A10| Saturday/Sunday, October 19 - 20, 2019 **** THE WALL STREET JOURNAL.
WILLIAM J. POPEJOY
1938 — 2019Mortgage Banker Took On
Thankless Rescue Missions
W
illiam J. Popejoy could
have retired comfortably
in 1983 to hone his tennis
game and tinker with antique cars
at his home in Newport Beach, Ca-
lif. The mortgage-lending executive
was 45 years old and had reaped $
million on stock options from the
sale of a savings-and-loan company
he headed, Financial Federation Inc.
That was big money for some-
one who starred in high-school
track and football but couldn’t af-
ford a letterman’s jacket. “I didn’t
have to work again,” he said later.
But Mr. Popejoy, who died Oct.
12 at age 81, couldn’t resist new
challenges. In 1984, he accepted
the job of chief executive at Finan-
cial Corp. of America, parent of
American Savings & Loan, then the
nation’s largest financial institu-
tion of its kind. Depositors were
pulling out their money in a panic
over losses on real-estate loans.
Despite Mr. Popejoy’s efforts to
save the lender, regulators seized
American Savings four years later
in a rescue that cost taxpayers an
estimated $5.4 billion.
In 1995, Mr. Popejoy took on an-
other thankless job. Orange County,
Calif., had declared bankruptcy in
late 1994 after trading in high-risk
securities by the county’s treasurer
resulted in $1.7 billion of losses. The
county hired Mr. Popejoy as its first
CEO, charged with restoring finan-
cial order. He agreed to work free of
charge but soon clashed with
elected officials over a proposed
sales-tax increase and other mat-
ters. After five months, he resigned.
“I think I’m attracted to the
flame of something that people
say can’t be done,” he told the Los
Angeles Times in 1997.
He died at his Newport Beach
home of complications from Par-
BYJAMESR.HAGERTY
OBITUARIES
WORLD NEWS
kinson’s disease, his son Matthew
Popejoy said.
William John Popejoy, known as
Bill, was born March 26, 1938, and
grew up in a suburb of Sacra-
mento, Calif. His father, Virgil
“Tex” Popejoy, had a variety of
jobs, including picking fruit and
running a doughnut shop. By his
own admission, Bill Popejoy was
an inattentive student in high
school, where he was a champion
shot-putter and fullback on the
football team.H
e married Nancy Rice, a
high-school girlfriend, in
1957, and by the time he
was in his early 20s, they had
three sons. Parenthood instilled
discipline and greater ambition. He
worked evenings at an aerospace
plant while studying at Sacramento
State College. In his late 20s, he
accepted a job in the mortgage di-
vision of a Los Angeles home
builder, partly because he noticed
that the company’s founder, Larry
Weinberg, owned a yacht.
In 1970, Congress created Fred-die Mac, an agency to provide
funding for mortgage loans made
by savings and loans. Mr. Popejoy
became a marketing executive at
Freddie Mac and was named CEO
in June 1973.
Fifteen months later, he was re-
cruited to become president of
American Savings & Loan in Califor-
nia. He reported to Mark Taper,
chairman of First Charter Financial
Corp., which at the time was the par-
ent company of American Savings.
Mr. Popejoy went on to other
mortgage-industry jobs, including
CEO of Far West Savings & Loan of
Newport Beach, owned by the
Belzberg family of Canada.
Meanwhile, a merger put Ameri-
can Savings under the ownership
of Financial Corp. of America,
headed by Charles Knapp. Regula-
tors, worried about deteriorating
results and outflows of deposits at
American Savings, in 1984 pres-
sured Mr. Knapp into stepping
down as CEO of Financial Corp.
Mr. Popejoy, with the backing of
regulators, took the job and began
his four-year quest to rescue
American Savings.
Mr. Popejoy appeared in TV ads
to assure customers their deposits
were safe. He sold corporate jets
and tried to increase interest in-
come with new loans hehoped
would allow the company to grow its
way back to health. By mid-1988,
however, losses drove the thrift deep
into insolvency. The Federal Home
Loan Bank Board arranged for a fire
sale of American Savings to a group
led by Robert Bass of Texas.
“I failed,” Mr. Popejoy concluded
of his efforts to revive the thrift.
Seven years later, though, he told the
Orange County Register there was
“nothing more we could have done.” Read a collection of in-depth
profiles atWSJ.com/ObituariesJOHN BACHMANN
1938 — 2019Edward Jones Leader
Stuck to Quaint Ways
A
s managing partner of the
stockbrokerage Edward
Jones from 1980 to 2003,
John Bachmann shunned Wall
Street trends while aggressively
expanding the firm nationwide.
Mr. Bachmann, who was the
first head of the St. Louis-based
firm outside the founding family,
died Wednesday while being
treated for a brain hemorrhage in
Charleston, S.C. He was 80.
At Edward Jones, he kept
branch offices small, usually with
just one financial adviser and one
administrator. Employees were
steeped in a tradition of conser-
vative, long-term investments.
The firm steered clients away
from internet stocks during the
dot-com bubble.
Under Mr. Bachmann’s watch,
Edward Jones advisers communi-
cated with clients through hand-
written notes delivered by the
U.S. Postal Service, though the
firm has since embraced email
and texting.
By sticking to its quaint ways,
the firm thrived, growing from
about 220 offices in 1980 to 9,
when he stepped down in 2003.
“Someone once said we shot our-
selves in the foot,” Mr. Bachmann
told The Wall Street Journal in- “Well, I guess we missed.”
Edward Jones still doesn’t of-
fer online trading. “We love the
internet,” Mr. Bachmann said.
“We just aren’t going to use it to
trade stocks.”
John William Bachmann was
born Nov. 16, 1938, and grew up in
Salem, Ill., where his father helped
run a family furniture store. As a
teenager, John pitched for local
baseball teams. He once wrote
Hall of Fame pitcher Hoyt Wilhelm
for tips on throwing knuckleballs
and received a detailed reply.
He took an early interest in se-
curities, based partly on chats
with a grandfather and an Edward
Jones salesman who occasionally
visited Salem. While studying
economics at Wabash College in
Crawfordsville, Ind., he hounded
Edward Jones managers until
they gave him a summer intern-
ship. He joined the firm for good
after earning an M.B.A. from
Northwestern University.
Early on, Mr. Bachmann saw po-
tential for Edward Jones to expand
far beyond its Midwestern roots
and hired management guru Peter
Drucker as a consultant. Mr.
Drucker challenged the firm to re-
examine its policy of putting offices
mainly in small towns. Edward
Jones began penetrating major
metropolitan areas and found its
formula worked there, too.
Rather than appealing to do-it-
yourself bargain seekers, EdwardJones looks for clients who want
lots of guidance and are willing to
pay for it. In the Bachmann era,
the firm’s advisers often went
door-to-door seeking customers.
The firm has spread across the
U.S. and Canada. A move into
Britain in the late 1990s flopped,
partly because costs for real es-
tate, employee benefits and regu-
latory compliance proved higher
than expected. Edward Jones sold
its British operations in 2009.
On a trip to Bulgaria in 1991,
Mr. Bachmann met Kay Inglis, a
law professor at the University of
South Carolina. Both were serving
as election observers. They mar-
ried in 1996. Mr. Bachmann’s ear-
lier marriage ended in divorce.BYJAMESR.HAGERTY‘We love the internet,’
Mr. Bachmann said.
‘We just aren’t going to
use it to trade stocks.’doctrine known as “willful
blindness” in the U.S.—the
idea that a person intention-
ally stays unaware of facts in
order to avoid liability—peo-
ple familiar with the probe
told the Journal.
Vale said the company’s top
executives never had any
knowledge or received any indi-
cation about a critical or immi-
nent risk to the stability of the
dam. All of Vale’s geotechnical
engineers and external inspec-
tors considered the dam safe, a
spokesman for the miner said.
Through an attorney, Mr.
Schvartsman on Friday denied
that he had any knowledge of
the dam’s structural prob-
lems. Mr. Schvartsman said
that he proactively sought in-
formation on dam safety and
that he would have acted on
any concerns. Mr. Schvarts-
man also said Vale increased
spending on dam safety under
his watch.
On Jan. 25, the 280-foot-
high dam, which was no longer
in use, gave way near the town
of Brumadinho in southeast
Brazil. Since then, Mr. Sch-
vartsman and Vale’s other top
executives have said they had
little detailed knowledge of
dams. But mining experts have
questioned why executives
didn’t try to find out more
about the company’s higher-TÜV SÜD for covering up
structural dangers at the dam
during last year’s safety audits.
A spokeswoman for TÜV
SÜD declined to comment on
the police inquiry, saying the
company was cooperating with
the authorities.
Police continue to investi-
gate. State and federal prose-
cutors are also preparing
their own charges, which
could include murder or man-
slaughter charges, authorities
told the Journal.
In the report reviewed by
the Journal, police concluded
that consultants hired by Vale
and Vale’s own workers were
aware of serious problems at
the dam in the months and
days leading up to its collapse.
The Journal reported in
May that several of the mine’s
workers had warned their
bosses last year the dam was
about to collapse and shored
up parts of the giant dam with
sandbags on more than one
occasion. Vale said it never re-
ceived any complaints about
the dam from workers.
Police cited a lack of follow-
up on problems with water-
monitoring equipment and on
abnormalities in radar read-
ings in the weeks before the
dam collapsed. Vale said the
equipment had only “configu-
ration problems.”BELO HORIZONTE, Brazil—
Brazilian police believe top ex-
ecutives and managers atVale
SA deliberately shielded them-
selves from incriminating in-
formation about the state of
the company’s dam that col-
lapsed in January to avoid lia-
bility, according to a copy of a
police inquiry reviewed by The
Wall Street Journal.
Studies conducted by Vale’s
own consultants in the 12
months preceding the disaster,
which killed 270 people,
showed the structure was
fragile and would eventually
collapse, Brazil’s federal police
said in a 215-page report. The
collapse of the dam, which
held waste from mining, was
the world’s deadliest in more
than half a century.
The report served as the
basis of the first criminal
charges related to the catas-
trophe, which were unveiled
last month against employees
of Vale and its German audi-
tor,TÜV SÜD. While the bulk
of the report—which hasn’t
been publicly released—details
the evidence behind those
charges, one of its conclusions
addresses what police say is
culpability on the part of
Vale’s management.
“The top bosses of Vale
continued to...boast about the
falsely impressive quality of
their structures,” police wrote
in the report. “They closed
their eyes to studies commis-
sioned by the company itself,
preferring to remain ignorant
so that, in a moment like this,
they could allege ignorance as
their defense.”
The report doesn’t offer ev-
idence to back up the accusa-
tion. No official charges
against any top Vale execu-
tives have been filed.
Brazilian law-enforcement
authorities have been investi-
gating Fabio Schvartsman,
who stepped down as Vale’s
chief executive in March, and
other top executives in con-
nection with the dam collapse.
Prosecutors are examining the
possibility of filing criminal
charges on the basis of a legalBYSAMANTHAPEARSON
ANDLUCIANAMAGALHAESBrazil Police Say Vale Executives
Shielded Themselves From Dam Data
Rescue workers searched for bodies weeks after the January collapse of a Vale dam in Brazil.DOUGLAS MAGNO/AGENCE FRANCE-PRESSE/GETTY IMAGESrisk dams, such as the one
near Brumadinho, especially
after a similar dam partly
owned by Vale collapsed three
years earlier, killing 19.
While Brazilian prosecutors
have increasingly looked to
borrow legal doctrines such as
“willful blindness” from
abroad, they are often difficult
to apply under Brazil’s criminal
law, which doesn’t recognize
such concepts, said São Paulo-
based lawyer Pierre Moreau.TÜV SÜD certified the dam
as safe in both June and Sep-
tember of last year. The Jour-
nal reported in February that
employees at Vale and TÜV
SÜD knew for months of dan-
gerous conditions at the dam
but that TÜV SÜD employees
certified it as safe anyway,
worried about losing business
with Vale.
In last month’s charges, po-
lice formally accused seven
lower-level individuals from
Vale and six employees fromVale executives
‘closed their eyes’ to
studies about the
dam, police say.In Memoriam
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IN
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