Even Leonard L. Kingswood, the energetic chairman of Northam Steel and Alex Vandervoort's most fervent supporter on the board, had a good word as he passed by. "Hear you corralled Supranational, Roscoe. That's first-class business." Other directors were equally complimentary.
Among the last arrivals were Jerome Patterton and Alex Vandervoort. The bank president, his white-fringed, bald head gleaming, and looking as usual like a gentleman farmer, went at once to the head of the long, elliptical boardroom table. Alex, carrying a folder of papers, took his regular seat midway on the left-hand side.
Patterton gaveled for attention and speedily disposed of several routine matters. Then he announced, "The first main item of business is: Loans submitted for board approval."
Around the table a flurry of turning pages signaled the opening of FMA's traditional blue, confidential loan folders, prepared for directors' use. "As usual, gentlemen, you have in front of you details of management's proposals. What's of special interest today, as most of you know already, is our new account with Supranational Corporation. Personally, I'm delighted with the terms negotiated and strongly recommend approval. I'll leave it to Roscoe, who's responsible for bring.ing this new, important business to the bank, to fill in background and answer any questions."
"Thank you, Jerome." Roscoe Heyward eased on his rimless glasses which he had been polishing out of habit and leaned forward in his chair. When he spoke his manner seemed less austere than usual his voice pleasant and assured.
"Gentlemen, in embarking on any large loan commitment, it is prudent to seek assurance of the borrower's financial soundness, even when that borrower has a triple A credit rating, as Supranational does. In appendix 'B' of your blue folders" around the table there was again a rifling of pages "you will find a summary I have personally prepared of assets and projected profits of the SuNatCo group, including all subsidiaries. This is based on audited financial statements plus additional data supplied at my request by Supranational's comptroller, Mr. Stanley Inchbeck. As you can see, the figures are excellent. Our risk is minimal."
"I don't know Inchbeck's reputation," a director interjected; he was Wallace Sperrie, owner of a scientific instrument company. "But I know yours, Roscoe, and if you approve these figures then they're quadruple-A for me." Several others chimed in their assent,
Alex Vandervoort doodled with a pencil on a pad in front of him.
"Thank you, Wally, and gentlemen." Heyward permitted himself a slight smile. "I'm hopeful your confidence will extend to the concomitant action I have recommended."
Although the recommendations were listed in the blue folder, he described them anyway the fifty-million-dollar line of credit to be granted in full to Supranational and subsidiaries immediately, with financial cutbacks in other areas of the bank to become effective at the same time. The cutbacks, Heyward assured the listening directors, would be restored "as soon as possible and wise," though he preferred not to specify when. He concluded, "I recommend this package to the board and I promise that, in light of it, our own profit figures will look very good indeed."
As Heyward leaned back in his chair, Jerome Patterton announced, 'The meeting is open for questions and discussion." "frankly," Wallace Sperrie said, "I see no need for either. Everything's clear. I think we're witnesses to a masterstroke of business for the bank and I propose approval." Several voices together called out, "Second!"
"Proposed and seconded," Jerome Patterton intoned. "Are we ready to vote?" He obviously hoped so. His gavel was poised.
"No," Alex Vandervoort said quietly. He pushed his pencil and doodling away. "Nor do I think anyone else should vote without a great deal more discussion."
Patterton sighed. He set the gavel down. Alex had already warned him, as a courtesy, of his intentions, but Patterton had hoped that Alex, sensing the near-unanimous mood of the board, would change his mind.
"I genuinely regret," Alex Vandervoort was saying now, "to find myself before the board in conflict with my fellow officers, Jerome and Roscoe. But I cannot, as a matter of duty and conscience, conceal my anxiety about this loan and my opposition to it."
"What's the trouble? Doesn't your girl friend like Supranational?" The barbed question came from Forrest Richardson, a longtime PMA director; he was brusque mannered, had a reputation as a martinet, and was a crown prince of meat-packing.
Alex flushed with anger. No doubt directors remembered the public linking of his name with Margot's "bank-in" campaign three months earlier; just the same, he was not prepared to have his personal life dissected here. But he withheld a strong retort and answered, "Miss Bracken and I rarely discuss banking nowadays. I assure you we haven't this."
Another director asked, "Just what is it you don't like about the deal, Alex?" "Everything."
Around the table there was a restless stirring and exclamations of annoyed surprise. Faces which had turned toward Alex betrayed a lack of friendliness.
Jerome Patterton advised curtly, "You'd better lay the whole thing out."
"Yes, I will." Alex reached into the file folder he had brought and extracted a single page of notes..~
"To begin with, I object to the extent of the commitment to a single account. And not only is it an ill-advised concentration of risk, in my opinion it is fraudulent under Section 23A of the Federal Reserve Act."
Roscoe Heyward leaped to his feet. "I object to that word 'fraudulent."' "Objecting doesn't change the truth," Alex said calmly.
"It is not the truth! We have made plain that the full commitment is not to Supranational Corporation itself, but to its subsidiaries. They are Hepplewhite Distillers, Greenpastures Land, Atlas Jet Leasing, Caribbean Finance, and International Bakeries." Heyward snatched up a blue folder. "The allocations are spelled out specifically in here."
"All those companies are controlled subsidiaries of Supranational."
"But also long-established, viable companies in their own right."
"Then why, today and all other times, have we been speaking solely of Supranational?" "For simplicity and convenience." Heyward glowered.
"You know as well as I do," Alex insisted, "that once the bank's money is in any of those subsidiaries, G. G. Quartermain can, and will, move it around any way he chooses."
"Now hold everything!" The interruption came from Harold Austin who had leaned forward, slapping a hand on the table for attention. "Big George Quartermain is a good friend of mine. I won't sit quietly hearing an accusation of bad faith."
"There was no accusation of bad faith," Alex responded. "What I'm talking about is a fact of conglomerate life. Large sums of money are transferred frequently between Supranational subsidiaries; their balance sheets show it. And what that confirms is we'll be lending to a single entity."
"Well," Austin said; he turned from Alex, addressing other members of the board, "I'll simply repeat that I know Quartermain well, and Supranational too. As most of you here are aware, I was responsible for the Bahamas meeting between Roscoe and Big George where this line of credit was arranged. In view of everything, I say it's an exceptionally good deal for the bank."
There was a momentary silence which Philip Johannsen broke.
"Could it be, Alex," the MidContinent Rubber president inquired, "that you're just a little sore because Roscoe, and not you, was invited to that Bahamas golf game?"
"No. The point I'm making has nothing to do with personalities. "
Someone else said skeptically, "It sure doesn't look that ways,
"Gentlemen, gentlemen!" Jerome Patterton rapped sharply with his gavel.
Alex had expected something of this kind. Keeping his cool, he persisted, "I repeat, the loan is too big a commitment to one borrower. Furthermore, pretending it isn't to a single borrower is an artful attempt to circumvent the law, and, all of us in this room know it." He threw a challenging glance around the table.
"I don't know it," Roscoe Heyward said, "and I say your interpretation is biased and in error."
By now it was obvious this had become an extraordinary occasion. Board meetings normally were either rubber-stamp affairs or, in event of mild disagreement, directors exchanged polite. gentlemanly comments. Angry, acerbic argument was virtually unknown.