your old age,” Ted quipped.
“Old age! Want to arm wrestle smart-ass?” Strom retorted. A broad grin broke out on his wrinkled face.
“I wouldn’t do it, Ted. You were a punter in high school. Strom was an all-state tackle.”
“I’ll pass.” Ted smiled at a grinning Strom.
Alex lifted his menu. “What’s good today?”
“They have ham and Swiss with a cup of minestrone on special,” Strom offered.
“Sounds good to me,” Alex replied.
“Me too,” Ted said as both men tossed their menus on the table.
Just seconds later, the smiling waitress approached them. “Oh boy, my three favorite dirty old men are here today,” she joked as she banged three sweaty glasses of water on the table.
“Hey! We’re not all old, Libby!” a smiling Alex exclaimed.
“You’re old to me, Mr. Crane.” she retorted.
The powerful men laughed out loud; they loved being brought down to size and the feisty Libby never disappointed.
“What’ll it be, fellas? I ain’t got all day!” The cheeky waitress kept the needle in.
“We’ll have three of those ham and Swiss specials,” Alex said. “And give me the check please.”
“Will do, Mr. Crane. Just water to drink?”
“I’ll have an ice tea,” Ted said.
“Thank you, fellas.” The waitress finished her notes and hurried off.
Alex’s expression changed quickly after the fun exchange with Libby. He looked directly at the other men. “I’m a little pressed for time so I’ll get right to the point. Gentlemen, I think we may have a problem brewing at Midwest.”
Their smiles faded, the men listened intently.
“You’re both aware that I want to pay back the TARP money to the Feds in its entirety.”
The men nodded.
“Strom and I have already had a few lengthy conversations about this recently so let me bring you up to speed Ted. If you have any questions or comments, please feel free to jump in at any time.”
Ted nodded again.
“I don’t think it’s a secret to anyone that I was opposed to accepting these funds last fall.”
“Yes, that was kind of Barnes’s baby,” Strom offered.
“It certainly was Strom, and Barnes doesn’t want to pay the money back. He seems hell bent on stopping me; he’s more determined than I’ve ever seen him. I’m not sure what’s driving him.”
“He has a dog in this fight for certain, Alex. He owns quite a bit of Midwest stock as I’m sure all of the board members do. I don’t agree with Barnes, but maybe he sees his investment being threatened and he thinks that keeping the bailout money will help. It could be as simple as that,” Ted said matter-of-factly.
Alex scribbled nervously on his napkin. “You’re right, Ted. Barnes and several of the board members are getting older and their retirements are an issue, but I don’t think Barnes is that worried about his Midwest stock. He has huge holdings and is a very wealthy man. It’s more than that with him—he’s on a mission. I’ve never seen him so determined. And as of late, I have discovered some things that concern me.”
“Such as?” Ted queried.
“Well, you know our friend, Vito Taglioni, over at First Financial Services?”
“Yes, yes, I know, Vito. Who doesn’t?”
“Well, First Financial handles all our big bond deals here in Indy. The other day, I discovered, quite inadvertently, that Vito has opened satellite offices for First Financial in all the cities where Midwest has offices.”
Ted’s eyebrows rose slightly. “Well, he certainly has the right to open an office wherever he likes as long as he gets all the red tape right.”
Alex felt exasperated. “That’s not all, Ted. Barnes has opened offices in all the same cities and he and Vito have been making a fortune for the past year peddling those bonds. Something smells fishy and I don’t like it.”
“I’m sorry, Alex. But Vito has every right to open a storefront in any city he chooses,” Ted replied.
Agitated, Alex scribbled more aggressively. “Isn’t that a conflict of interest or something with Barnes?”
“Not unless he handles your account himself—which I’m certain that he doesn’t. Otherwise, the man has a right to make a living.”
“A very good living!” Alex squirmed in his seat.
“No law against that.”
Alex pushed on. “Remember when Nicky and I went to Europe last year?”
“Yes.”
“Well, in my absence Barnes asked Strom to call an emergency meeting of the board.”
Ted replied, “As a board member, Barnes has every right to do that, even though it seems inappropriate with you out of town. Did he document the meeting so you would know what took place?”
Alex grimaced. “He documented it alright, Ted. Barnes is no dummy. But what he did in essence, without making it appear so in the minutes, was open the flood gates on subprime mortgages, something he knew I was vehemently against. The result was that he and Vito got rich and now Midwest has millions of dollars worth of bonds going belly-up every day.”
Ted leaned back against the shiny cushion on the booth. “Did the board approve the action?”
“Yes….yes they did; but they didn’t know his objective. He did a masterful job of masking his intentions. He merely made a motion to leave the decision on how to acquire more mortgages up to the local managers in each town and the board approved.”
“And?”
“And….those managers and their originators are on commission, Ted! You can’t leave underwriting decisions up to them! They love subprime—any warm body can qualify for a subprime mortgage. The board gave them the green light and they started making mortgages to anyone who walked in the door! Barnes knew it would be a disaster for the bank, but he also knew that he and Vito could make a fortune in the meantime. And all this happened while I was out of town.” Alex shook his head in disbelief.
“Inappropriate maybe, but certainly not against regulations. Ignorance is no excuse under the law. Your board should have known better than to approve such a potentially problematic policy, especially with you not at the meeting.”
Strom’s face flushed with embarrassment. He felt the sting of the attorney’s insinuations.
The
