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Trust, Community and Laundered Money

Posted By Prucia Buscell, Monday, March 04, 2013


After Hurricane Katrina ruined Hancock Bank's corporate headquarters in Gulfport, Mississippi and destroyed or damaged 90 of its 103 branches, a few of the bank's executives huddled outside and wondered how to get through uncharted chaos without electricity, computers, records, or normal police and fire protection.

 They examined the values and mission stated in the bank's 1899 charter—to serve people and take care of communities. The bank had back up files in Chicago, but access would take time. Many Gulf Coast storm victims had lost everything—wallets, check books, and identification. Credit cards, even for those who still had them, wouldn't work to buy food, gas or other necessities. People needed cash, right then.

 So the executives took bold steps to trust and help their neighbors. They decided to give $200 cash to anyone who provided a paper IOU with an address and social security number. Three days after the storm, they opened 30 branches without lights or phones, and in some cases without roofs. In some places they set up card tables under tarps. They salvaged cash from flooded casinos, bank vaults and ATMs, washed it, ironed it, and handed it out to people in need, whether they were Hancock customers or not.

 Andrew Zolli and Ann Marie Healy reported this story in their book Resilience, Why things Bounce Back. Click here to hear Zolli tell it. "Leadership and Mission in Resilient Organizations: Hancock Bank as a Case Study,” by James Pat Smith, notes the bank's 80 year-old chairman Leo Seal Jr. had emphasized for years that banking wouldn't be possible unless 99 percent of the people were honest. That sentiment guided Hancock COO John Hairston and CEO George Schloegel as they decided to distribute money and trust in community. They put $42 million into the devastated local economy.

 Zolli and Healy write that social resilience often flourishes where people have faced devastating challenges. Joe Nocera makes similar observations in his New York Times column "Rebuilding on Their Own.” He tells of visiting New Orleans with Roberta Gratz, author of The Battle for Gotham: New York in the Shadow of Robert Moses and Jane Jacobs. Gratz, who was mentored by Jacobs, owns a home in New Orleans' Ninth Ward and is writing a book on the city's post-Katrina recovery. Gratz describes people trickling back into the Ninth, where volunteer groups are still helping to rebuild homes and neighbors are helping neighbors. Nocera quotes Gratz's observation that "cities change from the bottom up, block by block.” In New York's Rockaways, still suffering from destruction of Superstorm Sandy, a similar ground-up rebuilding is underway. Habit for Humanity, nonprofits, and neighbors are at work. Government aid has helped both places. But Nocera suggests the Rockaways will recover through the same ad hoc-volunteer-dependent activities that are pulling New Orleans back from ruin.

 After three years, 99.5 percent of unsecured cash distributed to Katrina victims was paid back to Hancock Bank. Smith notes in the five months after the storm 15,000 new accounts were opened, and over time Hancock's deposits grew by $1.5 billion. The bank flourished, and its CEO George Schoegel became mayor of Gulfport.

 In 2005 a group of 600 New York firefighters went to New Orleans to help. Now, Nocera writes, a group of New Orleans firefighters have come to help in the Rockaways to return the favor.

Tags:  buscell  community  complexity matters  resilience 

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