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Interview with: Dan Arnold
Interviewed by: Minette Basil
Date: July 16, 2010
MB: Today is July 16, 2010, and I have the privilege of being here with Mr. Dan Arnold. We are recording him for the Houston Oral History Project. My name is Minette Basil and we are in his office in the First City Tower. Dan, I want to thank you for being with us. You are a native Houstonian. Tell us a little bit about your formative years and your schooling and that first block of your life.
DA: Well, as you say, I am a native Houstonian. I grew up in Houston during the Depression, having been born in 1930 but fortunately, those of us who grew up in this part of the country did not know what a Depression was or realize it to any extent. My grandchildren have a lot better life than I did then with all the trinkets that they have in this day and time. We would go down to the park and play baseball every night and do all those kinds of things, so we had a very happy childhood. I am one of five. And, of course, a big family helped very much as well. I walked to grade school. You could walk a mile to grade school in those days, crossing Almeda and your mother did not have to worry about getting you kidnapped or something of the kind. So I think I just had a very normal childhood for that day and time.
MB: And you lived in what part of town?
DA: In Riverside Terrace, about one-half block off where 288 is today on Calumet Street. We had a nice little park down at the end of it that was a lot of fun and tennis courts down on Ennis and played a lot of tennis in those days. That is where I heard about Pearl Harbor down on those tennis courts on that Sunday afternoon.
MB: And then you went on to the University of Texas. Can you tell us about your college and a little bit beyond that?
DA: Well, I started out at Rice, flunked out there, then went to Princeton for 1 year and ended up coming back to Texas to get a business degree so I could hopefully get through law school in record time since Korea had just started in that era. And so, I went back to the University of Texas and got a business degree, having spent my first 2 years in engineering school. And then, went on and got my law degree from the University of Texas. I had to start working when I got out of school.
MB: And you went immediately into a law practice?
DA: Yes, I started to work for what is now Vinson and Elkins right after I got out of school and spent, round figures, 30 years there.
MB: That is a long period of time. What was your special interest working at V and E?
DA: Well, I used to say that everybody in that era . . . or today, people refer back to that era and want to know what you specialized in. I always said that I specialized in whatever came over the transom because in those days, Vinson and Elkins was a big, big law firm. We had 60 lawyers. Baker Botts had 58, I think. So, you did not have the degree of specialization in those days that you do today. I have tried lawsuits, I have examined titles, I have done a lot in the oil and gas business and, I guess, built a little bit of a reputation in the real estate field, did a lot of mergers and acquisitions work for several companies. As I say, whatever any client wanted me to do, I did.
MB: Well, I know you expressed that you had done a lot of real estate matters and one that you had mentioned previously to me was the Allen Center complex. Could you share a little bit about that experience?
DA: Oh, that was quite an experience. I think it was in 1968 or so when we had to close 52 real estate transactions at one time. There were a bunch of options that were expiring that day, several orders from bankruptcy courts that we closed in that we could buy these tracks but there were a total of 52 different partials of land that we closed in one afternoon and I was representing Metropolitan Life Insurance Company and Trammell Crow in. Without getting into too much detail, the Metropolitan Life lawyer was more interested in what kind of opinion we would get to him on the purchase than in closing the transactions but fortunately, a Mets EVP was here, he knew real estate and finally, by noontime, I think we had about $40 million or $50 million in our escrow account to make all those purchases. Finally, about noontime, I told them that, “If we don’t start closing, we are not going to close today and your options run out this evening and if we can’t this thing closed, you can write off the last 6 months of work that has been done to bring this transaction together.” He says, “Don’t tell my lawyer but start spending my money.” So we spent his money and the 5 o’clock lawyer wanted to know if we are going to start closing. I said, “It’s all closed.” It was quite a deal. We had 5 lawyers down there doing it all and, of course, it had all been choreographed before. Those transactions are very interesting types of things to do.
MB: Oh, that is enormous. It takes up so many square blocks of downtown. It is a huge credit to you to get done.
DA: Well, it was a very interesting project and we were very proud of what we did. You see what has happened since then with all the office buildings and garages, everything except the Antioch Baptist Church which we tried to buy. I tried to get Trammell Crow to go down there and pass the offering plate on Sunday morning and see if he could talk them into it, selling, but where we ended up there was that Allen Center handled all the landscaping and you see what a beautifully landscaped area that is now and I think it is a great entrance or one of the great entrances in the Allen Center, is that old Antioch Baptist Church.
MB: It really is. It is like an ____ to the whole complex. It is beautiful.
DA: Very much so.
MB: That was a big opportunity that you worked on there. Any others that kind of stand out in your mind with your _____?
DA: Oh, there are a lot like 3 years I sort of had to take off and unwind the T.J. Bettes Company which was then the world’s largest mortgage servicing business. It had gotten very overextended like some of the banks you think of back in recent times. I got asked to put that back together and spent about 2-1/2 to 3 years unwinding all of it without going through any bankruptcy proceedings or anything of the kind and everybody who stayed the course got their money back. Of course, I made a lot of deals as we went along to get us to that point. You know, if you were practicing law in those days without the great degree of specialization you find today, my view is it was a lot more interesting in that era.
MB: You also were involved with the Astros.
DA: Well, one of the big things I did was to refinance the bank debt of the Astros, and I represented Ford Motor Credit. The Astros could not keep up with it so we negotiated a deal to take over the team, Ford and GE Credit, and with the Ford representative here, I sort of had a lot to do with running that baseball team for I guess it was about 5 years before John McMullen walked into town with a $10 million letter of credit from Chase Bank, as I recollect, and bought the team.
MB: What year was that roughly?
DA: Oh, probably the late 1970s, I guess.
MB: So, you were involved 5 years up until that point?
DA: Something like that. I have forgotten. The years slip by at this point in time. Tal Smith was out there running the club, doing the baseball part at the time, and he is still with the club as the Director of Baseball Operations. He did a great job of putting the team together. The last year we were out there, the Astros won their division even though it was owned by a couple of credit companies from up north.
MB: Well, you had a long history of ____ service to our community. It is staggering, all of the organizations and wonderful things that you have done to help shepherd throughout our city. I know one of the early activities that you were very involved with was the City and County charity hospital system in the 1960s. Could you tell us a little bit about that?
DA: I think it was 1962 that Mr. Ben Taub invited me to come down to his office. He talked a little about the system and said, “Wednesday City Council is going to meet and you are going to be elected to the board of the City/County charity hospital system,” which was the forerunner of the Harris County Hospital District. Six months later, I repeated that visit and Mr. Ben said, “I’ve been running this show for 32 years,” or something of the kind – he was in his 80s by that time – “and I think I have served long enough. Wednesday, the City Council and Commissioners Court is going to have a joint meeting and you are going to be elected Chairman.” At 32 years of age, I thought that was quite a responsibility to undertake as a city job when I was trying to practice law full-time and make a success of that. I took it. They did have some problems there but one of the biggest ones was financing, like when there was one of those staph infections out at the old Jefferson Davis Hospital, I remember, and we tried to get a little money for overtime for some extra nursing help and to sanitize the newborn infants’ room. Roy Oakes who was then the controller said, “No, we haven’t got any extra money.” And, of course, I was a little disappointed in that. I called my office and a Channel 11 reporter who _____ said, “Well, can you come down here and go on TV?” So I drove out to Channel 11 just out the Allen Parkway and went Live at 5 and telling my story as I just told it and maybe with a little more embellishment. By 7 o’clock that night, Mayor Louie Welch calls up and says, “I surrender. You have your money. Get off television.” I don’t know why that story just sticks out in my mind. The lack of financing was always a problem and with that in mind, I led the effort in 1963 to create the Harris County Hospital District which was, of course, a public referendum that had failed 3 times before. We did carry it with about two-thirds vote. The Hospital District started operating as a hospital district in January 1964. I stayed on another 4 years and I think got that underway properly. And today, I think . . . or, I think most people who know anything about medicine around the country would feel that the Harris County Hospital District is one of, if not the best public hospital systems in the country. I am very proud of what we were able to accomplish to get it . . .
MB: ______ to make it work. And then, you were also involved with the Red Cross.
DA: Well, I chaired that for 2 years. Tom Martin Davis, the previous chairman, who was a senior partner in Baker Botts called me up one day, wanted to come by and visit. I told him, “Mr. Davis, I will be right there.” “No, I’m coming over to see you.” He started telling me about all the nurses that the Red Cross had given to the Ben Taub Hospital to help us through some of those types of instances I just described. He said, “You owe it to the Red Cross to become the chairman.” So I did that for 2 years.
MB: That was right after your service _____ with the Harris County Hospital District?
DA: Right. So I did that for a couple of years and it was, of course, a very fulfilling and rewarding experience, especially with Hurricane Camille and the fundraising we had to do and all those types of things.
MB: And you also were involved with the Houston Urban League. That must have been quite an experience in the 1960s trying to shepherd public opinion and policy through.
DA: An African American by the name of Quentin Mease, who is, to me, one of the real heroes of this city, was named to be one of the first trustees/directors of the Harris County Hospital District. He and I became close friends. You could write a whole history on what Quentin did for this city. He lived to be 100 years old and died a year or so ago. But he had come to know Whitney Young who was the head of the National Urban League. You had a few different views on what the African American community should be doing and I was very sympathetic to those views. Quentin got him to come visit Houston and with him, we launched the Urban League here in the late 1960s, early 1970s back at that time. I think it has been quite a success. Whitney Young believes that there should be no handouts to the African American community but they should go to work and earn their way. That was his mantra. That is what he preached. Of course, I believe very strongly in that, as did a number of other people, and we got the community behind getting the Urban League going. Of course, it is a very successful organization in our city today and I think they do a great job. Again, I am privileged to have a part in launching it here.
MB: And when you launched it and it moved into the Civil Rights Act of 1964, I believe, what was the participation by the Urban League and by you in taking that role?
DA: The Urban League here was after 1964.
MB: In 1968.
DA: I think it was a little after that. Of course, the Urban League participated in all those types of things.
MB: You kept on with your interest in the medical field, particularly with Baylor College of Medicine. You were involved with that institution.
DA: I had a lot to do when, on January 1, 1969, we separated Baylor College of Medicine which really then was the linchpin of the Texas Medical from Baylor University in Waco. Baylor University did not support it to be on the board of Baylor College of Medicine under the Baylor University aegis. You had to be a Baptist and the Baptists were not supporting the school to let it grow like it should. So a group worked together to handle that separation. You’ve got to think that Abner McCall, who was quite a revere Texan, having served on the Texas Supreme Court and who was then the president of Baylor University had a lot to do with it. He realized that needed to be done and he cooperated to the fullest with a group of Houstonians, and I was privy to go ahead and serve on that first board where I served until, I think, 2004 for quite a bit of my history.
MB: And you were chairman also.
DA: I served 5 years as Vice-Chairman, 5 as Chairman.
MB: You raised quite a bit of money for that over those years.
DA: That was always a very necessary thing. When I went in, when we separated, Baylor had $10 million of red ink. When I retired as Chairman, we had an endowment of over $1.2 billion so during that time, we had raised quite a bit of money.
MB: That is incredible. And how did the Texas Medical Center board sort of interact with all of that?
DA: Well, of course, the Texas Medical Center board . . . the Texas Medical Center is the home of a number of medical institutions -- I won’t say a governing body but a coordinating body is the board of the Texas Medical Center. When I started the Hospital District and went on the Ben Taub board, I was invited to serve on the Texas Medical Center board. I stayed there basically until my days at Baylor in early 2004 or 2005. The Texas Medical Center has done a great job of coordinating things. It is more like the city functions. All the streets out there are private streets. Parking operations is a big thing out there. I used to say there were 50,000 employees in the old Medical Center. I do not know how many there are today. Of course, you have the additional facilities on the east side of 288 now that were not a part of it then. There are always continuing problems of growth of the Medical Center institutions, is what the TMC board deals with.
MB: Well, as Houston is growing and the need for a transit system, our Transit Authority began in the 1970s and you were very instrumental in that entity.
DA: Well, Houston had a very poor transit system in the 1970s. A referendum in 1977 or 1978 created the Houston Transit Authority, Metropolitan Transit Authority, it was known as which was a county-wide effort. One year into it, I think Howard Horn who had really played a very major role in getting that done was ____ chairman for 1 year and some political things came about and he wanted to retire. Then, Mayor Jim McConn called me at home one night and told me what I should do. I think my name came up because of my experience with the Hospital District. So I did that for 4 years. At that time, the Houston Chronicle had a box score on the front page of the paper that showed how many busses went out and how many came in under their own steam. We had 1 bus barn at the time that had some mechanics pits dugout and the roof was leaking so that every time we had a hard rain like we did a few weeks ago, you had a bucket ____ to get all the water out of those mechanic pits. Now, we have probably 6 or 8 bus barns around the city that are very modern. And, of course, this has taken place over a long period of time but we do have one of the best bus systems in the country now thanks to that. I have always been sorry that I could not carry the 1983 Rail Referendum that we had but you win some and lose some, and that is one I did not win!
MB: Well, and that is also about the same time that you hired a first manager, general manager.
DA: Well, that was a problem the first year, getting an experienced general manager in. Howard had met this fellow, Alan Kiepper from Atlanta who put in the Atlanta rail system and had not convinced him to come down here, so I followed through with him and got Alan Kiepper to come down here and brought several of his folks from Atlanta. That had a lot to do with launching what I think of today as the success of the MTA, was getting that kind of management team down here which is anything you do, you’ve got to have proper management or it is not going to work.
MB: And what about funding in those early years of Metro? How did it develop?
DA: Of course, we had the penny sales tax but in trying to do the rail system and build up the bus system, there were certain funds, a lot of federal funds available and one of the first things I did was started going to Washington to meet with the subcommittee or the appropriations committee that handled transportation matters. We got to know all of them very well. I guess one of the things I was proudest of . . . not many people got Mickey Leland and Billy Archer to meet for lunch together.
MB: That would have been interesting.
DA: Well, it was interesting but here are two people on the opposite end of the political spectrum who realize what Houston needed and both worked together to get it. There is a certain senator, Rodney Ellis, who is very well-known in Houston today. He was not very well-known in those days. But he was Mickey’s AA. Rodney worked as hard as anybody to make that happen. At that time, we had John Tower and Lloyd Bentsen as our two senators. To have two leaders in the Senate and one on each side of the aisle sure made things a lot easier and they both worked hard to launch the funding which is still the big thing today with trying to get this light rail system built.
MB: You were instrumental in getting the first federal . . .
DA: We started the flow of federal money during that time. It was quite an accomplishment, I think, for the city to get Metro funded a lot better.
MB: And you also, in addition to being an attorney and doing so many things in your career, ended up going into the banking arena in many different respects. How did that happen?
DA: Well, I guess it was in 1982 when Jim Elkins, who was then the Chairman of First City National Bank, First City Bancorporation, asked me to please come down and help him. When the cracks first started appearing in the energy business, it culminated, of course, in the late 1980s. I had worked with the bank on various projects over the years. He asked me if I would come down and assume the presidency of the First City Bancorporation which in those days in the unit banking era, I think we had 52 banks around the state. So I agreed to do that. I was always interested in the business side of things. There were a lot of things I had done that had caused me to develop a lot of interest there outside of strictly the law practice. And so, in January 1983, I went down to the bank and later assumed the chairmanship of it. I guess my timing was not the best because I remember I had a half billion dollars of capital promised if we could get some approvals from the Fed and being in Washington one morning up there to go talk to the Fed ____ if you don’t put that half billion dollars up, which was a lot of money in those days, and watched them post headlines that morning with, “Oil Hits $8 A Barrel.” I said, what am I doing here? Needless to say, it did not work out and I think the history of the banking industry in Texas has been well chronicled.
MB: But then, you kept on going and helped some other banks and their issues.
DA: Well, after the FDIC took over First City, the Savings Association had gone public, a savings and loan, Farm & Home which was well-known in those days and they were having significant troubles, and I got asked to go in and see if I could right that ship. So, I led a recapitalization. I think we did it in the latter part of 1968, consummated that in 1969, and I really brought some of my old First City people back into it - people I had known here and had been in business in Missouri and Texas. You had a lot of Missouri money that was put into Texas real estate for the way it really worked but we got that all worked out and got them straightened out, and then sold it to what was then Roosevelt Savings in St. Louis. They thought we were doing such a good job, they needed us and they were willing to pay up for it, and when somebody wants to overpay, well, you can have it, as far as I am concerned.
MB: But you are a turnaround man.
DA: I did a lot of turnaround work both in the law firm as well as subsequent to that time.
MB: But then, you served also on the national level in Washington with the Federal Reserve . . .
DA: Well, that was part of my Farm & Home situation where there was a Thrift Advisory Council of the Federal Reserve. It was interesting going up there 4 times a year and spending a day with 7 members of that board who had really put you through it. Alan Greenspan was Chairman then. It was very interesting to sit up there and be grilled by him and his fellow governors for a day at a time 4 times a year. I thoroughly enjoyed that experience as well.
MB: And you served as President of that Council?
DA: Yes, I served as President.
MB: That is quite an honor.
DA: It was.
MB: You also had some private interests, too, that you were involved with in terms of businesses.
DA: Well, I have done a few things privately in my mortgage experience. I have done some with my old Farm & Home group, put together a company to finance real estate developers, developers of residential lots in the lower end of the housing field. And we have been doing that since 1994. We made over $1 billion worth of loans of that type just developing small developers. We are very proud of the fact that even though this real estate downturn, we are still making money. I do not think there is anybody in our particular type of business . . . there is probably not anybody left that we know . . . we do not have that much competition but there is not that much business today either. All the banks where we borrow a lot of money and do this are very leery but our banks have stood by. Those who are still alive have stood by us -- Citicorp and Wachovia and some of those, Franklin. Of course, we don’t have lines with them anymore because they got out of the business. But the local banks where we have done a lot of business still have complete confidence in us and they are supporting us, so we think we have done a good job there.
MB: Well, with all your experience and know-how, have you ever thought about entering politics over your decades of career and service?
DA: Yes, I have and I have decided that that is just not my thing. I have enjoyed my public service the way I have done it, it has been a big part of my life, but I do not think I want to run for political office and have the newspapers go back into my history that much. They might find out some things that I don’t remember!
DA: No, that has not been my thing but I have thought about it. In fact, I had a group on me to run for mayor years ago but that is not my . . . I have done things sort of behind the scenes more and enjoyed life from that standpoint.
MB: And along with this, you have had a great family. Can you tell us about your family _____?
DA: Well, if we have another couple of hours, I will do that. I am very fortunate. I married Beverly Bintliff in 1955. We have 3 children who I think have all turned out very well, and 7 grandchildren, 4 of whom are now college graduates and working and 3 still in school. I will say they have all turned out very well. When you have a record like that today with all the opportunities to do the wrong things there are in life for young kids, you’ve got to feel very fortunate that at least if they have been doing things they should not have done, I don’t know about it!
MB: Well, if you had a message to impart to people about your experience in life, what would you like to perhaps say?
DA: That you’ve got to put more back into your community than you can take from it. You can’t be a taker, you’ve got to be a giver. The biggest, I think, satisfactions or rewards – call it what you want – I have had in life have been to see some of these things I have done in the not-for-profit world where you don’t get paid a dollar a year but to see the good that can come out, the successes that can be achieved if you are willing to get in and get your hands dirty and getting the political process out of the way, which I have done, and give back to your community. Locally, state-wide, or nationally. I have done all of it in various ways from time to time. That is what I think has made our country great and what people can particularly . . . I mean, I preach that to the younger generation now that they’ve got to take up the mantle that some people ahead of us handed down to me and my generation. I used to give speeches on what people ahead of me used to do . . . Jesse Jones, Judge Elkins, George Brown who I was privileged to know – all that group handed on down to our generation and I think our generations have done a pretty good job of carrying on but there is another generation coming up that has got to pick up that mantle and give of themselves in public service and not just take from it.
MB: Well, you have certainly been a shining example both professionally and in your service career. We thank you and Houston thanks you. We thank you for this interview.
DA: You are very kind. It is my pleasure and privilege. Thank you.