the rise and fall of jake butcher’s banking...

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The Rise and Fall of Jake Butcher’s Banking Empire:

The Collapse that Caused a Turning Point in Banking

Gillian Huskin

Junior Division

Individual Paper

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“The House of Butcher rocked and swayed in a financial earthquake that eventually toppled the second largest bank in the state of Tennessee and triggered the third largest banking disaster in the nation’s history” 1 Sandra Lea stated in her book Whirlwind.

Events from the past have shaped the banking industry, as we know it today. The rise and

fall of Jake Butcher’s banking empire was a turning point in banking history. Jake Butcher, his

brother C.H., Jr., and their advisors exploited banking regulations in the late 1970s and early

1980s for their own gain. To allow closer oversight, new legislation placed all banks under

Federal Deposit Insurance Corporation (FDIC) regulation. This legislation ultimately brought

about the downfall of the Jake Butcher empire and started the savings and loans (S&L) crisis. It

also set the stage for sub-prime lending that led to the collapse of the housing market during the

last decade. The Garn-St. Germain Act of 1982 was perhaps the most altering piece of legislation

passed during this time and would eventually have unforeseen and disastrous effects on the

banking industry because as cleverly stated by James R. Adams, “The run itself isn’t the

problem. It’s what the government does afterward that causes the damage.” 2

In 1950 C.H. Butcher Sr., and three of his colleagues, established the Union County

Bank. This was where Jake Butcher and C.H. Butcher, Jr. grew up. 3 During the climax of the

Vietnam War in 1968, the brothers started their own banking careers by purchasing The First

National Bank of Lake City. 4 Soon, the brothers had eleven banks under their control. 5 In 1974

1 Lea, Sandra. Whirlwind The Butcher Banking Scandal. N.p.: J. Lord, 2000. Print. . 2 Adams, James R. The Big Fix Inside the S&L Scandal How an Unholy Alliance of

Politics and Money Destroyed America's Banking System. New York: John Wiley & Sons, 1990. Print. Page 1. 3 Adams, James R. The Big Fix Inside the S&L Scandal How an Unholy Alliance of

Politics and Money Destroyed America's Banking System. New York: John Wiley & Sons, 1990. Print. Pages 89 and 90. 4 "Vietnam War." History.com. A&E Television Networks, n.d. Web. 12 Feb. 2013. 5 Smith, Lee M., ed. "Butcher." The Tennessee Journal [Nashville] 17 Nov. 1975, Front sec.: 1-4. Print. Page 1.

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and again in 1978, Jake Butcher ran unsuccessful campaigns for the governorship of Tennessee. 6

Jake Butcher ran for state treasurer; however, he lost the race by a single vote. 7 Nevertheless,

life was good for the Butchers. “Friends wandered in. Liquor flowed. Someone had not seen a

million dollars in cash. Fine. Bring it up from the vault… Soon the revelers were playing catch

with bundles of money only slightly smaller than a ball… That was the world of Jake and C.H.

Butcher Jr.” 8 They both lived lavishly with expensive tastes and the means to provide for them,

but things were about to change.

During the late 1970s, banking conditions significantly worsened. Although the United

States of America’s population grew steadily, the economy was in for difficult times. 9 In 1979,

the United States was recovering from a recession and oil prices were increasing. 10 Banks could

no longer compete for depositors because other investment options like money markets offered a

higher interest rate on investments. 11 Regulation Q was a piece of legislation that forbid banks to

offer over a certain maximum interest rate for their depositors. 12 Banks began to fail because

many lacked sufficient funds from deposits to grant loans due to this legislation. Congress

6 Lea, Sandra. Whirlwind The Butcher Banking Scandal. N.p.: J. Lord, 2000. Print. Pages 19, 24, 34, and 59. 7 Adams, James R. The Big Fix Inside the S&L Scandal How an Unholy Alliance of

Politics and Money Destroyed America's Banking System. New York: John Wiley & Sons, 1990. Print. Pages 90, 91, 92, and 93. 8 Daughtrey, Larry, Alan Hall, James Pratt, Sandra Roberts, Thomas F. Chester, Bob Hetherington, and Joe Krakoviak. Borrowed Money, Borrowed Time The Fall of the House of

Butcher. N.p.: Tennessean and Knoxville Journal, 1983. Print. . 9 Bouvier, Leon, Roy Beck, and U.S. Census Bureau. Projected U.S. Population Growth. Chart. N.p.: Susps, 1970-1993. Print. Graph. 10 Hetherington, Bob. E-mail Interview. 6 Nov. 2012. Page 2. 11 Allman, Barbara. Banking How Economics Work. Minneapolis: Lerner Publications, 2006. Print. Page 23. 12 Adams, James R. The Big Fix Inside the S&L Scandal How an Unholy Alliance of

Politics and Money Destroyed America's Banking System. New York: John Wiley & Sons, 1990. Print. Pages 21 and 22.

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decided to do away with Regulation Q in 1980. 13 This solved the problem of the banks’ inability

to compete with other investment options, but the measure was too little and too late to save

many of the banks. “They could now hold on to their depositors by offering higher interest rates,

but they couldn’t change the return they were earning on most of their mortgages. The

combination of high cost of money and low earnings put a deadly squeeze on their profitability.”

14 Soon after, at least fifty banks closed. 15

By 1978, the Butchers had a new pair of advisors for their banks. David Crabtree directed

the Southern Industrial Banking Corporation (SIBC). 16 David Crabtree worked in the “financial

world in which companies that existed only on paper were loaded down with loans, discarded

when the debt became too heavy, and replaced with new paper companies.” 17 Jesse Barr, a

former banker who had spent a year in prison for illegal banking practices, practically ran Jake’s

banks during this time. 18 After his prison sentence, Jesse Barr was forbidden, by law, to go back

into banking, but that was not a problem for the Butchers who appointed him as their

13 Adams, James R. The Big Fix Inside the S&L Scandal How an Unholy Alliance of

Politics and Money Destroyed America's Banking System. New York: John Wiley & Sons, 1990. Print. Pages 21 and 22. 14 Adams, James R. The Big Fix Inside the S&L Scandal How an Unholy Alliance of


Politics and Money Destroyed America's Banking System. New York: John Wiley & Sons, 1990. Print. Pages 21 and 22. 16 Lea, Sandra. Whirlwind The Butcher Banking Scandal. N.p.: J. Lord, 2000. Print. Pages 49 and 51. 17 Daughtrey, Larry, Alan Hall, James Pratt, Sandra Roberts, Thomas F. Chester, Bob Hetherington, and Joe Krakoviak. Borrowed Money, Borrowed Time The Fall of the House of

Butcher. N.p.: Tennessean and Knoxville Journal, 1983. Print. Page 3. 18 Lea, Sandra. Whirlwind The Butcher Banking Scandal. N.p.: J. Lord, 2000. Print. Pages 39 and 40.

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“consultant.” 19 Jesse Barr was a master manipulator, operating by pulling money from other

banks and illegally transferring failed or insider loans to various banks owned or controlled by

the Butchers. He skillfully did this while keeping the shady dealings hidden from the FDIC, a

corporation that governed 13,000 banks. 20 The Butchers constantly frustrated FDIC regulators.

They could tell that something was amiss, but could not catch the Butchers in the act because of

Jesse Barr’s methods. Roy E. Jackson, former head of the FDIC’s regional office in Memphis

stated, “My examiners have had no success establishing legal affliction.” 21 The FDIC regulators

were, largely, worried about the lack of capital held by the banks run by the Butchers. 22 Capital

is a safety net for banks; it consists of the assets put aside by the bank in case loans default and

the bank must pay them off. To avoid continued scrutiny from the FDIC, Jake Butcher soon

switched his banks from the Federal Reserve System over to the jurisdiction of the more lenient

state regulators in November 1976. 23 “Butcher pulled out of the Fed system to escape criticism

over his personal benefits from the banks and the huge volume of insider loans that were

draining the capital reserves of the banks.” 24

In 1980, the brothers decided to separate their banking empire. This would allow them to

make loans to each other with little or no collateral. Only one year after the split, C.H. Butcher,

19 Lea, Sandra. Whirlwind The Butcher Banking Scandal. N.p.: J. Lord, 2000. Print. Pages 35, 36, 37, and 38. 20 Adams, James R. The Big Fix Inside the S&L Scandal How an Unholy Alliance of

Politics and Money Destroyed America's Banking System. New York: John Wiley & Sons, 1990. Print. Pages 71 and 72. 21 Jackson, Roy E. "The Butcher Banks and Their Practices." Letter to John J. Early. Oct. 1977. MS. Memphis, Tennessee. Page 1. 22 Hetherington, Bob. E-mail Interview. 6 Nov. 2012. Page 4. 23 Daughtrey, Larry, Alan Hall, James Pratt, Sandra Roberts, Thomas F. Chester, Bob Hetherington, and Joe Krakoviak. Borrowed Money, Borrowed Time The Fall of the House of

Butcher. N.p.: Tennessean and Knoxville Journal, 1983. Print. Page 9. 24 Daughtrey, Larry, Alan Hall, James Pratt, Sandra Roberts, Thomas F. Chester, Bob Hetherington, and Joe Krakoviak. Borrowed Money, Borrowed Time The Fall of the House of

Butcher. N.p.: Tennessean and Knoxville Journal, 1983. Print. Page 9.

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Jr., owned 21 financial institutions. 25 C. H. Butcher Jr. also owned the SIBC. During this time,

shortly after the overturning of Regulation Q, the SIBC was paying extremely high rates of

interest on deposits. They were offering interest rates up to 16% while their competitors were

only offering 8-9%. 26 “We took a loan out for a new car. We were able to pay the interest on the

loan with the interest the SIBC was giving us back on our deposit,” stated Deborah Womble, a

former SIBC depositor who lost her savings when the corporation failed. 27 This was one reason

that many of the Butcher’s banks collapsed. An excerpt from Whirlwind by Sandra Lea explains

very well what had happened, “If the Butchers weren’t totally lost by 1980, their doom was

sealed when interest rates soared to exotic levels. Like many banks and thrifts from 1980 to

1982, to get money in, they had to spend more in high interest rates on deposits than they were

making on their fixed interest loans.” 28

While his younger brother focused on expanding his own banking empire, Jake Butcher

set his eyes on a new project, campaigning to bring the World’s Fair to Knoxville. W. Stewart

Evans first imagined the idea of Knoxville hosting the World’s Fair; Jake Butcher, who readily

became chairman for the project, soon took over the idea. 29 Jake Butcher believed the World’s

Fair would bring businesses he could use to bring money into his banks. Later during the

investigations, all but $10 million worth in loans granted for the World’s Fair’s construction


Politics and Money Destroyed America's Banking System. New York: John Wiley & Sons, 1990. Print. Pages 91 and 95. 26 Womble, Deborah T. Telephone interview. 10 Feb. 2013. 27 Womble, Deborah T. Telephone interview. 10 Feb. 2013. 28 Lea, Sandra. Whirlwind The Butcher Banking Scandal. N.p.: J. Lord, 2000. Print. Pages 79 and 80. 29 Lea, Sandra. Whirlwind The Butcher Banking Scandal. N.p.: J. Lord, 2000. Print. 2.

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were traceable to Jake Butcher or his banks. 30 In all, there was a total of $38 million of insider

loans; some were made with tax dollars put aside for the World’s Fair. 31 In 1982, Knoxville

became the smallest city ever to host a World’s Fair. 32 Over 11 million people came to

Knoxville’s World Fair to see inventions like touch screen computer displays and exhibits from

all over the world. 33

By 1982, interest rates had increased again. 34 That same year the United States congress

passed the Garn-St. Germain Act. Before the passage of this act, savings and loan associations

had been restricted to granting home loans as their main source of income. The Garn-St.

Germain Act allowed them to make business and construction loans, in addition to home loans,

in a desperate attempt to help the failing savings and loan associations across the country. 35 The

act also lowered the minimum capital required of the bank to have on hand in the event that one

or more of their loans should not be repaid. 36 Unfortunately for the Butchers, the act would also

erase many of the boundaries between state and federal banks, giving the FDIC complete power

to supervise state banks, as well as federal ones. This may have been added to prevent bankers

from switching their banks from federal to state banks simply to avoid the FDIC regulators. This

30 "Paper Ties Butcher to Most Fair Construction." Knoxville News Sentinel 5 Apr. 1982, sec. B: B1. Print. Page B1. 31 "Paper Ties Butcher to Most Fair Construction." Knoxville News Sentinel 5 Apr. 1982, sec. B: B1. Print. Page B1. 32 "Fun Facts about Knoxville." City of Knoxville. City of Knoxville, 2012. Web. 23 Oct. 2012. <http://www.cityofknoxville.org/about/funfacts.asp>. Page 1. 33 "Fun Facts about Knoxville." City of Knoxville. City of Knoxville, 2012. Web. 23 Oct. 2012. <http://www.cityofknoxville.org/about/funfacts.asp>. Page 1. 34 Hetherington, Bob. E-mail Interview. 6 Nov. 2012. Page 2. 35 Adams, James R. The Big Fix Inside the S&L Scandal How an Unholy Alliance of


Politics and Money Destroyed America's Banking System. New York: John Wiley & Sons, 1990. Print. Page 22.

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is, of course, exactly what Jake Butcher had done; and it had worked for years to a disastrous

effect for the FDIC. According to James Adams, “The Butchers’ empire may have been based on

crooked books since 1977, but it survived until November 1982 … Its slow collapse included the

biggest series of bank closings since the Great Depression.” 37

Using their newfound power over the Butcher banks, the FDIC set their trap for Jake and

C.H. Butcher, Jr. the day after the World’s Fair’s ended. Previously the Butchers’ were able to

anticipate the regulators’ visits because the FDIC would pull records from the targeted bank’s

computers. This gave Jesse Barr time to prepare the bank. He would transfer the toxic loans to

another bank while at the same time moving capital into the bank to be visited, giving it the

appearance of good health. It was a con artist’s shell game, played on a massive scale.

Investigators dubbed Jesse Barr as using “a free-wheeling business style in which forged loan

documents, illegal wire transfers, falsified institution to another to conceal the true condition of

banks.” 38 On November 1, 1982, around 200 regulators appeared without warning on the

doorsteps of twelve branches of Jake Butcher’s banks in both Tennessee and Kentucky. 39 Before

this, the regulators had been unable to catch the Butchers because they could not coordinate an

in-depth examination of multiple banks simultaneously. 40 The truly awful condition of the banks


Politics and Money Destroyed America's Banking System. New York: John Wiley & Sons, 1990. Print. 9. 38 Daughtrey, Larry, Alan Hall, James Pratt, Sandra Roberts, Thomas F. Chester, Bob Hetherington, and Joe Krakoviak. Borrowed Money, Borrowed Time The Fall of the House of

Butcher. N.p.: Tennessean and Knoxville Journal, 1983. Print. Page 3. 39 Adams, James R. The Big Fix Inside the S&L Scandal How an Unholy Alliance of

Politics and Money Destroyed America's Banking System. New York: John Wiley & Sons, 1990. Print. Pages 87, 88, and 91. 40 Daughtrey, Larry, Alan Hall, James Pratt, Sandra Roberts, Thomas F. Chester, Bob Hetherington, and Joe Krakoviak. Borrowed Money, Borrowed Time The Fall of the House of

Butcher. N.p.: Tennessean and Knoxville Journal, 1983. Print. Page 3.

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dawned on the regulators as they finally saw through the smoke and mirrors created by Jake

Butcher and Jesse Barr.

The investigations into the true condition of the Butcher banks went on quietly into the

next year. After United American Bank of Knoxville’s (UAB-Knoxville) financial press release

in 1982 had predicted good business for the next year, the FDIC forced them to release a more

truthful statement, possibly notifying depositors of coming trouble as UAB-Knoxville lost

around $80 million to depositors’ withdrawals. 41 Jake Butcher went to court on Tuesday,

February 8, 1983. 42 Less than a week later on February 14, regulators declared the UAB-

Knoxville insolvent. Its closing created $92.5 million of debt for the FDIC. 43 The collapse of

UAB-Knoxville was the fourth largest collapse in the United States of America’s history. 44

After the failures, many banks in association with UAB-Knoxville came forward to say

that the bank made improper and risky loans. 45 “Jake and C.H. Butcher Jr. were involved in a

fraudulent scheme to drain their banks for their own personal benefits while ‘masterfully

concealing that fraud’ from other bank stockholders and directors, a former Butcher associate

charged yesterday (1983).” 46 Multiple agencies including the Federal Bureau of Investigation,

FDIC, Securities and Exchange Commission, and the Internal Revenue Service among others

41 Daughtrey, Larry, Alan Hall, James Pratt, Sandra Roberts, Thomas F. Chester, Bob Hetherington, and Joe Krakoviak. Borrowed Money, Borrowed Time The Fall of the House of


Politics and Money Destroyed America's Banking System. New York: John Wiley & Sons, 1990. Print. Pages 118 and 119. 43 Siler, Charles. "Five Latest Bank Failures May Cost FDIC $80 Million." Knoxville News

Sentinel 3 June 1983, sec. B: B1. Print. Page B1. 44 Hetherington, Bob. E-mail Interview. 6 Nov. 2012. Page 4. 45 Chester, Thomas F., and Alan Hall. "Kentucky Bank Accuses Butcher of Loan Fraud." Knoxville Journal 29 Apr. 1983, Front sec.: Front. Print. Front Page. 46 Thomas, Lois R. "Butcher Fraud Scheme Alleged." Knoxville News Sentinel 16 June 1983, Front sec.: Front. Print. Front Page.

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took part in the examination into the failed banks. 47 Investigators found $377 million worth of

failed loans in the closed banks. 48 Of that amount, $211 million was debt from illegal insider

loans taken out by the Butchers, their friends, and associates. 49 Jake Butcher’s banking empire

was “built largely on paper, with successive banks financed with loans by earlier banks in

transactions that violated state and federal laws.” 50

The collapse of UAB-Knoxville set off a series of events that eventually ended with the

Butchers losing 19 banks across two states. “On May 27, United American Bank in Chattanooga,

United Southern Bank in Nashville, and C&C in Knoxville, Rockwood and Oak Ridge were

declared insolvent in the largest single day of bank failures since the Great Depression.” 51

Regulators declared many of the Butchers banks in Tennessee and Kentucky insolvent. Some of

the failed Butcher banks merged with other larger stable banks.52 Various Tennessee banks

purchased the rest. “The bank failures were part of the ‘ripple effect’ of the closing of UAB-


Butcher. N.p.: Tennessean and Knoxville Journal, 1983. Print. Page 40. 48 Krakoviak, Joe, and Alan Hall. "SIBC." Knoxville Journal 8 Apr. 1983, Front sec.: Front. Print. Front Page. 49 Krakoviak, Joe, and Alan Hall. "SIBC." Knoxville Journal 8 Apr. 1983, Front sec.: Front. Print. Front Page. 50 Daughtrey, Larry, Alan Hall, James Pratt, Sandra Roberts, Thomas F. Chester, Bob Hetherington, and Joe Krakoviak. Borrowed Money, Borrowed Time The Fall of the House of

Butcher. N.p.: Tennessean and Knoxville Journal, 1983. Print. Page 3. 51 Daughtrey, Larry, Alan Hall, James Pratt, Sandra Roberts, Thomas F. Chester, Bob Hetherington, and Joe Krakoviak. Borrowed Money, Borrowed Time The Fall of the House of

Butcher. N.p.: Tennessean and Knoxville Journal, 1983. Print. Page 31. 52 Lyons, David. "In-State Bank Sales Costly, Sasser Says." Knoxville News Sentinel 2 June 1983, Front sec.: Front. Print. Front Page.

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Knoxville Feb. 14, the third largest bank failure in the FDIC’s 50-year history.” 53 Later, the

savings and loan crisis would cost $300 billion when eighty banks failed from 1982 to 1985. 54

Thousands of investors in Jake Butcher’s banks lost their deposits, ultimately sharing the

cost of his banking practices. 55 When C.H. Jr. Butcher’s banks came under scrutiny it ended in

far more disastrous results. The SIBC lost $3.3 million related to illegal insider loans. 56 Unlike

all of the brothers other holdings, SIBC was not officially a bank; and therefore, did not have the

protection of the FDIC’s depository insurance. Because the deposits lacked insurance, $52

million of depositors’ money vanished. 57 Many of the depositors would later receive a portion of

their deposits back, but for that time the money was gone. 58 In the year of 1983, the FDIC lost

$172.5 million in Tennessee alone. 59

Hearings for the brothers and their associates went on for years after many of the banks

failed. Jake and C.H. Butcher, Jr., both ended up bankrupt as did their wives, David Crabtree,

and other business associates of the Butchers, excluding Jesse Barr who was already legally

53 Siler, Charles, and Richard Powelson. "Knox C&C, 4 Other Banks Fail; Announces Buyers for All." The Knoxville News Sentinel 28 May 1983, Final Home ed., Front and A sec.: Front-A9. Print. Front Page and Page A9. 54 Adams, James R. The Big Fix Inside the S&L Scandal How an Unholy Alliance of

Politics and Money Destroyed America's Banking System. New York: John Wiley & Sons, 1990. Print. Pages 17 and 19. 55 Daughtrey, Larry, Alan Hall, James Pratt, Sandra Roberts, Thomas F. Chester, Bob Hetherington, and Joe Krakoviak. Borrowed Money, Borrowed Time The Fall of the House of

Butcher. N.p.: Tennessean and Knoxville Journal, 1983. Print. Page 3. 56 Krakoviak, Joe, and Alan Hall. "SIBC." Knoxville Journal 8 Apr. 1983, Front sec.: Front. Print. Front Page. 57 Daughtrey, Larry, Alan Hall, James Pratt, Sandra Roberts, Thomas F. Chester, Bob Hetherington, and Joe Krakoviak. Borrowed Money, Borrowed Time The Fall of the House of

Butcher. N.p.: Tennessean and Knoxville Journal, 1983. Print. Page 33. 58 Womble, Roy. Telephone interview. 10 Feb. 2013. 59 Siler, Charles. "Five Latest Bank Failures May Cost FDIC $80 Million." Knoxville News

Sentinel 3 June 1983, sec. B: B1. Print. Page B1.

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bankrupt. 60 After being found guilty of fraud, Jake Butcher received a sentence of twenty years

in a federal prison camp on Monday, April 22, 1985. 61 He would receive parole seven years later

on April 30, 1992. 62

“Knoxville’s Jake Butcher and his brother caused the fourth largest bank failure in

history.” 63 The rise and fall of Jake Butcher’s banking empire influenced banking history by

necessitating the passage of the Garn-St. Germain Act. This act, mainly created for two reasons,

was a turning point for the banking industry. First, it allowed closer oversight, preventing

fraudulent banking practices that were common in Jake and C.H. Butcher, Jr.’s, banks. Secondly

it endeavored to help the struggling banks and savings and loans associations. Unfortunately,

this act also set the stage for many problems that have affected the present day economy. To

protect their investment from potential loss, banks would approve only low risk applicants for

loans before the passage of the Garn-St. Germain Act. After its passage, banks were able to issue

loans to high risk applicants, a practice known as sub-prime lending. 64 Later, a massive housing

boon, created by the many loans being approved due to this practice, would occur. Like Jake

Butcher and his colleagues, the banks found ways to take advantage of existing regulations to

improve their profitability. Although the banks knew some of the applicants would be unable to



Politics and Money Destroyed America's Banking System. New York: John Wiley & Sons, 1990. Print. Pages 87, 88, and 91. 62 Lea, Sandra. Whirlwind The Butcher Banking Scandal. N.p.: J. Lord, 2000. Print. Pages 567 and 582. 63 "Fun Facts about Knoxville." City of Knoxville. City of Knoxville, 2012. Web. 23 Oct. 2012. <http://www.cityofknoxville.org/about/funfacts.asp>. Page 1. 64 Connolly, Sean. Banks and Banking World Economy Explained. North Mankato: Amicus, 2011. Print. Page 45.

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repay the loans, the lure of profit once again proved too enticing and ultimately led to the

housing market collapse during the last decade.

(2458 words)

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Annotated Bibliography - Primary

Bouvier, Leon, Roy Beck, and U.S. Census Bureau. Projected U.S. Population Growth. Chart. N.p.: Susps, 1970-1993. Print.

Annotation ~ This graph, created using U.S. Census numbers from the years of 1970 to 1993, showed the United State's population growth during the collapse of Jake Butcher's banking empire. It helped me to understand how the U.S. as a nation was evolving while it was coming out of a recession in the late 1970s.

Cary, Miles J. FDIC Examiners Close the West Haven Branch of UAB. 1983. Photograph. KNS Archive, Knoxville. FDIC Examiners Close the West Haven Branch of UAB. Knoxville: Knoxville News-Sentinel, 1983. N. page. KNS Archive. Web.

Annotation ~ Taken by J. Miles Cary, this photograph depicts two FDIC examiners shutting down one branch of the United American Bank. The photo gave a visual account of one of the many bank closings that occurred on February 14, 1983. The date the photo was taken and also the day the UAB-Knoxville collapsed, and the days after could be illustrated in a similar manner.

Chester, Thomas F., and Alan Hall. "Kentucky Bank Accuses Butcher of Loan Fraud." Knoxville

Journal 29 Apr. 1983, Front sec.: Front. Print.

Annotation ~ This article from 1983 was written only a few months after the UAB-Knoxville collapsed. UAB-Knoxville failed because of improper banking practices. The article focused on other banks coming forward to accuse the UAB-Knoxville of risky insider loans among other unsound practices.

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Dahl, Drew. "C.H. Butcher Moves to Be More Visible." Knoxville News Sentinel 22 Nov. 1981, sec. C: C1. Print.

Annotation ~ This article from the Knoxville News-Sentinel was written soon after the brothers, Jake and C.H. Butcher Jr., split their banking empire. By 1981, when the article was published C.H. had a growing number of banks in his control, a fact that the document focused on. Also included was a brief summary of the early banking careers of the Butchers.

Daughtrey, Larry, Alan Hall, James Pratt, Sandra Roberts, Thomas F. Chester, Bob Hetherington, and Joe Krakoviak. Borrowed Money, Borrowed Time The Fall of the

House of Butcher. N.p.: Tennessean and Knoxville Journal, 1983. Print.

Annotation ~ Borrowed Money, Borrowed Time was written by a team of reporters from both The Tennessean and The Knoxville Journal. These reporters investigated the events that made up the rise and fall of Jake Butcher’s banking empire and gave eye-witness accounts of their findings within the book. The book delved into the findings to explain the improper banking practices that caused the collapse of many Butcher run or owned banks.

DuBose, Mike. Jake Butcher Talks to Press outside the Federal Courthouse. 1984. Photograph. KNS Archive, Knoxville. Jake Butcher Talks to Press outside the Federal Courthouse. Knoxville: Knoxville News-Sentinel, 1984. N. page. KNS Archive. Web.

Annotation ~ In this 1984 photograph, Jake Butcher is shown speaking to the press outside a federal courthouse. There was a high level of interest in the trials of the Butchers and their associates after the collapse of UAB-Knoxville. Multiple reporters covered Jake Butcher’s statements the day the photo was taken.

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DuBose, Mike. UAB Employees Leave on Feb. 14, 1983. 1983. Photograph. KNS Archive, Knoxville. UAB Employees Leave on Feb. 14, 1983. Knoxville: Knoxville News-Sentinel, 1983. N. page. KNS Archive. Web.

Annotation ~ Throughout the series of bank failures that started with the closing of UAB-Knoxville the depositors who lost money were not the only ones affected. Taken the morning of February 14, 1983, the picture shows UAB-Knoxville employees leaving the bank after being told of its imminent closing.

Hetherington, Bob. E-mail Interview. 6 Nov. 2012.

Annotation ~ I interviewed Bob Hetherington, one of the authors of Borrowed Money Borrowed

Time and one of the team of reporters that investigated that collapse of UAB-Knoxville. Having lived in Knoxville during the late 1970s and early 1980s, he was able to provide insight as to the economic and banking conditions of the time. He also provided information on the overall rise and fall of Jake Butcher’s banking empire. This interview was extremely helpful and allowed me to attain a higher understanding on the subject.

Jackson, Roy E. "The Butcher Banks and Their Practices." Letter to John J. Early. Oct. 1977. MS. Memphis, Tennessee.

Annotation ~ In this memo from 1977, I found an account of a FDIC examination of one of the Butcher’s banks. The memo, written by Roy E. Jackson to John J. Early who were both FDIC employees, expressed opinions of FDIC examiners regarding the Butcher’s banks.

Krakoviak, Joe, and Alan Hall. "SIBC." Knoxville Journal 8 Apr. 1983, Front sec.: Front. Print.

Annotation ~ This newspaper article was the only source I found that focused completely on C.H. Butcher Jr.’s corporation, the SIBC. The SIBC, otherwise known as the Southern Industrial Banking Corporation, was run by C.H., but unlike his other holdings was not considered a bank. Because of this, when it failed due to debt from insider loans among other improper banking practices; the deposits were not protected. Every depositor lost their savings when the SIBC collapsed.

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Lee, Tom. "Room Rentals for Fair Have Doubled in 5 Weeks." Knoxville News Sentinel 1 Apr. 1982, sec. A: Front-A6. Print.

Annotation ~ In early 1982, Knoxville was preparing for its World's Fair. The rate of room rentals prior to the World's Fair are listed in this article. This article showed the business the World's Fair brought to Knoxville. It also brought business for the chairman of the event, Jake Butcher, and his banks.

Lyons, David. "In-State Bank Sales Costly, Sasser Says." Knoxville News Sentinel 2 June 1983, Front sec.: Front. Print.

Annotation ~ The losses the region suffered while selling the failed Butcher banks are explained in this article. This article was published in June 1983 during the period of time when many, of the failed banks were being sold. A large portion of the article quotes Sen. Jim Sasser explaining the losses the state could have avoided by selling the banks to out-of-state buyers.

"Paper Ties Butcher to Most Fair Construction." Knoxville News Sentinel 5 Apr. 1982, sec. B: B1. Print.

Annotation ~ Knoxville was preparing to host the World's Fair in early 1982. Before the World's Fair $48 million was spent on construction. Of that amount $38 million was linked to the Butchers and their banks. This article showed how the chairman of the event, Jake Butcher, used the fair for his own personal benefit.

Siler, Charles, and Richard Powelson. "Knox C&C, 4 Other Banks Fail; Announces Buyers for All." The Knoxville News Sentinel 28 May 1983, Final Home ed., Front and A sec.: Front-A9. Print.

Annotation ~ Articles from the months after the UAB-Knoxville collapsed were helpful because they showed the short-term impact my event had locally. This particular one from May 1983, had information regarding the failures of five separate banks. I loved how it explained how UAB-Knoxville’s collapse affected other banks, using the term “ripple effect.”

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Siler, Charles. "Five Latest Bank Failures May Cost FDIC $80 Million." Knoxville News Sentinel 3 June 1983, sec. B: B1. Print.

Annotation ~ Unlike some of the other newspaper articles, I found this one focused on the impact the bank failures had on the Federal Deposit Insurance Corporation (FDIC). The article stated that the FDIC expected to lose $80 million in only a few of the many banks failures after the collapse of UAB-Knoxville. This is a relatively small number considering the total amount the FDIC lost in 1983.

Smith, Lee M., ed. "Butcher." The Tennessee Journal [Nashville] 17 Nov. 1975, Front sec.: 1-4. Print.

Annotation ~ This is one of the earlier, if not the earliest, articles I discovered that pointed out the corruption in the way the Butchers ran their banks. The article from 1975 was written seven years before the Butchers’ banking empire crumbled. Not only did the article suspect corruption, but it listed many of the improper banking practices that later caused Jake and C.H. Butcher Jr.’s banks to fail.

Thomas, Lois R. "Butcher Fraud Scheme Alleged." Knoxville News Sentinel 16 June 1983, Front sec.: Front. Print.

Annotation ~ This article quoted a former business associate of the Butchers, accusing them of using their banks for their own personal profit. He also spoke about the Butchers’ habit of granting insider loans and being careless with depositors’ money. All of which the Butchers were later found guilty.

Womble, Deborah T. Telephone interview. 10 Feb. 2013.

Annotation ~ Speaking to Mrs. Womble was very helpful as she had lost savings in the collapse of the Southern Industrial Banking Corporation (SIBC), a small loan company owned by the Butchers. She was able to provide information about the previous rates of interest on deposits and personal recollections about the rise and fall of Jake Butcher's banking empire.

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Womble, Roy. Telephone interview. 10 Feb. 2013.

Annotation ~ Speaking to Mr. Womble was also very helpful as he had, along with his wife, lost savings in the collapse of the Southern Industrial Banking Corporation. He provided many personal recollections about the failure of many Butcher banks along with the SIBC.

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Annotated Bibliography - Secondary

Adams, James R. The Big Fix Inside the S&L Scandal How an Unholy Alliance of Politics and

Money Destroyed America's Banking System. New York: John Wiley & Sons, 1990. Print.

Annotation ~ The Big Fix had great information about how the rise and fall of Jake Butcher’s banking empire was a turning point in banking. It, in part, caused the passage of the Garn-St. Germain Act of 1982 which as the book explained was one of the causes of the S&L crisis. The act also allowed for sub-prime lending which was one of the causes of the housing market collapse in the last decade.

Allman, Barbara. Banking How Economics Work. Minneapolis: Lerner Publications, 2006. Print.

Annotation ~ Banking How Economics Work did a good job of explaining the basics of banking. I read this to give myself a basic understanding of the way banks function before delving into the more technical aspects of the Butchers’ banking practices.

Connolly, Sean. Banks and Banking World Economy Explained. North Mankato: Amicus, 2011. Print.

Annotation ~ Banks and Banking World Economy Explained discussed the way banks and thrifts function and the laws behind banking. The book gave me information similar to what Banking How Economics Work gave me. It also gave me a basic understanding to build upon while researching the rise and fall of Jake Butcher’s banking empire.

"Fun Facts about Knoxville." City of Knoxville. City of Knoxville, 2012. Web. 23 Oct. 2012. <http://www.cityofknoxville.org/about/funfacts.asp>.

Annotation ~ This website listed many significant events that make up Knoxville’s history. The banking collapses caused by the fall of Jake Butcher’s UAB-Knoxville were among them. Another event listed was the 1982 World’s Fair hosted by Knoxville. Jake Butcher fought to have the fair in Knoxville and later used it for his own personal gain.

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Lea, Sandra. Whirlwind The Butcher Banking Scandal. N.p.: J. Lord, 2000. Print.

Annotation ~ Whirlwind was the only book written years after the event that focused solely on the Butcher banking scandal. The book examined the practices that were used by the Butcher banks and their directors. Whirlwind was very thorough in explaining the events that lead up to, made up, and came after the rise and fall of Jake Butcher’s banking empire.

"Vietnam War." History.com. A&E Television Networks, n.d. Web. 12 Feb. 2013.

Annotation ~ The additional historical context this article provided proved useful for giving more perspective as to what was going on in the world at the time my event took place. This particular article was written about the Vietnam War and the United States of America's part in it.

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