Then and Now: Paul Walker
Since His 1986 Profile in Chase Directions
"When people around Chase mention
‘Dr. Walker’, you can’t take it for granted they’re referring to Granville, the
bank’s medical director for 20 years.
"They could just as well be thinking of the other ‘Dr.’ Walker – Paul, the loan doctor’ – who has spent almost 10 of his 29 years at Chase nursing sick loans back to health."
That’s how a profile of Paul Walker began in the March 1986 issue of
Chase Directions. (To read the rest of the article, click
on the link below the adjacent photo.)
We thought we would catch up with Walker and see how he views what has happened in the credit world in the near quarter century since that profile and the 20 years since he left Chase.
“When I was at Chase, most of the credit problems were due to granting exceptions to credit standards, driven by desire to enhance the bottom line,” he said. “Many were of the belief that inflation would bail them out.
“Since my departure, so-called ‘financial engineering’ became in vogue, and credit problems gained momentum. Financial models were created based on limited history – models were developed, and old principals were overlooked,” Walker said.
“Derivatives were created to achieve profitability, but basic transactions on which derivatives were based needed to be evaluated using basic credit principles. People forgot to think about the underlying credit risk, which became a buyer’s liability.”
“Today – as in my day – the basic credit principles still apply. Ignoring them for the sake of additional profit has its repercussions,” he cautioned.
He thinks that Chase rightly had a reputation for the best credit training program in the banking industry, “and it even got better when I got in charge of it.”
When Walker left Chase at the end of 1990, it was totally organized. Bill Butcher retired and Tom Labrecque took over as chairman, and one of the vice chairmen, Richard Boyle, was given Walker’s responsibilities. “They didn’t go outside to hire my replacement,” he said.
Walker himself became a trustee of the Drexel Burnham Lambert Liquidating Trust and the 61 Drexel subsidiaries that comprised it, noting proudly that in liquidating Drexel he got them 80 cents on the dollar.
In 1996, he co-founded Walker, Truesdell and Associates, which provides comprehensive senior management, advisory and administrative services to distressed or bankrupt companies. He fully retired two years ago and now spends as much time as he can on the golf course (“playing often but not well”) near his home in Ponte Vedra Beach, Fla.
“Banks always have problems,” he reflected. “REITs were problems, there are highly leveraged deals, there are country risks. Banks always weathered the crises.
“Foreclosure has to be resolved somehow,” he added. If there’s a bright side, it’s that “after the problems we’ve seen of late and the reluctance of lending institutions to plunge back in, there’s been an awakening of the risk side of the equation.”