"The Man Behind 2009's Biggest Bank Bust," by senior editor Brian O'Keefe, is filled with incisive reporting, splendid writing, and substantial insight on the fall of a regional banking powerhouse.
But it left us with this question: Will the nation's business press ever scrutinize the activities of Lowder's cross-state counterpart, Greene Group Inc. CEO and University of Alabama trustee Paul W. Bryant Jr.? Lowder is on the precipice of criminal charges, but Bryant already has been there--and his activities received pretty much zero press coverage.
Lowder's problems are serious and could get worse. As O'Keefe writes:
The seizure of Colonial's roughly 350 branches and $26 billion in assets--the bulk of which were then handed over to BB&T (BBT, Fortune 500) of North Carolina--made it the sixth-biggest bank failure in U.S. history, the worst this year, and the third largest since the beginning of the credit crisis that plunged the markets into turmoil in 2008. (Only Washington Mutual and IndyMac, which went under last year, were bigger.). . .
As Colonial's largest shareholder, with some 8 million shares, Lowder personally lost $164 million on paper during the stock's plunge from its 2006 high to its delisting from the New York Stock Exchange in August. To many of his enemies it's more than a little ironic that Lowder (pronounced "louder") has retained his role overseeing Auburn's finances. . . .
As much as Lowder has already lost, he could still lose much more. A slew of class-action suits have been filed by both Colonial shareholders and former employees that charge Colonial with reckless and dishonest conduct and name Lowder as a primary defendant.
Lowder's woes could dip into criminal territory. Reports O'Keefe:
Perhaps most worrying for Lowder is an investigation by the FBI and the Office of the Special Inspector General for the Troubled Asset Relief Program into Colonial's so-called warehouse-lending business.
Colonial applied for $550 million in TARP funds last fall but was never cleared to receive a bailout. On Aug. 3, just 11 days before regulators shut down Colonial, agents raided the bank's offices in downtown Orlando, where the warehouse lending was managed, and spent hours carting away boxes of documents.
As the man who signed Colonial's financial statements, Lowder could face civil or even criminal charges if evidence of fraud is found in the bank's TARP application.
It would be grim irony for Lowder if he winds up facing criminal charges for fraud. That's because one of Paul W. Bryant Jr.'s companies was implicated about a decade ago in a massive insurance fraud case in Pennsylvania--one that resulted in a 15-year prison sentence and a $17 million forfeiture for a Philadelphia lawyer named Allen W. Stewart.
Bryant and his company, Alabama Reassurance, came through the episode virtually unscathed. Sources tell Legal Schnauzer that a full-bore investigation of Alabama Re was to commence once the Stewart conviction was secured. In fact, Caryl Privett--then U.S. attorney for the Northern District of Alabama and now a Jefferson County Circuit judge--reportedly had promised investigators that they could go after Alabama Re once the Stewart trial was over.
By then, however, Privett was out of office, and someone in the U.S. Department of Justice called off the Alabama Re investigation. One can only wonder if Bryant's company has forsaken the fraudulent business practices that were revealed in the Stewart trial. One can also wonder who cut Bryant and his company a break--and why.
It probably would be fair to say that Bobby Lowder and Paul W. Bryant Jr. are rivals--perhaps not so much in business, but in the far more important arena of college football in Alabama.
Bryant's father, Paul "Bear" Bryant, was the University of Alabama's Hall of Fame football coach. Bryant Jr. has become one of the strongest financial supporters of the Crimson Tide, which is undefeated this year under current coach, Nick Saban.
Lowder holds a similar status as Auburn's most high-profile football booster. It has been widely reported that neither school makes a major football decision--coaching change, pay raises, stadium expansion, etc.--without consulting Bryant or Lowder.
The Fortune Magazine piece focuses heavily on Lowder's interest in football. Writes O'Keefe:
Not surprisingly given that it's Alabama--where, as they say, "college football isn't life or death; it's more important than that"--Lowder's most high-profile clashes have involved the football program. . . .
From the time he joined the board of trustees, Lowder has shown a special interest in day-to-day operations, chairing an athletics committee of the board that met in private and, insiders say, calling coaches directly to mandate changes. And he has shown that he runs out of patience with football coaches just as he does with bank executives.
O'Keefe goes on to weave a masterful tale about business, banking, power, politics, football, and (perhaps) fraud.
A similar story--maybe even a juicier one--could be told by heading to the western side of the state and focusing on the University of Alabama and Paul Bryant Jr.
Will anyone in the business press tackle that assignment?