Marilyn Writes

Marilyn MacGruder Barnewall began her career as a journalist with the Wyoming Eagle in Cheyenne. During her 20 year banking career, she wrote extensively for The American Banker, Bank Marketing Magazine, Trust Marketing Magazine, and other major industry publications. The American Bankers Association (ABA) published Barnewall’s Profitable Private Banking: the Complete Blueprint, in 1987. She taught private banking at Colorado University for the ABA and trained private bankers in Singapore.

Thursday, August 09, 2007

Good Advice Unheeded Led to Tragedy

November 11, 2003     Grand Junction Free Press      Page 10
(c) Copyright 2003, Marilyn MacGruder Barnewall, All Rights Reserved
Grammy's Axioms,
By Marilyn MacGruder Barnewall

Axiom: You choose each road you travel in life. If you don’t like the destination, don’t curse the road. You control your feet.

     I chaired our loan committee three times a week. Most large loan requests -- the ones requiring my approval -- were presented then. At least they were when things were normal. This particular day was not going to be normal.
     One of my private bankers brought me a large loan request. The banker put the request on my desk and said, “You’re not going to like this very much. In truth, I don’t much like it either... but I’m not sure what to do with it.”
     He gave me the loan commitment sheet to review and I must admit, my eyebrows shot up. Denver Bronco Lyle Alzado wanted to borrow the money needed to post a specific performance bond to finance an exhibition fight with Mohammad Ali.
     The source of loan repayment was income from the fight’s gate proceeds. He wanted to use his personal residence as collateral.
     There was no way I could approve the loan. The source of repayment was about as speculative as you can get. I asked a lot of questions: Is there any other repayment source? What’s the status of his Bronco contract? Can we take an assignment of it? Are there enough years -- enough cash flow during his contract years -- to justify repaying a loan this large? There was not. I hated to turn the loan down... but I liked my job. The loan was rejected.
     Two days later, the banker was back. He put the same loan request on my desk. I gave him the same answer. “No way.” It was Alzado, not the banker, who wasn’t taking “no” for an answer.
     The banker, Jerry, called Alzado and scheduled a meeting in my office. I told him I’d be glad to explain why we could not approve the loan.
     Lyle showed up with his lawyer, a sports agent.
Ali, it seemed, would not sign the contract to appear in Denver until the bond was posted. He wanted guarantees that the bout would be held in Mile High Stadium and a few other things. All in all, he was being quite reasonable. But Alzado could not afford “reasonable.”
     “The people love me,” he said. “When they hear about this fight, they will come from Wyoming and Utah... from all over Colorado. When they come to the games on Sunday, they come to see me!”
     I was a bit taken aback. I had met him on other occasions and never saw arrogant bluster as a dominant part of his personality. In those days, we did not yet know about steroids or their impact on the personality of someone taking them.
     “I’m sorry, Mr. Alzado,” I answered. “You may be right. The stadium may be overflowing. It may not be, too. Without a successful gate, you cannot afford to repay this loan.”
      “Well... but you would have my personal residence as collateral!”
     I thoroughly explained to him that loans are made on repayment capability, not the liquidation of collateral. I spent time explaining it all to him.
     “I especially do not want to be the banker who goes to court in Denver, Colorado, to sue Lyle Alzado – to kick him and his family out of their home – so I can repay a loan,” I told him. “As you said, the people love you.”
     The sports agent/attorney asked me a few questions and we discussed why the best course of action would be to find private investors. Alzado understood it all, very well.
     “We have a three-day deadline, at this point,” he told me.
     Later that day, I was talking with a friend, a broker at Blinder Robinson. Meyer Blinder was almost single-handedly responsible for making penny stocks a viable product in the Denver investment community. Russ, my friend, suggested that Blinder might be interested in sponsoring the Alzado - Ali fight.
     I called Alzado’s lawyer and told him to call Russ. Blinder agreed to make the loan and Lyle and his lawyer sent me a beautiful bouquet of flowers, a thank you note -- and a dozen fight tickets.
     There was a small reception so Meyer Blinder could introduce Ali to his personal friends. I barely knew Meyer, but gladly accepted his invitation, and that’s how I met Mohammed Ali. He was a soft-spoken, pleasant guy. You couldn’t help but like him. There was no “float like a butterfly, sting like a bee” attitude about him in private. He seemed very humble.
     My kids were in the Navy and I am not a fight fan, so I gave all but one of my tickets away. I stayed only for the start of the fight. My seat partner was Bronco coach Red Miller... who was livid about the entire Alzado adventure in pro-boxing land.
     A few months later, I left the bank to start my own consulting company. I forgot all about the fight. At least I did for three years... until a process server found me.
     I was called to court to testify for Meyer Blinder. Lyle Alzado was claiming he did not understand how by using his home as loan collateral he might lose the home if the loan was not repaid.
     I remembered the hour-long meeting I’d had with him, carefully explaining how by putting his home up as collateral on a loan he could lose the house.
     Justice being what it is these days and Bronco fans being what they are, the jury found in Lyle's favor. Meyer Blinder took the loss and Lyle Alzado won the lawsuit with a lie. Blinder made the loan I'd refused to make and suffered a loss for the very reasons I refused to make it and Mr. Alzado told the same lie in a courtroom with Meyer Blinder that he would have told in a courtroom with me had I made the loan.
     Lyle Alzado knew the path his feet trod. He was a bright guy. He was also very mixed up. No one knew it at the time, but steroids had begun what would be the final destruction of his brain. The steroid damage caused brain cancer (some people say) or a stroke (other people say) and the big guy died at age 43 within a few years of this incident.
     Lyle had cursed the road rather than controlling his feet... but he was not a well man.
     God bless him wherever he is. He learned a very hard lesson... some of it at my expense. It was a huge lesson for me in how “thank you for your help” can turn into personal insults in the courtroom.
     And you thought bankers had dull, uninteresting lives!