The Bench Ain’t Bad

In 1985, the world oil market collapsed and left Texas, Oklahoma, and many other energy states facing failing saving and loan associations as well as negatively impacting money center banks. Real estate values crashed and home owners’ home equity disappeared. Nineteen percent of America owned manufactured homes, and in the energy states much of the employment came from oil-related businesses. M&A Financial had $2.6 billion in outstanding manufactured home loans. The parent bank completed an assessment of its risk and estimated it could experience up to $500 million in credit losses.

While I was managing the auto loan business, a new president was assigned to M&A Financial. After working for him for just a few months, he asked me if I would become a co-manager of the manufactured housing business with one of the area managers. I respected his approach to business issues. He was open to ideas and direct when it came to communicating with his direct reports, so I responded in a matter-of-fact way by saying, “I would rather run a Taco Bell stand.” I remembered my English grandfather telling me that “a partnership is the darndest ship ever set afloat.”

His physical reaction was unusual. He stood up and looked out the window into the parking lot. After a few moments of thought, he asked, “Are you saying you won’t take the job?”

“That’s correct,” I responded in a firm tone.

Without looking at me and without emotion, he turned back to his desk and said, “I’ll have to get back to you later.”

I felt I had been excused and quietly left his office. It was quite obvious my response was not what he had anticipated. Why would I leave running a profitable auto finance business with a team committed to serving its customers and dealers with less than .80 percent credit losses and join a partnership sharing decisions with someone whom I knew had no interest in serving people?

I had listened in senior management meetings when the area managers talked about the forty-four hundred manufactured home repossessions and foreclosures they were experiencing and how the customers either paid up or their units were repossessed. In my opinion, it was unbelievably stupid to repossess manufactured homes. The customers were in trouble and needed help. They had to live somewhere, so why not work with them and find a way to keep them in their homes? I wanted no part of it or their reliance on the law to collect their deficiency balances. It was the blind leading the blind.

My boss called the next day and suggested we have lunch. He never went out to lunch. He had been with Big Bank twenty-six years. They had paid for his master’s degree from an upscale California university. He was a brilliant guy, evidenced by the amount of information he absorbed in just a few months on the job. He was direct in conversation, but it was never clear what he really had on his mind. We ordered lunch; I just waited. He always took time to think before he spoke. He began the conversation with a compliment. “You have an excellent track record of solving problems, Jacob.”

“Thank you, sir,” I responded, waiting for the other shoe to drop.

“Call me Ben,” he insisted before he came directly to the point and asked, “What do you think the solution is to the manufactured housing credit loss problem?”

“I’m sure it isn’t simple and will require much research,” I answered, not wanting to set myself up for a future fail by prejudging all the potential problems in the business.

“We want you to run the business, but I am asking you to keep Wayne as your number two. Would you be willing to do that?”

“I would be on the condition—which I want in writing—that if he ever refuses to support any initiative or implement any directive from me that you will immediately remove him.”

“Why in writing?” he queried.

“Because I don’t know you that well, Ben.”

He laughed and reached out his hand. I shook it. He was easy to like, and I enjoyed working for bright people—so much for me to learn and such a challenge to keep up.

Wayne had no interest in helping customers and ninety days later was reassigned to special projects.