Friday Night Lights: A Town, a Team, and a Dream (38 page)

In February 1982, the bank's economic research arm estimated a 13 percent increase in the number of oil rigs and concluded, based on careful consultation with the country's leading
economic experts, that the price of oil would increase at least as
fast, if not faster, than general U.S. inflation for the next ten
years.

It was around this time that Aaron Giebel had begun work
on his house-although calling it a house was the same as describing the Statue of Liberty as a figurine. It really wasn't a
house at all but a private kingdom. Initially his wife was against
building it, but Giebel pushed it because it was a wonderful
symbol in a part of the country where subtlety was owning an
eight-seater prop instead of a Lear. It was, as he said, "a salute
to our success." The thirteen-thousand square-foot house had
a pool, it tennis court, a gazebo, two jacuzzis, a workout room,
ten bathrooms, and a special wing with a video room for his
seven grandchildren. It cost $2.4 million.

Along with the other things going on in Midland-the trip to Palm Beach that one oilman had sponsored for himself and
several hundred of his friends in a chartered 747, the announcement that the Rolls Royce dealership had received a Silver Lady award for being one of the three top Rolls dealers in
the United States-Giebel fitted comfortably into the rhythm
of things.

And then it had ended. Just like that. Not with a warning,
not in a way so that those who got caught had only themselves
to blame. One day the lights were on; the next day they were
off. Demand for oil began to slacken significantly in 1982, and
the result was a glut. "[The price] just dropped, like off the side
of a building," said Giebel. "We were like children. I said, `Oh,
my God, it can't stay like this. It can't really be happening, the
situation will rectify itself.'"

Almost as soon as Aaron Giebel had finished his house, he
knew he was going to have to sell it to meet cash flow problems.
And it was hard to remember a worse day in his life than the
one when he turned to his wife and simply said, "This thing's
got to go." He sold it without ever moving into it, at a loss of
$700,000. In a year, from the end of 1981 to the end of 1982,
his empire was in ruins. Thousands of other empires were in
tatters also, including that of the seemingly untouchable bank
that had financed him.

At the end of 1981, a record 4,530 drilling rigs were running in the United States. Ten months later that number had
dropped to 2,379.

The First National Bank, which had dished out loans as
freely as a doctor gives out lollipops, was in grave trouble. In
July and August 1982 alone, deposits had dropped $150 million. An examination was quietly begun by the Office of the
Comptroller of the Currency off the hank premises to preclude
local panic. Every day, credit files were flown from Midland to
Dallas, where examiners pored over the loans. The examination, done in the summer and fall of 1982, turned up startling
news: $108 million in loans-8 percent of the total-was overdue; $357 million in loans-26 percent of the total-did not have sufficient documentation. To the examiners, the situation
was crystal clear: the bank had become a running crap game.

The bank, which on its seventy-fifth anniversary had received a resolution from the Texas State Senate congratulating
it for its "active, aggressive and effective" role in the cornrnu-
nity, became an example of all that had gone terribly wrong.
The town's mightiest symbol suddenly found itself on its knees
because of the blindness of its greed and its utter lack of
caution.

In the bank's dire need for cash to keep it afloat, everyone
became a potential pawn, even its best, most loyal customers.
They trusted the bank blindly-stupidly, as it turned out.
When asked to jeopardize millions of dollars of' their own
money to keep the bank going, they did so, still rooted in the
ethos of the fifties, when you just gave help with no conditions
attached when a friend asked for it. But this was the eighties,
when nothing was sacred-except, of course, the making of
money and the protection of glass-house empires at all expense.

At the end of 1982 the bank, desperate to show a profit, proposed a whirlwind deal to sell its headquarters to a partnership
of seven customers for $75 million. These men, either personally or through their companies, had over $200 million in loans
from the bank. The way the deal was structured they would he
able to do it without putting up any significant amount of cash,
and there might also he some nice tax advantages in it. Beyond
that, all of them felt a certain amount of moral indebtedness to
the hank since it had helped them make their fortunes. Several
of those who signed promissory notes did so without reading
the paperwork.

"Come on, you know me better than that," oilman Tom
Brown, who had $160 million in loans from the bank through
his company and had executed three promissory notes for
$6.25 million, told a lawyer in subsequent court testimony. °I
did not read any papers. I wanted to get back home, for one
reason.... It was New Year's Eve."

The bank used the alleged profits from the sale to show a
profit in 1982 of $11.9 million instead of a loss. The Securities
and Exchange Commission later said that those figures were
"false and misleading," in part because the sale price for the
headquarters had been overvalued by as much as $40 million.
But for the time being, the First National Bank was still afloat.
In June, however, the results of another examination by the
Office of the Comptroller of the Currency showed that 39 percent of all of First National Bank's loans were in trouble.

The bank was dying, but still the people of Midland, and
even Odessa, refused to believe it. There was an air of unreality
to it all, as if the situation would somehow, someway, magically
fix itself.

In the backs of people's minds there had to have been days
during the boom when they looked out at their world, a world
so drenched in materialism that even Ronald Reagan might
have gasped, and wondered when, like a stage set, it was all
going to disappear, when the Lears and the Rolls Royces and
the eighteenth-century antique desks would eventually have to
go back into their boxes. But never in a thousand years did
anyone in Midland, in Odessa, in all of West Texas, ever think
that the bank would crumble. Sure, it would take a few hits, just
like everyone else did. But if anything could withstand the bust,
it was be the First National Bank, the institution that had made
Midland unique and had set its course from the very beginning.

"It was more important than the Father, Son, and the Holy
Ghost," said attorney Warren Burnett. "They truly thought it
was untouchable." But as for many other institutions in the
eighties, greed overcame history. On Friday evening, October
14, 1983, at 6: 13 P.M., the First National Bank was declared
insolvent by the Comptroller of' the Currency. In terms of the
size of assets, the bank's failure was second largest in U.S.
history.

When the First National Bank of Midland went down, it certified not only that the boom had ended, but that a way of life
had ended. Its failure was a precursor to the falls that would later inevitably take place all over the country, on Wall Street in
New York and State Street in Boston. "It was like dropping an
atomic bomb on a town," said former mayor Hank Avery, and
the explosion was felt in Odessa. For perhaps the first time
ever, there was no gloating over the misfortunes of Midland.

"It was frightening," said Lanita Akins. "It brought you back
to reality and made you realize that the boom was over and that
it wasn't going to turn around the next day. I remember gasping for breath."

But Aaron Giebel, who had been forced to file for corporate
bankruptcy when the bank had foreclosed on several of his oil
properties, had a different view of it, a view colored by his own
experiences, but also by the craziness of the times that he had
lived in. "There is no question the banks were tantamount to
prostitutes during the boom," he said, recalling how representatives of banks all over the country had called up begging to
do business with him.

Several years later federal judge Lucius Bunton compared
the First National Bank to the Titanic. "The First National
Bank, like the vessel, was a magnificent, extravagant, enviable
Camelot," he wrote in an opinion in a case involving the bank.
"It was regarded as unsinkable, said to be designed and engineered to withstand the formidable forces of natural laws. The
bank, like the liner, was doubly-supported, tightly-compartmental. If one of its parts were weakened or damaged, the
other sections were designed to keep it afloat."

It was a wonderful analogy, not only for the bank but for all
of Midland. For eight years the whole area had been like the
Titanic, a raucous, crazy ship equipped with every possible amenity, towering atop the nubby, gnarled brown sea of West
Texas, its passengers dining every night at the fabulous firstclass restaurant where between bottles of $150 wine they pulled
out their wallets to show off laminated pictures of their jets
and rigs and Brangus bulls, so caught up in the revelry and
the merriment that they forgot it was still a dangerous, unpredictable world out there over which they had no control. Did Aaron Giebel see the iceberg looming as he built his San Simeon and dreamed his dream of cows strong enough to pull
buildings? Did Tom Brown, as he took out $160 million in
loans and signed promissory notes for $6.25 million without
reading the paperwork? I)id any of the hundreds of others who
had expanded beyond all imagination? Of course not. Should
they have?

Maybe it wasn't the Titanic at all, but just a Ship of Fools
turned mad by money and greed.

If Aaron Giebel was thankful for anything, it was that his son
Mark had been there to witness the terrifying things that oil
and money could to do a man. "I thank God that my son has
been in here," said Giebel. "He has seen all this, and thank God,
he is not going to succumb to it."

IV

In the fall of 1988, Midland and Odessa were still in the doldrums of the bust. Nothing quite as dramatic as the sinking of
the First National Bank of Midland had taken place for some
time, but by then people had become immune to catastrophe
anyway. In July 1986, the nation's rig count hit an all-time low
of 663, some 85 percent fewer than the high it had hit less than
five years earlier. At the same time the wellhead price of U.S.
oil dropped to $9.25 a barrel. There was some slight improvement afterward, but not enough to make a difference. The oil
production industry in West Texas had collapsed.

People had been drilling for oil in the Permian Basin for over
sixty years. They had punched thousands of holes into the
scrubby earth, and some believed it was only a matter of time
before the place got tapped out. Unlike the Middle East, where
oil almost literally flowed out of a spigot, finding it here was
getting harder and more expensive. The days of the great
gushers had been gone for years. It took extensive drilling to
find what was there, and the yields were not enormous. When the price of oil had been high in 1980 and 1981, it was worth
the cost. But when the price dropped, the frantic search for oil
in the Permian Basin, and all of Texas, quickly became much
less attractive. In 1987, the amount of oil produced in North
America had actually been the sane as the amount of oil produced in the Middle East, about 12.5 million barrels a day. But
it took nearly six hundred seventy-five thousand wells to produce that amount in North America. In the Middle East, it took
about forty-five hundred.

The bust had extracted a terrible toll, and the list of' people
and institutions that had been destroyed read like a horrible
casualty list. Six banks had failed; ten bankers had been convicted of criminal activities ranging from embezzlement to
fraud and received prison sentences as high as twenty-four
years; hundreds, big and small, had filed for bankruptcy, and
many more were still trying to extract themselves from the
rubble of'houses they couldn't sell and creditors they were trying to pay off. All around were signs of what was and now
wasn't-office buildings of darkened glass in downtown Midland and Odessa that were virtually empty and had the scent of
unopened boxes, streets where three-quarters of the houses
were for sale, warehouse lots filled with beautiful new rigs that
had never been touched.