The Moneychangers

Perhaps, Alex thought, his doubts and depression stemmed from his own declining influence within the bank. And it war declining. That had become evident in recent weeks.

In contrast, Roscoe Heyward's star was high in the ascendant. He had the ear and confidence of Patterton, a confidence expanded by the dazzling success of Heyward's two-day sojourn in the Bahamas with G. G. Quatermain

Alex's own reservations about that success were, he knew, regarded as sour grapes.

Alex sensed, too, that he had lost his personal influence with Straughan and others who formerly considered themselves on the Vandervoort bandwagon.

"You have to admit," Straughan was saying, "that the Supranational deal is sweet. You've heard that Roscoe made them agree to a compensating balance of ten percent?"

A compensating balance was an arrangement, arrived at after tough bargaining between banks and borrowers. A bank insisted that a predetermined portion of any loan be kept on deposit in current account, where it earned no interest for the depositor yet was available to the bank for its own use and investment. Thus a borrower failed to have full use of all of his loan, making the real rate of interest substantially higher than the apparent rate. In the case of Supranational, as Tom Straughan had pointed out, five million dollars would remain in new SuNatCo checking accounts very much to FMA's advantage.

"I presume," Alex said tautly, "you're aware of the other side of that cozy deal."

Tom Straughan appeared uncomfortable. "Well, I've been advised there was an understanding. I'm not sure we should call it ithe other side.'"

"Dammit, that's what it is! We both know that SuNatCo insisted, and Roscoe agreed, our trust department would invest heavily in Supranational common stock." "If they did, there's nothing down on paper."

"Of course not. No one would be that foolish." Alex eyed the younger man. "You've access to the figures. How much have we bought so far?"

Straughan hesitated, then walked to the desk of one of the Trading Center supervisors. He returned with a penciled notation on a slip of paper.

"As of today, ninety-seven thousand shares." Straughan added, 'The latest quote was at fifty-two."

Alex said dourly, "There'll be a rubbing of hands at Supranational. Our buying has already pushed up their price five dollars a share." He calculated mentally. "So in the past week we've bulldozed nearly five million dollars of trust clients' money into Supranational. Why?"

"It's an excellent investment." Straughan tried a light touch. "We'll make capital gains for all those widows and orphans and educational foundations whose money we take care of."

"Or erode it while abusing our trust. What do we know about SuNatCo, Tom any of us that we didn't two weeks ago? Why, until this week, has the trust department never bought a single Supranational share?"

The younger man was silent, then said defensively, "I suppose Roscoe feels that now he'll be on the board he can watch the company more closely."

"I'm disappointed in you, Tom. You never used to be dishonest with yourself, especially when you know the real reasons as well as I do." As Straughan flushed, Alex persisted, "Have you any idea what kind of scandal would blow up if SEC stumbled onto this? There's conflict of interest; abuse of lending limitation law; the use of trust funds to influence the bank's own business; and I've not the least doubt there's agreement to vote the Supranational stock with management at the next SuNatCo annual meeting."

Straughan said sharply, "If it's so, it wouldn't be the first time - even here."

"Unfortunately that's true. But it doesn't make this smell any sweeter."

The question of trust department ethics was an old one. Supposedly, banks maintained an internal barrier sometimes called a Chinese Wall between their own commercial interests and trust investments. In fact, they didn't.

When a bank had billions of dollars in clients' trust funds to invest, it was inevitable that the "clout" this gave should be employed commercially. Companies in which a bank invested heavily were expected to respond with reciprocal banking business. Often, too, they were pressured into having a bank director on their board. If they did neither, other investments would speedily replace their own in trust portfolios, with their stock nudged downward as the result of a bank sell-off.

As well, brokerage houses which handled the huge volume of trust department buying and selling were expected to maintain large bank balances themselves. They usually did. If not, the coveted brokerage business went elsewhere.

Despite banks' public relations propaganda, the interests of trust department clients, including proverbial widows and orphans, often rated second to a bank's own interests. It was one reason why trust department results were generally so poor.

Thus, Alex knew, the Supranational-FMA situation was not unique. Just the same, the knowledge did not make him like it any more.

"Alex," Tom Straughan volunteered, "I may as well tell you that at the money committee tomorrow I intend to support the Supranational loan." "I'm sorry to hear that."

But the news was not unexpected. And Alex wondered how much longer it would be before he would stand so alone and isolated that his position in the bank would be untenable. It could happen soon.

After tomorrow's money policy committee meeting, where the proposals concerning Supranational were certain to be approved by a majority, the full board of directors would meet next Wednesday with Supranational on its agenda too. At both meetings, Alex was sure, his would be a lone, dissenting voice.

He surveyed, once more, the ever-busy Money Trading Center, dedicated to wealth and profit, unchanged in principle from the ancient money temples of Babylon and Greece. Not, he thought, that money, commerce, and profit were in themselves unworthy. Alex was dedicated to all three, though not blindly, and with reservations involving moral scruples, the reasonable distribution of wealth, and banking ethics. Yet, when exceptional profit was in prospect, as all history showed, those with such reservations were shouted down or swept aside.

Facing the powerhouse forces of big money and big business exemplified now by Supranational and a majority in FMA what could one individual, alone in opposition, hope to do?

Little, Alex Vandervoort concluded dismally. Maybe nothing.

11

The meeting of the Board of Directors of First Mercantile American Bank, in the third week of April, was memorable on several counts.

Two major items of bank policy were the subject of intense discussion one, the Supranational line of credit, the other a proposed expanding of the bank's savings activity and the opening of many new suburban branches.

Even before proceedings began, the meeting's tone was evident. Heyward, unusually jovial and relaxed, and wearing a smart new light gray suit, was on hand early. He greeted other directors at the boardroom door as they arrived. From the cordial responses it was clear that most members of the board had not only heard of the Supranational agreement through the financial grapevine but were heartily in favor of it.

"Congratulations, Roscoe," Philip Johannsen, president of MidContinent Rubber, said, "you've really moved this bank into the big league. More power to you, fellal"

A beaming Heyward acknowledged, "I appreciate your support, Phil. I'd like you to know I've other targets in mind." "You'll hit them, never fear."

A beetle-browed director from upstate, Floyd LeBerre, board chairman of General Cable and Switchgear Corporation, came in. In the past LeBerre had never been especially cordial to Heyward, but now he shook-the other's hand warmly. "Delighted to hear you're going on the Supranational board, Roscoe." The General Cable chairman lowered his voice. "My switchgear sales division is putting in some bids for SuNatCo business. Sometime soon I'd like to talk about them."

"Let's make it next week," Heyward said agreeably. "You can be sure I'll help all I can." LeBerre moved on, his expression pleased.

Harold Austin, who had heard the exchange, winked knowingly. "Our little trip paid off. You're riding high."

Today, the Honorable Harold looked more than ever the aging playboy: a colorful plaid jacket, brown bell-bottom trousers, his gaily patterned shirt sporting a cerulean blue bow tie. The white flowing hair was newly trimmed and styled.

"Harold," Heyward said, "if there's anything at all I can do in return."

"There will be," the Honorable Harold assured him, then strolled to his seat at the boardroom table.