Allan Sloan: Remembering Art Snyder, a banker who did good work
Hating bankers is all the rage these days. Hey, what's not to hate when we hear bankers whine about being "demonized" while knocking down multimillion-dollar pay packages from banks that wouldn't exist if U.S. taxpayers hadn't rescued the world financial system?
I was especially sensitive to the bankers' self-pity, because even as they carried on in Davos about how unfair life was to them, I was preparing for the memorial service of an unsung hero: Arthur F.F. Snyder, the kind of guy who gave banking and business a good name.
Art, who morphed from a news subject of mine into a teacher and then a friend, made venture capital-like loans to companies like Continental Cablevision and Jamesbury that came to employ thousands of Americans and make billions of dollars for shareholders. He financed other, less spectacular successes, too.
I met him in 1972, when I covered banking for the Detroit Free Press, and he was imported from Boston to fix Motown's ailing Bank of the Commonwealth. He left in 1976, but we stayed in touch.
Art didn't get his picture on magazine covers. He wasn't, for the most part, high profile outside Boston. He didn't leave a vast fortune when he died in December at the age of 92. But he changed many lives for the better - not because he was a do-gooder, but because he did good work.
"He was a larger-than-life figure who played a central role in . . . the development of today's venture capital industry," says Howard Anderson, co-founder of Battery Ventures who teaches entrepreneurial studies at MIT's Sloan School.
Hence the extraordinary late-January event I attended: a touching memorial service for a deeply capitalistic banker during a time of anti-banker rage.
More than 200 people braved the ice and cold to attend the celebration of Art's life at the First Unitarian Church in Dedham, Mass. I was one of five eulogists. The others were a family member; a sailing and business friend; a Kenyan MIT graduate Art befriended and whose company he helped launch by cutting a personal check; and a co-founder of Continental Cablevision, which started with $600,000 of capital and fetched $11 billion when it was sold 33 years after Art first financed it.
Art loved banking, but he was no naÃ¯f. His self-published 2008 book, "Generalizations of a Banker," had lines like, "Every 20 or 30 years the bankers, by their greed, almost destroy the country," citing disasters ranging from the First Bank of the United States in 1795 to "the subprime mess today." He sure got that right.
Amos Hostetter, the Continental Cablevision co-founder who eulogized Art, says, simply, "He was a god." Hostetter says that after spending months vainly seeking capital at banks throughout the country, he came back to Art, with whom he used to carpool to work.
After throwing Hostetter's elaborate business plan into the trash and asking him to just explain why his plan deserved backing, Art did more than agree to make a loan. He gave Hostetter a letter to show potential investors saying that Bank of New England would lend Continental $300,000 if it raised another $300,000 of capital subordinated to the loan. "Without that letter, we'd never have gotten started," Hostetter said.
A few years later, Art asked Continental to sell the bank a 5 percent stake at the founders' price, which was essentially zero. Hostetter agreed. When Continental was sold in 1996, that stake was worth $400 million.
Art, who retired a decade ago, began to grow disenchanted as many banks changed from making loans to hold for the long run to making loans to sell for a quick boost to the bottom line. Regulators and legislators have trouble distinguishing between commercial banking and investment banking, but Art saw a bright line. "Investment bankers who date your daughters are looking for a one-night stand," he'd say. "Commercial bankers marry them, and help raise the kids."
Art didn't fix Bank of the Commonwealth, which muddled along and was sold for a pittance in 1983. But even so, Art Snyder and his disciples and many other people like them are proof that you can do God's work while doing Mammon's.
Allan Sloan is Fortune magazine's senior editor at large.