Frank B. Holding, “the banker,” speaks frankly about financial matters, so when I wrote A Looming Terror, I made an appointment with Mr. Holding to get his outlook. That was almost two years ago that I expressed concerns for perils of a growing national debt and, as I put it then, my “wearily growing qualms about these economic times.”
I first knew of the Holdings in the 1940s. Frank’s father, Mr. R. P. Holding, Cashier at the First Citizens Bank from 1918-1935, became President and Chairman of Board. He was principle leader and stockholder leading First Citizens’ expansion in eastern NC, service primarily to farmers, during the Great Depression era. Founded in 1898, first known as “Bank of Smithfield,” it was the first bank in Johnston County, NC. The first modern physical facility, built in 1913 at Market and Third Streets in Smithfield, was donated by First Citizens in 1996 to The Johnston County Heritage Center.
When I was just a lad, R. P. Holding and C. L. Denning, a local resident running for sheriff, stopped at roadside where I tended the fertilizer bag as my daddy cultivated the crop. It was an era, lethargically growing out of the 1930’s Great Depression, immediately following World War II, eighty-plus years after the American Civil War, when plowing in this Bentonville Battleground soil, sometimes, uncovered “minie balls” (lead bullets). Confederate and Union soldiers fought from opposite sides of Sam Howell branch which ran on the east side of my Bentonville Township community home. Many longleaf pines at field’s edge when sawn for lumber, the smooth cut of the saw blade revealed the shine of a lead bullet, embedded more than eighty years earlier.
As daddy walked behind the horse-drawn plow he might have had an askew eye for a minie ball, to add to his Civil War collection, a bullet that may have been unfurled by the plow. But on this round as he approached row’s end, his eyes would squint on the two stalwart gentlemen-politicians, soon to become successful Democratic officeholders. Mr. R. P. Holding served until death in 1957, at which time his young son, Frank Holding, was appointed to replace his dad as county commissioner. Frank’s reelections gave our county exceedingly capable, admirable service until 1994 when a demographic wave of Republicanism enveloped Johnston County, a bedroom-community expansion in one of the nation’s fastest growing areas, adjacent to the Research Triangle Area of Raleigh, Durham and Chapel Hill, NC.
Frank, his brothers, and family, the majority stockholders, have operated one of the most conservative banking institutions over the past half century. (Some of my friends might say, too conservative.) For most of those years, his brothers held the higher official-officer-titles but no doubt Frank’s influence in First Citizens was, at least, of equal importance to the bank’s success. In addition to his ownership in First Citizens, Frank personally owns fifty-plus banks under the “Southern Bank” name throughout eastern NC. Frank’s unassuming personality, content to be in background, declining commissioner’s chairmanship, his progressive yet fiscally responsible leadership during his thirty-seven years as a commissioner of Johnston County, not only was an invaluable human resource for our county ----- it as well in his responsible, down-to-earth demeanor gave an incomparable impetus for building successful financial institutions.
Time-honored leadership hereof ascribed may be long lost in the management of many colossal financial institutions. Andrew Sorkin, in his current book, Too Big to Fail, chronicles the harried days, 24/7 round-the-clock diligence, leading up to the edge of a national financial apocalypse. He follows the day-to-day role of the big-bank players, including government officials, Hank Paulson, Tim Geithner, and Ben Bernanke. Many people now in retrospect look at these later three as either the “problem” or “the problem solvers.” But as it was in “real time” of a pending financial catastrophe, I believe our world is fortunate to have had these men at the monetary helm. (Even so, a world economic crisis, raising to one billion the number of people going hungry, was not prevented according to the United Nations.) Bernanke, the Federal Reserve Chairman since 2002, an intellectually bright kid raised in Dillon SC, became a scholar of The Great Depression. “He advanced the views of Milton Friedman and Anna J. Schwartz who had argued that the Federal Reserve had caused the Great Depression by not immediately flushing the system with cheap cash to stimulate the economy. And subsequent efforts proved too little, too late. Under Herbert Hoover, the Fed had done exactly the opposite: tightening the money supply and chocking off the economy.” (Too Big to Fail, Location 1836-43) Time Magazine’s naming Ben Bernanke Person of the Year 2009 may be a well deserved recognition for saving the world from a financial abyss. Although, he continues to have critics as in reconfirmation to the Fed: Bernanke Comments on the "Doom Loop." But Does He Get It?
While many of these big-players were extremely intellectually brilliant, probably none could claim a unique-value system such as a Frank B. Holding, whose youth rooted out of economic depression times. Many of Frank’s proudest moments may have been standing with his cotton farmer for a picture, having ginned the first bale of cotton of the season or purchasing an animal at a youth livestock sale. Frank is contented riding his pickup truck, loaded with hand tools, out to the farmhouse for relaxation and exercise. The stories I’ve heard include: Holding as a young boy, to some people’s estimation, at least in some diminutive measure, was a protégé of a local mule and equipment trader by the name of Smooch Heavener. Frank and Ella Ann raised their children, possibly, in an inimitable quality: he walked with them along roadside having them pickup recyclables; the local public schools were good enough for their kids. (Though, some at least, I believe, attended private schools in the higher grades.) I’ve heard their teacher’s comment of their studiousness and very polite manners. When Frank learned of an upper-echelon manager parking his luxurious-model automobile at First Citizens Corporate office in Raleigh, word was conveyed, “That’s not the image of our company.” After many years driving Chevrolets, Frank moved up to Buicks. A former Chevrolet dealer tells of his arrival to purchase a new car, at a time that most autos were pre-equipped with electrical accessories. But he wanted only a vehicle with hand-crank windows. “Well sir, to get hand-crank windows it’ll cost you more.” In SC driving with some friends, he presses the brakes, gets out and walks back to pick up some bottles. Redeemable deposits!
Today, two of Frank and Ella Ann Holding’s children hold chief positions at First Citizens. Frank B. Holding Jr. is its Chairman and CEO. Hope Holding Connell is Executive Vice President at First Citizens & President of Ironstone Bank. On the Nasdaq (FCNCA) as First Citizens BancShares Inc, it is one of the top 100 financial institutions in the country, and it is one of the largest family controlled banks in the U.S. First Citizens’ “Ironstone Bank” operation stretches from Florida and Georgia across the nation to California, Oregon and Washington. This September as reported: “The Raleigh-based bank announced late Friday that it acquired the operations of Venture Bank, which has 18 branches in the Puget Sound region of Washington where Microsoft is headquartered, after it was taken over by the Federal Deposit Insurance Corp. That purchase followed July's acquisition of virtually all the assets of an 11-branch Southern California bank, Temecula Valley Bank.” “First Citizens' conservative banking practices have enabled it to eschew the federal stimulus money that many large regional and national banks have relied on since the recession hit. That conservatism made it one of the select few that can afford to buy troubled banks today.”
Now, almost two years ago when I sat down with Mr. Holding, he briefed me on how some banking functions work. He believed America was a safe haven for China’s investments. He said today’s physical-bank-structure buildings had to be of a modern facade, image, to be successful. He expressed an adverse opinion on CEOs of large banking, and large corporations in general, drawing exorbitant salaries. (American CEO Salaries in the 1980s averaged 40 times that of a regular employee; today it’s 400 times as much, plus large bonuses. European counterparts of the top 20 CEOs make only 1/3 of this amount. [Ref. page 122, Reckless]) In the end, Mr. Holding said he was an “eternal optimist”. No doubt his idealism, in part, comes from his knowledge of the secure-financial base on which his banks are grounded.
In a time past, when toil of hands to the plow, honestly grubbing a living from the soil; when WWII citizens made sacrifices of true patriotism for their country; when the Lee Iacocca type CEOs of Chrysler (in a government subsidized recovery) worked for $1.00 annual salary ---- we have to ask, as Iacocca has: “Where have all the leaders gone?” Where are all the integrity-example setters? Are we a victim to big-money lobbyist? Abuses for personal gain, a disregard for ethics, inside and outside of government, intertwined of government and businesses, ran rampant over recent decades. Time Magazine list 25 people to blame for the financial crisis, including Bill Clinton and George Bush, but at the top of the list is Angelo Mozilo, Countrywide’s co-founder in 1969, who built Countrywide into the largest mortgage lender in the U.S. Countrywide was just one operation to offer exotic mortgages to borrowers with a questionable ability to repay them. As has been reported, many of these institutions crossed ethical lines into predator lending, content to collect their big-package fees, even knowing the deals were spurious. And therein lies a grievous moral decline. Could that be a manifestation of society in general?
A side note: (All too freely Democrats and Republicans, for personal gain in many
cases, aided the Government-sponsored enterprises (GSE) Fannie Mae and Freddie
Mac. Newt Gingrich, Ralph Reed, among others, worked as consultants for Fannie
and Freddie; Raham Emmanuel served on board of Freddie Mac. GSEs cover 40% of
housing investments. Fannie was created in 1938, Roosevelt’s response to the
housing slump of the Great Depression; under Lyndon Johnson a process of
privatizing Fannie began, and in 1970 a political concession [sop] was made to
its critics; thus, Freddie Mac {Federal Home Loan Mortgage Corporation} was
created. {Source: Too Big to Fail})
Holding’s balance of idealism and honest-realistic-pragmatic style of management, where long-term focus is not obscured by a desire for short-term profits, is a lessons to be learned by some of the failed behemoth banks and other corporations that go for big-easy short-term quarterly gains. Frank Holding’s modus operandi is in stark contrast to those CEOs of the super-large banks, too big to fail, who traveled with chauffer driven limousines and private jets. The behemoth-bank players earned the mantra: “Banks that are ‘too big to fail’ are too big not to be regulated.” That’s government’s responsibility. But who will regulate/re-dedicate “We the People” to the better instincts of humanity and a higher moral calling for leadership? Thomas Friedman says: “The standard answer is that we need better leaders. The real answer is that we need better citizens.”
Of our leaders -- one thing is for certain: If the giant financial institutions; predator-loan operators such as Golden West Financial Corporation that mortally wounded Wachovia and Countrywide Financial that significantly injured Bank of America, and their ilk throughout the nation; GSEs Fannie Mae and Freddie Mac; government in its runaway national debt (when it could and should have paid its bills) --- had operated as responsibly as the banks of Frank B. Holding, we would not be in this “Great Recession”. If by chance we had fallen into a mild recession, much easier to correct, the recovery would not be as protracted as inevitably this one is sure to be. However, there may be good reason for brighter economic days ahead: One of the very few who predicted the housing bubble and economic contraction, Nouriel Roubini, said, “The Obama administration’s policy makers—and especially the much-maligned Tim Geithner—have gotten a lot right. Pitfalls may still abound, but he (Roubini) is now projecting an end to the recession, and he sees growth ahead.” On the other hand, some believe we are not out of the woods yet, in part, evidenced by 10% unemployment. In either event, in the highest degree possible, we’ll do well to be an “eternal optimist” of a Frank Holding’s frugal, principled character.
