Yes! Tom Wolfe has written about bankers-and some say it rings true!
This week's No. 1 best seller is "A Man in Full," a 742-page doorstop that has turned into the banking industry's latest source of executive- watercooler gossip. Who are the real senior bankers at "Plannersbanc" whom Mr. Wolfe describes? What is the true identity of the real estate developer whom the bankers bring to his knees?
Mr. Wolfe-whose liberal use of exclamation points is as famed as his penchant for white three-piece suits-spent time in Atlanta, where his book is set, and interviewed numerous business leaders before writing it. The buzz of the city is that most characters are composites.
America's leading cultural chronicler, who satirized the world of New York investment banking in 1987's "Bonfire of the Vanities," does the same for commercial banking in "A Man in Full." A real estate loan workout- reminiscent of the late 1980s and early 1990s-is a central plot element.
Mr. Wolfe is booked for interviews until January-January!-but bankers who have read his tome say its workout chapter is the most memorable. Developer Charlie Croker, the main character, owes his chief lender, PlannersBanc, $515 million, of which he has personally guaranteed $160 million. Croker Concourse, his 40-story office tower, is 60% unleased and bleeding money.
Worse still, Charlie is insulted, berated, patronized, and cussed at by PlannersBanc's workout group, euphemistically named the Real Estate Asset Management Department ("Ream'd") and headed by the menacing Harry Zale, who lost four fingers in Vietnam and wears suspenders emblazoned with skulls and crossbones.
The scene rang true for Thomas J. McCool, a senior vice president in charge of corporate-loan workouts at PNC Bank, Pittsburgh.
"Getting (the borrower) out of his regular environment, that's something we do all the time," Mr. McCool said. "We like to have it at the lawyer's office or, if it's at the bank, at a less-than-thrilling setting. Trying to make him sweat, pushing him hard, sure, we do that."
Charlie Croker's workout is held in a "cunningly seedy and unpleasant" conference room, cheaply furnished and with a dead plant in the corner. Mr. Wolfe contrasts this with the bank's opulent executive dining room, where Charlie was once a welcome guest-before he missed $36 million of interest payments and a $60 million scheduled principal repayment.
The fictional bankers threaten to foreclose on his properties, and demand that he sell some of his prized possessions-including his BMWs, his private jets, and "Turpmtime," the 29,000-acre plantation where he breeds horses and hunts quail.
By the end of the chapter, the sides of Charlie Croker's shirt are soaked with sweat. "Saddlebags!" exclaims Raymond Peepgas, the craven, conniving loan officer who resents Charlie's success and macho swagger. Charlie is utterly humiliated.
In another scene, the bank intentionally embarrasses Charlie by reposessing his private plane at the airport just as he and his friends disembark!
Mr. McCool of PNC said he got a chuckle out of that one. "I've repossessed more than a few airplanes," he said. "There have been times when the guy landed at the airport and we told him not to bother shutting the engines off, we'll take it the way it is."
Also realistic, Mr. McCool said, are the obscenities tossed about by members of PlannersBanc's Real Estate Asset Management Department. Debtors are called a particularly unflattering name.
"I spent four years in the Navy, and I didn't learn half the words I know now until I got into the workout business," Mr. McCool said.
Though the author exaggerates and embellishes, bankers say the novel is a valuable reminder of an era of widespread loan defaults and restructurings-one that could recur.
"Most of us who were around then have some level of fear that it will happen again, so the discussion is topical and healthy," said Matthew Galligan, managing director of real estate investment banking at Fleet Financial Group, Boston.
For some bankers the most significant character in "A Man in Full" may be one the reader never meets-John Sycamore, the aggressive salesman who cultivated PlannersBanc's relationship with Charlie and made all those loans. Sycamore, Zale tells Charlie, is "no longer a factor here."
The author has definitely done his homework. One well-known workout banker, who did not want to be identified, says Mr. Wolfe interviewed him about technical matters, such as deeds in lieu of foreclosure.
Real estate professionals believe Charlie is a composite of several southern developers, including Trammel Crow, John Portman, Tom Cousins, and Jim Wilson. Mr. Portman, Mr. Crow, and Mr. Wilson did not return phone calls. A spokesman for Mr. Cousins said he had no comment on the book.
Though the novel is set in Atlanta, and PlannersBanc's name suggests southern institutions like NationsBank and Union Planters, the drill- sergeant-like Harry Zale appears to be based on New York bankers, said another workout veteran who requested anonymity. "The New York style is much more gun-at-your-head than a conciliatory 'let's-work-this-out' approach."
Other bankers say the workout depiction is unrealistic. "It doesn't sound like anything I've seen," said Patricia Goldstein, division executive of Citicorp Real Estate. "No one put these guys in the bottom basement. The workouts were done in the same conference rooms the deals were done in. There aren't any other conference rooms."
Attempting to emasculate the borrower would not be a viable strategy for a lender trying to recoup its money, said Donald Kuemeller, a partner at Pacific Coast Capital Partners, San Francisco, who worked out bad loans while at Wells Fargo in the early 1990s.
"Workouts are rarely one-sided affairs where the financial institution holds all the cards. The parties are so mutually dependent on one another, it's hard to be dramatically forceful."
Mr. Wolfe has certainly taken some artistic liberties. We are told that PlannersBanc chose to spell its name with a "c" because "the French banc was supposed to show how cosmopolitan, how international, how slick you had become." In fact, many companies use the "c" because of regulatory restrictions on the use of the word "bank."
The real estate business has evolved since the era that "A Man in Full" is based on. More properties are held by publicly traded real estate investment trusts, which are subject to strict disclosure requirements and have low leverage. The rise of the market for securities backed by commercial mortgages has standardized underwriting and given banks a way to make long-term loans without holding the risk.
Perhaps most important, securitization has subjected real estate to the fickleness of the capital markets. Many argue that this year's financial market panic nipped potential overbuilding in the bud.
Indeed, Wismer Stroock, Charlie Croker's "technogeek" financial officer, is a creature of the late 1990's, not the 1980's. "The Wiz" is Charlie's financial conscience, the only person at the Croker Global Corp. who breaks it to the "Cap'n" that he may in fact need to sell some of his luxury toys.
Mr. Galligan of Fleet said Wiz-type number crunchers-known as "quants"- were not part of a developer's camp until fairly recently.
Today, "there is a lot more disclosure, a lot more disicpline" in real estate than in the 1980s, Ms. Goldstein said. "Public ownership and securitization have created the need for sophisticated financial talent."
But, she added, "you still have human nature and you still have cycles."
Unlike a mortgage, a construction loan cannot be securitized; the lender has to hold at least some of the risk on its books.
Some lawyers and bankers fear future workouts on securitized commercial mortgages will be even more complicated than past debt restructurings. Instead of negotiating with the original lender, each borrower will have to deal with a trustee, a special servicer, and numerous bondholders.
"We're about to enter a new era of construction finance," Mr. Galligan said. "Lenders with only five to 10 years of experience have never had face-to-face exposure with classic entrepreneurs like Croker. Telling war stories about adversarial negotiations between banks and developers is a healthy way to make people alert."
Donald Trump hasn't read the book. But, after hearing a brief description of the characters, he said, "That's much different from anything I've witnessed. I think bankers are fine people."
