by Gary Rivlin
“If we were going to survive,” Ronnie Burns said, “Alden was going to have to rebuild this thing brick by brick.”
“WHERE DO PEOPLE SLEEP?” Rhesa asked the first time her future husband had brought her around to meet his family. “On the walls?” She had grown up the only child of a prominent lawyer, the princess whose corner of the house included a private bathroom. The McDonalds, by contrast, were a family of seven living in a two-bedroom shotgun, and that didn’t include the set of grandparents who lived with the family throughout much of McDonald’s childhood or the stray his sisters occasionally brought home.
McDonald’s parents had the back bedroom. The other bedroom had a pair of bunk beds for him and his two brothers and a double bed for the grandparents. The two girls slept on a sofa bed in the living room and made room for a third when necessary. In a pinch, the small space between the living room and the first bedroom could fit a rollaway. Maybe the biggest challenge was managing with a single bathroom. “We came up hard,” said the middle brother, Byron.
Their father worked as a waiter at the Boston Club, a place so exclusive no sign was on its building, only an etched B on its frosted-glass door on Canal Street. At this whites-only redoubt, Alden McDonald Sr., thin, dark-skinned, and standing over six feet tall, worked his way up to headwaiter during a fifty-two-year career. Aaron McDonald, the baby of the family, described his father as “real smooth.” He worked lunch, the cocktail hour, and dinner at the Boston Club and often stayed late for private parties or to serve when Rex met there. On the weekends, he was usually Uptown working the parties of Boston Club members. “He was very highly regarded,” Alden McDonald said of his father, though hardly well compensated. This job never paid more than $15,000 a year, including tips, and never included health insurance or retirement benefits. If anyone in the family fell sick, he or she saw a doctor at Charity Hospital.
McDonald’s mother always worked. She was a short, stout, good-natured woman who devised any number of ways for bringing extra money into the house. She sold burial insurance to neighbors, most of whom paid by the week, and hired herself out as a kind of community taxi service. First in the family station wagon but then in the van she bought to accommodate more passengers, she carted old people needing to do errands and added extra pickups in the morning when taking her own children to school. She made and sold pickles and candy and, in the warmer months, sold a frozen, sugary concoction the kids called a huckabuck. The family never wanted for food, but had plenty of nights of “stewed wieners”—hot dogs and peas cooked in the same pot.
Everyone started working at an early age in the McDonald household. Two of their mother’s brothers were bricklayers who ran their own company. By ten or eleven years old, the boys were working “on the pile,” as Byron put it, cleaning and sorting bricks, mixing mortar, and dragging the cinder blocks they could not lift. By thirteen, they joined their father on weekends at the houses of the wealthy white people whose parties the senior McDonald worked. They’d make themselves handy doing yard work or mopping the kitchen floor or helping set up chairs for a party.
All the kids worked hard growing up, but none more so than the oldest son, who always seemed to be doing something to make extra money, whether collecting bottles and cans on the street or getting the siblings into car washing. One Christmas, a thirteen-year-old McDonald convinced his younger siblings that what they all wanted was a movie projector for Christmas—and then used it to get them into the movie business. He draped a white sheet over a clothesline he had set up in the empty lot next door and then charged kids a nickel entrance fee. It was the mid-1950s. A movie cost thirty-five cents a day to rent back then, but he’d pick it up on a Saturday because the rental shop was closed on Sundays and that way he got a free day. He also set up a concession stand to sell popcorn and lemonade. He split the take with his siblings, who, as part-owners of the projector, were his business partners. “He always took care of us that way,” Byron said. “He was a good older brother.”
McDonald wasn’t a brilliant student or a standout athlete. He had friends, but not so many or so few that people talked about it. Through his father’s Uptown connections, he entered a fancy Catholic prep school, but he didn’t study hard and they asked him to leave. He graduated from the local high school, where he continued to post average grades. “I was always more interested in making money than books,” McDonald said. He delivered prescriptions for a local drugstore and started a grass-cutting business. He took a job for a local electronics company selling batteries, flashlights, and transistor radios to area stores.
McDonald was from the Seventh Ward, a working-class enclave. His uncles had done well for themselves, so he figured he’d work as a bricklayer after graduating high school. At his parents’ behest, he gave college a try, matriculating first to Xavier and then to Loyola University, an Uptown institution next to Tulane. But college proved a repeat of his high school days. The pest-control company that he and a childhood friend had started consumed him more than books. After only a few semesters, he dropped out of Loyola and signed up to study accounting and other more practical skills at a local business trade school.
McDonald’s big break came courtesy of his father’s Uptown connections. The senior McDonald was working a party Uptown when he heard about the new bank a prominent family in town was starting, the International City Bank and Trust, or ICB. They talked about hiring a few promising young black employees, and the senior McDonald recommended his industrious firstborn. McDonald was twenty-three in 1966 when he and two other African-American men became the first three black bankers in New Orleans history. By twenty-six, McDonald had moved up from part-time bookkeeper to vice president.
McDonald routinely worked eighteen hours a day. Eventually, he was a free-floating manager sent to help fix any underperforming department. McDonald was a vice president but also a black man without portfolio or pedigree working in an almost all-white industry. Yet what might have been a fraught situation was made easier by the manner in which the bank’s president handled it. “He’d call a department head into his office and say, ‘Alden is being brought in to clean up. So whatever he tells you to do, you’ll do.’ ”
McDonald was twenty-nine when a group of black leaders started meeting to talk about establishing the city’s first minority-owned bank. They included Xavier president Norman Francis and Dutch Morial, a former state legislator then serving as a sitting judge, and also a powerful white state senator named Michael Hanley O’Keefe. O’Keefe had been a classmate of Francis’s in law school and helped them to secure a charter for their bank and to raise $2 million from a multiracial group of investors. “We couldn’t have done it on our own,” Francis said. And they couldn’t do it without the right person to run their start-up operation.
McDonald said no the first time Francis approached him about going to work for Liberty. He had only been in banking for around six years. He was not ready to leave ICB. Francis laid it on thicker the second time they met. New Orleans needed a bank where all felt welcome, whatever the color of their skin or the size of their bank account. The black community needed a bank to spread homeownership and build a more robust entrepreneurial class. “You can be part of history, Alden,” Francis told him. But again McDonald said no. He only said yes the third time because Francis didn’t give him any choice.
MCDONALD WASN’T A ONE-DIMENSIONAL career man. He was indefatigable and still had the energy to enjoy himself on Saturday night even when he had been at the office since early that morning. “I had the party house Uptown, but it was Alden who had the party house downtown,” said Bill Rouselle, a longtime friend. “You knew you were going late if Alden was putting on the party.” There’d be music and dancing and the alcohol flowed. Shortly after the two met, Rhesa attended one of these legendary parties—a birthday bash McDonald was throwing for himself. “I decided to bake him a cake,” she said. “When I arrived, I had to put mine next to the six birthday cakes that other ladies had made for him.”
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They had met at a fund-raiser being held for Rhesa’s father, then a crusading civil rights activist running for district court judge. McDonald, who was still working at ICB, confessed he was there to network. Rhesa Ortique was there because she was twenty-two and her mother pushed her single daughter into attending an event certain to draw at least a few bachelors. One of McDonald and Rhesa’s earliest conversations was about the new black-owned bank that people were asking him to run. “I think Alden was genuinely scared that he wasn’t ready,” Rhesa said. McDonald attended a part-time executive training program in Baton Rouge, on LSU’s campus. Two years later, he had earned a certificate from LSU’s Graduate School of Banking.
Rhesa had been a pioneer in her own right, albeit a reluctant one. In 1962, she had been looking forward to attending high school at Xavier Prep with the rest of her friends. But there was a price for being the only offspring of a crusading civil rights attorney who liked quoting Frederick Douglass’s famous line “If there is no struggle, there is no progress.” Her father and others were talking about integrating several of the town’s more exclusive all-white private schools. So Rhesa and two others were the first blacks to attend Uptown’s Ursuline Academy, an all-girls Catholic school that dated back to 1727. “Everyone was perfectly nice to me there, but I never felt that it was my school,” Rhesa said. After Ursuline, she would earn a degree at Xavier University of Louisiana. She had just started teaching for the Orleans Parish school district when she met McDonald. The couple would marry two years after they met.
MOON LANDRIEU, THE CITY’S new, liberal mayor, attended Liberty’s grand opening in 1972. A stage was set up next to the trailer on Tulane Avenue a few minutes from the central business district. That was the bank’s first branch and where McDonald had set up his office. Landrieu addressed the crowd, as did McDonald and Norman Francis. A torch was lit that has been a fixture of the Liberty logo from the beginning. “This bank represents freedom of our community,” McDonald said. “A light shining the way for a better New Orleans.” They would accelerate black homeownership, speakers said, and provide the essential seed funding to would-be shopkeepers, restaurant owners, and other entrepreneurs in the black community. “We were starting to attain political power,” McDonald said, “but not economic power.” Two thousand people opened accounts that first day.
Liberty’s early days were about survival. “I think of the racism still going on then,” said Ronnie Burns, who was one of McDonald’s first half-dozen hires. “I think of the odds against any small business.” Back then Burns was the one-person accounting department, “but also janitor, courier, and the man who turned the lights on in the morning.” Like everyone else, McDonald grabbed a broom if he saw a mess on the floor or picked up a phone if it was ringing.
With only $2 million in start-up cash, mortgages would have to wait, as would commercial loans. Instead McDonald started where he knew the need was great: fairly priced consumer loans for such items as refrigerators, bedroom sets, and home repairs. A lack of banks in the black neighborhoods gave rise to so-called hard moneylenders such as Household Finance and Beneficial that charged annual interest rates of 20 percent or more for loans that McDonald knew would be profitable at less than half that. His customers paid closer to 6 percent. “We saw ourselves as offering financial freedom in the black community,” McDonald said. His parents never had much money, but they had faithfully met their financial obligations and so had their neighbors. “Credit score has always been on the bottom of the list for us,” McDonald said. “We want to hear that person’s story and judge eye to eye if we think they’re going to pay us back.”
That’s not to say McDonald was anyone’s soft touch. Once a week, the staff stayed late to work on delinquent accounts. Each staffer was given the same lesson from the young bank president. See if someone will work with you. “Even if someone is willing to pay you just ten dollars or twenty dollars a month, that shows a commitment,” he counseled. But the flip side of that was no sympathy for anyone unwilling to agree to a payment plan. “Growing up poor, Alden knew what giving someone a break could mean, but he wasn’t going to let anyone step all over him,” Ronnie Burns said.
The banker who didn’t like being taken advantage of was on display late one evening when a man owing the bank money on a car told McDonald he had no intention of paying what he owed and then hung up the phone. McDonald had his people call the New Orleans cop they kept on retainer for repossessions and then rode shotgun in search of the car. “It’s like midnight when we find it,” Burns said. The off-duty cop jumped out of the car brandishing a shotgun while another Liberty employee jimmied his way into the car. “I’d go along just to make sure no one does something stupid,” McDonald said, but Burns wondered if it wasn’t also for a bit of justice. “Alden worked hard each and every day, and he expected the people we did business with to do the same,” Burns said.
It took two years to move out of the trailer and into a permanent building. At the same time, Liberty opened a second branch in nearby Gentilly, another predominantly black community. “With Alden it was all about perseverance,” said Bill Rouselle. McDonald’s old friend from the days when they had competing party houses had become the city’s first on-air black television reporter in 1968 before cofounding a marketing company two decades later. McDonald was a natural at marketing, Rouselle said, but it was his “Eveready bunny” personality that was the difference. “He just kept pushing, pushing, pushing. And when there were obstacles in his way, he kept moving and eventually he got there.” One clever PR gimmick that won the bank attention was what McDonald called “five minutes with the president”: anyone thinking he or she had unfairly been turned down for a loan could take the case to McDonald.
Most new banks lose money for a few years before they start to make money. Liberty was profitable from year one. “In the early years, Alden would scare me sometimes, but he understood the need for us to take risks more than I did,” Norman Francis said. “Not willy-nilly risks, but the risks that would let the bank serve its core function helping the black community grow.” Six years after it opened its door, in 1978, Dutch Morial, one of the Liberty’s founders, was elected mayor. Soon the City Council majority shifted from white to black. “Liberty would become this test of black consciousness in the community,” said Jacques Morial, who was ten when he opened a savings account at his father’s new bank using the $20 he had earned working the opening-day festivities. The bank opened a third and then a fourth branch.
Liberty was able to start offering mortgages shortly before its tenth year. It helped that the competition was guilty of redlining—the practice of withholding loans to minority communities—in a robust economy. Oil prices spiked from under $10 a barrel in 1974 to more than $40 a barrel in 1980, and the same gushers that made the city of Dallas a perfect locale for a nighttime soap opera about avarice and lust had a big impact on New Orleans as well. The area’s refineries and the offshore oil rigs meant opportunities for the ambitious Uptown blue blood looking to extend the family fortune (Jimmy Reiss, for instance, who made tens of millions of dollars selling them supplies and technology), but it also meant good-paying blue-collar jobs. Liberty also started offering college loans. Again credit score would prove only a small factor when evaluating someone’s risk portfolio.
Liberty also started making business loans. The city’s main newspaper, the Times-Picayune, dubbed chef Leah Chase, the co-owner of Dooky Chase’s, “the Queen of Creole.” Since first opening its doors in the 1940s, Dooky’s was the only white-tablecloth establishment that served black customers. When it needed money in the 1980s to expand, Liberty loaned Chase and her husband, Dooky Jr., $120,000. “Before Alden McDonald, it was hard to even get a conversation with a banker,” Leah Chase said. Liberty bankrolled other promising restaurateurs and also a former Pizza Hut executive who grew a chain of forty franchises in the area, creating hundreds of jobs.
Oil prices crashed in the mid-1980s. Crude had dropped to $14 a barr
el in 1986, and remained in the teens or low twenties for a decade. People lost jobs, hours were slashed, the price of real estate plummeted. Liberty posted its first loss in 1987, then its second and third in 1988 and 1989. No local bank turned a profit during those three years, but unlike several others, Liberty stayed open. To save money, the bank organized systems to make sure the paper clip used at the front end of a process would be reclaimed in a box at the end. The bank went more than a year without spending a dime on rubber bands courtesy of a retired postal worker who told McDonald he could get as many as the bank needed from his old place of work. Liberty didn’t lay off a single employee. “We were well seasoned in survival by the time Katrina hit,” McDonald said.
The downturn caused heartache but also opportunity. Liberty had helped plenty of young professionals buy homes for $150,000 or $200,000 in burgeoning middle-class black neighborhoods, but McDonald thought of people like his parents who’d worked hard their whole lives but never had a chance at homeownership. The drop in oil prices meant that a wider range of the population could afford the monthly payment on a house. Liberty created a loan that could be had for a down payment as low as 3 percent. That way McDonald could underwrite plenty of mortgages for homes costing $50,000 to $70,000 in working-class enclaves such as the Seventh Ward. The program proved successful enough that Fannie Mae, the government-backed mortgage giant, flew McDonald to Washington so its people could learn more.
In the 1990s, the bank opened a branch in Uptown, on Magazine Street, and another across the river on the West Bank. It expanded to Baton Rouge and Jackson, Mississippi, and moved its operations to a larger space in New Orleans East. Liberty put up the money when a group of African-American doctors proposed a multistory professional building in New Orleans East. It funded small shopping centers and other sizable projects. The bank’s original $2 million investment turned into $20 million, turned into $200 million. Liberty had $350 million in assets by the time of Katrina.