The Great Recession Comes to Owens Valley
by Ralph E. Shaffer
Roger Nielsen left his car in the municipal lot next to the city park and walked onto the footbridge over Bishop Creek. The rushing water below him sounded almost musical, and he stood there for a few minutes enjoying the melody and the view of the Sierra to the west. It was a glorious morning in 2008, and it was enhanced by the view and the creek. As he usually did, Roger pulled a coin from his pocket and tossed it into the little torrent. He thought it brought him good luck and that today luck would really arrive.
What made the day especially inviting was the deal he was about to close that would make him the largest auto dealer in Owens Valley. His errand this morning was to arrange for the necessary loan that would enable him to buy out another dealer, who had already agreed to the purchase. All that was needed to complete the deal was the loan.
Nielsen had been selling new and used cars in Inyo County for nearly thirty years. He almost went under soon after he opened his dealership, but the Inyo County Bank loan department had gone out on a limb and extended him credit just when he thought he would lose the business. Since then, his only bank had been ICB. Loan after loan, the interest always paid on time, had followed regularly, each loan a little larger than the previous one. Now, in his mid-fifties, Nielsen was on the verge of his greatest success.
That morning he had chosen his clothes carefully. Mrs. Nielsen had commented on his appearance, something she rarely did as he dressed for work since normally he didn’t take such pains as he had done this time. Roger thought that his appearance, on this occasion, should match the importance of the day. He had even whistled a cheerful tune as he left the house, and now, as he stood on the footbridge, he whistled another. Then, with a smile on his face. he was on his way, walking briskly.
Bishop residents who met him on Main Street mentally noted his affable manner when he greeted them by name. When he walked into the bank, he imagined that all the other customers and tellers gazed at him, impressed, aware that he was about to close a big deal. His success, he thought, simply exuded itself from his appearance and demeanor.
At the loan desk, he announced his presence to the clerk, speaking in a voice much louder than necessary, apparently to impress other bank customers. He told the clerk that he had an appointment with Sam — Mr. Willard — the bank manager, the official he had dealt with many times over the years.
When Roger first came to ICB, Willard had been the assistant loan officer. As Nielsen rose in his profession, so did Willard’s position at the bank increase in importance. Now he was manager, although ICB had been bought up by a Wall Street national bank chain and he now was beholden to a hierarchy to which the local bank had not been accountable in previous years.
The clerk regretfully informed Roger that although he had an appointment for 9:00 a.m., officials from the parent bank had arrived unexpectedly and were meeting with Mr. Willard. Would he please take a seat, and she thought it would not be long.
At about 10:00, the Wall Street executives were escorted to the front door by Willard. Roger noted that the goodbyes were not the usual, congenial “Good-day” that normally marked the end of a meeting in Bishop. No loud voices nor heated words, but their departure was not cordial. Willard looked disturbed as he returned to where Roger sat.
Willard forced a smile and held out a warm hand for his old friend, customer and the car dealer who had sold him car after car over the years.
“Sorry to keep you waiting, Roger. I didn’t expect those guys or I wouldn’t have told you to come in at 9 o’clock. What’s up that brings you in this morning?”
Roger, his up-beat attitude still at a peak, tried to lighten up his friend with a jovial, brotherly greeting, believing that explaining the dealership purchase and the profit the bank would make on the loan would do the trick.
“Sam, you know the car business is hurting for most dealers. Not just here in the county, but all over the country. We’ve lost two dealerships here since the recession started, and several of the others are having a hard time. I’ve even had to let some of my employees go, at least until things get better. I hated to do that, but even a compassionate owner has to keep an eye on the bottom line.”
“Yes,” Willard responded, “I know things are tough, but you have always stayed ahead of the game, even in those dark days when you were just starting out. And we helped you through as best we could. Then, we were a local bank and we knew all our customers, grew up with them as kids, in many cases. Things are different now.”
“Yes, they are,” replied Roger, “but good management, whether in a bank or car sales, makes a difference. That’s why I’m still in business and your bank hasn’t joined the list of failed financial institutions. We — you and I — know how to survive.”
“That’s right, Roger. But even friendship isn’t enough in times like this. You and I need to talk.”
“Well, before we talk, Sam, let me explain my proposal to you, a plan that will not only help me, make money for the bank, but also keep a lot of Bishop people employed when they otherwise would be on the street because of a failed business.”
“That sounds interesting, Roger. Maybe what you have to say will trump my own concerns. Go ahead.”
Roger explained how he had met with the failing car dealer and had worked out a plan to buy the agency, keep most of the workers employed, and keep the service bays open so that local residents wouldn’t have to travel sixty miles to Lone Pine to have their cars repaired and serviced.
“Sidney has agreed because the sale will help him financially. If he just went under and closed doors, he wouldn’t get anything. My purchase of his agency will permit him to stay in town in retirement and not lose his house as well. Sam, it’s a good deal all around: for me, for Sidney, and for you and the bank. As they like to say, a win-win situation.”
“Roger, these are bad times—”
“Yes, I know that, and that’s why this deal is a godsend for all of us. Including the bank. All I need is the usual loan. Interest rates are lower now than in years, and that makes it all the more inviting. A hundred thousand on the usual terms will do it. What do you say?”
“Roger, it’s not that simple. You know how bad things are—”
“Sam, what’s to worry? We’ve made this loan arrangement a dozen, maybe twenty, times, over the years. There’s never been a problem. If we sign the papers today, Sidney will turn over his dealership to me by the end of the week, work will go on, workers will be spared the anxiety of possible business closure, and Bishop will still be the land of opportunity.”
“Roger, I’ve been trying to tell you. I would love to make this loan. Yes, we’ve done this zillions of times over the years, but now it’s this year. And I can’t make the loan because the big bank won’t let me. That’s why those Wall Street guys in the suits and briefcases were here this morning. No more business loans for now. They can’t do it because they got in financial trouble and the Fed has increased the amount of reserves the bank must have on hand, and making loans deplenishes that. They’re even calling in existing loans to bolster reserves.
“Roger, maybe in a few months, or a year or two, I can make the loan. I’m sure the time will come when we can do that. We just can’t do it now.”
Deeply disappointed at the unexpected turn of events, an outcome he hadn’t even dreamed of, Roger mused aloud that he would just have to continue as he has. “Sidney will lose his business, all his workers will lose their jobs, Bishop’s economy will suffer as a result. But we’ll get by... I guess. I’ll get by ’cause my existing loan will tide me over until next year, then maybe, if Sidney can only hold out a little while longer, we can make the deal then.”
“Roger, you still don’t quite understand. I have to call in existing loans. Your loan is a call loan, payable on demand. I’ll be calling in your loan, too.”
No, Roger didn’t understand. He had borrowed with call loans for nearly thirty years and not one of them had ever been called in. When the loan was due, the bank had always written up a new one. He paid his interest on time, always. The bank made a small fortune on the interest he paid. He prospered and the bank prospered as well. Why couldn’t they continue that way?
“Not this time,” said Sam. “We need the cash, all of it, within two weeks, as stated in the loan agreement.”
“But I don’t have the cash. I can’t pay it back in two weeks. I’ll be ruined. Sam, you can’t do this to me.”
Sam shrugged his shoulders. “It’s not up to me, Roger. I don’t have any choice. The suits even hinted that I’m lucky they aren’t closing this branch like they’ve closed so many others. I can probably put off the repayment for a month instead of two weeks, but I can’t even promise that. I’m sorry, Roger. We’ve been friends and had this business association for a long time. I hope this won’t hurt our relationship.”
Roger did not respond. He was too deeply involved in thought to even say good-bye. He simply turned and left the bank, muttering: “I’m ruined. I’m ruined.” Acquaintances he encountered on the street thought it best to ignore this befuddled man who was babbling to himself. Friends who asked if they could help were met with the phrase he repeated again and again: “What am I going to do?”
He didn’t even remember the drive back to the dealership, where he parked with the squeal of brakes, taking up two spaces, and went directly to his office, talking to no one on the way. As he sat at his desk, Roger looked at the awards the car manufacturer in Detroit had given him over the years for being among the best dealers in the country. Photos of his kids and wife smiled back at him from atop his desk. How would he pay the home mortgage, the kids’ college tuition, even the premium on his life insurance? It was all so hopeless.
That last question suggested a way out. He took a copy of his life insurance policy from a drawer, ran quickly through the pages, looking for the part that had suddenly occurred to him as a solution. There it was, but suicide voided the policy. The premiums had been less with that clause, and until now he had never regretted that it was in the policy. Now even that solution was gone. The pistol he had so carefully hidden in the top drawer, in the event of a robbery, would remain there, untouched.
Hours later, as the sun was setting west of the Sierra and the sun’s last rays shone brightly on the Inyo Range to the east, he wandered back to his car.
On the way home he stopped at the park, walked to the footbridge he loved so well, and listened to the tumbling water flowing beneath. There, at his lucky spot on the footbridge, he pondered the financial disaster he now faced. Then a possible solution came to him.
He could borrow against his life insurance, the kids would have to go to junior college for a couple of years, and he was friendly enough with local federal officials that he might get one of those business bail-out loans the president had pushed through. Some of the workers would have to go, he couldn’t prevent that, but the business would survive. He would no longer be one of the nation’s leading dealers, but he’d still be in business. That month’s delay in calling in the loan might just be enough to make it.
Dejected, but with a feeling that not all was lost, Roger started to throw a coin in the creek, then, reconsidering, put the dime back in his pocket. While he needed good luck, at the moment he also needed all the coins he had.
Copyright © 2023 by Ralph E. Shaffer
