God Save Texas: A Journey Into the Soul of the Lone Star State(14)
In good times, a kind of forgetfulness falls over the land. It’s easy to make money when the price of oil skyrockets and building cranes loom over the cities like praying mantises and the malls are jammed and you can’t get a dinner reservation. Then the reckoning arrives.
The central fact about boom societies is that they inevitably go bust. The collapse of oil prices, beginning in the early 1980s, then falling into an abyss in 1986, put an end to one of the most expansive periods in Texas history, bringing down the savings-and-loan industry and puncturing the real-estate bubble that had created so much illusory wealth.
In the Age of Money, Roberta and I watched many of our friends sending their children to private schools named Saint This or Saint That. They spent their evenings going over architectural plans, and generally lived life as it is glimpsed in magazine ads. Occasionally, we made the mistake of going out to dinner with them. We spent more on the tip than Roberta and I would ordinarily spend on a meal.
A few years into the decline, I was serving on a jury in Travis County, which includes Austin. During a recess, I walked out of the courthouse to get some air, and there was a mob of people on the steps, pushing themselves forward to grab a paper that was being handed out. I had gotten used to signs of economic distress by then. Department stores were shuttered. Vacant skyscrapers were called “see-throughs.” Out-of-state interests bought up our newspapers and banks, so that we lost control of our sources of information and finance. Now Serving Breakfast banners foretold the next restaurant about to close. One of my neighbors, an engineer who worked for the city, lost his house and moved into his Volkswagen van. But I had never seen foreclosed properties for sale on the courthouse steps.
My father, who was a retired banker by this time, watched many of his friends and colleagues in Dallas go through bankruptcy. They had been some of the most respected people in the city, the money men who had raised Dallas fifty stories into the air. One of Daddy’s friends, Jim Toler, a jovial former college football star, was the mayor of Garland, near Dallas. At Christmas, we always got a burlap bag of pecans, inscribed Nuts to You from Jim Toler. He had made a fortune on a crazily speculative suburban condominium development along the I-30 corridor. Some of the properties were sold as many as eight times in a day, starting at $100,000 in the morning and winding up at a million bucks by nightfall. There was a lot of fraud involved. Savings-and-loan associations, once known as “thrifts” because they were supposed to be more cautious financial institutions, had been deregulated in the Carter administration, and they became the piggy banks for the speculators. They were making loans on properties at 110 percent of the grossly inflated values, meaning that buyers, instead of putting money down, got a cash bonus when they signed the loan. You’d walk away with thousands of dollars in your pocket. The concept spread like a virus, infecting S&Ls all over the Southwest. When the scheme collapsed, more than seven hundred financial institutions in the country were shuttered. Toler was eventually convicted on forty-one counts of conspiracy, racketeering, and bank fraud. Daddy used to visit him in prison.
Our former governor John Connally, who had been secretary of the Treasury under President Nixon, suffered a humiliating bankruptcy auction. He sat gallantly with his wife, Nellie, over the four days it took to dispose of their luxurious possessions, including his ceremonial saddles, extensive gun collection, Persian rugs, and even a Santa Claus cookie jar. At the end, Nellie salvaged a cardboard box so that Big John could have a bedside table for his alarm clock.
Texas was riveted by the Connallys’ plight, but they were merely the grand marshals of the bankruptcy parade, which included Denton Cooley, the great heart surgeon in Houston, who owed $100 million on his unprofitable real-estate holdings; the Hunt brothers—William Herbert, Nelson Bunker, and Lamar—who were $1.5 billion in debt, after two of them tried to corner the market in silver; and the owner of the Dallas Cowboys, Clint Murchison Jr., who died broke. Even Willie Nelson was wiped out, owing nearly $32 million in back taxes, one of the largest individual tax liabilities ever generated by the IRS. The government seized almost everything he owned, except his guitar, which he hid at his daughter’s house. That still didn’t pay the tax collector, so he made a record to pay off what he could. It was called The IRS Tapes: Who’ll Buy My Memories?
One day in 1989, while our children were in Saturday-morning music classes in Austin, Roberta was talking to some of the other parents about real estate. We had invested in a little rent house with a friend, paying $62,500 for it only four years before. Now it was worth half that. Roberta asked one of the mothers about the house she had had for sale for months. “Well, we deeded it back to the bank,” the woman said. “It cost us a hundred thousand dollars, but at least it’s off our backs.” Then another mother asked, “Oh, how do you do that?” It turned out that every single parent in the group was thinking the same thing. They were all looking for some relief from their crushing financial burdens.
I knew about the fall of financial titans. I had read about the sleazy dealings of some of our most prominent political figures, and the corruption and mismanagement of our financial institutions. But when the bill for these misdeeds came due, it was paid mainly through the suffering of ordinary people. For some, the downturn passed by unnoticed. That same mother who told Roberta about deeding her house back to the bank recalled that the very next day her son was picked up for a concert by a friend in a Rolls-Royce with mink-covered seats.