Word: knapp
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...Charles Knapp, whose passion for vintage planes and daredevil business tactics earned him the nickname Red Baron, bailed out last week as chairman of California's troubled Financial Corp. of America (assets: $32.7 billion). The company is the parent of American Savings and Loan Association, the nation's largest thrift institution. Knapp says that he resigned voluntarily, but many industry observers believe he was pressured to leave by the Federal Home Loan Bank Board, which regulates S and Ls. Knapp's biggest mistake was to make too many fixed-rate loans that became unprofitable when interest rates...
...Knapp's successor will be William Popejoy, 46, a longtime industry executive who was president of American Savings before F.C.A. bought the thrift in 1983. Popejoy will have no time to ease into his new job. F.C.A. reported on Aug. 15 that it has certificates of deposit worth about $15 billion that mature by the end of September. Popejoy must quickly convince investors not to pull out all that money...
...problems, withdrew $1.4 billion in deposits, forcing F.C.A. to borrow emergency funds from the Federal Home Loan Bank in San Francisco. Coming just three weeks after the $4.5 billion federal bailout of Chicago's Continental Illinois Bank, the troubles at F.C.A. were particularly unsettling to financial circles. After Knapp's press conference last week, the Dow Jones industrial average dipped more than 15 points. F.C.A., the most heavily traded stock of the day, was the biggest loser, falling 21A points to 5. A year...
F.C.A. has sailed into rough waters almost as suddenly as it rose to prominence. Starting with a small California thrift with assets of $390 million, Knapp, 49, built up the financial institution to its present size in less than ten years. Last year the Los Angeles-based corporation gobbled up California's First Charter Financial, doubling its assets in one stroke. At the end of 1983 F.C.A. proudly boasted a 600% increase in earnings, to $172.5 million, or $5.13 per share...
...pilot who likes to restore vintage aircraft in his spare time, Knapp enjoyed being known as the Red Baron of the S & L industry. His biggest mistake was to gamble heavily that interest rates would fall. While other S & Ls hedged their bets by offering homeowners variable-rate mortgages, Knapp aggressively marketed fixed-rate mortgages at about 12.5% in the expectation of making big profits when interest rates fell. Instead, they rose slightly in the second quarter, putting the squeeze on F.C.A. To make matters worse, Knapp had permitted large institutional investments, many of which have deposits that exceed...