Katrina: After the Flood (11 page)

Back on the boat, the group headed a couple of miles deeper into New Orleans East to check on the bank’s old headquarters and the branch next door. They could do nothing but shake their heads over a pair of buildings with six feet of water inside. Doubling back the way they had come, the police officer motored through Lake Forest Estates—Alden McDonald’s subdivision. There, the water was still so high that the only clue that cars were parked along the street was the occasional antenna poking up.

Once back on dry land, they doubled back the way they had come. After a few miles, they jogged north and west to look at Gentilly. Liberty had another two branches in the area. It was also where Labbe lived.

They found water inside both of Liberty’s branches in the area, but Labbe discovered that he and his wife were among the lucky ones. Their
house was built on a slight ridge. Their home, set up a few feet on a foundation, had been spared.

DURING THOSE FIRST WEEKS
after Katrina, Alden McDonald worked when he wasn’t sleeping. He arrived at the Southern branch before 9:00 a.m., driving the putty-colored minivan that he chose from the scant inventory the car-rental company was offering. He sometimes had cell phone coverage in those first days after the storm but often he didn’t, which made for a frustrating half-hour drive each morning. That was prime time to call the East Coast, where it was one hour earlier, or to steal a few private moments with Rhesa. The workday ended well after 9:00 p.m., if not later.

Nothing proved easy during those first weeks. McDonald may have had the foresight to outfit the Southern branch with an extra ten phone lines to handle diverted customer-service calls, but he had not counted on the telephone company’s being overwhelmed by service calls. So many businesses and people had relocated to Baton Rouge that it took BellSouth until the second Thursday after Katrina—ten days after the storm—to rerate the bank’s customers to its 1-800 lines.

Putting together even a skeletal crew meant finding a place to live for each additional employee McDonald brought on—this in a city where every hotel was sold-out. “In some cases, it wasn’t just employees but entire families,” McDonald said. And it wasn’t just a matter of finding them housing but also paying them an extra stipend to cover their costs. Post-storm, even a modest apartment could cost a displaced employee thousands of dollars a month. “You need to worry about how they’re going to cover their expenses,” McDonald said. “You have to make sure their families will be all right.”

McDonald had around twenty people helping him in those first weeks after Katrina. Most worked in the open office space in back of the Southern branch. The bank’s loan department comprised two people sitting in mismatched chairs at a folding table. Next to them sat the one-person department assigned the task of figuring out which homeowners with a Liberty loan had flood insurance and which did not. Four tables pushed together in the middle of the room served as a makeshift
call center. Even with the extra phone lines, customers had to listen to busy signals for hours before getting through. Some callers were worried about past-due bills (Liberty granted every customer affected by the storm a four-month grace period on home and car payments), while others called to see about a bump in the limit on a Liberty-issued credit card. Desperate to know how much money they had, many phoned for an account balance, not realizing the bank itself didn’t know. Several times a day, a car pulled into the parking lot driven by someone coming from Houston or Dallas or somewhere else far away. They were customers worried about the large sum of money they still owed on a seemingly worthless house or car or business who had driven a half a day or more in the hope that someone could answer their questions.

McDonald himself set up shop at a small table in a windowless conference room. Piles of cardboard boxes lined the floor in this space, which doubled as the bank’s records room. McDonald had a door but it usually remained open. Every minute or two, someone else would be seeking guidance or passing along a message. He had two cell phones, and often one would ring while he was already talking on the other. The bank’s chief operating officer had resigned earlier that year, and Liberty was without a chief financial officer. McDonald, who was doing the job of three people, seemed to be in perpetual motion, bouncing between the main room, the branch lobby, and his own office, where only occasionally did he allow himself to sit exhausted in his chair and do nothing before the inevitable next request for his attention.

At around 7:00 p.m. each evening, McDonald convened a small group in his office for what he called “my daily crisis-management meeting.” McDonald, a practicing Catholic, prayed. “I said to myself, ‘Lord, you have to help me out here because I’m not one hundred percent sure we’re going to make it.”

THE BANK STILL HADN’T
heard from a large portion of its employees. In the silence it was hard not to think the worst. One week after the flooding, the mayor speculated on the
Today
show that about ten thousand of his fellow citizens had likely perished—and Liberty’s people generally lived in the city’s hardest-hit areas.

Finding the employees wasn’t easy. People’s home phones didn’t work and of course work extensions were worthless. The bank had some cell phone numbers but that usually meant listening to the rapid busy signal everyone in the 504 area code was hearing. Weeks passed before anyone heard from Pete, an appraiser for the bank. He had been rescued from his roof in New Orleans East. Others had endured the hell of the Convention Center or the Superdome. A month passed before McDonald was able to say with certainty that no Liberty employee had perished in the storm.

CELL PHONES STARTED WORKING
more reliably nine or ten days after the storm. That made communication easier, and as people’s phones chirped to life, a corresponding burst of hope occurred among the city’s business leaders. That only brought into greater relief the disparity between McDonald’s life and that of most of his corporate peers.

On Thursday nights in Baton Rouge, the well-connected gathered at Gino’s, an Italian restaurant with a large bar area popular with legislators, lobbyists, and other local power brokers. Over copious glasses of wine on the second Thursday after Katrina, the mood was almost triumphant as good news finally started to arrive via newly revived phones. The French Quarter was dry. So, too, was the core of the central business district and Uptown—or at least the Uptown of old New Orleans. “Things have really started to turn for the better in the past forty-eight hours,” said Stephen Perry, a Gino’s regular and CEO of the New Orleans Convention & Visitors Bureau. Perry, who had served as chief of staff to Blanco’s predecessor, was hearing that power would be restored to the core city within three weeks. The water and sewer systems should be functioning in key parts of New Orleans by then as well. Perry predicted the Quarter could be ready to greet visitors in less than ninety days. In a town where tourism was the number one industry, the areas that visitors would care most about, including the Warehouse and Garden Districts, were the least affected by the flooding. That, Perry said, would provide the city a base on which to build.

Uptown hadn’t escaped unscathed. Fallen trees and downed utility poles were everywhere. Falling limbs had destroyed much of the catenary
that powered the streetcars that run up and down St. Charles. Many Uptown homes suffered roof damage. Yet optimism coursed through this well-heeled, mostly white crowd. A well-connected corporate attorney talked about the possibility of holding Mardi Gras that February as usual. An executive with a major oil company saw no reason his coworkers couldn’t be back at their desks inside a few weeks. He had been on the phone with his employees all day. Not a single person he spoke with owned a home that had taken on water.

In many ways, the men and women gathered at Gino’s that night were McDonald’s peers. He served on the same boards and commissions and knew them from meetings of the Chamber of Commerce, where McDonald was the presiding officer. Like McDonald, most seemed to be doubling up in satellite offices or working at borrowed desks. “Alden is one of the city’s five or ten most prominent movers and shakers,” said Patrick Quinn, a prominent developer and hotelier in town who, along with his wife, a state senator representing the western and northern suburbs, had taken up temporary residence in Baton Rouge. Perhaps it went without saying that few, if any, other blacks were on Quinn’s list.

The contrast was not lost on McDonald. In much of the western half of town, where the majority of whites lived, Katrina was proving a severe inconvenience more than a tragedy. Most of the white businesspeople at Gino’s that night were frustrated that they couldn’t get home, but they knew they would have a home and belongings, and a job, to which to return.

McDonald, however, lived in the black half of town, where everyone he knew was staring into the abyss. Their homes and businesses were in ruins. “You’re looking at the television and seeing water up to the street signs,” said Arthur Johnson, an administrator in the New Orleans school district at the time of Katrina who lived not far from McDonald. “And we’re all thinking, We’ll never go back. There’s no reason to go back. Everything is gone.”

RUSSELL LABBE AND JOE
James were hailed as heroes for their water journey into New Orleans to retrieve the software and equipment Liberty so desperately needed. But another week of phone calls followed
with the emergency-backup company, who always told McDonald and his people that the problem was on their end. In the months to come, no topic—not his interminable fights with insurance firms or utility companies or even a final bill on all the money the looters stole—irritated McDonald quite like his disappointments with a backup company that had him running the bank blind for nearly two weeks. Not until 4:00 p.m. on Friday, September 9, 2005—eleven days after the flood—was Liberty back on the interbank network.

Initially, McDonald had put a $100 daily limit on all ATM withdrawals. But imagining his customers in hotels around the country, racking up expenses, he upped the daily maximum to $500 and hoped his customers had the money to cover the cash they were withdrawing. In a catastrophe, he was intent on playing Jimmy Stewart’s George Bailey and not Lionel Barrymore’s Mr. Potter. “A banker is someone who gives you an umbrella when the sun is shining and takes it away when it starts to rain,” McDonald said, repeating an unflattering adage about his profession. But he added, “We try not to be that banker.” The decision cost Liberty close to $1 million.

That was nothing compared to the bank’s other losses. A no-questions-asked, four-month grace period on any home, business, or auto in a flooded area might have been the right thing to do, but it also represented millions of dollars in checks the bank wouldn’t be cashing in the months to come. And even once January 1 came, then what? Could he expect most people to resume payments on properties and cars and businesses that had been wrecked in a once-in-a-lifetime flood? Pre-Katrina, Liberty generated $150,000 in loan fees and another $70,000 in charges from checking accounts every month. But the bank wasn’t originating many loans in the months after Katrina, and Liberty had suspended checking fees for most of its customers. The $100,000 a month the bank generated leasing out space in its headquarters also disappeared. Liberty had frozen interest charges on credit-card balances, representing more lost revenues, and there would be no late fees for four months. In the long run, it would be good for Liberty’s business that people carried larger balances on their credit cards, but first the bank needed to survive the short run. “Everywhere I look,” McDonald said six weeks after the storm, “I’m losing money.”

Layoffs were inevitable. “I’m going to have to give severance packages and try to help people get to where they’re going to get,” he told a reporter around an hour after Liberty was back on the global financial grid. “I need to balance income and expense.” Eleven days after Katrina, he offered a few halfhearted words of optimism and then confessed, “I’m running against time.”

He knew the regulators were watching him closely. State examiners in Baton Rouge were coming by his temporary offices, and another set were checking in from Dallas, where the FDIC has its regional office. “They understand we’re losing a certain amount of money now,” McDonald said. “But regulators are not going to let us lose too much before they step in.” Six of his eight branches in New Orleans had flooded. Several had been battered by looters, including one of the two that hadn’t taken on any water. The ground floor of his new headquarters was a complete loss, and what was happening with the rest of the building remained a mystery. If nothing else, he would need to replace every window. He had insurance on the building, but what his policy would cover and what it wouldn’t was another unknown.

The Whitney, where the city’s blue bloods banked, was off the ATM network in the days after Katrina. So, too, were other local banks. “Regulators were worried about the whole system in New Orleans collapsing,” McDonald said. “But I think it’s fair to say they were more worried about me than anyone else.”

It would have been an overstatement to say that as went this one bank, so would go New Orleans. But it didn’t seem too much of a stretch to claim that Liberty’s success and the future of the city’s black neighborhoods were entwined. McDonald would need a healthy black middle class if he hoped to revive the bank. In turn, the black middle class would need a bank like Liberty to help it thrive again.

At the moment, it looked as if the French Quarter, the Garden District, and other parts of New Orleans precious to locals and visitors alike would survive. The prognosis for New Orleans East and Gentilly, however, and the smaller, black or Creole neighborhoods such as the Seventh Ward, St. Roch, and the Lower Ninth Ward, was far from clear. Dennis Hastert, the Speaker of the House of Representatives, was openly suggesting that at least some of these neighborhoods didn’t
have a future. “It looks like a lot of that place could be bulldozed,” said Hastert, a Republican from Illinois, two days after Katrina. Through his own contacts in Washington, McDonald knew Hastert was speaking on behalf of many inside the Beltway. A great deal of recovery money would be set aside for New Orleans, McDonald’s Washington contacts assured him, but it would be nowhere close to the multiple tens of billions the city needed to rebuild after the most expensive disaster in US history. After thirty-three years spent building Liberty into one of the country’s biggest black-owned banks, McDonald was asking himself whether he would outlast the bank examiners to celebrate a thirty-fourth.