Howzit Howard

Possible pinnacle of a remarkable career

Ron Migita's story may be the most interesting in the history of Hawaii banking. Migita, born and raised on Maui, worked his way up from the bottom of the Bankoh management until taking early retirement 29 years later as a senior vice president at the age of 53. City Bank Chairman James Morita recruited him to come over as president, effectively promising that Migita would succeed him, only to deny him any real authority and then push him out for asking for it. A revolt against Morita, led by mainland institutional investors, led to his ouster in 1997 -- the stock value grew by a third on the news -- with Migita brought back to run the bank. City Bank's closest rival was Central Pacific Bank. Both were founded in the 1950s to serve the ethnic Japanese business community. Both had close ties to banks in Japan. By the 1990s, both were working hard to expand beyond their original constituencies. Central Pacific hired Clint Arnoldus from California to broaden its base, and one of the first things Arnoldus decided was that he should acquire City Bank. Migita, who had earlier tried without success to acquire Central Pacific Bank, resisted acquisition. The two men traded sometimes acrimonious news releases, and City Bank fought merger with everything from poison pill stock policies to grass roots sign-waving campaigns by employees that resembled politics more than corporate merger battles. Someone should have written a book about it. In the end, and ironically after pressure from City Bank's institutional investors on the mainland, Central Pacific won City Bank, but at a higher price, and Migita was made a non-executive board chairman while Arnoldus was left running the combined bank. The merger was consummated in 2004. I attended the last City Bank shareholders meeting and it felt like a funeral (and I felt like a vulture, because I had gleefully covered the dueling press releases and other sideshows). I confess to thinking to myself when I learned the terms of the deal, I wonder how Migita will regain the ascendancy this time? Because, in a quiet, dignified way, he seemed really scrappy. And he had come back from exile before. The answer turned out to be that Arnoldus would stumble eventually, and people would look to Migita to save the day. Arnoldus stumbled by doing something that he probably thought was very sensible. Looking to diversify the bank and make it less vulnerable to the vagaries of the Hawaii economy, he decided to get into the California market, and lent a lot of money to developers there. Then the housing boom in California ended. Central Pacific was left with hundreds of millions in non-performing debt -- while the Hawaii economy outperformed California's. Arnoldus had diversified into an economy weaker than ours. In March, Arnoldus announced he would retire at the end of the year, while a national search for his successor would be conducted. On Thursday, the bank announced that its board has chosen its chairman to be CEO. Ron Migita, while keeping the until now titular role as chairman, would also become president and chief executive officer. "These are difficult times," Migita said in a statement. "But, during my career, I have seen difficult times before." He takes the reins officially Friday -- four months before Arnoldus had said he would retire. The official announcement didn't play this up, but to me it means this: Migita has won again. And get this. Migita is the first Hawaii-born CEO that Central Pacific Bank has ever had.

Return of the Potted Plant

Twenty years ago, U.S. senators were investigating the Iran-Contra scandal, in which the Reagan administration sold arms to Iran (which President Reagan said he would never do) to raise funds to support the Contra rebels in Nicaragua (which was illegal, though a court challenge to the Congressional ban might have gotten it thrown out on Constitutional grounds). At one point in the Senate hearings, Sen. Dan Inouye, D-Hawaii, got tired of hearing Oliver North's lawyer speak for North, a Marine lieutenant colonel who played a key role in the matter. Inouye suggested that North speak for himself. And his lawyer, a little pugnacious guy, leaned into his own microphone and said, "What am I, a potted plant? I'm here as a lawyer. That's my job." That was Brendan Sullivan. He is "a lawyer" the way Mauna Loa is "a mountain." He got North off, though there is no question he committed crimes, by having him describe them in immunized Congressional testimony, so the courts could throw out his later conviction on the grounds that prosecutors could not prove they would have nailed him without the immunized testimony. Sullivan is back. He's representing Sen. Ted Stevens, R-Alaska, who faces seven counts of making false statements in the case of an oil contractor who made improvements to his home that more than doubled its size. On Thursday it was Sullivan entering a not-guilty plea, while Stevens stood silently, playing the potted plant role. Stevens, whose career dates back to an Interior Department post in the Eisenhower administration, has been a good friend to Hawaii for many years. Stevens and Inouye, though of different parties, are friends, and close allies, each working with the other to round up bipartisan support for federal grants and projects to aid their two remote states. It is difficult to imagine any outcome to this matter which does not pose some peril for Hawaii. Stevens will be acquitted or convicted or settle out of court, but regardless of which way the matter ends legally, politically it will lead to a new campaign focus in the battle to succeed Stevens, who is 84 and approaching his 40th anniversary as a senator. Hawaii benefits from an Alaska senator who gets things done. Is Stevens, apart from a senator who gets things done, one who engages in improper conduct? Perhaps the court case will answer that. What he allegedly did is fail to report gifts from VECO Corp., and its chief executive officer. VECO is an Alaska-based oil pipeline construction and maintenance firm. It hired more than 2,000 workers to clean up the mess after the Exxon Valdez oil spill in Prince William Sound, a spill so great that if it had happened along the Atlantic Coast it could have stretched from the mouth of Chesapeake Bay to Cape Cod. CEO Rick Allen and Vice President Rick Smith pleaded guilty last year to extortion, bribery and conspiracy. Allen and Smith resigned and Allen's daughter Tammy became chairman. The FBI and the IRS raided Ted Stevens' home a year ago Wednesday. The indictments Tuesday said Stevens received hundreds of thousands of dollars in unreported gifts. We'll see how Stevens does, and what kind of performance is turned in by the "potted plant."

Brevity, brains and bread

My father can take out a yellow legal pad and write down a page full of short thoughts, gags and opinions, so aphoristic you can almost fit them on bumper stickers. The way his mind works, for better or worse (which depends on the circumstances), is to zero in on the crux of the matter, yielding an opinion or conclusion that has clarity and simplicity. As a radio network anchor who wrote his own scripts, I learned how to tell stories as succinctly as my father does, but for me it is an acquired skill, not a natural talent. Different people's brains work differently, and mine races down countless corridors of side issues. Want an example? We've started a new feature on "Sunrise" called "Ask Howard." We send a cameraman and a producer out into the community and invite people to ask questions. Most, so far, have turned out to be pithy questions about the economy, on matters I have already written and spoken about, so I have answers ready. This morning, however, I got a question out of left field: "What's your favorite bread?" Before punting (withdrawing my wallet and saying that my favorite bread was what was inside it) my brain flooded with the following thoughts:

• My favorite food is bread pudding -- I like it so much I ask for it instead of a birthday cake -- but I hate raisins in bread pudding and prefer no fruit or nuts of any kind.
• I bought some rye a few days ago and it was really dry.
• Hamburger rolls are perfect for sandwiches for which you don't want a lot of bread, and because they're soft they don't squeeze out the innards.
• Fresh-baked whole wheat bread tastes better than fresh-baker white bread, but otherwise I like white bread better.
• Pumpernickel is nice now and then.
• I don't like seeds on rolls because they're messy.
• The heels of a loaf of bread can be useful in prevent leaks from a juicy sandwich.
• If making a grilled cheese sandwich in a waffle iron with reversible grilling surfaces, keep it on the waffle iron side and the parts that get smashed will taste crunchy like Cheese-Its.
• Microwave-melted cheddar on toasted bread actually tastes better than a grilled cheese sandwich without the need for any butter.
• When I was kid and we were briefly poor, an enjoyable snack was a piece of toast covered with butter, cinnamon and sugar.
• One of Ronald Reagan's contributions to American culture was acquainting millions of people with monkeybread. He liked it, so it was served at Thanksgiving and Christmas, and the news is so slow on those holidays that White House correspondents always file reports on the dinner menu.

All these thoughts come from someone asking, what's your favorite bread. Can you imagine the difficulty of speaking or writing coherently when you brain is running in all directions at once like this? Maybe you can. I've read that so-called "autism," once considered a rare condition, is in milder form a common alternative wiring of the brain, which may actually be better to have if you work in certain professions. Boy, I hope this is one of them!

How do you pick a running mate?

We've seen two interesting example of non-traditional running mate selection in recent presidential elections, which may have caused some younger voters to forget the conventional thinking. The conventional thinking is that the running mate should "balance the ticket." This could mean a black choosing a white or a woman choosing man but mostly it meant a Northerner choosing a Southerner (Kennedy-Johnson) or vice-versa (Johnson-Humphrey, Carter-Mondale) or a Westerner choosing an Easterner (Nixon-Agnew, Reagan-Bush) or vice versa (Bush-Quayle). The first non-conventional choice of recent times came when a Southerner picked another Southerner -- from an adjacent state! -- (Clinton-Gore) which worked because they got along so well it was like watching a buddy movie. The other came when a candidate seen as lacking D.C. experience picked a veteran defense secretary and congressman (Bush-Cheney). Since Cheney was older and was advising Bush already, he was like a running mate-cum-consigliere. And the current campaigns? McCain is a Washington insider who can afford to, maybe needs to, reach outside the Beltway, as they say inside the Beltway, for someone who is young and dashing, a conservative Obama. Obama won't be choosing Hillary Clinton. She's been a target of humor, ridicule and criticism in Republican circles for years; with someone else Obama might get crossover votes, but not her. Sen. Chris Dodd, D-Conn., has been mentioned, but that won't happen: the chairman of the Senate Banking Committee took a cut-rate mortgage from Countrywide Financial. The Washington Post reported Tuesday that Obama aides have been vetting other possibles, including the governors of Kansas and Virginia as well as Sen. Joe Biden, D-Del., and former Sen. Sam Nunn, D-Ga. Biden and Nunn have this in common: they are international recognized experts on foreign policy. Most of the world's leaders know both of them. There has even been a little bit of talk of Obama considering a Republican. I doubt if a nominee of either party would do this other than in exceptional circumstances, since there was a case early in our country's history where that happened, and the president died in office, so the party in power actually changed. William Henry Harrison, the old general who died a month after his inauguration, was a Whig. His vice president John Tyler was a Democratic Republican, the ur-Democratic Party. Relax, I didn't remember, either; I had to look it up.

Gas prices are falling -- sort of

The Lundberg Letter reports national gasoline prices have fallen 12 cents in two weeks, and AAA reports Hawaii prices have also begun to fall -- Honolulu self-serve regular below $4.40 a gallon, Wailuku below $4.70 -- though our island prices are not yet below the level of a month ago. Let's keep this in perspective, though. Gas averaged $3.18 a gallon in Honolulu a year ago Monday. A decline of a few pennies is a drop in the tank when prices are still more than $1.20 higher than they were last summer. So the real question is how much prices will fall. Will they fall enough to constitute a "Return to Before," in other words -- and the answer to that question is, no. Demand for oil is still surging worldwide, but not in the United States. The increase is in countries like China, where consumers bought 18% more cars last year, and India, and Indonesia. Did you know that fuel prices are subsidized in China, India and Mexico? I mean consumers pay less than the real price and the governments make up the difference. Their economies could collapse otherwise. In India, for example, people burn subsidized kerosene. If they couldn't afford it, they would burn wood, and it would be an ecological disaster. In China, the central government spent $40 billion on fuel subsidies last year. This year it will spend even more. In Indonesia, where diesel-guzzling boats pay the same low subsidized prices that scooter owners do on land, the mere announcement of price hikes set off demonstrations. British Petroleum, which does more market research than most oil companies, says countries with fuel subsidies account for 96% of all increased oil consumption. I told you earlier that the weak dollar and the weak stock market (driving some investment dollars to oil futures contracts, bidding their prices up) were contributing factors to high oil prices. Well, I think the decline we've seen in recent days has resulted from a slightly stronger dollar and a slightly stronger stock market. But this may already be over.

When you outlive your lifetime job

It feels so prudent to work for one company for many years. If you're sensitive to the negative consequences of ambition, if you are a naturally modest person, it seems almost virtuous to keep working for the same company through your entire adult life. This accentuates the psychological upheaval, even, sometimes, the sense of betrayal, when the company to which you have devoted your workaday life decides that what the company really needs right now is for you to go away. It doesn't seem right. After all, everyone agrees, even the person handing you the pink slip tells you, that it was nothing you did. It wasn't your fault. This implies, by its very grammar, that it was someone else's fault, that someone is, in fact, to blame. I noticed years ago that we never get so angry at someone else as when we are also mad at ourselves, and our anger at whomever we blame for layoffs may often be magnified by self-loathing for not having seen it coming, or, worse, foreseeing but not acting in time. Others are more qualified than I to help people who have been laid off already -- the state labor department's rapid response team actually includes counseling for those who want it -- but I have a few things to say to the rest of us, who could face a similar situation one day. The average American has several career changes in a lifetime. To work for decades with good pay and benefits for an airline or a hospital or a factory has always been exceptional employment, not just in the sense of "good" but also in the sense of "rare." Hawaii residents who have lost really good jobs have quickly learned that there are lots of jobs in our economy but few of them come close to the wages and benefits they enjoyed. There are, in real life, some cases where owners or bosses are so enlightened, and also so competent, that they are able to preserve jobs that others would quickly slash. We have seen this in Hawaii. But we have also seen the situation change in a heartbeat -- the Waikiki hotel where the patriarch died and the next generation didn't care -- Aloha Airlines, where management preserved jobs for years only to have investors suddenly realize it wasn't ever going to work for them and yank funding in a trice -- hospitals that preserved jobs only by running up ever larger operating deficits until someone else had to come in and do the dirty work. Wherever you work, however secure your job appears to be, however much you like your management or your ownership, you should never forget that it can change in a heartbeat. If it does, what will you do next? Do you have savings? Do you have skills that will make your employable elsewhere? Do you have amicable contacts at other companies? If a prospective future employer asked your colleagues what you're like to work with, will they sing your praises? The beauty of thinking like this is that being prepared for the worst will make you better, and happier, in your current job, even if it never goes away.

Pauline, John, Amy and Bernadette

And right now Pauline and John are thinking, "Who are Amy and Bernadette?" But that's okay because I'm not sure if Amy and Bernadette know Pauline and John. But come to think of it, Bernadette should remember John, and it's possible that Pauline grew up with Amy. Pauline Wilson and the Honolulu Jazz Quartet performed on "Sunrise" Thursday morning, but only briefly because we went live to Barrack Obama's "Ich bin ein candidate" speech in Berlin. We will have both back at their convenience, together or singly. Pauline, perhaps better knows for her work with Seawind, has the distinction of having been the first Grammy-winning singer in Hawaii, and is on the short list of really good jazz singers in the islands. John Kolivas plays bass with the Honolulu Symphony and heads the Honolulu Jazz Quartet, which has a Saturday night concert at the Doris Duke Theatre to raise funds to attend a jazz festival in California next month. It's $30 a ticket because of the fundraising need. These guys are good. My wife Bernadette, who will remember John and the quartet because they played at our wedding reception, is another topic -- all week I've been featuring Hawaii farmers as a lead-up to this weekend's Hawaii Farm Bureau annual fair at Bishop Museum. It was Bernadette who instigated this, but I never featured her, even though she'll be there, too, selling lumpia and beignets. And Amy? That's Amy Hennessy, who like Pauline Wilson hails from Hilo. She's one of the most competent public relations people in Honolulu, and at the moment she's also a Pacific Century Fellow, and blogging quite interestingly about it: http://30somethingish.wordpress.com/

My first facial

Yup. You read right. I've had a facial. It happened like this. The Hawaii Performing Arts Festival invited me to emcee its Rodgers and Hammerstein concert last Friday night, and put me up at the Four Seasons Hualalai. Bernadette and I decided to do as little as possible other than my concert commitment and just relax otherwise. My idea of relaxing is sleeping. Her idea of relaxing is shopping. So the day after the concert, after driving to Waimea-Kamuela and Hawi, I did something I haven't done in many years -- drew a really hot bath in a really nice bathtub and fell asleep in it. Bernadette went shopping. I awoke to find her taking a little brown jar out of a bag. "What's that?" I asked. "This," she said, "is clay, mixed with chocolate. I am going to give you a chocolate facial." "I have a confession to make," I said. "I'm not sure I even know what a facial is. Is that where you put clay on the face and it dries and when you take it off you're supposed to feel better?" "Correct," she said. "Actually, your skin should feel smoother. And, it will smell like chocolate." "Okay," I said, because it meant I didn't have to get out of the bathtub yet. And she applied cocoa-scented, cocoa-colored mud to my face. It needed to set, which was fine because it meant I could remain in the tub even longer. "This is Peruvian chocolate," Bernadette said. Okay. Heaven forfend someone would paint me with Icelandic chocolate. I thought Peru was only known for Lima beans (joke). Skipping to the end, my skin actually did feel smoother, though I have to admit I had not realized it was insufficiently smooth before. I also felt a passing sentiment that this was a waste of perfectly good chocolate, Peruvian or otherwise. The jar and the applicator cost $25. If ever you're offered a facial/ Your response ought not to be glacial/ Your skin will feel new/ When you wash off the goo/ But it helps if your bathtub's palatial.

Health care and the rest of the economy

This is what high-end realtors tell me: that mainlanders who want to retire to neighbor islands, often change their minds and retire to Oahu, after checking out the quality of health care on other islands. They prefer the slower pace of life on other islands but settle for Oahu because they want to survive their first heart attack. That comes to mind as two Big Island hospitals cut staff to try to control their ballooning operating deficits. The little hospital in Kealakakua is on the verge of cutting more than 50 jobs and the hospital in Waimea-Kamuela has already done the same thing, so upsetting the community that I heard reports someone threatened the new head of the hospital, who tried to fix but didn't create the problem. (He's resigned.) Doctors have been telling us for years that medical care on neighbor islands is threatened by soaring malpractice insurance costs, insufficient compensation for treatment of Medicare patients, and limits to state and local financial support for hospital operations. They weren't making it up. Malpractice insurance costs are driven by lawsuits, which I assume increase when the quality of medical care suffers. The gap between Medicare compensation and the actual cost of treating Medicare patients has been growing for years, and for years no one did anything about it except to soak others to make up the difference. Congress did vote this month to bar any cuts to Medicare compensation. Governor Lingle agreed to a plan to increase state compensation, triggering a federal match, but backed out of a plan to make it retroactive to the just-ended fiscal year, citing tighter state finances. This same factor is likely to put limits on what the state can do to resolve the hospital crisis. Kaiser Permanente has been trying to control costs through smarter procedures in its system. The jury is out on that one. As a 30-year member I can tell you it has never been harder to get in to see someone for a non-emergency matter, though emergency treatment does not seem to have been adversely affected. This is already a major issue, but it will get even bigger. Hawaii has an aging population, and to some extent represents where the rest of the country will be in a dozen years. Older people need even more health care. In fact, a local health care executive -- he comes from the bean-counting side of the house, not the knee-thumping one -- told me people are surviving so many illnesses that used to kill them, now they're living to a ripe off age and then suffer wholesale health collapse leading to expensive care through their final days and months.   

In praise of what Bush said about Wall Street

President Bush asked attendees at a Republican fundraiser in Houston to turn off their cameras. Someone didn't. A Houston TV station got hold of video. "Wall Street got drunk," Mr. Bush said. "And now it's got a hangover. The question is, how long will it sober up and not try to do all these fancy financial instruments?" A very good analysis. One little-mentioned factor in the subprime mortgage debacle is that financial instruments have indeed grown so complex that even the experts don't understand them well enough to accurately foretell all their effects. Look at the financial giants who've lost tens of billions of dollars in bad debt writedowns and lost investment opportunities: companies Lehman Brothers and Merrill Lynch are supposed to be the smart ones. They owe their very existence to the public perception that they know how to invest better than the rest of us do. But when subprime lending returned fast profits and others dove into the mortgage-backed securities business, they followed. They went on a bender. Now they have the mother of all headaches. The president, who by the way must have known someone would have recorded what he said, is totally right about this one.