photo: Warren Wong
There are no walls in my new offices. Instead, each of my team’s desks is shaped like a donut with a seat in the middle. They make me think of the battle stations on some sci-fi star cruiser; everybody’s tools are close at hand, and there are no impediments to communication. All it takes to talk, actually talk, to anybody else in the room is the twist of a chair. The idea extends to the walls of the office itself. Instead of being located in some office park somewhere, the office takes up the entire 41st floor of a round building in downtown Minneapolis. With a glance around the room, my team members can connect with one another. And with a glance out of the expansive windows, they can connect with the city they are serving.
Right now, the team is small. We have an entire floor of the building, but we don’t use much of the space. The actual work area occupies only a small core of the center of the huge room. But today, my team members aren’t alone. They’ve brought their families. I wouldn’t have had it any other way. And so as I sit there I watch, delighted, as young boys and girls race around the empty outer edges of the massive open room.
The children may not be using my office as an office, but they are using it well nonetheless.
I realize, with surprise, that even though my own family is not here, I am happier than I have ever been before.
And then, through the fog of my euphoria, I see one little boy at the far reaches of the room. He is just staring out the huge glass windows at the city below. I see him and I remember doing the exact same thing. In fact, my earliest memories are of standing in that exact same spot, watching that same city, and imagining what wonders my future would bring.
I had no idea what the world had in store for me. And I have given up trying to guess.
I was born in 1966 to Benjamin Peterson and Sarah Peterson. I was born just one year after they were married. My father had been 62 years old then. He liked to claim that he’d taken so long to start a family because he’d been married to his business. But I knew the truth was more basic; it took him 62 years to find my mother.
For her part, my mother was 21 years younger than him. My father liked to joke that Sarah was his trophy wife. But I could see another answer in his eyes. I knew that he could imagine no one more beautiful than her.
But all that romance aside, I wasn’t raised by a man who could chase after me. And so, instead, he brought me to work. I literally grew up surrounded by my father’s business, the Minneapolis Lakes Savings and Trust. The bank had survived the great depression in the stable hands of my grandfather. In those days, my family had given up their own home in an effort to avoid calling the loans of those they had lent their money to. And it had almost all been for naught. But, in the end, the bank had survived and the kindnesses my family had performed earned them the trust of the community. I grew up embraced by that community, and loved by it. Even a generation later, people in the Midwest remember the generosity of those around them.
My father had gotten his own start in the bank during the Great Depression. In good time, though, he had taken over from his own father. And he grown the bank, albeit slowly. Eventually, he financed the very building I’m sitting in now. He financed the construction and then he bought one floor for the bank itself. The 41st floor. The one I’m sitting in right now. And so, I grew up looking out that window.
At first, it was in simple wonder. But as time passed, my view began to change. The city was growing, but the bank seemed to stand still. My father was a child of the Great Depression and so he was a very conservative man. As I looked out the window, I began to see opportunities we had passed by. And as I looked out the window I began to see the obligations the city owed to my family.
I didn’t only look out the window through. I also watched my father as he worked. At first, I admired everything he did. But as I grew, I changed. I started to get bothered by my father’s lenience with borrowers. He seemed to eager to forgive the obligations of others. All too often, or so I thought, my father used to hang up the phone after a difficult conversation and say, simply, ‘there but for the grace of G-d go I.’
I didn’t see things the way he did. Instead, I saw money that I was owed that would never be mine. And all because people just did stupid things and weren’t made to learn from them. They didn’t buy insurance, they didn’t put away savings, they spent more than they could afford, they ate too much and sick. And then when their mistakes caught up to them, they begged my father to help them out. And all too often, or so I thought, he did.
As I saw it, they didn’t pay the price of their poor decisions. And if they didn’t pay the price, they would never learn a better way.
I used to tell myself, as I watched my father patiently defer debt after debt, that the Great Depression was long over. My father’s out-of-date ideas were stopping him from turning something good into something great.
I knew I could do better.
And so, like clockwork, I got my MBA, married a beautiful woman and bought a big house. And when I was 25 years old, my reluctant father finally handed over the keys to the family business. What happened next became the stuff of business legend.
I thought at the time that I had simply been brilliant, but I know now that I had simply been blessed with the miracle of timing.
I took over the bank just as the 1980s Savings and Loan Crisis was unfolding. Minneapolis Lakes Savings and Trust was a well-financed and unusually strong bank. I leveraged everything it had buy distressed assets from all over the country. I revised his father’s lenient policies and established a new – and extremely effective debt-collection department. As I saw it, the more credit I could make available to people who could actually pay their debts, the better it would be both for me and for society as a whole.
By the end of the 1980s, I’d ditched the Minneapolis Lakes Savings and Trust name for the far simpler LakeCorp. The bank had become one of the largest in the United States. And, unusually, it wasn’t a public institution. Instead, I owned the whole thing. I bought the entire circular tower my father had once financed. And I moved my own offices to the top floor. When I looked out the window, I saw an empire. I could see that nothing had been left on the table. I’d taken a midsize regional bank and made it a colossus.
I was proud of what I’d done.
Eager for more, I surrounded himself with like-minded men. They were aggressive and powerful. They were doers. They had beautiful wives and homes. And they inspired the jealousy of others. We were captains of industry. Even when we visited New York, we were treated like royalty.
And then, in 1989, at the age of 95, my father died. I showed up at his side at the last minute. We hadn’t spoken in almost a decade and we barely spoke even then. The old man simply looked at me and said, quite simply, “Providence will show you the error of your ways.”
I ignored the message.
Instead, I fulfilled my duty and waited until the old man was gone. And then I went right back to work as if nothing had changed.
The bank kept growing and I bought more and more assets; from mortgages to mineral rights. Providence would teach me nothing. Diversification would protect me from the mistakes that had brought others down. That was just the way it worked.
I divorced my first wife in the mid-80s. She had been a trophy and she was a trophy no more. I married two more times. I didn’t have much to do with my children. The way I saw it, they were simply there to keep my wives busy. And I didn’t resent the rich child support payments that followed my relationships. They were so generous that the press covered them. Like everything else, they were a sign of my incredible success.
And then, I got sick.
The sickness was nothing life-threatening. It was just a nasty bout of viral pneumonia. It was easily survivable for a 40-year-old man. But it took me out of the game. For just one week in September 2008, it took me out of the game.
It just so happened that that was the week Lehman Brother’s collapsed. I knew then, and I know now, that I could have maneuvered through the resulting storm. People knew I paid my debts. They would have trusted me when I told them their patience would be rewarded. I knew I could have stabilized things long enough for calm waters to return.
But I was in a hospital bed – nearly delirious from the virus running through my body. When executives from Goldman Sachs or AIG or Bank of America called, I could not be reached. They, quite reasonably, thought I had lost my cool. They called their loans.
With asset prices severely depressed, the bank had to sell everything almost overnight. I went into the hospital a respected billionaire. I came out with my single largest asset wiped away from existence. Tens of thousands lost their jobs.
Of course, LakeCorp wasn’t my only asset. But it also wasn’t my only obligation. Bit by bit, I found myself selling houses and cars. Before long I was living in a foul-smelling budget apartment in a complex I had once owned and I was driving an old beater of a Ford Explorer my gardener used to borrow. And, of course, my friends vanished. They weren’t the kinds of people who associated with a failure. I couldn’t blame them. I wasn’t either.
When I finally filed for bankruptcy, the national news followed the story. But they soon lost interest and in the quiet months that followed, I took a job as a teller at a bank branch LakeCorp had once operated. But the storm had not yet passed. The bankruptcy had eliminated most of my obligations; but I had seven children from three different marriages and I owed child support for three of them. I had three minor children and no money to support them.
I pleaded with the courts to cut the payments, but they had little pity for a man who had been a billionaire the year before. They found me in contempt of court and with that, I lost my job as a bank teller. Broke, I moved into my car mere weeks before it broke down. Even after it died, I stayed in it. I had no place better to go. I hardly noticed when the courts cancelled my driver’s license. They thought all my apparent poverty was simply a show. They were going to squeeze me into compliance.
I found a job stocking shelves in a nearby store. But I couldn’t begin make my payments. And so, in 2015, I was arrested for contempt of court. I spent two horrifying weeks in jail. By the time I was released, my Ford Explorer had been towed and I had a criminal record. I wouldn’t have hired me. Reluctantly, I moved into a downtown shelter and started panhandling at a freeway offramp.
I had nothing, not even a cellphone. As far as anybody could see, I was just another bum on the street. That was all I could see as well. My only reminder of my old life was that circular building. When I looked up from the freeway offramp, I could still see the window I used to stare out of as a child.
I guess it natural that I began to hate myself. I was clean, I was able-bodied, I was well-educated and I was smart. He should have been able to meet at least some of my obligations. But I couldn’t. Everything was beyond me.
And then, one winter day when I was freezing in what passed for a coat, I realized that my father had been right. Providence had showed me the error of my ways.
I made myself a little sign then. It read “Jack Peterson, Banker.” The second line read: “Must pay child support, please help.” The way I thought of it, if I had nothing else to offer, at least I could serve as an example to others. The sign was kind of funny and so a local paper wrote it up. But the story didn’t sudden change because of it. Instead, I spent day after day and month after month begging for child support at that freeway offramp.
My confidence was shattered and my hubris torn down.
As I looked at the drivers of the cars, I found myself saying what my father once had: “There but for the grace of G-d go I.” I knew I deserved my fate.
And then, one spring day, a man in a Honda Civic pulled up onto the shoulder next to me. He got out of his car and he asked, simply, “Are you really Jack Peterson?”
“Yes,” I said, a bit confused.
“Are you the Jack Peterson who owns Grasslands Oil?”
I searched my memory. And then I knew what he was talking about. Grasslands Oil had some worthless claims somewhere near the Rockies. It had been one of the assets so meaningless nobody had bothered to seize it.
“Yes,” I answered, tentatively.
“We’d like to buy it,” said the man.
The man offered only a few thousand dollars, but I wasn’t an idiot. If they’d bothered to track me down at a freeway offramp; something more had to be at stake. I investigated and before long I realized what I had. A huge oil and gas find had occurred just a few miles from the claims I owned. Suddenly, that one abandoned asset was worth tens or even hundreds of millions of dollars.
Just like that, I was back in the game.
I was back in the game, but I wasn’t the same man I’d been before. Debt and its repercussions had reinvented me. G-d had reinvented me. The very concept of interest gnawed at me. It was the most natural of things. Interest was charged because of the risk that another might not be able to repay. But I knew now that interest was not simply a passive acknowledgement of risk, it made that risk real. And along the way it created new and concrete consequences that supercharged the effects of unfortunate circumstance.
I knew, without debt, that I would never have suffered as I did.
And as I looked over the history of my family, I realized the dangers of debt were written throughout it all. A financial bust had almost destroyed my grandfather 80 years earlier. He had survived, earning the trust of his community along the way. But none of it had to happen. When the Great Depression came, and when the Great Recession came, asset values dropped and borrowers found themselves drowning in obligations they could not possibly fulfill. It was the chain of consequence, made real by debt, that raced upwards and claimed everybody it touched.
But Providence had taught me the error of my ways. And now, Providence had blessed me so I could find another road forward.
The first thing I did was buy back my father’s old office. Then I moved into it, forgoing any sort of apartment. The place had a shower and that was all I needed. I moved into the office so I could spend all of my time planning. I had to find another road forward, and I didn’t know what it was.
But, bit by bit, as I stared out the office windows, my plans began to take form. A few months in, I began to hire my team. But instead of surrounding myself with hotshot bankers, I built a team of people who bought into my vision. I hired a lawyer excited to write up new kinds of contracts and an analyst stoked to develop new kinds of scoring and executives eager to raise the investment necessary to supercharge the idea and IT experts dedicated to developing the management systems that could make it all work. Finally, I hired salesmen eager to pitch my product to open-minded mortgage brokers. And I discovered something I hadn’t expected. I discovered that I liked these people. I discovered that I loved them.
And now, I’m sitting at the conference table and a 32-year-old black woman named Susan Jones is sitting with me. Her husband and two children are at her side. In the world I’d once lived in, no circumstance would have brought us together. But it is circumstance that has brought her to me now. A health scare drove her into debt and her credit was destroyed. And then I met her. I visited her and I saw that she took excellent care of her possessions; the apartment she rents is clean and in good shape, her kid’s toys all work. And she and her husband are conscientious about their jobs.
Susan Jones is not a rich woman, but her character shines through and I am proud to call her a friend.
And that is why she – a poor woman from a bad neighborhood – is about to sign an agreement with me, a man who was once the most powerful banker in America. The two of us are about to buy a house, together. She will own 20% and I will own 80%. She will pay rent on the 80%; to be set annually by a normally automated third-party assessor. Susan will have a fund to draw on for routine repairs while major repairs and renovations will have to be mutually agreed on. Critically, Susan will never be underwater. She’ll own the same percentage whether house prices rise or fall. If she stops paying rent then I will be able to sell her home, taking 80% of the proceeds. But she will still get her 20%.
And as she is a part owner, I am confident Susan will take good care of the place. Both of us have a stake in the value of the home.
As a final incentive, Susan isn’t stuck with 20% ownership. She will have the right to buy more of the house from me at any time, based on the most recent assessment of the property. Instead of a mortgage, and interest, we are invested, together, in an asset.
With that, so much danger is eliminated. Instead of realizing profit by giving life to risk, I will share in the ups and downs of my partners. I will create the reality my father and grandfather could only dream of; a reality in which a financial downturn does not destroy the families caught within it.
I look around the room once more. And I see the little boy is still standing there, looking out the window. I see him and I know what he sees. He sees what I saw when I was his age; a city filled with wonder.
But unlike me he won’t grow up to see a city defined by lost opportunities, unmet obligations and fear. Instead, he will grow to see a city defined by hope and aspiration.
He will grow to see a city forever filled with possibility.
I smile again then, surrounded by the people I have come to love.
I pick up the pen in front of me. As if on cue, the crowd hushes and the children stop running.
And then, surrounded by sudden silence, I lean forward and sign the first of the Benjamin Patterson Mortgage Agreements.
The Torah reading of Nitzavim-Vayelech is described as a covenant with the nation. The covenant, also called a poem and a curse, is named as a witness against the Jewish people. As the reading puts it: “when many evils and troubles have befallen them, this poem shall testify against them as a witness.”
These curses start with the people observing the idols of the nations that surround them. The idols are described as abominations (sheketz), the only time idols are defined in such a way. But the idols are not only given a unique adjective, they are also given a unique noun. They are called Gelulaim. The word Gelul implies a cycle; it points to simple cause and effect in a world that goes around and around. The world of Gelulaim is a world without an historical arc and without a greater divine plan. Unlike G-d, idols of wood and stone and silver and gold are inanimate servants of natural law. They are not truly alive. And their world, fully defined by cause and effect, is abominable to G-d.
The reading warns that, surrounded by this world, there will be those who claim “I shall have peace though I walk in the stubbornness of my heart.” They deny there is a greater morality at work. And as the nation is rotted by those described as headstrong and intentional sinners, the nation will come to be cursed. It will become an example to the nations.
Only when the people recall the curses recorded in this reading will they be ready to return to G-d. Only then will they be brought back to their land and be showered by G-d’s blessings. They will be redeemed, but they will not be the same people they had been before. Their desire to ignore G-d will have been erased and they will embrace Hashem with all their hearts and all their souls.
In this story, Jack Peterson goes through the same process as the people of Israel. He worships a world of cause and effect. He sees a world without intelligence. He is headstrong and stubborn. In his story, his father’s admonitions serve as a warning for him. They serve as the song-witness described in this story. When when everything conspires against him it is this witness – the last words of his grandfather – that opens the door to his redemption.
It is only when he is begging on the side of the freeway offramp that he understands the source of his suffering and is ready to be freed of it.
It is only then that he can dedicate himself to Providence.
p.s. I chose a banker for this story for a few reasons. First, S’dom and Amora are mentioned as prior examples of the curses the people will face. While S’dom and Amora had no problem paying their obligations (offering payment to Avraham for his rescue), they are places that offered nothing to those who had not earned it, even travelers. Perhaps they feared the impact of such decisions. S’dom and Amora were places of creation without holiness; charity was beyond them.
Second, later in the reading, the Shmita year, the year in which debts are forgiven, is also mentioned. It is during the Shmita year that the Torah is read as a reminder of the values of Hashem. The Shmita represents yet another of the Torah’s attacks on the reality of interest and debt. These attacks run throughout the Chumash. Debt focuses on the risks in our world; that is how it is priced. It gives life to risk and reality to evil. Even if all goes well, debt finance enables people to dedicate years of future earnings to the acquisition of assets. This, all by itself, drives the price of those assets up far beyond what would otherwise be affordable.
In contrast to debt, equity investments like the Benjamin Peterson Mortgage Fund are built on opportunity and give reality to the good.
Image: Chris Yarzab, Flickr