The Moneychangers

by Arthur Hailey

  “A bank, as a commercial undertaking, is entitled to expect probity in those whom it selects—as you were selected—for exceptional trust. But a bank is more than a commercial institution. It is a place of public trust, and therefore the public is entitled to protection from those who abuse that trust—individuals such as you.”

  The judge’s gaze shifted to include the young defense counsel, waiting dutifully beside his client. Now the tone of voice from the bench became more brisk and formalized.

  “Had this been a more ordinary case, and in view of the absence of a previous criminal record, I would have imposed probation as defense counsel eloquently urged last week. But this is no ordinary case. It is an exceptional one for the reasons I have stated. Therefore, Eastin, you will go to prison where you will have time to reflect on your own activities which brought you there.

  “The sentence of the Court is that you be committed to the custody of the Attorney General for a period of two years.”

  At a nod from the court clerk, a jailer moved forward.

  A brief conference took place, a few minutes after sentencing, in a small locked and guarded cubicle behind the courtroom, one of several reserved for prisoners and their legal counsel.

  “The first thing to remember,” the young lawyer told Miles Eastin, “is that a two-year prison term doesn’t mean two years. You’ll be eligible for parole after a third of the sentence is served. That’s in less than a year.”

  Miles Eastin, wrapped in misery and a sense of unreality, nodded dully.

  “You can, of course, appeal the sentence, and you don’t have to make a decision about that now. But I’ll tell you frankly, I don’t advise it. For one thing I don’t believe you’d be released pending an appeal. For another, since you pleaded guilty, the grounds for appeal are limited. Also, by the time any appeal was heard, you might have served your sentence.”

  “The ballgame’s over. No appeal.”

  “I’ll be in touch with you anyway, in case you change your mind. And while I think of it, I’m sorry how things came out.”

  Eastin acknowledged wryly, “So am I.”

  “It was your confession, of course, that did us in. Without that I don’t believe the prosecution would have proved its case—at least the six-thousand-dollar cash theft, which weighed heaviest with the judge. I know, of course, why you signed that second statement—the FBI one; you thought the first was valid so another wouldn’t make any difference. Well, it did. I’m afraid that security man, Wainwright, tricked you all the way.”

  The prisoner nodded. “Yes, I know that now.”

  The lawyer looked at his watch. “Well, I have to go. I’ve a heavy date tonight. You know how it is.”

  A jailer let him out.

  Next day Miles Eastin was transferred to a federal prison, out of state.

  At First Mercantile American Bank, when news of Miles Eastin’s sentencing was received among those who knew him, some felt regret, others held the view that the retribution was what he had deserved. One opinion was unanimous: No more would be heard of Eastin at the bank again.

  Only time would prove how much in error that last assumption was.

  PART TWO

  1

  Like a bubble surfacing from underwater, the first hint of trouble appeared in mid-January. It was an item in a gossip column, “Ear to the Ground,” published in a city newspaper’s Sunday edition.

  The columnist wrote:

  … Whispers around downtown predict major cutbacks soon at Forum East. ’Tis said the big-big rehab project has bankroll problems. Nowadays who hasn’t? …

  Alex Vandervoort was unaware of the item until Monday morning when his secretary placed it, ringed in red, on his desk with other papers.

  During Monday afternoon Edwina D’Orsey telephoned to inquire if Alex had read the rumor and if he knew of anything behind it. Edwina’s concern was not surprising. Since the beginning of Forum East, her downtown branch bank had handled construction loans, many of the mortgages involved, and accompanying paperwork. By now the project represented an important segment of branch business.

  “If there’s something in the wind,” Edwina insisted, “I want to be told.”

  “So far as I know,” Alex reassured her, “nothing’s changed.”

  Moments later he returned his hand to the telephone intending to check with Jerome Patterton, then changed his mind. Misinformation about Forum East was nothing new. The project had generated much publicity; inevitably some was inaccurate.

  It was pointless, Alex decided, to bother the bank’s new president with needless trivia, particularly when he wanted Patterton’s support on a major issue—a large-scale expansion of FMA savings activity, now being planned for consideration by the board.

  However, Alex was more concerned a few days later when a longer item appeared, this time in the regular news column of the daily Times-Register.

  The report read:

  Anxiety about the future of Forum East persists amid growing rumors that financial backing may shortly be reduced severely or withdrawn.

  The Forum East project, which has as its long-term goal a total rehabilitation of the city’s downtown core both business and residential, has been underwritten by a consortium of financial interests spearheaded by First Mercantile American Bank.

  A spokesman for First Mercantile American today acknowledged the rumors but would make no comment except to say, “An announcement will be forthcoming in due course.”

  Under the Forum East plan, some inner city residential areas have already been modernized or rebuilt. A highrise, low-rental community development has been completed. Another is in progress.

  A ten-year master plan includes programs to improve schools, assist minority businesses, provide job training and employment as well as cultural opportunities and recreation. Major construction, begun two and a half years ago, has so far remained on schedule.

  Alex read the morning news story at his apartment over breakfast. He was alone; Margot had been out of town on legal business for the past week.

  On arrival at FMA Headquarters Tower he summoned Dick French. As vice-president of public relations, French, a burly, blunt-speaking ex-financial editor, ran his department knowledgeably.

  “In the first place,” Alex demanded, “who was the bank spokesman?”

  “That was me,” French said. “And I’ll tell you right now I wasn’t happy about that ‘statement in due course’ crap. But Mr. Patterton told me to use those words. He also insisted I shouldn’t say more.”

  “What more is there?”

  “You tell me, Alex. Obviously something’s going on and, good or bad, the sooner we put it on the line, the better.”

  Alex curbed a rising anger. “Is there a reason I wasn’t consulted about any of this?”

  The p.r. head appeared surprised. “I thought you were. When I talked on the phone to Mr. Patterton yesterday I know Roscoe was with him because I could hear them talking. I assumed you were in there, too.”

  “Next time,” Alex said, “don’t assume anything.”

  He dismissed French, then instructed his secretary to inquire if Jerome Patterton were free. He was informed that the president had not yet arrived at the bank, but was on his way, and Alex could see him at 11 A.M. He grunted impatiently and went back to work on the savings expansion program.

  At eleven Alex walked the few yards to the presidential suite—two corner rooms, each with a view of the city. Since the new president had taken over, the second room usually had the door closed and visitors were not invited in. Word had leaked out through secretaries that Patterton used it to practice putting on the rug.

  Today, bright sunshine from a cloudless winter sky shone through the wall-wide windows onto Jerome Patterton’s pink, near-hairless head. Seated behind a desk, he wore a light patterned suit, a switch from his usual tweeds. A newspaper in front of him was folded open to the news story which had brought Alex here.

  On a sofa, in shadow, was Roscoe
Heyward.

  The three exchanged good mornings.

  Patterton said, “I asked Roscoe to stay because I’d a notion what the subject might be.” He touched the paper. “You’ve seen this, of course.”

  “I’ve seen it,” Alex said. “I’ve also had Dick French in. He tells me that you and Roscoe discussed the press queries yesterday. So my first question is, why wasn’t I informed? I’m as involved as anyone with Forum East.”

  “You should have been informed, Alex.” Jerome Patterton seemed embarrassed. “The truth is, I guess, we got a little rattled when the press calls showed there had been a leak.”

  “A leak of what?”

  It was Heyward who answered. “Of a proposal I’ll be bringing before the money policy committee next Monday. I’m suggesting a reduction of the bank’s present commitment to Forum East by approximately fifty percent.”

  In view of the rumors which had surfaced, the confirmation was not surprising. What astounded Alex was the extent of the proposed incision.

  He addressed Patterton. “Jerome, do I understand that you are in favor of this incredible piece of folly?”

  A flush suffused the president’s face and egg-like head. “It’s neither true nor untrue. I’ve reserved judgment until Monday. What Roscoe has been doing here—yesterday and today—is some advance lobbying.”

  “Right.” Heyward added blandly, “An entirely legitimate tactic, Alex. And in case you object, let me remind you that on plenty of occasions you took your own ideas to Ben in advance of money policy meetings.”

  “If I did,” Alex said, “they made a damn sight better sense than this one.”

  “That, of course, is solely your opinion.”

  “Not solely. Others share it.”

  Heyward was unruffled. “My own opinion is that we can put the bank’s money to substantially better use.” He turned toward Patterton. “Incidentally, Jerome, those rumors now circulating could be helpful to us if the proposal for a cutback is agreed to. At least the decision won’t come as a sudden shock.”

  “If you see it that way,” Alex said, “maybe it was you who leaked the rumors.”

  “I assure you it was not.”

  “Then how do you explain them?”

  Heyward shrugged. “Coincidence, I suppose.”

  Alex wondered: Was it coincidence? Or had someone close to Roscoe Heyward floated a trial balloon on his behalf? Yes. It might well be Harold Austin, the Honorable Harold, who, as head of an advertising agency, would have plenty of contacts with the press. It seemed unlikely, though, that anyone would ever find out.

  Jerome Patterton raised his hands. “Both of you save any more arguments until Monday. We’ll go over all of them then.”

  “Let’s not fool ourselves,” Alex Vandervoort insisted. “The point we are deciding today is how much profit is reasonable and how much is excessive.”

  Roscoe Heyward smiled. “Frankly, Alex, I’ve never considered any profit excessive.”

  “Nor have I,” Tom Straughan put in. “I recognize, though, that making an exceptionally high profit is sometimes indiscreet and asking for trouble. It becomes known and criticized. At the end of the financial year we have to publish it.”

  “Which is another reason,” Alex added, “why we should strike a balance between achieving profit and giving service.”

  “Profit is giving service to our shareholders,” Heyward said. “That’s the kind of service I put first.”

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

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

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

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

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

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

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

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

  “I am looking at it in terms of need,” Heyward said. “The bank’s need.”

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

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

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

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

  Alex argued, “Our profit last year was thirteen percent. That’s damned good for any business, as all of us know. This year the prospect’s even better—a fifteen percent return on investment, maybe sixteen. But should we strain for more?”

  The treasurer, Orville Young, asked, “Why not?”

  “I already answered that,” Straughan shot back. “It’s shortsighted.”

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

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

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

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

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

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

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

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

  Heyward scoffed, “We’d never let it happen. The banking lobby is the strongest in Washington.”

  The chief economist shook his head. “I wouldn’t count on that.”

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

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

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