Misplaced Pages

#355644

63-398: The Moneychangers is a 1975 novel written by Arthur Hailey . The plot revolves around the politics inside a major bank. As the novel begins, the position of CEO of one of America's largest banks, First Mercantile American , is about to become vacant due to the terminal illness of Ben Roselli, the incumbent chief, whose grandfather founded the bank. Two high-ranking executives groomed for

126-447: A self-fulfilling prophecy . Indeed, Robert K. Merton , who coined the term self-fulfilling prophecy , mentioned bank runs as a prime example of the concept in his book Social Theory and Social Structure . Mervyn King , governor of the Bank of England, once noted that it may not be rational to start a bank run, but it is rational to participate in one once it had started. A bank run is

189-623: A Limited Series (Susan Flannery) and Outstanding Cinematography in Entertainment Programming for a Series ( Joseph Biroc ). Arthur Hailey Arthur Frederick Hailey , AE (5 April 1920 – 24 November 2004) was a Canadian novelist whose plot-driven storylines were set against the backdrops of various industries. His books, which include such best sellers as Hotel (1965), Airport (1968), Wheels (1971), The Moneychangers (1975), and Overload (1979), have sold 170 million copies in 38 languages. Arthur Frederick Hailey

252-517: A bank reorganization. Bank runs first appeared as a part of cycles of credit expansion and its subsequent contraction. From the 16th century onwards, English goldsmiths issuing promissory notes suffered severe failures due to bad harvests, plummeting parts of the country into famine and unrest. Other examples are the Dutch tulip manias (1634–37), the British South Sea Bubble (1717–19),

315-527: A country is wiped out. The resulting chain of bankruptcies can cause a long economic recession as domestic businesses and consumers are starved of capital as the domestic banking system shuts down. According to former U.S. Federal Reserve chairman Ben Bernanke , the Great Depression was caused by the failure of the Federal Reserve System to prevent deflation, and much of the economic damage

378-480: A criminal organization, he tries going back to his former employer to ask for some kind of job. Nolan Wainwright, the bank's Head of Security, obviously won't hire him to work directly for the bank, but with the approval of higher management, is allowed to pay Eastin to go undercover as an affiliate of the forgers and secretly report back details of their operation to Juanita Nunez, who had forgiven him after he came to see her and apologize for what he did. She agrees to be

441-431: A crisis is triggered by unsustainable fiscal policies, expansionary fiscal policies are typically used. In crises of liquidity and solvency, central banks can provide liquidity to support illiquid banks. Depositor protection can help restore confidence, although it tends to be costly and does not necessarily speed up economic recovery. Intervention is often delayed in the hope that recovery will occur, and this delay increases

504-507: A financial newsletter. As readers increasingly appreciate Vandervoort, the protagonist , they learn of his troubled personal life. His advancement in banking circles has come as his marriage is failing; his wife Celia is confined to an inpatient psychiatric facility . Vandervoort is shown as having developed a relationship with Margot Bracken, who is depicted as a radical attorney and political activist many years his junior; her attitudes sometime conflicts with Vandervoort's role at FMA. She

567-574: A hobby. Arthur Hailey's papers are housed at the Thomas Fisher Rare Book Library , University of Toronto , and at the Harry C. Moore Library of the College of The Bahamas . Hailey would usually spend three years on each book. First, he would dedicate a year to research, then six months reviewing his notes, and finally 18 months writing. His research was painstaking: he read 27 books about

630-406: A larger fraction of unbooked losses; if it rolls over its liabilities at increased interest rates, it squeezes its profits along with the profits of healthier competitors. The longer the silent run goes on, the more benefits are transferred from healthy banks and taxpayers to the zombie banks. The term is also used when many depositors in countries with deposit insurance draw down their balances below

693-484: A potentially fatal run on a fictitious US bank. A run on a bank is one of the many causes of the characters' suffering in Upton Sinclair's The Jungle . In The Simpsons season 6 episode 21 The PTA Disbands has Bart Simpson starting a hush whisper campaign at the Bank of Springfield as a prank to instigate a bank run. The bank run is not shown, instead the bank manager, who bears resemblance to Jimmy Stewart, says

SECTION 10

#1732869237356

756-668: A run on the banks under the rallying cry "Stop the Duke, go for gold!". Many of the recessions in the United States were caused by banking panics. The Great Depression contained several banking crises consisting of runs on multiple banks from 1929 to 1933; some of these were specific to regions of the U.S. Bank runs were most common in states whose laws allowed banks to operate only a single branch, dramatically increasing risk compared to banks with multiple branches particularly when single-branch banks were located in areas economically dependent on

819-542: A scale matching or exceeding the bank's geographical area of operation, depositors' unpredictable needs for cash are unlikely to occur at the same time; that is, by the law of large numbers , banks can expect only a small percentage of accounts withdrawn on any one day because individual expenditure needs are largely uncorrelated . A bank can make loans over a long horizon, while keeping only relatively small amounts of cash on hand to pay any depositors who may demand withdrawals. However, if many depositors withdraw all at once,

882-566: A scholarship which would have enabled him to continue his schooling. From 1934 to 1939 he was an office boy and clerk in London. He joined the Royal Air Force in 1939, and served as a pilot during World War II , eventually rising to the rank of flight lieutenant . In 1947, unhappy with the post-war Labour government , he immigrated to Canada, becoming a dual citizen. Settling in Toronto, he held

945-667: A single industry. Banking panics began in the Southern United States in November 1930, one year after the stock market crash, triggered by the collapse of a string of banks in Tennessee and Kentucky , which brought down their correspondent networks. In December, New York City experienced massive bank runs that were contained to the many branches of a single bank. Philadelphia was hit a week later by bank runs that affected several banks, but were successfully contained by quick action by

1008-430: A suburban shopping plaza where the bank had installed the first two stainless-steel Docutel automatic tellers. Vandervoort, whose clothes looked like they were from the "fashion section of Esquire " and who had the "mannerisms a la Johnny Carson", was not at all like the classical solemn, cautious banker in a double-breasted, dark blue suit. Peacock compared him to the new ATMs which embodied modern banking. The history of

1071-431: A valuable service by aggregating funds from many individual deposits, portioning them into loans for borrowers, and spreading the risks both of default and sudden demands for cash. Banks can charge much higher interest on their long-term loans than they pay out on demand deposits, allowing them to earn a profit. If only a few depositors withdraw at any given time, this arrangement works well. Barring some major emergency on

1134-509: A variety of jobs in such fields as real estate, sales, and advertising. He was editor of a trade magazine called Bus and Truck Transport . During these years, he continued to write. Hailey's professional writing career began in 1955 with a script called Flight into Danger , which was purchased by the Canadian Broadcasting Corporation and telecast on 3 April 1956. This story of a plane flight in jeopardy after its crew

1197-557: Is also related to Edwina D'Orsey, as she is her first cousin. Meanwhile, Vandervoort's antagonist , Heyward, is depicted as a devout Episcopalian who strives to maintain an air of personal integrity and morality, only to slowly sacrifice them both in his pursuit of the presidency of FMA. As these men pursue their battle for the soon-to-be-vacant position of CEO, various issues involving the banking industry, such as credit card fraud , embezzlement , inflation, subprime lending , and insider trading are discussed. First Mercantile American

1260-447: Is discovered to be defrauding the bank whilst casting guilt on another teller, a young single mother named Juanita Nunez. He is dismissed, arrested, and convicted. While in prison, he is gang-raped by a gang of fellow inmates. In prison, his knowledge of counterfeiting brings him to the attention of a gang of credit card forgers, who offer him a job on his release. Owing money to loan sharks , and desperate not to have to go to work for

1323-448: Is eventually revealed to have a doppelganger in the form of an organized crime family. The fight for control of the bank continues under the darkening clouds of an approaching economic recession . Heyward is manipulated into making a large, illegal and toxic loan to Supranational Corporation (SuNatCo), a multinational conglomerate (loosely based on International Telephone and Telegraph , with certain elements of Penn Central ) run by

SECTION 20

#1732869237356

1386-406: Is incapacitated was "the smash hit of the season," won enormous acclaim, and was broadcast internationally. It was adapted as a novel by "John Castle" (a pseudonym for Ronald Payne and John Garrod), with Hailey credited as co-author; it was published by Britain's Souvenir Press in 1958 under its original title, but renamed Runway Zero-Eight ( Doubleday ) for its 1959 American publication. The story

1449-502: Is not a book you cannot put down; it is a book you can hardly hold up. It will sell in millions and be translated into 34 languages. Possibly it is more readable in Icelandic or Urdu." And Time magazine, reviewing Wheels together with Harold Robbins 's The Betsy , said, "Yes, junk fans, it is a mano a mano for novelists who are all thumbs. Two of the greatest schlockmeisters in the history of solid waste have just published novels about

1512-540: Is often delayed in the hope that insolvent banks will recover if given liquidity support and relaxation of regulations, and in the end this delay increases stress on the economy. Programs that are targeted, that specify clear quantifiable rules that limit access to preferred assistance, and that contain meaningful standards for capital regulation, appear to be more successful. According to IMF, government-owned asset management companies ( bad banks ) are largely ineffective due to political constraints. A silent run occurs when

1575-648: Is the story of the chief pathologist at a Burlington, Pennsylvania, hospital. The book received good reviews, and was a selection of the Literary Guild of America . Hailey's second novel, In High Places (Doubleday) was published in 1962. Dealing with international politics the book was again selected by the Literary Guild, and was a best seller in Canada. Hailey's commercial breakthrough came in 1965 with publication of Hotel (Doubleday), which followed five days in

1638-411: The " cut-out " whom Eastin will contact, and she will report back what he tells her to Wainwright. Eastin is discovered to be a planted spy by the criminal organization and tortured, only to be rescued in the nick of time as a result of Juanita being captured by the forgers and forced to identify Eastin. She is released, but uses her photographic memory to count the amount of time she spent blindfolded in

1701-568: The 1930s, even under conditions such as the U.S. savings and loan crisis of the 1980s and 1990s . The 2007–2008 financial crisis was centered around market-liquidity failures that were comparable to a bank run. The crisis contained a wave of bank nationalizations, including those associated with Northern Rock of the UK and IndyMac of the U.S. This crisis was caused by low real interest rates stimulating an asset price bubble fuelled by new financial products that were not stress tested and that failed in

1764-461: The Bahamas, of what doctors believed to be a stroke . Bank run A banking panic or bank panic is a financial crisis that occurs when many banks suffer runs at the same time, as people suddenly try to convert their threatened deposits into cash or try to get out of their domestic banking system altogether. A systemic banking crisis is one where all or almost all of the banking capital in

1827-606: The French Mississippi Company (1717–20), the post-Napoleonic depression (1815–30), and the Great Depression (1929–39). Bank runs have also been used to blackmail individuals and governments. In 1832, for example, the British government under the Duke of Wellington overturned a majority government on the orders of the king, William IV , to prevent reform (the later Reform Act 1832 ( 2 & 3 Will. 4 . c. 45)). Wellington's actions angered reformers, and they threatened

1890-605: The auto industry." But Hailey's ability to tell a story was recognised by some critics. In the New York Times , John Reed conceded, in a review of Wheels , that "Mr. Hailey is nothing if not a competent craftsman." Christopher Lehmann-Haupt , in his New York Times review of The Moneychangers wrote, "What I had in mind was diversion, and, to tell the shameful truth, I found it." Reviewing Detective , Publishers Weekly wrote, "Old pro Hailey... remains adept at hooking readers with his propulsive brand of storytelling." Hailey

1953-420: The bank itself (as opposed to individual investors) may run short of liquidity, and depositors will rush to withdraw their money, forcing the bank to liquidate many of its assets at a loss, and eventually to fail. If such a bank were to attempt to call in its loans early, businesses might be forced to disrupt their production while individuals might need to sell their homes and/or vehicles, causing further losses to

The Moneychangers - Misplaced Pages Continue

2016-667: The benefits of collective prevention are commonly believed to outweigh the costs of excessive risk-taking. Techniques to deal with a banking panic when prevention have failed: The bank panic of 1933 is the setting of Archibald MacLeish 's 1935 play, Panic . Other fictional depictions of bank runs include those in American Madness (1932), It's a Wonderful Life (1946, set in 1932 U.S.), Silver River (1948), Mary Poppins (1964, set in 1910 London), Rollover (1981), Noble House (1988) and The Pope Must Die (1991). Arthur Hailey 's novel The Moneychangers includes

2079-420: The car and the movements it made, and as a result is able to lead police to the safe house where Eastin was being held and tortured. At the end, Eastin, Juanita and her daughter, Estella, move out of the state where both get new jobs. Also featured is Edwina D'Orsey, the head of FMA's flagship downtown branch, through whom a reader gains much insight into day-to-day branch banking, and her husband, Lewis, who writes

2142-598: The downturn. Under fractional-reserve banking , the type of banking currently used in most developed countries , banks retain only a fraction of their demand deposits as cash. The remainder is invested in securities and loans , whose terms are typically longer than the demand deposits, resulting in an asset–liability mismatch . No bank has enough reserves on hand to cope with all deposits being taken out at once. Diamond and Dybvig developed an influential model to explain why bank runs occur and why banks issue deposits that are more liquid than their assets. According to

2205-516: The fall 1930 bank runs and forced banks to liquidate loans, which directly caused a decrease in the money supply , shrinking the economy. Bank runs continued to plague the United States for the next several years. Citywide runs hit Boston (December 1931), Chicago (June 1931 and June 1932), Toledo (June 1931), and St. Louis (January 1933), among others. Institutions put into place during the Depression have prevented runs on U.S. commercial banks since

2268-631: The film, together with that of 1972's The Poseidon Adventure , led to the proliferation of " disaster films " during the 1970s, which included three additional films in what became the Airport franchise. After the financial success of Airport , on the advice of his tax attorney, Hailey moved as a tax exile to the Bahamas settling in Lyford Cay on New Providence Island . He had intended to stay for just two years, but liked it so much that he remained there for

2331-547: The first four years of the crisis. Several techniques have been used to help prevent or mitigate bank runs. Some prevention techniques apply to individual banks, independently of the rest of the economy. Some prevention techniques apply across the whole economy, though they may still allow individual institutions to fail. The role of the lender of last resort, and the existence of deposit insurance, both create moral hazard , since they reduce banks' incentive to avoid making risky loans. They are nonetheless standard practice, as

2394-556: The hotel industry for Hotel , he spent months at a Detroit car plant for Wheels , and he spent time—at the age of 67—with rebel guerillas in the jungles of Peru for The Evening News . Hailey had no discernible literary pretensions; he said, "I'm a storyteller and anything else is incidental." Hailey was not a critical favourite. In the New York Times , Martin Levin called him "a plodding sort of writer." Martha Gellhorn , reviewing The Evening News for The Daily Telegraph wrote, "This

2457-431: The implicit fiscal deficit from a government's unbooked loss exposure to zombie banks is large enough to deter depositors of those banks. As more depositors and investors begin to doubt whether a government can support a country's banking system, the silent run on the system can gather steam, causing the zombie banks' funding costs to increase. If a zombie bank sells some assets at market value, its remaining assets contain

2520-416: The larger economy. Even so, many, if not most, debtors would be unable to pay the bank in full on demand and would be forced to declare bankruptcy , possibly affecting other creditors in the process. A bank run can occur even when started by a false story. Even depositors who know the story is false will have an incentive to withdraw, if they suspect other depositors will believe the story. The story becomes

2583-658: The leading city banks and the Federal Reserve Bank . Withdrawals became worse after financial conglomerates in New York and Los Angeles failed in prominently-covered scandals. Much of the US Depression's economic damage was caused directly by bank runs, though Canada had no bank runs during this same era due to different banking regulations. Milton Friedman and Anna Schwartz argued that steady withdrawals from banks by nervous depositors ("hoarding") were inspired by news of

The Moneychangers - Misplaced Pages Continue

2646-575: The lender. The same principle applies to individuals and households seeking financing to purchase large-ticket items such as housing or automobiles . The households and firms who have the money to lend to these businesses may have sudden, unpredictable needs for cash, so they are often willing to lend only on the condition of being guaranteed immediate access to their money in the form of liquid demand deposit accounts , that is, accounts with shortest possible maturity. Since borrowers need money and depositors fear to make these loans individually, banks provide

2709-408: The limit for deposit insurance. The cost of cleaning up after a crisis can be huge. In systemically important banking crises in the world from 1970 to 2007, the average net recapitalization cost to the government was 6% of GDP , fiscal costs associated with crisis management averaged 13% of GDP (16% of GDP if expense recoveries are ignored), and economic output losses averaged about 20% of GDP during

2772-481: The lives of employees and residents of New Orleans' luxurious St. Gregory Hotel. The book spent 48 weeks on the New York Times Best Seller list , peaking at No. 3, and became the eighth highest-selling novel of the year. It established the template for Hailey's future works: ordinary people involved in extraordinary situations in a business or industry which is described in meticulous detail. Following

2835-427: The model, business investment requires expenditures in the present to obtain returns that take time in coming, for example, spending on machines and buildings now for production in future years. A business or entrepreneur that needs to borrow to finance investment will want to give their investments a long time to generate returns before full repayment, and will prefer long maturity loans, which offer little liquidity to

2898-408: The model, the bank acts as an intermediary between borrowers who prefer long-maturity loans and depositors who prefer liquid accounts. The Diamond–Dybvig model provides an example of an economic game with more than one Nash equilibrium , where it is logical for individual depositors to engage in a bank run once they suspect one might start, even though that run will cause the bank to collapse. In

2961-422: The organization of central banks that act as a lender of last resort , the protection of deposit insurance systems such as the U.S. Federal Deposit Insurance Corporation , and after a run has started, a temporary suspension of withdrawals. These techniques do not always work: for example, even with deposit insurance, depositors may still be motivated by beliefs they may lack immediate access to deposits during

3024-496: The pharmaceutical industry, was published in 1984 and was another major best seller; it became the thirteenth highest-selling novel of the year. His commercial success had declined somewhat by 1990 with publication of The Evening News (Doubleday), and with his final novel, Detective (Crown), which appeared in 1997. Hailey continued to write, but—except for the slim The Lyford Legacy: A Brief History of Lyford Cay from 1788 (Lyford Cay Foundation, 2000), —Hailey now wrote only as

3087-484: The powerful, unscrupulous CEO, G. G. Quartermain. It turns out that SuNatCo is on the verge of bankruptcy, using the bank's loan in a vain attempt to keep afloat. The ensuing scandal causes a bank run and panic among depositors, shareholders, and employees. An investigative reporter discovers that Heyward was not only the key facilitator of the toxic loan, but he had accepted bribes (securities and in-kind) to do so. Facing arrest and possible prison, he commits suicide. By

3150-511: The prototype and the first working Docutel ABM was installed at Chemical Bank in New York. The bank is very loosely based on the Bank of America , although it is located in a Midwestern American city loosely drawing mostly from Cincinnati, Ohio . During the first 5 chapters of the book, it only describes the bank's location as a state in "the Midwest" and the state itself is never identified. The novel

3213-544: The real Docutel was traced in a New York Times magazine article. The breakthrough came when Don Wetzel, Vice President of Product Planning at Docutel, was waiting in a long line for a teller at a bank in Dallas, Texas in 1968. Wetzel had seen cash dispensing machines in Europe and was inspired to adapt Docutel technology, which was originally used in airport baggage handling, to create Docuteller, an American version. By 1969 work began on

SECTION 50

#1732869237356

3276-633: The rest of his life. In 1971, he published Wheels (Doubleday), set in the automobile industry; like Airport , it was a no. 1 New York Times best seller, and the highest-selling novel of its year. Hailey followed it with two additional no. 1 sellers: The Moneychangers (Doubleday, 1975), about the banking industry; and Overload (Doubleday, 1979), about an electric utility company. In 1979, following publication of Overload , Hailey announced his retirement. After undergoing quadruple heart bypass surgery, however, he felt rejuvenated, and returned to work. His novel Strong Medicine (Doubleday), about

3339-425: The stress on the economy. Some measures are more effective than others in containing economic fallout and restoring the banking system after a systemic crisis. These include establishing the scale of the problem, targeted debt relief programs to distressed borrowers, corporate restructuring programs, recognizing bank losses, and adequately capitalizing banks. Speed of intervention appears to be crucial; intervention

3402-524: The success of Hotel , Hailey moved to California. In 1968 he achieved international fame with his fourth novel, Airport (Doubleday), the story of one eventful night at a midwestern international airport. The novel was No. 1 in the New York Times for 30 weeks, and became the top-selling novel of the year. The film adaptation , released in 1970, was the second-highest-grossing film of the year (second only to Love Story ) and received ten Academy Award nominations, including best picture. The success of

3465-515: The succession begin their personal combat for the position. One, Alex Vandervoort, is honest, hard-charging, and focused on growing FMA through retail banking and embracing emerging technology; the other, Roscoe Heyward, is suave, hypocritical, and skilled in boardroom politics, and favors catering more to business than to consumers. Heyward lives in a "rambling, three-story house in the suburb of Shaker Heights ," Cleveland, Ohio. Many characters and plot lines interweave. Senior bank teller Miles Eastin

3528-663: The sudden withdrawal of deposits of just one bank. A banking panic or bank panic is a financial crisis that occurs when many banks suffer runs at the same time, as a cascading failure . In a systemic banking crisis , all or almost all of the banking capital in a country is wiped out; this can result when regulators ignore systemic risks and spillover effects . Systemic banking crises are associated with substantial fiscal costs and large output losses. Frequently, emergency liquidity support and blanket guarantees have been used to contain these crises, not always successfully. Although fiscal tightening may help contain market pressures if

3591-503: The violence portrayed in the miniseries. He described the scene that concluded Part 1 involving the rape of embezzler Miles Eastin by fellow inmates as "one of the most explicity [ sic ] sexual-assault scenes devised without benefit of outright hardcore pornography." Christopher Plummer received a Primetime Emmy Award for Outstanding Lead Actor in a Limited Series in 1977 . Three additional Primetime Emmy Award nominations were for Limited or Anthology Series , Lead Actress in

3654-489: The vote of the board of directors, Vandervoort assumes the position of CEO of the half-ruined bank. One of the banking innovations that Hailey mentioned in The Moneychangers is Docutel , an automated teller machine , based on real technology that was issued a patent in 1974 in the United States. In the novel, Jill Peacock, a journalist, interviewed First Mercantile American Bank executive VP, Alexander Vandervoort, in

3717-485: Was adapted for television as a 6 + 1 ⁄ 2 -hour NBC miniseries titled Arthur Hailey's the Moneychangers of which its four parts aired on December 4, 1976, and each of the subsequent three Sunday evenings through December 19 as part of the network's “Big Event” format. Ross Hunter and Jacque Mapes were the producers and Boris Sagal directed. John J. O'Connor of The New York Times raised concerns about

3780-496: Was born on 5 April 1920, in Luton , Bedfordshire , England, the only child of George Wellington Hailey, a factory worker, and Elsie Wright Hailey. An avid reader, Hailey began to write poems, plays and stories at a young age. He once said, "My mother left me off chores so I could write." Elsie encouraged her son to learn typing and shorthand so that he might become a clerk instead of a factory worker. At fourteen, Hailey failed to win

3843-508: Was caused directly by bank runs. The cost of cleaning up a systemic banking crisis can be huge, with fiscal costs averaging 13% of GDP and economic output losses averaging 20% of GDP for important crises from 1970 to 2007. Several techniques have been used to try to prevent bank runs or mitigate their effects. They have included a higher reserve requirement (requiring banks to keep more of their reserves as cash), government bailouts of banks, supervision and regulation of commercial banks,

SECTION 60

#1732869237356

3906-517: Was filmed in 1957 as Zero Hour! ( Paramount ), and for television in 1971 as Terror in the Sky . With the success of Flight into Danger , Hailey was in demand as a television writer, and wrote for such shows as Studio One , Kraft Television Theatre , Playhouse 90 , and Suspense . In 1959, he adapted his teleplay No Deadly Medicine (for which he won an Emmy nomination) into his first novel The Final Diagnosis. Published by Doubleday, it

3969-486: Was married twice. In 1944 he married Joan Fishwick (1918–2004), with whom he had three children before divorcing in 1950. In 1951 he married Sheila Dunlop (1927–2017), with whom he also had three children. In 1978 Sheila Hailey published I Married a Best Seller: My Life with Arthur Hailey (Doubleday), which was not always complimentary, but the couple remained together for 53 years. Arthur Hailey died at age 84 in his sleep on 24 November 2004, at his home in Lyford Cay in

#355644