Knapp Finds Life Easy After FCA
While his successors at Financial Corp. of America grapple with the lending problems left behind by his management team, Charles W. (Charlie) Knapp appears to be having the time of his 52-year-old life.
The erstwhile FCA chairman has a job that is easier and more private, a glamorous new movie actress wife (Lois Hamilton) and a life style more in tune with California hedonism than the old workaholism Knapp had.
“I’m more relaxed and happier than I’ve ever been before,” Knapp told one interviewer last fall.
His new life is said to include vitamins taken with caffeine-free tea in the morning and tennis in the late afternoon after a normal work day. New hobbies include painting and sculpting in addition to the old standbys of flying and sailing.
Once one of the most accessible executives in the savings and loan industry, Knapp gives interviews selectively these days. Among the magazines he has talked to in recent months are California Business and Institutional Investor.
However, he declined interview requests from The Times. “Give me one reason why I should?” Knapp is reported to have asked Don Reynolds, his longtime public relations man. “And I couldn’t give him one,” Reynolds said.
Criticized the Press
Reynolds was among the FCA spokesmen who criticized The Times, among other newspapers, for writing stories blamed for accelerating a deposit run at American Savings, FCA’s operating subsidiary, in 1984.
Knapp’s years at FCA were highlighted by remarkable ups and downs. Phenomenal growth and record earnings were intertwined with harsh disagreements with banking regulators, securities analysts and competitors over the freewheeling way in which FCA lent money and raised deposits.
Knapp’s days at FCA ended abruptly when federal savings and loan regulators demanded his resignation in exchange for a public vote of confidence in American Savings, which was in the throes of the deposit run at the time.
Knapp did resign, but not before FCA’s directors quietly gave him a severance payment of $2 million. A few hours later, American Savings, under new boss William J. Popejoy, received its statement of support from the Federal Home Loan Bank Board.
Following his ouster, Knapp tried relaxing for a while and at one point reportedly even thought about traveling around the world on foot and by boat.
Before long, though, Knapp got back into the world of finance by forming an investment banking firm, known as Trafalgar Holdings. The core of the company was made up of old colleagues at FCA who had quit or were forced out in the wake of Knapp’s resignation.
Trafalgar has made news occasionally, but it has not registered very high on Wall Street’s Richter scale. Trafalgar’s chief notoriety has been gained from a hostile bid--later aborted--to take over a ball bearing company in Japan.
Sued Old Employer
Though Knapp has never talked publicly about what happened in the final months at FCA, he did file suit several months ago against his old employer, seeking more than $100 million in damages.
The suit, part of the extensive litigation that surrounds Knapp’s ouster, indicates that Knapp is not about to apologize for the way he ran the company. It strongly suggests that FCA’s new management is using him as a whipping boy for subsequent problems.
“Highly exaggerated loan loss reserves” and false charges of improper lending are among the methods used by new management to discredit him, Knapp indicated in his suit, which was filed after FCA had sued him.
Knapp has also sold more than a million shares of FCA common stock “at prices substantially below” what he could have gotten if it were not for “FCA’s false and misleading statements,” the suit said.
Whether Knapp eventually will have to answer for FCA’s problems is very much in doubt. What is known is that FCA’s lending practices under Knapp have been under scrutiny for years, but nothing has yet come of the probes.
Popejoy said in an interview that five separate grand juries are looking into past business practices, while FCA has spent $3 million of its own on an internal probe.
Beyond that, Popejoy will not comment. “Charlie is suing us and we’re suing him,” he said. “I’ll let the investigation speak for itself when it is done. It is a waste of my time to worry about how we got here.”
