Old-fashioned banker meets new fangled heist

Imagine robbing Mother Teresa and taking money she'd use to feed the hungry. Something like that happened to Pittsburgh banker Robert R. Lavelle and his family business.

Bank regulators shut his Dwelling House Savings and Loan on Aug. 14 and sold the $13 million in savings account assets to the much larger PNC regional bank. That ended more than 50 years of discounted mortgage loans for low-income families to buy homes in the predominantly African-American Hill District of Pittsburgh.

The thieves in this case didn't have to stage a holdup at the bank. And though there's plenty of crime in the Dwelling House neighborhood, these robbers simply stole through the internet. When the cyber-thefts became public, several Pittsburgh foundations and civic groups tried to step in to replace the lost capital, but the regulators from the Office of Trust Supervision (OTS) said it was too late, that the loss of $3 million or more in capital reserves would require even more help than the groups were offering.

Robert R. Lavelle, 93, retired from the thrift several years ago, turning it over to his son, Robert M. Lavelle, 65. Ironically, the Lavelles were successful where bigger lenders such as Fannie Mae have failed ("Robert Lavelle's wonderful life," Dec. 25, 2004). They endured years longer than nonprofit groups that receive government grants for discounted mortgages to promote low-income home ownership. Instead of foreclosing over a missed payment, they visited clients, counseling them to budget and to continue payments-nurturing many toward home ownership. When they started in the late 1950s, the home ownership rate in the Hill area was about 13 percent. Today it is near 40 percent.

For Robert R. Lavelle the bank was a Christian ministry, a tangible way to apply the Good Samaritan story, where, as Jesus explained, a neighbor can be the injured person, someone of another race or faith, or down-and-out by the side of the road.

Lavelle was as much preacher and teacher as banker, telling clients they needed to keep up payments to develop self-respect, praying with them when needed. A heart attack came close to killing him in 1980. Yet the extension of his life gave him almost 30 more years to demonstrate his faith in the midst of a troubled neighborhood in a big city.

The son of a pastor who died when Lavelle was young, he came from a poverty-stricken African-American family in Pittsburgh and for many years wanted to make a success of himself on his own.

His conversion to Christ in his 40s gave him a different perspective."God didn't give me a lot of smarts. He knew I'd be too egotistical," he said in a recent interview. "So I had to depend on the Bible. All my success only came when I was applying biblical principles to my life."

Lavelle recalled, "Around the table we all had to say a Bible verse. Mine was Matthew 6:8-'Blessed are the pure in heart.'"

Lavelle sank the Scriptures very deep into the Dwelling House mission, attracting savers from all over the country, including a number who did not share his faith but appreciated the fruits of it.

"Dwelling House is the most biblically sensitive and Christian institution I have ever seen," says Ball State University professor Robert Wauzzinski, author of a book on the savings and loan. "They have brought racial reconciliation, mercy, justice, goodness, stewardship and love to the business of buying and selling."

The dream seemed to get shattered by two challenging transitions, generational and technological.

The elder Lavelle is a man of deep conviction, with his strength sometimes perhaps becoming a weakness. As in any father-son working relationship, the younger one struggled for his own security and identity, apart from a strong father well known as a leader in the Pittsburgh African-American community. "I would tell him repeatedly that he needed to manage and not do all the work," Robert R. Lavelle said of his son. "He wasn't able to notice all that was going on."

The other crucial transition was from paper to computer. Bank examiners found it hard to rescue Dwelling House because of the confusing mix of paperwork and computer records that made the thrift vulnerable to cyber-theft. Bank regulators fired the younger Lavelle earlier this year for not watching operations closely enough to detect the fraud.

Wauzzinski said that the Lavelles knew the basic skills of home mortgages and were extraordinarily capable in building customer relations but never fully grasped the computer operations. "These cyberthieves were extraordinarily sophisticated," he noted. "They would hide their tracks pretty well."

The elder Lavelle's stubborn conviction also led to a clash with banking regulators, who wanted Dwelling House to quit allowing prisoners to save at the bank. He was convinced by Scripture that the savings and loan had to help prisoners, prompting fines against him ($2,500) and his son ($5,000) by OTS.

Wauzzinski believes that OTS had a bias against Dwelling House on a kind of philosophical basis related to the elder Lavelle's outspoken Christian faith and indirect critique of other lending institutions. "We serve the need, not the greed," was a Dwelling House slogan. The shutdown seemed to result from a clash of the traditional banking culture fostered by government regulators with the Lavelles' stubborn commitment to fighting urban poverty.

One tragedy of the OTS closure of Dwelling House is that, while prominent political officials have endorsed the Dwelling House objectives, they also have supported rescues for bigger lending institutions, most without the record of social accomplishment and community engagement.

Dwelling House was successful because the Lavelles knew their clients and community. They were very old-fashioned bankers who knew where their clients lived and could walk or take a short car ride to see them. They seldom got robbed by anyone with a gun because those kinds of Pittsburgh thieves generally left them alone out of respect for their commitment to helping needy families.

Cyberspace thieves, on the other hand, didn't care who they were robbing.

Pittsburgh-area supporters of Dwelling House did. "Dwelling House is a golden thread forever woven into the fabric of this city," wrote Dave and Barb Brewton and Marc and Lynn Portnoff in the Pittsburgh Post-Gazette after its closing. "We thank you and we stand among the many who say with confidence, 'Well done, good and faithful servants.'"

The Dwelling House loss did not end the Lavelle family civic leadership tradition. Father, son, and grandson Robert D. Lavelle have a real estate company. The third-generation Lavelle won a City Council seat primary earlier this year and has no opposition on the ballot come November. "He told me when he was 15, I guess I'll be the first black mayor of Pittsburgh," Lavelle said of his grandson.

Wauzzinski believes that the Dwelling House model needs to be recaptured: "It is imperative that the ideals that Dwelling House helped make real endure beyond the demise of the business, for those very healing principles represent one powerful and successful strategy for overcoming urban poverty."