A History of Banking
in Enumclaw
in Enumclaw
Even more local and an integral part of Enumclaw history is the White River Credit Union. As a financial cooperative, White River Credit Union fits well into the tradition of cooperative enterprises in our town, such as the Rochdale Co-op Store, the Cooperative Creamery, the Fruit Co-op, and Mutual of Enumclaw. In the same way that B.E.C.U. was originally created to serve Boeing employees but is now open to all state residents, our local credit union started in 1952 as a service to workers at White River Lumber Company, but now can serve all state residents (although "We cater to locals here on the Plateau.") (16)
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In the earliest of pioneer times around Enumclaw, banks were unnecessary for most people since they didn't have much money. What little cash they were able to acquire by selling produce to miners and railroad workers was saved in the cabin for occasional trips to Wilkeson or Seattle to for supplies.
A few newcomers arrived with money, such as George Vanderbeck, who came with $1000, a huge sum at the time. His friend Johannes Mahler brought only $100. (1) James McClintock, a world traveler, sea captain, and entrepreneur, earned a stake before settling down on the Plateau. (2) And more than a few struggling homesteaders such as John Kochevar, were able to bring back money from the Alaskan gold rush. (3) When the Montgomerys reached Tacoma, they had to wait for someone from Enumclaw to come and vouch for their identity before they could withdraw funds in Tacoma from their bank in Scotland.(4) Most people of means did their banking in Seattle or Tacoma.
Many of the farmers had to mortgage their homesteads during the fluctuating markets, sometimes with a sad outcome. Maud Buchanan Kealy reflected on her parents' great success followed by foreclosure: The family bought property to extend their homestead near Mt. Baldy, then purchased some of the best timberland in the area and acquired 1000 fruit trees and stock animals. "Father persuaded mother to let him mortgage the ranch for $1,000 in order to clear and ditch more land." (5)
But all the markets collapsed in the Panic of the 1890s. Maud Buchanan Kealy continued: "One day in early fall a stranger walked slowly toward the house. He had come to foreclose the mortgage. . . It seems impossible that so much could have been accomplished in the years we owned the place. What grieved us was the amount of labor and money that mother and father had sacrificed." (6)
Gradually, some of the settlers wanted a safer place to keep some money. Sam Lafromboise put a safe in his saloon and became the town's first banker. Soon other businesses installed safes for their own use, but their security came into question as a rash of safe-crackings hit town. Explosives were readily available for clearing land, but also worked well to open reinforced locks.
A few newcomers arrived with money, such as George Vanderbeck, who came with $1000, a huge sum at the time. His friend Johannes Mahler brought only $100. (1) James McClintock, a world traveler, sea captain, and entrepreneur, earned a stake before settling down on the Plateau. (2) And more than a few struggling homesteaders such as John Kochevar, were able to bring back money from the Alaskan gold rush. (3) When the Montgomerys reached Tacoma, they had to wait for someone from Enumclaw to come and vouch for their identity before they could withdraw funds in Tacoma from their bank in Scotland.(4) Most people of means did their banking in Seattle or Tacoma.
Many of the farmers had to mortgage their homesteads during the fluctuating markets, sometimes with a sad outcome. Maud Buchanan Kealy reflected on her parents' great success followed by foreclosure: The family bought property to extend their homestead near Mt. Baldy, then purchased some of the best timberland in the area and acquired 1000 fruit trees and stock animals. "Father persuaded mother to let him mortgage the ranch for $1,000 in order to clear and ditch more land." (5)
But all the markets collapsed in the Panic of the 1890s. Maud Buchanan Kealy continued: "One day in early fall a stranger walked slowly toward the house. He had come to foreclose the mortgage. . . It seems impossible that so much could have been accomplished in the years we owned the place. What grieved us was the amount of labor and money that mother and father had sacrificed." (6)
Gradually, some of the settlers wanted a safer place to keep some money. Sam Lafromboise put a safe in his saloon and became the town's first banker. Soon other businesses installed safes for their own use, but their security came into question as a rash of safe-crackings hit town. Explosives were readily available for clearing land, but also worked well to open reinforced locks.
Enumclaw National Bank, originally People's State Bank
State Bank of Enumclaw, the town's first real bank, was organized in 1904 by Sam and his friends J. J. Smith, A. F. and A. W. Stone. It was located in what is now The Kitchen restaurant. Their original safe is still there. (The bank soon moved down to the corner where Jackson's restaurant is now.) Six years later, Bryon Kibler, S. L. Sorensen, J. W. Davis, and Chris Borgaard opened People's Bank on Griffin as competition, and later moved it to the corner of Cole and Griffin (Almost Necessities now.) (7) The two banks were nationalized in 1922, with the confusing names of First National Bank of Enumclaw and Enumclaw National Bank. (8)
The original People's State Bank building now houses Trip Hart's law office.
The Kitchen Restaurant is located in the original State Bank of Enumclaw building.
Kibler's bank (Enumclaw National) was on the verge of collapse a few years into the Great Depression. There was no Federal Deposit Insurance Corporation in 1932, so plateau customers faced the loss of all their deposits. And these customers were the friends and neighbors of the bankers on the opposite corner. "First National Bank [of Enumclaw] made banking history by offering to assume all the assets and liabilities of the rival bank." (9) "Cash, bonds and financial records were moved [hand carried] kitty-corner across the street under the stern oversight of local sheriff Tom Smith." (10)
First National survived the Depression and moved into new quarters across Griffin (later to become McRae's Indian Bookstore) in 1942 and thrived with the rapid development of the area following World War II. Enumclaw's hometown bank continued for nearly half a century more until it was acquired by Puget Sound Bank in 1990, which, in turn, sold out to New York-based [at the time] Key Bank only two years after that.
First National survived the Depression and moved into new quarters across Griffin (later to become McRae's Indian Bookstore) in 1942 and thrived with the rapid development of the area following World War II. Enumclaw's hometown bank continued for nearly half a century more until it was acquired by Puget Sound Bank in 1990, which, in turn, sold out to New York-based [at the time] Key Bank only two years after that.
When Puget Sound Bank (later Key) acquired the National Bank of Enumclaw, the building became McRae's Indian Bookstore. New owners bought the building in 2013. One unusual item they found was the inch-and-a-half thick bulletproof glass panel from the walk-up window, a rarity in banks.
Enumclaw did see the opening of two other homegrown banks. Cascade Security Bank opened in 1964 and continued to do business in town for twenty-three years, until it was sold to Key Bank in 1987. (11) Mount Rainier National Bank was founded in 1990 by local business and dairy people, serving the community for seventeen years, until it was sold to Columbia Bank. "National" was then dropped from its name, and it operated for a year as Mount Rainier Bank while customers became familiar with the new brand. Columbia is a Pacific Northwest bank based in Tacoma.
Meanwhile, some of the biggest megabanks in the country also set up shop in Enumclaw. Delaware-based (did you realize that?) Washington Mutual became a familiar name in town until it went bankrupt in the largest bank failure in U.S. history. It was founded in Seattle in 1889, twenty-four years before Enumclaw became a town. It changed its name over the years, but kept the "Mutual", even after it "de-mutualized" in 1983. WaMu became "the Walmart of banking", but experienced huge losses because of its aggressive position in the sub-prime market, and it went bankrupt in 2008. (12) J.P. Morgan-Chase bought the remnants, and it is their sign that now stands across from QFC. Chase is the biggest bank in the United States and ninth in the world.
WaMu went under in 2008 and was bought by Chase.
Second largest in the U.S. is Bank of America, and it built a bank on Cole Street. Citibank, third largest, hasn't seen the need to come here, while fourth largest, Wells Fargo, has a one-room storefront inside Safeway. That minimalist presence is one of greatest ironies of our town.
The one person who probably did more to change modern banking in the United States was the long-time CEO and president (1998-2005), as well as Chairman (2001-2009) of Wells Fargo , and he is from Enumclaw. Richard Kovacevich grew up here, where his father worked in a sawmill. He graduated from Enumclaw High School in 1961, before going on to Stanford and the banking world. One of his signature changes for the field was the shift of local banks from branches to stores, marketing a wide variety of financial products and services. He was instrumental in expanding the business of banking from checking, savings, and loans to include insurance and investments. He was also successful in lobbying for the legal changes to permit those activities. (13)
Richard Kovasevich, former Chairman and CEO of Wells Fargo, graduated from EHS. Safeway houses the Enumclaw branch of Wells Fargo.
A major factor in the crash was outright fraud such as predatory lending, robo-signing, falsification of eligibility, switching to subprime loans without the buyer's knowledge. One settlement with Bank of America, Wells Fargo, Chase, Citibank, and Ally (name change for G.M.A.C., the General Motors bank) imposed penalties of $25 billion, the largest in U.S. history. In 2016, years after the crash, Wells Fargo was fined $185 million for setting up 1,500,000 accounts and 500,000 credit cars its customers were not aware of.
Local Courier-Herald columnist (and relative of early banker Sam Lafromboise) Wally Duchateau summed up the feelings of many in Enumclaw: "No matter how you slice it, something important has been lost here. You could always trust Sam Lafromboise and Rufus Smith, but can you trust the international banking cartel and the Wall Street bunch? (That's not a serious question.)" (14)
Local Courier-Herald columnist (and relative of early banker Sam Lafromboise) Wally Duchateau summed up the feelings of many in Enumclaw: "No matter how you slice it, something important has been lost here. You could always trust Sam Lafromboise and Rufus Smith, but can you trust the international banking cartel and the Wall Street bunch? (That's not a serious question.)" (14)
Our Boeing Employees Credit Union branch is located in the parking lot right in front of Chase Bank. B.E.C.U. started in 1935 at the height of the Depression, with eighteen members and total assets of nine dollars. The first loans were limted to $2.50. They now have 800,000 members and more than $11 billion in assets. (15)
NOTES
(1) Nancy Irene Hall. In the Shadow of the Mountain. The Courier Publishing, Enumclaw, 1983, and republished by Heritage Quest Press, Orting, 2004. p. 115
(2) Poppleton, There Is Only One Enumclaw. 1995. p. 4
(3) Nancy Irene Hall. In the Shadow of the Mountain. The Courier Publishing, Enumclaw, 1983, and republished by Heritage Quest Press, Orting, 2004. p. 210
(4) Mary Montgomery. "The Montgomery Family". Pioneer History of Enumclaw. Women's Progressive Club. p. 84.
(5) The Buchanan Family, Maude Buchanan Kealy. Women's Progressive Club. p. 108.
(6) The Buchanan Family, Maude Buchanan Kealy. Women's Progressive Club. p. 110.
(7) Mrs. James Peterson. "Johannes Mahler". Pioneer History of Enumclaw. Women's Progressive Club. p. 19.
(8) http://www.courierherald.com/community/162650676.htmlWally
(9) Poppleton, There Is Only One Enumclaw. 1995. p. 36.
(10) (2)http://www.courierherald.com/community/162650676.html Wally
(11) http://www.bankencyclopedia.com/Cascade-Security-Bank-19017-Enumclaw-Washington.html#b
(12) http://en.wikipedia.org/wiki/WaMu
(13) http://en.wikipedia.org/wiki/Richard_Kovacevich
(14) http://www.courierherald.com/community/162650676.html
(15) Getting to Know BECU
(16) http://www.whiterivercu.com/join-white-river-credit-union/
(1) Nancy Irene Hall. In the Shadow of the Mountain. The Courier Publishing, Enumclaw, 1983, and republished by Heritage Quest Press, Orting, 2004. p. 115
(2) Poppleton, There Is Only One Enumclaw. 1995. p. 4
(3) Nancy Irene Hall. In the Shadow of the Mountain. The Courier Publishing, Enumclaw, 1983, and republished by Heritage Quest Press, Orting, 2004. p. 210
(4) Mary Montgomery. "The Montgomery Family". Pioneer History of Enumclaw. Women's Progressive Club. p. 84.
(5) The Buchanan Family, Maude Buchanan Kealy. Women's Progressive Club. p. 108.
(6) The Buchanan Family, Maude Buchanan Kealy. Women's Progressive Club. p. 110.
(7) Mrs. James Peterson. "Johannes Mahler". Pioneer History of Enumclaw. Women's Progressive Club. p. 19.
(8) http://www.courierherald.com/community/162650676.htmlWally
(9) Poppleton, There Is Only One Enumclaw. 1995. p. 36.
(10) (2)http://www.courierherald.com/community/162650676.html Wally
(11) http://www.bankencyclopedia.com/Cascade-Security-Bank-19017-Enumclaw-Washington.html#b
(12) http://en.wikipedia.org/wiki/WaMu
(13) http://en.wikipedia.org/wiki/Richard_Kovacevich
(14) http://www.courierherald.com/community/162650676.html
(15) Getting to Know BECU
(16) http://www.whiterivercu.com/join-white-river-credit-union/
The megabanks played a pivotal role in the crash of the housing bubble and financial collapse of 2008. Once consumer banks were free to engage in high-securities like investment banks, the stage was set for a disaster that almost became a second Great Depression. Government intervention saved the megabanks and the global economy, but little was changed in regulating their dangerous behavior, so it is possible there will be a repeat of 2008.
A major factor in the crash was outright fraud such as predatory lending, robo-signing, falsification of eligibility, switching to subprime loans without the buyer's knowledge. One settlement with Bank of America, Wells Fargo, Chase, Citibank, and Ally (name change for G.M.A.C., the General Motors bank) imposed penalties of $25 billion, the largest in U.S. history. In 2016, years after the crash, Wells Fargo was fined $185 million for setting up 1,500,000 accounts and 500,000 credit cars its customers were not aware of.
Outraged by the big banks, an estimated 9.6 million people participated in the Move Your Money campaign and did just that--moved their money out of large financial institutions. One of the favored places of transfer was the member-owned, not-for-profit credit union. Enumclaw has two. Credit Unions are cooperatives, part of the financial movement that made our town famous more than a century ago.
