Some Hope for the Ex-Champ

By Marshall Loeb

Executive View

The free economy has been good to Robert Abboud, and maybe that is why he worries so much about its future.

He has shown that in this wide-open economy a hard-nosed scrapper can beat the odds. His first big boss warned him not to expect to rise too high in banking because grandsons of Lebanese immigrants can't make it big in that Wasp world. Abboud was not impressed, and several years ago he beat out three other candidates to become chairman of First Chicago Corp., parent of First National Bank of Chicago. He savors the perks: the chauffeured limo that picks him up in the exurbs at 6 a.m.; the ballroom-sized corner office decorated with Oriental artifacts to remind him of his recent trip to China.

Banker Abboud, 49, also has liabilities. The $3.4 million loan that he approved for fellow Democrat Bert Lance still embarrasses him; and many officers have left First Chicago because Abboud has a short fuse--befitting a man who is 5 ft. 6 in. and expects everybody to share his own I-made-it-the-hard-way workaholism. But few question that he runs a top bank; last year First Chicago Corp.'s assets rose 14% to $22.6 billion. Or that he comes forth with some unstarchy ideas from behind his stiff collars and vested suits.

Excited by the oil prospects that he saw in China, he foresees a three-way trade between capitalists and Communists. In Abboud's view, the U.S. will sell oil equipment to Peking. Then the Chinese will ship oil to Japan. Completing the deal, the Japanese will continue to send their cars, cameras and appliances to the U.S. Result: the U.S. will pay for its Japanese imports by selling drilling gear to China--and there will be oil for the lamps of Japan.

What troubles Abboud now is that U.S. capitalism is not getting enough new capital. "There is a tremendous disinvestment in the economy," he says. The number of shareholders has shrunk so drastically that Wall Street's plum has become a prune. Americans are spending instead of investing, figuring as do Latin Americans that it is better to buy now because the price of everything is going to be higher tomorrow. "In consequence," adds Abboud, "big firms like A T & T can get capital, but small companies have a hard time. So the basic job-producing engine is drying up." No wonder pugnacious foreign competitors are winning America's markets at home and abroad. "It's like an ex-champ on the ropes," says Abboud, punching out the words.

The U.S., Abboud argues, must do three things:

First, reduce the growth of Government spending on consumption-oriented programs, which are using up so much capital. In Abboud's metaphor, "the Government is like, the big elephant coming to the pond, drinking all the water, leaving the gazelles with nothing."

Second, unwind some Government regulations that devour capital. "For example, we have to develop domestic sources of energy, and some environmental rules will have to take a backseat --temporarily."

Third, defend the "grossly undervalued dollar" by. buying up dollars in world markets. "We're out of our minds not to go in and spend whatever it takes. I don't think that it will take more than $20 billion to $30 billion, but it wouldn't bother me if it were $100 billion."

If this were a political platform, any prudent banker would deny a loan to finance Abboud's campaign. Yet he speaks some hard truths. Unless the geometric growth of some popular and politically "uncontrollable" programs is controlled--Abboud mentions Social Security and veterans benefits--then much deeper deficits lie ahead. Until the Government eases some regulations, managers will spend capital to meet those rules instead of to create jobs. Buying up dollars will not permanently lift America's currency but at least will give the U.S. time to ease the trade and budget deficits that are dragging the dollar down.

Clubby bankers from Zurich to Tokyo have confided to Abboud that Middle Eastern, Latin American and Asian capitalists are poised to invest many billions in the politically stable U.S.--as soon as they become convinced that they will not lose because of further dollar erosion. When these worldly investors plunge in, the stock market will surge, many jobs and business opportunities will be created, and the temporarily groggy champ will start to bounce back.

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