MODERN HISTORY THE GREAT DALLAS BUST WHAT THE HELL HAPPENED?

WE NEVER KNEW WHAT HIT US. I REmernber that fall of ’85 pretty clearly, and I don’t recall any strong scent of impending doom or panic floating about on those sweet autumn breezes that blew in from Canada that October, ushering in, as they always do, the city’s loveliest season. To be sure, there were harbingers and omens of the catastrophe to come, if you looked hard enough through the haze of boomtown hype that still pervaded the atmosphere here, but they were too faint and too easy to dismiss.

Since 1984, some economists had been warning that if Dallas wasn’t careful, it could follow the lead of Houston, which found itself in the clutches of a vicious recession due to instability in the oil industry and absurd overbuilding in the development business. One of them was University of North Texas economist Bernard Weinstein, then with SMU, who wrote in the pages of D Magazine as early as November 1985, that the real estate market, both commercial and residential, in Dallas/Fort Worth was gravely overbuilt, over-leveraged, and headed for a serious “shakeout.” He and co-author Harold Gross added that the region’s S&Ls could find themselves holding the bag for hundreds of millions of dollars in bad real estate loans if they didn’t begin exercising more care in their lending policies.

That audacious prescience, says Weinstein today, earned him a spate of angry letters from local bankers and other business types, all assaulting him with that most venomous Dallas pejorative, “naysayer.” One of the letters was from an executive of one of the city’s major banks, who accused him of something on the order of civic sedition. Soon enough, Weinstein found himself summoned to the office of the dean of the SMU’s Cox School of Business, which happened to enjoy quite a bit of funding from local banks. “The message was pretty much that that son of thing shouldn’t be said,” says Weinstein.

Another standard message employed to swat away such heresies in those days was the time-honored, “Dallas is not like Houston-it’s not oil dependent. It’s a diversified economy. ” As for commercial overbuilding, which even by ’85 had reached such bloat that some economists feared the city wouldn’t be able to absorb the empty space for a decade, if ever, the fallback position was, “’Well, some smaller players may take some hits, but over all, it’ll just be a minor adjustment.” The mantra of perpetual boom had by then become so ingrained that even businessmen, who really should have known better, nodded comfortably at such homilies and headed off for a round of golf. As for we poor slobs who were out of the loop-any loop-we did what Dallasites had always done: We took it on faith that the city was virtually recession-proof.

It is positively mind-bending now to contemplate just how deeply-believed was that particular article of faith. In the case of Dallas, we embraced not only the old saw, “What’s bad for the nation is good for Texas,” but the corollary belief that, among all Texas cities, Dallas, with its white-collar distribution-and-financial-nexus economic base, stood impervious to the fickle and haphazard currents of the national or even the regional economy. In this, we believed we had transformed our biggest genetic deficit-the lack of geographic or primary industrial reason for being-into our largest asset: Let other cities pump for oil and mine for manganese, grow and harvest, manufacture and refine things-and suffer for the risk. We’ll stand by and count the money-taking our standard fee for each transaction, of course.

It was an intoxicatingly persuasive premise that we served as chief accountant, banker, insurer, lawyer, and public relations agent to the booming Sunbelt, and the problem with facing its speciousness- even when, as the ’80s dragged on torturously, we began to wonder if we really did have any reason for being-was that, for a time, it had all been absolutely true.

That was the thing about the bust of ’85, It was all the harder to countenance because the boom that preceded it had not merely been some blip on an economist’s computer screen, or the hackneyed contrivance of some news magazine writer in search of a cover story. The Sunbelt boom of the 70s and early ’80s had been a concrete and indubitable economic, political, and social movement, and, Chamber of Commerce conceit notwithstanding, it had always carried the intoxicating scent of permanence.

If anyone was paying attention to the warnings of economists like Weinstein that fall, nobody was admitting it publicly. Indeed, the mood of the city seemed as brassy and optimistic as ever. The Cowboys were back on the turf at Texas Stadium; the rich and nearly so were back out strutting their stuff at the annual autumn society balls. I remember one of them, a fund-raiser for the symphony at the gargantuan new Interfirst Plaza building in downtown Dallas, which pretty much said it all about Dallas’ insouciance toward impending peril. At a certain point in the evening, everybody’s favorite society hostess, then-mayor pro tern Annette Strauss, was asked to commemorate the evening by flipping on Interfirst’s glitzy external lighting display, which consisted of thousands of blinding neon-green bulbs, strung from street to apex and back again-a true display of Dallas gaucherie, if there ever was one.

When the lights roared ablaze, the crowd gasped, then applauded this newest phallic beacon-our final, as it turned out, monument to our faith.



Yes, Virginia, There Was Really a Sunbelt

I MOVED TO DALLAS IN 1971, WHEN THE BOOM WAS NASCENT, AND the town was still a confused adolescent. Like any adolescent, she could be alternately vain and self-conscious, wildly assertive or shy, primly conventional or recklessly adventuresome. And through it all, shone a deep and neurotic identity crisis. She’d long since passed through the dark and brooding tunnel of the “City of Hate” post-JFK years, and seemed to be casting about for some sense of self beyond the growing popularity of her professional football team and the “Super Americans” iconography of journalists like John Bainbridge about the eccentric fortune-making of Ross Perot and H.L. Hunt.

At street level, Dallas really could seem like an outsizcd Wichita Falls, with its pre-liquor-by-the-drink, moribund night life, its immature arts community, its Bible Belt values, and its instinctive, oil-flush wantonness. But even a newcomer could sense at the time something roiling about beneath his feet here, that this town wasn’t going to sit still for its adolescence very much longer, that a major passage was about to be traversed. Given that I was fresh out of college and about to negotiate the passage of my first job in the real world, I felt an immediate and deep emotional attachment to the place. Dallas and I would navigate our respective passages together, and I very much appreciated the company.

The exhilarating thing was forming yourself even as you were helping to form the place you had chosen to live. And, depending on how you chose to look at it, Dallas’ small-mindedness and small-town-ishness was not necessarily a glass halt empty. In fact, the city’s young, emerging leadership was urging us to look at it as half full. “Whatever we lack, we can build ourselves” was their message, and being 22 and ambitious, 1 personally couldn’t think of a better way to spend my young adulthood.

Like thousands of other Dallasites, I happened to have stumbled into the right place at the right time. For the exotic forces of national economics, demographics, and politics would soon conspire to allow such audacious ambition to become more than mere precociousness and pretense. By the early 70s, a massive migration of indus-try and people had begun from the depressed Northeast and upper Midwest southward and westward to what would come to be called variously, the Sunbelt, the Sun Cities, The Third Coast and, in our most presumptuous days in the early ’80s, New America.

The cities in the foundry had begun the slow crawl down the lower side of the urbanization bell curve, where public safety, schools, and social services became more inept and tattered, even as taxes rose, This, coupled with the inflation -cum-stagflation of the economy, had left many of the region’s industries-not to mention residents-restive and looking for greener pastures. The states to the south and the west, still under-urbanized, under-unionized, and possessing safe streets and schools, cheap and available housing, growing job markets, growing tax bases, and pro-business governments seemed plenty green enough.

The situation was ripe for a boom in the South, but it took the vagaries of international politics–specifically, the politics of oil-to ignite it. In the early 70s, the Middle East was experiencing another bout of instability, which culminated in Egypt’s 1973 attack on Israel. Israel, of course, retaliated, swiftly and certainly. Cowed and embarrassed, the Arabs contrived to apply pressure to the West- whom they blamed for Israel’s military superiority in the region- through the most obvious of means. They turned the screws on the production of their massive oil fields, almost overnight generating an “energy crisis” in oil-dependent nations like the United States.

The industrial Northeast was thrown into economic panic and chaos. Fuel to make the basic stuffs of the auto industry- mainly, steel-was suddenly scarce and expensive; at the same time, the autos being turned out were less and less attractive to panicky consumers who began turning to Japanese and European compacts in droves. The Arabs, in one swift and brutal move, had sent the foundry’s cost of production soaring and its revenues plummeting. To add insult to injury, Northeast-erners suddenly found themselves paying exorbitant heating bills.

The energy crisis was the most profound example of the truth of the homily “What’s bad for the rest of the nation, is good for Texas” in modern times. As the nation’s primary domestic producer of black gold, Texas, and the regions that radiated out to her east and west, were suddenly in the catbird seat. The price of crude shot up from $3 a barrel to $ 10 during the next four years-increasing many-fold the already prodigious fortunes of wildcatters like the Hunt family. But the whipsaw of fortune presented by the energy crisis did much more than make the rich richer.

Say what you want about trickledown economics: In Texas in the 1970s and early ’80s, with oil money doing the trickling, it worked liked a dynamo. The migration to the Sunbelt turned into a torrent: Houston, for example, nearly doubled its size between 1970 and 1980; Dallas added residents at a clip of as much as 1,000 per month, increasing its population by a third during roughly the same period. And it apparently wasn’t just the movement of faceless bodies, but a wholesale immigration of the young and well-educated from other regions of the country. As the decade churned forward, Dallas would rise from her lowly station as ” regional center” to seventh in the nation in corporate headquarters, fifth in total assets in commercial banks, fourth in airline passengers, and in several years, absolute first in commercial construction and convention business.

But the numbers give only a thin silhouette to the boom, for it was not merely just a gold rush, but a kind of cultural event. I suppose a few of those refugees migrated to the new Mecca in the Southwest literally in search of their first quick million, but a lot more of them were drawn by a broader sense of promise here, by the inclusive ethos of the place.

Strange, but Dallas, known to outsiders primarily for her prissy airs and her fearsome right-wing politics, was, during those halcyon days, one of the most liberal places I’ve ever seen or read about. Its business community was utterly egalitarian, unconcerned about an entrepreneur’s age, family credentials, and place of birth. The only requirement for initiation into the fraternity was a decent idea and a plausible prospectus. That’s what gave the boom its bloom-the thousands of smaller fortunes, and just comfortable livings made by young men and women who found Dallas and other Sunbelt towns fertile environments tor creative, even eccentric, entrepreneurship. When I think of the early years of the boom, the 70s, I think of the success of entrepreneurs like restaurateurs Gene Street and Alberto Lombardi; advertising folk like David Ritz, David Dozier, and Stan Richards; and high-quality “custom developers” like Jim Coker (Olla Podrida) and later, Chip McCarthy (Travis Walk]. There were hundreds, even thousands more such entrepreneurs, men and women in their 20s and 30s who were able not only to make a tidy dollar, but found ways to exercise their creative gifts and build the company or development their imaginations urged with little or no resistance from any established business hierarchy.

Dallas considered itself the paradigmatic Sunbelt boomtown, promoted herself tirelessly as such, and, in the process, I think, came to believe that there was nothing cyclical or temporary about its boom-town status. It was the “Perpetual Boomtown.” In time, as the 70s churned onward, this became more than a matter of dollars and cents. Political and social power were moving our direction too. Beginning with the Lyndon Johnson presidency, federal largesse was redirected from the upper Midwest to the Sunbelt states in the form of defense contracts and military installations-setting off a new war between the states. And in the distance, you could already hear the steady march of the oncoming Reagan Revolution.

In this way, Dallas had stumbled into the political spotlight as well as the economic one. As a city that had had a vociferous and well-organized local GOP since the ’60s. Dallas suddenly found its politics ahead of the national curve. So when the Reagan Republicans marched into the political consciousness in 1980-following the anomalous and star-crossed interregnum of Democrat Jimmy Carter-Dallas found herself not merely hurrying to join the new political mainstream, but leading the way.

For, though Reagan was a Californian, no city better embodied his political beliefs than Dallas, which had been genetically encoded with a fierce reverence for the free market unfettered by overweening government; trenchant anti -Communism; the clear-eyed conviction that the American Dream was alive; and the certainty that “growth” was not only a preferred state of affairs, but, really, the only sign of life. Dallas was Reagan’s City on a Hill.

With the arrival of the Reagan Revolution and the Me Too ’80s, Dallas and the rest of Sunbelt culture were suddenly not just some upstart regional phenomenon, but the most urgent current in the mainstream of American popular culture. This fascination had, in fact, started in the late 70s, with the movie Urban Cowboy and the rise of Texas Chic. It’s always dangerous to read too much, if any, meaning into the movements of popular culture, but in this case, the gravitation of the mass psyche toward things Texan, it seems to me, was an important signal that the rise of the Sunbelt-and its titular capital, Dallas-was now consummated.

No byproduct of the whirring factory of popular culture better emphasized this than the sudden and, to me, anyway, completely inexplicable popularity of the CBS nighttime soap opera, “Dallas.” This show, with its single-dimensional caricatures of the Sunbelt ruling class and cheesy plotting and dialogue, was a ratings smash from the get-go, a reflection of a national curiosity about life in this new Promised Land. And though the official line from native Dallasites was that it was all a bunch of exaggerated soap opera hooey, down deep we enjoyed the international spotlight and would admit, at least privately, that there was actually a good deal of truth to its portrayal of the city’s culture.

For by the early ’80s, the clear-eyed, earnest, and endearing naive ethic of entrepreneurship in Dallas had begun to turn dark and cynical and J.R. Ewingesque. Suddenly, office buildings and parks and plazas, shopping centers and condo developments weren’t being conceived and executed with anything remotely resembling care or prudence. Fueled by the continuing inflation in the worldwide price of oil, the deregulation of the country’s savings and loans, and a relaxing of the tax code to give investors huge write-offs for real estate investments, Dallas began to attract what one prominent member of the real estate community called “international sleaze.”

This was, by and large, a whole new set of players to the entrepreneurial scene. To hear legitimate businessmen describe it today, they seemed to have swooped in by cover of night, snatching up S&Ls, ramrodding baseless developments through the City Plan Commission at will, deflowering a city so drunk with its own success that it barely noticed the rape.

I first noticed that something was haywire in America’s favorite boomtown, that creative and spirited entrepreneurship had turned into a kind of free enterprise orgy in the summer of 1984. On my frequent drives from my office in Oak Lawn to the downtown area, I began to notice many more demolitions, excavations, street closings and detours, cranes and cement trucks than seemed plausible even for the Buckle on the Sunbelt. I knew of some of the developments, trusted the reputations of the developers, understood the concept behind the proposed edifices.

But there were many more holes in the ground that just seemed to have materialized from nowhere-office buildings and condos under construction that seemed to have been approved without any consult of common sense. Who were the guys building these, and why had they decided that this construction was necessary? I knew from developer friends that, statistically speaking, Dallas was already becoming seriously overbuilt: Between ’83 and ’84, in fact, the city had added a mind-bending 3 0 million square feet of new office space alone-this, to an already estimable inventory of unleased space that stretched from downtown through Oak Lawn to LBJ and Preston over to Las Colinas.

The overbuilding problem had become so widespread and acute, in fact, that the city council had ordered a moratorium on construction during the August ’84 Republican National Convention so as to “put on the city’s best face” for the visiting Republican delegates. What did it mean, I wondered, when Ronald Reagan’s City on the Hill had to, in effect, apologize to a crowd of fiercely free enterprise Republicans for growing too much, too fast?



Night Cometh

IN THE LATE FALL OF ’85, THE SAUDIS DECIDED TO RESTORE THEIR flagging market share and re-assert control over an unruly international oil marketplace by precipitously returning to pre-energy crisis production quotas. The ensuing downward run on oil prices, as it turned out, provided just enough spark to set the whole Sunbelt economic infrastructure ablaze with the speed and rapaciousness of a wildfire.

By year’s end, oil, which had settled in at a per barrel trading price of about $27, began a steep decline that took it to $12 a barrel by March, then to $9 a barrel by August. If that wasn’t bad enough, there seemed to be few industry analysts brave enough to call this particular collapse in the oilmarket anything but a “temporary readjustment. ” A drop of nearly $20 a barrel in the infinitesimal period of six months? No, this was the Big One, all right, and the fallout could range as far and as wide, as insidiously and for as long, as the radiation of a nuclear bomb.

For oil-intensive cities like Houston and Midland, the ’85 oil market crash was simply the last straw. But for Dallas, it was the first stroke of what would turn out to be a protracted lashing. The first Big Lie that got flushed out was this Chamber of Commerce hooey about how Dallas was a diversified economy and invulnerable to the vagaries of the oil business. This confession came, interestingly enough, from the folks at Interfirst Plaza, who, in February of ’86, cut the juice on their gaudy exterior lighting display. Fast on the heels of this somewhat less than subtle symbolic white flag came the hard facts: No, Dallas wasn’t “oil intensive” in the truest sense of the term; but her major lending institutions had as much as 50 percent of their loan portfolios in energy related ventures. Trouble in the oil patch meant a tightening of the screws at the banks on all sort of loans- including the countless millions outstanding on the city’s still-burgeoning real estate industry.

Jeff Doumany was partner in an oil “landmanning” business at the time, a young entrepreneur who’d combined initiative and hard work to carve out a respectable niche and a comfortable living from the Texas oil business. As part of the service component of the industry, Doumany sat someplace in the large, white-collar middle of the oil business pyramid, between the majors and the big independent drillers at the top and the blue-collar oil field workers at the bottom. In his way, he, and thousands of young men like him, had been the heart of the Texas oil boom of the 70s and early ’80s.

“I remember I was out of state on business in November of ’85,” he recalls today. “I picked up a newspaper and saw what the Saudis had done and that the price of crude had gone from $28 to $22, like, overnight. I said to myself, ’This can’t be good.’ “

That wasn’t the half of it. Within “what seemed like months,” Doumany’s business went from about 40 employees to six. The oil business wasn’t just in a downturn; it was devastated-top to bottom. Unlike the majority of his comrades in the white-collar, middle of the oil industry pyramid, Doumany toughed it out through the lean years, and emerged with a small, but breathing company. “In an odd way, I may have lucked out, because right there in ’84 and ’85, we’d started doing a little of our own exploratory drilling and come up with nothing but dry holes. In retrospect, that saved us, because if we’d hit right then, when the crash came, we’d undoubtedly have been overextended and expanding.”

Many in the oil business, however, were, and their punishment at the hands of the marketplace was swift and certain. In retrospect, die implosion of the oil business might have stayed primarily industry-specific had it not been for the fact that the real estate market had coin ci dentally developed its own set of pathologies-quite separate and apart from those of the oil business. For while the “domino theory” of the 1985 bust-bad oil loans tainting real estate loans leading to runs on deposits, etc.-became a tidy way to look at an otherwise confusing series of events, it turns out to be not entirely true.

If the boom-to-bust cycle in the oil business had been at the hands of volatile international politics, real estate’s woes were the handiwork of well-intentioned, but short-sighted actions of our friendly local Congressmen. For the Sunbelt real estate boom might have continued unabated at a steady, healthy pace, dictated by continuing inmigration and business startups and expansion, had it not been for Congress’ ostensibly altruistic desires to reform the tax code and to salvage the ailing savings and loan industry.

The first blow was delivered to real estate joint venturers, who until 1986 had enjoyed the privilege of so-called “passive loss” write-offs on real estate ventures. This loophole, which during the early ’80s had caused private capital to surge into real estate (the write-offs were so handsomely profitable, it often didn’t matter if the building invested in actually leased up and made money) was summarily shut tight, retroactively, by Congress in the populist spirit of Reagan’s ’86 tax revision program. And while it did make the political establishment much better able to defend itself against charges of endorsing a tax code that allowed the rich to get richer at the middle class’s expense, its immediate effect on a real estate heavy market like Dallas was to turn, overnight, a lot of well-funded real estate ventures into dry holes. But the impact of this tightening of the tax code paled in comparison to what Congress wrought in deregulating the S&Ls, which may go down as the most dramatic case in history of good intentions producing tragic results.

At the time, the nation’s S&Ls were in woeful shape, hamstrung as they were by federal regulations that limited them to paying only about 6 percent on passbook savings accounts, which had sent billions of mom and pop savings account dollars to the loosely regulated money market funds that could pay the prevailing double-digit rates. Congress’ efforts to bring the S&Ls quickly up to speed in the impetuously changing world of money all made perfect sense. Essentially, the thrift industry needed two problems remedied: The first, which was handled by legislation styled Garn-St. Germain in 1981, untied their hands and allowed the S&Ls to pay whatever they wanted to savings customers on passbook accounts and CDs. Second, since they would now be paying new savers as much as 16 to 18 percent on savings instruments, the thrifts needed to do something with all those musty old home mortgages they were carrying, which were paying them as little as 5 or 6 percent. So the Federal Home Loan Bank Board generously allowed the thrifts to sell off the losing paper at fire sale prices, write off the losses over a long period of time, and, in the interim, use the cash for creative entrepreneurship that, it was hoped, would recoup the losses on the sale of the loans.

The government’s desire to have entrepreneurs take the reins of the S&L industry did not go unnoticed. From California to Texas to the Carolinas, Young Turks swooped in to snatch up these newly-tuned money-making machines like vultures to carrion. Some were legitimate entrepreneurs, but many were either outright crooks or a new breed of banker-developer who, while staying within the lenient limits of the law, brought a whole new sensibility to banking and land development. Rather than sticking to the old, conservative rules that dictated that buildings of various kinds ought to be built where they’re needed, to suit the size of the present market, this real estate “new-think ” said, in essence, that buildings could be built just because there was money available to finance them, and that land could be appreciated in value just by the mere trading of it.

As OPEC and the energy crisis had perverted our collective sense of oil and oil money, and unremitting double-digit inflation had twisted our regard of money, Garn-St, Germain and the new sort of thrifts that it promulgated contaminated our sense of the value of land and development on it. Too much of a good thing, begotten too easily, had despoiled our perspective. Our celebration of entrepreneurship and success had turned into a profane and ugly orgy. And, as with most orgies, we partyers had finally taken our reverie so far that we trivialized the object of the celebration.

Like many Dallasites, I wandered through this minefield of bad news and worse rumor in a daze. The collapse of the oil industry-at the time, anyway-seemed a hopeless abstraction. The news of imminent washout in the real estate quarter was too spectral to get a firm grasp on. It seemed like we were in deep trouble, but you couldn’t get a straight answer out of anyone-least of all, members of the business community.

Some of this, I think, had to do with sheer shock. That nose dive of oil prices on the Merc had been the worst sort of sucker punch, and so perhaps it wasn’t surprising that our local financial gurus turned up a bit paralyzed and tongue-tied. But in time, I began to sense a less sympathetic reason for the gobbledygook we were hearing from the business community through the local press: denial.

In this way, the city was following time-honored psychological theory that says, when suddenly assailed by tragic circumstance, the first reaction of the human psyche is to fall into a brief period of catatonia, followed by a lengthy period of denial. “It just wasn’t happening! ” was the message we began to get out of the front page everyday, and the only further explanation we got from our captains of industry and the economic gurus was that it just wasn’t happening because it….just couldn’t be.

We were told we’d “bottomed out” on an almost daily basis, the desired inference being that the worst was over and we were “rebounding” somehow. When this term began wearing out its welcome-I counted half a dozen “bottom outs” in a single month-the spin doctors advised that we were “turning the corner.” But as with bottoming out, we seemed to turn a new corner, with another ugly surprise around it, every week.

As ’86 plodded on, a curious truth became obvious: We average folk had pretty well dispensed with our denial. We didn’t know all the academic arcana that presumably underpinned vague terms like “bottom out” and “turning the corner,” but we did know that the oil business in Texas had its belly up, the real estate business had its belly so bloated it was about to explode, and that both conditions had left our lending institutions with more than queasy stomachs.

But the business community, and its willing companions in spin, the daily press, seemed to dig themselves more deeply into denial with each passing bombardment of bad news. Indeed, their words began to reflect the sort of dazed disorientation of clinical depression. Business types like Republic Bank CEO Gerald Fronterhouse began emitting gibberish like, “We think we have the bulk of it behind us, but it is a judgmental kind of factor that we are trying to apply in looking out and trying to determine what the future will hold.”

Missives from the analysts became even more confusing once they got their hands on some polls and statistics. For example, one day I espied a headline in The Dallas Morning News that read: “CPA’s Gloomy About Economy, poll shows.” The story caught my eye because it was evidence that at least the worker bee class that serviced the Big Players was finally fessing up. Imagine my surprise then, when I noted a story in the Dallas Times Herald-rest its soul-that advised, regarding the same poll: “Survey: CPA’s optimistic about economic outlook for Texas.” Curiosity aroused, I read and reread both analyses of the poll, The Herald noted in its story that “For the first time in a year, Texas certified public accountants surveyed were optimistic about the state’s economy, with 43 percent anticipating improved conditions six months from now.” The News, correctly as it turned out, chose to ignore that “for the first time in a year” stuff and reported that a majority, 57 percent, of the accountants “think either things will be the same or get worse six months from now.”

Amidst all the denial and hot air, one of the Big Players finally decided to come clean and go public. His name was Craig Hall, and the importance of his ever-so-public announcement-that his multi-billion dollar real estate concern, Hall Financial, had run afoul or’ some of its enormous debt commitments, and that it was embarking on an ambitious restructuring program with his investors-can’t be underestimated. For one thing, Hall was breaking ranks, speaking up when most in his industry were still murmuring their troubles to their bankers and lawyers. For goodness’ sake. Hall even sent out a press release announcing his financial troubles.

Second, and more importantly, Craig Hall was not just some bit player in the Sunbelt soap opera, a small-time S&L cowboy or a fast-talking broker who’d run into trouble because he just wasn’t a very careful businessman. Hall was a legitimate mogul who’d built a company that owned some 60,000 apartments and some 3.5 million square feet of office space. He had acquired 10,000 investors and held about $3 billion in total assets, including oil ventures, banking interests, and a minority share of the Dallas Cowboys. More than that, Hall, a 37-year-old immigrant from Michigan, was the very personification of the Sunbelt mythology: A young man who’d started a healthy, thriving business in the upper Midwest and moved it to the Sunbelt in the early ’80s to take it into the next dimension. He was an unabashed lover and promoter of the virtues of Dallas’ wide-open entrepreneurial ethos, and a shining exemplar of how that ethos could fulfill even the wildest of dreams.

One had to wonder, pondering Halls extraordinary honesty, just who else of his station in the pecking order of the Lords of the Dominion of the Sunbelt might be in the same straits. And if they were, and they weren’t telling us, what other nasty surprises we might be in for?



Too Much Money?

IT WAS HALL, IN FACT, WHO WOULD LATER PROVIDE ONE OF THE most provocative explanations for the Great Depression of ’85 that I’ve heard or read. In a 1990 book of his successes and misadventures. News of My Death… Was Greatly Exaggerated (a tiresomely self-centered, but nonetheless bright and lucid analysis of the ’80s boom-to-bust cycle), Hall points out, among other things, that while the problem as of ’86 and ’87 was that no one had any money, the bigger problem that had fomented that circumstance was that everyone had had too much money.

What’s that, you say? Well, it’s all a matter of supply and demand. When the early ’80s hit, the combination of years of hyper-inflation and the arrival of Reagan’s laissez-faire economic regime opened the floodgates of billions of dollars of pent-up capital from the hands of private investors and the nation’s newly-deregulated S&Ls. As a consequence, too much money chased every and any real estate deal. And nothing-not even the double-digit cost of money in those days- seemed able to rein in the torque of the boom. Indeed, in hindsight, it seems that one of the things that gave our real estate industry such a sense of invincibility was the simple fact that while most of the rest of the country was crippled, or nearly so, by the torrid inflation of the late 70s, the Sunbelt was, in the words of a developer friend of mine, “kicking butt at 18 percent interest.”

For many of us, the game went no further than buying up in the home market every three years, armed with a 100 percent profit from the previous home. But our heady experience in the modest arena of personal residential real estate exemplified just how weirdly grandiose the real estate market had become: The mere act of securing shelter for one’s family became a deal.

Once the S&L “entrepreneurs” had their feet on the ground and fresh capital flowing in, the effect was a little like tossing gasoline on an already raging fire, Not only did their invasion of the real estate marketplace dump more money into an already money-glutted market, but this particular tender was, courtesy of government leniency, quite literally play money. The thrifts were basically empowered to loan exorbitant amounts on extremely risky ventures at a paltry 3 percent risk to their actual assets (the new thrift capital requirement). If the project succeeded, the thrift–which commonly was not only a lender, but a profit-sharing partner in those days-would reap 100 percent recoup of the loan, plus interest, plus profits on the venture; if the venture turned out to be a dog- and here’s the kicker-the S&L was, at worst, out its 3 percent guarantee, since all of the loaned funds were federally insured.

The real estate gold rush had long since been spread to the middle class via tax-shelter joint venture investments. The newly emboldened thrifts, in effect, made every taxpaying citizen a player in the game, since, at the end of the daisy chain, it was we, the taxpayers, who held the only true, liquid money. If all of that wasn’t bad enough, the worst part was that these new S&L cowboys somehow had been made to feel mandated by federal law to play fast and loose with federally insured money. This tended to sponsor the belief among all real estate developers that when they went and dug a big hole in the ground and filled it up with a reflecting-glass high-rise, they were carrying out something on the order of the Lord’s work. I recall overhearing a barroom diatribe by a developer whose proposed venture had just run afoul of the City Plan Commission for some reason. The gist of his argument was that his Constitutional rights were being infringed upon by city bureaucrats’ reluctance to rubber stamp his development.

By 1987, evidence of just what a catastrophe the S&L “entrepreneurs” had wrought began streaming out in the press. Consider the case of John Hopkins and his Commodore Savings Association of Stamford, a small burg north of Abilene. Pre-St. Germaine, Commodore, then known as Big Country Savings Association, had three branches and total assets of $87 million. Almost all of its business was in small home mortgages. In 1982, Hopkins bought it, and with the blessings of Congress, gave the conservative, small-town thrift a totally new face. Between ’82 and late ’86, Commodore’s loans on apartment complexes rose from about $1 million to over $100 million; loans on other commercial real estate rose from $5 million to $160 million; and land loans soared from $273,000 to $192 million. Other secured and unsecured loans ballooned from zero in ’82 to $86 million by the end of 1986.

By the time the bust was well in place, Commodore’s speculative loans outnumbered its traditional loans by $4 to SI. Since many of the loans had been made on real estate ventures in which apparently no thought was given to how much, or even whether the building would lease up, many of the loans quickly became delinquent, leading Commodore to a 1986 bottom line that featured $23.7 million in repossessed real estate and actual losses of nearly $30 million-the former a six-fold increase from the previous year, the latter an astounding 30-fold increase from 1985.

Take that paradigm and multiply it by the hundreds, and you have the story of the S&L crash. By 1987, the government was sheepishly predicting that in excess of 200 thrifts in Texas would be in similarly woeful shape, and that the total tab for this misguided experiment in entrepreneur-ship might top $200 billion.

One might have been able to write off such financial moronity as just that had it not been for the disgusting way in which some S&L cowboys flaunted their funny money. Cowboys like Vernon Savings and Loan’s notorious Don Dixon weren’t just out there making lousy real estate deals with our money, they were spending it on their own Beverly Hillbillies-like gluttony. During Dixon’s fast, short ride as owner of Vernon, he used Vernon funds to pay for a $2 million second home in Del Mar, Calif., and to pick up the tab for up to half a million a year in personal entertainment expenses. In just three short years, Dixon paid himself more than $8 million in salaries and other perks.

In the wake of the first wave of S&L news, denial turned to its next logical psychological stage: resignation. A certain grimness began to hang over the city, and the belief that some dens ex machina would arrive to tell us this was all a bad dream, or that it really wasn’t as bad as it looked, began to flag. If we had any hope in those latter days of 1987, it was in the institution that had always been the bedrock of the city: the banks.



The Banks Fail, and It’s Official: This Is a Depression

I CAN’T REALLY REMEMBER THE FIRST TIME I actually mouthed the word depression, but I suspect it had to be some time in mid-’87, when the city’s two largest totems of economic security and strength, Interfirst and Republic banks, reported that their respective loan portfolios were in grave straits. Until that juncture, I had naively rationalized away the worst case scenario of bank failure on the thinking that: a) We’re in the midst of another real estate adjustment; it’s happened before, it’ll happen again in that volatile business. Some high-flyers will wash out, prices will deflate for a while, development will slow. But the big banks, which had always cared for this city like doting grandparents, will make certain that unmitigated disaster doesn’t occur. And b) The horrific numbers being posted by the failing S&Ls were the result of the shenanigans of a bunch of pirates who took over an ailing industry, and with the misguided encouragement of the federal government, made a shambles of it through incompetence and corruption. But it was an isolated pathology, and it seemed unthinkable that the cancer might have spread to Interfirst and Republic.

But the numbers didn’t lie. Interfirst, Republic, and perennial number three, Mercantile, had all invested heavily in energy and real estate, and just because their board members were still silver-haired civic patriarchs rather than blow-dried Young Turks of the S&L game, it didn’t mean that their hundreds of millions in loans were performing any better. They had, it seemed, been seduced, like everyone else, into the belief that what was, would always be.

Our discovery that the banks could not be counted on as a safety net came as a devastating blow. Our bankers had always been not only our economic godfathers-trustworthy holders of our collective wealth, benefactors of the common weal-but our spiritual leaders as well-architects of our future, guides for our communal ambitions. More than any other single group, they had been what passed for the city’s brain trust. And when things had turned sour, they had been the totems of stability we had turned to for comfort. So now the ugly question was: What happens when the brain trust turns out to be ill-advised?

One thing that happened was that people finally seemed willing to use the dreaded D-word, Somehow the idea that our banks were teetering on the precipice of failure finally forced that awful word depression out of the closet. And with it came not only the fears, but, in some cases, the stark realities of die Big One in the 1930s. When the first wave of terrifying numbers from the banks hit the headlines, there was even a brief run on deposits at the two institutions. What was next, bread lines?

In some ways, the collapse of the big banks had as much to do with the decades-long competition with one another as with troubled economic times. Ever since the mid-’40s, when upstart Republic opened its new, gleaming tower and shortly thereafter passed staid old First National as the region’s largest bank, the two institutions had fought tooth and nail, not only for depositors and big money clients, but for the symbolic mantle of the region’s largest bank.

The two banks parried for pre-eminence over the ensuing decades, with Republic con centrating its strategy on oil lending and civic do-gooding, First National on the stewardship of old money and prudent business practice. By the 70s, and the dawning of the age of bank holding companies in the state, First National had taken the lead back from Republic, which had grown complacent and self-satisfied with its status as civic pillar. Not only had the bank been left at the starting gate in the holding company race, it had begun to suffer from obsolete management thinking.

Republic’s response was to elevate young, fresh blood to the executive suite in the person of Gerald Fronterhouse, who completely reordered the bank’s style of doing business. Since its inception, Republic bad operated on a so-called “vertical” chain of command and decision-making, forcing all types of business to run a cumbersome upward gauntlet of approval before being acted on. Fronterhouse reorganized the institution into half a dozen ’’banks within the bank,” independent divisions that specialized in real estate or trust management and had their own managers with the line autonomy to make most decisions.

Fierce competition erupted among the divisions for business, and, not surprisingly, as the ’80s dawned, the real estate division usually won the sweepstakes. Not so many years before, Republic’s degree of play in real estate had been a puny 11 percent of its loan portfolio; by the early ’80s, it had climbed to 40 percent. This made Republic officers especially happy, since there were already storm clouds on the horizon in the oil industry, where Interfirst still had much of its loan portfolio. They’d apparently bet on the right horse.

For a time, it appeared Fronterhouse’s gambit had paid off handsomely. By late ’83, Republic was reporting a profit of S130 million, while Interfirst posted losses of $114 million, due largely to already-souring energy loans. Fronterhouse was immediately declared a banking genius, but his celebrity would be short-lived. By ’86, both banks were in perilous condition, Interfirst largely as a result of its large oil loan portfolio, Republic because of its involvement in the rapidly cra-tering real estate market. Both banks were also beleaguered by poorly producing loans to Mexico, which had undergone a peso devaluation. Bank officials talked uneasily of government involvement, and tightened the screws on outstanding money, which only drove up the number of nonperforming loans and foreclosures.

Interfirst and Republic officials huddled with the government, and in late ’86, Fronterbouse announced that because of “sagging earnings”-a euphemism for going broke-the two banks had agreed to merge into one titanic megabank. The merger, which took formal effect in mid-’87, lasted about a year, and then in the spring of ’88, First Republic announced that the bank had lost a tidy $2 billion during its first year of operation-proving that combining two sick banks only resulted in one bigger, sicker one. The merged entity had been savaged by the economics of bust from ever)’ direction imaginable: Big real estate players like Southland and Vantage hadn’t been able to pony up sufficiently on hundreds of millions in loans, and, in the midst of it all, Brazil had declared a moratorium on interest payments for a lot of its foreign debt, forcing First Republic to dump about $300 million in loans to the nation into the non-performing file.

What happens when the brain trust turns out Co be ill-advised? In this case, the city had had its financial, political, and social bedrock ripped out from under it. Adding insult to injury, the Feds soon announced that forthwith , our banks would be run by a bank holding company from North Carolina.



Bankruptcy Chic: The Culture of Bust

MORE THAN ANYTHING ELSE, THE FALL of the banks made this thing personal. For the first couple of years of the bust, it really did seem to be, as Craig Hall would later call it, the “rich man’s depression.” The names that paraded across the front page with the word “bankruptcy” preceding or succeeding them were LTV Corp., the Hunt brothers, Sakowitz, Conn ally, Murchison, Debakey-the super-rich who, for all we knew or cared, had simply played with fire and got burned.

But with the failure of the banks, the depression became as egalitarian as the bust had been. Bankruptcies doubled between ’84 and ’88; foreclosures shot up an astounding 30-fold-from 33 in 1984 to 1,006 in 1988. Unemployment swelled to 7.3 percent. In downtown, Oak Lawn, up along the erstwhile Golden Corridor on LBJ, in Las Colinas, and on the outer reaches of Garland, brand spanking new office parks and condo developments sat empty and forlorn-the instant slums of this Rich Man’s Depression that had now become something much larger.

You could see just how much larger if you visited U.S. Bankruptcy Court at the Earle Cabell Federal Building in those days. Bankruptcy courts in this town had always been a bit of a judicial joke. Like the lonely repairman of the GE ads, they represented a legal safety net that few if any folks in America’s favorite boom town ever needed. But come 1988, the corridors and anterooms of Dallas’ two bankruptcy courts fairly overflowed with broke Sunbelters seeking the curious and ignominious status of “legally broke.”

Each morning they were organized into groups and assigned a time that they would appear before a judge to swear to their relative financial destitution, sign some papers and walk out, dead broke in the eyes of the law, but also legally shielded from certain creditors who had the audacity to believe they should be able to collect every last red cent owed them. In time, in fact, the ignominy of being bankrupt faded, and it became something of a perverse badge of pluck. I lived by the boom, and I died by it, by God, it said, and for a time there, it seemed that if you weren’t in bankruptcy-or at least contemplating it or emerging from it-your credentials as a true citizen of the Sunbelt were somehow in question.

Our once and former titans of industry, like the Hunts, the Murchisons, and John Connally, acquired a new sort of celebrity in their respective bankruptcies. Between 1981 and ’88, the Hunt brothers. Bunker and Herbert, earned begrudging admiration from at least some of us for their chutzpah in fighting every single creditor-including and especially the 1RS-every step of the way. These particular Hunts, who’d been alternately feared, loathed, and scoffed at during the glory days of their attempted takeover of the world silver market in 1981, now became cult favorites as they fought what would become a multi-billion dollar bankruptcy, the largest personal financial collapse in the nation’s history.

If the fall of the Hunts appealed to our pugnaciousness, the fall of the Murchison fortune plucked at our heartstrings. Clint Murchison had been every bit the “Super American” entrepreneur, building an immense fortune in oil and real estate, not to mention the Dallas Cowboys. And he had done it in the strictest tradition of that generation of Texas entrepreneurs: With handshake deals, by spreading money about “like manure,” by taking risks where others wouldn’t. When his empire began to crumble, like so many others, it seemed that a whole way of doing business did too.

Murchison fell so far into arrears that he had to sell his beloved Cowboys to Bum Bright in 1984. That same year, he caused quite a stir in the financial community when he showed up at a Boys Club of America dinner, looking frail and infirm in a wheelchair. Nervous whispers flitted about the crowd, many of them bankers to whom Murchison owed sizable amounts of money.

Some of the whispering may have been in sympathy for the old fellow’s deteriorating condition, but a lot of it was out of panic, What if the old man kicked before his creditors could get a crack at whatever assets he had left? Thenext day, it seemed, every lender in town-and out of it-wanted to sue Clint Murchison. These creditors all had their rightful claims, but their descent onto the Murchison fortune took on the ugly air of vultures circling a dying animal.

Murchison’s problems were severe enough that he was forced to file for bankruptcy ahead of the curve-in 1985, before many of his ilk had even called their lawyers-listing $400 million in debt, $70 million in assets. One of the more brutal details of his filing was the revelation that at the time of it, Murchison had a relatively paltry S4,000 in his checking accounts. He sold off his $5 million mansion and moved to a smaller suburban home nearby, crippled and beaten and broke. He would soon die of an affliction of the central nervous system. Whereas there had been either cheers or jeers for the Hunt brothers during their fall, one could only see bathos in the fall of a man like Murchison. It almost seemed as if the bust had literally sucked what little remaining life the man had from him.

As we became more inured to the fact of bankruptcy-for really, what all this Chapter 11 and 7 filings meant was that we, as a culture, were collectively going broke-it actually turned into a kind of spectator sport and media event. By far the most successful celebrity bankruptcy was that of former governor John Connally, who had gotten himself into financial hot water through a spate of bad real estate deals, many of them with former lieutenant governor Ben Barnes. Unlike the Hunt brothers, who’d taken a pugnacious and combative approach, or Murchison, who’d inspired pathos, Connally actually had the political wherewithal left in him for one last bit of spin from a master.

Connally’s bankruptcy was small in comparison to those of the Hunts and the Murchisons-a mere $100 million in debt led him to the courthouse. But from the outset, he was available and forthright with the press and honest, in a calculated way, about his mistakes. He presented h is embarrassing state of affairs not as an aberrant and unkind act of nature, but as the result of his own bad judgment. His political skills notwithstanding, Connally’s honest, even humble tones in the wake of his bankruptcy were a refreshing alternative to the whining and gibberish we’d been hearing from other bankruptees.

Big John even managed to parlay his financial collapse into a new career as a pitchman for an S&L in Houston. “Nellie and I made our mistakes by reaching too far,” the former governor told TV viewers gravely. “Now it’s time to rebuild. ” A lot of Connally watchers found that syrupy advisory more than a little disgusting, but I personally found it uplifting and revivifying. If nothing else, it proved that this thing hadn’t entirely sucked all of the wind out of Texans’ sails: Our once and former leader showed that a Texan still knew how to turn the worst sort of adversity into some kind of gain.

I wandered out to the Circle K Ranch in 1989 to look over the Hunt brothers’ stuff just so that I could later say I’d been there. Historical moments, of course, are where you find them, but it seemed to me that the fire sale of the remnants of the largest personal bankruptcy in U.S. history might be something worth remembering.

The auction itself was rather spirited. A Persian Rig went for $9,000; a bronze panther for $4,000. Hunt estate trustee Carl Pate later told a reporter: “It’s unbelievable the way this thing has taken off. A $20 dime store teapot sold for $ 150, and the crowd just went wild.” Somehow, it seemed fitting that that would be the Hunt brothers’ last financial flip-of this boom cycle anyway.

The only Hunt in attendance, Bunker’s son Houston, didn’t see much irony or humor in the affair, however. “This is unpleasant,” he told reporters, and on reflection, I’d have to say I agreed. The Hunt brothers’ bankruptcy auction had been a bit of a hoot, a useful diversion, but as of 1988, none of this was very entertaining anymore. The Depression of the Rich had proceeded to trickle, then surge down to the middle class. Most of those bankruptcies and foreclosures reported each month were not, after all, the surrender of folks like the Hunts, but of people of modest means who’d just gotten ambushed by the storm.

It took a couple of years, but sooner or later, pretty much everybody found themselves circling the drain–old and young, wealthy and of modest means, crooked and pure as the driven snow. Depressions, like all natural disasters, aren’t discriminating about who gets hurt. A lot of innocents got caught in the downward spiral-folks kid off by panicky, downsizing companies; modest borrowers who got squeezed by ever-tightening banking regulations. As with the boom years, it was their woes-not the histrionic crashes of the Hunts and Murchisons-that were the real story.

This was true even in the much-loathed real estate industry. Thousands of young broIters and developers, who were just trying to make a living and had played by the rules, got sucker punched by the thing-victims, in a way, of their own auspicious successes.

“We were dead and we didn’t even know it,” recalls Jim Strode, who went as near to broke as a man can without filing bankruptcy and leaving town. Strode, like a lot of young developers, moved into the business pretty soon after graduating from the University of Texas in the mid-’70s, and found moving up the ladder, if not easy, an ascent unimpeded by stuffy tradition. He started in brokerage, where he quickly went from making $12,000 a year to $60,000 to a few hundred grand selling raw land to developers, investor consortiums, and big home builders like Fox and Jacobs and Centennial.

At age 30, he was making several hundred grand a year, and had effortlessly acquired the trappings of nouveau “richery”; a home in Highland Park, a weekend ranch. Tired of the limitations of brokerage fees, he started looking around to shelter income (at age 30!). He started buying land himself and doing small developments like duplexes and mini-warehouses, By 1980 or so, he was ready to play in the Big Show: He borrowed $800,000 to develop a strip shopping center, which he-then sold for $ 1.65 million a mere 11 months later. “When things are like that,” he says now, “your perception gets stretched to where it almost looks illegal, but it’s not.”

Strode ran into trouble in ’85, when the region’s lending institutions began tightening the thumbscrews on the people holding their huge volume of outstanding loans. Like many developers at the time, he was carrying his projects on interim financing with the hope of moving them to permanent mortgages with, say, a life insurance company as a soon as possible. But the long-term, permanent financing sources dried up, leaving Strode to carry his developments on interim paper. During the salad days of the boom, that would have been as easy as a phone call. But now interim financiers were also putting the squeeze on loans. “It was funny,” he says today. “Even the banks couldn’t tell us what to do.”

As his situation worsened, Strode consistently resisted the idea of bankruptcy. “It was going on all over, but I had some cash reserves.” He used those and a conciliatory attitude with the banks to “work out” his several-million -dollar problem. But it ate up most of his company’s cash; he had to sell his ranch and his Highland Park home as a way to make ends meet personally-and as a show of good faith to his bankers, demonstrating that he was not simply trying to wiggle out of debt without making any personal sacrifice.

’That turned out to be important, ” he says. “We all became branded criminals because we lived in expensive homes. The other thing was, I always answered my phone when they called. A lot of guys took to not doing that,”

Having avoided total calamity, Strode licked his wounds and saved his money for a year or so, and gingerly re-entered the real estate business developing build-to-suit projects for clients like Office Depot. His conservatism is reflective of the regions new, much smaller real estate industry. In retrospect, he says the outlandish business practices of the S&L cowboys and other unscrupulous operators who turned the Dallas real estate industry into a free enterprise orgy were only part of the problem. In some ways, the overreaction of the supposed good guys-bank regulators and the banks themselves-fomented as much panic in the marketplace and instant paucity of capital as the actions of the bad guys.

Strode’s story was repeated hundreds, even thousands of times over the short, bloody term of the bust: Legitimate businessmen, who happened to be in the business of real estate, crushed by a market implosion caused by the negative synergy of a few bad apples; edgy, even spiteful federal regulators; and deflation run amuck.

Even those of us small fry who had played no more of the real estate game than the securing of a home mortgage didn’t come away unbruised by this thing. By 1988, the toxicity of the depression had had time to settle deep into every square inch of dirt in the state. In Dallas, home values, which had been appreciating at rates of as much as 100 percent every three years since the onset of the boom, now collapsed like flimsy houses of cards, dropping in value 20 to 50 percent in what seemed like the blink of an eye.

This was when the depression really went populist on us. reached its clammy fingers out and clutched every one of us who’d been trying to ignore it. When I got the first adjusted appraisal on our home in West Highland Park, I finally felt the true power of the punch of this thing. The depression had finally gotten personal. Not only was my home now valued at about 80 percent of what I’d paid for it; given our neighborhood, the true market value of it was probably more like zero-because that’s precisely what the present market would bear. It was the biggest investment I’d ever made, the most expensive thing I’d ever owned, and for the time being, it was worthless.

Living in Occupied Territory: Dallas, the International Colony

BY 1989, WHEN SUNDRY EXPERTS WERE telling us we were already In a recovery, (he bust took on the air of Old Testament punishment, Maybe it was true that we’d “bottomed out” and were now inexorably rebounding according to the arcana of economic statistics. But at street level, the depression-at least in purely psychological terms-only deepened.

A lot of this had nothing to do directly with dollars and cents. Now the city was taking a cultural and social thrashing as well. The TV’ show bearing our name stumbled, then crashed in the ratings. The SMU football team came under NCAA scrutiny for a variety of sins and was handed college football’s direst punishment, the so-called “death penalty.” And our beloved Cowboys had gone in the tank just as the economy had gone south,

Few moments were more morbidly poignant in this collapse of our cultural iconography than Tom Landry Appreciation Day, wherein close to 100,000 denizens turned out to say farewell to the longtime Cowboys coach after his summary firing by new owner Jerry Jones earlier that year. The idea was to show proper respect for the professional passing of one of the city’s most prominent figures, but observing the festivities that day, J got the feeling the city was somehow mourning a much bigger passing-the loss of our mantle as America’s favorite boomtown. Tom Landry, no longer the coach of the Cowboys? The Cowboys, owned by some yahoo from Arkansas? You bet. It made about as much sense as, say, our major bank now being headquartered in Charlotte, N,C.

All of this began to foster the sensation of living in occupied territory. We had been at war, I realized, and lost. The only questions were: Who had we been at war with, and what concessions of surrender would now be exacted? The former was never clear, though in the wake of the crash of the banks and the S&Ls, some smart -mouthed politicians from other parts of the nation took a good deal of pleasure in sniping at the Sunbelt’s crash and the billions in tax dollars that would have to be ponied up to bail out the nation’s banking system. (Well, they sniped until banks and S&Ls in their neck of the woods began to crash as well.)

The price of defeat, however, slowly began to come into focus. You can’t suffer a cataclysm of almost Biblical proportions-$150 billion or so for the bank/S&L failure alone-and expect to awaken to clear skies and a beckoning horizon. Our economic and cultural infrastructure had been pulverized to fine dust and swept away to parts unknown by the last blue norther. In hard numbers, we’d lost a staggering 25 percent of our industrial employment base, as well as our banks and many of our major companies. For a time, there wasn’t much there there.

What was there was the disarming imperial presence of banks from North Carolina and Ohio, investors from Amsterdam to Australia. The vultures were no longer just circling; by 1990, they’d all swooped in and quickly-cheaply-colonized a town whose chief ideology had always been economic chauvinism.

It was sad, really, to take a stroll around downtown in those days, as I did one day in 1990. The Times Herald, at the time, was passing through one last death throe at the hands of a group of investors headed by John Buzzeta. It would soon be bought by the rival Morning News, folded, and its facility leveled for parking space. On up Pacific, there was the old Sanger-Harris building, which, lor a time, was Foley’s and now was the headquarters for the region’s star-crossed mass transit system, DART.

A bit up the way were the former LTV Tower, the mostly empty and decrepit Fidelity Union Tower, the completely empty jetton’s cafeteria, and a once-favored lunch spot of mine, Hamby’s, which was now, so I understood, owned by an Iraqi. Easing eastward, I passed Thanksgiving Tower, once owned by the Hunt Brothers, now the domain of investors from Singapore; Lincoln Tower, now owned by Met Life; Southland Center, now owned by some group from Amsterdam. Republic Bank Tower-my favorite downtown building-was, of course, now owned by our chief occupying force from North Carolina.

Wandering around downtown that day, I realized that, save the government buildings, Dallas, which had once fancied itself an emerging International City, had become little more than an International Colony. Economists can spin that fact by saying it’s as it should be-we live in the age of an international economy. But I have to say it still cuts deep. What, indeed, happens when you take the boom out of the Perpetual Boomtown?



Slouching Toward…?

TALK TO SURVIVING REAL ESTATE PLAYERS today, and they will tell you that theecon-omy of this town hasn’t merely undergone a facelift; genetic re-engineering might be a more appropriate metaphor. Remarkable as it still seems, Interfirst. Republic, and Mercantile are long gone, not even pleasant memories. They have been replaced by NationsBank, Comerica, and Bank One of Ohio. These “foreign” banks have moved conservatively bur steadily in the local marketplace, though some developers complain of a somewhat imperial attitude. “You see where they [NationsBank] threatened to move out of downtown?” griped one. “Can you imagine Republic ever even considering anything like that. Do you think they’d do that to downtown Charlotte?”

In the real estate arena, the former big three-Crow, Lincoln, and John Eulich’s Vantage Corp.-are not gone, but arc a much more gossamer, even spectra] local presence, involved more in property management than in development. They have been replaced by national concerns like CB, a spin-off of Coldwell Banker of California; Centex; Grubb and Ellis, which purchased Henry Miller; and out-oi-towners like Opus of Minneapolis. The one local company you hear mentioned most is the Staubach Company, which the former Cowboys quarterback has turned into a dynamo of a real estate services concern.

Commercial development has been spotty and tentative, though economists like Weinstein point out that we may soon be heading for, of all things, aglut of retail space. Spurred by low interest rates, seven new shopping malls are on the boards for the met-ropolitan area, which many feel is already overbuilt with retail. The idea of another bout of “overbuiltitis” isn’t especially pleasant news, though I take a little guilty nostalgic glee in revisiting the problem of an overbuilt anything market.

And if there are, in fact, too many shopping malls on the drawing boards, I somehow feel we’ll get it right this time. Just because you learn your lesson the hard way doesn’t mean that you won’t continue to be confronted with temptation. From another view, temptation is opportunity, and I would hope if we learned anything from the devastation of the 1985 depression, it is how to distinguish between the two.

We’ve learned other things as well from the Depression of 1985-an event which has affected, and will continue to affect the soul of this town as much as the Kennedy assassination 20 years before it. We’ve learned that massive deflation does follow massive inflation-sooner or later. That no place can boom in perpetuity, That there issuchathing as too much money; and it is every bit as destructive as too little. We’ve learned that the romantic adage, “If you build it, they will come” is only true within the immutable laws of supply and demand.

What the hell happened? We grew up.

MEMO



TO: Michael Eisner, Michael Qvitz, Disney Company

FROM: Jim Atkinson

RE: Sunbelt Museum and Theme Park



Between 1985 or so and 1990 or so, we down, here in the Sunbelt had. one hell of an economic donnybrook. Oil, real estate, banks, and S&Ls-all circled the drain and then disappeared into the septic tank of Chapter 11. Bad news, blood on the sand, apocalypse. This bust was an epoch, and since I. know that’s the sort of terms yon guys like to deal in, here’s my idea.



I propose something called “The Official International Sunbelt Hall of Fame, Theme Park, and Wax Museum: Tribute to an Era-1970-1985 ” Its a high concept-type operation that I firmly feel is right in you guys’ parkway. I mean, a lot of that magic kingdom, at Epcot, you guys had to invent. I’m talking here about a magic kingdom that actually existed-or at least an awful lot of us thought it did-for about a decade and a half between 1970 and 1985.



Now, I know you’ve had some problems with this, sort of thing before-I’m thinking of the snafu on that Civil War business you wanted to do around Manassas, Va.- but trust me, no liberals are going to howl about you messing up their backyards in these parts. For one thing, we don’t have many liberals down this way. For another, we have plenty of empty space-from raw land to lavishly finished office quarters-that we’d just love to have you despoil and rape. Make your own choice on space, though I might suggest the former Republic Bank Building and adjoining tower smack in the middle of downtown. Dallas-truly one of Dallas’ architectural treasures.



The concept here is multi-faceted. I envision a large collection of Sunbelt boom-to-bust memorabillia in one large room. You know, stuff like Herbert and Bunker Hunt’s final buy order for silver (or sell order, as the case might be) before the titanic crash of the silver market, displayed in a vitrine with, say, the brothers’ original bankruptcy filing a few years later. Maybe another display case with Danny Faulkner’s Rolex collection, and another with original First RepublicBank stock certificates. That sort of thing. Maybe we could include the original architects’ rendition of the Cityplace plan- just so that we can be reminded of how the best-laid plans go awry.



The possibilities are endless. I’m thinking wax museum in another wing of the place, with paraffin statues of Sunbelt hero/heels like John Connally, Don Dixon, Fast Eddie McBirney, and the rest of the Sfi?L robber barons. Maybe a video game for the kiddos, where, in a kind of Sunbelt Pac Man scheme, players would be challenged to gobble up, say, * 100 million in unsecured debt via bankruptcy filings, selling off the paper, etc. before the RTC monster catches up with them.



As you can plainly see, this thing’s got legs. And lest you worry that folks in these parts might not take too well to a museum commemorating one of the darkest chapters in the region’s history, worry no further than the bottom line on the Kennedy assassination museum-our chief tourist attraction. Remember: This is Texas, and we can turn anything into profit, especially adversity.