Celebrating bank's role in saving Boscov's

Albert Boscov said larger banks had declined to help.
Albert Boscov said larger banks had declined to help.
Posted: March 10, 2009

It's a part of the bailout story few hear: bankers actually taking tax dollars and putting them back onto the street.

So a U.S. representative, a financial executive, and a retail rescue hero met yesterday at that most equalizing of American institutions - a New Jersey shopping mall - to praise bailout banking at its best.

"We've heard an awful lot about the abuses of this program," Rep. Robert E. Andrews (D., N.J.) said at a news conference in front of the Boscov's department store in the Deptford Mall.

Abuses on his mind: taxpayer-funded spa getaways for corporate miscreants and jet-plane buying binges by boardroom types raking in federal aid.

Good stuff he noted: how the region's own Susquehanna Bank helped Boscov's emerge from bankruptcy in December.

The Lancaster County bank floated a $21 million loan to help family leader Albert Boscov, 79, buy back the 39-store chain and keep it from going out of business.

About the same time, Susquehanna received a $300 million loan from the government, though bank officials said they likely would have helped Boscov even without the impending aid.

"For 9,000 families, it means a paycheck this week because Boscov's is thriving," Andrews said of the bank's decision, which came as the government approved the bank's request for aid through the Troubled Asset Relief Program.

About 1,000 Boscov's jobs in New Jersey were preserved, said Andrews, whose office initiated yesterday's late-morning event, which left pedestrian traffic at a standstill at one end of the mall. An additional 4,500 jobs were spared in Pennsylvania, and thousands more in Delaware, Maryland, and New York.

Susquehanna's last-minute help - a temporary "bridge loan" - helped Boscov and others in his family and circle of business associates complete a $305 million buyback of the chain out of Chapter 11 just after Thanksgiving.

"There's a big difference between Wall Street banking and Main Street banking," said William J. Reuter, chairman, president, and chief executive officer of Susquehanna Bancshares Inc., which owns Susquehanna Bank.

"We're all reaching out and touching people in the community," Reuter said.

Boscov, whose immigrant father, Solomon, started the Reading company nearly a century ago, stood off to the side with his hands stuffed into the pockets of his blue suit, listening as the men spoke of his family's recent misfortune and subsequent good fortune.

The recession has retailers suffering to a degree not seen in decades, but Reuter called Boscov a strong loan candidate because of his and his family's reputation.

Reuter said he had "kicked the tires" at a Boscov's in Lancaster while considering the loan request.

"I saw the employees smiling and bought a few hundred dollars' worth of merchandise for my family," he said.

The bank, with almost $14 billion in assets, applied for federal money to increase its lending capacity, not out of need, officials said. Since receiving the $300 million Dec. 12, it has created $148 million in loans.

Boscov gave Reuter a hug as the event wound down and said Susquehanna had stepped in after larger banks demurred.

"The big banks are not there unless you have a tremendous amount of collateral," Boscov said.

Andrews said he hoped more on-the-ground lending would result from future bailout disbursements.

Contact staff writer Maria Panaritis

at 215-854-2431 or mpanaritis@phillynews.com.

comments powered by Disqus