Charles M. Aulino

Collateralized mortgage obligations, credit default swaps and other so-called “toxic assets” have dominated the financial news for some time now. You hear about people giving up on plans to retire, and optimism is in short supply.

At times like this, it is worth recalling the son of Italian immigrants who faced catastrophe fearlessly throughout his illustrious career: Amadeo Peter Giannini. He quit school as a teenager to go to work in the produce business for his step-father on the San Francisco wharf. Within a few years, success led to boredom and the young man was looking for new challenges. By then, Giannini was serving on the board of directors of a bank. But he resigned in a rage over the rejection of his expansion plans – developing business from immigrant working families. He burst into the office of a banker-acquaintance named James Fagan and exclaimed “Giacomo, I’m going to start a bank. Tell me how to do it.” Soon a charter was issued for “The Bank of Italy in America” which commenced business in a one-room office that had previously been a neighborhood saloon.

Giannini acquired accounts by door-to-door solicitation; he could cajole immigrants into taking their savings out of their mattresses and depositing it with him. He also made credit available at far better rates than those offered by local loan sharks, his customers’ only prior source of financing. On the day after the great earthquake and fire, Giannini dug through the rubble to rescue his bank’s gold and records, then set up a temporary office on the wharf and made loans on a handshake to help get the process of economic recovery started.

By the time the Great Depression hit, Giannini’s bank was a financial empire, but also beset by challenges. High-powered bankers from Wall Street, in whom Giannini had placed great confidence, were planning to split up the enterprise and end his dream of a coast-to-coast branch network. He was plagued by bank regulators who seemed intent on blocking his expansion plans and he was battling a debilitating illness. None of that stopped him. He waged an epic proxy battle to regain control of the beleaguered financial giant, withstood threats from federal authorities to put his bank in receivership and launched a “back to good times” campaign stating “Depressions are the product of fear ... Prosperity, however, is born of confidence.” He showed his own confidence by backing a daring public development project: construction of the Golden Gate Bridge.

Giannini’s bank is still in business, now known simply as “Bank of America.” The current challenges it faces are compounded by its acquisition of what had been the largest brokerage firm in the country. That move was made, under pressure from the highest levels of our national government, to prevent a failure that might have further deepened the crisis. I’m sure A.P. Giannini would have approved.

Above all else, Giannini’s life is a monument to the principle of doing well by doing good. Modern bankers should take a lesson from his life story, for those who emulate his courage and determination will not fail to overcome the challenges we all face together.