The Hunts face Congress and bankers after their fallThose bashful bullionaire brothers W. Herbert and Nelson Bunker Hunt
showed up in public last week for the first time since their
speculative bubble burst on “Silver Thursday,” March 27. The Hunts were
testifying before two congressional subcommittees looking into their
metal market machinations over the past year. As the brothers told the
tale, they were just worrying, like most Americans, about the worsening
economy. As Bunker Hunt has reportedly said, “A billion dollars is not
what it used to be.” Inflation had destroyed their faith in the dollar,
so early in 1979 they began putting even more of their wealth into a
“harder” currency: silver. By late March they allegedly controlled
almost two-thirds of the world's privately held supply of the shiny
metal, but “artificial factors,” like higher margin requirements and
limits on the amount of silver futures contracts they could hold,
spoiled all the fun. At least that was the story that Herbert Hunt, the
younger brother, told the House Subcommittee on Commerce, Consumer and
Monetary Affairs. “At no time,” said Herbert solemnly, “did I attempt
to corner, squeeze or manipulate the silver market.”But not everyone agrees with Herbert.
The subcommittee has been conducting hearings into the Hunts'
silver-buying activities, which triggered the worst financial panic in
nearly 20 years; silver that had cost more than $50 per oz. in January
slumped to $10.20 per oz. in late March. The congressional
investigators are trying to discover how the Hunts had corralled so
much of the world's silver and how deeply they went into debt during
the silver crash. The brothers' foggy memory on some of these points
last Friday caused sharp exchanges with Subcommittee Chairman Benjamin
Rosenthal. When asked about his total wealth, Bunker Hunt replied in a
manner that recalled J.P. Morgan's famous quote that people who have to
ask the cost of the annual upkeep of yachts cannot afford them. Said
he: “I don't have the figures in my head. People who know how much
they're worth aren't usually worth that much.”Despite their fabled billions, the brothers Hunt in recent weeks have
resembled penny poker players trying to rustle up some money to keep
off the loan sharks. Their staggering losses in silver the past couple
of months have forced them to go, stetson in hand, to bankers in the
U.S. and abroad. The weekend after Silver Thursday, they showed up
uninvited at the Reserve City Bankers Association convention in Boca
Raton, Fla., to plead for help in meeting their debts. The brothers
supposedly told leading bankers that they probably owed about $1.7
billion. Over cups of coffee and cold cheese sandwiches, the moneymen
debated long into the night whether to give the Hunts a loan. Federal
Reserve Chairman Paul Volcker made an appearance wearing a shirt over
his pajama top and kept an eye on the proceedings. But finally the
Hunts were told it was no go.Though Volcker testified last week that he neither initiated nor guided
the negotiations for any loans to the Hunts, his continual monitoring
of the situation was interpreted by bankers to mean that the Federal
Reserve, despite its credit restraint policy, favored some kind of
bailout to keep the Hunts from going under.
