Rising From The Ashes Of L.A.

When his father called at 3 a.m. the morning after the fateful Rodney King verdicts, a groggy Paul Hudson simply couldn't absorb the news: The headquarters of his family's 45-year-old savings and loan association in South Central Los Angeles was in flames, and the blaze set by rioters had already consumed most of the building. "My initial reaction was that he was overstating the case," Hudson recalls. "I couldn't believe we'd been looted, much less burned." Not until the next day did he see for himself the smoldering rubble and tangled metal where Broadway Federal Savings & Loan had once stood.

For Hudson, Broadway's 44-year-old chief executive, it seemed inconceivable that his family's thrift would get caught in the fury that swept through Los Angeles that night. After all, black-run Broadway Federal was a South Central landmark, started in 1947 by Paul's activist grandfather, H. Claude Hudson, specifically to lend money to working-class and poor customers. Broadway was the only lender for miles around. Its second-floor community room was a meeting place for dozens of neighborhood organizations. For 15 years, Hudson had kept his office there, continuing a tradition of personal contact with South Central residents.

"I still don't know why they burned us," he says. But as far as he's concerned, that's not the point. As the Hudson family regroups--at turns sad, angry, and bewildered by their loss--they blame the nation's festering social ills for the turmoil, not the largely hard-working, law-abiding community they see every day. While Hudson admits he "misread the rage," the eruption has recharged his interest in helping South Central save itself. "It's important we send the message that this is a good place to do business," he says. "There was never any question we'd rebuild on this site."

TRADITION. Hudson, who took over from his father, Elbert, as Broadway's CEO in March, certainly has the choice. As the third-generation scion of an upper-middle-class banking family, he's blessed with resources most blacks in America don't have. Hudson grew up in a stable Los Angeles neighborhood and attended the University of California at Berkeley before moving mn to law school at Berkeley's prestigious Boalt Hall. As a rookie attorney, he worked in Washington for Wilmer, Cutler & Pickering before ultimately heeding the call of his family's business.

The pull was tradition. Broadway founder Claude Hudson was a community activist long before he was a banker. A dentist by trade when he moved to Los Angeles in 1923 from Shreveport, La., he quickly became active in the local chapter of the National Association for the Advancement of Colored People. As chapter president, he spearheaded an action to integrate the beaches of Los Angeles and led a movement whose credo was: "Don't buy where you can't work." When it became clear that his neighbors couldn't get home loans from white-owned banks after World War II, he organized a group of investors to launch Broadway Savings. To this day, black Angelenos remember Claude Hudson as "Mr. NAACP." He served on the national board until his death in 1989.

Claude Hudson, who lived to be 102, wasn't the family's only luminary. Paul's other grandfather, and one of Claude's investors, was Paul Williams, a black architect whose designs include the Beverly Hills Hotel and the homes of several Hollywood stars. Elbert Hudson, Paul's father, is an attorney who ran the thrift for 20 years while serving on former Los Angeles Mayor Sam Yorty's police commission. Paul's sister, Karen, who looks after Broadway's large collection of paintings by black artists while managing the thrift's outreach programs, recently completed a book about her architect grandfather. It will be published soon by famed art-book imprint Rizzoli International Publications Inc.

From the beginning, Broadway's mission was to foster community economic stability by lending to black homeowners. And these days, residential mortgages still account for the bulk of the $69 million in loans made by the thrift's three branches. Deposits, too, come largely through small savings accounts held by working-class neighbors. The one big difference between Paul's bank and the bank of his grandfather is that a growing portion of Broadway's loans today are made to Latinos, mirroring Los Angeles' shifting inner-city mix.

Broadway, which has a mere $94 million in assets, sets lending rates about 1/4 to 1/2 point higher than those at larger banks--reflecting both the higher risk and the smaller size of the average loan. Because he understands his customers' habits, though, Hudson will often O.K. loans other banks shun. "They may be late eight times out of 12 months with their payments," he says. "But they will always make those payments."

Loans are sometimes given to a person who, while a good credit risk, may be in a tough situation. Hudson recently approved a home-equity loan, for instance, to postal worker Patricia Joseph, whose husband Curtis was laid off after 23 years on the job. The Josephs wanted to consolidate their credit-card debt and do some home improvements. "I have always made my credit-card payments on time," she says. "But I don't think the big bank even looked at my credit report, which is A-1." Says Curtis Joseph: "Everything the rioters did was stupid, but I was shocked that people would do something as stupid as burn down Broadway Federal."

As an S&L, Broadway can't offer a full range of business services, but some executives have switched over anyway. "You need a banker, not a bank," says Virgil Roberts, president of Hollywood's SOLAR Records, an independent, black-owned record company. "We were with a major bank for six years and would often receive substantial sums of money from distributors. The branch manager said it looked like we might be involved with drugs. If I'd been white with a six-figure balance, he would have been trying to make me a loan."

To Roberts, Hudson embodies the type of involvement too often absent among the black middle and upper classes. "If we had more educated Afro-Americans who had the commitment that Paul Hudson has, many of the ills of the black community would have been solved," he insists. Commitment definitely has its price. In Washington, Hudson would easily be pulling down big bucks. At Broadway, he earns $76,800.

Of course, not everybody in the black community loves the Hudsons. Some complain that their wealth has been extracted from the neighborhood. Others feel Broadway is as much a part of the Establishment as any other financial institution. Resentment can run deep. As Hudson drove into South Central the day after Broadway's headquarters was burned, the devastation shocked him. But he also noticed that on his street, Broadway was the only building that was torched. "There were Latinos and whites in the streets, as well as blacks," he says, "and our bank got hit just like Korean-owned and white-owned businesses. The argument could be made that there is racism, but maybe the problem is one of class. There is too big a gap, and too many have-nots."

NO BULLHORNS. Rebuilding will be made easier because the structure--along with the one beside it that housed the main field office of U.S. Representative Maxine Waters--was insured for a total of more than $2.2 million. No cash was lost except what few dollars employees had left in their personal desk drawers. While the fire left the main-floor vault perched crazily atop the basement vault, both were recovered intact.

If only rebuilding South Central were so simple. The riots reinforced Hudson's belief that community self-sufficiency is essential to saving the inner cities. "It's not realistic to be dependent on government programs and the social-consciousness whims of people from the outside," he says. Washington is mercurial at best when it comes to helping minorities--and only when it serves political aims. That's why Hudson wants to redouble efforts to expand Broadway's branch system while boosting its neighborhood loan activity. "If a bank is in the community and doing well," he says, "maybe an investor will figure it's safe to put up a grocery store next to it."

Hudson's ability to forgive his community is based on his sense that the riot was nothing less than a form of spontaneous combustion--a reaction to years of frustration. "It was a destructive kind of Mardi Gras, violent and horrifying," he says. "There were a lot of people in the street. Jesse Jackson didn't get them there. Louis Farrakhan didn't. There was nobody going around with a bullhorn. Not just in one neighborhood, but all over Los Angeles, people took the Rodney King decision as a clear signal that the system does not work."

Hudson's hope is that the riots prompt business leaders nationwide to reconsider strategies that export jobs and ignore the plight of America's inner cities. "If we are dictated to by short-range concerns and objectives," he reflects, "then I think there are certain consequences, one of which is civil disturbance. If people want to line their pockets today, then they'll have to worry whether their children are safe on the streets tomorrow."

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