Casey at the Bat : Government: Albert V. Casey will have to wield a big stick to straighten out the RTC. But he risks striking out with taxpayers.

Shortly after he was hired as dean of the Edwin L. Cox School of Business at Southern Methodist University in Dallas in 1982, Roy Herberger was invited to the offices of then-American Airlines Chairman Albert V. Casey.

During their meeting, Casey wanted to make one thing clear to Herberger: Don’t expect a thank-you letter in the mail for coming out. What followed, Herberger recalls, was a lesson from Casey on the horrors of bureaucratic paperwork and endless memos that bog down corporations at the expense of face-to-face contact.

Asked about it today, Casey says he always shunned the kind of tasks that slow down most chief executives. “In 11 years at American Airlines, I never wrote a single memo internally,” he said. “I’m also not big on staff meetings, and I’m not big on general conferences.”

Sometime in the next few weeks, Casey, 71, is expected to become chairman of the Resolution Trust Corp., the nation’s much-maligned savings and loan cleanup agency. He will replace L. William Seidman, whose term as both RTC chief and head of the Federal Deposit Insurance Corp. expires this month.

Casey’s management style makes him an unusual choice. To the agency’s many critics, the RTC has come to symbolize the kind of unwieldy bureaucracy that only the federal government can create. That is a long way from the kind of operation Casey is used to running, where time-wasting memos and meetings are virtually forbidden.

“He’ll drive the RTC people crazy. Because he believes if people have a problem, you work it out in front of each other and you don’t do it through second and third parties,” said Herberger, a close friend of Casey’s who now serves as president of the American Graduate School of International Management near Phoenix.

Casey has already signaled that things will be different. He told RTC executives to meet one-on-one for an hour once a week with the people who report to them. According to one account, Casey attended a large staff meeting of RTC officials. After the meeting was over, Casey suggested such large staff meetings be held once a year, “around Christmas time.”

A Civil War buff, Casey also is about to mount what amounts to his own Pickett’s Charge. He will march the agency headlong into the line of fire of Congress, the press and a host of experts who regularly second-guess the agency’s every move.

“He’s not coming here for a cakewalk. This is going to be a tough job, and there is going to be a lot of criticism,” said Rep. Bruce Vento (D-Minn.), a member of the House Banking Committee.

Casey says he isn’t intimidated by the job or criticism, in part because he spent most of his life getting an earful from consumers: As an executive with Southern Pacific railroad, it was the late train; as president of Times Mirror Co., owner of the Los Angeles Times, it was a newspaper thrown on a roof or an editorial that was too liberal; at American Airlines, it was baggage bound for Florida that ended up in Seattle, and during a brief stint as U.S. Postmaster General, it was the letter arriving weeks late.

“I’ve spent my life in consumer products,” Casey said. “Criticism is the part of the game I enjoy.”

Reshaping the RTC may well be the biggest challenge Casey has faced. The RTC was formed in 1989 in the financial industry’s equivalent of the Big Bang. On its first day of life in August, 1989, the RTC had fewer than 300 employees and controlled $102 billion in assets, more than BankAmerica Corp. had at the time.

Casey’s job involves spending the next two years steering the agency through its adolescence, directing more than 7,000 workers and trying to wipe off the books nearly $160 billion in real estate, junk bonds, mortgages and other assets that once belonged to failed savings and loans.

It has become a thankless job that could be a career-ending move for a younger man. Doing well means that the loss will be a few billion dollars less than someone previously projected. Before it is over, the cleanup will cost at least three generations more than $500 billion.

Nonetheless, friends and business associates of Casey expressed no surprise when he took the job. Pan Am Chairman Thomas G. Plaskett, who worked for Casey at American and remains a friend, called it typical of the kind of challenge Casey seeks.

“He’ll take the bureaucracy on. He won’t tolerate it,” Plaskett said.

Herberger added that Casey has thick enough skin to take on the diverse groups pressuring the RTC.

“He is a person who is not afraid of lawyers, he’s not afraid of accountants and he’s not afraid of senators and congressmen. He won’t allow the objectives of the agency to be swayed by the political ramifications,” he said.

Casey is an unlikely choice for other reasons as well. At 71, he is a year older than his predecessor, the popular Seidman. Age and health are two concerns he is having to address directly since word of his selection surfaced last month.

He has suffered what he describes as four bouts of severe chest pain (not full-scale heart attacks, as many believe). He suffered a brain aneurysm in 1976 that he says doctors cured after they “took the top of my head off for 11 1/2 hours.” Add to that his current leg fracture, suffered when he slipped while playing golf in Canada in shoes without spikes.

None of it, Casey argues, will hinder his performance.

“I’m older than anybody else in this town, but that doesn’t bother me,” he said, adding that he enjoys working seven days a week.

Friends such as Sears, Roebuck & Co. Chief Executive Edward A. Brennan also are convinced that Casey has more than enough energy to lead the RTC.

“Most people have a tough time keeping up with him,” Brennan said.

Casey’s age or health are not a concern to members of the search committee who picked him. Asked about his health and energy, Seidman simply replies: “Have you ever met him?” The message is clear: The guy’s health and age are not a factor.

Indeed, some believe that Casey’s age, combined with the fact that he is well off financially, may actually work to his advantage because it gives him freedom that a younger executive might not enjoy.

“He’s not concerned about his next job. You need to be independent in this job, and comfortable in making your own decision,” said Office of Thrift Supervision Director Timothy Ryan, who also was on the search committee.

A native of Boston, Casey received his master’s in business administration from Harvard in 1948, then worked his way up the ranks of the Southern Pacific railroad. He joined Times Mirror in 1963, eventually becoming president and leading the firm’s diversification into other publishing fields along with the acquisition of such operations as Newsday on Long Island, N.Y.

In late 1973, Casey gave notice that he would resign on the assumption that he would become then-President Richard M. Nixon’s next railroad czar. But battles between Nixon and Congress over the Watergate scandal held up his confirmation, which gave American a chance to recruit him.

Casey at first couldn’t believe that the airline wanted him, figuring that it must have confused him with his brother, John, then a Braniff executive. After being assured that wasn’t the case, Casey took the job.

At American, Casey found the kind of turnaround challenges he would face four times in the next 17 years. American, plagued by losses and a scandal involving illegal campaign contributions, needed to be revamped. Casey slashed costs and installed four executives under him who he believed were capable and trustworthy. Three of the four went on to lead airlines themselves.

After retiring from American in 1985, Casey was summoned for yet another turnaround when he was hired as interim Postmaster General for a few months amid a management crisis and bid-rigging scandal at the U.S. Postal Service.

Casey in 1986 replaced Paul Carlin, who was fired after some postal governors complained that he wasn’t a forceful manager. Carlin later maintained in court documents that he was fired for not going along with a kickback scheme involving Dallas-based Recognition Equipment Inc.’s sale of mail-sorting equipment to the agency. One postal governor later pleaded guilty to criminal charges in the scheme.

Carlin also alleged in court papers that Casey had been part of the plot to oust him. A spokesman for the Justice Department, which defended Casey, said he was dropped as a defendant after a judge found no evidence that Casey was involved in Carlin’s firing.

In 1988, regulators asked Casey to take over troubled First RepublicBank in Dallas. The bank, which later failed, was eventually sold to NCNB Corp. in a deal that cost the government’s deposit insurance fund about $3 billion. Casey was critical of the way the sale was handled, but it did not strain his relations with Seidman, who endorses him enthusiastically for the RTC job.

Casey said the RTC job was first suggested to him by Deputy Treasury Secretary John Robson. Once neighbors, the two got to know each other when Casey was at American and Robson at the former Civil Aeronautics Board. A widower, Casey added that he has been looking for a business opportunity since the recent death of his wife, Eleanor.

At this point, there is little doubt that Casey will take over the agency, although the terms under which he will do so are changing fast. Originally, he was to be named by the Treasury Department. Instead, a compromise was worked out that will require President Bush to nominate Casey and the Senate to approve him. In addition, the job is being restructured and eventually may enjoy much more independence than it has now under Seidman.

Casey may prove to be a beneficiary of good timing. The agency, after two years of stumbling, is finally being credited with disposing of large amounts of assets, having sold $180 billion to date. One of its most successful methods is packaging them together for sale to wealthy investors. It also has been selling or closing failed thrifts at a blistering pace this year.

“The RTC has been doing a much better job than it is getting credit for. The job it is doing in disposing of S&L; franchises has been nothing short of phenomenal,” said William Isaac, former Federal Deposit Insurance Corp. chairman and head of Secura Group, a consulting firm that deals extensively with the RTC.

More important, deep-pocketed investors are surfacing. In what may be its most significant deal yet, the agency is selling or plans to sell about $1.1 billion worth of commercial real estate loans for $527 million to affiliates of General Electric Capital and the Bass family of Texas.

Still, the agency faces huge problems. It must regularly beg a skeptical Congress for more money. What’s more, it has computer problems that have made it difficult for RTC officials and potential investors to get a handle on what the agency actually owns.

“The biggest problem right now, besides getting money, is to get a good management information system in place, so they know what they own and what it’s worth,” Isaac said.

Vento, a frequent critic of the RTC, said the agency is overstating its success, in part because some of its creative financing measures leave it with a stake in how well the assets perform. As a result, he said, the RTC is not fully ridding itself of some problem assets. In addition, Vento said, it is disposing of the assets that are easiest to sell.

Casey describes his plans in general terms. Among them are to identify and clear “the bottlenecks” so the RTC runs smoother. He said he is impressed with the staff and plans to meet at least an hour a week individually with all of the people who report directly to him. For now, he said, he is spending his time learning the agency’s jargon so he can talk to his future employees.

Friends of Casey say he will likely reorganize management soon after taking over, setting up a handful of executives reporting to him once he has had time to assess their abilities.

“He will surround himself with the smartest people he can find who have the ability to manage. His input will basically be strategic,” Pan Am’s Plaskett said.

As for his overall goal for the RTC, Casey is blunt: “I want to put it out of business.”

Bio: Albert V. Casey Expected to be next chairman of the Resolution Trust Corp. Age: 71 Born: Boston, Mass. Education: Received A.B. Harvard University in 1943 and MBA from Harvard in 1948. Family: Widower (wife was the former Eleanor Anne Welch). Two children. Resume: Southern Pacific Co., 1948-1961; 1961-1963, REA Express; Times Mirror Co., including president, 1963-1974; chief executive, American Airlines, 1974-1985; Postmaster General, 1986; Professor, Edwin L. Cox School of Busienss, Southern Methodist University, 1986-1988; Chief Executive, First RepublicBank Corp., 1988. Business philosophy: Delegates management to a small group of executives. Dislikes bureaucratic tasks that bog down a chief executive. Quote: “In 11 years at American Airlines, I never wrote a single memo internally. I’m also not big on staff meetings and I’m not not big on general conferences.”