'Anti-banker's banker' takes on bailout nation

"Did you hear the one about the Palestinian who married a Minnesotan?"

Bill Cooper, the ex-Detroit cop, former Minnesota Republican Party activist and multimillionaire banker, waits a few seconds. "They had a child. You know what they named him?"

The CEO of TCF Financial Corp. pauses again. The 250 shareholders in the hotel ballroom for the annual meeting have bigger things on their minds -- the bank's recent dividend cut and its virtually stagnant stock. But this is Cooper's show. Laughter bursts through the room on his punch line:

"Yasser You Betcha."

Cooper, 65, may be one of the few bank chief executives who is actually enjoying himself these days. He ditched retirement and returned to the helm of the state's third-largest bank last summer. Now he's turning the banking crisis into a public-relations bonanza.

In his hands, the federal government's efforts to stem that crisis through a massive bailout program have become public theater. Act 1: Accept $361.2 million in government aid. Act 2: Attack the myriad rules and regulations tied to that aid. The finale: Return the money to the government while bashing the U.S. Treasury for dragging its feet.

Cooper's anti-government pronouncements -- aired on Fox television and repeated on countless blogs -- have tapped into deepening public hostility of taxpayer bailouts of big financial institutions. ¶ TCF officials say they have received thousands of letters and telephone calls from average Americans who sympathize with Cooper's anti-government stance. It's one reason, they maintain, that TCF collected a record $1.4 billion in deposits during the first three months of the year. ¶ In the twilight of his career, Cooper the CEO has morphed into something larger -- a symbol of defiance against regulatory ineptitude and a banking system that rewards excessive risk-taking. To his supporters, he is the "anti-banker's banker," a corporate executive who takes no salary (he's paid in stock), and is a populist preaching against conformity, because in his mind, that's always made good business sense. ¶ "I certainly don't need some clown in Washington telling me what to do," he said. "The regulators never rang the bell once as countless billions of dollars in losses were going on ... and now they're bayoneting the innocent."

Growing up in 'the pits'

Cooper was born in Detroit, and his family lived in a small apartment in a mostly black neighborhood along East Grand Boulevard. He had two newspaper routes and delivered papers to the recording studio that gave us Motown. Cooper's mother worked as a clerk for a railroad. His father -- a Welsh immigrant whom Cooper described as a drunk -- died when Cooper was a teenager. Of his former apartment building, he said, "It was the pits then, and it's the pits now."

Though he dreamed as a boy of becoming a rocket scientist, at Wayne State University he settled on accounting. He paid his way working the graveyard shift as a Detroit cop three nights a week. He studied in a squad car in the wee hours -- between 2 and 5 a.m. -- when even most criminals were sleeping.

His cop tales are legendary at TCF, partly by virtue of his own retelling. The son of the mayor of suburban Dearborn told him never to step foot again in the city with his uniform on, after Cooper knocked out the man's brother with a leather sack full of lead. Cooper says the man had hit a fellow police officer with a barstool. He still has a 6-inch scar on his arm from when a woman tore at him with a can opener as he tried to break up a domestic dispute.

But law enforcement was just a way to make ends meet until he finished school. His first assignment as an accountant (at a predecessor to De- loitte & Touche) was auditing the books of Michigan National Bank. He recommended that it consolidate its five banks into a single holding company -- a novel concept at the time. The bank hired him as controller and gave him an office on the executive floor. He was 28.

There, he fell under the tutelage of the now-deceased George Pearson, then Michigan National's vice chairman, who pushed Cooper to behave less like a cop and more like a banker.

"Pearson had no children, so he basically adopted me," Cooper recalled. "He told me to get rid of the clip-on ties, and told me that you can't wear white socks to work and you gotta put a napkin on your lap. ... I'm not kidding. Where I grew up, no one ever told me where to put your napkin when you ate your dinner."

Even today, Cooper keeps a copy of Pearson's 12-point "lenders' creed," as do many of TCF's loan officers and executives. It includes such admonitions as, "Don't put on the same rose-colored glasses as your borrower; he has more to gain than you do."

His blunt talk, he says, got him hired in 1985 at TCF, then known as Twin City Federal Savings and Loan. In the job interview (Wells Fargo Chairman Dick Kovacevich also applied) Cooper offered the bank's chairman, Norman Lorentzsen, some advice.

"I said, 'Norm, listen, whether you hire me or not, you better get off the board, or get somebody in here quick, because this thing is in a world of shit,'" he said. "I think he appreciated my candor."

Kids as spies

It would take Cooper five years to clean up Twin City Federal's bad loans.

The savings and loan had more than $1 billion in exotic interest rate swaps on its books as well as $1 billion in toxic real estate loans from a New York subsidiary. "Every one of those loans went bad," says Cooper of the New York division's portfolio. "I mean, every single one! It was unbelievable."

At one point, an official with the Federal Deposit Insurance Corp. showed up at the bank's door and insisted it had to be shut down. The regulator backed off after Cooper showed him how a securities trade the day before had generated fresh capital. "We were like a fox with the hounds nipping at our heels for basically five years."

Cooper was not afraid to use his seven children as information sources, said Bob Evans, a former TCF president. His kids worked low-level, summer jobs and then reported inefficiencies back to their dad.

"Then he'd call me into the office the next day and say, 'Why are we doing this?'" Evans said.

TCF's ultimate growth was driven by two pioneering concepts: "totally free checking" (though there were still some fees) and placing many branches in supermarkets, with cheaper rents and built-in traffic. TCF rolled out the concepts in the late 1980s, and Cooper said it took 15 years for larger banks, more interested in high-margin business such as wealth management instead of Regular Joe depositors, to react. Such Regular Joes, he argues, are the lifeblood of a bank, because their deposits generate cheap funds to grow the bank.

"Who makes more money? Wal-Mart or Saks Fifth Avenue? Wal-Mart, by far," he said. "We're Wal-Mart and they're Saks," referring to his big-bank rivals. "And Saks is in the tank."

Expanding his influence

Inevitably, Cooper's bold assertions migrated from the executive suite to education and state politics.

Once a big public-school supporter -- in the 1990s, TCF gave about $1 million to Patrick Henry High School in Minneapolis -- Cooper now thinks public schools are too bureaucratic and beyond reform. He has since turned his attention to private schools, donating $1.5 million in recent years to Ascension Catholic School and a network of 18 charter schools known as Friends of Education.

And the former chairman of the Minnesota Republican Party thinks his party blew it in the most recent U.S. Senate campaign. As chairman in the late 1990s, he pushed for a statewide telephone survey to determine where Republicans lived, which the party then used to mail targeted campaign material and absentee ballots. He thinks the failure to mail absentee ballots in the last election cost Norm Coleman his Senate seat.

"Would Coleman have gotten 300 more votes?" he asked. "Absolutely."

TCF faces major challenges. It just finished one of its worst years on record. Its losses on bad loans have more than tripled over the past two years, and analysts fear the worst of loan write-downs have yet to come because of the bank's heavy loan concentration in commercial real estate and home-equity loans. TCF also has a large presence in Michigan -- a state suffering through Great Depression-type unemployment levels.

"Let's face it, this is not the kind of growth machine that it was eight or 10 years ago," said Ben Crabtree, a Stifel Nicolaus analyst. "Stories mature, and the challenge is to adjust the expectations with reality."

Much of the optimism surrounding TCF -- shares are up 30 percent since his return despite the market's downturn -- seems based on Cooper's personality and speculation that he returned to fulfill a simple mission: Clean up the loans and sell the company. Before the market crashed, there were persistent rumors that TCF might be acquired by Bank of Montreal or Minneapolis-based U.S. Bancorp.

"It's no secret that Cooper came back to sell it," said Richard Perkins, co-owner of a Wayzata-based money management firm that owns TCF stock. "It might be one of the reasons he gave back [the federal aid]. He wants to sell this to whomever he wants to, and when he wants to, and he doesn't want the government intervening."

Cooper insists he is merely trying to protect his investment, a 3.3 percent stake worth about $70 million.

For now, he seems to be relishing his prolonged honeymoon as CEO come home. At the shareholders' meeting, he mingled with investors long after official business had ended. In a blue blazer and khakis, he looked more like the captain of a cruise ship than a CEO. His high-pitched laugh echoed through the ballroom. Then, well after most shareholders had left, Cooper climbed into the back seat of a Chevy Suburban -- alone and grinning.

Chris Serres • 612-673-4308