Mark Singer

WHILE MAKING the world go round, money doesn't recognise national or geographical boundaries. The global economic system flows not with ideology but with currency, and although it's a complex organism of inter-dependent parts it is delicate enough for a nick at one end to cause a virus to spread throughout.

The Penn Square Bank was an ordinary neighbourhood bank in small-town middle America. It stood in a shopping precinct in Oklahoma City and moved in just a few years from financing new patios and lawn mowers to a point where its collapse, in 1982, could have brought down the whole U.S. economy plus a chunk of the Third World. Its fall, if unchecked, would have made the depression of the '20s seem like a hole in the pocket.

What makes the Penn Square story so strange is that its decline was not brought about by greed, fraud or corruption. Rather it was a conspiracy of circumstances aided by a large dose of stupidity. The prime ingredients were: the OPEC oil price increases of the early 1970s, the supposed oil and gas deposits in Oklahoma, the mechanisms of finance in "th'awl bidness", the spirit of what the author calls "Okiesmo", a little of the old college baseball cap and a brace of characters so odd that any novelist inventing them would be accused of unreality.

The chief loans officer at Penn Square had spent his college years hanging nude from lamp posts, and he brought a similar professionalism into the boardroom. As Penn Square escalated the scale of its loans, it was common for a deal to be concluded within 20 seconds if the borrower was small fry – ie only needed a million dollars – with a "yeah, you look okay to me".

Meanwhile, the de-regulation of the U.S. banking system enabled small banks to lend beyond their means by selling the loans 'upstream' to bigger banks. The goings-on at Penn Square eventually involved even the massive Chase Manhattan. At one point money was borrowed from Chase Manhattan to pay back interest on a previous loan from Chase Manhattan.

Singer's historical perspectives and analysis are spot on. What marrs the story is his aiming for a post-Wolfe New Journalism and hitting a new journalese. Too often he's impressionistic when he should be investigative, filling half a page with irrelevant physical details: a man "shaped like a relief pitcher", a face "creased like an old road map" or a handshake "like cold cooked spaghetti". Another flaw is at the end. Face-to-face with the protaganists during the aftermath, Singer wastes wordage describing their offices, homes and automobiles instead of asking questions.

The trail of economic disaster that Penn Square's collapse began was halted when the U.S. Government "bought" Continental Illinois – a bank which had lost One Billion One Hundred And Sixty Million dollars in three months and was about to drag every major bank in America into the mire with it.