The Snowball_ Warren Buffett and the Business of Life - Alice Schroeder [206]
At home, Susie had begun paying attention to Peter, her quiet son, in a different way, treating him, too, as friend, confidant, and source of emotional support, now that he was growing up and about to enter high school.
Susie Jr. was living in Lincoln, having enrolled at the University of Nebraska. Howie, who had broken the family record for getting grounded, was in his junior year of high school and Susie now devoted herself to launching him into college; she took him to debate meets and helped him corral his energy and burnish his high school record. Warren, as usual, was happy to delegate all these responsibilities to her.
Susie did succeed in enticing Warren to really pitch in and get involved—rather than simply write checks—whenever business intersected with a cause to which he could lend his expertise. Her friend Rodney Wead and other leaders in the black community had gotten the idea of starting a minority-owned bank to enhance community pride and economic development on the North Side. Promoting “black capitalism,” they came to Buffett and his friend Nick Newman, the man who had sponsored Warren in local civil-rights activities.37
Wead was a respected figure in Omaha, and Buffett liked banks. He had just joined the board of Omaha National Corporation, the biggest bank in town, a long-held ambition.38 He had an automatic—and rational—predisposition toward any business where people gave money to the business faster than the company disbursed it. So he was willing to listen to Wead, but wanted to know if a minority bank was viable. Since the hope was that Community Bank would attract a diverse group of customers, he hired Peter and one of his friends to sit outside another minority bank to count how many people went inside and to classify them by race.39 Peter’s tally made Warren optimistic, so he joined an advisory board of directors for the Community Bank of Nebraska and also got John Harding from Ruane, Cunniff on the board.40 Buffett told the founders that if they could raise $250,000 in stock from the black community, the advisory board would raise money to match it.41 The bank set up its office in a trailer. “You’re really hitting bottom, Warren,” said Joe Rosenfield, “when we’re asking people to put their money into something you can drive off in the middle of the night and take the whole bank with it.”
Most of the managers and the board of directors—which included Buffett’s baseball player friend Bob Gibson—were black, and most were financial tender-foots. To stave off disaster, Buffett went into his teaching mode and tried to educate the founders on the need for strong lending standards. The bank, he stressed, was not a charity or social-services agency. He attended monthly board meetings that stretched late into the night, but, as with the companies he owned, he was never involved in the day-to-day management.42 Harding, however, spent every day at the bank, making sure its numbers balanced. “The management from the community was well-intentioned,” Harding says, “but not financially savvy.” Asked for more money to cover bad loans, Buffett said no. Wead felt Buffett “didn’t understand the cycle of poverty” and “never understood his role as a wealthy man in our beleaguered community.”43 But Buffett understood the numbers; he knew the bank wouldn’t help anyone by relaxing its lending standards and making uncollectible loans, which would only teach the wrong financial lesson. So the bank limped along for years without growing.
He got a chance to help in another way when Hallie Smith, a friend of Susie’s, began to bring her the names of black kids who needed money because they couldn’t pay for college. Susie started giving a thousand dollars here and there. “I’ve got