1983: The United American Bank (UAB) collapses. Jacob “Jake” Butcher was born in 1936 in Union County, Tennessee. His father was a general store manager and president of the bank in Union County. Jake attended the University of Tennessee and Hiwassee College and then served in the United States Marine Corps. He and his younger brother, CH Butcher, Jr., worked at their father’s bank while teenagers. The brothers began buying stock in many Tennessee banks in 1968 and by 1974 owned or controlled eight banks. Their United American Bank controlled 39% of the banking reserves in Knoxville, Tennessee.
In the late 1970s, UAB built a 27-story headquarters in Knoxville and it was, and remains, the city’s tallest building. Plaza Tower was joined by CH Butcher’s City and County Bank’s Riverview Tower, the second tallest building in the city. Jake expanded his area of influence in the early 1970s by entering politics. In 1974, he hoped to gain the Democratic Party’s nomination for Governor of Tennessee, but lost in the primary. He did get the nomination in 1978 but lost the election to Republican Lamar Alexander. There was talk of his running again in 1982, but he supported Knoxville Mayor for the race. His brother supported Alexander’s bid for a second term. Alexander won.
The 1982 World’s Fair open in Knoxville, a project which had greatly benefited from Butcher influence. It was considered to be a success with over 11 million visitors in the six months it was open. The site remains in use as a park in Knoxville. By 1982, UAB owned over half of Knoxville’s business loans and Jake’s personal net worth was listed at about $34 million. There were rumors the brothers had engaged in illegal banking practices. On November 1, 1982 the Federal Deposit Insurance Corporation sent in 180 federal bank regulators to all 29 bank branches and offices owned by the brothers simultaneously to prevent transfers of funds to cover malfeasance.
The investigation revealed illegal loans, forged documents, and various other forms of fraud. On this day, the USB bank failed, the fourth largest bank failure in the country – up to that time. Seven other Butcher-controlled banks and a separate loan entity run by CH failed during the remainder of the year and three more failed in 1984. The FDIC estimated the losses connected to these collapses to be approximately $382.6 million. Jake Butcher was also found to be penniless. His assets were listed at nearly $12 million but his liabilities were $32.5 million. He pled guilty to bank fraud in 1985 and was sentences to twenty years and received parole in 1992. CH was also sent to prison and was paroled in 1993. He died in 2002. Jake is reportedly working as Toyota distributer and real estate developer near Atlanta, Georgia.
There is no evidence that more regulation makes things better. The most highly regulated industry in America is commercial banking, and that didn’t save those institutions from making terrible decisions. – Wilbur Ross
It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning. – Henry Ford
Banking was conceived in iniquity and born in sin. – Josiah Stamp
There’s a loss of faith in the banking system that for so long has been the backbone of prosperity and growth. – Lucy Powell