"Building Home: Howard F. Ahmanson and the Politics of the American Dream"(University of California Press, 2013) tells the story of California businessman Howard F. Ahmanson, who, following World War II, established the largest savings and loan corporation in the U.S. This abridged passage is taken from Chapter Five: Building Home.
Charlie Fletcher wanted to talk politics. He was running for Congress in September 1946, and Howard Ahmanson, ostensibly, was his campaign manager. With two months left before the election, they had lunch together at the Stock Exchange Club in the heart of L.A.’s financial district.
As they were walking back to Howard's office, Charlie casually mentioned that he knew a savings and loan manager who wanted to get out of the business. The association was for sale. He suggested Howard should buy it.
"How much is it?"Howard asked.
"Sixty thousand.”
"Where is it?”
"Highland Park,"Charlie replied.
Howard considered the area and the opportunity. Located along the Arroyo Seco just west of Pasadena, Highland Park included some of the oldest homes in Los Angeles. "Come on up to my office,"he told Charlie.
Howard wrote out a check to Tomlinson and asked Charlie to make the deal for him. Characteristically, he was not interested in negotiating. If the price was fair, he paid it. If it wasn't, he walked away.
In telling this story years later, Ahmanson made it sound impulsive, as if nothing that came before had prepared him for that moment. In fact, he was anything but impulsive. As one of his longtime employees recalled, "Howard explored every facet of everything before he made a decision."Ahmanson had spent years studying the savings and loan industry. He had also spent months thinking about the postwar future of Los Angeles.
Ahmanson knew the demand for housing in Los Angeles was explosive. He was already positioned to take advantage of this growth by selling residential fire and hazard insurance, but he wanted to increase his bet. He bought stock in cement companies because new homes needed foundations. He continued to buy real estate because developers and builders had to have land. But he also recognized that tract builders would need financing and that savings and loans were uniquely positioned in the postwar era to provide construction loans and mortgages.
Ahmanson knew that most savings and loan managers didn't see the opportunity. For too long they had been focused on surviving. Hit hard by the Depression, nearly one in four in California had gone out of business. Those that remained carried large portfolios of delinquent loans and foreclosed properties through the 1930s. By the end of the war, only 101 state-chartered savings and loans and 73 federally chartered thrifts were still in business in California. Within the industry, the federally chartered institutions were the strongest. Statewide, they accounted for 59% of total assets. Meanwhile, most of the state-chartered, stockholder-owned thrifts had barely $1 million left on their books.
Savings and loans in California also seemed disadvantaged by public policy that favored commercial banks. Mutual savings banks, the leading source of home loans on the East Coast, had not been enabled by the California legislature, so commercial banks played a greater role in the mortgage market in California than they did on the East Coast. California was also unusually permissive with regard to branch banking, which weakened the competitive position of strictly local institutions. As a result, Bank of America, the nation's largest commercial bank, had been able to achieve enormous economies of scope and scale.
