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What Our Family Owes Governor Abercrombie
August 14, 2014 - Ray Tsuchiyama
In the fall of 1983, when I returned from Massachusetts just as the leaves were turning yellow and gold to a bright and sunny Honolulu (where I would eat Japanese bento lunches at a then-new mall named “Ward Warehouse”*), the President of the United States was Ronald Reagan (his major push was the “Star Wars” missile-building program, named after a Sci-Fi movie that was the hit of 1977).
Interestingly, President Reagan may have noticed a Forbes magazine article that called Hawai'i a "veritable purgatory of business" and actually compared (Reagan may have chuckled) the Hawai'i political leadership to the Soviet Union dictatorship.
After the President Jimmy Carter “stagflation years” affecting the national real estate industry, the average mortgage rate in October, 1983 was 13.61%, and an ARM (Adjustable Rate Mortgage) was 11.60% -- which sounds like exorbitant loan shark rates today. (And buyers in 1983 still took out house and condo loans.)
In 1983 there were signs that the Hawai'i economy, long dominated by the Big Five conglomerates, was changing: Amfac officially relocated its headquarters to San Francisco, Castle & Cooke’s Dole food division had also moved to the Bay Area, the venerable Dillingham construction firm was sold to an investor group (and would be sold again to a Japanese firm later), and shockingly – for that time -- Del Monte closed its Oahu pineapple cannery and laid off half of its Molokai field employees.
The early-1980s was also a busy time for Hawai'i government leaders to plan for a diversified future economy: the Hawai'i High Technology Development Corporation was established by the State legislature and the Economic Development Corporation of Honolulu appointed its first CEO (the Maui Economic Development Board also began exploring a “technology park” during this same period).
Only a year away, no one in Honolulu predicted the massive Japanese tourism and buying wave to Hawai’i, and so many structural changes for Hawai'i’s economic future never were made, leading to the nearly decade-long 1990s recession.
Politically, Hawai'i Governor George Ariyoshi was in his third term, with John Waihee as Lt. Governor (actually, Ariyoshi had three different Lt. Governors during his three terms). Governor Neil Abercrombie in 1983 was a Hawai'i State Senator. He was barely 45 years old, in great fighting form. It was 13 years since he launched his first political campaign, an “outsider” bravely seeking the Democratic Party nomination to the United States Senate. (I remember Abercrombie standing and waving a sign at the corner of University and King Streets, and saw his yellow Checker taxi cab -- with his bearded face in silhouette -- parked at the then-named Kahala Hilton hotel.)
He lost that first primary race, then ran for the Hawaii State House of Representatives – he served from 1975 to 1979. He was then elected to the Hawaii State Senate, where he served from 1980 to 1986. He was part of the “dissident” faction in the State Senate, against then-State Senate President Richard Wong.
So this frames the historical time of my arrival in Honolulu in fall, 1983: right away my parents told me of a frightening incident – Manoa Finance Co., the State’s fourth-largest finance loan firm, run by trusted Nikkei managers, went bankrupt. Their hard-earned money was lost. I discovered that Manoa Finance was an industrial loan company with more than $45 million in frozen funds with over 7,000 depositors when it closed in early 1983, and the State agency responsible for regulating that financial sector was overwhelmed and did not have enough funds to cover the depositors.
Many, if not most, of the depositors were like my parents: Nikkei, elderly, conservative, not that wealthy, and trusting of a local firm that paid a bit more interest than a bank. Coincidentally, state senator Neil Abercrombie represented the leafy Manoa Valley district, full of older homes with university faculty and old-timer families. On a Manoa street just before a shopping center there was a large clock in front of the Manoa Finance Co. office – oddly, I think it is still there. Many depositors lived in Manoa, and he heard their pleas.
Elderly Nikkei did not have much political clout. Some did not speak English well. They were about to be abandoned by the State government when Abercrombie led a coalition of Hawai'i banker and state officials to create a rescue package of State government and bank loans to help elderly investors recover their losses.
At many State government public forums, where I testified on behalf of my parents, Abercrombie’s boisterous voice, so passionate about the underdog, the neglected, the powerless in society, was re-assuring to profoundly shocked people like my parents. They loved his righteous anger and demands for the return of monies to the depositors. I witnessed great-grandfathers and great-grandmothers cry and repeat “Thank you, thank you” in Japanese when they shook Abercrombie's hand.
The Hawaiian word “kupuna” is over-used in political campaign ads today, but back then, the word was noticeably absent. The elderly depositors who built Hawai'i in many ways, enduring years and years of self-sacrifice, believed at first that no one in the State government would be their advocate and they would be cast out and ignored by an uncaring society.
Since I spoke Japanese, I joined the Depositors’ Committee as an interpreter with many elderly Issei who did not speak English well. During this time I met attorney Paul Alston and former First Hawaiian Bank CEO Walter Dods, then-House Representative Ben Cayetano (who would become Lt. Governor under Governor Waihee, then become elected Governor himself), and former vice chairman of Bank of Hawaii Charles Klenske – all who devoted much time to resolve the outstanding claims. My parents would quiz me often on the progress of the claims. I felt powerless, but again, elderly depositors like my parents probably felt far worse.
In 1985 the Hawai'i State Legislature passed Act 187, nicknamed “The Dods’ Plan”. It included a large State loan (plus bank loans) that repaid depositors, including my parents. Unfortunately, during the time from the Manoa Finance collapse to the mailing of monies back to depositors, several individuals passed away and never saw their funds back in their hands.
Since that time, through many elections, political pundits wondered why a core group of elderly Nikkei would be so devoted to Neil Abercrombie. The answer lies in the terrible events that made my parents unable to sleep nights back in that fateful year of 1983. Our family owes a great debt to those who came to aid the elderly depositors -- led by Governor Neil Abercrombie. In "doing the right thing", he never forgot us, and in a sense, became one of us.
*Media reports state that the Ward Warehouse site will be transformed into high-rise condominiums.
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