The Other Gerald Ford's 50-Year-Old Playbook

Gerald J. Ford walked into the room with a reputation...

It was 1988, and Texas was in crisis. The state's economy, once buoyed by oil, had collapsed. And with it went hundreds of savings and loan (S&L) institutions.

S&Ls across the country were folding under the weight of bad loans. But nowhere was the disaster worse than in Texas.

Oil prices had plummeted. And the S&Ls, deeply entangled in real estate and speculative lending, were crumbling.

This collapse wasn't just a local problem. It threatened to spread, wreaking havoc across the U.S. economy.

And Ford saw opportunity in the chaos.

Ford – not to be confused with former President Gerald R. Ford – was already a veteran in the business of turning around troubled banks...

He scooped up the majority of the First National Bank of Post, Texas back in 1975 for just over $1 million. He did the same with First National Bank of Lubbock seven years later.

As the doors of the Federal Deposit Insurance Corporation ("FDIC") opened for him, he stepped into negotiations over five failing Texas S&Ls. These weren't just banks in trouble – they were bankrupt and facing liquidation.

But Ford saw something others didn't. With the right backing from the government, he could not only save them... but make them profitable again.

Hundreds of millions in taxpayer dollars had already been pumped into the industry in a desperate attempt to stabilize it.

The FDIC needed someone who could pull off the kind of turnaround that might stave off a national crisis.

With his no-nonsense approach and history of bank acquisitions, Ford seemed like the perfect candidate...

And he knew it.

Over the course of those tense negotiations, he struck a deal to acquire the five insolvent S&Ls, including First Texas Savings. He would rebrand them as First Gibraltar Bank.

Ford didn't do this alone. His partnership with billionaire Ronald Perelman, known for his aggressive corporate takeovers, helped cement the deal. Together, they constructed one of the largest banking platforms in the Southwest... built on the ruins of the S&L crisis.

But what made Ford's strategy brilliant wasn't just his willingness to take on failing banks... It was his understanding of the government's desperation.

Eager to stabilize the market, the government offered a mix of favorable terms, including lucrative tax breaks and loss-sharing arrangements.

Ford took full advantage of these. By transferring bad loans to the government and keeping the good ones, he turned what seemed like a failing venture into a highly lucrative one.

At the time, it seemed like he had pulled off a miracle...

The FDIC estimated it saved billions of dollars by selling off these failed institutions instead of letting them go completely bankrupt.

And Ford emerged not just as the man who salvaged all those wrecked banks, but with a hefty profit to boot.

He didn't stop there. His strategy of acquiring troubled institutions became his signature move. In the 1990s, he went on to buy several more banks, building a financial empire in the process.

By the time he was done, he had overseen the acquisition of more than 20 smaller banks.

And with every failure he acquired, he laid the groundwork for what would eventually become one of the largest and most successful bank rollups in U.S. history.

The story of Gerald J. Ford during the Texas S&L crisis is more than just a tale of financial rescue...

It's a reminder of how, in moments of economic collapse, the boldest and savviest investors can find opportunities to not just survive... but thrive.

We expect a wave of deregulation and consolidation to hit the banking industry during Trump's next term. And investors who can act with Ford's level of precision are poised to profit once again.

Over the course of this week, we'll outline exactly what's going on in the banking industry.

We'll start with a look at the events of the past few years. Then we'll cover just how bad things have gotten... and the huge opportunity it's creating.

Finally, we'll reveal why things seem like they're changing for the better.

Stay tuned.

Regards,

Joel Litman
January 7, 2025