Tears formed in Ann Kiley’s eyes. Beside her Bobby Kiley’s face was pale and bony. He put his hand on his daughter’s shoulder. She didn’t appear to notice.
“Shawcross has disappeared,” I said. “We don’t know where he is. We don’t even know who he is. He’s safe. Reaching back here for Conroy is a risk that doesn’t make any sense.”
Conroy shrugged.
“We can keep Ann out of it,” Kiley said. “He makes a couple of minor adjustments, which we can help him with, Annie’s name never has to come up.”
“You okay with that?” I said to Conroy.
He nodded.
“You?” Bobby Kiley said to me.
“Yeah,” I said. “I’m all right with that.”
CHAPTER FIFTY-NINE
Abner Grove wore a blue polo shirt and tan slacks, loafers with no socks.
“Casual day?” I said.
Grove smiled. “Every day,” he said.
I looked at Rita.
“Abner’s so good,” Rita said, “he can get away with pretty much anything he wants to.”
“He married?” I said.
“Sadly yes,” Rita said.
Grove waited patiently while we discussed him.
Then he said, “A loan to value is one where the bank assumes all risk. I don’t know the details yet of what Soldiers Field and Pequod were doing. It will take years to peel all that away. But here’s how an LTV can work.”
“LTV?” I said.
“Loan to value,” Grove said. There was a hint of scorn in his voice.
“That’s right,” I said.
Grove frowned for a minute, then went on, as if I hadn’t teased him.
“I don’t want to keep saying Soldiers Field Development every time,” Grove said, “so we’ll call them Soldier, and we’ll call the bank Pequod. Soldier has some property it wishes, or appears to wish, to develop. It borrows say fifty thousand dollars from Pequod and buys the land. It then flips it.”
“That is, sells it back and forth,” I said. “With somebody in on the deal.”
“Yes. Each time inflating the cost and getting a new loan from Pequod to cover it.”
“Doesn’t the bank get suspicious?” I said.
“Of course,” Grove said. “Finally, let’s say, Soldier has now inflated the value of this property to a million dollars, and it’s quote unquote owned by their flipping partner. Soldier goes to Pequod for an ADC loan.”
“Which would be?” I said.
“Acquisition, development, and construction. They get a loan to value-which is to say that the loan covers all costs, including fees and even interest on the loan for the first two years. There is no down payment.”
“I’m beginning to see how this might work out,” I said.
“After a time, Soldier defaults on the loan, government insurance covers the loss, and everybody makes a lot of money.”
“Doesn’t the government catch on after a while?”
“Sometimes. Sometimes Pequod might sell the loan to a sister institution, which gets it off Pequod’s books, so that when it defaults it defaults on the sister bank.”
“And what’s the sister bank get out of that?” I said.
Grove smiled. “Reciprocity,” he said.
I looked at Rita. She was wearing a bright green suit today, long jacket, short shirt. Her hair was gleaming. She was leaning back in her chair with her spectacular legs crossed, one foot swinging gently. Her shoes were black.
“Talk a little about interest rates,” Rita said to Grove.
“One of the things a bank will do, obviously, to attract depositors is to pay high interest rates. But if you pay too much interest you can’t make a profit.”
“You have to charge more interest than you pay,” I said.
“There you go,” Grove said. “You’ll make a banker yet. Pequod paid the highest interest in the area. Significantly higher. Possibly because they were not worried about profit.”
“Because they were simply Soldier’s vehicle for fraud,” I said.
