LITTLE ROCK, Ark. -- Sometimes it doesn't pay to have friends in high places.
As chairman, chief executive, and president of Worthen Banking Corp., Curt Bradbury helped fellow Arkansan Bill Clinton raise political contributions in the 1992 presidential election. The state's largest bank even gave the native son an unheard of $3.5 million credit line at a critical point.
The friendship helped Mr. Bradbury land a seat on the American Bankers Association board and got him a White House invitation. But he says his advice for Mr. Clinton is limited to the presidential golf game. He insists that reports of his influence in Washington are greatly exaggerated.
Shareholder Relationship Probed
Indeed, links to the First Family appear to have caused the bank more harm than good. Observers blame the election-year loan for sparking a Federal Reserve probe of the connection between Worthen and the billionaire Stephens family.
The bank's second-largest shareholders led with $32 million to recapitalize the bank, saving it from certain failure in 1985.
But the fact is that regulators have been monitoring the relationship between the bank and the Stephens family for years. The Stephenses run a Little Rock-based investment banking firm, so regulators are concerned about the "chinese wall" between securities and banking remaining intact.
Bank Denies Family Exerts Any Control
The Stephens empire was for many years the single-largest shareholder in Worthen. The acquisition of Union of Arkansas earlier this year moved the family's stake into second place with a still significant 26% holding.
Despite the Stephenses' stock position, no family members sit on Worthen's board. And the bank insists the family exerts no control over Worthen decisions or operations.
Bank analysts say the Federal Reserve investigation could be completed by the end of the year. The fed does not discuss its investigations and no one is guessing what the outcome may be. The worst case: the Stephenses may have to sell off part of their stake, though few expect that to happen.
For this part, Mr. Bradbury, formerly an investment banker with the Stephens brokerage, will be glad when it it over. He says the negative headlines have spooked some would-be investors, adding: "We don't see any problems, but the controversy has been detrimental."