Skip to content
Link copied to clipboard

+ Charles M. Cawley, 1940-2015

MBNA's intense boss deserves to be remembered

Charles Michael Cawley was the old-fashioned kind of corporate boss who used his power as if he cared about making an impact on people and the world around him, alongside the usual CEO responsibility to make himself and his shareholders rich; he did that, too.

Cawley, 75, was buried Nov. 21 from a Catholic church in Camden, Maine, the seaside former factory town where he'd spent summers as a kid, and where he had made his giant credit card bank, MBNA America, the region's dominant economic and social force, for a time. Maine was a sideshow to Cawley's larger enterprise; he based MBNA in Delaware, a banker's tax haven, pre-conditioned by the du Pont dynasty to eras of rapid job creation, corporate paternalism and well-polished surfaces, which Cawley delivered as if picking up the slack from "Uncle Dupie's" long decline from the time he moved there in 1981.

He deserves a place alongside John H. Patterson (of NCR), Tom Watson (IBM), AP Giannini (Bank of America) and even Steve Jobs of Apple in the Pantheon of full-throated (Charlie was a baritone, partial to Irish-American standards) practicioners of American corporate sales culture and fortune-building; though he's not likely to rest there, for reasons I'll get to.

Reviving Camden -- turning vacant textile plants into light-flooded call centers, drafting hungry local tradesmen at premium wages, half-inspiring and half-terrifying new college grads to believe they were gifted managers, annoying oldtime summer people with his big new house and his fast loud boat, fabulously patronizing neighborhood cultural, educational and gustatory institutions -- was a typical Cawley project.

The Jesuit-educated son of a hard-driving Beneficial Finance manager who died young, Cawley was a grandiose, blunt, emotional, relentlessly demanding and giving, maniacally focused boss who saw himself as a leader of leaders. "You 'train' horses; we educate men and women," he liked to say.

Cawley pioneered the trick of marketing credit cards to colleges (starting with his alma mater, Georgetown University) and professional groups (starting with the nation's neglected dentists, advancing to the NFL, National Education Association and thousands more) for a cut of the fees (he paid Penn State's alumni association more than $30 million for its annual mailing lists, with football coach Joe Paterno getting a cut.)

He took a commodity -- Visa and MasterCard consumer credit -- and differentiated it into thousands of premium-priced brands, deploying live staff to do credit approvals and other jobs that were digitized or contracted out by streamlined rivals like Richard Vague's First USA Bank (now part of JPMorgan Chase).

While hiring classroom-loads of graduates from the University of Delaware and other state and Catholic colleges (MBNA eventually employed more than 10,000 in its home state, 30,000 nationwide), Cawley built whole office parks culminating in a quarter of downtown Wilmington, trimmed his signature Kelly green, with flattering incandescent lights in the women's rooms because Cawley believed the twentysomething women who predominated in his workforce would hurry back to the job if they saw they looked good.

He changed the landscape in other ways: built bridges and moved roads to accomodate MBNA facilities; pushed his armies of lieutenants to buy upscale homes, cars and clothes; set up programs employing the disabled; incidentally subsidized public school enrichment programs, Catholic and private school tuitions, hunger programs and art museums.

He also dispatched lobbyists and directed cash donations that, through Delaware's small but influential congressional delegation, including then-Sen. Joe Biden, blocked American credit card debtors from federal bankruptcy protection. Which, some economists tell us, helped make the 2008 recession that much more severe.

Cawley's sponsorship of a poor New Jersey kid, who he helped launch to Yale, only to see the boy killed in a drug deal, is recounted in the recent book The Short and Tragic Life of Robert Peace.

No less intense and longer-lasting is the mark Cawley left on people like Cindy Mann, now principal of Padua Academy in Wilmington: "When Charlie offered me a position, I asked one thing of him - to teach me how to think like him. I wanted to learn how to think big - to think strategically and to communicate vision" and excite others to hard effective labor, she told me.

Working her way through MBNA banking departments (Cawley liked to move managers from Facilities to Credit to "Customer Satisfaction"), Mann rose to head the MBNA Foundation. When the bank was sold she applied what Cawley taught her to a new career as a school principal, eventually heading the all-girls prep, which under Mann's leadership enjoys a waiting list.

"Charlie changed my way of thinking," Mann says. "The lessons -- about service, leadership, courage, treatment of people... teaching (me) to think, to vision, to move with courage and conviction... without excuses or words like 'can't'," guide Mann's daily labors, she insists, and are being imprinted by her on the nearly 200 girls Padua graduates annually (my daughter is a student there.)

As a reporter at the Wilmington News Journal 20 years ago, I chased Cawley until he caught me. When he ignored my queries about the mountain of debt propelling MBNA growth, I visited New York bank analysts and quoted their trenchant initial crticisms, then wrote items that annoyed Cawley to the point where he barred our paper from its newsstands (yes, MBNA had newsstands; also an in-house law firm, ad agency, gardening service, daycare centers, restaurant chain and security force, each as big as any in the state).

And then, two days before scheduled publication of a three-day series chronicling MBNA's rise that I'd lead-written without the company's cooperation, I was summoned (I had to stop at Jamesway to buy a tie along the way) to Cawley's office for a four-hour interview with the silver-haired red-faced boss and three of his top aides.

At MBNA headquarters in Ogletown, Del. (later moved to downtown Wilmington), MBNA walls were painted with Cawley-isms: "ATTENTION TO DETAIL DRIVES EVERYTHING WE DO"; "THINK OF YOURSELF AS A CUSTOMER."

He showed he meant it by trashing picture frames or sheets of wallboard that weren't plumb, yelling himself red at subordinates (some were "fired," then rehired at day's end), imposing a passion for order on landscapers and tradesmen that meant tearing apart even a competent new-finished job Cawley decided needed changing, and doing it over, sink the cost.

He was similarly declamatory in interviews: "Financial products are sold, not bought" explained the company's apparent marketing excesses (how many antique cars do you need to sell to auto collector groups?)

Asked about the board of insiders that approved his stock and cash compensation of up to $50 million a year, Cawley intoned, "If you remain in your line of work long enough, Mr. DiStefano, you may come to understand that corporate boards are always composed of insiders, even if the personal connections are not apparent to you from official resumes."

Cawley was unapologetic that his empire's most profitable subjects were digging themselves into debt. Surely, he reasoned, specialized MBNA was a better, more careful, more reasonable creditor than loan sharks, high-rate finance companies or strictly-by-the-numbers banking conglomerates?

It was an enterprise founded on optimism. MBNA assumed its borrowers, even as they spent more, were also graduating to better jobs, higher incomes, bigger homes; when they paid down their credit lines the bank would be there to pick up their their second mortgages and home-equity lines of credit (though an experiment with mutual funds was quashed on fears that periodic market declines would hurt the company's brand association with personal success.)

Cawley's high-gloss approach echoed that of American Express Co., which convinced millions of Americans to pay hundreds of dollars in annual fees for pure snob appeal.

But while AmEx was blue-chip and high-cost, with its glass-and-stone headquarters towering over downtown Manhattan, MBNA was an expression of middle America mobilizing the old virtues -- self-discipline, long hours and well-knotted ties -- to out-compete less-committed outfits.

The company typically sited its offices far from high-rent districts: near Cleveland (chairman Al Lerner's home), in Maine, in Chester, England, and at a Texas IT center, where the company's tech chief told me Cawley had sent him a message to spend more time by changing the Brandywine School prints outside the man's Delaware office for cow skulls and other Western scenes.

MBNA plowed its strategic savings into marketing -- and rewarding loyalists. Besides being labor-intensive, the company was generous with bonuses and executive stock options (Cawley collected over $300 million in his last 10 years on the job); the shareholders were similarly enriched. To fund its growth, MBNA pioneered credit card derivative bonds.

Cawley's mission as he saw it included injecting care and discipline that had gone missing back into corporate America. At MBNA you didn't dress casual, you didn't let phones ring more than twice, you demanded answers and action from subordinates and provided them to bosses.

Cawley wasn't MBNA's solo operator but a co-founder, with Alfred Lerner, the Cleveland-bred Marine pilot turned furniture salesman, financier and Wall Street pal of Bear Stearns boss Ace Greenberg. Lerner astutely helped himself to a billionaire's controlling share of Cawley's company -- and closed lucrative inside deals with other companies he controlled -- as the price of helping Cawley extract MBNA from declining Maryland National Bank and take it public in 1991.

Freed of slow-moving bank-bureaucrat bosses, Cawley boosted his company to the front of the fast-growing card business through the 1990s. The company took on royal trappings: it owned jets and helicopters, lifesize wild-animal bronzes, those antique autos (a Duesenberg in the lobby!) that complemented Cawley's personal collection.

It couldn't last; after Lerner died in 2002, and credit card growth slowed, the Lerner appointees on the MBNA board limited Cawley's stock options and demanded he repay the company for personal trips in MBNA's air force and his home security systems (the Cawleys split their time between mansions in Maine, Delaware and Florida).

Cawley stepped down in 2003; two years later Bank of America bought the company for $35 billion and was soon laying off thousands, ending the extra-pay for extra-work management standard and undoing most things that made MBNA distinctive under Cawley. The nation's largest bank, BofA valued Cawley's customer list and loan portfolio but let his growth machine go.

Though he didn't much like being interpreted, Cawley loved to tell his story; but Lerner resisted cover-boy treatment for anyone at the company -- some Cawley partisans claimed the chairman didn't want too much scrutiny of the company's high-finance practices.

So MBNA was mostly absent from the fawning financial press of its 1990s boom years, its considerable charitable support was mostly spent in provinces far from high-visibility New York or Washington, and its leaders remained obscure even to the average card-wielding MBNA Customer (a word Cawley always capitalized). And so when the time came, Cawley's company vanished from the scene, like so many old brands in the landfill of business history.

Even in Delaware, Cawley and his company have been quickly forgotten by the general public. At the University of Delaware (where the job center used to be named for MBNA), my sons' finance professor in 2012 said they were the only students  who had a clue what MBNA was, even though the business school they all attended was named for the late MBNA Chairman Lerner (in his day he had owned NFL franchises in Baltimore and Cleveland, but by then students didn't remember him, either.)

There are still Cawley-funded charities, and he may yet get his marker, hall or street namesake, like a local politician. But this is a lesson Cawley and MBNA taught me: American companies, even very significant ones, can be ignored by the mainstream and financial press for years if they don't want to be written about and avoid making extra-ugly mistakes.

And this corollary: Even the most dominant, wealthy, significant-looking corporations are more ephemeral than a small town -- or a single life. Expensive reputations can vanish as quickly as the digital shadow of share assignments in a takeover deal.

If there's a legacy more persistent than credit card debt, beyond Cawley's widow, doctor son, banker daughter and grandchildren, it will be through the many people Cawley's enterprise infused with faith in themselves and elevated to new responsiblity, such as principal Mann, and her students beyond.