Want the news summarized?
Subscribe to The Morning Report.

Thursday, Aug. 17, 2006 | If James O. Goldsborough wanted to see some first-class owner meddling of a newspaper, he should have worked at The San Diego Union not after, but before Helen Copley.

James S. Copley was the publisher when I went to work there as a training intern in 1972. The paper then was locally known for its corral of sacred cows, and for what we called “fourth-floor interference” (where the executive offices were) with stories before they went into the paper.

It was so infuriating, and amusing, that I kept some clips, now yellowed with age, as they say. The most infamous, I suppose, are those telling the story of the failure of the U.S. National Bank, a property within the empire of businessman C. Arnholt Smith, who was a Union sacred cow second only to Richard M. Nixon.

Here is the story as it ran on Friday morning, Oct. 19, 1973, in The Wall Street Journal. The headline: “Big San Diego Bank is Insolvent; Sale is Set; Depositors Protected: Shareholders to Lose.” The first three paragraphs of the story:

The U.S. National Bank of San Diego was declared insolvent yesterday by federal authorities, who said the collapse was the largest in the nation’s banking history.

At the same time, the authorities said they were working out a rescue of the bank, which has assets of around $1 billion. Earlier this year, the Securities and Exchange Commission said that the bank was a victim of a ‘massive’ fraud allegedly perpetrated by a group, including its principal shareholder, financier C. Arnholt Smith. (Mr. Smith has denied any wrongdoing.)

In recent days, the bank has been on the brink of collapse. Yesterday, 440 bank examiners and liquidation specialists descended on the bank and its branches, and last evening federal regulators announced that the Federal Deposit Insurance Corp. would take over as receiver.

Here is the story as it ran in the Union, after fourth-floor interference, that same Friday morning. The headline: “Crocker Bank Purchases U.S. National Bank Here n Service Normal for Depositors.” The first seven paragraphs:

San Francisco-based Crocker Bank was the successful bidder last night to purchase the commercial banking and trust business of United States National Bank of San Diego, this city’s largest locally owned bank.

This morning, all of U.S. National Bank’s offices in San Diego, Orange, Los Angeles and Riverside counties were to open at their usual times as branches of Crocker Bank.

Jim Mulvaney, recently named president of USNB, said late last night that the Crocker Bank purchase would mean all branches would open this morning with “business as usual.”

“No one will lose a penny,” Mulvaney said.

Mulvaney said he and Richard Woltman, USNB chairman of the board, are both “former officers” of the bank but that they would remain in “some executive capacity” with Crocker.

Crocker Bank is new to the San Diego region, and has been considering ways to penetrate the market for several years. The purchase will add about $940 million in deposits to Crocker’s $6.7 billion of deposits.

Crocker’s bid was accepted by the Federal Deposit Insurance Corporation, which last night was declared receiver for the bank, which the Comptroller of the Currency declared insolvent.

A couple of things about that story remain as stunning today as they were that morning in 1973. The nation’s largest bank collapse in history, which happened in San Diego, was not on Page A-1, the front page, but on Page B-1, the Local News section. And the word “insolvent” does not appear until the last word of the seventh paragraph. C. Arnholt Smith’s name appears once in the story, in the 15th paragraph.

Gripe if you must about today’s Union-Tribune ownership, but in editorial interference, it is bush league compared to the old days. Of course, there is a constant that shows up in performances like this.

Whenever it happens, whenever columns are spiked, as Goldsborough’s was, or stories spun towards favoritism, it means that the reporters and editors – I felt so sorry for the editors, the middle management, in the old days – know things their readers don’t. And when that happens, it is always the readers that lose.

It is reasonable that U.S. National Bank shareholders, who stood to lose as much as $35 million in the bank’s collapse, could have sued The San Diego Union, if they could prove its financial editors and reporters knew information about the bank’s precarious, and allegedly fraudulent, position, that didn’t appear in the newspaper because of owner interference.

With all the griping today about spiking, and owner interference, and a “great sucking vacuum of news coverage,” as a reader described it, is it reasonable to wonder if Union-Tribune reporters and editors knew things about the city’s finances, that didn’t appear in the paper? Fascinating, to imagine a newspaper being the subject of an investigative story wondering what it knew, and when. You actually hope it would turn out to be just laziness. It would be a relief, sort of, since the readers are going to lose either way.

Journalist, author and educator Michael Grant has been putting his spin on San Diego, and the city putting its spin on him, since 1972. His Web site is at www.michaelgrant.com. Or, send a letter to the editor.

Leave a comment

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.