BELLY UP: The Collapse of the Penn Square Bank by Phillip L. Zweig

BELLY UP: The Collapse of the Penn Square Bank

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Dallas"" translated into real life. While partying and raising hell (the head of the bank's key gas and oil department was famous for drinking Amaretto out of his Gucci loafers and for writing loan approvals on restaurant napkins), Oklahoma City's Penn Square bankers and lenders violated most rules of the business, basing collateral on unproven reserves, making larger loans to cover up smaller bad debts, not documenting their deals, and palming off shaky loans on larger banks. But in 1982, reality--in the form of a gas glut and resulting price drop--caught up with Penn Square, which became one of the largest bank failures in history. Its fall exacerbated the collapse of the Oklahoma gas and oil industry, swallowed up millions of dollars of investors' money, and shook up the banking and financial world. (Chase Manhattan was embarrassed by its involvement; Seattle First and Continental Illinois flirted with failure.) Zweig, who broke the Penn Square story for the American Banker, follows the action with a reporter's eye. This makes the book fast-paced and informative on a day-to-day level, but it avoids a satisfying discussion of the broader issues of banking ethics and practices, the federal government's supervision--or lack thereof--over the industry, and the political context of the FDIC's decision to let Penn Square fail rather than ""merge"" it or cover all deposits, even those over the FDIC's $100,000 maximum. Also, a glossary of banking terms would have been helpful. In sum, the kind of book you'd like to read with a banker friend who could fill in the omissions--or sum up in a phrase.

Pub Date: Sept. 1st, 1985
ISBN: 0449902056
Publisher: Crown