Someone like Bernie Madoff, Sir Stanford in Tennessee in 1982?

By
Mortgage and Lending with Crescent Bank & Trust

East Tennessee Realtors: Does the name "Butcher" ring a bell with anyone? For everyone outside the Knoxville / Maynardville area of TN who are interested in reading about bankers gone wrong, look for a copy of "Whirlwind: The Butcher Banking Scandal", written by former Knoxville Sentinel reporter Sandra Lea.

The Butcher tale parallels the greed & deceit of Sir Stanford & Bernie Madoff. For folks in East Tennessee who were old enough to have a bank account during the Jimmy Carter presidency, there are only two emotions associated with the Butcher name: loathing or adoration.

In the late 1960's & early 70's brothers C.H. and Jake Butcher built a legitimate banking empire based in Maynardville, TN and were ultimately credited with putting Knoxville on the U.S. financial map by bringing the 1979 World's Fair to East Tennessee. Along the way, the Butchers established a sister company called Southern Industrial Banking Corporation (SIBC) which was a state-chartered Savings & Loan.  SIBC paid interest rates on deposits which were substantially above market and deposits were supposedly fully insured. You can see where this is going . . .

FDIC examiners accomplished the shutdown of the Butcher shell game by an intricately-planned, simultaneously-executed examination of several Butcher banks, with teams of examiners showing up at the multiple banks simultaneously. The regulators' precision is all the more interesting since no one had a Blackberry in hand or an I-Phone to help synchronize the teams. In 1982 Ms. Lea published a multi-page "playbook" in the Knoxville Sentinel naming those associated with the scandal.

There are honest, hardworking people all over East Tennessee who heard the Madoff & Stanford stories and had "been there, done that, lost the T-shirt". If you're interested in learning more of the Butcher story, but reading about banking isn't your cup of tea, just respond to this post & I'll add a little more info in future posts.

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North Metro Atlanta community banker, Woodstock, GA

Comments (2)

Richard Harbin
Century21 AAIM - Knoxville, TN

And they sat we are behind the times in TN! HA See ya on the lake!

Mar 12, 2009 01:43 AM
Clark Blackwell
Crescent Bank & Trust - Woodstock, GA

Richard, Thanks for reading my blog. I probably should've mentioned that Whilrwind was the name of Jake's mansion.  My in-laws retired from Atlanta to Polk County, TN. In Coker Creek, the opinion of the Butchers is that they made Knoxville what it is today. . .  In banking (especially among FDIC examiners), the joke is "You can milk a bank over & over. You can only Butcher it once."

Mar 13, 2009 01:48 AM