduled an early morning meeting with the wife of one of the bank's new clients. Her husband was out of town, and she had to come to the bank to sign documents before we could fund the money.

At the appointed date and time, a woman approached my desk, which was located on the platform. She was about 15 years older than me and was quite attractive. I correctly guessed that she was the wife of our client.

The platform, before the coming of the cubicle age, was a big open area in the middle of the bank where junior offices got to sit for about ten years until they earned an office. It was and is very exposed.

Without introducing herself to me, she unabashedly blurted out the following words.

“Steve, I would rather tell you the most intimate details of my sex life than discuss my money with you.”

I immediately offered to discuss the matter at hand with her in the privacy of the conference room. It did not occur then that my privacy offer might have been misunderstood. She was happy to complete the signing at my desk and left without saying anything. I never saw her again, but her comment made me realize two essential aspects of my job. First, my clients depended on my integrity to guard their secrets; second, I had to be wary of their secrets not revealed to me. Nobody shares all the intimate details of their sex lives.

For the next 35 years, whenever I had a meeting where someone would share their financial situation with me, I would remember her words. Her straightforward, straight-to-the-point statement provided me with a foundation on which I built my career. Money is personal power and more sensitive than sex. Building trust is essential in building relationships and is more powerful than money or sex. Thus being discreet and discrete about everyone’s financial situation builds trust. And maintaining this trust is the only way an economy can create and sustain long-term wealth.

 But first, I had to be sure I could trust them because I was at risk. As then President Reagan said about Nuclear Detent with USSR. “Trust but Verify” 

Navigating the ever-changing dynamics of power and trust would be the currents on which my career would float along or capsize on the rocks. I would experience both.

In some ways, this book is autobiographical. It is about my observations on how people are affected by money and how money is affected by people. The common denominator of this book is money. The concept of a common denominator is discussed in the Math Chapter. Sorry you have to know basic math to understand money

The structure of this book is simple. There are only six chapters. After a brief introduction, I start with First-grade math and end the 6th chapter with Macro Economics. The interim four chapters discuss Money Accounting, Finance, and Banking. Like most things, staying strictly on one subject is difficult because everything seems connected to something else. So any chapter may have ideas or elements found in the other chapters. Math is usually an element found in all chapters.  

 Tales from The Vault is not a textbook. It is a book of short stories. The stories are all true. I do not always change names to protect the guilty if I think I can get away with it. If you only read the stories, the book will be entertaining. If you can also learn anything, I will feel happy that I may not have wasted time writing it. If only one person benefits from my experience, then I will have succeeded. If only one person avoided financial losses because of something learned in this book, I will have succeeded. If only one person buys this book, that’s on my publisher. I can still say that I am a published author, but I will have to remain humble.”

“Mark that is it.”

When Stephen wrote this prologue, his vision was narrower than what Tales From The Vault evolved. The Sylvia Li story and using me as a narrator was integrated much later. The six-chapter format was eliminated.

I returned to Los Angeles after striking out in Aspen. I am almost broke again, and I have no idea what I want to do. I am no longer in the restaurant business. I am 8 weeks away from a potential overdraft. My father suggests that I visit Joe Edelstein in San Francisco.

Joe Edelstein was a partner in a small stock brokerage firm called Edelstein Campbell, located in the financial district. Joe went to high school with my mother and became a lifetime family friend after my mother married my father. That is all I know about Joe, but on the day of our meeting, he will open a door I never thought of going through.

There are only a few things I remember about visiting his office. Hardwood floors, connected to plush light brown carpet, panels of dark wood on the walls. And the receptionist, who was a 20-something looker.

Joe met me in the lobby, shook my hand, and asked me how Mom and Dad were. I could tell he was busy, and I first worried that I was wasting his time and mine.

He directed me to a small hallway where we would stand to talk. No tour of the office, no offer of coffee, and no hint of offering me a job. The meeting was brief, honest, and right to the point

Having known me since I was born, he did not think I had the personality to be a stock broker. He did believe I could be a good stock analyst. However, when I told him about my experience with Bratskellar as a controller, I did not know how businesses worked despite having a dual degree in business and chemistry. He gave me a short, quick suggestion

"Get a job in a bank."

I would never see him again or tell him how that short sentence changed my life.

After being turned down for a date by the receptionist, I returned to my apartment in Manhattan Beach. I am down to seven weeks of liquid funds. I do not have any illiquid assets except my Fender Mustang base, a Fender Rhodes keyboard, a Beatle amp, and a four-track Teac tape recorder.".If I did not get a job soon, I would seriously consider robbing a bank rather than selling my "Music Studio

Joe's comment about finding a job in a bank floated in and out of my mind for a few days. I had never thought of banking as a career. I took an elective class in psychology that predicted I would fail as a banker.

We took a test called the Kuder Preference test. The test asked about your interests, likes, dislikes, and habits. Your answers were designed to correlate with other successful people in their professions.

I still remember most of my scores. My highest correlation was the entertainment industry, 85%; next came orthopedic surgeons and social workers, 72%, followed by the military, 55%, and religious leaders, 51%. My lowest scores were farmer, 10%; accountant, 7%; banker, 5%. 

The professor had us discuss our results with the class. I remember one comment he made about my religious score combined with my military score. He was surprised at the equality of these scores. I have no idea why he said this.

I could understand the Entertainment score; I have always gotten along well with musicians, actors, and people who like to tell stories. I did not give much thought to an orthopedic surgeon because of the requirements. Still, I could see myself working as a social worker, helping people in trouble (remember this), except for one negative. I liked to make money. My military and religious scores also baffled me a bit. Each of these professions must require the same personality traits. But I have no clue.

Now for the lowest scores. I don't know why they were low, especially for farmers, because I liked gardening. After my interview remembering these scores bothered me and caused some doubt that banking was the best path.

 I called my father to tell him about my meeting with Mr. Edelstein and what Joe's suggestion was and then told him about my low-interest score in banking.

He responded by saying. "You can make anything interesting if you open your mind to it."

After my conversation with my father, I decided to open my mind before the bank closed my account.

xxxxxxxx

Somehow, I find a recruiter who specializes in placing people in banks. I cannot remember who I talked to when I went there or why he even interviewed me. I remember his comment when I asked him if he needed a photograph. His answer was, "Only if you were black."

As the interview continued, my banking career began with a small lie. Or maybe a large fib. I cannot tell the difference.

I already made a feeble attempt to explain lying in the Statistics * section, but that did not go nearly far enough. What is a lie? It is never black or white. The black truth mixed with a white lie is gray. A black lie combined with the white fact also makes it gray. Here I did not substitute the word dark for black because dark and white do not make gray. All you get is either dray of whack.

*Dear Reader: Stephen’s “feeble” attempt to explain lying is in the Statistics chapter of the EconoShell model. I am repeating it here because of its relevance

One of My mother’s favorite quotes is,” There are Lies, there are Damn Lies, and there are Statistics.” This quote was made famous by Mark Twain but not attributed to him.

According to Wikipedia, the origin of the original quote is not known for sure.   The implication of this quote is obvious. Statistics are worse than Damn Lies. David Huff wrote a book titled “How to Lie with Statistics” in 1954. Because it appears to be a book on recognizing scams based on numbers, it could also be seen as a how-to book, in which case the title could be Liar Liar  Pants on Fire. If I may paraphrase from “Guns do not kill People, People kill people,”  Statistics don’t lie; statisticians do. You can also substitute a statistician with a politician if you wish, as the paper is full of examples during the romancing of voters.

I never did know the difference between Lies and Damn Lies or where other quotes about lies fall in the pantheon of lies. Another of her favorites is “Everyone will forgive a little white lie, but no one will forgive the dark truth*  I could not find the origin of this quote. Maybe my mother made it up. But this did create some confusion in my mind.

Where does the little white lie stand in relation to other lies? Is it before Lies and Damn Lies? And what about the dark truth? Maybe it is worst than statistics, thus implying statistics are ok if they hide the dark truth. But then we are confronted with “know the truth and the truth will set you free.” John 8:23 The Bible New Testament.   Now I need to know the difference between the truth and the dark truth. If I tell the truth and it turns out to be the dark truth, I will never be forgiven. If I do not tell the dark truth, I will not have to worry about forgiveness, but I will remain enslaved because I can never be set free.

*The original quote was “The black truth.” Stephen felt this use of the word black, as quoted by his mother, might be offensive to some. But the word “dark” was used in the past to identify African Americans in film and print. He could not find a third word, so he settled on “dark. “

Some say there are only two types of lies: The lie of commission, when you tell someone something you know is not true, and the lie of omission, where someone is relying on something you know is not true. Whether it is a lie of commission or omission, the liar is the one who benefits from either good consequences or avoids terrible consequences.

So, what is the category of the following.?

I babysat my two young nieces, Amy, age five, and Rose, age three, many years ago. I gave them a cookie on separate plates and went to the bathroom. When I returned, Rose cried and said Amy had eaten some of her cookie.

 I looked at the cookie now resting on one of the plates on the table. The other plate only had a few crumbs on it. Sure enough, someone had eaten part of the remaining cookie. Since only Amy and Rose were in the kitchen, I first assumed Amy had taken a bite. The following dialogue discloses the truth.

"Amy, Is that your cookie or Rose's cookie?"

"Rose’s”

“Did you take a bite out of Rose’s cookie?”

“No”

Now I have a problem, which one is telling the truth?

Maybe Rose took a bite and forgot?

Next question to Rose

“Rose, did you eat any of your cookie”

“No”

Then I asked Amy

“Did you eat any of Rose’s cookie?”

Long pause. “Yes”

“Well, how did you eat her cookie if you didn’t take a bite out of it?”

“I broke it off.”

My first thought was we had a budding lawyer in the family.

Was this a lie of commission, omission, or just clever?

Any Pink Panther fan will remember this exchange:

Inspector Clouseau enters a hotel and encounters a dog in the doorway.

He turns to the hotel clerk and asks

“Does your dog bite?”

To which the clerk answers, “No.”

So Clouseau bends down to pet the dog, and the dog bites his hand

“I thought you said your dog does not bite? “

To which the clerk replies: “It is not my dog.”

Was this a lie of omission since the clerk clearly understood the reason for the question? As did Amy above. In the cookie situation, Amy was trying to avoid the benefit of disclosure through deflection, So it is a lie.

On the other hand, the clerk had no benefit at all, but did he have a moral obligation

I found two quotes that shadow every negotiation.

“There is a sucker born every minute,” Attributed to P.T. Barnham but not proven.

If you can’t dazzle them with brilliance, baffle them with bullshit.” ; W. C. Fields.

There is a story about P.T. Barnham that fits both quotes.

P.T. opened a menagerie tent in a small town. The tent had many exotic exhibits which the inhabitants had never seen. The tent was not very large and soon filled up with the curious. It was so attractive to the town folk that they remained in the tent.

 P.T. realizing there were still many potential paying customers in line outside, asked his attorney for another word for exit. His attorney suggested the term “egress.”

P.T. had one of his employees make a sigh and hang it over the exit.

“THIS WAY TO THE EGRESS”  

Thinking there was more to see, the tent soon opened to more townsfolk.

I have decided that Statistics is the answer to the above puzzle because statistics provides me with the tools to “dazzle them with brilliance or baffle them with bullshit.” Since most people cannot tell the difference until they step in it, they always assume it is true because statistics do not lie.

Although the above examples are verbal, it is possible to tell lies on financial statements. I have encountered both lies of omission and commission throughout my career. Some outright blatant, others as clever as “this way to the egress.” Or “I broke it off.”

If I might digress for a brief comment here. Almost every legal dispute I have been involved in has one or more of the above elements. Banks have always been the target of many frivolous lawsuits.

When the borrower loses money and gets into financial trouble, the claim is the bank's fault. The banks win most of these cases. However, during the last 20 years, the banking industry has changed. The final section of the chapter on banking discusses this change and is, to me, the saddest part of my book. But that is years off from now.

On top of life with my father, who believed lying should be one of the commandments, my training as a banker has given me an acute sense of “smell.” My nose twitches when someone is lying, deflecting, or slightly oozing guilt.

I confess that being able to see and learn by the deflection of others allowed me to bend whatever it was that I felt needed bending.

 I should add that bearing false witness is covered by one of the Commandments. Still, by my father’s standards, it is too narrowly defined. Since Moses came down from the mountain, jurisprudence continues to argue the legal status of “it’s not my dog,” “I broke it off,”:  or “This way to the Egress.”Usually at $500 per hour.

I now return you to the interview.

The employment recruiter did say that the bank usually hires MBAs and that a minimum of a B average in accounting was necessary to get into the training program. GULP. I only had a B.S. degree; while acquiring it, accounting and philosophy were my worst nightmares. Accounting was a C minus average.

My mind wanders to the fact that I got As in Finance and Organic Chemistry and a B plus average in economics. I visualize that accounting did not have the same status as finance or economics. Accounting to me was like practicing piano scales. Finance was playing jazz, and economics was the concerto.

How did you do in accounting?

Huh? Oh, Fine. No problem.” This was the lie. All I could think about was my financial situation and lack of initiative in seeking other options.

But he would get me an interview at Union Bank because I had been a controller at the Bratskellar.

Now I have to say something that may be hard to believe. Since applying for a paper route with the Marin County Independent Journal at age 11 and before applying to Union Bank at age 26, I have always been hired at the end of every job interview.

These jobs included three lumber and hardware stores (remember Tiny).; a waiter in 3 different restaurants, including the Bratskellar, The Akron Los Angeles, Bellach’s Furniture San Rafael, UPS driver during Christmas. Willie Mays was on delivery route for S.F. retail  Pharmaceutical store and two casinos at Lake Tahoe. I realize anybody may have been hired at their initial interview for anyone of these low-level jobs.

Because my initial success rate was 100%, I decided Union Bank would hire me, and I wouldn’t have to explore other opportunities. My evaluation will not go as expected.

The interview with Union Bankers begins early Monday morning after I fill out a lot of paperwork and make a couple of copies of my resume. In the past, I only talked to the person who would hire me. At Union Bank  I had to run the gantlet of four interviews by four people in three different departments. I was also introduced to about four or five other employees who would have no significance in my future career.

The interviews took a week to complete. I am now in the 5th week of the eight weeks I had to find a job. I slowly began to realize that this was not just a job. I am interviewing for something more serious. But I am still confident.

I feel comfortable now that the interviewing process is over. I did not feel any negative vibes from anyone who interviewed me.   Since the weather was nice and my apartment was only three blocks from the beach, I would do some sun, sand, and sea time;  and at night, check out the action at Ponchos.

The LA airport is near Ponchos, and my apartment was only two blocks away. The bar was a popular Manhattan Beach hangout for “stews” hopeful male admirers.

While waiting for a call from Union Bank, I went to Ponchos with a friend at an unusually early hour. Poncho’s was packed. We had to stand quite a way from the courting dances. We ended up next to someone he knew. He asked me if I would like to meet someone who would be a “well-known actor.”

The guy was a little taller than me, about as good looking, but had a chiseled face, perfect posture, and was wearing the whitest, fluffiest  sweater I have ever seen.

 My friend asked him if he would like a drink, and I never forgot his answer, “No thanks, I don’t drink.” I could not figure out why this guy came to Ponchos if he did not drink.

When we left Poncho’s, I asked my friend how he knew Grant Westwood. He asked me, “Who is Grant Westwood ?“ “ The guy you just introduced me to, Mr. Teetotaler.”

 He laughed and said his name was Clint Eastwood. While writing this section, I looked him up to see how old he was. I was surprised. At the time, he was fourteen years my senior. I can only surmise his lifestyle kept him looking young.   At the time, however, he was a tall guy in a fluffy white turtle-neck sweater who did not drink or seem interested in the talent.

When I move to Los Angeles, mid-career, I will be responsible for the bank's entertainment department. It will be 20 years between star encounters.

Another week goes by, and no phone call. I worry that the bank did not call because I was just a beach bum who liked to drink at Poncho’s. Your mind does funny things when you believe you are home free, but no feedback could mean tagged out at the plate. Finally, I decided to pull a bluff. I called the head of personnel and put on my controlled, indignant mode. I had nothing to lose at this point.

I said something like this.

“I have been waiting for a return call from your department for over a week now. I enjoyed meeting the people who interviewed me, and Union Bank is my top choice. Still, keeping a candidate flipping in the wind does not seem professional or prudent. Especially if he has other offers that have put on deadlines for an answer. (this was the implied lie)

This was the response

It is Stephen, right?

Yes, Stephen Dane.

“I have your offer of employment on my desk. I will send it out today. You will report to the accounts receivable department next Monday at Union Bank headquarters at 5th and Figueroa. Do you accept.?”

A slight pause to pretend I have other offers. I say, “Yes, Thank You.”

That he had my offer in front of him at that moment smelled funny. I let it go.

On October 30, 1970, I was officially employed as a banker. Two days later, I got the offer letter, and the salary was $50 a month, more than they discussed at my last interview.

 What I did not know at the time, I was hired by the bank with the best Commercial Lending Training program west of Wall Street. Their underlying philosophy is to hire people who are independent, aggressive, sales-oriented (not my strong suit), and customer-focused. Many Union Bankers will become Presidents and Chairmen of other banks.

There is one little detail I noticed in the letter. The offer date was two days after my last interview. It must have been sitting on the head of the personnel’s desk for a week. Which is why he had it when I called

I can only surmise it was a test to see if I would take the initiative and call them. Phew.

Union Bankers will be cut from a different cloth, so Stephen's concern about his banking score on the Kuder test would not apply to Union Bankers. Stephen was probably correct; they wanted him to sell himself aggressively. A good description of the philosophy of Union Bank was written up in an article  Link Here.

 article  Link Here.

The standard practice for new hires in Union Bank’s 18-month training program, called Loan Analysis, was first assigned to either the Credit Department or the Accounts receivable department for six months.

The pre-loan analysis experience was probably done to evaluate a candidate’s ability to survive a very vigorous 18 months. I was told only 50% of the trainees complete the training program. Not the same attrition rate as the Navy Seals, which is 73%, but It reminded me of boot camp. Five trainees were in my class, and two would ring “the bell.”  When he has had enough, a Navy Seal recruit rings the bell. Our attrition rate was only 40%. So either we were intelligent and challenging, or our instructors were softies. But I am ahead of myself here.

I was assigned to the Accounts Receivable department, which I learned was the best department to get into Loan Analysis. I had no idea what the Credit Department did, but I assumed I would eventually find out.

The Accounts receivable department acts in an auditing capacity to ensure the bank’s borrowers conform to the terms and conditions of their loan agreement. My first job in banking will be as an accounts receivable auditor.

Union Bank pioneered the concept of Account Receivable Financing. The bank was founded in Los Angeles and had, and still has, a large clothing manufacturing sector called the garment district. Union Bank was started by a group of Jewish businessmen who saw an opportunity to lend money to this industry. The owners of these companies were predominantly Jewish at the time, and the market was and still is highly competitive.

The nature of the garment business is fascinating in that much of it is both seasonal and style driven. These challenges require each company to be prepared to adjust to the market quickly.

There are usually three seasons, so the turnover of products is fast. This rapid cycle also requires that the company has enough money to pay its bills. As the company’s sales grow or expand and contracts due to seasonality, more of the company’s current assets are tied up in receivables. Sometimes for a short period due to seasonality or a more extended period due to growth. When this happens, they do not have enough cash to buy new cloth or pay for the sewers. They would sell their receivables to a factor at some discount to solve this cash shortage. The company would then tell their customer to pay the factor directly. The following is the simplest example.

Mr. Garment Man Inc. sells 20 dresses to Macy's for $100 each, creating a receivable of $2,000. The terms of the sale to Macy's are 2% 10 net 30. Macy's can take a 2% discount if they pay within ten days, but the balance is due in 30 days.  

The Macy's receivable is then sold to Factorman at a discount, say 4%. Mr. Factorman now owns the receivable and assumes the risk of default by Macy's. Mr. Garment Man Inc receives $1,920 immediately. If Macy's pays early, Factorman’s receivable due from Mayc’s is reduced to $1,960 because Macy’s took the 2% discount.

 On the surface, this looks like a bad deal for the factor. It is a better deal because Factorman received the payment 20 days sooner.

 $20 on a $1,960 loan for ten days or $60 on an a$1,940 loan for 30 days is the same earning per day. So, what is better, $20 on a 10-day loan or $60 on a 30-day loan? Your answer would be they are equal.

 But they are not equal because the factor got his interest money early when the discount by Macy's was taken. He can now invest this interest money for 20 days. The above transaction exemplifies the “Time value of Money.” Remember this phrase. “The Time Value of Money”

There are many more elements to factoring than just time and rate, which are also subject to negotiation and competition. The factor can offer a cheaper rate if the buyer discount is applied before the factor buys the paper. (paper in the Factoring and A.R. world means the receivable.) In that case, the element might discount the receivable by only 2%. But advance only $1,920. (I rounded). If Macy's pays early (XXX)the 

Other considerations include returned merchandise, buyer disputes, the buyer's credit quality, and the fact that the borrower would probably not sell a receivable to a factor if he knew he could get his money in 10 days. In short, the company will offload the worst receivables if it can get the factor to buy them.  

This risk transfer factor makes this financing costly to the business. The risk to the company is the element will not accept some of the receivables. If the company depends on the factor, the company could be in a financial bind if the factor declines a purchase.

Here is where Union Bank sees an opportunity. Instead of buying the receivables, the bank takes a lien on all the company’s receivables. It analyzes the financial structure of the borrower. No consideration is given to the quality of the buyer. In short, Macy's repayment risk is not analyzed. Neither are any of the company’s clients.

Here Mr. Garment’s company receives a genuine commercial loan. Accounts receivable financing will become the bread and butter of the Union Banks commercial loan division. How these loans are structured and monitored will be the foundation of my training. Everything I learn will grow from this seed.

I will spend six months in the Accounts Receivable Department before getting promoted to Loan Analysis.

My first day on the job was to meet Mr. Daniels, who, according to rumor, was one of the developers of Union Bank’s account receivable financing product. He looked to be in his late 60s, and I assumed he was getting ready to retire. I would not have any more contact with him. The following person I talked to was Henry Drusedeaux. He was the actual manager of the department and my boss’s boss. Henry is a difficult man to forget.

He was about 6 feet tall, with an athletic build, a back straight as an arrow, blue eyes, blond hair, and the spitting image of a German WW II officer direct from central casting. But his name was spelled with a French ending *. His English, however, had an apparent German accent.

Henry was an expert in receivable financing and told me his office was open to me if I had a question or concern. He then introduced me to the man who would train me. I am so embarrassed that I cannot remember his name. Still, he will spend several weeks explaining what to look for when I audit the bank’s customers. It will be several months before I am ready, but two of my cases will be memorable.

·       A background story on Henry was circulating in the bank, but it was only whispered. Henry was a very young Luftwaffe pilot during the war. He did not believe in the regime and risked his life by flying his plane to Canada, where he deserted his unit, melded into the populace, and changed his name from Drusedau to Dresedeaux. How he came to America or got hired by a Jewish bank is a mystery.   Whether this is true or not, his physical appearance, accent, and current age of about 50 add credibility to this story.

·        

My very first visit to a bank client occurred in my third month. I was invited to go with the vice president, the loan officer responsible for handling the account. I was not told anything about the client before we arrived at his place of business somewhere in the Valley. While driving to the client’s location in the Vice President’s car, he told me to observe. He said not to touch anything and maybe give some of the auditors, who were already there, a hand.

He parked the car in front of the company’s warehouse loading dock, and we entered through a side door. It was pretty dark inside the warehouse. Only a few of the lights were on. There were no employees.

Then I saw what would be the human side of financial failure. A man in his mid-fifties, slightly overweight and sloppily dressed, was running around the warehouse like a madman, half screaming, half crying, arms waiving, pulling at his hair. And intermittently between emotional eruptions pleading “No, No, No. “He then disappeared from the warehouse, and the loan officer followed him.

I just stood there watching other bank personnel, taking inventory of the thousands of wigs that were scattered all over the place. Some were on the shelves, some in opened crates, and a few on the floor. It was a big warehouse, and I would be standing there for a couple of hours just taking it all in.

Much of the warehouse was in disarray, with dirty floors, damaged boxes, several rat traps along the wall, a torn calendar next to the ( legal postings, and an OSHA poster.  It appeared that a garbage truck had used it as a dump site. The bank employees also ran in and out of the warehouse office and performed many tasks I didn't understand. They never asked me to help.

I would later realize that the most important lesson I learned that day, but did not really think about it at the time, was the condition of the warehouse.

Then, almost as fast as this scene developed, the loan officer approached me and said, “Let's Go."

It was almost like a dream sequence. I was watching something significant, but I was not a participant.

We stopped for lunch on our way back to the bank. The Vice President, who worked at the San Fernando Valley Regional Center, told me the client had been transferred to the loan workout department when the account officer left the ban.   

About a year ago, the client filed for Bankruptcy under Chapter 11. Still, his reorganization plan failed, and the courts moved it to a 7. The bank had a lien on the company's Receivables and Inventory (wigs), and we were there to protect our collateral from disappearing.

Henry thought it would be good for you to observe this process. Although it is rare, it is a good learning experience. He said, “Every loan you make or manage could end up like you saw today.”

We then went to lunch, and he asked me a little about myself and where I thought I might like to work when I finished Loan Analysis. He did not say, "If you finish the loan analysis.” That comment was an ego booster.

I did not know it then, but this was a job interview. He went on to tell me additional information about how Union Bank operated. There were no branches, only Regional Offices. I already knew this information but did not know what this meant. 

Union Bank was unique because each Regional Office was assigned a territory and managed by an RVP. It turned out that the man at lunch with me was not just a Vice President. He was the RVP of the San Fernando Valley office. Each RVP was responsible for the profitability of his region. An essential duty was the hiring and firing anyone to work in that regional office. Each regional office was run like a small independent bank. But unlike a small independent bank, it could lend like a big bank. I did not fully understand the significance of his statement about hiring and firing. My lack of understanding of this policy almost cut my banking career off at the knees.

He had a high personal lending limit, which meant he could make a loan under certain conditions without additional approvals. He then said that when I complete the program, I will be given q $25,000 limit to make loans, which would increase as I progressed through the bank; in today's dollars, 2015, that would be equivalent to $150,000

He also told me the bank had a different subculture. There are real estate lenders and commercial business lenders.

 The bank also had installment loans and an International department, but I would not attend one. Everyone wants to get into the Real Estate division out of the training program because it is the darling of the bank. He mentioned that I was probably on the Business loan track because I was assigned to the A.R. Department. I was not too fond of this last sentence; it reminded me of going to the minors.

Each regional office has a head of real estate lending and a director of commercial lending who reports to the RVP. The RVP controls some lending authority limits, but most loans go through a tier of lending limit approvals. The higher loan limit loans go to the Senior Loan Committee.

When the dessert arrived, he looked at me with a smile and said. “The second half of your training will involve financial analysis to assist the lender in charge of his account. It is called a Credit Call. At every level, a banker's real job is to understand the risks of lending money. Although it is not your money, it does not hurt to believe it is. You will be the first soldier on the battle line to obtain the necessary information, analyze it and present it for approval.}

This lunch was probably the best introduction to what I was getting myself into. I did not get all the details, especially about lending limits, approval rules, or what the workout department did. But the road map was briefly presented. The chapter on banking will explain lending limits and authority levels. 

Driving back to the bank, he told me more about the client we had just visited. He had been with the bank for ten years. In the first several years, he was a small wholesaler and struggled to penetrate the market. He had a minimal relationship with a local factor. He only used the bank to make deposits and pay his suppliers. An outside payroll company handled his payroll. He carried domestic and imported wigs and sold them to the retail market. We gave him a small receivable line in his fourth year when his business began to explode. His sales were still mainly in New York and Los Angeles.

But he expanded too fast and overbought just before the last recession. The loan officer handling the account left the bank just as the company began to lose money. The Senior Loan and Credit officer sent him to  the loan workout department because he had violated some of his loan covenants,

Two years ago, he filed for bankruptcy under Chapter 11. Filing under Chapter 11 prevents creditors from foreclosing on their collateral until the unsecured creditors accept a reorganization plan.  

Suppose the plan fails in an 11; the borrower can voluntarily liquidate his assets under court supervision. However, if the Chapter 11 plan fails and he refuses to cooperate, he can be forced into a  Chapter. Moving an uncooperative borrower into Chapter 7 is how secured creditors can liquidate their collateral. You will get the details of the bank's rights during a client's bankruptcy when you go to loan analysis.  

 As you witnessed today, our client did not go quietly into the night when his reorg plan failed. He was forced into a 7. We were there to protect our collateral. It is unfortunate, but the hardest thing to accept is when one of your clients, whom you have nurtured and trusted, turns the corner on you. And it will happen more often than you like by the person you would least expect.

Not long after my lunch with the RVP, he left Union to be the Executive Vice President of a small bank in Northern California. I never knew why he quit; better deal? Better location? Bad loans? All three. I felt I lost someone who could be a good mentor at the time. However, I discovered that most of my bosses were good mentors. They will make me feel that I have finally entered the major.

The second memorable call was my last month before going to Loan Analysis. It was not as dramatic as the first. I was there to do a collateral review. Later on, I will describe a complete loan analysis write-up. But the A.R. department did train me on how to evaluate this one asset. To cut to the chase, I will say that after being at the client's location and following my training, I was sure I had caught a fraud.

First, I present some background and then describe how the fraud was committed. The bank had lent money against all of the company's receivables. For example, assume a company has 100 receivables totaling $100,000. These receivables may have different maturity dates, or some of the client's creditors are just late in paying. So these 100 receivables are assigned to different periods of how far they are past due.

Putting separate totals of receivables due on different dates creates an accounting chart called accounts receivable aging. The bank typically advances 80% of the total on every receivable not over 90 days past due. The $100,000 on the company's books assumes $50,000 are current, $25,000 are 30 days past due, $15,000 are 60 days past due, and $10,000 are 90 days past due. For the above Accounts Receivable Aging, the bank would lend 80% of $90,000 or $72,000. Now there are many ways that the amount of collateral shown on the aging does not match the actual receivable owed to the company, which is why I am there.

 One way is to put a receivable on the aging that is no longer there; this may or may not be a fraud but just an accounting error. Then there could be a receivable on the aging that was never a real receivable in the first place. A thorough audit will catch this fraud.

 However, there is another more subtle way to borrow for short periods that self-corrects and is rarely caught. This is done by using a credit memo. A credit memo documents an item you sold on day 25 of the current month for $15,000 and is due in 30 days. The receivable will be on the books at the end of the month at $15,000 and listed on the accounts receivable aging when submitted to the bank.

.But assume the customer returns the item sold on the 5th day of the following month. The borrower no longer has a receivable, but he has increased inventory. But we are not lending against inventory. We have made an advance of 80% on $15,000 or $12,000 on collateral that does not exist. A credit memo documents the return of the item. Credit memos are an everyday occurrence in business. But a conscious effort to exploit this process is fraud.

While I was going through the company's files, I noticed a lot of orange credit memos. I smelled something fishy. I decided to investigate these further and documented what I found. I did not say anything to the owner because I was still a rookie and not sure. And two, if I am correct, I did not want him to know I knew.

When I returned to the bank, I told my boss what I had found, and he ushered me into Henry's office. After my presentation, Henry looked at me and said.

” I believe you have uncovered a possible fraud, do not worry about completing the analysis; I will take it from here."

I never got any feedback, but the customer left the bank before being promoted to loan analysis.

There are many reasons the receivable on aging is not what it appears. Besides returning the merchandise, the customer may have paid the receivable early. The accountant does not remove the receivable from the aging even though the company has the cash. Another example is the invoice amount being in dispute for one reason or another, wrong pricing, damaged goods, etc. 

I should mention that banks often will not bring legal action when fraud is discovered. It is a decision usually based on a cost-benefit analysis or some socio-political reason. In some cases, the fraud is a benefit to the bank. Later in my career, I will have one that turned a possible charge-off into a good loan. 

 possible charge-off into a good loan.  

Loan Analysis: 

I Planet Earth entered several millenniums of chaos when the Babylonians eliminated Ophiuchus from the Zodiac. The removal reduced the number of Signs from 13 to 12 and allocated stars to the wrong sector. It also shifted the corresponding dates that now overlap the old allocation.

Interpreters of the Zodiac have unintentionally used the wrong Sign in their craft when creating some charts. In addition, many believers have adapted their behavior to the old blueprint of their Signs personality traits.

Those assigned the wrong sector of the universe may have chosen the wrong profession, entered a marriage doomed to divorce, indulged in extramarital affairs, and continued to march to more devastating wars. The highest impact would be on the financial fate of the believers.  This confusion continues to feed the chaos. The integration of the original Zodiac has only recently been addressed but is it too late?

                                                                                       xxxxxx

December 21, 1971

Mr. Ted Langdon

PO Box 8997

Bijou California

Dear Ted: I am sorry you left the loan analysis training program. Our group is now down to four and we are being transferred to San Francisco with yet another instructor. My gut tells me to watch out for this guy, but what can I do?

 I hope your decision to become a ski instructor at Lake Tahoe works out for you. Send me your address, and maybe I can visit you someday. My family has a cabin at South Shore.

You may have made the right decision to leave banking. I just saw a movie called "THX1138, " and a scene made me think banks may be gone before I retire. Assuming I get that far. I won't tell you the plot or the scene, so you can judge yourself should you wish to see it.

Maybe I should investigate becoming a ski instructor. But first, I will have to learn how to ski.

Warm Regard

Stephen.

I only print the word God if it is in a quote. I will use the word Creator in its place. As explained below, I will also use the letter E when using a pronoun for the Creator.

 E also seems appropriate because the entire Universe exists in some form of energy. E=MC^2. . In this, Einstein’s most famous formula is where M is mass (you, me, and the lamp post), which has potential energy, and C, which is the speed of light. Since C has a speed, it can be measured. Since it can be measured, it must exist. But as noted above, the darkness (probably a jealous black hole floating in a sea of dark matter) does not understand it. So by association, the Creator is light who begins his job creating the Universe as we know it in complete darkness.

Moving on to the old testament

First Book of Moses 

Called Genesis

Chapter 1      …verse 31

“And God saw everything that he had made, behold, it was very good. And the evening and the morning were the sixth day.”

Chapter 2

 Verse 1;

“Thus the heavens and the earth were finished, and all the host of them.”

Verse 2; “And on the seventh day God ended his work which he had made, and he rested on the seventh day from all his work which he had made.”

All the above leads to the big proclamation paraphrased from verse 3: He blessed and sanctified the Seventh day, which is why we have Sunday School followed by everything that isn’t work. I guess Moses felt if the Creator could rest, so could we. Well, it used to be.

Thinking about Moses leads me to a joke.

When Moses was summoned to a conference on the mountain, he seemed to be gone for a long time. When he returned to his followers with his famous tablet, he said with some pride. “I have good news and bad news.” The good news is I negotiated from 15 down to 10. The bad news is adultery stays.

I have spent my entire career analyzing information;

For some reason, the above statement “and on the seventh day He rested” just did not hang together for me. 

My first inkling something was amiss occurs in Chapter 1, verse 31, “….And the evening and the morning were the sixth day”.

What happened to the afternoon? This description of a full day baffled me, but I will let it slide.

Next, There is a bit of a contradiction in “the work ended on the seventh day, and He rested on the seventh day.” If  E rested the entire day, the work ended on the 6th day, not the seventh.

My doubt is confirmed by verse 1 of Chapter 2, which directly follows verse 31 of Chapter 1. “Thus the heavens and the earth were finished.”

It would make sense if the preposition “on” were replaced by the preposition “by.” The preposition “by” implies the beginning of the 7th day but “on” could mean during the seventh day. “On” could be modified to “beginning on,” confirming that work ended on the 6th day. But the preposition “on” creates a loophole in the logic.

If E ended it on the 7th day and not the sixth day, then E did not get a full day’s rest which may explain why some religious services take up only part of the blessed seventh day.   Some practitioners of the Jewish faith keep holy the whole day on their seventh day, while in the Christian faith, on the 6th day. This fact may explain why the afternoon of the sixth day is missing. More on this later when I discuss commerce. Whatever the facts, I am only concerned with the content of ..” on the seventh day He rested.”

Take the opening title of this section, for example. Someone with no astronomical facts wrote it. From the outset, I have a problem using “day.” A day is a measure of time, universally accepted as one complete rotation of the Earth on its Axis. We can assume the Creator’s work is the creation of the Universe, The Universe, and by extension, the Earth was not created in 6, or 6 plus a little, of our days. But we know the Universe is billions, if not trillions, of our rotational days in creation. It may even be infinite. Further, the concept of Infinity is not something that I can completely comprehend because my brain does not have an endless number of cell connections.

Some human brains can store not an infinite number of variables but enough that they may actually be able to communicate with the Creator. I put Albert Einstein and Eric Clapton as two possible candidates here. 

One of Einstein’s statements will contribute to a significant part of my analysis of economic behavior. I would have included some guitar riffs by Clapton, but they travel close to the speed of light, alter the time-space continuum, and would be difficult to chart. I did find it coincidental that one of his album titles is “E Was Here.”

However, the traditional concept of time as measured by the rotational cycle of Earth will play an essential role in the following analysis of why you are not rich. I have devoted a whole 10% off a chapter on time.

This concept is not incorporated in my EconoShell (AWIM) for those familiar with Einstein’s space-time theory. The reason for this is simple. The space-time continuum is way over my head. As far as I can tell, we are not traveling at the speed of light, which, according to Albert, must be approached before Space-time can be usefully measured.

On the other hand, now that high-speed computers can calculate financial variables approaching the speed of light, Space-time may become a factor in today’s economic theories and calculations.

Since the word “Day” above is an inaccurate measure of time as a variable in the creation of the Universe and, by extension, the Earth, I eliminate the word “Day from the above sentence. Further because the words “the Seventh” modify a word that has been eliminated. I find it necessary also to strike these two words  The original sentence, which is now missing the (object of a prepositional phrase), becomes “On …… He Rested. “

The next word I have a problem with is “He.” This word troubles me because one of my clients, a doctor whose opinions I respect, told me over lunch that in life, “there is only male and female.” This concept is somewhat supported by the story of Adam and Eve. But suggests another conflict in logic and another target for analysis. The word “He” follows a religious tenant: we were created in the Creator’s image. I say this because I am sure a biased male wrote the subject sentence to curry favor with the other males in his tribe. If we are created in the Creator’s image, then the Creator must be male and female or neither. My use of E as the pronoun for the Creator is based on the fact that the only commonality in both he (male) and she (female) is the letter E.”

I eliminate the word “He” on this technicality.

We now arrive at the word “Rested.” Many other phrases now flood my mind when I justify a resting Creator. “No rest for the weary," “God's work is never done," and "The devil never rests" ( probably preparing to meet Eric at the Crossroads). My money is on Eric.

The quote that he ended his work and rested implies that the Creator had at one time stopped working on creating the Universe because there was nothing more to do.

 So the options are, the Creator never stopped, thus the "7th Day" never occurred: stopped and then restarted, but there is no comment and no proof or stopped and is now resting.

The last option supports the work ended. But we know now, because we now have the Hubble telescope, that the Universe is still being created, which could also mean the "day" of rest, using a euphemism for the word day, has yet to arrive. This suggests that I now eliminate the word Rested  

Suppose all the work has ended, and the Creator is now resting. In that case, it leads me to conclude that everything that happened in the past, is now and ever shall be, is on automatic pilot. Thus all future events from the time you complete this sentence are predestined.

So I am left with the word "On," which implies a beginning point of time in the above sentence, not something placed on the dinner table.

I leave this word as it is. Genesis starts verse Ch 1 Vs. 1 "In the Beginning…",   which means at time zero,  or to the paraphrase, "to begin on

Why did I include this somewhat stream-of-consciousness story of Genesis? Some decisions are based on false, inaccurate, or misleading information. The origin of lousy information can come from anywhere. Sources include the press, advertising, media sales pitches from investment bankers, political rhetoric, CPA-prepared financial statements, and the Internet. The most egregious is information from people we trust but shouldn't.

The training in loan analysis is to recognize trends in financial data. To acknowledge and document the information for both positive and negative risk factors. 

After five months of auditing accounts receivables, I am qualified to join loan analysis. I will begin my loan analysis training "on" my 6th month at the bank. There will be no resting on the 7th day for 18 months.

There are 5 of us in the group, three will complete the course, and only two will find a position within the bank.

We had three different instructors. Our first instructor, Dave, lasted three months and then left the bank to take the CPA exam; he will eventually become a CPA in Sausalito. I never saw him again. The second instructor, also named Dave, will quit to Join Wells Fargo Bank. One of the loan analysis program graduates, who became Chairman of Wells Fargo Bank, hired Dave away from Union Bank to run one of their divisions. Our last instructor was Doug.

 Before we were blessed with Doug, the bank's president, decided to establish a loan analysis program in San Francisco as the bank was expanding to Northern California. Some of the bank's top executives and recent stars of the loan analysis program were already in San Francisco and Sacramento. There were rumblings within the bank that some were not pleased with this decision. I know the Northern loan analysis program only trained one more class before being shut down.

Our class will be the first to graduate from the new location.

If you remember, I overstated my accounting skill at my interview. Because the training course would begin with an extensive review of accounting, I took an intermediate accounting course offered at a UC extension. Enrolling was a decision forced by fear.

Fortunately, I had an epiphany while taking a shower. I was always confused by a straightforward concept in accounting. I could not understand how you could have a sale on the income statement and still show what was sold on the balance sheet as money due. Unpaid money owing, which is recorded as a current sale, is called an account receivable.

The epiphany was figuring out the difference between two fundamental concepts in accounting. One is the cash method, and the other is the accrual method. Without this new understanding, I would never have survived loan analysis. This realization cleared all the confusion I endured during my college days. I got a B in the class and felt confident I would have little trouble with the loan analysis classes.

 For me, it was a cruel lesson that needed to be mastered.

The concept of accrual accounting will be shown later. This concept is more relevant to companies and their tax obligation strategies. However, it will apply to some of your decisions even if you do not own a company.

The following is an outline of the loan analysis program

A:     Review of Accounting principals

Accounting Test

B:     The Spread Sheet

Numerical accuracy

Conceptual Accuracy

C:     Pre Credit Call analysis

Analysis

The write-up:

D:     The Credit Call

         Sales pitch

         Interview

Data Gathering

E:     Loan write-up and presentation; Screened by

Immediate supervisor

RVP

Senior Loan and Credit Officer

Immediate supervisor

RVP

Senior Loan and Credit Officer

Senior loan Committee

The program begins with a review of accounting. I will present some accounting later after I introduce the EconoShell (AWIM), which from here on means "a word I made up"

After reviewing accounting, most of our first six months will be spent mastering the spreadsheet.

The spreadsheet is the tool used to create the data to evaluate a company's financial condition. Today this is done with data entry into computers. I could write a book on how the computer changed risk analysis parameters. The short version is here are the pros ( speed and accuracy) and cons (garbage in, garbage out, and formulas in place of an individuals character )

Because computers are available to almost everyone in America, I will use computer models to develop my EconoShell (AWIM).

There were no computers at the time, and calculators were not allowed,

We had to do all of our calculations on a slide rule.

The spreadsheet.

I do not have a copy of a spreadsheet. However, the concept is quite simple. Spreadsheets are formatted to correlate with two reports on a company's financial statement.

 Information is taken from the company's balance sheet and income statement and placed on the appropriate line on the spreadsheet.

Most entries are similar to a cut-and-paste function on the computer. Some entries on the company’s accounts must be reallocated on the spreadsheet. The reallocation of accounts is where the analytical process begins.

The company’s financial statements also include notes on the last pages of the report. These notes usually modify the risk associated with the account.

Two examples: The company shows cash on its balance sheet of $126,578. On the surface, this looks like a lot of available money to cover expenses or liabilities. But the notes say the company has pledged $100,000 as surety to a legal judgment on appeal. On the spreadsheet, this is considered restricted cash and is removed as an asset to cover current expenses of other debt.

A second example: The company’s financial statement shows an account receivable total of $1,467,985. The notes have two caveats. The first shows that $385,000 is over 90 days past due, and the second states that $ 124,000 is being disputed as damaged merchandise. These notes impact the earnings on the income statement and the available assets on the balance sheet.

The reallocation of account totals is the first task to complete. The second task is comparing accounts from period to period and applying financial tools to evaluate risk. During our training, we learn to identify these types of modifications.

I will provide a simple example of how financial statements are evaluated in the finance chapter.

Once the spreadsheet is filled in, our instructor then looks for errors. There are two types: One is math errors. Math errors occur if we total wrong, make calculation mistakes on the slide rule, make an entry on the wrong line, or put the wrong amount on the proper line. Posting the wrong amount is usually a transposition error.

The second is analytical errors. These are the most critical errors to avoid.

An example of an analytical error is putting the entire $126,578 on the cash line of the spreadsheet.

To graduate from loan analysis, you had to submit spreadsheets with no more than one math error and no analytical errors for each spreadsheet submitted for review. There was some tolerance for the math entry because slide rules are hard to read.

I should point out again spreadsheets are used to analyze companies, not individuals. However, the development of your EconShell will use some of the same financial tools that apply to companies.

The first assignments are completed on financial statements that provide the best challenges to our knowledge. The next step is to take the information on a spreadsheet and write a formal analysis in a 10 to 12-page report. We get the final test when the instructor is confident we are competent in spreading, analyzing, and presenting our findings.

The next step is to analyze the financial statements of clients currently with the bank and deliver the results of our analysis to the loan officer in charge of the account. We must also make a recommendation in the report based on our risk analysis of the borrower’s financials. The final paragraph is a recommendation on how the loan might be structured.

We never recommend that a loan be turned down, but we include all the negatives discovered so the loan officer can follow up with his client. I cannot have “her” because I cannot remember a single woman as a loan officer or in the loan analysis program.

The final test is the credit call

Up to this point, all instructions have been in the classroom. The final phase of loan analysis is the most critical. It is called the credit call.

The credit call happens in two phases. The first phase is to accompany the loan officer to the initial meeting with a prospective client. Initial contact is the most challenging part of the training. It entails convincing a new client to bank with Union Bank. Then after gaining interest, walk away with all the information required to perform a risk analysis.

The last phase of the credit call is to go out alone.

The objective for existing customers is to obtain financial information from an interview and up-to-date financials. We are preparing a report for the loan officer from interview notes and spreading the financials.

The final test is to make a credit call set up by a marketing office, not a loan officer. The marketing officer's sole job was to find potential customers. These are usually companies run by the owner. And the owner already has a bank. Success in this role will determine my success in the bank. My first interview with a nonclient was a disaster. I almost quit the bank that night.

Another negative was my relationship with the bank's Senior Loan and Credit Officer. (SLO) He was held in high regard, and he did not like me. Or he did not like my level of skill. I never knew which.

On one occasion, I made a report on one of the bank's significant credit risks. I was to accompany the SLO on his loan presentation to the Senior Loan Committee. He would use my report as a script for his presentation.

The Senior Loan Committee is the highest level for loan approval. They can grant loans up to the bank's legal lending limit. No single officer, not even the bank president, can approve large loans.

Although the presentation went well, he said my write-up was confusing. If he couldn’t understand it, neither did I. Because of his status, I assumed I must not be very good at analysis.

After the presentation, I was not confident that I would make it. Although I knew the material, I decided to review my report and compare it to other representations to the Senior Loan Committee. These were provided to me by Dave number two.

Everything I put in my report was correct except for one detail. My write-up was all over the place. It was a Jackson Pollack analysis. It did not flow along a nice easy path. 

My conclusion was The Senior Loan Officer (SLO) did not understand my presentation because it did not follow a format that most analysts used. He didn't want to take the time to unravel my mess.

His comment was the best advice I have ever received in my career. Unfortunately, sometimes I know the answer, but I do not know how I got it. Even if I know the answer, I must present it so my audience will understand it.

To solve this possible career killer, I noticed that all the presentations I studied had a similar format. All I had to do was learn the design and then put my analytical work into this framework. It is a process I will refine year after year. Just before I left Union Bank, my RVP said I had the best write-ups of any officer he had reviewed. I thank SLO Donn Moen for his observation. He may have saved my career

 But I survived loan analysis training and was completing my last assignment before looking for a commercial loan lending position.

Graduating from loan analysis did not guarantee me a job in the bank. I will have to sell myself to open positions.

Dear Reader: Stephen told me a story about finding a job within the bank. He did not elaborate on the details of his search in his book, but it is worth telling an unwritten detail here because it seems to follow a pattern of fate.

He told me his third instructor, Doug, was unhappy about being transferred to San Francisco. He wanted to be in Los Angeles, so he eventually got the new Northern loan analysis closed up. Doug was supposed to find openings in the bank so the trainees could obtain interviews. Doug told Stephen no one in the bank was interested in him. Stephen does explain what happens so that I will return you to Tales from the Vault.

Senior loan Committee

nker begins here

In 1969 Union Bank decided to expand to Northern California. The move north was accomplished by merging with Commonwealth National Bank in San Francisco on April 4, 1970. I won’t be hired until October 1970. The bank then moved some senior officers and recent graduates to manage the now San Francisco Regional Office. In addition, a NorCal loan analysis program was created and our class was sent to the San Francisco Regional Office. We will be only one of two classes to complete the program before it is shut down.

 I assessed that the bank offered me a transfer because I grew up in the Bay Area and attended college in San Francisco. Soon, the bank opened a regional office in Sacramento, headed by Tom Anderson.

After being transferred to San Francisco, Ted and I rented an apartment in Mill Valley, California. During this time, Ted decided banking was not for him, and he left the program. We continued renting together until I accepted the Sacramento position. I will never see Ted again. But last I heard, he was on avalanche patrol at Lake Tahoe. Three of us will graduate.

I packed all my possessions into two suitcases and a couple of paper bags. I drove east 90 miles on Hwy 50 from San Francisco to Sacramento. I smiled as I passed the Milk Farm billboard, knowing this would be an adventure.

The bank opened the Sacramento Regional Office about one year before I arrived.

I stayed in a hotel for a few days and then rented an apartment on 15th Street near the bank. The bank was within walking distance between the Sacramento River and the State Capital. But I never walked to either.

Walter Bragdon, Vice President of commercial loans, will remain my supervisor until I leave Union Bank. But he will report to three different RVPs while I am there. All three RVPs will influence my career. Tom Anderson will be the first.

Walter Bragdon was the best boss I have ever worked for. Wally was a complete banker. Eventually, he will become President of a bank in Petaluma. I only mention him because he was the one who told me to” listen to the little man inside.” His comment means that after all the analysis and risk evaluation if your instinct tells you something is wrong, it probably is.

It also works in reverse. If the numbers are negative and analytical tools point to a turndown, the little man inside says, keep looking; this is a good deal. It usually is. I will experience both of these scenarios to my advantage.

When I meet people socially, they ask what I do, and I say I am a banker. My answer is usually met with a blank stare.

Many TV programs feature doctors and lawyers; they are only second to private eyes. But I do not recall a TV series involving a banker or a CPA firm. I have concluded that these professions deal in numbers, which are not sexy. I only see bankers on TV when the bank is robbed.

Also, there are a lot of lawyer jokes, followed by doctors’ jokes.

I know a joke about a doctor conversing with a lawyer he met at a party.

“John Simpson?”

“Yes”

“I am Dr. Barry Delbert; our host  tells me you are a lawyer.”

“Yes, I have a small firm specializing in business practices.”

.

“Excellent,  maybe you can answer a question me here.”

“Maybe”

“When I go to parties, people are always divulging their ailments to me

and expecting some resolution on how they can cure it. My question is, can I charge for that? “

I think the perception of bankers is there is no perception, except until recently. Still, I heard two snippets about bankers early in my career. 

One was the description of a large two-story shiny black stone outside the plaza of Bank of America. Locally it is known as “Bankers Heart.”

Bankers Heart, which looks like a large piece of volcanic obsidian glass, brings me to the only joke I ever heard about bankers. Oops, white lie, Later, I will tell a joke about an investment banker. Investment bankers are different than commercial bankers. So I don’t put them in the same category of jokes.

Jake, the (commercial) banker, was known for his tight fist and ultra-conservative lending practices. He loved watching A Christmas Carol at Christmas time and would mock the ghosts while throwing stale popcorn at the TV screen. In his living room, he has framed a cartoon of Gladstone Gander sleeping in his coin room. Jake’s only infirmity is he has one glass eye. 

One day his younger brother, who Jake had avoided for many years, came into his office with a request.

“Jake,” he said. “Mom requires a heart bypass operation. She knows your attitude about money, so she sold the house to pay for the procedure, but even that will not cover the difference of the copay. She needs an additional $5,000. Can you lend it to her,”

“No,” Jake said. “There is no collateral anymore, and Mom should have taken better care of herself.”

“How can you say that, Jake? Didn’t she work her tail off paying for your schooling? I got nothing: What kind of son are you?”

Jake thought about it for a moment and spoke.

.

“I'll tell you what. If you can guess which of my eyes is glass, I will lend her the money.”

The brother stared into each eye and said, “The left one.”

“That's right," Jake said, a little miffed. "How did you know? Or was it just a lucky guess?"

"I did not need to guess. It is the eye that showed the most sympathy."

So, I began my career and was given a lending limit of $ 25,000, precisely as the departed RVP had informed me. But the limit came with some conditions. First, I could not approve a loan to a first-time borrower. I needed my boss's concurrence, and because we were a business bank, very few loan requests were under $25,000. I had to get approval if a borrower was already above the $25,000 limit. I made no loans under my authority while at Union Bank. Eventually, I will achieve a much larger personal lending limit when I become a vice president at another bank years later.

Access to money that I could lend to others placed me in a position of power, like a father, mother, or guardian, who controls the children's allowance. I was also in a position requiring the highest level of trust from my client and me.

Even though I am retired, I am still expected to maintain this confidence level. Some of the names and locations of the stories have been modified to keep my moral obligation to protect the guilty from exposure and the stupid from embarrassment.

Obscuring identities should also reduce the probability of my publisher and me having a possible lawsuit. 

On the other hand, I will tell the story's names and all where permission was received or where my publisher or I feel we are in the bounds of legal protection. 

The financial structure of a bank is simple to explain.

Unlike Agriculture, Manufacturing, Wholesale distribution, or Retail stores, which deal in hard goods, banks have only one product called money which is not sold. It is leased.

Like an auto lease, you pay money to use the car for a period and then return the vehicle. The bank lets you use" their money," and you return it after a fixed period.

To go with this analogy a bit further.

When you rent or lease a car, you pay the rental agency its costs for the risk of driving, the cost to maintain it, depreciation based on the car's initial price, rental agency overhead, and return on investment.

When you borrow money, you pay the bank for the cost of funds to the bank, risk of default, bank overhead, inflation risk, and return on investment.

The subject of interest rates, which applies to leased money, is where economics collides with politics. The most significant difference in comparing these transactions is the value of money changes faster than the value of the car. This variance is because the Fed controls the interest rate.

Dear reader A brief explanation of how the Fed works or does not work is explained in the following link.

Another difference is that the interest on the leased money is sometimes paid at the end of the loan, not during the loan. So, there are two structures of interest payments. One is monthly, like your credit card; the other is at the loan's termination, usually in less than 90 days. Why the difference in when interest is paid is significant and will be discussed in the Money and Banking chapter.

You may notice I put their money in quotes. Most money is not the bank’s money; it is your money. So, I am a broker using your money (OPM) to create leases. In the world of finance, these leases are called loans.

I did not include the service industry in the product group above because banks are also in the service industry. In addition to leasing (lending) money, bankers provide business advice to their clients and check accounts to their depositors.

 Recently, banks have become increasingly involved in wealth management, which has been the private preserve of investment bankers. The lines of difference between the two are blurring. This trend will cause the financial crisis in XXX. They are discussed later.

As a commercial loan officer, I have two primary responsibilities. First, I will build my loan portfolio by attracting new clients and servicing existing ones. Second: to collect the money I lend at a profit. Getting the money back is the job's biggest challenge.

Although Wally is my boss, most of Union Bank's loans exceeded his personal lending limit. He could approve my loans under his limit, and initially, some of my loans will fall into this category,

The next level of approval is the RVP's limit. Some of my loans will come under his limit. Still, the bank's largest loan requests will require approval from the bank's Senior Loan Committee. My success with this committee determines advancement in the bank.

Central controls have made my training obsolete except in one area. All my training was designed to present credit write-ups to the Senior Loan Committee. The approval of these presentations is the bank's lifeblood, and the committee members can be brutal on young lending officers. Presenting loans to obtain consent to higher and higher levels of authority is similar for all banks that lend to commercial borrowers. However, computer-generated financial models have modified the reliance on loan officers to get and analyze credit requests. Shades of THX1138. Computers cannot judge character. They have no little man inside.

Tom Anderson was Wally’s boss when I joined the Sacramento Regional Office.

Tom was an example of Union Bank's philosophy of hiring sales-oriented officers with a dash of entrepreneurial talent. 

My only story about Tom was an incident demonstrating the bank's marketing focus. 

Tom was in a pay parking lot on a Sunday afternoon. The pay mechanism to exit the lot was a coin-activated gate. If you did not have a coin, your car was trapped until Monday, when the attendant arrived. It was a typical 100-degree Sacramento scorcher sometime in July.

Tom was about to leave when he saw the owner of a new Jaguar stuck at the gate. Mr. Jaguar only had a $20 bill.

Tom walked over to the owner and asked if he could help. The owner asked Tom if he could change a twenty and include some quarters.

Tom had a roll of quarters in his car but not enough additional cash to change a twenty.

Tom immediately saw a sales opportunity. Tom told the owner of the Jag he was the new RVP at Union Bank, and the bank had just entered the Sacramento market. He then spun the sales pitch that we were all taught in training. He gave the Jaguar owner his business card and the two quarters to exit.

A week later, an envelope was on Tom's desk. It contained two quarters, a check for $600,000, and a letter of thanks. There was also prefilled application for a deposit account and a short note.

"I will be in the bank tomorrow to open a DDA* in the amount of $600,000. Please have all the documents ready by 11:30. If you are free for lunch, I would like to take you to my club."

Sincerely Cal Setzer.

*demand deposit account. The type of account that pays no interest.

The Setzer family owned the largest lumber company in Sacramento.

This client will be one of the bank's best customers and will also provide the bank an entry into the lumber industry. Lumber, agriculture, and the State capitol were, and maybe still are, the leading economic drivers in the area.

Wally will end up becoming an expert on lending money to this industry. I will cut my teeth on agriculture and real estate development loans.

By the time I leave Union Bank, 20 % of my clients will be in these three industries. They will represent 80% of my portfolio total in dollars. My largest loan will be a $20,000,000 revolving line of credit to one of California's major highway overpass contractors. Two of my clients will introduce the Mafia into our regional office. I will tell these stories as my career at Union Bank unfolds.

MOSEMAN HERE :

You never know what you study will one day come to your aid.

Richard “Dick “Moseman was one of the most interesting of my clients. He was a graduate of Stanford and had a degree in Engineering. He was educated as a bridge builder but as my client, I helped his company finance highway overpasses that he designed and built for the California highway system.

 I was a Junior officer and he was about 20 years older than me. When he was told by my supervisor that I would be his loan officer. I could see reluctance on his face that I might not be experienced enough to handle his needs. My first visit to his modest office was met with a cool reception and he delegated his CFO to provide me with what I wanted.

It was always difficult to engage him in social conversations and even after being his banker for 3 years I knew very little about his personal history.  He was not arrogant but very private when it came to exchanging information other than that which was required to prove the bank to finance his needs. The CFO(Chief Financial Officer)  who was 10 or 15 years older than Dick told me that he had worked with Dick for more than 25 years and he did not know much more about him than the day he started working for him.

 Initially, most of my dealings were with his CFO who always provided me with the information that I needed to process his loan needs. His company was always up to date on its financials and never missed a payment, violated any loan covenants, or failed to provide financial information when requested.

I usually like to get to know my clients personally for reasons that will be discussed in the banking Chapter. But given the way he related I decided to keep all my conversations with him to the absolute minimum.

One day he came to the bank to tell me the state was dragging out a payment and he needed an over-advance for 30 days while the state got its act together. I could tell he did not like being in a position of reliance. He said he had modeled his cash flow requirements using an econometric model and the delay upset his plans,

He was the only client in my entire career who used sophisticated planning tools and I asked him if he hired someone to do it. He said no. He added that he had an economics course at Stanford that used a book that he considered his Bible. The book was Principals of Engineering Economy by Eugene L Grant and W Grant Iverson.  He said he referenced this book often when he prepared his bids.

This was a stroke of luck for me. At the end of my Spring semester, I was 3 units short to complete my major and I needed one more elective. I had the option of waiting until fall which would have given me more options but would delay my entry into the mainstream (Get a real Job) or I could take the only summer class offered that met the requirement. I decided to forgo a summer of fun and get it over with. The class was Engineering Econometrics and the textbook was the same one.  He lit up when I told him that I also had the book and I also consult it from time to time to review present value formulas (this was a bit of a fib) I did and still have the book and many of the formulas I use in analyzing financial plans are taken directly from it.

I think he was surprised that a young banker understood the concepts in the book Maybe he was a little arrogant but I wasn’t offended because from that day forward I felt he began to believe that I could handle his business. Which I did and he was a valuable client to the bank.

Several years later he had just landed the largest contract in his company’s history It was to build the 605 overpass in San Jose. I got a loan approved to finance the construction and As part of my bank duties I had to inspect the progress and report back to my committee. Explain draw procedure

The bank also wanted a lien on his cattle herd which meant I had to go to the Ranch and inspect the operation

Before visiting the ranch, he invited me to his home for lunch in his living room he had two grand pianos which he said he did not get to play as often as he wished. One belonged to his ex-wife which is the only piece of personal history he ever revealed to me. And I let it stay there.

. He was a pilot who had his airplane and a landing strip on his 7000-acre cattle ranch in northern California The raising of cattle was a kind of hobby. He had a prize bull which at the time he said was worth$50,000 That was a little more than 3 times my yearly salary.  And he managed his herd with a sophisticated computer program. He was always trying to improve the quality of the herd and making money was not the primary objective. The sophisticated documentation on the cattle was not only evidence of my collateral but the seriousness he applied to all his business endeavors.  I could tell however that he did not like the bank asking for this collateral support, especially the bull.

 I thought we were going to fly in his plane but he told me that he was going to stay at the ranch and I would have to drive there. It was about 60 miles away.  I was a little disappointed because I had never flown in a private plane before but I was also excited to see the Ranch

The only time I ever saw him relax was when he invited me into the ranch house and he talked about his ranching operation.  I could never figure out why he subordinated ranching to bridge building which he seemed to love the isolation and bridge building which required political acumen, government bureaucracy and   It was my first experience with which he eventually took me on a tour. As we drove around, he showed me his operation and explained the economics of ranching. Somewhere in the middle of the Ranch was a huge old fig tree that he was told was the marking spot of an ancient Indian burial ground. He would not cut down the tree even though it would increase the grazing area and tried to keep his cows from eating or sleeping anywhere near the tree. That comment told me more about the heart and honor of Dick Moseman than anything I could have learned about his character. If I had had the authority, I would have lent him all the money he needed just based on his word alone. I did convince the loan committee that monitoring the cattle was more trouble than it was worth. So we left the cows alone.

Just after the final draw was requested he invited me to see the completed overpass. It was not connected to the road yet because the state ran out of money. The overpass was 3 levels high and cost $30,000,000 to build. It had an artistic design on the side which would become Dick Moseman’s trademark.  How we got to the top of the overpass I do not remember but it was windy and it was scary. Soon after this experience I got married and left the bank. I never saw Dick again. However, my wife and I visited then Yugoslavia on our honeymoon and I sent Dick a postcard with a picture of the Mostar bridge. One of the oldest bridges in the world. The postcard is all that remains of the original bridge because it was destroyed in the (WAR)

Although Tom Anderson hired me, I had minimal contact with him. I never got a chance to thank him. Why he left the bank, I do not know. The rumor was he stepped over the line.

However, while he was there, the building owners of the bank were constructing a new tower. We will soon be moving into new offices on the first floor of the new building. Our move is scheduled in about three months. During this time, the following event occurred. It will be the first of several dramas I will experience. 

The day began like any other. I went to the employee coffee room, drank a quick cup, proceeded to my desk, and sat down. As an Assistant VP, I am still working from the middle of the platform. I have not yet earned an office. We were not allowed drink coffee on the platform. That is why I always drank my coffee in the coffee room. 

Getting an office is a significant incentive to work hard and advance to Vice President because you can drink coffee in your office. No longer is it necessary to hang around the coffee room with the rest of the staff.

Support staff does not like officers hanging out with them, no matter how junior. The proximity of an officer mutes one of the support staff's significant incentives for coming to work: office gossip and its evil twin, rumors.

Norma, a petit 23-year-old, had just been assigned to me as my secretary. She was as innocent as a California Poppy. She would soon play a small role in the drama about to unfold.

The year was 1973, and we did not yet have computers on our desks. As I usually began my day, I reached into my inbox and pulled out a few 12 x 18-inch interoffice envelopes. The contents of interoffice envelopes were the hard copy versions of emails.

They had a "to" and "from" section, like email. The 40 or 50 address lines covered the envelopes' front and back until the lines were all filled in. The same envelope could be distributed throughout the bank multiple times.

When you received an envelope, you were supposed to remove the contents, cross out both your name and the sender's name, and put the empty envelope in your outbox to be picked up by the mail clerk. Occasionally, I had to forward something to someone else in the bank. I would then put the material in the envelope and address it on the following empty line.

 Unlike email, you could only send it to one person. Also, unlike email, which always goes to the addressee, I sometimes get an envelope that does not belong to me in my outbox. I always checked the "to" line to ensure it was meant for me.

 It was easy to send the envelope to the wrong person if the prior user failed to cross off the address on the last line on the front. The current user ignoring that it was not crossed off, put the new addressee on the top of the back of the envelope.

The mail room would then accidentally send the envelope to the last address on the front line. In the future, this error, started by my failure to cross off my name at the bottom of the envelope, would begin the most dangerous episode of my career.

Today the interoffice envelope, addressed correctly to me, contained a signed legal document that was supposed to go to the note department, an announcement of a staff meeting, and a mysterious small envelope addressed personally to me.

The small envelope had no return address but included the following letter. The letter contained a request for money but not in the form of a loan request. The proposal was typed using an old typewriter which will become a significant fact in my story.

I immediately gave the letter to Wally and waited.

The following day before the bank opened to the public, an all-male FBI posse of 5 invaded the bank and rushed into the conference room.

Not to alarm the staff, the President implied they were bank examiners without lying ( I guess this is a white lie). They dressed like bank examiners, with white shirts, black ties dark suits. They had the standard bank examiner like hair cut; and no smiling. Unlike bank examiners, their white shirts were pressed. But no one noticed this fact.

Only bank officers who had previously worked with regulators were told the truth. They were cautioned to silence. 

 I might interject a comment about bank examiners here. Sometimes bank examiners were women, so the following does not apply.

Compared to the men who now occupied the conference room, male bank examiners had cheaper suits, clunky shoes, rumpled shirts, and an attitude just right of Atilla the Hun.

In short, unlike the FBI, which follows the spirit of the Constitution, you were considered guilty until proven innocent by bank examiners. The standard for innocence was unattainable.

From my perspective, bank examiners believed their authority was higher than the bank’s Board of Directors. Regulators represented the government, which indirectly supplied the money and insured the deposits. Therefore, the bank belonged to the government, and they ran this part of the government.

We will visit bank examiners and their role in the fate of thousands of bankers and millions of citizens.

I was the junior officer in the bank going to meet with the "bank auditors." Of course, the staff could tell something was amiss. First, I wore my grey suit, as instructed in the letter; I only wear my grey suit in summer. It is a light fabric suit, and I have to wear it in the middle of a cold winter. Also, I could be seen going into the conference room for a meeting. My low status must have induced questions among the bank’s staff.

The FBI instructed me to go to my desk and wait for the phone call. Then, to relay my conversation to them.

The bank failed to tell the FBI that all calls to me went through my secretary Norma. A young newlywed and recent hire. Her desk was directly in front of mine in the middle of the bank lobby,

So when the call went to Norma, the extortioner assuming he had the correct contact, introduced himself as the bomber. At which point Norma panicked and yelled out something.

Her action spooked the extortionist, and he hung up. It also frightened Norma, who was given the day off. I cannot remember her exact reaction, but everyone on the platform heard her outburst.

Of course, now most of the employees are aware that something is wrong. It also alerted everyone within earshot that the conference room crew were probably not bank examiners.

The staff was never told it was a bomb threat. Norma was instructed to say nothing.

Since no additional calls came into the bank that day, we began to feel it was not serious. We thought the first letter might be a prank. As the week passed with no calls, we were convinced it was just someone angry with the bank. We were wrong. A week later I got another letter. This one was a little more ominous.

,

For a second time, the same FBI posse enters the conference room. Now every employee knows the FBI is here but does not know why. Norma, the California Poppy, did not open up.

Now as Sherlock would say, "The game is afoot." It will be my feet that will play the game.

Several hours after putting the red card in the window, I am told to go to a pay phone booth about three blocks from the bank; I will be given instructions once there.

I immediately go into the conference room and get instructions from the FBI.

But the first thing I hear from Tom Anderson is  '" Steve, you do not have to do this."

Since I was single and had no obligations, I volunteered. At least, that is how I justified my decision to deliver the money after the ordeal was over.

 Why did I put myself in danger? I have no logical data to support my decision. It was a pure adrenaline rush. The thrill of adventure, belief in the FBI to protect me, a chance to be a hero.

So, before I walk out of the bank case in hand, I am equipped with a wire and a microphone and instructed on how to use it.

One requirement in the letter that baffled the FBI was why I was instructed to have several dimes in addition to $75 in cash. The need for dimes seemed to worry them.

Before leaving the bank, I tested my communication device and a second time about a block from the phone booth.

Today, talking on a cell phone while walking on a public sidewalk is normal. When I tested the microphone attached to the inside of my suit collar, I received a few strange looks from women who assumed I was talking to myself.

Before I get to the phone booth to receive the call, I wish the extortionist had asked me to wear warmer clothes. He probably saw my nameplate on my desk during the summer and decided the suit would identify me.

The phone rang when I arrived at the phone booth. I was shaking from the cold and maybe a little fear. The timing of the ring confirmed that I was being watched. Upon answering, the extortionist asked me to identify myself and if I had the bag.

He then told me to get into the cab across the street. The cab driver has been instructed to take me to Sacramento Airport. Use the $75.00 to pay him. What is left over should bring me back to the bank.

When I got to the airport, I was instructed to enter the men’s main bathroom, enter one of the pay toilet stalls, and wait.

I put the receiver as close to the phone as possible, hoping the FBI could hear. I did not repeat back to him because I thought it would make him suspicious.

Then he said something that shook me. “There better not be any police, or else”  My first thought was he saw me move the phone. This threat contradicted his first extortion letter.

As far as I know, I responded immediately with no black and whites involved. I hoped my response was evasive enough to convince him. I did not consider this a lie. The FBI is not the police in my mind. (Shades of “I broke it off” or “This way to the Egress”)

I repeated the instructions into my mic after entering the cab.

“What?” the cab driver asked me, 

“I was just confirming that you are taking me to the airport.” Phew!!

 Then I repeated the instructions when I arrived at the airport. But I hoped the FBI heard my original broadcast because there was no way they would know where I was.

I paid the driver, entered the airport lobby, and asked a porter for the location of the restroom. The men’s room was packed, and a line formed waiting to use the urinals. Only one stall was open, so I put a dime in the lock control, opened the door, and entered. I hung the bag on the stall door hook, sat, and waited.

About three minutes later, I got a note from the adjoining stall that said, “I have a gun” I was perplexed. Who wrote the letter? The bomber, or the FBI. I could only see a handwritten sentence, “I Have A Gun.”

The threat from the extortionist now created some fear. Because I made no response, my stall buddy said,” I am FBI.”

At first, I was relieved, but then I thought, “What if this is a bluff?”

Fortunately, logic prevailed. It had to be the FBI. The extortionist would only ask for the bag and leave as quickly as possible.

How the FBI team got to the airport ahead of me and infiltrated the bathroom is a total mystery to me.

Not two minutes after I got the note, someone was standing in front of my stall, looking through the crack in the door. He was a big guy. I guess he stood 6 foot 4 and was a husky 220 pounds. He stood there for about 30 seconds, then nothing. No contact and no notes under the door. Nothing.

There was a knock on the stall door and a voice. “Steve, this is Captain McNeal. You can come out. He is gone. I am sure we will catch him.”

It was over. I gave the bag to the FBI, who opened it before me. There was no money in it. Only newspapers cut up like money.

At first, I felt a little pissed that the bank put me at risk. Before I questioned him, he said.

 “We did not know if you were involved.”

His comment hurt a little, feeling my trust was betrayed. Still, I also realized the suspicion was based on a small probability.  

After he closed the bag, he asked me to meet him in the main lobby in ten minutes.

No doubt you are curious about what happens, but  I do not find out until a week later all the details of the drama.

So, my participation in this event ended when I met with the FBI team in the airport lobby.

I was glad it was over. However, the next 5 hours will be most memorable.

First, I must tell you the FBI did not dress like bank auditors. Two were dressed like hippies, one was in casual clothes, and one was in a Hawaiian shirt wearing white pants and sandals. It was a perfect disguise. He had been totally out of place on this cold January day. I was the only one wearing a suit.

 As the five of us stood in the middle of the lobby, a bearded 25-year-old with long hair dressed in green fatigues and worn army boots ran up to me and said.

 “Hey, man, be careful; this place is crawling with Feds,” and he ran off.

The FBI team burst out laughing. I guess the man in fatigues was familiar with scoring pot and thought the “hippies” were transacting business.

We left the airport in two cars, and the lead agent asked me if I would like to stop for a drink before they took me home.

In my car were the two top agents and a driver who was about my age.

We ended up in a semi-sleazy bar in West Sacramento. The other car never arrived, and I did not ask why.

After the first drink, the head agent told me part of the story. The bomber entered the bathroom with a two-year-old child. Initially, the agents did not consider him a suspect. But he made one mistake.

He did not take off his gloves. No male would leave his gloves on to use the bathroom.

I could not see what transpired, but something gave the bomber cold feet, and he left without using the facility. The agents were sure this was the right guy, and two agents followed him out of the airport.

Before I conclude the story, I had the most interesting evening in a long time. The two top agents knew how to drink, and by the third round, the Captain began to tell me about their failures. The young FBI agent did not participate in the merriment. As the designated driver, he just sat and listened, drinking soda pop.

I will retell two of the FBI failures using each agent’s voice. At least as much as I remember.

FBI story told by McNeil.”

“It was extortion, and the victim was told to come after 9 pm, put the money in two paper bags, go to the designated location, look for an old white Chevy customized with a Carolina squat, open the trunk, and put the bags inside and close the trunk.

We intercepted the drop spot and placed ourselves behind a hedge on the opposite side of the street. We watched as the victim put the money in the trunk. And we waited and waited for several hours. We decided this would not happen tonight as the perpetrator probably spotted us. 

So, we went to retrieve the money. It was gone. The perpetrator parked the car over an open sewer. We could not see it because the car was low to the ground, and the utility hole, without a cover, was lined up with the rear wheels. A large hole was cut in the trunk floor and covered with a rug. The perp must have known the sewer system. We never caught him. “

The following story was told by the 2nd in command as we began to finish our third and last round.

My story is almost identical, and I will not go through all the steps. There are a few differences. The car was parked facing the street at a forty-five-degree angle on the edge of a bluff about two hundred feet from the bottom. The victim was told to put the money in a waterproof bag and put it in the box located in the trunk. Do not close the trunk yet. Back away from the car, and when you hear a loud pop, shut the car trunk, and leave.

We were stationed about 100 feet from the car, so we could not see what had happened. The victim did as he was told. After he backed away from the vehicle, a loud pop threw the box and the money over the bluff.

Like a Jack in the Box, the trunk floor had been rigged with a spring device that popped the box out of the trunk and over the cliff.

“Bottoms up, I am sure we got this guy,” was the Captains final comment.

As we left the bar, the second car arrived and gathered the two top agents. The designated driver took me home.

A week later, I am invited to the conference room to meet with the head FBI agent, the bank President and the RVP.

The agent relayed the following information to me. The bomber was an employee of the State Government; he had an excellent, high-paying job, was married, and had a couple of kids. The motive was never divulged to me, but the agent seemed sympathetic to the bomber. His exact words were

“This is not the profile of an extortionist.”  

The agent said they did not catch the bomber that night but eventually linked him to the typewriter on which the letters were written. My guess is the man confessed.

After the meeting, the President thanked me for my service and gave me an envelope.

I returned to my desk and opened it. It was full of real money, not cut-up newspaper clippings. A feeling of accomplishment coursed through my body. Then I noticed that Norma was not at her desk. I asked Wally why she was absent.

Wally said: “While driving home last night. Norma’s husband was involved in an accident. A drunk driver hit him head-on, and he died at the scene.”

Wally’s words hit me hard. Norma had been married less than a year. I went from joy to sorrow in less than 5 minutes. The FBI drama will quickly fade. It will take me weeks to process the crushing of my California Poppy.

The next RVP was Thomas Fitzmeyers. Tom was a rising star in the bank and not much older than I was.

During his watch, I had two exposures to the American Mafia.

Story number one:

There was a period when the lumber industry had trouble maintaining its financial stability. One of my clients, a lumber broker,  was underwater (negative net worth), and we had to cancel his small line of credit. We did retrieve all the money owed us, but he was illiquid and insolvent. Illiquid means current assets cannot cover current liabilities, and insolvent means total debts exceed total liabilities. In short, a negative Zone 3 in your EconoShell These are two conditions evident before a  company seeks protection under our Bankruptcy Laws.

It is incredible how long a company can keep its doors open while running on fumes. They can limp for a long time if they have sales, make payroll, and juggle the accounts.

At this point in the game, however, they have exhausted any source of financial help. Suppliers will not supply, banks, factors, and more expensive non-bank commercial lenders will refuse. Relatives will run for the hills.

Enter the lender of last resort, the illegal usury business. These are money lenders that charge more than the usury laws allow. Usury laws have changed dramatically since this time. Ironically, your credit card interest rates, fees, and penalties would have been considered usury when this story occurred.

What is usury? You may ask. Credit cards notwithstanding, usury laws are still on the books. For example, in the seventies, usury was violated if the rate charged was some percentage over the Fed funds rate. Assume 6 % over-Fed funds was the limit. If fed funds were at 3%, a 9.25 %   rate would violate the law. Usually, there is a cap. If treasury rates go to 6%, the cap might be 11%, so now the 6% index falls to 5%. The law would be broken when the interest charged is over 11% as opposed to 12% when the Fed funds rate was 3%.

If I might digress a moment. At a time, the banks were paying rates on CDs* over $100,000 higher than the usury laws. One afternoon I got a phone call from one of my clients that wanted to buy a $100,000 CD. He asked me this question.

Steve, if I buy a $100,000 CD from the bank, am I violating the usury laws. ? This question floored me. The concern was that my client lent the bank money at usury rates. I began to laugh and told him I would have the legal department contact him. The law was amended for banks.

  *Certificate of Deposit

Now back to the lumber broker.

My client called me one afternoon and said he had found a lender willing to help him. I wondered who this stupid lender could be, but it was none of my business.

He continued by telling me the lender was from San Diego and wanted the bank to monitor the money and a few other requests.

Would I meet with him?

I agreed since it was not a commitment on my part to do anything. Besides, I was curious as to his source. Perhaps I could use this lender to bail out one of my problem loans. If I ever have any.

He told me the lender would be in Sacramento on Friday. Can I meet him at 11:00 A.M?.  I agreed, and the meeting was set.

That Friday was hot early, probably in the mid-nineties.

Exactly at 11.AM, “He” enters the bank. I will use “He” to identify him just to be safe. “He” was about five foot six, 135 pounds. His body had no fat, and his face scared me a little. His hair was pitch black and looked like it was held down by three tablespoons of Vaseline. His skin was ruddy brown, and his nose may have been broken in the past. He wore brown loafers, dark pants, and a red shirt with a thin black tie. But the most memorable part of his wardrobe was a three-quarter-length black raincoat.

My antenna went to full reception, and I thought he might have a gun under his raincoat. Since he came by plane, I dismissed this possibility.

,

Wally was out of the bank that day, so I met with “He” in Wally’s office. I sat behind the desk, and “He” sat in one of the interview chairs.

“He” began with the following sales pitch.

‘” We have money to lend; we are experts in this industry and are confident that we can help your client through this time of stress.

What we would like the bank to do is keep a record of the invoices on the buy and sell. We will put a $100,000 demand deposit in your bank, untouched, until this cycle is completed. 

‘We just want a legitimate bank to watch the client, but you have no legal responsibility.”

I should mention that a $100,000 Demand Account was a bonanza then.

Despite his appearance, he spoke clearly and with intelligence. My anticipation of hearing the tv dialogue of a Brooklyn hood vanished. I was becoming intrigued, so I began to initiate a social conversation.

I do not remember how long we talked, but I remember the following exchange.

I said, “ I understand you are from San Diego? My parents live in Horizon Hills next to Mount Helix”.

Mount Helix is a somewhat exclusive area of San Diego, and my comment triggered a response I will never forget. I believe his competitive ego required him to say.

“I just finished building my home in La Costa. “

That was all I needed to know. Having managed the Bratskellar in La Jolla, I knew the rumors about La Costa. I am sure that “He” is somehow affiliated with the Mafia.

We continued briefly, and then he asked if he could go to the men’s room.

I said, “ Sure; ask the guard where it is. I need to call one of my clients, and we can continue if you wish.”

When he left to ask the guard, I immediately called a number in the bank that deals with “special” circumstances. The officer who ran the department, Leo, was a friend of mine. I told him about my meeting and gave him the name and where “He” lived.

Leo was unfamiliar with the name but had the latest copy of Penthouse magazine in his office. He told me they had just completed an article on the development of La Costa. Leo got the magazine and, before “He” returned to my office, said, “He”’ is in the magazine and is the number 3 man in the Organization.” Leo’s last words to me were, “Be careful.”

I hung up just as “He” came back. We reviewed his request, and I told him I would call him on Tuesday with our answer.

“He” left for the airport, never removing his raincoat.

After our meeting, I went into Tom Fitzmeyer’s office and told him the story. I said I thought the deal's structure was just usury in the form of buying and selling invoices because lumber delivery is never made.

I told Tom that even though our role in this scheme does not appear illegal, and  I am tempted to add the $100,000 deposit to my goals, I am uncomfortable with this scheme.”

Tom said, “OK, I will deal with it.”

Since my client was no longer in my portfolio, I was not involved with whatever happened.

I often wondered if my feeling uncomfortable was the “little man inside: Wally told me about.  

This usury scheme works because the Organization buys lumber from the seller, the one in financial trouble, and pays for the lumber under the seller’s invoice. Buying the lumber that is not delivered is a loan, not a purchase. The broker sells the actual lumber to a third party at a profit.

 Next, the Organization sells lumber to the lumber broker, the one in trouble. But, again, there is no lumber delivered to the lumber broker under the Organization’s invoice. However, payment on this invoice is expected.

Because usury is tied to interest rates, this scheme hides the interest in the form of invoice pricing. If the lumber broker cannot pay the Organization’s invoice from the sale proceeds to the third party, I assume he will get to see the knee doctor. But the result is the same—an expensive loan.

Story number two. This story does not involve the bank directly with the Mafia.

One of my clients was a lawyer who came to me with an unusual request.

He asked me if we would consider loaning to one of his clients without requiring a personal guarantee. Before I continue, I need to explain why the lawyer asked this question.

.In banking, there are two primary commercial loan borrowers. Companies that are public or very large and require bank financing that exceeds the bank's legal lending limit. The other is small independent companies, usually with one or two owners. I will expand on these loans when I work in a Japanese bank.

The laws under which a company may be formed are diverse. The traditional ones are Sole Ownership, General Partnership: Limited Partnership, and Corporation. Not included here are additional legal structures that evolved later.

All of the above, except Corporations, do not require the bank to obtain a continuing guarantee because the owners are already responsible for paying the loan.

 Corporations, on the other hand, are considered to be independent entities. Being independent means the stockholder, or stockholders, are only responsible for the Corporation's debts to the amount of their stock ownership. When a Corporation is liquidated in bankruptcy, there may not be enough assets to pay the bank loan. In that case, the stockholders are not responsible for paying the shortfall to the bank. For the bank, it is a loss.

A problem occurs when a bank lends money to a Corporation with only one stockholder. The company owner needs only to move assets from the Corporation to his personal account and then default on the loan. The bank has no recourse to the owner if there is a loss because a Corporation under the law is independent. It is very easy to cheat the bank if the Corporation gets into trouble.

Enter the continuing guarantee. The continuing contract is a document that obligates the owner to put his personal assets at risk. Most owners hate this document because it circumvents one of the primary reasons to form a corporation. That reason is to protect the individual stockholder from the failure of the Corporation.

The bank's philosophical argument for requiring this document is.

“If you( the borrower)  don’t believe in the viability of your company, why should the bank.”

The real reason is the bank has more control over the borrower's behavior, and there are additional assets to pay the loan.

I had to explain all this boring stuff because it sets the stage for the next drama.

You remember the lawyer asked me if we would consider a loan without a personal guarantee. I do not know all of this story's details because it is based mainly on hearsay and newspaper reports by others. And maybe, I am way off base. But this is it. I feel it prudent not to identify the lawyer, his client, or the company's name. They are no longer among us.

The lawyer introduced me to JW. JW told me his story and why he did not want to guarantee the loan.

JW owned a trucking company that leased trucks to farmers transporting agricultural products.

JW  was contacted by someone who wanted to meet him at the Nut Tree in Vacaville. Vacaville is about 20 miles West of Sacrament. There he would be shown contracts by lettuce growers engaging various truck drivers to haul the lettuce to market,

JW met the man and was told that a local Bank of America officer had a new program to finance trucks. JW only needed to apply for loans to buy the trucks, and the income from the lettuce contracts would service the debt. Of course, Bank of America required a personal guarantee.

JW  had a very successful company and a substantial personal net worth. He believed the value of the trucks alone would cover any defaulted debt.

JW took the bait. He went to Bank of  America and negotiated for several weeks to get truck financing. I do not remember the number of trucks he purchased, but it was more than ten and less than twenty. Everything went fine for a month, but the lettuce contract payments soon stopped. Realizing something was wrong, JW would eventually gain possession of all the trucks. He then stored them in a warehouse patrolled by Pinkerton guards.  

According to JWs lawyer, JW went to B f A to talk to the loan officer. The officer had not returned to the bank in over a week, and the bank did not know where he was. JW then went to the warehouse. The trucks were gone, as were the guards.

JW is now on the hook for the truck loans with no trucks as collateral.

At first, I had a hard time believing this story. I can accept the loan officer was gone. He was probably fired. But the disappearance of the trucks was hard to swallow.

Whether true or not, JW was responsible for the loans on the trucks, and he paid off all the debt to B of A. His company was wiped out, and 80% of his outside net worth was liquidated to honor his guarantee.

His request to my bank was he wanted to start an agricultural supply house. But he did not want to guarantee the loan because he lost most of his personal net worth, including his primary residence.

He still had little capital to invest and only needed a small line of credit. His business plan was based on farmers in the valley knowing him well, and the bank loan would be seasonal. A seasonal line of credit would be cleared to zero once or twice a year.

My little man inside did not balk at this story; too many positives to overrule any holes in the story. He did make B of A whole. And submission of his financial statements before his encounter proved he had been successful. His lawyer provided more assurances. Based on the matter-of-fact way he endorsed JW, I jokingly asked him if he would guarantee the loan. Then I smiled. He knew I was joking.

Before I continue with the Mafia story, I only need to say that my small line of credit gave JW enough support that he recovered all he had lost within three years. He was now investing in corn dryers which will make him wealthy.

JW was, without a doubt, the savviest, honest businessman I had ever had the honor to deal with. I even considered leaving banking as a career and asked him if I could join his company. Why I didn’t will become known shortly.

What was the scam?

Later in my career, the US government decided that bank loan officers had direct access to acts of money laundering. We would be subject to fines and prison if we did not report certain activities of our depositors. I became a de facto spy for the government. It is the beginning of government snooping into the lives of private individuals. It is the first step in total government control of our economic lives. The final step will be the THX1138 effect and the implementation of digital currency by the year 2030. (My opinion)  

But these controls are still a long way off. The earnings from illegal activities were only viable if they could be made legitimate and washed through legitimate businesses, like owning cigarette machines, gambling casinos, or a monopoly on cheese pizza. If not, the money could finance lighter crimes or unethical companies. The truck scam falls into the latter category.

Assume the legal weight on California highways for lettuce carriers is 5000 pounds.

The Organization's trucking company would underbid on lettuce-hauling contracts to obtain the business. All the drivers on these contracts would haul lettuce using JWs trucks. If the average cost-plus profit to deliver 5000 pounds of lettuce is 20 cents a pound, the legal trucker will receive $1000. If the cost to provide lettuce is 16 cents a pound, the trucking company makes $200 per delivery

If the Organization agrees to deliver at only 15 cents a pound, they will get $750 per load. But their cost would be $800. They would lose $50 per load.

Underbidding is not a crime, so where is the gain?

Simple:  Bribe a few Highway scale operators to pass a truck loaded with 10,000 pounds of lettuce. The gross income of the Organization's truck is $1500. The cost to deliver is slightly higher due to gasoline costs and maybe truck unloading. Assuming an $850 delivery cost, the net profit is $650 per delivery, less the bribe cost.

In 1971 look magazine wrote an article delineating Mayor Alioto of San Francisco's ties to the Italian Mafia ties.

The mayor brings a lawsuit for defamation of character. It will be the most protracted civil suit in court history. There will be three trials and a fourth non-jury trial adjudicated by a judge.

If you want a weekend of exciting reading, go on the internet and follow all the postings on the Look Magazines article and the ensuing court dramas that follow—especially the story of Jimmy Fratianno.

I will say that Look magazine paid a visit to JW during one of the later trials while I was still at the bank. Worried that all his records of the truck fiasco might be subpoenaed, he burned them. When I asked him why his answer was simple.

When I was at the Nut Tree meeting, Mayor Alioto was there with three other people. I did not think anything of it at the time. When Look Magazine contacted me, I realized my family could be in danger. My sons are too precious to me. I took it as a lesson in bad judgment and walked away.”

I will say that the court records and some newspaper articles confirm that Jimmy Fratianno owned a trucking company and had invested in a packing house. And regarding Mayor Alioto.

 From an article on the net, I thought this might be relevant

“ During the fourth trial of the libel suit, Alioto had testified he met Fratianno 'once in my life that I can recall.'

Two things to close. Who initially met with JW at the Nut Tree.? And why was Alioto there?

And last, I told this story to a friend I have known since kindergarten. He spent years working for AT&T. He said he thought I was telling him a bunch of bullshit. I was a little hurt, but I knew what I knew. Almost ten years later, we went out for a drink, and he said;

 “Steve, I must apologize to you.

“For what?”

“Remember when you told me that story about the Mafia lettuce incident, and I said it was bullshit.

Last week, I was installing a phone system in a bar in Stockton. At the bar was a drunk guy yammering on how the Mafia stole his truck.”

What are the odds of this getting back to me?

Tom Fitzmeyrer left the bank to become the President of Simpson Strong-Tie.

e Nut Tree.? And why was Alioto there?

And last, I told this story to a friend I have known since kindergarten. He spent years working for AT&T. He said he thought I was telling him a bunch of bullshit. I was a little hurt, but I knew what I knew. Almost ten years later, we went out for a drink, and he said;

 “Steve, I must apologize to you.

“For what?”

“Remember when you told me that story about the Mafia lettuce incident, and I said it was bullshit.

Last week, I was installing a phone system in a bar in Stockton. At the bar was a drunk guy yammering on how the Mafia stole his truck.”

What are the odds of this getting back to me?

Tom Fitzmeyrer left the bank to become the President of Simpson Strong-Tie.

The next RVP was Mac. Graduate of Stanford supported by a Baseball Schloraship  Mac was an easy-going guy with whom you liked to have fun. He smoked cigars and smiled a lot.  I won’t be with the bank much longer, so my relationship with him was short. But he will be instrumental in providing me with a challenge that will open the door to working with companies in trouble. The successful completion of this challenge will eventually define my role in banking and beyond.

We were one of the company's three banks. The bank had a $200,000 loan secured by delivery trucks owned by the Northern California Coke-Cola bottler. Their total debt was in the millions. At the time, the franchise had a market value of about 5 million dollars. But there was a problem. The head of the company was fighting a debilitating medical condition. It impaired his judgment and led to the company's over-expansion at a time when a more conservative strategy should have been employed. His sons were trying to fill in, but the problems faced by the franchise were overwhelming.

The timing of this challenge is essential. Coca-Cola franchises have their most significant months from mid-spring to early autumn. Because of the expansion, they ran out of money to pay their suppliers at the beginning of their busiest season. The two biggest suppliers were American Can and the Coca-Cola Company for syrup. Although partially secured by receivables, their other bank loans were fully extended. No more money from these banks was available. The company was delinquent on their loan to us and we had to reserve for a potential loss. In addition, Pepsi had just introduced a new product that took sales away from some of its best customers. 

 They owed their accounting firm a considerable amount of money. This firm was located in our building and was also a bank client. The other banks were experiencing overdrafts. The company must provide updated financials to prevent a covenant violation with the other banks. The accounting firm could not do any more work until the unpaid invoices were paid.

Then came the bombshell. The head of the accounting firm came down to Mac's office on a Friday afternoon and told us that the Coca-Cola company was trying to take over some of their franchises. I don’t remember the CPA’s  name, so I will call him Robert,

 The complexity Coke Atlanta situation is way beyond my skill level to describe. Still, it will be a benefit to our borrowers.

  I remember that Coke Atlanta had locked in sugar prices with their suppliers. The cost of this sugar was higher than Pepsi's cost. It made competing with Pepsi's new marketing strategy impossible if they could not pass the syrup costs to their bottlers. This high sugar cost in the syrup put our local bottler at a distinct disadvantage. They didn’t contract for the sugar, but they had to get a higher price from their customers. This is one reason the local bottler was losing market share.

 Part of acquiring the franchises was to gain local control—at least Coke Atlanta’s reason. My suspicious mind told me they wanted a $5,000,000 franchise for free.

But Coke Atlanta had the right to take over a franchise if it was not performing.

 Robert told Mac that his job would be in jeopardy if Coke of Atlanta took over the local franchise. The bottler's debt to the CPA firm could be the most significant loss in the whole company. It exceeded $350,000.(1974 dollars) The CPA firm was one of the biggies at the time. Price Waterhouse

Robert also said his firm had hired a law firm to stop Coke Atlanta from any action against the local bottler. And further threaten to sue, on behalf of their client,  if the Parent refused to send syrup for nonpayment. I have no idea how this was done, but it gave me some leverage when I was in the middle of the fight.

So what was my challenge? Mac made me responsible for collecting the defaulted payments on the Trucks. If I could not find a way then to repossess the trucks. My dilemma is that if I take the trucks, NorCal cannot deliver. The company is toast. Mac asked me to tell him what we should do on Monday.

The NorCal Coke loan is my first challenge in restructuring a credit problem. It was Clavey Falls and a chance of another unassisted triple play combined. It got my blood flowing.

That weekend I took the company's financial statements home to study. On Monday morning, I had a plan. But it would only work if American, Coke Atlanta, and another supplier, whose name escapes me, agree to my proposal. In addition, I would need the cooperation of the other banks to agree to allow us to finance on a secured basis. They had to agree to allow Union Bank to be in a first lien position on any new receivables and unsold inventory from the agreement until September 1.

The plan was conceived by simple logic. - If we enter the high season, sales and profitability should increase over the next three months. This increase in cash flow should allow the company to reduce payables and buy time to reestablish a marketing strategy. It would also provide the other banks an opportunity to liquidate their position. Since their loan is secured by  80% of the receivable, every receivable collected would kick a 20% cash infusion back to the bottler.

My three challenges were getting the Senior Lon Committee to agree to my plan, getting the suppliers to continue to supply during the next three months, and getting Coke Atlanta to continue to provide syrup without getting paid until the end of summer. 

Mac presented my 16-page credit write-up to the Senior Loan Committee. I did not attend the meeting. Mac was working in the background dealing with the CPA firm and had information on the problem with Coke Atlanta. This leg of the journey was out of my hands. The Senior Loan Committee could say no and tell me to repossess the trucks, or they could agree.

Submitting my plan for approval carried some risk to my standing.

If the committee decided that this proposal fell into the “good money after bad” category, I am not getting any brownie points. Waiting for a decision was an anxious moment for me.

Until this credit was approved, I could not contact the three suppliers.

When the committee meeting concluded, Mac called me into his office, handed me my credit report, and said

“Good Job,  Call the creditors.”

I felt both relieved and anxious. I now had to contact the three creditors.

My spirits were pretty high since my first big challenge was successful. But the little man inside modified my ego. Mac and the CPA’s lawyers probably drove the decision for the committee to agree. After all, the legal challenge to Coke Atlanta was the biggest hurdle.

I made the calls from Mac’s office:

My first call was to  Coke Atlanta to explain what we would do. I can guarantee that the bank will have full access to the collection of receivables and will send a monthly progress report. They agreed to extend credit until the end of summer. Coke Atlanta decided after grilling me on the details. Mac sat by me to help if I couldn’t answer any questions. I felt Coke Atlanta was getting legal heat; they grilled me with low energy. The little man inside was probably correct.

The second call to America Can was even easier than the Coke grilling. I gave the same guarantees I gave Coke Atlanta. The only difference was  American Can did not match Coke Atlantas end of summer payment, They agreed to a 60-day exposure on new credits and a 10% per month reduction of old debt beginning on August 1. I guaranteed the control of the collateral but not the reduction of old debt. I said the Bank would honor this to condition the best we could.

The third creditor was nervous and somewhat in a panic. He was a minor player; I think he was the supplier of the cartons or the labels. I don’t remember, but his support was needed. I could tell I was losing my plea,

I decided to sound very serious as I risked a bluff. I told him this problem was almost impossible, but all should work out if we got the company through the summer. I explained that American Can and Coke Atlanta were on board so he would feel a little more comfortable. I told him we would ensure he got 10% of the old debt and 100% of the new debt every 30 days. If all goes according to the forecast, he should recover 100% of the outstanding debt.   If he did not help, the company would probably be liquidated because I held the trucks as collateral. If everybody is not on board, I am required to repossess the delivery trucks. You will probably get maybe 10 cents on the dollar. I am glad he did not ask for the forecast because I did not prepare one. 

In September, the storm was over. The Pepsi War was fought to a standstill, and our borrower survived. The account was transferred to the problem loan department because this account will require special handling for a few years. I am thanked for my work by the President's sons and given a unique book on the history of Coke a Cola. I still have it as my first trophy.

The stories above are the most memorable, and there were many more. But the loan restructuring of the NorCal Coke loan experience gave me a sense of purpose.

Saving companies in financial trouble will give me a mission. Preventing owners who need assistance before they are liquidated will become a significant part of my future. This mission will also put me in conflict with senior conservative bankers who never believe in good money after bad—Conservative lenders who take the safe way out of a problem. Conservative lenders will say they are protecting the bank and, by extension, their jobs. 

I will do everything I can to avoid visiting a bankrupt wig warehouse

 [SS1]

I have not said much about my personal life because it was irrelevant to banking. But, before I got married, I bought a home on 43rd Street. Two streets away from Ronald Regan's house. I also purchased a small Citrus Heights home about 20 miles from the bank.

I decided to rent my 43rd street house and move to Citrus Heights. I transferred all my belongings, including my music studio, I was thers a month when I got robbed during the day. My Mustang Base, Teac 4 speed, electronic organ and all y stereo equipment were stolen. They left the Beatle amp probably because of its size.

When the police arrived, he made a comment I never forgot.

  "You don't belong in this neighborhood."

I had the stolen items insured, but this was the statement made by my insurance company when they gave me 40% of its value. 

Their legal position was, "We have the choice of replacing your equipment or paying you what we can buy it for less estimated depreciation" I got robbed a second time."

I gave up music for a while. I decided I needed a change. That change came one day when Terri was going to lunch, and the voice said. That is the woman you are going to marry.

Terri ran the bank's note department. We never got along, so the voice was a little confusing. Why we got together is another story, but we were married in April 1975. We asked the bank for a six-month leave of absence. The bank offered 90 days.

Also, we were told that one of us had to leave the bank.

The bank had a policy that a married couple could not work in the same office.  This applied double to Terri and me.  It does not take Sherlock Holmes to conclude that a loan officer who submits the loan approval to the note department whose wife documents and boards the loan would put the bank at risk, . Terri and I decided to leave Sacramento. 

We both loved working at the bank. Our reasons for leaving seemed to out-way the reasons for staying. One of us had to leave the office and there were no other offices within 90 miles,

 My renter's lease was up on the 43rd street home so I could sell it.  My other home was too far from the bank and my memory of the theft of my Mustang Base and the cop's statement “You don’t belong here”, may have influenced my loyalty to Sacramento. So I sold it also.

Although Terri and I loved to take bike trips along the Sacramento River, she hated the summer heat, and wanted to return to the Bay Area. She graduated from Berkeley and loved city life.  I had no problem returning to the culture I was born.

We turned down the 90-day offer and decided we wanted a six-month honeymoon. Despite the RVP saying publicly we would both be welcome at Union when we return, this will turn out to be just a statement to appease the remaining staff.

The bottom line is I sold both my homes with a nice profit, put our furniture in storage, and deposited half the proceeds from the sales into the bank.

We ordered a new Volkswagen Camper Van for foreign delivery in Germany and in September took an international flight on Icelandic Airlines.

 Our first stop was a week in Iceland then onto Luxembourg where we obtained transportation to Enenda Germany. We picked up the Volkswagen Camper and for the next 400 days visited every country in Europe except Sweden and Norway.

When we returned to the US, we decided to stay temporarily in Sacramento. I took a job working for one of my former clients, while I spent 6 months trying to rejoin Union Bank.

My efforts were rejected by every Union Bank office I applied.  Later I heard the bank had a policy of not rehiring officers who had left.   I am not sure this was the reason. The Bank had gotten into financial trouble and was sold to Standard Charter, then again to a Japanese Bank. Union Bank will eventually be dissolved.

My experience at Union Bank training will be my ticket to getting further employment. The officers who survive the training program were welcome at every bank that competed with Union Bank.

Soon Terri and I return to San Francisco and rented an apartment in San Francisco. I obtain a lending position with the Banque Nationale De Paris.

Our two-bedroom apartment was in Pacific Heights, about two blocks away from the most expensive homes in San Francisco. 

Because we were both professionals the landlord wanted quality renters. He offered us the apartment at $200 a month below the market rate.  Three months after we signed the rental agreement San Francisco passed a rent control law that was extremely tough on apartment owners.  Annual rent increases were fixed and it was nearly impossible to evict anyone.  I am not an advocate of rent control for many reasons. However, rent control creates a problem for those who are not yet renters. Rent control reduces the inventory so unrented units can charge whatever they want. I will discuss the pros and cons of rent control in Book Two.

ent owners.  Annual rent increases were fixed and it was nearly impossible to evict anyone.  I am not an advocate of rent control for many reasons. However, rent control creates a problem for those who are not yet renters. Rent control reduces the inventory so unrented units can charge whatever they want. I will discuss the pros and cons of rent control in Book Two.

                                                                                                         BNP  HERE

Banque Nationale de Paris was a major French bank. It was formed in 1966 through the merger of Comptoir national d'escompte de Paris (CNEP, est. 1848) and Banque nationale pour le commerce et l'industrie (est. 1932). In 1999, it merged with Paribas to form BNP Paribas.

Overview[edit]

In 1966, the French government decided to merge Comptoir national d'escompte de Paris with Banque nationale pour le commerce et l'industrie to create BNP.[1]

In 1990, BNP entered into an alliance with Dresdner Bank and supported a joint venture with Dresdner Bank to enter the Russia market supporting a Dresdner Bank branch in Saint Petersburg with Vladimir Putin's close friend Mathias Warnig as its chairman.[2] This alliance to enter the Eastern European markets continued until December 2000.[3]

The bank was re-privatised in 1993 under the leadership of Michel Pébereau as part of a second Chirac government's privatization policy.[4][5]

E BANQUE NATIONAL DE PARIS. (BNP)

This will be my first experience with a foreign bank doing business in America. The BNP is one of France’s largest banks. History and type here) SEE BNP DESKTOP

A position with the BNP was not what I had expected when I first started looking for a new job. Given my training and prior experience I assumed I would be hired as a loan officer with an American bank. I did not expect the negative reaction during my interviews with the old guard employed by these banks

 The old guard would expect you to get a job and stick with it. And if you did leave it was a direct transition to another job.   No gaps are allowed.  In employment were a big no no with the old guard.

Terri’s and my 400 day venture was considered a career killer by the Brooks Brothers suits. A rough breakdown of their responses was 65% considered me irresponsible; 25% were jealous and wished they could have done it but were conformists; the other 10% said they would do it if given the chance. But none of them were going to risk their careers. The irony is many will lose their jobs anyway, as the American banks begins to consolidate.

The BNP was not full of old-line old guard bankers, but stylishly dressed European trained bankers. Bankers in Europe enjoy a very high social status. Some have a PhD in economics or finance. Unlike American bankers, European bankers enjoy high salaries.

 Despite my training I am not hired as a loan officer but as an underwriter in the Credit Department.  My supervisor will be a nice guy but with limited underwriting experience. My guess is I was put into the credit department to test my skill level.

There was a  rumor that I may end up the head of the department because my boss was leaving banking to do something else. I was not chosen. They gave the job to one of my peers in the department.  A young attractive woman younger than me.  She had been with the bank for about a year so she had seniority. But her training and background was well below mine. I would have welcomed her as a supervisor if I was confident, I could learn from her.  I did not have that confidence.

 Her reason for being chosen is open to speculation. But I did not promote the various rumors. I rationalized that she had been with the bank longer and promoting women was becoming a political issue.

The bottom line is am not doing what I was trained to do, nor was a higher position open to me. I decided to look for another opportunity within the bank, or to leave.

 I was offered a lending position in a subsidiary of the bank called French Bank. French Bank will eventually become Bank of the West, but I will leave before this happens.

I am not a well-tuned machine when it comes to navigating corporate politics. And the BNP was a simmering cauldron of departmental jealousies. Eduard Sauter who was the top dog, seemed to like me and asked if I would like to go to France. I will be trained into the BNP system.

 I had already had two semesters of French in college and the only requirement was I needed to spend a year, at the banks expense, to become relatively fluent.  The training in France will be in French

 However, Eduard was somewhat of a control master. Every morning all the officers were required to attend a meeting at a long table in the Executive Board room. There Eduard would hand out all the mail that had arrived between the mandatory morning meetings.

He would look at each envelope and then give it to the ones it was addressed to. He wanted to control the flow of information.

 Some letters were looked at and placed aside. Why I cannot say. His management style could be open to four interpretations. One: for your benefit and his benefit. Two: for his benefit and not your benefit, Three: for your benefit and not his benefit, and 4: to nobody’s benefit. You can guess which one would be the winner.

Why he made me the conditional offer to go to France, was now being questioned by the little man inside since it would take me at least a year to become fluent in French. Edward was scheduled to more up a rank and to return to France long before I had mastered French.

Olivier Lecoin who was in line to take Eduard’s job,  had a debate with Eduard on where to place me.

From a pay standpoint I am making more than I did at Union Bank.  However, living in San Francisco, even then, would have been hard to save any money on just my salary. But Terri had accepted a job at a law firm doing Maritime law and we had locked in a very low rent in the best neighborhood in the city. Our rent was only 5% of our gross income.

We owned our van for weekend trips and we usually walked or used public transportation so we did not need another car. Our apartment came with a garage which is a huge benefit in SF.

 We were able to save money and enjoy a comfortable life style, and could take an annual 3 week vacation to my families cabin at Lake Tahoe. We ate out a lot.

The French Bank was a wholly owned American subsidiary of the BNP. Its president was a young guy about my age named Don McGrath and my boss will be Peter Hudson.  It was small bank that specialized in local commercial loans like Union bank with one difference. It did not have access to capital to make larger loans.  Most of the loans were under $250,000. Although I had some interesting clients, my loans were small and I became bored with the work.

I only remember four of my clients. One was to be the chef of Domain Chandon in xxx. I was responsible to underwrite the loan for the kitchen and finance the chef’s home.

 Domain Chandon is a major Champaign bottler in France and they bought a Get History)  I was hopping to get this account for myself, but it was too big for the French bank. It was handled by Olivier Lecoin at the BNP level.

Another client will be  Vern Rollins he owned a small wine distribution company, History here I had a small loan to him but it will be my first loan loss. Besides getting upside down financially some of his wine went bad. Rollins   Story here

One other person who was given to me was to interview was Nolan Bushnell. Nolan Bushnell was the inventor of Pong and founder of the Atari software company. He was the pioneer of video games. I will only have two separate meeting about a week apart. They would be memorable. Not because of who he was, or what he had accomplished but what he wore and what he wanted.

 At our first interview he wore a very loud gold Lemay suit and white shoes. My job was to ask him a few questions of what he wanted and tell him what financial information will be required. Management also wanted me to get him to open an account. 

His manner was a little arrogant but he was very proud of what he had accomplished. To be honest I was a little awe struck to be given this opportunity. However, I was not given this potential account as a reward. Nolan wanted to buy a home on the Ilse de St. Louis in France. This is where the Notre Dame cathedral was erected and home to some of the most influential members of French society.

My only assessment of why he wanted to buy a home on Ile de St. Louis was his ego. He had the money, but he did not have the required credentials.

At my second meeting, to which Nolan was invited before he had provided the bank with the necessary financial information, was short and to the point. I was allocated the duty to tell him only French citizens could own property on Ill de St. Louis.

 Whether this was true or not I did not know. However, when I asked if there was anything else we could do to get his business, he walked out in a huff. I never saw him again. I believe because I was an American, I could be the guy to pull the trigger, while French management avoided the potential conflict. As I said the BNP, not the French bank, was a boiling cauldron of political behavior.

I never knew if it was to keep me from going to France, or to keep me for himself, but my decision to agree to this assignment will lead me to make a career mistake. I passed up a possible great opportunity to possibly become a BNP international banker. The only regret that still haunts me.

My decision to leave was based on several factors.  My confidence in learning the required French needed, the fact that Terri and I had a great apartment with very low rent. My belief that working in a small bank would be a good learning experience, and I was uncomfortable knowing Lecoin would eventually be in charge and I did not totally trust Mr. Hudson. My distrust will be confirmed at the conclusion of this chapter.

I will eventually get an offer I cannot refuse.

Another French bank client named XX was managed by Peter. XX owned an Intermediary Insurance company and maintained large deposits in the bank. His company did not have a line of credit as I remember. When I told Peter I would like to get involved with something more exciting he introduced me to xx and let me manage the account.

After a month or so XX invited me to join his company and he offered me 50% more than I was making This offer blinded me to focus on the longer view.  However, I was now going to learn the insurance business. This experience will pay a large dividend in Book two when I join World Trade Bank in Beverly Hills. 

The most interesting part of my job was analyzing financial statements of Insurance company’s. These statements are prepared for the State Insurance Commission to monitor the insurance companies’ financial solvency. They are known in the industry as the Yellow Book. If I might divert a little.

The Yellow Books are like bank financials that are prepared for the Office of the Controller Currency (OCC) and the Federal Deposit Insurance ( ) (FDIC). This report does not have a color assigned to it. The OCC and FDIC are government agencies that decide which banks get to live and who must be sold, recapitalized, or merged into a stronger bank. They also approve mergers between two strong banks not under regulatory supervision. As mentioned earlier the consolidation of banks continues to occur as I write my story. The OCC and FDIC will be the ones determining much of this trend.

 My association with xx will not last long as I was uncomfortable with some of the company’s practices.

.But, my experience there will provide dividends when I get to apply what I learned working with X. I will defer writing about how I applied insurance underwriting until Book Two.  This will be when I join World Trade Bank in Beverly Hills.

 I will say that insurance and banking have a lot in common on how their financial statements are prepared. Both deal in risk. The main difference is banks bet that predicted outcomes will occur, and Insurance companies bet that predicted events will not occur.

To predict that an event will not occur is based on years of data. This requires years of study in actuarial math. The premiums charged by insurance companies are based on these studies. Actuarial studies predict the probability of you NOT having an auto accident. Variables of study include your age, type of car, neighborhood, commute time, driving record and probably many other measures.

These variables are then correlated, (matched to) those who HAVE accidents. Premiums are established to cover the cost of accidents, overhead and profit. In short, if premiums from those do not have an accident plus the premium paid by those who do have an accident covers all costs, the income from premiums keep the insurance company solvent.  That is why insurance is a viable industry.  This is a simplistic overview of insurance and is not banking.

However, the FDIC operates like an insurance company  Your deposits are insured, up to $250,000 in the event a bank fails. So banks, like auto insurance, are underwritten by the FDIC and regulated by the OCC  by analyzing the banks monthly financial statements to predict insolvency.

A model that predicts the solvency of insurance companies is further developed in Book 2. It will be both my biggest financial success, followed by the biggest disappointment in my life.  

I was at the insurance company for about nine months when an opportunity to work for a Japanese bank presented itself. I was contacted by another American banker who knew my background and told me I should interview with this bank.

I took a 30% cut from my current salary, but it was more than I made at the BNP and I would be a loan officer again with an Assistant Vice President title. I have moved up one rank with more money.   This will be a new position and my boss will be Japanese. The following stories are all true and working for the Japanese will be enlightening.

. Banks are not allowed to declare bankruptcy. this law was created to prevent runs on the banks by nervous depositors. How this works is described below under Redwood Bank

BANK OF TOKYO HERE

The Bank of Tokyo, Ltd. (株式会社東京銀行, Kabushiki gaisha Tōkyō Ginkō, BOT) was a Japanese foreign exchange bank that operated from 1946 to 1996. In January 1996, it merged with Mitsubishi Bank to form The Bank of Tokyo-Mitsubishi (now MUFG Bank). Its headquarters was in the Nihonbashi district of Tokyo, adjacent to the Bank of Japan.

BOT was the successor to the Yokohama Specie Bank, a state-chartered foreign exchange bank, and initially operated as an ordinary bank using the YSB's assets. In 1954 it became registered as a specialized foreign exchange bank, and closed all of its business unrelated to foreign trade. BOT became a close partner of the Ministry of Finance and the Japan Bank for International Cooperation in directing Japan's foreign trade policy during the postwar era. BOT had major operations in New York and London, and developed an early system to settle payments between Japanese yen and Chinese yuan during a time when direct foreign exchange was not possible.[1]

Due to the peculiarly international nature of its business, BOT was the only Japanese bank that employed more foreigners than Japanese, and it had large overseas operations and a large number of non-Japanese customers.[2] BOT was particularly active in California from around 1953. It acquired a controlling stake in San Diego-based Southern California First National Bank in 1975 and later renamed it California First Bank. In 1988, California First acquired Union Bancorp to form Union Bank (now MUFG Union Bank), one of the largest banks in California.[3]

BOT historically operated the foreign exchange counters at Japan's international airports, including Haneda Airport and Narita International Airport, which remain under operation by its successor BTMU. Like the Long-Term Credit Bank of Japan, Nippon Credit Bank and Norinchukin Bank, BOT was permitted to issue special bonds to obtain yen funding; BTM continued this program for several years after the Tokyo-Mitsubishi merger.

The "BOT" abbreviation is still used by BOT Lease, a Mitsubishi UFJ Financial Group leasing company established by BOT

Bank of Tokyo  DRAFT

I do not remember how I made the transition to the Bank of Tokyo, who I interviewed with, or who made me the offer. It may have been Jim. He was an American banker there who had achieved Senior Vice President level.

I use to know his full name and I can describe him, but his last name and who hired me is a black hole. He may have worked at Union Bank and may have known me from there. Since I cannot remember, I do not want to speculate, However, he will come back into the story when I am transferred to the second floor.

As a Japanese banker you are expected to play golf. During my initial interview I was asked if I played golf. I responded by saying “I have not played much since high school and my best score was 12 over par. But I am way out of practice.”

I thought this an irrelevant question but had a thought that they might want me to solicit business from golf courses or obtain deposits from players. Neither were ever a factor.

Golf approaches a religion in Japan. In the future, when I am about to play my first game with my Japanese coworkers, my boss pulled me aside to explain why I was invited, and how to behave.

He said: “If you hit a good shot do not gloat laugh or celebrate. If you hit a bad shot do not swear, yell or throw your club. Your emotional reaction to winning and losing on the golf course will determine your managerial potential. Lose control and you get sent to the Economics department”

 I assumed the Economics departments in Japanese organizations is where you lived out your life as a nobody until mandatory retirement

At that time, in Japan you were hired for life at the firm you join. You would never be fired only sent to the Economics department.  Since I was not Japanese, and knew I would never be a manager in a Japanese bank, I had no fear of servitude for life.

Now I knew why I was asked if I play golf.

I would not have to worry; At the time I was an  average weekend golfer but decided to play below my top level. I was afraid it would look like I was showing off. The advice was sound.  I would just focus on not throwing my club, or strutting after a good shot. I also refrained from congratulating members of my foursome since I was unfamiliar with the etiquette.  I felt keeping my mouth shut was the best behavior. Not unlike the advice given to me by the Captain of the Choi lee: with a slight modification.

“Keep your head down, your mouth shut, and behave properly at the Yo party” I said to myself.  Of course, keeping my head down in golf has a different consequence than on a sail boat. Not keeping my head down in golf might send my ball into the water. Not keeping my head down on the boat might send me into the water.

I do not remember my score, but I was not sent to the Economics Department.

 My direct supervisor will be Mr. Nikano, a Vice President. I was never given his first name. He was about 45 or 50 years old. Even though our desks were next to each other on the lobby platform, he barely spoke to me. I do not know if it was Japanese culture, if he was uncomfortable working with me or English was a challenge for him. He did have a heavy accent when he spoke English.

I do know that he was not involved in my hire because the first time I met him was the day I was takin to my desk.  My[RD1]  overall impression was he was not happy where he was. Or maybe he was upset because he was excluded from interviewing me, but given the responsibility to supervise me.  Unlike most of my fellow workers, who I would get to know, I found out nothing about him.

His first words to me were “work hard to get clients.” It seemed I was the only one under his direction and we both generally went our separate ways. He handled Japanese clients. I had none. My directive was to build a portfolio by obtaining business clients. My marching orders were no different than my Union Bank job. I maintained my AVP title.  

Nikano wanted me to focus on companies in Silicon Valley, and to attend meetings of the American Electronics Association. ( I think that is what it was called). I will let you be the judge on why they hired me after I tell you my experience there.

I did call on several companies in Silicon Valley including chip manufactures and the manufacture of Seagate hard drives, I attended several meetings and job fairs given by the AEA. But something was wrong.

At Union Bank initial contact with potential clients was always met with a welcome businesslike manner. I was always given polite attention, invitations to maintain contact, and consistent follow-up. .  However, for some reason when I gave out my bank of Tokyo card at AEA events, I received a cool reception and no follow-up questions. It bordered on rude.  Sometimes I just stood in the room with a drink in my hand and was never approached.

My first impression was the Silicon Valley companies wanted to use local American banks, like B of A, Wells Fargo, or the new Silicon Valley Bank. I also thought that an AVP title was considered too low to play with this group. No doubt both could be assumed to be the cause. I will find out later from a friend that the cause was probably related to being employed by a Japanese bank. I will expand on this issue at the end of this section.

After several months of making solicitations, I had not obtained a single client.  My lack of success was beginning to frustrate me. I had never failed to meet my goals and I was behind. Further, none of my clients from the French Bank followed me to my new job.  Then my first encounter with the bank’s Japanese management will give me a clue as to why I was probably hired. It will be unforgettable.

One morning Nikano came to my desk and said “the CEO of the bank wants to talk to you.

I asked “the President?”.   “No” he responded, “the Chairman. Put on your jacket and go to the top floor board room.”  That is all he said and went back to his desk.

What I am about to tell you probably was experienced by very few Americans.

The board room on the top floor was huge. A fifty-chair conference table made, of some exotic wood that travelled the length of the room. The lighting was very low, the carpet very thick and no windows that I could see. I would describe it as a long plush linear cave.

As I entered the room, I could barely see five people sitting at the end of the table near the entrance.  Two on the left, two on the right and one at the head of the table with his back to me. All five dressed the same with a white shirt, black tie, and a dark expensive suit.

My emotions were high. This is a big deal to be called by the Chairman for a meeting. It had to be something special because he would not be involved with something negative regarding my status. (status is very important in Japanese culture).

As I approached the table there was no seat for me so I stood behind two of the Japanese bankers on the right side.  From there I got my first look at, not his face, but the top of the Chairman’s head.  He had his eyes down reading something on the table.  Then one of the others said something in Japanese and the Chairman looked up at me. He greeted me with a formal welcome, which was then echoed by the other four.

The four were there to take notes. Each had a small note book and kept their heads down while the Chairman spoke to me.  He was reading my resume. Then came the most intriguing question I have ever been asked while in the banking culture. He lifted my resume off the table and pointed to the education section. 

“I see you have a degree in Chemistry, is that true?”

“Yes, I do” still standing and wondering why my degree in Chemistry was important.

“We have a company that has approached us to finance a $250,000 lease on their equipment. We would like you to visit the company, do some due diligence and report back to us. Mr. Nikano will give you the details”

“Do you want the assignment?”

“Yes” I said with mild enthusiasm.  I did not question what he meant by financing a lease? Banks do not buy equipment and lease it to their clients. Probably what he meant the company wanted to borrow funds to and pay off a lease. I will never know what the company wanted because of what eventually happens.

The Chairman then dismissed with a polite “Thank you.”  The other four said nothing, nor did they lift their heads to look at me. They were busy writing in their little note books. I went back to my desk to discuss my meeting with Nikano but he was out of the bank.

r said nothing, nor did they lift their heads to look at me. They were busy writing in their little note books. I went back to my desk to discuss my meeting with Nikano but he was out of the bank.

There was a note on my desk telling me the name of the company, the name of the President and where to go. I was to leave the next morning directly from my home and visit the company before coming into the bank. I could go home early and prepare for my meeting.

When I saw the name of the company I was overwhelmed with anticipation. It was Genentech. In case you do not know, this is the company that developed “gene splicing” in 1976.  If I could land this deal my future at the bank would be gold.  It will become gold--fool’s gold.

I arrived at Genentech the next day and was greeted by one of the founders, Robert Swanson. He asked me if I would like to see the laboratory where the equipment was. This equipment is what they wanted to borrow against. 

When we entered the lab, I was shocked. It reminded me of a scene from a low budget horror flick. Three or four large round metal tanks with bubbling liquid; all about five feet high and four feet in diameter perched on a platform about three feet off the floor.  And there were tubes, wires, and all kinds of different sized pipes. Everything looked old and worn out. There were some 1950s styled electronic equipment which just seemed to do nothing.  It felt more like a warehouse than an organic laboratory.

Think of Dr. Frankenstein’s lab from the original movie

The whole room smelled funny and I could not wait to get out of there. This was not a pristine glass equipped laboratory, or a Star Trek clean room., There was no lab table containing a crucible or titration equipment (Burette). I did not see any pipettes. evaporation condensers, test tubes, Erlenmeyer or Florence flasks, funnels, beakers, or Bunsen burners.  I did not locate any equipment like a centrifuge, balance scales, spectrometer, or a microscope.  There were several fire-extinguishers however.

Looking at the imposing tanks, I visualized being captured and dumped in to a tank to harvest my genes. After all, where did the genes come from to be split? 

I returned to my serious banker mode and began to wonder how much this equipment is worth if we had to sell it. How would we clean it? Who would want to buy it? After the tour, I met Mr. Swanson in his office. I told him a little about the bank and asked a few questions regarding their financial needs.  I requested the financial material we would need to underwrite the loan. Normally an initial interview lasts 45 minutes to an hour. I was given 15 minutes.

He said his Chief Financial Officer (CFO) would send it to the bank. He gave me his business card and the CFO’s card and asked me to call the CFO in a couple of days. He thanked me and left the room.  A big win is to leave the interview with the financial data. All I got was a card with a number on it. But I was encouraged.

The next day I arrived to the bank a little early to organize my notes and my thoughts. I felt this would be challenging deal but there was a chance. Nikano was already waiting for me, He asked if I had the meeting and I said “Yes.”

He then instructed me to go back to the Board room. I placed my briefcase on my chair and removed my notes. With my notes in hand, I took the elevator back to the top floor Board room.  There seated were the same five, in the same suits hold the same pencils writing in the same little note books.

This time I was greeted warmly by everyone, given a seat next to the Chairman who asked me asked how it went.

Not referencing my notes, I started by talking about my tour and that the company’s CFO would send financials after I contact him in a couple of days.  I just gave them my plan to follow-up. They said nothing but listened politely. The four clones were busy writing down everything I said. At least that is what I assumed.

Then the Chairman said “OK, how do they do it?”

 I was a little lost, so I said how do they do what? 

“Cut the genes” he blurted. Then followed with a move like a Samurai swordsman cutting off his arm. I was totally sidelined because I knew I could not answer his question:

I continued with “What?” like I did not understand the question. My response gave me more time to think. Meanwhile the gang of four, was now staring at me with anticipation. They had their pencils in one hand and the notebook in the other.

“You know, slice up the genes? And he made the Samurai move again only twice this time.

I noticed he changes from “cut” to “slice” maybe thinking cut was the wrong word

In any event I stood up and said with a bit of exasperation in my voice. “They are not going to tell me, or anyone else, how they do it. It is proprietary information”

There was a slight pause. The four put their pencils and notebooks back on the table and went radio silent.

The President then said “OK. You can go” ,

I walked out saying nothing. That was it.

When I got down stairs, I waited for Nakano to get off his phone. As soon as he hung up, I told him what had happened at Genentech and at the Board room meeting. He said nothing except it would not be necessary to call the CFO.  I threw my notes into the basket under my desk.

That same week a major human relations problem occurred. This is the story as whispered around the bank.  I am not the only American in the bank so the story was probably started by them. Probably the most difficult Asian cultural norm to understand by Westerners is the concept of losing face. I am not going to pretend to know the intricacies of this value system, but I do know a little. This event occurred between a female American bookkeeper and a male Japanese Vice President. The woman, about 40 years old worked on the Mezzanine. The Vice President worked on the third floor. The woman was given a column of numbers to total. Which she did.  These numbers were totaled in dollars and cents. But the numbers entered were sometimes contained 3 decimals.  1/3 would be entered as .333 and 2/3 would be entered as .666.

The Vice President totaled the same column of numbers on his calculator. Comparing the totals to be sure they were correct. But they were off by one cent. The VP told the woman she made an error and to run again. She did and came up with the same number as before. The VP accused her of being incompetent and she went ballistic. She filed a complaint to HR and threated to quit.

 Most of her friends supported her and management had a huge dilemma. Much of the staff was angry. How much of the conflict arose from how Japanese males, at the time, treated women. Or a case of the Japanese male losing face. Maybe a little of both. Anyway, as emotions cooled down, two different people were assigned to run the numbers on each of the calculators. The numbers should have matched. But they did not. The person totaling the Vice President’s calculator got the same total as the Vice President’s total. Likewise, the woman’s calculator got the same total as her original total. The culprit was the calculators. Both calculators ended with the third decimal at .005. But one rounded up and the other rounded down. Two .005 created the penny difference.

HR apologized to the woman and gave her a paid day off. She did not quit. The rumor about the VP was he got sent back to Japan. Whether he was sent to the Economics’ department is unknown.  Later I enquired with an Officer who knew the real reason he was sent back. This was not his first reactive response with a woman, but more importantly management felt he should have investigated the potential cause by running the numbers himself on the woman’s calculator.  In short, he threw his club.

I found the culture fascinating and I tried to assimilate, but I always felt like I went to a party in the wrong costume.  My lack of success, for the first time made me think of my low banking score on the Kuder Preference test. The only thing that kept me focused was Terri and I were expecting our first child. I had to dig in.

Then, like the unbelievable luck of getting into the Coast Guard Reserve during the Vietnam War, I am given a gift. I will be removed from my desk, Nikano, and the feeling I do not belong.

It was a day I would never forget.  I am sitting at my desk and I saw Nikano talking to an American who was a little over weight, about 6 feet tall with a combination of receding grey and blond hair. He was dressed in casual clothes. I heard Nikano tell him the bank would finance any projects he had started.

Two days later he came to Nikano and put 7 or eight blueprints on Nakano’s desk. The projects, he said represented $20,000,00 of warehouse and office buildings, Nikano turned white. He had made a promise, now he could lose face. I do not know what occurred for the next two weeks, but the bank’s management approved the deals.

 I was then asked to go to the second floor and see Jim. The management had decided to give me the account and Jim would be my new supervisor. I was now on the second floor.  In a single day I went from zero to a potential $20,000,000 loan portfolio. This would be my 2nd largest deal to date and my only responsibility. I did not obtain the account, nor, did I know how my new client initially came to the bank. But all the construction was to occur in Silicon Valley. Unknown to me was that this would be the beginning of an economic boom in high tech that will transform the Bay Area over the next 25 years. My client would eventually be on Fortune magazine’s list of Americas most wealthy. That the bank honored Nikano’s promise was to me the highest form of corporate virtue. It softens, but did not eliminate my growing negative perception of Japanese business practices.

Before I introduce my new client, I will describe the second floor. If I might move forward in time I attended UCLA.s Anderson School and obtained MBA. One of my professors was William Ouchi. (pronounced  OOCHEE). In1981 he published a book called Theory Z, How American Management Can Meet the Japanese Challenge. This book was not available before I joined the Bank of Tokyo. But had it been and had I read it, I might not have left for greener pastures. I only bring up Professor Ouchi because I remember two things he did or said. 

One day he walked into class and drew a large barn on the left blackboard and 7 small barns on the right blackboard. The large barn represented the American farmer and the right 7 barns represented Japanese farmers.

The analysis was that the American farmer and his family had to survive on their own in a country with unlimited land; where  hard work, independent action and self-initiative were the foundations that shaped the American character. Character traits that still define Americans today.

The Japanese farmer, on the other hand, had limited land and required cooperative effort to survive.  The only common denominator was the requirement of hard work. Thus, independent action was replaced by group co-operation and adherence to group norms. Harmony by the many, not the melody of the one, is the rule.

It is not hard to see how these cultures would clash.  Flaunting a good shot or throwing your club was an independent act. However, if six of the seven farmers meet and give the 7th permission to throw his club, then it is accepted. Consensus versus independent action are the competing styles. Bridging the gap to manage an organization where both are present is the challenge

If you have seen High Noon and The Seven Samurai you can see the two philosophies brought to life on the screen. In High Noon the sheriff must act alone to protect the city from a gang of bad guys. In the Seven Samurai, (Kurosawa version) the Village with the help of the seven Samurai must work together to defeat the invading gang.

On the last minute of our last class with Professor Ouchi he closes with this. “The most important thing to remember when managing any group of people is “Monkey see monkey do” 

After 3 months of intensive study this was the only thing, he said that really made sense.

. This is brought home by my next story.

While writing about my bank of Tokyo experience, I remembered an even that occurred 2019.XX years after I joined the bank.  The following event triggered a memory of a meeting I had with a Vice President of the bank who was visiting from Tokyo. I was informed by Nikano that he was an important star in the bank’s hierarchy and wanted to discuss World War II. This comment left a lump in my throat. A lump that will be totally de-lumped when we meet.

A pecan tree began growing in my parents back yard about 50 years ago. Nobody in the family remembered planting it and it was not there when my father purchased the land. Over the years it grew to 125 feet. It annually produced thousands of nuts. Even after a flock of parrots visited the tree each year to fight over the crop, the tree produced more nuts than could be given to friends or consumed by the family.

One morning while having coffee and reading the paper by the pool I noticed, and partially captured on my iPad, a drama that probably occurs every day all around the world.

On this day a group of black crows, not parrots, were, harvesting the nuts. Unlike the parrots that eat the nuts on site, the crows would get one nut and fly off with it.

There were about 30 crows in the tree, and as one or two left, one or two more would arrive.

After about 20 minutes I could hear the parrots coming. They were loud and flew toward the pecans like a swarm of bees There were over 100 of them flying in a tight formation. I was about to witness something Ornithologists have probably written books on, but for me it will be a lesson in warfare.

As the parrots entered the tree squawking and-fluttering, I heard several crows call out and all the crows left the tree flying off in different directions.  Crows no doubt can communicate with each other.

If I might digress a moment to tell a joke relayed  to me by “Tex. “ Introduced earlier.

In Texas one nature lover noticed that on some roads there were a higher number of dead crows than on others.  After several months of research, it was discovered that most crows were killed by trucks. The conclusion was that crows can scream “Caw Caw”, but not “Twuck Twuck”.

Back to the battle. All the crows were now gone and the parrots began their feeding frenzy. About 10 minutes later a single large crow returned to the tree. It perched on the end of a branch that was furthest from the parrots. About 30 seconds later two more crows arrived and perched on the end of outside branches.  It was with the approach of 3 more crows coming from different directions that I began to film what I suspected was going to be a counter attack. 

Like the three crows before them they also perched on outside branches, I notice that the crow’s position was to surround the parrots but from a distance. The crows made no sound.  Then I heard the approach of more crows arrive and now both crows and parrots begin a cacophony of screeches and calls. Finally, about 15 to 20 more crows landed on different branches at all different levels as the noise and agitation level increase to a fevered pitch. The parrots were surrounded Then, in a flash, crows and parrots both swarmed out of the tree. Parrots heading West in the same tight formation and Crows flying solo in all directions except West.

All the birds were now gone and the battlefield remained silent. Except for a few parrot feathers on the ground there were no casualties. Over the next ten minutes five crows returned to the sight, each from a different direction and each picking up a single nut from the ground and flew off. Then silence.  

By my estimation the only winner in this battle was me.  I began to gather up the fallen nuts. 

My meeting with the Japanese Vice President was memorable as it was instructional. The first half of our lunch was of the “get to know you” variety, school, family, career etc. Then out of the blue he asked me if I had studied World War II.  I said I knew a little about World War I because my grandfather was stationed in Russia, but not World War II.  He then said he wanted to discuss the Battle of Midway.  This sent a flush through my body because I had forgotten that my uncle was a gunner on the Enterprise and he fought in that battle. I kept this to myself but was suspicious as to why this battle was the subject of his interest.

I have discussed various aspects of Japanese culture as I have perceived them. The following discourse from the VP will confirm everything I had learned so far.

He proceeded to say in very few words, not because his English was a challenge but because he had mastered it.

He said: “You should have been defeated at the battle of Midway because we had more and better ships, the Zero was a superior fighter and our warriors had years of training. Our original plan was foolproof.”

“But”

The word “but” is always the key word when a serious subject of major consequence deviates from the expected out come

“But”, there was a change in the weather and this required a new consensus.

“Obtaining a new consensus” he continued “delayed the action for two days. During this time the US Navy was able to re-deploy before our new plan was complete. This delay now made our ships vulnerable to attack by the US fleet.  It was a disaster for us.”

I was still waiting for the reason for our lunch. The VP fell silent for a minute then he said.

“It was our management style that lost the war.” The concept of individual independent action which we believe your Captains had, gave them the authority to exploit any opportunity they seemed appropriate. This concept was totally foreign to us. We are now trying to integrate harmony and independent action in our management style.

That was it. It is all he wanted to say. I still have, no idea why I was singled out for this discussion.

Many years later, I saw a program on the Battle of Midway that stated we won because we had cracked their code.

So, I am left with a bit of a conundrum. If the code was cracked, was it the cause of their defeat. Or was it the need for consensus that gave us the time needed to crack the code. Or was it neither.  I like to think that it was the consensus reason so that the code developers could save face and not be expected to commit hari-kari for loss of face.

If you remember I discussed professor Ouchi’s blackboard diagram comparing the US Farm house and the Japanese village. The concept of consensus to maintain harmony being the primary process of decision making. When you have consensus there is no backup plan because to create a backup plan admits a possible flaw in the original plan and the leader would lose face. To address obvious problems the “yo” party which is really a group re-evaluation of the original decision to obtain a new consensus.

It was a junior Japanese officer that explained to me the function of a “Yo” party when I asked why a good suggestion for improvement is never made in public,  I don’t know if he made this word up or not but what is represented is real.

After working hours relevant members of the banks work force meet for an hour or two to have drinks. This “party” is not really a party. It is a time when those of lower status can complain, suggest changes, or criticize a corporate decision. The bank’s management team including the  President, are there to listen.

This is how Japanese management gets feedback without losing face. The norm is , anything said  while drunk, is not considered offensive.

I then asked what happens to a subordinate that suggests a change to the President.

He said the President will have a meeting with the staff and will incorporate what ever the change will be based on the subordinate’s suggestion. The change is then assumed to be a result of managements incite. The subordinate is not credited, but the reward of a promotion is enhanced.

When I arrived at the second floor I was met by Jim. He showed me to my desk and introduced me to a young American banker who will sit next to me. He will be my only contact for the next several months.

The room was very large and had about 40 occupied desks, Jim explained the significance of the organization of the personnel. There were 6 rows containing about 8 desks per row. Three of the rows were dedicated to domestic business. The other three for corporate lending.

I was placed in the domestic group. The last desk in each row has the highest status for that row. Jim occupied that desk in my row. Facing the back of the room the first row on the left has the lowest status and the row all the way to the right has the highest status.

Corporate bankers which are made up of the three rows to the right have a higher status than the three rows to the left. Next comes the desk in each row, The first desk has lowest status. These are for secretaries and low-level analysts. Next come loan officer based on title. I am an AVP so any VP is behind me. The last desk in each row determines the status. The President sits in the last desk all the way to the right. Jim sits in the last desk all the way to the left. He holds the lowest rank of all the senior officers who occupy the last desk in each row.

I sit in the 3rd desk of the first row behind a secretary and an analyst. Next to me in the second row, also at the third desk was another American. We had equal titles but he had been with the bank for two years earning a seat in the second row.

The Corporate group handled large loans to public companies. Many of these loans are participated among various banks. This spreads the risk in the event of a default. Loan participations to public companies is totally different than the type of loans I underwrote.  Risk analysis for Ford Motors is easier to monitor than risk analysis for the local manufacturer of bathtubs. Much of the analysis on Ford is performed by CPA’s publishing SEC, (Securities Exchange Commission) requirements. Corporate deals require lawyers to coordinate the negotiations among the parties. The SEC is the government regulator that protects the investors money.

My side of the room underwrites smaller commercial loans, large loans to nonpublic companies, or sometimes to wealthy individuals.

My new client will fall into the category of wealthy individuals who form a partnership to build high tech buildings in Silicon Valley.

Before I tell you about my client, I need to finish explaining the organization of the room There are no offices, not even for the President. He sits with everybody else in the far right corner.

There were several meeting rooms on the floor for training and negotiating with clients, The only real challenge is how to handle phone conversations where everyone around you can hear,

Peery and Arriallga Here

I can only speculate that I was given this account because I had handled large loans to individuals before, I spoke English better than Nikano, or Nikano suggested I move to the 2nd floor and work in the domestic section. In short get rid of me.  In addition, management, as did I, projected more success in gaining Silicon Valley clients if the bank was financing buildings there.

However, I was still encountering resistance in developing more high-tech business accounts, and the effort now needed to manage.  Richard Peery’s request was limiting my time. After about two months I was beginning to get frustrated. Then out of the blue, a former Union banker I knew from the training program called me. He needed someone to help him at Redwood Bank. Would I be interested?.

This request put me into a conflict. I liked working with Jim, I had a very important client and access to what would become the major economic force in America.  I was beginning to adapt to Japanese culture, and management gave me challenges that matched my skill level.

The negative side of working for the Bank of Tokyo, was a feeling I was being exploited. The meeting with the Chairman was the first clue. However, the most influential event that influenced my decision was a discussion I had with an AEA member at my last AEA event.

I was talking to a group of bankers who were soliciting the same accounts I was. I told them I was having a difficult time getting follow up. One of the bankers then told me that the Japanese have a history of stealing trade secrets. He then speculated “That is why they will not talk to you.”

Of course I have no Idea if what he said was true or if he was trying to eliminate me from the competition.  That comment, however, solidified my reason for leaving. I remember the Chairman saying “How do they do it?” and making a fake Samurai slice with his arm. He then sliced me out of the discussion.

When I told Jim I was offered another position and I am giving notice, he took me to the conference room and tried to persuade me to stay. I felt a little guilty letting him down, but he had no answers to my concerns. Had Japanese management talked to me I might have considered not leaving. They did not.

NINJA Story here :

Redwood Bank:

 I took an interview with JM at Redwood. He was in the Union Bank Training Program behind me and had achieved a VP level at Redwood. The bank had expanded and his duties were causing some logistics problems for him. In addition to supervising 4 junior lenders, he had to manage his own portfolio and take on the role of Senior Credit officer. He offered me a VP level, increased my salary 20% with potential bonus, full medical and four weeks’ vacation.  The cherry was I would have my own office and a full-time secretary.

Despite the circuitous route I took, I felt I was finally where I should be. I also rationalized that this was a small community bank and it would have less bureaucracy. It was locally owned and would feel like I had returned to my own culture. Now I could call on some of the smaller high-tech companies with out the Japanese anchor. A concern was the birth of our first child would mean Terri would not be working so the 20% raise would be a major benefit,  Probably the best reason was I got along well with JM.  

The one thing that I did not know was that the bank was under regulatory supervision. . This was one area I stupidly did not investigate. Sometimes when you are dissatisfied where you are and offered a great opportunity, the positives in your mind out weight the negatives, you jump without looking. And then the positives become out gunned by an unknown negative: But too late.  I would have never left The Bank of Tokyo if I had done my due diligence on Redwood. I am extremely focused when I execute due diligence on others, but I am sloppy when something is for me.

Whether JM knew the bank was under regulatory supervision at the time I do not know. My assessment today is he did not.  The decision to Join Redwood. will become the Clavey Falls of my career.

 But it all starts out well. My duties are to help JM supervise the Junior lenders, solicit my own accounts and take over the loans to the bank’s directors.

Yo Party

NinJa photo

Corporate moving upstairs describe

American wanted me to stay

Perry and Arriaga

Addidas

IBM Bust