“Tom” Clausen a Legacy of Lead

Oral History Center University of California The Bancroft Library Berkeley, California A. W. “Tom” Clausen A Legacy of Leadership: CEO of Bank of America and President of the World Bank Interviews conducted by Germaine LaBerge in 1996 Copyright © 2015 by The Regents of the University of California ii Since 1954 the Oral History Center of the Bancroft Library, formerly the Regional Oral History Office, has been interviewing leading participants in or well-placed witnesses to major events in the development of Northern California, the West, and the nation. Oral History is a method of collecting historical information through tape-recorded interviews between a narrator with firsthand knowledge of historically significant events and a well-informed interviewer, with the goal of preserving substantive additions to the historical record. The tape recording is transcribed, lightly edited for continuity and clarity, and reviewed by the interviewee. The corrected manuscript is bound with photographs and illustrative materials and placed in The Bancroft Library at the University of California, Berkeley, and in other research collections for scholarly use. Because it is primary material, oral history is not intended to present the final, verified, or complete narrative of events. It is a spoken account, offered by the interviewee in response to questioning, and as such it is reflective, partisan, deeply involved, and irreplaceable. ********************************* All uses of this manuscript are covered by a legal agreement between The Regents of the University of California and A. W. “Tom” Clausen dated June 17, 1996. The manuscript is thereby made available for research purposes. All literary rights in the manuscript, including the right to publish, are reserved to The Bancroft Library of the University of California, Berkeley. Excerpts up to 1000 words from this interview may be quoted for publication without seeking permission as long as the use is non-commercial and properly cited. Requests for permission to quote for publication should be addressed to The Bancroft Library, Head of Public Services, Mail Code 6000, University of California, Berkeley, 94720-6000, and should follow instructions available online at http://bancroft.berkeley.edu/ROHO/collections/cite.html It is recommended that this oral history be cited as follows: A. W. “Tom” Clausen “A. W. “Tom” Clausen: A Legacy of Leadership: CEO of Bank of America and President of the World Bank” conducted by Germaine LaBerge in 1996, Oral History Center of the Bancroft Library, The Bancroft Library, University of California, Berkeley, 2015. iii A. W. “Tom” Clausen in the 1970s iv A. W. “Tom” Clausen was born a Midwesterner and moved to California in 1949 where he began his Bank of America career at the Los Angeles Main Branch while studying for the California Bar Exam. He went on to lead Bank of America from 1970 to 1981 and again from 1986 to 1990. From 1981 to 1986 he was president of the World Bank. Mr. Clausen was a graduate of Carthage College, and served in the U.S. Army Air Corps during World War II. He passed away in 2013. v Table of Contents — A. W. Clausen Introduction by Barbara Desoer ix Interview History by Germaine LaBerge xiii I. Family Background, Childhood, and Education 1 Mother, Elsie Emma Kroll — Norwegian Roots of Father, Morton Clausen — Father Emigrates to the United States — Relatives Come from Norway to Hamilton — Early Hamilton Industry — Barter in Hamilton — Learning to Care for the Poor — First Job: Picking Strawberries — Working on Father’s Newspaper — Getting the Nickname “Tom” — Childhood Mischief — Church Life — Father was a Respected Leader — Memories of School Life — Favorite Subjects in School II. The War Years: Carthage College of the Army Air Corps, 1940-1946 22 Graduating from High School and Going on to College — The EX Club and Cultural Experiences — Love of Books — Choosing Carthage College — Working at the Bowen Newspaper — Dating at Carthage — Reaction to World War II on Carthage College Campus — Into the Service — Chanute Field, Urbana, Illinois — Reaction to the End of the War, 1945 — Assignment to the 53rd Weather Reconnaissance Squadron, 1945 — Hunting for Weather and Playing Bridge in the Azores — Parents Separate III. Law School at the University of Minnesota, Moving to California, and Joining Bank of America, 1946-1955 37 Going to Law School — Working During Law School — Telling Mother about Meeting Peggy Crassweller — Applying for a Job at Security Pacific Bank — Robert Van Buskirk and First Bank of America Job — Dating Peggy Crassweller — Quitting Job at Bank of America — California was a Tough Bar Exam — More on Tom’s Mother — Assigned to the International Office with Francis Herwood — At the Lincoln Heights Branch for Two Years — Buying the First House — Teaching at the American Institute of Banking (AIB) — Working at the West Glendale Branch #433, 1952 — On the Junior Advisory Council, 1955-1956 — Junior Advisory Council: Length of Service — The Junior Advisory Council Ends — Employees as Shareholders — Joins Loan Supervision Department, Category Section — First Assignment in the Category Section — Dinner with Herwoods to Meet Peggy — Noticing Employees with Potential — Being Willing to Say “I Don’t Know” — Tom’s Mentors at the Bank — Peggy’s Help re Being Shy; Peggy’s Condition — Asked to Set Up and Electronics Group — Two Boys — “You Don’t Have to Chop People Down” — Executive Training Class — Teledyne IV. Ascending the Corporate Ranks at Bank of America, 1956-1970 79 Tapped to Head Corporate Finance in the North — Missing the Los Angeles Home — Lloyd Mazzera as a Mentor — Corporate Finance in the North — Harry Cordere; Philosophy on Professional Psychologists — Ichak Adizes — Harvard Advanced vi Management Program — Benefits of Attending the Harvard Advanced Management Program — Role in the Living Quarters — Gaining a New Focus on Human Resources — The Value of Planning — Sending Other Bank Officers Through Harvard’s Program — Recruited for Presidency of the First National Bank of Minneapolis V. President of Bank of America, 1970-1981 90 Candidates for the Job of President of Bank of America — Looking Back on Selection as President of Bank of America — First Priorities as CEO — Internal Communications — Engaging Senior Managers’ Participation — Bob McNamara’s Style — Rudy Peterson’s Style — The Multinational Division is Created — Improving the Wholesale Organization — Applying the Collegial Approach — Improving Communication at Senior Management Retreats — Isla Vista and Social Policy — Chairman Louis Lundborg Speaks Out on the Vietnam War — Ethics in Corporate Management — Meeting with Youth — The Wells Case on Discrimination Against Women — Dick Rosenberg Developed His People — Political Pressure on Banks — The San Francisco Clearing House Association — General Draper Asks to Increase Contribution to UNFPA — Keeping Up with the Times — The Origins of Transfer Pricing at Bank of America — Bringing the Profit Accounting System to Life — The Value of Committees in the Bank — Corporate Codes — The Voluntary Disclosure Code — Corporate Code of Conduct — Given a Lot of Thought to Ethics — Qualities of a Good Senior Manager and CEO — — A CEO Needs a Good Head of Personnel — The CEO’s Need for Someone to Talk to — Success Depends on Right Decisions About People — Instituted Collegial Approach at the World Bank — On Joe Carrera — Al Rice as Possible Successor — The Challenge of Keeping Good People — Stock Options and Restricted Stock — Pressure of Cronyism on a CEO — Mr. Clausen’s United Way Planning Experience — Line and Staff — Line and Staff Units — Effects of the Arab Oil Crisis, 1970s — Oil Money in Bank of American and Slowing Growth — Security After Patty Hearst Kidnapping — An Intruder at the Clausen Home — Personal Dislike of Traveling with Security — Jimmy Carter Extends Invitation to Join His Team, 1976 — Speech in Nairobi Drew Attention — Invitation to Meet With President-Elect Carter in Plains, Georgia — Traveling to Plains, Georgia — Miss Lillian’s Pond House — Responding to the President-Elect’s Request — Willingness to Help the Carter Administration — President Carter Changes U.S. Financial Leaders — President Carter Offers Mr. Clausen the Role of Chairman of the Federal Reserve — Reasons for Saying “No” — The Mentor System and Development — Executive Exchange Program — Background to Mr. Clausen Leaving Bank of America — Trust and Making the Transition from “Doer” to CEO — Thoughts on Succession Planning — Promoting One Spouse — Context of Going to the World Bank — Speaking with the Vice President About the World Bank Position — First U.S- Japan Wiseman's Council — Assessment of President Carter — Being a Republican and Working with a Democratic President — On Being a Diabetic — Playing to One’s Strengths — Could Mr. Clausen Have Avoided Bank of America’s Troubles in the 1980s? vii VI. President of the World Bank, 1981-1986 178 Ibrahim Shihata — Beryl Sprinkle and the U.S. Treasury Department — Counseling Shihata — Rebuilding Working Relationships with Arab Countries — Shihata Brings MIGA to Life — Increasing Country Representation on Management Team — World Bank Structure and Shareholders — Concern for Sub-Saharan Africa — Management Committee of the World Bank — Secretary of the Treasury Donald Regan and Hungary — Candid Advice from James Burnham, U.S. Executive Director — Looking for a New Chief Economist — Anne Krueger — Treasury is Upset Again — The Issue of Filling a Senior Position — Moeen Qureshi —

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