Novelist Erdman Takes It Easy--Promoting ‘Panic’

CHICAGO — Paul Erdman, ex-banker, ex-convict and novelist, leans forward on a velvet banquette in The Dining Room of the Ritz-Carlton Hotel, a goblet of Jordan Cabernet Sauvignon in one hand and a big Partagas cigar in the other.

The 54-year-old writer of financial thrillers is on tour to promote “The Panic of ’89.” Tonight, he is celebrating the book’s swift climb onto the New York Times best-seller list with a meal of Beluga caviar, Maine lobster, quail and wild mushrooms.

“I’ve been rich and I’ve been poor,” muses Erdman, who began his first novel, “The Billion Dollar Sure Thing,” in 1970 while locked up in a Swiss prison on suspicion of bank fraud. “Believe me,” he says, swirling the wine in his glass for emphasis, “rich is better.”

The words dissolve into a paroxysm of laughter--perhaps because of his good fortune, more likely at the banality of his remark. Erdman’s laugh is long, drawn out and throaty; like the twinkle in his eyes, it belies the author’s pin-striped, banker-ly appearance.

Clearly, this irreverent son of a Lutheran minister revels in life, and why not? His improbable career can be viewed as a series of little jokes on the world.

Erdman’s “Crash of ‘79” never materialized, but his novel of that title sold 4.5 million copies. His fictional forecasts of gasoline at $3.85 a gallon and steak at $16 a pound also missed the mark.

Never mind. Doom and gloom sell, especially when packaged by a born raconteur with an insider’s knowledge of international finance and a knack for exploiting plausible fears about the world’s economy. Erdman popularized financial fiction and remains its reigning master.

Let the critics decry his “cardboard characters” and “wooden dialogue.” “I do not write literature,” he says defiantly. “I tell stories. I write for the businessman who wants to spend a few hours on an airplane without opening his briefcase. Basta! “

“Panic” may be Erdman’s most engaging effort yet, a fast-paced tale of intrigue whose international cast of villains targets Bank of America by name--and later the entire U.S. banking system--for a run. In a subplot, Palestinian terrorists try to gun down the nation’s financial leadership.

The book does more than entertain; it illuminates. Readers can painlessly learn about such financial arcana as interest rate swaps and Third World debt.

Why has Erdman chosen to pick on Bank of America, whose very genuine woes have been so widely chronicled? Is there a danger that he might he set off a panic in 1987?

“Oh, come on,” Erdman scoffs. “This is a novel. I’m just using the Bank of America as a model.” Besides, he adds, “they got themselves into this mess. I didn’t get them into it.”

And then the Canadian-born, Swiss-trained economist drops a tidbit that speaks volumes for his real-life faith in the U.S. banking system.

“I’ve got over half a million bucks in a single account at the B of A, money that I’ve got parked there for the moment.” The funds are part of Erdman’s $1,050,000 guarantee from Doubleday & Co. for the U.S. rights to “Panic.”

Shouldn’t Erdman the economist be concerned that the Federal Deposit Insurance Corp. legal obligation is limited to $100,000 per account? “The regulators would never let B of A--or any other big bank--go under,” he says. “They proved it in 1984 with Continental Illinois (which was salvaged by an expensive federal bail-out).”

Firsthand Knowledge

Erdman’s knowledge of bank failures comes firsthand. In 1970, he presided over one of the most spectacular collapses in the history of Swiss banking. As a money manager in the 1960s, he earned millions for clients by speculating in commodities and foreign currency. Then, backed by some partners, he opened a bank in Basel, Switzerland.

Those were his salad days. Erdman had a Cadillac shipped over to Switzerland--”just to bug the Europeans”--and soon made a deal to sell the Swiss bank to United California Bank--now known as First Interstate Bancorp.

But Erdman’s luck changed. The markets turned against his bank’s traders, the bank failed, and Erdman was included in the roundup by Swiss authorities. (First Interstate got stuck with a $19.4-million tab.)

His 10 months in Basel’s medieval monastery-turned-prison were far from onerous. “Herr Doktor Erdman” was permitted to send out for meals and was wined and dined by the warden. But his Swiss wife, Helly, was forced to go to work as a secretary to support their two daughters.

“We lost everything, everything,” Helly Erdman recalls. She sold antique furniture, paintings and a parcel of land to raise bail--which Erdman promptly jumped by fleeing Switzerland.

“It cost Helly 100,000 bucks,” cracks Erdman, “but she got back a damn good husband.”

He was tried in absentia, convicted of fraud, sentenced to nine years in prison and a $25,000 fine. He was also banished from Switzerland for 15 years. Should he ever return, he would still face incarceration, although he cannot be extradited under current U.S.-Swiss treaties.

“No great loss,” shrugs Erdman, who blames the bank’s commodities traders for all the problems and disclaims personal responsibility. After years of foreign travel, the Erdmans prefer to stay close to home--a gently rolling 40-acre ranch in the wine country north of San Francisco.

Busy Promoting Book

These days, however, Erdman is on the road, promoting “Panic” on a nationwide tour. A week into the tour, Erdman gets word that the book has cracked the New York Times best-seller list.

“My job is done,” he says, riding from one radio station to another in the back of a Cadillac. “Once you hit the lists, the book sells itself. The rich get richer.”

Still, he doesn’t slow down. Over two days, he makes more than a dozen appearances in three cities.

He gracefully endures the indignity of being sandwiched between a dog act and crooner Engelbert Humperdinck on Detroit’s Kelly & Co., a morning TV show. He rolls his eyes benignly when his Chicago “schlepper”--Erdman’s term for the drivers who shepherd him around--takes a wrong turn and ensnarls the limousine in the maze of O’Hare Airport’s parking garage.

During interviews, he is charming, animated and laughing, spitting out comments and opinions with the regularity of a machine gun. At times he’s sagacious, at others outrageous. What follows is a sampler.

- On President Reagan: “It’s like Gertrude Stein said about Oakland. There’s no there there.”

- On Kurt Waldheim: “A greasy Austrian headwaiter. I even used to call him that when he was at the U.N.”

- On the stock market: “It is increasingly divorced from reality. As the Germans say, ‘Die Baume wachsen nicht in den Himmel’ : The trees do not grow into heaven.”

- On General Motors’ buyout of dissident director H. Ross Perot: “A bigger scandal than (Ivan F.) Boesky. Here was a guy who was trying to drag them into the 20th Century, and they pay him $700 million in ‘greenmail’ to get rid of him.”

- On Swiss bankers: “They’ve been in the middle of every dirty deal lately. Not only the Iran- contra deal, but also the whole Boesky thing. The whole Boesky scandal started with a branch of a Swiss bank in the Bahamas.”

The Swiss, of course, are a favorite target; he is paying them back, with interest, for his 10 months in prison. His novels portray the Swiss as cold and money grubbing. And his next book, an outgrowth of his doctoral thesis, is about Switzerland’s financial collaboration with the Nazis during World War II. “This neutrality stuff is a bunch of crap.”

Given Erdman’s outspokenness, it is little wonder that business groups pay the author $5,000--and provide first-class air fare--for him to deliver what is largely a canned speech about twice a month. “Like writing, it beats working,” he says, erupting into his trademark laugh.

Writing Is Hard Work

Actually, writing is hard work for Erdman. Unlike some popular writers who crank out several books a year, Erdman has written just five novels since taking up the profession in 1970.

Typically, he’ll write four or five pages a day on his IBM word processor, printing out the results and entering revisions up to five times until he’s satisfied. Then he’ll bounce the work off Helly. “I tell him if it’s boring,” she says.

The couple have two daughters. Both are in their 20s and share their father’s penchant for finance and intrigue. One works for the Defense Intelligence Agency in Washington (“She never talks about what she does,” Erdman says); the other swaps interest rate futures for Japan’s Mitsubishi Bank in New York.

Nevertheless, Erdman is genuinely concerned about Japanese inroads in the United States. “The United States is putting its financial future in the hands of the Japanese,” he warns. “If they don’t show up for a Treasury auction one day, we’ll be in for one hell of an interest rate spike.”

Moreover, he warns that if the trade imbalance between this country and Japan continues, the United States will become a chronic debtor nation: “The U.S. will become to Japan what Mexico is to the U.S.”

Erdman recognizes that while he can chronicle such financial goings on, his current role gives him little opportunity to change their outcome. “If I ever had a chance to make a difference, I lost it in Basel,” he says softly.

But if the Swiss bank imbroglio closed some doors for Erdman, his earlier experience as a graduate student in economics in Basel opened many others.

Erdman speaks fondly of the long evenings spent discussing economics, politics and philosophy with the political leaders and intellectuals who often visited the university. The sessions often stretched into the early morning.

“To get such an education was the luck of my life.”