Flat Broke

In the dusty border town of Zapata, the name of Manuel Medina, 52, stood for money and power. Son of a shrewd, up-from-the-adobe storekeeper, heavy-set "Don Manuel"--as everyone in town deferentially called him--owned the only bank in all Zapata County (pop. 4,400). He had also served eleven terms as county commissioner, piloted his younger brother Santos to the county judgeship, and for years ran Zapata's politics as a family fief. But last week Don Manuel's bank was closed down for lack of funds--and the whole county was flat broke.

Founded well before the state's 1923 banking law came into effect, the Bank of Zapata was one of a number of privately owned, unincorporated Texas banks that have no charter, are free from either state or federal audits. The Medinas, explained County Attorney Joseph Caldwell, "reported to the Lord alone." But the family reputation was impeccable; almost all the town's merchants kept their accounts in Don Manuel's bank, and public funds on deposit amounted to $250,000. Then, a month ago, a sign went up in the bank's window announcing that the place had been shut down. The roof fell in on Zapata. A court-appointed receiver turned up to examine the bank's books, discovered only $18,000 in cash assets, along with $424,000 in overdrawn accounts ($323,000 in the name of Don Manuel and his family). The bank's accounts were $665,000 out of balance, and the county money was nowhere to be found.

Three weeks ago Don Manuel Medina came briefly out of hiding in Mexico to try to explain to a grand jury what had happened. His sorrowful statement: "We just ran out of money and had to close." According to Medina, major depositors had withdrawn some $200,000 during the past four months, and the bank simply could not handle the demand for cash. As for his family's overdrawn accounts, Don Manuel explained that was simply his way of taking profits. But he had no explanation for the fact that most of the other overdrafts were in the accounts of his political henchmen. And he pleaded the Fifth Amendment when asked about the missing county funds.

Then Don Manuel slipped back across the border--just before the grand jury indicted him for the felony offense of accepting deposits in a bank that he knew was insolvent. As of last week, ex-Banker Medina was free on $50,000 bail after coming out of hiding to accept arrest. Before the indictment, he had promised to surrender his property to creditors--but, as it turned out, there was precious little property to give. Don Manuel had apparently lost heavily on the stock market recently, and had sold his cattle herd before the closing; even the bank building proved to be heavily mortgaged. Meanwhile, Zapatans were surviving with loans from families, friends and other banks.

Eventually the town might get a new, properly insured bank--but it would be a long time before anyone in the county had much money to deposit there.

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