The Santa Fe Review

Just find a bunch of people with money they don’t immediately need and persuade them to let you hold it for safekeeping — in return for, say, half a percent a year in interest. Then you loan out the money at a higher rate. Rarely do you physically hand over cash to borrowers. Each time you make a loan, you “create” a new deposit. Now you have, on paper, even more money against which to lend. Since it’s unlikely that everyone will show up at the withdrawal window simultaneously, you can lend as much as 10 times the amount you have in these virtual deposits. If the house of cards collapses the federal government will step in and arrange a takeover.

When that happened last week to Charter Bank I wasn’t too worried. My money is at Los Alamos National, which was started years ago by a man I admire, George Cowan, a scientist and philanthropist who was also a founder of the Santa Fe Institute. With unbeatable service and community investment, the bank has always struck me as a class act. I was surprised when I learned in December (by following a link from the Reporter) that LANB had a “troubled asset ratio” of 44.6 — three times worse than the national average. And that was after the bank had received a $35.5 million infusion from the federal Troubled Asset Relief Program.

Still I was unprepared for the news, announced this week in a frustratingly opaque press release, that LANB has entered into an “agreement” with bank examiners (it sounds so friendly) “focused on reducing the Bank’s classified loans [“classified” is a euphemism for “troubled”] and reducing its loan concentration in commercial real estate.”

A story in Tuesday’s New Mexican was only slightly more enlightening, reporting (way down in the eighth paragraph) that LANB officials are “bringing in” a federal regulator — as though by invitation — “to work with the bank on its problem loans.” These are presumably in addition to those that have already gone bust and are listed in two pages of “discounted real estate” — another great euphemism — on the bank’s website. The repossessed property includes condos, houses, and lots at the stalled-out Oshara, Aldea, and Tessera subdivisions and, as mentioned here before, one of the famous Juanita Street condos. (Another has apparently been sold.) In addition, the Journal reported in December that the bank had filed a foreclosure complaint against Don Wiviott, the developer and unsuccessful Congressional candidate, for a property near the Railyard on Cerrillos Road.

“We’re experiencing everything every other bank is,” LANB’s president, William Enloe, told the New Mexican. But how many other banks have entered into “agreements” with regulators, and what does that mean? Judging from a document on the website of the Office of the Comptroller of the Currency, An Examiner’s Guide to Problem Bank Identification, Rehabilitation And Resolution, it sounds as though LANB has been slapped with something called a “formal action”:

	A bilateral document [whose] provisions are set out in an

	article-by-article form to prescribe necessary corrective action.

	Violation of a formal agreement can provide the legal basis for

	more serious proceedings (e.g., cease and desist).

“Formal actions,” the document says, “are appropriate when a bank has significant problems, especially when there is a threat of harm to the institution.”

That sounds pretty serious. But without an inquiring reporter on the case, readers — and depositors — have no way to know.

George Johnson
The Santa Fe Review

Postscript, February 5. A story in this morning’s New Mexican serves as a reminder of another bad Los Alamos National Bank loan: to entrepreneur Charles Kokesh for the Santa Fe Horse Park. Mr. Kokesh, the father of Congressional candidate and Tea Partier Adam Kokesh, is also being pursued by the Securities and Exchange Commission and bankrupt Thornburg Mortgage.

North Sound, Virgin Gorda

After seeing so many green hillsides slashed with Zorro-like road scars, Mosquito Island, where we anchored for the night, looked refreshingly undeveloped. Later I learned that it has been acquired by Richard Branson, the entrepreneur who is head of the Virgin Group, operator of Virgin Records, Virgin Atlantic Airways, Virgin Megastores, Virgin Mobile, and dozens of other companies including Virgin Galactic, which is building Spaceport America in southern New Mexico for tourism beyond the earth. Sir Richard also owns Necker Island, just a little north of us, which can be rented for upwards of $36,000 a night with a three-night minimum. Mosquito Island, he has said, will be developed as an eco-friendly luxury resort with a zero carbon footprint. I wonder what they’ll do with their garbage.

After two days on the water and a brief bout of seasickness, I was glad the next morning when we took a dingy to Saba Rock  for lunch on solid ground followed by a walk around the Bitter End Yacht Club. Inside the commissary, which caters to boaters, I jotted down some prices: $9.25 for a box of Cheerios, $10.15 for a bag of Cheez-its — signs of what to expect when there is tourism on the moon.

Eventually, I guess, there will be space yachts even more luxurious than those that navigate the Caribbean. Several times on our voyage we spotted the Alfa Nero, an evil-looking craft whose dark, sharp angles reminded me of Darth Vader. Its inhabitants, I later read, have included Bill Gates, who chartered the boat for a family vacation. With more than 4,000 square feet of living space and a swimming pool that can be converted into a helipad, the 269-foot boat, owned by Theodore Angelopolous, a Greek shipping magnate and yachtmaker, is listed for sale for $190 million — almost ten times the price of the Davis mansion in Santa Fe. One evening when I had a wireless connection, I read in the Journal that the Santa Fe County Assessor had confirmed that Casa Davis is indeed the most expensive residence in New Mexico and will be billed for about $133,000 a year in property taxes. Not much, I guess, in the surreal world of the Caribbean jet set, barely enough for three days on Mr. Branson’s Fantasy Island.

The Alfa Nero

George Johnson
The Santa Fe Review

I’m one of those atheists who love Christmas, but I knew I wouldn’t be in the mood this year. With my mother’s death a few months ago, my side of the family had lost the magnet that brought most of us together on the holidays. My wife has also become parentless, so we reluctantly decided to give up tamales, posole, and the Canyon Road farolito walk for a few days in neverland.

West End, Tortola

We’d flown from Albuquerque to Charlotte Amalie in the U. S. Virgin Islands and spent a few hours wandering around Emancipation Park, where a Christmas tree stood among palms hung with ornaments and lights. Majorettes in skimpy red and green costumes twirled batons while calypso musicians prepared for a performance on the bandstand. In front of the old post office,  the Rising Stars Youth Steel Orchestra hammered the air with melodies, and escapees from a cruise ship bought duty-free jewelry and rum.

From Charlotte Amalie it was a short ferry ride to Tortola where hills green with mahogany and white cedar surrounded the harbor. Mansions as big as any in the Santa Fe foothills had been chopped into the steep slopes. (No sign of an escarpment ordinance here.) A recent construction project, we were told, had set off a landslide. You could barely see the scar anymore. Things grow so quickly in the tropics.

And yet there is a water problem. With only a few seasonal streams and no significant aquifer, rainwater must be collected in cisterns. But that is hardly enough. Tortola’s public drinking water comes from desalination factories run by corporations that sell the output to the government for as much as 1.6 cents a gallon — approximately triple what we pay in Santa Fe.

With only 23,000 residents on the island, most of the water is absorbed by the hundreds of thousands of visitors who pass by each year. They also produce most of the garbage. For $2 a bag it is collected at the marina and hauled a few miles down shore to a huge incinerator, which converts as much as 90 tons a day into smoke. (After complaints from a neighboring island, the local government agreed to install smokestack scrubbers and to separate out the tires and oil before burning.) Next to the incinerator, the island’s electricity is produced by a diesel-fired generating plant. And next to that is a gravel quarry.

At Soper’s Hole the infrastructure of industrial tourism is hidden from view. Walking along the wharf with its open-air restaurants and air-conditioned boutiques, one might as well be in Newport Beach or the Hamptons. People don’t come here to see the islands, except from across the water.

It was time to set sail. With little idea of what to expect, I apprehensively took a place on deck as we departed for Drake’s Channel and four days in an expensively maintained paradise.

George Johnson
The Santa Fe Review