In TV ads, Republican gubernatorial candidate Dave Spence recounts how "bank after bank turned me down for a loan to start my business" as a young entrepreneur. Eventually, he got a loan - and built a successful plastic bottling company.
Two decades later, the tables had turned. Spence had joined the board of directors of a St. Louis area bank, where he had no trouble getting about a dozen loans to purchase and renovate commercial buildings and homes - even after the bank received a $40 million bailout from the federal government.
With every move Spence makes in Missouri's 2012 governor's race, Democrats have countered by highlighting his connections to Reliance Bancshares Inc., which has yet to repay a penny of its federal money. Democrats contend Spence personally gained from his position on the bank. And they say the bailout runs contrary to Spence's campaign pledge to improve Missouri's economy by reducing government intrusion in business - calling into question why voters should choose him either in a Republican primary or against Democratic Gov. Jay Nixon.
Spence says his banking tenure actually cost him financially, drained him physically, took time away from his family and sometimes left him quite frustrated. If it now is a political liability, that's only because his opponents are ignoring the extent to which he tried to help out the financially strapped bank before finally resigning in March 2011 - eight months before he entered the governor's race as a self-financed, political newcomer.
"I can look in the mirror at the end of the day knowing I did nothing wrong," Spence told The Associated Press. "I played by the rules. I didn't like the outcome, and I
suffered personally for it. But I did nothing wrong."
Spence already was a self-made businessman - the owner of Alpha Packaging, which manufactures plastic bottles for pharmaceuticals and personal care products - when a friend who was the chief lending officer at Reliance Bank encouraged him to buy stock in the Frontenac-based company. He bought 88,000 shares, which Spence said gave him an ownership stake of 0.4 percent.
Soon Spence's involvement in the bank grew. He joined the board of directors of Reliance Bank in May 2005 and immediately took out a $7.9 million mortgage for the headquarters of Alpha Packaging. More loans followed in subsequent years. He borrowed money to buy and renovate a building in Earth City that he rents to another business. He also took out loans on a house for his sister-in-law and a condominium for his mother.
On Feb. 13, 2009, the bank's holding company - Reliance Bancshares - received $40 million from the U.S. Treasury under the Troubled Asset Relief Program, known as TARP. Later that same month, Spence took out an equity loan on his home. In May 2009, Spence was elevated to the board of directors for the bank holding company. The next year, he took out a more than $1.1 million mortgage on a vacation home at the Lake of the Ozarks and a smaller loan on his business property.
Democrats have been quick to seize upon Spence's role in overseeing a bank that required a federal bailout.
"Dave Spence helped drive this bank into the ground. The bank was then forced to get a $40 million loan from the taxpayers. And instead of repaying the taxpayers, he gave himself an insider loan to buy a vacation home," said Caitlin Legacki, a spokeswoman for the Missouri Democratic Party.
Technically, Spence did not give himself the home loan.
As a board member, Spence was considered a bank "insider" under federal regulations, and his loans thus required approval by the bank's board of directors. But Spence said he left the room while his colleagues voted to approve each of his loans.
"There was no favoritism and there was no special treatment, like "Oh that's Dave, he's good for it.' Baloney," Spence said. "You had to go through the same scrutiny, or more, on the board as you would if you came in off the street and wanted to buy a house."
It's not uncommon for bank board members to receive loans from the institutions they supervise, said Keith A. Thornburg, vice president and general counsel for the Missouri Bankers Association and a prior attorney for Missouri's bank regulatory agency. In fact, bank board members are sometimes among a bank's best customers, he said.
"When you're on a bank board, you are encouraged to do business with the bank," said Spence, adding that his prompt loan payments provided a reliable profit for the institution.
"In effect, by keeping my business with the bank, I was helping them out and giving them the ability to recover cash-flow-wise and start making TARP (payments)," Spence said. "Unfortunately, it just hasn't happened yet. But I did more than my share to help."
In addition to taking loans from the bank, Spence also bought 500,000 shares of Reliance Bancshares stock - at a price of $1.5 million - in fall 2010. Spence said the investment was part of a capital drive that was meant to generate up to $20 million but instead netted about $4 million, of which he provided the bulk. The bank's stock price plunged, dealing Spence a financial loss and leaving him frustrated that other large shareholders hadn't also invested.
Around December 2010, Spence said he informed fellow board members that he wanted to resign, but they persuaded him to remain a few more months. The failed investment was one of several factors in his desire to leave, Spence said. But most significant was the fact that the bank board was taking too much of his time, shorting both his family and his work in the plastic packaging business.
As one of his last actions, Spence said he voted with the rest of the bank board in early 2011 to forgo payments to the U.S. Treasury - a move that he said "didn't sit well with me" but which Spence said was suggested by regulators because of the bank's continued financial struggles. When his resignation became official in March 2011, Reliance Bancshares submitted a form to the U.S. Securities and Exchange Commission stating that Spence's resignation was "not related to any disagreements with (the bank's) operations, policies or practices."
Spence said that statement remains true, because his qualms weren't the main reason for his departure. But he adds that he's glad to be done with the bank.
Said Spence: "You'd come out of those meetings and you felt like you were hit over the head, or you went 10 rounds with Mike Tyson."