When it comes to making important
changes in interest rates, the big-time bankers of New York, Chicago
and San Francisco have recently taken a back seat to Philadelphia's
John R. Bunting, the controversial chief of the First Pennsylvania
Banking & Trust Co. On two occasions in 1968 and 1970, Bunting was the
first to cut the prime rate, and other bankers quickly followed. Last
week, ignoring pleas and pressure from the Nixon Administration,
Bunting acted again. This time he hiked the prime, from 5% to 5%. By
week's end Bunting was out on a long limb, because no other major banks
had followed. Still, he was unworried, figuring that the general rise
of other interest rates will soon bring the other banks around. As he
told TIME Correspondent John Tompkins: “I like to do things that others
consider risky—when I have an 80% chance of winning.”Earth Bonds. By word and deed, Bunting, who is 45, has often shaken up
the banking establishment. He has accused other bankers of
discriminatory hiring practices, and has made plans to add a woman, a
black, a priest and a consumer activist to First Pennsylvania's board.
He would like the Federal Reserve Board to have a double standard for
reserve requirements, enabling banks to provide special low-cost loans
for socially useful projects, including construction in housing-short
areas and black business development. Last year his bank introduced
“Earth Bonds,” a form of savings bonds, with most proceeds going to
programs aimed at controlling air pollution. But the bonds did not go
over well, because they were sold primarily to low-earning young
buyers. Bunting was more successful when he had First Pennsylvania lend
money to the producers of the movie Joe. The bank got 12% interest on
the loan plus $13,000 in warrants; they are now worth $138,000 and
Bunting is still holding on to them, believing that they will jump much
higher.For fear of creating conflicts of interest, Bunting makes no personal
investments for himself, nor has he accepted appointments to any
corporate boards since he became the bank's president in 1968. “Bankers
are invited onto boards for the wrong reason,” he says. “The company
chiefs think that such appointments ensure them a line of credit.” He
often criticizes politicians as well as businessmen. Bunting, who calls
himself a liberal independent, says, “I travel in Republican circles,
but I can't find many Nixon supporters.”
