Welcome Eric John Abrahamson (Wiki) and Host Cynthia Kouril (FDL)

Building Home: Howard F. Ahmanson and the Politics of the American Dream

If you ever wanted to know the real life background of the movie’s Mildred Pierce or It’s a Wonderful Life and to understand the social legislative, regulatory and economic forces that contributed to the post-WWII residential development of California, this book will provide you with a wealth of information.

If you want to confirm that strict regulation will not prevent someone from building up a huge and profitable business in a “managed economy”, Howard Ahmanson is your case study, he became very rich in the insurance and Savings & Loan businesses during a time when both were regulated far more so than today, or even most living memory.

If you want a backstage look at California Republican politics before Earl Warren or Richard Nixon went to Washington, there’s a bit of that in there. If you are a California history buff, there may be much in this book that is new to you.

Building Home follows the life and career of Howard Ahmanson who took a substantial, but not enormous inheritance, and used it to found first an insurance company, and later a Savings & Loan that turned into an empire worth hundreds of millions of dollars. In doing so, he was part of a small group who transformed the landscape of Southern California building up suburban developments from what had been ranches and orange groves.

As the sole owner of Home Savings & Loan, he made his fortune by catering to the dreams of the middle class for home ownership. His loans were of the conventional type and he cross-sold homeowner’s insurance to people who obtained mortgages from him. These were conservative mortgages, not no doc/ no doc/ liar’s loans, because in those days, the industry was very heavily regulated. This heavy regulation had the added benefit of keeping the savings and loan industry itself stable. What a relic of history.

Ahmanson is also another kind of relic. A one-percenter who believed in the civic duty to give back. He did so, in terms of the involvement in the University of California, involvement in politics, and by creating a foundation that gave out grants in education and the arts. Are you old enough to remember when Masters of the Universe actually felt the need to give back? Can you remember the days when regulations were seen as good things? When the phrase “consumer protection” was used by someone other than Elizabeth Warren? If you’re too young to remember what the world was like when we had decades of prosperity and relative economic fairness in the “managed economy”, or if you want to take stroll down memory lane, back to the days of economic regulation, you may want to crack the spine on this book.

 

[As a courtesy to our guests, please keep comments to the book and be respectful of dissenting opinions.  Please take other conversations to a previous thread. - bev]

109 Responses to “FDL Book Salon Welcomes Eric John Abrahamson, Building Home: Howard F. Ahmanson and the Politics of the American Dream”

BevW August 17th, 2013 at 1:50 pm

Eric, Welcome to the Lake.

Cynthia, Welcome back to the Lake, and Thank you for Hosting today’s Book Salon.

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Eric John Abrahamson August 17th, 2013 at 1:58 pm

Wonderful to be here. I’m looking forward to the conversation.

Cynthia Kouril August 17th, 2013 at 1:59 pm

Hi everybody, taking a break from appellate brief writing to do …. more writing!

Everyone please Welcome Eric and I hope you all have lots of questions for him.

BevW August 17th, 2013 at 1:59 pm

Eric, thank you for an interesting book about the history of the housing industry and finance since the 50s.

dakine01 August 17th, 2013 at 2:00 pm

Good afternoon Eric and welcome to Firedoglake this afternoon. Hi Cynthia!

Eric, I have not had an opportunity to read your book so forgive me if you address this in there but how do you think Howard Ahmanson would have reacted to the debacle of our current times? Would he have been feeding at the trough with the rest or would he have been aghast at the looting?

Cynthia Kouril August 17th, 2013 at 2:00 pm

Ah good, you’re here. Let’s start off with why you pick this person for biography, he’s hardly a household name.

Eric John Abrahamson August 17th, 2013 at 2:03 pm
In response to dakine01 @ 5

The first question is one of the toughest. I get asked this a lot and have finally decided my answer is to punt. As a historian I think it’s really important to understand people in the context of their times. Ahmanson is so representative of his era – the postwar era when so many Americans still believed in the capacity of government and the private sector to work together. It’s hard to imagine how he would have done business in the early 2000s.

Eric John Abrahamson August 17th, 2013 at 2:07 pm
In response to Cynthia Kouril @ 6

For a long time I have been interested in how the government and private sector work together or in opposition to manage the American economy. The market for homeownership offers one of the best laboratories for studying the American political economy. In the postwar era, government/business collaboration was the norm in many arenas. Ahmanson turns out to have been a master of the art. Recognizing the competitive advantages created by the legal and regulatory structure surrounding savings and loans in California in the 1940s and 1950s, he played the system to his advantage — and helped promote a dramatic increase in homeownership.

Cynthia Kouril August 17th, 2013 at 2:09 pm

Yes, what about this man in particular?

Eric John Abrahamson August 17th, 2013 at 2:11 pm

One more thought about Ahmanson in response to the part of the question that refers to looting. As I discuss in the book, Ahmanson wanted to make a profit. He did so by focusing on very efficient operations and prudent lending. In his relationships with regulators, in Sacramento and Washington, he was always respectful, seeing them as partners in the process of expanding homeownership. In the 1960s, as other savings and loan execs lobbied to be allowed to enter other lines of business, Ahmanson resisted these moves. He believed that savings and loans had a good deal under the current laws and if they looked too greedy, regulators and legislators would (and did) treat them differently.

ThingsComeUndone August 17th, 2013 at 2:12 pm

If you want to confirm that strict regulation will not prevent someone from building up a huge and profitable business in a “managed economy”, Howard Ahmanson is your case study

What about Union built homes?

ThingsComeUndone August 17th, 2013 at 2:15 pm

If you want to confirm that strict regulation will not prevent someone from building up a huge and profitable business in a “managed economy”, Howard Ahmanson is your case study, he became very rich in the insurance and Savings & Loan businesses during a time when both were regulated far more so than today, or even most living memory.

Profit Margins in savings and loan business at that time. Profits in Savings and Loan Business now. Does anyone have numbers we can trust of actual profits in the savings and loan business right before the S@L bailout?

Eric John Abrahamson August 17th, 2013 at 2:16 pm
In response to Cynthia Kouril @ 9

Ahmanson’s personal story is pretty fascinating. Like many residents of Los Angeles in the 1920s, he came from the Midwest. He grew up in Omaha, the second son of an insurance executive. His father doted on him and believed he was a genius. After dinner, when Howard was barely a teenager, they would sit and talk about business while his father smoked a cigar. His father even opened a brokerage account while Howard when Howard was barely a teenager and let him make his own trades. Ahmanson worked in the insurance industry before he left home for college and developed a keen understanding of risk. His father’s death in 1925 was a major blow and prompted Howard’s move to California. Ahmanson then started his own insurance agency in Los Angeles before he graduated from the University of Southern California. He was an innovator and became a millionaire in 1933 in the midst of the Depression.

Cynthia Kouril August 17th, 2013 at 2:19 pm

You might wan to tell the story of the Midwesterner’s invasion of California and how it transformed So. Cal.

Eric John Abrahamson August 17th, 2013 at 2:19 pm

I don’t have those numbers. By the 1980s, the savings and loan industry was very different from what it was in the 1950s. In the 1950s, under federal regulation, savings and loans had an advantage over commercial banks in the residential mortgage market. They could offer savers a higher interest rate on their savings accounts, so they had access to capital. But they were essentially in one business – residential mortgage lending. By the 1980s, the competitive advantages or protections had been eroded by changes in the law and they were free to take much greater risks (with taxpayer guarantees) in many more sectors.

ThingsComeUndone August 17th, 2013 at 2:20 pm

forces that contributed to the post-WWII residential development of California,

Were built with government regulation how are those homes doing now if we are right that government regulation can be good we should expect those homes to still be in good shape.
Of course earthquake and more insulation regulations I think came after this period so that would be a mitigating factor.
But still lots of McMansions were built cheap.

Cynthia Kouril August 17th, 2013 at 2:20 pm

TCUD

What about union built homes? Can you expand on your question?

Cynthia Kouril August 17th, 2013 at 2:22 pm

The Ahmanson built house were in the ’30s and 40′s and 50′s, before the cardboard McMansion era

Eric John Abrahamson August 17th, 2013 at 2:24 pm
In response to Cynthia Kouril @ 14

Southern California developed a reputation in the 1880s as the place to go if you suffered from tuberculosis, asthma or a variety of health problems. When the Southern Pacific Railroad completed its line to Los Angeles, Midwesterners began flocking to the City of Angels. By the 1920s, annual picnics for Iowans and Nebraskans attracted hundreds of people. Midwestern values, blended with the Mexican and Californio traditions, shaped the culture of the place. Ahmanson, like many Nebraskans, loved it.

BevW August 17th, 2013 at 2:26 pm

The Southern California housing boom of the 50s-60s, was this similar to or part of the Levittown planned communities?

ThingsComeUndone August 17th, 2013 at 2:26 pm

By the 1980s, the competitive advantages or protections had been eroded by changes in the law and they were free to take much greater risks (with taxpayer guarantees) in many more sectors.

If you had the numbers I think it would still be a fair comparison on the one hand the markets were protected and had a pretty much guaranteed profit. Just like the airline industry before deregulation and all those airline companies going bankrupt notice no airline went bankrupt before deregulation of the airline industry. Or look at the power industry small but steady almost guaranteed returns except for the 70′s oil shocks then you get deregulation and Enron.
The comparison is protected markets vs free markets and more risk.

Cynthia Kouril August 17th, 2013 at 2:26 pm

Ahmanson had a variation on relationship marketing and did it, in my opinion, the right way.

Can you tell the readers about the way he introduced himself to prosepcts and convdrted them into insurance customers?

Eric John Abrahamson August 17th, 2013 at 2:28 pm

I’ve walked through a lot of these neighborhoods that were built in the postwar era. At the time, they were heavily criticized for their sameness and cheap construction. Over many decades, many of these homes have been refashioned by successive generations of owners. Carports turned into bedrooms or garages. New bedrooms added up or in the back. Many of these neighborhoods are still working class, but they reflect a great deal of neighborhood pride. — If you haven’t read Jerome Waldie’s prose poem book Holy Land about the postwar suburb of Lakewood, I highly recommend it.

ThingsComeUndone August 17th, 2013 at 2:28 pm
In response to Cynthia Kouril @ 17

Were there more Union built homes back then? How about quality of Union built homes vs today’s homes? I’ve seen homes built in the 70′s and 80′s I assume were not Union built and they should be torn down.
I’ve seen older homes built before then in much better shape.

ThingsComeUndone August 17th, 2013 at 2:29 pm
In response to Cynthia Kouril @ 18

The Ahmanson built house

How are they holding up?

Eric John Abrahamson August 17th, 2013 at 2:31 pm
In response to BevW @ 20

Builders in Southern California in the late 1940s and early 1950s were pioneers, along with the Levitts, in mass-production housing. In the book I talk about how many of the techniques for mass production were developed in other sectors of the economy. Henry Kaiser, for example, developed some of these concepts with other builders in the construction of the Hoover Dam. He then applied them to shipbuilding during the war, and after the war, he and Southern California builder Fritz Burns brought them to home construction. Burns played a key role in launching the National Association of Home Builders.

Cynthia Kouril August 17th, 2013 at 2:33 pm

When he made the move into Savings & Loan, he offered his mortgage customers, homeowner’s insurance in the same transaction. I found that a bit coercive, if only in a subtle way. Would he be able to do that today?

Eric John Abrahamson August 17th, 2013 at 2:34 pm

I agree. The history of much of the American economy since the 1890s illustrates how businesses, fearing the ups and downs of a volatile economy and competition, turned to government to stabilize their industry.

ThingsComeUndone August 17th, 2013 at 2:35 pm

I’ve seen the same homes they seem in great shape considering their age. I would like Carpenter, Roofer, plumber’s opinions about their quality compared to today’s McMansions which I know were built on the cheap. Plastic chrome plated faucets, wood panel doors instead of solid wood, cast iron tubs that last forever vs plastic tubs. I know the fixtures are crap from experience I don’t know much about how they were put together either the new or the old homes but from what I see the old homes do seem better built.

Eric John Abrahamson August 17th, 2013 at 2:37 pm
In response to Cynthia Kouril @ 22

Ahmanson was successful, in part, because he was a great salesman. In the 1930s, the managers of savings and loans were key. They gave him access to homebuyers looking for hazard insurance. Ahmanson taught his salesman that they should call on these managers regularly. Never sit down because you never wanted to overstay your welcome. Always give them information that would be useful. Spend a year building this kind of a relationship before you ever tried to make a sale. — He was not a fan of relationship building over golf. He thought you could cover more ground and visit more people in the time it took to play a round of golf. So he discouraged this kind of salesmanship.

ThingsComeUndone August 17th, 2013 at 2:38 pm

Then the economy got better and government regulations which helped build the economy were ditched for a fast buck but people paid higher prices assuming the housing quality was still good. The builders kept the profits but now years later the homeowners are stuck with crap homes.

ThingsComeUndone August 17th, 2013 at 2:39 pm

Why where did the push for deregulation of home building and S&L lending come from it seems like they had a good thing going?

Cynthia Kouril August 17th, 2013 at 2:40 pm

One of the things that separates Ahmanson and his contemporaries from modern mortgage landers was his relationship with his regulators.

He actually seemed to believe that there was a place for regulation in his industry and that it could be a good thing.

Can you compare and contrast that with modern captains of finance?

Eric John Abrahamson August 17th, 2013 at 2:41 pm

In my research I didn’t run into a lot of information on union versus non-union homebuilding in Southern California in the 1950s. I’d be interested to know more if someone has that information.

ThingsComeUndone August 17th, 2013 at 2:41 pm

Are you old enough to remember when Masters of the Universe actually felt the need to give back? Can you remember the days when regulations were seen as good things? When the phrase “consumer protection” was used by someone other than Elizabeth Warren? If you’re too young to remember what the world was like when we had decades of prosperity and relative economic fairness in the “managed economy”, or if you want to take stroll down memory lane, back to the days of economic regulation, you may want to crack the spine on this book.

God I’m young:)

ThingsComeUndone August 17th, 2013 at 2:43 pm

How about homes built during this time period in general vs after government regulations were cut? Also home prices Why did real estate evaluators keep increasing the value of homes after the quality was cut?

Cynthia Kouril August 17th, 2013 at 2:44 pm

So, it’s “Oh, Pioneer” right up to the
“Grapes of Wrath”?

Elliott August 17th, 2013 at 2:44 pm

What became of his empire?

ThingsComeUndone August 17th, 2013 at 2:46 pm

What regulations would you suggest we bring back for home builders and the S&L industries? What would be the effects on the economy short and long term? I assume with greater upfront costs this might slow down profit but I don’t know much about the housing market. I assume long term the cost would more than pay for itself.

Eric John Abrahamson August 17th, 2013 at 2:46 pm

That’s a really interesting question and a key theme in the book. Savings and loans were a backwater coming out of World War II. Ahmanson realized the potential and was really the first in the country to try and build a chain of savings and loans. By the mid-1950s, when it was clear he was getting rich, others jumped in. Ahmanson owned Home Saving & Loan outright. Some of the newcomers created public companies, so the pressure for immediate profits was higher. As banks realized that S&Ls were taking away a significant share of the residential mortgage market, they began to push legislators to remove some of the competitive advantages enjoyed by savings and loans. Meanwhile, some savings and loan companies lobbied to get into other businesses where they thought they could make more money. All of these came in the early 1960s — the beginning of “deregulation” in my mind. In the book, I talk about Ahmanson’s reaction to the credit crisis of 1966. This was a crucial turning point.

Cynthia Kouril August 17th, 2013 at 2:48 pm

I think you are conflating two kinds of regulations. The regulations on homebuilders would be local and state building and fire codes and the like.

The regulation on the financial services industry can be federal, though banks and S&Ls are chartered at the the state level

ThingsComeUndone August 17th, 2013 at 2:48 pm

I talk about Ahmanson’s reaction to the credit crisis of 1966. This was a crucial turning point.

What would he have thought of the 80′s S&L bailout?

Epoch Calypso August 17th, 2013 at 2:50 pm

the book acknowledges that he was also known to chalk his good fortune up to luck and call himself the “undertaker at a plague” as he got rich selling fire insurance to foreclosed properties during the Great Depression.

Was this fire insurance sold to the foreclosing banks? Can you specify the service his company provided for his accrued wealth? Why were banks so willing to grant him this large profit that they could have had themselves?

Cynthia Kouril August 17th, 2013 at 2:50 pm

Ahmanson seemed to be a guy who consistently took a long view. I find myself wondering if not being accountable to stock holders has a lot to do with that. He would be able to invest near term for a long term goal

Eric John Abrahamson August 17th, 2013 at 2:51 pm
In response to Cynthia Kouril @ 33

By disposition and because of the industries he worked in, Ahmanson liked stability and disliked risk. He thought government had a role to play in stabilizing the economy. He thought homeownership stabilized communities. I tell a number of stories in the book about times when regulators were concerned because some savings and loan was in trouble and they feared that depositors would be hurt. They would often turn to Ahmanson and ask him to take over the faltering thrift. He usually did. As a result, his business got bigger. But there were also times when he wanted to expand and the regulators wouldn’t let him. Usually, he politely backed off. As I tell the story, 1966 was a turning point when he decided he’d had enough and defied the regulators. I’m not certain how his relationship with government might have changed in the deregulated era. He died in 1968.

BevW August 17th, 2013 at 2:54 pm

I talk about Ahmanson’s reaction to the credit crisis of 1966. This was a crucial turning point.

Could you tell us about this credit crisis? What caused it, how long did it last?

ThingsComeUndone August 17th, 2013 at 2:54 pm
In response to Cynthia Kouril @ 41

I am interested in the impact of both. S&L regulations were gone mostly by the 80′s and led to a government bailout. Home Building regulations are a joke now and many McMansion owners are complaining about cheap Home Depot fixtures and the cost to heat their homes the cost to insulate their homes and buy more insulting windows.
S&L’s should have been telling home builders if the free market worked that quality homes would get higher prices and bigger home loans.
Instead sq footage and amount of property decided the value of homes.
If free markets can’t do the job in the Real World then Government should step in.

Mauimom August 17th, 2013 at 2:54 pm

Welcome, Eric.

I lived in Southern California during the 1970s, and I recall what reverence Ahmanson’s name inspired.

Eric John Abrahamson August 17th, 2013 at 2:56 pm
In response to Elliott @ 38

What became of the empire is also a great question. In the 1950s, when inheritance taxes were very high, many entrepreneurs like Ahmanson created private foundations. They set up their wills so that most of their wealth — embedded in the equity in their companies — would pass to the foundation. They did this primarily so that the company wouldn’t have to be sold after their death. Ahmanson died in 1968. The next year, under the Tax Reform Act of 1969, foundations could no longer own more than 20 percent of a business. H.F. Ahmanson & Co. was forced to go public so that the Ahmanson Foundation could gradually reduce its equity to the new legal limit. So most of the value of the estate went to the Ahmanson Foundation, which is a major donor to good causes in Los Angeles and Southern California today.

Eric John Abrahamson August 17th, 2013 at 2:57 pm

Given his opposition to savings and loans getting into other lines of business in the early 1960s, I’m pretty sure he would have opposed the changes that created the crisis in the late 1980s.

jhsrcsd August 17th, 2013 at 2:59 pm

Do you think a return to a more regulated regime along the lines that we had for mortgage finance before Phil Graham came along would be an improvement?

Eric John Abrahamson August 17th, 2013 at 3:01 pm
In response to BevW @ 46

The credit crisis was sparked by the first real rise in interest rates in the postwar era — the beginnings of Vietnam Era inflation. The Federal Reserve and the Federal Home Loan Bank, each trying to take care of their constituent industries, implemented policies that forced banks and savings and loans to go head-to-head in a fight for deposits. Many savings and loans were in real trouble. Home Savings and Loan was so well managed and capitalized that Howard Ahmanson could afford to defy the regulators (he didn’t need access to the credit provided by the Federal Home Loan Bank). His defiance led to a new law that gave the regulators the ability to set prices and force Ahmanson and others to cap the interest rate they could offer to depositors.

Dearie August 17th, 2013 at 3:02 pm

Can you mention a few developments in Southern California that Ahmanson developed that are worth a look-see today?

Cynthia Kouril August 17th, 2013 at 3:03 pm

Yeah, but isn’t your beef with the appraiser then? If an appraiser puts the same value on houses with the same square footage and acreage, but one house is energy efficient or has real solid brass hardware and the other house doesn’t, that’s the appraiser’s fault.

S&Ls don’t have the right to command what a house price should be and don’t dictate building codes. Now if your loaning directly to the developer, should you be more inclined to loan to one who will build a better house? It would probably depend on the profitability

Mauimom August 17th, 2013 at 3:03 pm

Did Ahmanson make any effort to draw Midwesterners to California, touting, perhaps, his own success there?

ThingsComeUndone August 17th, 2013 at 3:03 pm

So in other words the government bailed out bad business models and hurt good ones then later on they deregulated even more and we got the 80′s S&L crisis.

Eric John Abrahamson August 17th, 2013 at 3:04 pm
In response to Mauimom @ 48

By the early 1960s, Ahmanson had become a leading philanthropist in LA. His money played a critical part in the construction of the Los Angeles County Museum of Art and Music Center. By 1967 he was just beginning to develop a coherent philanthropic vision, but it hadn’t really come together. If he had lived longer, his impact might have been greater. The Ahmanson Foundation has continued to give to LACMA and other institutions, following the pattern that Ahmanson set.

ThingsComeUndone August 17th, 2013 at 3:05 pm
In response to Cynthia Kouril @ 54

S&L’s depend on the appraiser to set home prices who pays the appraiser who regulates them?

karenjj2 August 17th, 2013 at 3:08 pm
In response to Epoch Calypso @ 43

this book is written about the time when businesses were owner operated and supervised. the owners knew the services they provided inside out. bankers at that time knew banking, not insurance.

during the years described, business owners were not devoted to profit above all; they took pride in “giving their customers their money’s worth.” business owners took pride in their communities.

Eric John Abrahamson August 17th, 2013 at 3:08 pm
In response to jhsrcsd @ 51

Its tough to find solutions to today’s issues in the history of the postwar era. After experiencing the Depression and World War II, a large majority of Americans believed in the government’s ability to solve problems. And in this era, although there was plenty of lobbying going on and Ahmanson was a key force in his industry, Washington had not yet become such a critical battleground for competitive advantage. Today, regulation largely reflects the battle between economic interests for competitive advantage. I’m concerned that the average citizen’s needs and concerns are not well represented in the fight.

Cynthia Kouril August 17th, 2013 at 3:09 pm

IDK how they do it California, but here the appraisal is part of the closing cost, so the buyer pays. But Bill Black is doing a series about appraisal fraud in the modern era, I just don’t want to go off topic here.

Eric John Abrahamson August 17th, 2013 at 3:11 pm
In response to Mauimom @ 55

Ahmanson recruited his two nephews to come to LA from Omaha. They played an important part in his business and his philanthropy, especially after his death. Other than that, I don’t think he tried to recruit Nebraskans to move to California. He continued to return to Omaha throughout his life. He gave speeches there encouraging city leaders to be forward-thinking.

Cynthia Kouril August 17th, 2013 at 3:11 pm

I actually think after this modern era of bank “shenanigans” as DOJ likes to call it [shaking head over that one] we may once again enjoy a climate where government regulation is acknowledged for its value in creating both stability and opportunity.

Crazy risk and crazy reward pays off for so very few.

Eric John Abrahamson August 17th, 2013 at 3:13 pm
In response to karenjj2 @ 59

This is a good point. It’s also important to remember that in the 1950s, commercial banks and savings and loans operated in very local markets. There was no integrated national or global financial services sector. Interest rates, for example, were higher in California than New York because there was less capital available.

marymccurnin August 17th, 2013 at 3:16 pm

Was Joseph Eichler (Northern California) as big as Ahmanson? An Eichler sells in Marin Country now for between $650,000 and $1,200,000. But they are considered fire traps.

Eric John Abrahamson August 17th, 2013 at 3:17 pm
In response to Cynthia Kouril @ 63

One of the interesting things that the postwar era should make us think about is that business/government cooperation looked a lot like what we call crony capitalism. Regulators came from the industry they regulated. The advantage was, they knew the business and they had solid relationships with the leading players. Consumers weren’t really at the table. This meant they could solve problems in informal ways that we would probably frown on today. In an effort to blow the smoke out of the back rooms, we have made the mechanics of regulation far more burdensome for everyone. I keep wondering if there is a way to recapture the efficiency of the earlier era without losing the equity gains that we all hope for.

Eric John Abrahamson August 17th, 2013 at 3:19 pm
In response to marymccurnin @ 65

Eichler was a builder/developer. Ahmanson played a big role in mass production developments, but he did so as a lender. Eichler gets a lot of credit for his innovations in housing design. Ahmanson helped more people become homebuyers by making the lending process more efficient.

jhsrcsd August 17th, 2013 at 3:19 pm

So you’re saying that the middle class has essentially lost any say in economic policy and that we’ll just have to learn to live with whatever crumbs fall off the table as the economic titans wrestle each other on K Street?

marymccurnin August 17th, 2013 at 3:22 pm

Do you think that housing developments are a thing of the past? The suburban neighborhood I live in now is falling apart. Could an Ahmanson help restore faith in housing generally?

Eric John Abrahamson August 17th, 2013 at 3:22 pm

I’m always leery when we talk about government as if it was something other than us. I would say that the process of political competition led to regulatory regimes that promoted bad business models. They also untethered the relationship between risk and consequences. That was a key problem in the 1980s and in 2008.

karenjj2 August 17th, 2013 at 3:23 pm

i.e. you ‘re probably young if you don’t recall that customers were renamed consumers, corps were renamed companies, and the war department was renamed defense.

this sounds like a great book illustrating the life of a business man whose success is far greater than today’s pathetic measure of data entries; i.e., money.

Cynthia Kouril August 17th, 2013 at 3:23 pm

Sadly, I think the regulators were simply more ethical and believed that they were there for the economy as a whole, not just to get their ticket punched at a government job so they get a much better paying job as a reward from an entity they formerly regulated.

There is a real “you gotta play ball” mentality today. This sounds corny, but a genuine lack of patriotism, and “how can I get mine” mentality to the revolving door of government service.

Cynthia Kouril August 17th, 2013 at 3:24 pm
In response to marymccurnin @ 69

Their certainly not a thing of the past on America’s first suburb, Long Island. Only now they are attached houses and low rise apartment condos

Eric John Abrahamson August 17th, 2013 at 3:25 pm
In response to marymccurnin @ 69

I don’t think large-scale housing development is a thing of the past. After 2008, it may be less speculative, but that’s probably a good thing. A lot of the press in the housing industry today suggests that there is growing pent-up demand for single-family homes.

Cynthia Kouril August 17th, 2013 at 3:25 pm
In response to karenjj2 @ 71

Ding ding ding, Karenjj2 wins the internets today!

Cynthia Kouril August 17th, 2013 at 3:27 pm

Here on Long Island we are starting to see these little mini developments. A house on 5 acres gets torn down to make 8 houses on 3/4 acre on a cul de sac.

Eric John Abrahamson August 17th, 2013 at 3:29 pm
In response to jhsrcsd @ 68

I think the political system is dangerously dependent on lots of cash and polarized by other demographic trends. (See The Big Sort). In Ahmanson’s day, he was a leading backer of California Assembly Speaker Jesse Unruh. Unruh used Ahmanson’s cash to help finance the campaigns of other legislators, thus gaining their loyalty. But Unruh was loyal to Ahmanson on issues that reflected regulatory competition among economic rivals. He considered himself free to pass social legislation that would benefit working class Californians who were his key constituents.

BevW August 17th, 2013 at 3:30 pm
In response to Cynthia Kouril @ 76

Here in the DC area it is townhouses as far as you can see. Take down businesses (local nursery is gone) and build rows of townhouses.

Epoch Calypso August 17th, 2013 at 3:30 pm
In response to karenjj2 @ 59

That is myth:

Mortgage insurance began in the United States in the 1880s, and the first law on it was passed in New York in 1904. The industry grew in response to the 1920s real estate bubble and was “entirely bankrupted” after the Great Depression. The bankruptcy was related to the industry’s involvement in “mortgage pools”, an early practice similar to mortgage securitization. The federal government began insuring mortgages in 1934 through the Federal Housing Administration and Veteran’s Administration, but after the Great Depression no private mortgage insurance was authorized in the United States until 1956, when Wisconsin passed a law allowing the first post-Depression insurer, Mortgage Guaranty Insurance Corporation, to be chartered. This was followed by a California law in 1961 which would become the standard for other states’ mortgage insurance laws.

Again, what was Ahmanson’s service and where did his wealth come from?

Eric John Abrahamson August 17th, 2013 at 3:35 pm
In response to Cynthia Kouril @ 72

One of the reasons I wanted to write this book was to try to better understand what has changed between then and now. Certainly the war helped promote a shared value system and a sense of the common good. There are lot of ways to explain the erosion of that value system since the 1960s, but I think fundamentally we have probably returned to a more historically normal state of competition in business and society that cultivates a “got mine” mentality.

Eric John Abrahamson August 17th, 2013 at 3:38 pm
In response to Epoch Calypso @ 79

Hi, I’m not sure I understand your question. Ahmanson owned a company called H.F. Ahmanson & Co. It started as an insurance agency. After the war, H.F. Ahmanson & Co. became the owners of Home Saving & Loan, which became the largest savings and loan in the United States. Is that what you were asking?

Cynthia Kouril August 17th, 2013 at 3:40 pm
In response to Epoch Calypso @ 79

He inherited some money, used it to start an insurance business, built up that insurance business selling homeowners insurance to new homebuyers, and then used the profits from that to start his S&L.

That’s where his money came from. The “service” he provided was insurance products and mortgage products.

The difference as Karenjj pointed out, is back in those days, sellers regarded the people they sold to as customers and thought they actually owed them a good product and worked for repeat business based on doing a decent job for the customer.

Our country once had a different ethos. Pride in your work, rather than a race for the quickest buck.

Eric John Abrahamson August 17th, 2013 at 3:40 pm
In response to Cynthia Kouril @ 76

This kind of in-fill development has its pros and cons. Long-time residents resent the increase in density. Urban planners who see environmental benefits from greater density are big fans of this trend.

Dearie August 17th, 2013 at 3:41 pm

Any final intriguing tidbits that might encourage a reader to purchase?

Cynthia Kouril August 17th, 2013 at 3:41 pm

To change topic just a tiny bit and since we have a few movie fans and Angelinos around, would you tell the readers about Ahmanson’s connection to the Academy Awards, albeit a bit indirect?

Eric John Abrahamson August 17th, 2013 at 3:44 pm
In response to Dearie @ 84

Ahmanson was an odd sort of executive. After he had a heart attack in the mid-1950s, he stopped coming to the office. So he delegated a lot of the day-to-day to other people, but he was very hands-on about the strategy. I think people interested in management will be intrigued by his style.

Eric John Abrahamson August 17th, 2013 at 3:45 pm
In response to Cynthia Kouril @ 85

For many years the Academy Awards have taken place at the Dorothy Chandler Pavilion, which is part of Music Center in Los Angeles. Ahmanson was a major contributor and worked with Chandler on other philanthropic initiatives. The Ahmanson Theater at Music Center is named for him.

Cynthia Kouril August 17th, 2013 at 3:46 pm

I find it sad when beautiful old houses get torn down to make way for McMansions, but somebody has to pay the property taxes or we will end up like Detriot.

The other day I was at the amazing home of woman who owns 50 acres on the Gold Coast, great beautiful old house, original windows, they never installed central air conditioning, it’s looks like it did when Cole Porter last visited. And all night I was obsessed with how huge her property tax bill must be instead of focusing on the murals on the walls.

So, if folks can’t afford the taxes on 5 acre zoning, you have to expect 3/4 acre zoning, or how do pay the school teachers?

Cynthia Kouril August 17th, 2013 at 3:47 pm

Maybe he though Howard Hughes had started fad?

Eric John Abrahamson August 17th, 2013 at 3:47 pm
In response to Dearie @ 84

Angelenos will also like learning about Ahmanson’s second wife, Caroline Leonetti. She was a remarkable entrepreneur. She had her own charm school and was a regular on the Art Linkletter show. Kind of an Audrey Hepburn look. She built her business as a single mother in the 1950s long before she met Ahmanson.

Cynthia Kouril August 17th, 2013 at 3:48 pm

He also had a big effect on bank branch architecture, could you tell the readers a bit about the thinking behind his choices?

Eric John Abrahamson August 17th, 2013 at 3:48 pm
In response to Cynthia Kouril @ 88

The price of being a NIMBY.

BevW August 17th, 2013 at 3:51 pm

As we come to the last few minutes of this great Book Salon discussion,

Eric, Thank you for stopping by the Lake and spending the afternoon with us discussing your new book.

Cynthia, Thank you very much for Hosting this great Book Salon.

Everyone, if you would like more information:

Eric’s website and book

Cynthia’s website

Thanks all, Have a great weekend. Tomorrow – Mark Blyth / Austerity: History of a Dangerous Ideal; Hosted by Robert Kuttner, (The American Prospect), author of, Debtor’s Prison: The Politics of Austerity Versus Possibility

If you would like to contact the FDL Book Salon: FiredoglakeBookSalon@gmail.com

Eric John Abrahamson August 17th, 2013 at 3:51 pm
In response to Cynthia Kouril @ 91

Ahmanson worked with the artist Millard Sheets on the design of the Home Savings buildings. Many of these structures are owned by Chase today. Built with travertine marble to reflect an air of permanence that would give depositors confidence, the buildings integrated sculpture, stained glass and mosaic to reflect a sense of local (though often mythologized) history. Ahmanson found that the aesthetics played a big role in attracting deposits. They also remind us today of how local this business was in the 1950s and 60s.

Eric John Abrahamson August 17th, 2013 at 3:52 pm
In response to BevW @ 93

I enjoyed the experience. I’m also happy to follow up later if there are more posts to this conversation.

Cynthia Kouril August 17th, 2013 at 3:54 pm

Eric thank you so much for sharing your time with us.

Cynthia Kouril August 17th, 2013 at 3:55 pm

Everyone else, thank you so much for stopping by and for contributing so much to the discussion. And, as always, Bev is a goddess.

Epoch Calypso August 17th, 2013 at 3:58 pm
In response to Cynthia Kouril @ 82

So the mortgage insurance industry was completely bankrupted but Ahmanson’s fire insurance business made a killing. Hmm. Why were the banks who were already in trouble willing to provide Ahmanson large profits?

Elliott August 17th, 2013 at 3:59 pm

Thank you!
Best of luck on your book tour

Thanks Cindy, great intro and great discussion.
Shows it can be done right, hopeful.

Thanks Bev

karenjj2 August 17th, 2013 at 4:00 pm

Thank you, Eric and Cynthia; a very enjoyable discussion.

Eric John Abrahamson August 17th, 2013 at 4:03 pm
In response to Epoch Calypso @ 98

Hi Epoch Calypso. I’m not sure about what time period you’re talking about. In Ahmanson’s day, the banks and the savings and loans were pretty healthy. Ahmanson made money in the fire insurance business, but a greater percent of his wealth was reflected in the success of Home Savings. Banks tried to compete with him, but they were also in lots of other businesses. He was focused on one thing — residential mortgage lending. That’s part of what made him successful. Hope that helps.

Phoenix Woman August 17th, 2013 at 4:22 pm

I’m sorry I missed this!

I wanted to ask if this civic-minded Ahmanson was related at all (father? uncle?) to the Howard Ahmanson who is almost singlehandledly funding the church-based antigay movement in Africa. The irony that Cynthia speaks of would be complete, if they were related.

Eric John Abrahamson August 17th, 2013 at 4:35 pm

This Ahmanson is Howard Ahmanson, Jr.’s father. Junior was eighteen years old when his father died. I talk about their relationship in the book.

Epoch Calypso August 17th, 2013 at 4:35 pm
In response to Phoenix Woman @ 102

Yes, Senior was papa. Another reason I was curious about Senior’s ethics.

Epoch Calypso August 17th, 2013 at 4:41 pm

I am interested in his Depression era elevation to millionaire. It sounds suspicious.

Eric John Abrahamson August 17th, 2013 at 4:49 pm

Trading stock as a teenager in the early 1920s, Ahmanson built up a nest egg as the stock market boomed. He used to tell a story that in 1929 he was in an elevator when the elevator man stopped the lift and tried to sell him some insurance stock. Ahmanson decided then and there that the speculative fever was out of control, so he sold all of his shares before the crash. Going into the Depression, as he said, he was “beautifully liquid,” which gave him cash to invest in depressed real estate.

At the same time, in the late 1920s, insurance companies wouldn’t write policies on foreclosed homes. Ahmanson thought that was crazy because he figured the banks wanted to resell these properties and would take care of them. Before the Depression hit, he started writing hazard insurance on foreclosed homes. When the depression hit and foreclosures skyrocketed, he sold a lot of insurance. He said it was like “being an undertaker at the plague.” He got lucky and happened to be selling a service that did better during an economic downturn.

karenjj2 August 17th, 2013 at 5:36 pm

wouldn’t write policies on foreclosed homes. Ahmanson thought that was crazy because he figured the banks wanted to resell these properties and would take care of them.

and Amanson was right: my folks got their first house around 1940 in Grand Rapids, MI, using the equity in their paid-for car as down payment plus installing the oak flooring and painting with the materials provided by the bank!

What a different world that was.

Epoch Calypso August 17th, 2013 at 6:46 pm

It appears the Feds established the HOLC in ’32 which purchased foreclosed mortgages as a means of stabilizing banks. Is it possible that Ahmanson made his good profit, in a time that banks could not afford to sacrifice their own, off the federal government?

Eric John Abrahamson August 17th, 2013 at 7:05 pm
In response to Epoch Calypso @ 108

That’s a good question regarding HOLC. I didn’t find anything in my research that referred to Ahmanson’s relationship with HOLC. More often, Ahmanson appears to have let some of the savings and loans run a tab on the insurance they were buying on their foreclosed properties. Then he might take ownership of a piece of property in lieu of payment. In this way he accumulated valuable property which he sold later after prices had risen.

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