ORANGE COUNTY IN BANKRUPTCY : Popejoy’s No Stranger to Pressure--S&L; Assignment Tested His Resolve : Profile: Incoming county CEO says he has thick skin but enough sensitivity to deal with massive problems. Local business leaders praise his selection.
William J. Popejoy knows about working inside a pressure cooker. In August, 1984, as the nation was just beginning to understand the impending savings and loan debacle, he was called in to run the nation’s largest and most troubled S&L; amid huge loses and intense public scrutiny.
For four years atop American Savings & Loan, he rode out a series of crises that strained his nerves to the point that he blew up at times, prompting comments about him having a volcanic temper.
Not any more, says Popejoy as he takes over another massive institution in crisis as Orange County’s chief executive officer--a post to be vested with new powers to reorganize, downsize and revive county government.
Whatever temper he may have had, Popejoy said in an interview Friday night, he hoped he always “backed off.” And, with Popejoy, former co-workers say, anger is quickly over.
“I’ve always had a thick skin,” he said. “A thick skin helps, but I hope it’s still sensitive enough because what you need here is sensitivity in approaching the county’s problems. . . .
“I know it won’t be easy, I know there will be frustrations, but I know it can be fixed.”
With an affable, approachable manner, Popejoy is being asked to help orchestrate the county’s comeback effort after losses in its bond portfolio sent it into bankruptcy in December and still threatens the health of 186 other local government entities as well.
Local business leaders--many of whom pressed for a corporate-style executive--praised his selection.
“He’s a very sensitive person,” said Gerald Barrone of Newport Beach, an old friend from Popejoy’s S&L; days. “He doesn’t get excited, and it’s going to take that kind of temperament to deal with all the government entities, the media and Wall Street.”
“That’s a wise choice,” said Ray Watson, vice chairman of the board of directors of the Irvine Co., the county’s largest landowner. “He’s got the expertise they need, and he’s someone who can get something done without wielding a huge hatchet. He can make tough decisions, even those regarding personnel, but he has some compassion.”
Stephen W. Prough, president of Downey Savings & Loan, called him a “good communicator.”
“He’s got an excellent financial mind, he works very well with people and he is able to put the issues in perspective, which is really critical for the county in its situation,” Prough said.
Popejoy, who is independently wealthy and plans to return to the county any salary it gives him, said he is pleased that the county had the confidence in him to give him the reins.
Popejoy is a logical choice, say business leaders. They and county supervisors say that he knows the county well and he knows Wall Street, which will be a big help in dealing with the county’s money-losing portfolio of securities.
He has worked as a stock clerk and he has been a shop steward for a machinists union, but it wasn’t until he stated working in real estate and finance in 1967 that his star began to rise quickly.
In 1971, he became the first president of the Federal Home Loan Mortgage Corp. Known as Freddie Mac, the quasi-governmental agency is one of several government sponsored groups that buys home loans from thrifts, thus spurring the home finance market by providing lenders with more money to make loans.
He took over the reins of a smaller American Savings & Loan in Beverly Hills in 1974 and left six years later. Charles Knapp used his Financial Corp. of America in Irvine to buy American, meld it with other thrift interests and build it quickly into a powerhouse.
Popejoy, though, went on to other interests, including his one-year stint when he “traveled, read, played tennis and did housework.” It was Ed Gray, the nation’s thrift regulator, who brought him back. American was crippled and Gray was forcing Knapp out. Gray said Friday that American’s failure seemed imminent, threatening the entire industry.
The years at American were trying ones. Competitors groused about Popejoy’s management, contending that he was building the shaky thrift with questionable strategies and, thereby, putting the federal deposit insurance fund at greater risk.
Popejoy stood his ground, arguing that he was doing what regulators and FCA’s board wanted him to do. After all, he was reporting regularly to Gray and his staff and wasn’t following through with any big ideas until the regulators approved them.
Gray countered that the other executives simply wanted to tear American apart and grab pieces for themselves.
Popejoy had gathered some experts to help him sell the bad loans and real estate the thrift had foreclosed. In three years, American had sold $1.4 billion in troubled real estate, including 6,700 parcels of property in 1987 alone.
But it still lost $468 million that year, and critics wondered if Popejoy had the ability to turn the institution around. Industry analysts called Popejoy “too optimistic” in his outlook for American and asserted that he misjudged the severity of American’s problems.
But Gray stood by him, pointing out that Popejoy had inherited American’s problems from Knapp. Other thrift leaders eventually agreed, complimenting Popejoy for doing a good job keeping American afloat until it could be sold.
Still, American stands as the nation’s most expensive thrift failure, costing taxpayers an estimated $5.4 billion.
Even so, Popejoy emerged with his integrity intact, industry experts say, and they credit him with saving taxpayers an even greater amount. As Gerald Barrone, former president and now a director of Coast Federal Bank in Los Angeles, said, “He did a great job pulling together a shambles.”
