The thrift business
was a costly venture
for a group of
A banner sports a new name for the defunct Bloomfield Savings.
group of entrepreneu- made some errors, and it became dif-
rial executives learned a ficult to operate?"
hard lesson about the
troubled thrift industry "There are a lot of
when the Federal Home people who know a lot
Loan Bank Board, which monitors about banking but are
the industry, virtually forced Bloom- not bankers,' he added.
field Savings and Loan to merge with
"I suspect they were
a California-based institution at the
much more aggressive
end of last year.
After the Federal Savings and
Loan Insurance Corp. declared the bankers would have
thrift insolvent, Ford Motor Co.'s First been."
Nationwide Bank — with federal
In 1982, investors thought the
assistance — acquired Bloomfield
Savings. This ended a seven-year at- thrift's outlook was positive. They
tempt by the businessmen to make planned to target loans toward people
profitable the residential mortgage buying property in the burgeoning
suburbs of Detroit. Just over a year
Banking experts suggest the into an aggressive expansion plan,
group of investors — comprised large- Bloomfield became Michigan's eighth
ly of Jewish men in the real estate, largest savings and loan company.
legal and development professions —
But, industry regulators said,
made honest, yet costly mistakes dur- non-performing commercial loans and
ing shaky times in the savings and deposits that couldn't be managed
contributed to a growing debt.
Accordingly, said banking consul- Despite warnings from state
tant Justin Moran, the guidelines regulators during a time when in-
that helped bring success to these terest rates were rising and profits
men in their respective professions were marginal, Bloomfield ventured
are significantly different from the into some dangerous loans, including
rules governing the banking industry. a $15 million loan that was never
"We thought it was a good repaid by an Oklahoma City financial
business, and we found it to be a real estate firm.
tough business" said Merle Harris,
"A lot of people who are successful
one of the initial investors and a look at bankers as too cautious;'
Bloomfield Savings board member. Moran suggested. "They are conser-
"We overreached a little. We probably vative because they need to be. A
banker learns his trade by collecting tie. It was compounded with poor
bad loans, but the first loans tend to loans. It was a 1-2 crunch!
"There are a lot of people who
Hindsight, Moran said, shows know a lot about banking but are not
that buying 10 branches from Detroit bankers," he added. "I suspect they
& Northern Savings and two offices were much more aggressive than ex-
from Capital Federal S&L during perienced bankers would have been."
Bloomfield's rise and fall came
Bloomfield's first year of operation
was a mistake. That, he said, coupl- during tough times for the savings
ed with risky loans, likely caused the and loan industry. Throughout the
country, federal regulators are trying
demise of Bloomfield Savings.
Options were limited when to get rid of insolvent thrifts. Mean-
Bloomfield merged with First Nation- while, Bloomfield Savings and First
wide. The bank board could have Dearborn — also acquired by First
pumped money into or liquidated the Nationwide — were the only two
Michigan thrifts facing financial
It had grown to 22 branches, but woes.
Mike Thomas, spokesman for the
had been operating at a negative net
worth of $26 million. Bloomfield's Federal Home Loan Bank Board in
liabilities — $715 million — were Indianapolis, said the FHLB in 1988
greater than its assets — $689 resolved 155 troubled savings and
Bloomfield was placed in a
Kenneth Robinson, who resigned
as chairman of the board shortly after pass through receivership. The FHLB
problems arose, was out of the coun- took action to protect insured
try and could not be reached for com- depositors and to make sure that
ment. Attempts to reach developer Bloomfield's managers and stock-
Stuart Frankel, who took over as holders would not profit from the
chairman of the board after bad times federally assisted merger.
Bloomfield's unusual expansion
hit the thrift, were unsuccesful.
Among the other original in- was under constant scrutiny of state
vestors were businessman Marvin regulators, who feared management
Daitch, who declined to comment, policies could not keep pace with the
and retailer D. Larry Sherman, who explosive growth.
Two years after its inception, in
was out of town.
"I suspect it is a story of getting the midst of the criticism, Bloomfield
too much, too fast," Moran said. changed its charter from state to
"They paid too much and got too lit- federal. Problems continued.
THE DETROIT JEWISH NEWS