The Chair by the Second Pillar

She sat down then, and accepted the coffee, and held it without drinking.

"In 1997 your father decided to convert. Demutualize — a word invented so that no one has to say *sell the depositors their own bank and keep the change*. The law allowed it. God knows the law allowed it; half the mutuals in America did it in those years. The members would vote. The institution would be appraised. Each member would receive — in cash or in the right to buy stock — their share of the appraised value, and the new stock would be offered, first to members, then to the community, then, in practice and in order of actual importance, to the officers and directors and their friends, who understood what the stock of a sound bank was worth in a way that a widow with a passbook did not."

"Conversion was legal," Fred said. "It's still legal. Members voted—"

"Members voted on a number," Vera said. "That is the whole of it, Mr. Ames. Everything that happened, happened inside the number. The appraisal came in the spring of 1998 — a firm from Chicago, very smooth, very expensive — and it valued this bank at a figure my husband read three times at our kitchen table, the way you read a letter you believe is addressed to someone else. The buildings were valued as though they were functionally obsolete — this building, Mr. Ames, this marble inconvenience we are sitting on top of, was appraised at the value of its lot less the cost of demolishing it. As if it were a *liability*. Two branch properties on land the city had already announced for the new arena district were valued at their 1989 assessments. And the loan book — the loan book was discounted as if one loan in nine would fail, in a portfolio where my husband's department had measured actual losses, over thirty years, at one in sixty. Do you understand what that does to a number? You take a sound institution, owned by four thousand households, and you describe it as a tired one, and the tired one is cheap, and cheap is the entire point, because the cheaper the bank, the less the members' shares are worth — and the more the new stock is worth to the people who buy it at the appraised price and watch it find its real price in the market."

"How much?" Fred said.

"Emil's figure — his own valuation, done from the bank's own books, over five weekends, with a adding machine older than you — was forty-six million dollars of member equity that the appraisal made disappear. Forty-six million, belonging to four thousand one hundred households. It did not evaporate, Mr. Ames. Money like that does not evaporate. It *moved*. It moved into the subscription allocations — the blocks of underpriced stock reserved, in the conversion plan your father signed, for directors, officers, and the accounts they controlled. The single largest allocation went to a family trust whose name you know, because it is also yours. The Ames Family Trust bought its stake in this bank with the members' own missing equity, at a price set by an appraisal the members were not permitted to question, on the basis of books they were not permitted to see. That is not my accusation. That is arithmetic. My husband was the bank's arithmetic. It was his profession and, I sometimes think, his religion."

Fred had not touched his own coffee. He was looking at the photocopied page on the desk — the violet stamp, his father's era in violet ink.

"Emil audited the conversion," Vera said. "That was the design of his office, and to do your father justice — I do him justice once, here, so attend to it — I do not believe Harlan Ames understood, at the beginning, what the Chicago firm had built for him. I believe he understood it by the end of the summer, when the subscription numbers came in richer than his own projections and he chose not to ask why. A man does not have to design a theft to keep it. He only has to be incurious at the correct moment, with his family trust in the room." She set the cup down. "In September of 1998 the conversion audit came to Emil for his signature, as the law and the bylaws required. The chief internal auditor certifies that the valuation was fairly derived from the books of the institution. He had spent five weekends proving to himself that it was not. He wrote the memorandum — your page is its first leaf — and he gave it to the board through channels, as the bylaws also required. And then he did the thing that the whole of his life had been training for and that I have never, in twenty-seven years, been able to describe without pride, which you may find a strange failing in a widow."