A.W. Clausen, ex-leader of Bank of America and World Bank, dies at 89
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WASHINGTON — A.W. Clausen, an American banker who rose to the highest echelons of his field nationally and internationally, serving twice as president of Bank of America with a stint as head of the World Bank in between, died Jan. 22 at a hospital in Burlingame, Calif. He was 89.
He had complications from pneumonia.
Mr. Clausen began his career more than six decades ago as a part-time cash counter toiling away in a Bank of America vault. He advanced through the management ranks of the bank and its parent company to become chief executive in 1970.
Over the next decade, he led the San Francisco-based bank through a period of burgeoning growth and profit. By the time he left, the once largely regional institution had become an international powerhouse.
After departing the World Bank in 1981, Bank of America suffered devastating losses on loans — some of them undertaken during Mr. Clausen’s tenure — and he drew criticism for what his detractors regarded as his failure to invest sufficiently in new technology and loan management practices.
He was recalled as chief executive at the end of his World Bank term in 1986. Over the next four years, Mr. Clausen successfully defended the beleaguered institution from a hostile takeover attempt by First Interstate Bancorp.
Under his leadership, the bank shed a reported 20,000 jobs and sold off profitable divisions of the company to achieve fiscal recovery. The year before his retirement in 1990, Bank of America reported a net income of $1.1 billion.
At the World Bank, Mr. Clausen succeeded Robert McNamara, the former defense secretary who had astronomically expanded the institution’s lending programs to developing nations.
Mr. Clausen was named World Bank president in 1980 in a preelection agreement between President Jimmy Carter, a Democrat, and his successful challenger, Ronald Reagan, a Republican.
The World Bank is a sort of cooperative in which dozens of countries are shareholders. As the largest shareholder, the United States traditionally selects the president.
Mr. Clausen was a compromise candidate: a liberal Republican who professed his commitment to private-sector entrepreneurship and foreign aid, which he regarded as beneficial for both the borrower and the lender. His World Bank job paid a fraction of the salary he earned at Bank of America.
The World Bank continued to grow under Mr. Clausen’s leadership, although not as it had under McNamara. This was in large part because of the political and financial forces at work during the Reagan era.
The conservative revolution led by Reagan had begun to turn US policymaking against vast spending on foreign aid. Major powers such as West Germany and Japan also reduced their commitments to the bank.
On the financial front, the global recession of the 1980s made loans all the more necessary for poor countries and all the more complicated for rich ones. Inflation meant that the World Bank had to borrow money at high interest rates while still carrying old loans given at low interest rates.
Mr. Clausen’s ‘‘signal accomplishment’’ was his successful effort to ‘‘protect and preserve the major expansion in the bank’s role’’ in the world, said C. Fred Bergsten, undersecretary of the treasury for international affairs under Carter.
He was a forceful advocate for the bank and defended it from conservatives who said it existed mainly to redistribute wealth. He said foreign lending was not a matter of mere altruism. Upon taking the post in 1981, he noted that one-third of American exports were bought by developing nations.
‘‘That’s the vested interest I’m talking about,’’ he said.
‘‘I don’t believe in transferring wealth,’’ he remarked, ‘‘but I believe in helping those that want to help themselves.’’
Alden Winship Clausen was born Feb. 17, 1923, in Hamilton, Ill. His father was owner and publisher of the city’s newspaper; his mother was a homemaker. The younger Clausen became known as ‘‘Tom’’ after portraying a boy with the same name in a school play.
He received a bachelor’s in mathematics from Carthage College in Kenosha, Wis., before serving in the Army Air Forces in the final months of World War II. He received a law degree from the University of Minnesota in 1949.
Later that year, he joined Bank of America in California. The company placed him in an executive training program and made him a senior vice president when he was in his 40s.
As president, Mr. Clausen worked to refocus the institution on profit, not volume of loans. He decentralized it to give regional offices and local branches greater authority.Continued...