Recalling the closing of a bank in 1983

By Al Everson
BEACON STAFF WRITER

posted Sep 29, 2008 - 11:26:24am

"Coming events cast their shadows before them" — so goes a bit of wisdom.

As Americans become transfixed with each bit of news about the financial crisis spreading from Wall Street, the Bush Administration warns of an economic cataclysm not seen since the Great Depression.

We have been treated to images of a credit collapse and bank failures, followed by massive unemployment.

In my younger years, I heard my parents and grandparents tell many stories about life during the Depression. There were stories about the scarcity of cash and the "bank holiday."

I got a small glimpse of what that was like while I was working as a radio newsman in East Tennessee 25 years ago. The closing of the C & C Bank in Johnson City was a news story that affected the lives of thousands of people.

On a Friday afternoon in February 1983, I saw the bank shut down and customers turned away by police and armed guards, while federal agents and examiners worked inside.

The closing of the C & C Bank by federal and state regulators had not been totally unexpected, but the suddenness jolted many.

The rather cold sunny day became more chilling for those who had come to draw out cash for the weekend or to cash their paychecks. Construction workers were almost in tears, as they were told the bank was closed. Employees of other businesses came to the bank only to find the doors locked and guarded.

As word of the closing spread over the city, another large bank, Hamilton Bank, offered to cash — at no charge — the paychecks of "orphaned" customers. It was a good public-relations move for Hamilton Bank.

The crisis passed, and the Federal Deposit Insurance Corp. made good on its promise to safeguard the hard-earned money of C & C's customers. Within a few days, business in the region returned to normal. Within a few months, the C & C Bank became a distant memory for many.

In the early months of 1983, there was a wave of bank failures across the Volunteer State, following the demise of United American Bank in Knoxville.

United American Bank, with the ardent promotion of its president, Jake Butcher, had helped finance the 1982 World's Fair in Knoxville. The C & C Bank was part of Butcher's financial empire.

Butcher, by the way, had run for governor of Tennessee in 1978 as a Democrat, but he subsequently lost to the Republican contender, Lamar Alexander (now a U.S. senator).

C & C Bank in Johnson City was one of the casualties of the collapse of United American. As United American branches and affiliated banks around Tennessee began falling like dominoes, the C & C Bank appeared to be heading for a similar fate.

Claiming he had a responsibility to safeguard taxpayers' money, the county executive of Washington County, for example, monitored the news and withdrew the county's funds that had been deposited in the troubled bank.

A few days later, the C & C Bank in Johnson City was shut down. The doors were locked, and no one except regulators was allowed to enter, as number crunchers checked for irregularities in files and boxes of bank records.

Eventually, Butcher was indicted, tried and convicted of bank fraud. He was sentenced to 20 years in federal prison, and served about a third of the time before being paroled.

Daytona Beach Shores Assistant City Manager Jim McCroskey recalled another part of the Butcher story. I knew McCroskey when he worked as Johnson City's downtown business director, before he was elected to the Tennessee House of Representatives.

"Jake Butcher had helicopters, and he would move the money from the vault of one bank to another," McCroskey said, telling how the Knoxville banker stayed a step ahead of the regulators. "He became cozy with the auditors, and he took them out to dinner. He would ask them where they were going next."

Eventually, however, the weight of unsecured loans and bad debt brought down Butcher's empire, including one bank in a medium-sized city.

Bank failures may be associated with numbers, but the closing of the C & C Bank put human faces on the debacle.

— al@beacononlinenews.com

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