New Hampshire's Governor Is Fighter for State's Banks
When Gov. Judd Gregg of New Hampshire heard in April that BankAmerica Corp. had lost the contest to purchase the failed Bank of New England, he offered a consolation prize. Gov. Gregg hoped to coax officials of the San Francisco banking giant into buying some of the troubled banks in his state.
The task of finding aid for troubled banks is usually left to top executives, consultants, or the Federal Deposit Insurance Corp. But Gov. Gregg has identified bank recapitalization as one of his top priorities in seeking to revitalize the New Hampshire economy.
|Pushing as Hard as We Can'
In the Bank of New England aftermath, he talked with other losing bidders, as well as executives of nearby banks like KeyCorp in Albany, N.Y. He even called bankers in Canada and other foreign countries.
"We've been pushing as hard as we can," he said. "We are willing to accept capital from any part of the world."
Gov. Gregg has plenty of merchandise to sell. Five of the state's largest banking institutions are near collapse. Last year, the state's 75 commercial and savings banks lost a combined $411 million, up from $40 million in 1989. As a result, few loans are being made and the state is in a deep economic funk.
Drag on State's Economy
"Forty percent to 50% of our banking assets are not functioning right now," the second-term governor said in a recent interview. "Banks are calling in loans. That has a severely dampening effect on our capacity to turn this recession around."
Gov. Gregg has held several meetings this year with regulators and the executives of the ailing institutions to see if together they could come up with an innovative program to keep the banking system alive.
One plan calls for merging as many as three banks and recapitalizing them from both private and FDIC coffers.
Gov. Gregg also organized a meeting earlier this year of FDIC Chairman L. William Seidman and the New England governors to discuss the banking crisis.
And he is looking at legislation that would benefit banks in the state. One bill he signed this spring repeals a business profits tax and is designed to entice investors to pump capital into the troubled banks. Under the old law, any open-bank assistance would have been treated as taxable income.
Praise from Bankers
"He has taken a real leadership role in this effort," said Lawrence Connell, a former federal credit union regulator who is president of Concord-based New Hampshire Savings Bank, one of the troubled five. "He realizes that a gridlocked financial system doesn't produce revenues for the state."
Christopher Gallagher, legal counsel for the New Hampshire Bankers Association, said that by becoming involved, Gov. Gregg has bought time for the banks.
"Had that not occurred, we would have been early in line for FDIC clampdowns," he said.
All in the Family
Gov. Gregg walked into a problem that seems right up his alley. The 44-year-old governor comes from a New Hampshire banking family. His father and grandfather were chairmen of Indian Head National Bank in Nashua, later acquired by Fleet/Norstar Financial Group. (The governor's father, Hugh Gregg, was also a New Hampshire governor.)
Judd Gregg grew up in Nashua and graduated from Columbia University in 1969. Three years later, he received a law degree from Boston University Law School and went to work at his father's law firm, Sullivan & Gregg.
In 1980 he was elected to the first of three terms in the U.S. House of Representatives. He was elected governor in 1988.