CITY AND SUBURBAN
The bubble bursts in Boulder, Colorado, and BestBank turns out to be BustBank
CHRISTOPHER FILDES
When the history of the great finan- cial bubble of our time comes to be writ- ten, I shall look forward to the chapter on BestBank of Boulder, Colorado. Its own bubble has burst, leaving nothing behind it but a patch of moisture and a hole where $200 million was meant to be. I am left to wonder what WorstBank could be like, but no doubt we shall soon find out. Small banks bring big banks down, the world over — London & County was the brick that fell out of the wall and shook Nation- al Westminster; a little Midwestern bank called Penn Square brought down the mighty Continental — and BestBank encapsulates all of the shiny illusions that make a bubble what it is. Its own shiny new business idea was to lend money to people who could not or would not pay it back. In bankers' polite jargon, it was called credit-card finance for sub-prime borrowers. This was a growth market, obviously, and BestBank was a market leader. Edward Mattar III, the bank's chairman and principal shareholder, hired a president called Alan Boyd who had tried this idea out at Sioux Falls, with mixed results. At Boulder the business took off. There are many thousands of American banks, but in no time the Ameri- can Banker, their industry's sober-sided journal, was acclaiming BestBank as the best performer of them all. The return on its assets looked good, and no wonder, for it could charge usurous interest rates until its customers cracked under the strain, or defaulted, or vanished. Even that could be written off to experience and buried in the accounts as the business inflated, which it certainly did,
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