Thursday, July 31, 2008

Bottom Feeders

Every orphan has a story — and a price — at this homeless shelter.

Posted By on Thu, Jul 31, 2008 at 4:00 AM

All of them are homeless and a few of them hopeless. Some of them come from bad homes and have been abused. Each one has a story.

Once somebody loved them, but now they stand in the shade and roast in the sun. They sit on flat tires and rusted rims, with busted transmissions, engines that won't crank, and ignitions that might or might not have keys.

But after 30 days in the shelter of the city's motor vehicle impound lot, scores of these orphans are about to get new homes and owners on this 98-degree afternoon, for prices ranging from $50 to $1,900.

Every Tuesday at noon, at the old International Harvester lot in Frayser, the city auctions off about 100 vehicles. Like mutts in a kennel, they can be admired from afar through a cyclone fence for 30 minutes before the auction, but no close contact or inspection are allowed.

All sales are cash or cashier's check only. Cars, if you can call some of them that, must be paid for by 3 p.m. and hauled away within 48 hours.

"If you don't pay, you are barred from the lot and will not be allowed to come back for one year," supervisor W.L. Taylor tells the crowd of about 75 tire-kickers, ranging from junk dealers chomping on cigars to a few couples with young children.

It's a $2-million-a-year business with a steady supply of inventory. Memphis has about 7,000 motor vehicle thefts a year, and thousands more cars are abandoned. For several years, the impound lot was run by the Memphis Police Department, but in July it shifted to the city's General Services Division.

"We're putting things in order to be more effective and efficient," said GSA director Estrice Boone. "In General Services, we have always auctioned off city fleet vehicles, so it seemed more righteous to take over impounded vehicles and blend it together. The staff will remain the same over there, but they will work for General Services instead of the Police Department."

A lot of cash changes hands during an auction. The auctioneer is a strapping, red-headed man in jeans and a "Bama" ball cap. He is shadowed by a uniformed Tact Squad officer in black. A half-hour before the auction begins, buyers are allowed to pass through the gates and enter the yard. Hoods are raised, doors opened, radiator caps removed and sniffed, dipsticks pulled, and, yes, tires are kicked a few times, assuming there are any, which is true in about half the cases. The smart buyers carry umbrellas and wear pith helmets to block the sun. The rest of us sweat through our shirts.

You're not allowed to start up any vehicles, although only about one in 10 has a key anyway, and you can't get keys made on the lot. "As is" means just that, as in a 1997 Plymouth with diapers, a purse, a child's toys, CDs, a car seat in the back, and a completely smashed front end; a 1993 Ford Explorer with a box of Huggies in the back and a Ron Paul bumper sticker; and a 1985 Ford F-150 that has been cleaned out except for a Gideon's Bible on the front seat.

Nothing is too wrecked to auction, although some can only be purchased by junk dealers because the cops don't want them back on the road. There are cars that have been shot up in homicides, cars that have been stolen and stripped, cars in which the occupants were mutilated, crushed, or burned up. A 1992 Toyota has been compressed to less than half its original size, and the "1993 Toyota" next to it is nothing but a burned shell.

The first vehicle auctioned is a camouflage-painted four-wheeler with only two wheels. The bidding is brisk, and it goes for $825. Next up is a Toyota Camry that looks drivable and fetches $575. The 1997 Plymouth with the smashed front end and the toys in the back is the pick of the litter on this day and sells for $1,900. A 1991 Caddy with what the auctioneer calls "custom headlights" (clear duct tape) goes for $900. A 1993 Ford truck in the corner of the lot draws half a dozen bids before selling for $450.

"Are we at a yard sale, folks?" the auctioneer jokes when the bidding lags.

So it goes, for more than an hour. One person's headache or death trap is another's find and salvation. The 1985 Ford truck gets $550, but somebody has swiped the Bible during the auction. When it comes time to auction the compressed Toyota death car, the auctioneer says, "It may have been in an accident, but you be the judge."

It goes for $50.

Thursday, July 24, 2008

Graft's Good Old Days

If the FBI ran a sting these days they'd have to pose as repo men.

Posted By on Thu, Jul 24, 2008 at 4:00 AM

Joe Cooper believes there was jury tampering in the Edmund Ford trial, which the government lost in May with Cooper as its star witness.

"Some people in the jury room were intimidated," says Cooper, who was sentenced in June to six months in prison on money-laundering charges in a separate case. "I was told that the original vote was 10-2 to convict."

Cooper says he hasn't talked to any jurors but got his information from a "former elected official I have known for 25 years." He says 10 anonymous businessmen will pay $10,000 for information that conclusively proves there was jury corruption.

This is a shocking charge. That it would take 10 businessmen to raise $10,000 to bust the biggest story of the year may be the scariest evidence yet of the recession currently afflicting Memphis.

Ten thousand dollars, or one grand per businessman, to buy a little honesty. In the heyday of Memphis political corruption a few years ago, $1,000 was small change.

Former state senator John Ford used to tip that much when he was pocketing $850,000 from Doral Dental and United American HealthCare and $5,000 a month from his pals at E-Cycle Management, who boasted about their future public stock offering, which would earn them $20 to $30 million.

Former Shelby County commissioner Bruce Thompson got $270,000 from H&M Construction Company.

Former city councilman Rickey Peete got $12,400 from Cooper for supporting a single billboard ordinance.

The FBI used to pay undercover operatives like Tim Willis $7,000 a month during Operation Tennessee Waltz.

Stock IPOs, consulting contracts, SUVs and yachts, dinners at Morton's steak house, payoffs counted out in stacks of crisp $100 bills — those were the days. Now we've got the political crooks off the street, but nobody has any money. The only way an FBI sting could even be plausible these days would be if agents posed as repo men, met their targets at Wal-Mart, and offered promises of free tanks of gas and extra grocery store coupons. Cooper, of course, may be full of crap.

"I'm going to see if I can shake an acorn off a tree," he says.

Nothing if not persistent, he won't say who is "backing" the 10 grand, who told him the jury was in the tank, how one corrupt juror could convince 11 others, or whether he passed his info on to federal prosecutors and the FBI.

What most definitely isn't fiction, however, is the state of local government and the local economy.

On Monday afternoon, Shelby County commissioner Steve Mulroy and colleagues were hammering on county school superintendent Bobby Webb for his proposed $56,000 raise and its "symbolic" importance in a $353 million budget. Webb runs one of the most successful districts in the state and makes less than his peers.

Over at Chancery Court, attorneys for the city school board and Memphis City Council were arguing over how much can be cut out of the city schools' budget and who can cut it.

On Tuesday, two more regional banks, Regions Financial and SunTrust, announced their quarterly earnings. Like First Horizon last week, Regions and SunTrust wrote off millions more dollars in loans.

Regions, based in Birmingham, cut its dividend from 38 cents to 10 cents and increased it provision for loan losses by $128 million to $309 million. Morgan Keegan, a subsidiary of Regions, was a bright spot, earning $38 million in net income.

SunTrust, based in Atlanta, had positive earnings thanks largely to the sale of 10 million shares of Coke common stock that it owned. SunTrust's allowance for loan losses increased to $1.8 billion, and the company said "credit metrics continued to deteriorate."

Over in Nashville last week, John Ford was convicted for a second time on federal charges and faces additional prison time beyond the 66 months he is presently serving. How long ago, it must seem, when "Mr. 15 percent" was carrying lots of cash, driving fast cars, eating at expensive restaurants, wearing new suits, and doing deals.

We can relate, John.

Thursday, July 17, 2008

Banking Blues

A lament for cash dividends, stability, and elegant lobbies.

Posted By on Thu, Jul 17, 2008 at 4:00 AM

Bank on it. Take it to the bank. As safe as money in the bank. Keep your valuables in a safety deposit box at the bank.

That's how we used to talk about banks in the good old days when downtown Memphis was home to the Big Three. Their signs dominated the skyline — Union Planters, First Tennessee, National Bank of Commerce. The names have changed — Regions Financial, First Horizon, SunTrust — and the word "bank" no longer connotes steady growth, safety, and stability. If a bank is in the news these days, it's probably because of loan losses, sinking share price, cutbacks, or all three. Owning stock in a bank has been a speedway to financial ruin.

On Monday, First Horizon, the parent company of First Tennessee Bank, last of the Memphis-based Big Three, announced its second-quarter financial results. It lost $19 million, which the company said was "in line with expectations." Stockholders have been hammering First Horizon for over a year, driving the price down 87 percent to $5 and change. Competitors aren't doing much better. Regions is down 79 percent from a year ago, and SunTrust is down 68 percent.

Want to see what a dying institution looks like in a "mental recession," in John McCain adviser Phil Gramm's memorable phrase? Wander through the lobby of First Tennessee or SunTrust some afternoon after the stock market closes at 3 p.m. and the blood-letting mercifully ends for another day. For some reason, the banks stay open late — First Tennessee doesn't close until 6 p.m. on weekdays — and you won't find a quieter space this side of a church sanctuary.

The lobbies are relics of another era, with their high ceilings, marble columns, carpeted floors, leather chairs, and art collections. The annex of One Commerce Square, which SunTrust plans to vacate next January, is as elegant an office space as there is in Memphis. Across the street, First Tennessee's Heritage Collection of Tennessee art is a local treasure. Unfortunately, it's probably worth more than the loan portfolio in some of the 40 states where First Horizon does business.

Maybe some day these bank lobbies will be preserved as tourist attractions, like Sun Studio, Stax, and the Cotton Museum on Front Street. Former employees could sign up as tour guides at the Memphis Bank Museum and show schoolchildren and visitors the way things used to be in Old Memphis:

"Look over here, kids. This row of windows, these were called teller stations. People walked up and made deposits and withdrawals from an actual person instead of an ATM. And the people behind the partitions and the big desks and leather chairs over there were called loan officers. Loans and mortgages were actually repaid on time. And the bank paid interest of 5, 6, or even 7 percent on deposits, and for many years shareholders got cash dividends four times a year, which was sort of like an allowance without the chores."

I wish I could say I saw this coming, but I didn't. The 300 shares of FHN I've owned for 20 years, once pegged to pay a year's college tuition and room and board, will now buy a nice refrigerator if I sell them this week. I have a feeling the bank officers and insiders don't know what hit them either.

In January 2007, the bank announced the "retirement" of CEO Ken Glass, and the stock promptly went up from $40 to $44, fueling speculation of a takeover. What a fantasy. Just over a year later, the stock sank to $10, and directors announced that dividends would be paid in stock instead of cash after July 1st.

After I wrote that those dividends might be as worthless as Confederate scrip, I got a polite note from the media department protesting that the wisecrack was harsh and First Horizon was a "Top 30" bank with $37 billion in assets. On Monday, after the stock fell 25 percent in one day, the bank announced another new CEO and an expected $4 billion reduction in assets in 2008. In bank-speak, this is called "balance sheet shrinkage." As of noon Tuesday, the stock had gained back that 25 percent and then some and was trading above $6. Rally!

The developing local story will be what happens to all the Memphis employees of the Big Three banks after they downsize. SunTrust is moving a remnant to a smaller space in Brinkley Plaza. Leasing agents for One Commerce Square hope to replace SunTrust with Pinnacle Airlines, which has its own troubles. Maybe they can hang one of Pinnacle's regional jets from the lobby ceiling, like they do at the Smithsonian.

Thursday, July 10, 2008

Strange Bedfellows

Compromise can change Memphis for the better.

Posted By on Thu, Jul 10, 2008 at 4:00 AM

"Common ground" is a feel-good phrase, but a common threat is more likely to bring different groups together as strange-bedfellow coalitions that carry the day.

The late Jesse Helms knew it. Republican political strategist Karl Rove knows it. And some people in Memphis with long memories know it. The threat of an interstate highway saved Overton Park. The threat of school desegregation spurred white flight and the growth of the suburbs. The threat of development "saved" Shelby Farms.

Today the threats are crime, high gas prices, and a recession. The stakes include the downtown entertainment district, the dwindling downtown business community, the suburban lifestyle, and our public schools and parks. If the vested interests can't find common ground, maybe they can respond to a common threat and nudge Memphis forward in these hard times. Here are five "for instances."

Beale Street: The business mix or the music mix or the management mix won't matter if tourists stop coming and locals don't start coming. The club owners know it, developer John Elkington knows it, and the Memphis police know it. Beale Street's neighbor, Peabody Place, is getting out of the movie and retail business above the first floor of the indoor mall. Read blogger Randy Haspell's story on memphisflyer.com last week about his stepson's Independence Day mugging in a Peabody Place parking garage.

Next step: Elkington and the city of Memphis need to make a deal to get him out soon, so that attention can shift to bigger problems.

Overton Park: Forty years ago, a coalition of old ladies in tennis shoes, lawyers, and environmentalists joined forces to stop the Federal Highway Administration from running Interstate 40 through Overton Park. Today the threats to the park are apathy and fear of violence.

The Memphis Zoo needs customers. It costs a family of four around $50 just for parking and admissions. No wonder the zoo's busiest day is not Saturday but Tuesday, when admission is free after 2 p.m. Citizens to Preserve Overton Park, formed 50 years ago, has reorganized to protect the Old Forest from zoo expansion. Not many Memphians, however, know about the Old Forest, and fewer walk through it. The city has grown away from Midtown, but fear isn't helping. As I finished a column last week about how attractive the park was on the Fourth of July, Memphis police were investigating a double shooting in the park's picnic area that afternoon.

Next step: The nonprofit Memphis Zoological Society should give board representation to Citizens to Preserve Overton Park and representatives of the Levitt Shell, which will probably need the zoo's parking lot for its upcoming concert series.

The riverfront: Whatever the future holds for Front Street, it isn't going to be new high-rise buildings like the ones in the master plan that spooked Friends For Our Riverfront a few years ago. If only there were that much interest in downtown office space. At the rate First Horizon, Regions Financial, and other bank stocks are falling, there will be even more vacancies in a few years.

Next step: Before downtown becomes a ghost town, the Overton heirs, Friends For Our Riverfront, and the Riverfront Development Corporation should reach an agreement on the Promenade that complements the University of Memphis law school's arrival next year.

Sustainable Shelby County: An unholy alliance of environmentalists, politicians, and developers ensured that the growth of Memphis would leapfrog over 4,500-acre Shelby Farms to Germantown Parkway 35 years ago. Bill Morris Parkway and other roads sealed the deal. Shelby County mayor A C Wharton has been talking about smart growth for six years, but $4 gas is more powerful than words.

Next step: An inconvenient truth. It will take a surge in actual riders, not critics, to bring MATA into the 21st century, and that may not happen until gas hits $6. The cost of commuting creates some incentive for infill development, but now banks aren't lending. Memphis isn't growing. And jobs, churches, and schools moved to the suburbs long ago.

Politics: It's not often that politics is an exemplary process, but consider the Shelby County Democratic Party. On paper, an alliance of poor, undereducated blacks and well-to-do, overeducated whites and blacks makes no sense. But the Democratic Party in Shelby County is resurgent, thanks to people like Steve Cohen, Harold Ford Jr., and Barack Obama. And, above all, George Bush.

Next step: Political activism follows through as social activism.

Thursday, July 3, 2008

The Man Who Didn't Say No

Kind words make you wonder what might have been.

Posted By on Thu, Jul 3, 2008 at 4:00 AM

What if Rickey Peete had said "hell no" to Joe Cooper's bribe back in 2006?

I think the former city councilman — who did not say no and is serving four years in prison — had a rare opportunity to drastically change the course of his own life and even the course of Memphis history with an existential choice at that fateful meeting.

I thought of Peete last week while I was interviewing his former Beale Street associates Onzie Horne and John Elkington for this week's cover story. Both of them have known Peete since his first bribery conviction nearly 20 years ago and his political comeback and reelection to the council.

Horne replaced Peete as head of the Beale Street Merchants Association, which represents the businesses that employ some 700 people on Beale Street.

"The whole episode involving Rickey was emotional for them," Horne said. "You can see the hurt in them still today. Because they trusted him and were so disappointed and were genuinely hurt for Rickey and his family. Only now are they completing the healing. I think that's why they went so long before getting a new director."

Elkington is head of Performa Entertainment Real Estate, the company that manages and leases the district, where Peete regularly ate lunch at the King's Palace Café with bigshots such as Jerry West and Michael Heisley, owner of the Grizzlies.

"He could bring people together and make things work out," Elkington said. "For all the negative things people say about him, he had the ability to form coalitions and make people work together. He had a way of working with merchants to get them to not go to the lowest denominator and instead believe that a rising tide lifts all boats. It was such a shock to everyone down there. I mean no one had a clue what Rickey was doing."

I heard similar generous comments after Peete resigned from the City Council from former colleague Tom Marshall and from Jeff Sanford, executive director of the Center City Commission, where Peete was chairman of the board. Some of this was political courtesy and refusal to kick a man when he was down. When a council member gets himself or herself appointed to several powerful boards it can be a danger signal. And rubbing elbows with the rich and powerful can stoke greed and envy.

But Rickey Peete, with his 100-watt smile and hearty handshake and his courtesy and attentiveness in council meetings, was one likable politician. Like a lot of other people, I wanted to believe he was a reformed rogue.

So what if he had said no to Good Old Joe? I think he would have been a hero. I know he would have stayed out of prison. He would have derailed undercover federal investigations of political corruption in Memphis, possibly for years. And he might even have achieved his dream of becoming mayor of Memphis.

Consider this fictional reconstruction of the scene that didn't go down in Peete's office in the fall of 2006.

"So how about it, Rickey, three large to support my man's billboard deal?"

"Hell no, Joe, you're offering me a bribe. Been there and done that. Prison sucks. It wouldn't surprise me if you're wired up right now and working with the FBI. I hope you are because I'm going to the federal building right after I kick you out of this office, and then I'm going to tell the United States attorney, the FBI, and the media what a scumbag you are. I'll be the one playing tapes. Rickey Peete is not for sale." (big smile)

It's not like this never happens. Famous Mississippi trial lawyer Richard "Dickie" Scruggs is going to prison for five years because Circuit Court judge Henry Lackey refused to take a $50,000 bribe and instead reported it (three days later) to federal prosecutors, who wired his office and set up a sting. A year ago, Scruggs was the toast of Oxford and one of the richest men in Mississippi. In a few months, he'll be a prisoner.

With his theatrical flair and political ambition, Peete could have played Cooper and the FBI like a fiddle. Imagine the headlines: "Peete Busts Feds in Foiled Sting; 'Furious' at Being Targeted." So why didn't he? I suspect because the FBI, Cooper, and Peete himself knew damn well he would take the money because he had taken it before, probably more than we know.

Ethics rules, corruption laws, and prosecutions are fine, but our political culture ultimately comes down to individual decisions about right and wrong. It's their choice, and ours.

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