| Peter Klein |
All this talk about bad loans reminds me of the famous “workout” scene from Tom Wolfe’s A Man in Full, better known as the “saddlebags” scene. It must be the most brilliant, accurate, and entertaining account of a bank calling a loan ever written. You can read most of the scene (from chapter 2) here; if you haven’t read it before, you’re in for a treat. (Unfortunately the excerpt ends before the climax of the scene in which Harry Zales, the bank’s workout specialist, ends his speech that reduces the hapless borrower, Atlanta real-estate mogul Charlie Croker, to a nervous, sweating wretch with his arm raised triumphantly, middle finger pointed to the skies.)
If that scene were to be written today, however, the ending would be different. Just before the workout is over the heroic central banker or Treasury secretary would bound into the room, explaining that the bank should restructure Croker’s loan after all (in the story, Croker has defaulted on a $515 million loan — a mere trifle), and that he will write the bank a check on the spot to cover Croker’s obligation. Gotta maintain adequate liquidity in the system, after all! Upon leaving the room, the central banker or Treasury secretary also extends his middle finger — this time in the direction of the taxpayer.