Alan: Welcome back, I'm here today with Steve Buster, Steve is an accomplished executive here in Silicon Valley where he spent several years as CEO of a regional bank, and then went over to a life science company. I’d like to talk about this period of transition; but welcomed to today’s show.
Steve: Allen it’s a pleasure to be here and thank you for your interest.
Alan: So, why don’t we go into your background first? How you got to where you are today?
Steve: While I should explain that I was a very, very lucky young man to be born down in Orange County, Southern California and to grow up in such a simple and naïve time. Born in 1950, wonderful parents, six kids, good values and my dad was an industrialist down there. He had a company called Cherry Rivet, which became part of Textron, and they make fasters for all types of aircraft, from military to commercial Boeings etc., a wonderful company, part of Textron Corporation today. So, down in Orange County growing up in the 50s, 60s, 70s we never knew what a recession was, it was a wonderful time to grow up. I went to public high school down there, Foothill High School, and then to USC, University of Spoiled Children. And my dad told us, go to any school you want, and there's no question about what he was prepared to do, that was his priority. So I go to USC, I then got an MBA from USC and I realized all five of my siblings, everybody, went to private schools, and when I graduated and went to work, it was called United California bank, I realized how hard it was to make ends meet; I said my gosh Dad, why didn't you tell us to go to public schools, something less expensive. We all went, you know, to Stanford and Occidental College and USC, all went to private schools. He says this is the one gift I want to give you with no strings, after this, it’s up to you. Good values, both my parents were wonderful people.
Alan: And so, did you spend all your early career days down in the Southern California then?
Steve: Well initially, yes. I lived, located in Pasadena, got married in 1973 right when I started the training program for United California bank. I think I was there 23 years, it changed its name to First Interstate and a lot of wonderful interesting things happen for me at that bank. I think it was one of the best major banks that ever existed. It was originally part of Bank of America and A.P. Giannini, the founder of Bank of Italy, built this organization and they made a mistake, they opened an office in New York and made J.P. Morgan others jealous. And so what happened is, they passed the Bank Holding Company Act that forced a breakup of this major Bank of America organization. First Interstate was the kick off, back then it was called Western Bank Corporation, Bank of America's divesting of everything out of California. Plus, part of California B of A became California, and Transamerica became insurance and all those other things. That was our heritage and interestingly so, when I was at First Interstate, we tried to put it all back. We made an offer for Bank of America that was not well received by Clawson or the powers at B of A at the time. But they were really hurting, and our position was, we’re just trying to put back what was the original vision of A.P. Giannini, and a very good one. Unfortunately it didn't happen, and today First Interstate was finally acquired by Wells Fargo.
Alan: I have to fast-forward a little bit, because the last 8 years you were running a large regional bank here in the Bay Area very successfully. But I want to, when this down turn came in 2008, and TARP money was passed out, you made the news then.
Steve: I, I did indeed and, and what we had is kind of a very unusual situation. First of all, I left the major banks. I was in international capital markets for quite a while with both, First Interstate in London for five years, and later on they sold my division International Callow Markets to Standard Charter, which owned Union Bank for a while. But I was off to Singapore, so I lived there five years and suddenly I realized I didn't want to be in a major bank, the way they operate you know. I remember getting a call from CEO to fire 200 people before the end of the quarter because he promised the analysts, and I said we can’t operate with that few people, that’s when I was in Singapore at Asia-Pacific. And the CEO said, doesn't matter; I promised him, you can hire back what you need in the next quarter. After that, I thought gosh, what kind of operation is this, that you have to do these kinds of things. So I left, and I went to work for a Community Bank, very different, Mechanics Bank is the name. They’re a three billion-dollar bank and we have quite a few offices in Northern California, 33. And it is owned or controlled by a family that’s had it for 107 years, and is the Doubter Family. And the instructions are very clear; always do the right thing for the long-term. Take care of our customers, take care of our people and don't make quarterly decisions for money. Do the right thing for long-term, that marching orders, I liked!
Alan: I'm visiting here today with Steve Buster, who is the recent CEO of Mechanics Bank right here in Silicon Valley, in the San Francisco Bay Area. And we’ll be right back after these messages. I wanted to talk to you about doing the right thing and when you handed back the TARP money, one of the first guys to do so. I will be right back after these messages
Alan: Welcome back, I’m here today with Steve Buster, Steve is the recent CEO of Mechanics Bank right here in the San Francisco Bay area. And before the break, we were talking about your career and your build up into becoming the CEO for the past 8 1/2 years. And I left off with you were one of the first guys to tell our Federal Government you know, I don't need your TARP money.
Alan: What happened here? And was their response?
Steve: It was very interesting Allen, because first of all, with my background of international capital markets, I knew how serious this meltdown was internationally. If you don't believe in your banking system as your foundation, you don’t have an economy at all. If we had let it fail, and I know Sec. Paulson's engagement to try and salvage this was a very important step and subject to a lot of criticism. As much as I hate big banks being bailed out and little banks being closed, I do agree, you had to save the banking system. So I backed that move, ironically, because I so believe in the capitalistic system. But when it comes to banks, there’s a reason we’re regulated, and that’s because we have got to be a sound confident system for the economy to work at all. And I've seen runs on banks in Hong Kong, I saw a run on our bank at Standard Chartered because a bus broke down. People lined up and they thought it was some kind of run on the bank and they came flooding out of the buildings. They don't have FDIC insurance then, at the end of the day, we paid everybody with loads of money from the central bank, and then they wind up again putting it back, because they didn’t want it under their mattresses. So I know how this happens; now this gets around to TARP. They had to take a very, very big position and they made the pitch at the government level that they wanted us to take TARP because they wanted us to invest in things and stimulate the economy, early. And they made it an attractive deal financially, so we applied for it, we were approved, we were a very solid strong bank but we accelerated the next oh year or two maybe three years of investment of things that we're going to do and try and do it now. We thought we were being good citizens, but when I listened to Barney Frank and some of the others in Washington DC, I heard this rhetoric that they have to punish the banks, they want seats on the board to limit maximum dividends, if any, to the shareholders. I said wait a minute, were not sick, we’re healthy, we got a great bank, we were trying to do our share, so I turned it down. Well this made FOX News. FOX News called me down to their studios and they asked me why did you do this? And I said because I'm now listening to the response of what the government wants in terms of controlling banks, so what I thought would be strings have turned into ropes. And for banks not as well capitalized like us, ropes have turned into a noose. We don't want any part of this so we dropped TARP. The Treasury was upset with us, the central bank was upset with us, but we were the first out. Ironically, I get back to my office, the phone’s ringing off the hook at the call center. What did you do, my secretary said? I just told them we were turning down TARP on the news. The call center is flooded with people trying to open accounts all across the country to reward mechanics bank for turning down a government handout. So, ironic ending, but I'm glad it happened.
Alan: That's a good story and also it's a tribute to you for how you ran the bank and the business. It was in a well-capitalized and good financial position. Steve it has been wonderful having you on my show today, we’ll be right back after these messages.
About the Guest
Steven is the Chairman of Previvo Genetics and provides a wealth of experience and acumen to the company. Steve is the recent President and Chief Executive Officer of Mechanics Bank, the largest bank headquartered in Northern California’s East Bay region. The bank serves tens of thousands of consumer and business clients in Alameda, Contra Costa, El Dorado, Marin, Napa, Placer, Sacramento and San Francisco counties.