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ONE-ON-ONE - May 2005
by Ed G. Lane
'If Urban Kentucky Does Not Do Well, Rural Kentucky Won't Do Well'
Louisville business and civic leader Michael Harreld shares his thoughts on Kentucky as he departs for Washington, D.C.
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Michael Harreld
Michael Harreld, regional president of PNC Bank, Kentucky, has been named regional president of PNC in Washington, D.C. Harreld, a 36-year veteran of the company, will assume the new position this month, upon completion of PNC’s previously announced merger with Riggs National Corporation. During his tenure with PNC Kentucky, Harreld has chaired the Kentucky Council on Higher education and has served on the board of four Kentucky universities as well as organizations such as the J. B. Speed Art Museum, Norton Healthcare Inc., and The Muhammad Ali Center. He is a former chairman of the board of Greater Louisville Inc. and The Kentucky Bankers Association. Harreld received his B.A. degree in history and political science from the University of Louisville in 1966 and his J.D. degree from the University of Louisville Law School in 1969. |
Ed Lane: PNC’s acquisition of Riggs National Bank will be finished this month. Why did PNC’s management select you to be the regional president of PNC Bank in Greater Washington, D.C.?
Michael Harreld: I was with Citizens Fidelity Corporation for 17 years. Citizens was sold to PNC, and then I’ve been with PNC for 18 years. So, I’ve been on both the acquirer and the acquiree side of a transaction. Because this was a difficult transaction and because it carries with it some complex personnel issues, PNC wanted somebody who understands the pros and cons and would be able to keep the issues in balance.
EL: Riggs was found guilty of money laundering – its embassy banking and private banking departments made illegal international transfers of funds. What will happen when PNC takes over Riggs’ operations?
MH: Riggs’ international banking business is already eliminated. One of the requirements for PNC to acquire the bank was that Riggs would dispose of the embassy business before PNC would close the transaction. PNC is not engaged in any of the post-mortems and acquires sort of a “vanilla” banking franchise.
EL: Can you give our readers some perspective on why you decided to accept this position?
MH: Heading up this new region for PNC is a terrific professional opportunity. There are five million people within 50 miles of our main office in Washington. The opportunity to build a significant franchise for PNC is just extraordinary. I thought Washington would be a great place for both me and my family to live and experience. The professional opportunities outweighed the personal.
For the personal decision, it’s been very bittersweet. I’m a seventh generation Kentuckian. I have spent my entire life within five miles of the home in which I live, in Louisville. I love it. I love the state. I love Louisville. It’s been a very difficult decision. Not many people at 60 years of age get the best job of their life. So, this is a wonderful way to end a career, in a very exciting place, doing very exciting work, in an extraordinarily vibrant community.
EL: What do you consider your No. 1 concern about moving from Kentucky to Washington, D.C.?
MH: It’s the loss of relationships. I have been active in the state of Kentucky and in Louisville. As a result of that, I care deeply about many of its institutions, its legacy, its history, and its future. And, I also care greatly about many of the individuals that I know. I will miss the grounding of those lifelong relationships; they’re important to me.
I’m keeping my farm in Western Kentucky, which has been in my family for over 200 years. It’s a place that I feel most at home and feel very warm and emotional toward. We’re selling our home in Louisville. I don’t know whether we’ll be back or not. It remains to be seen how the children are in the next handful of years and how we like it.
EL: During your banking career in Louisville you have been a leader in business, the arts, education, economic development and politics. Having observed 35 years of changes in Kentucky and Louisville, I would like your perspective and opinion on a number of issues.
How well is Louisville’s new merged government performing?
MH: It’s doing a terrific job. The Louisville Metro Government is probably every bit as promising as we thought it would be. There’s a great sense of accomplishment and achievement on the part of people in Louisville about merged government. They feel like they were able to pull something off which has rarely been done in American government in recent years. In fact, they realize Louisville is the talk of the country.
They also feel good that we no longer have to do what I call “shuttle diplomacy,” where we were constantly back and forth between a mayor, a county judge, commissioners and aldermen trying to make things happen. Life is simpler. The organization of government is more direct, it’s more accountable and it’s cleaner. It’s fulfilling all of our hopes at this point.
EL: How would you rate Mayor Jerry Abramson?
MH: Jerry has been a friend of mine since we were children. We went to high school together and we have been long-term friends. Even with subjectivity aside, he’s simply the best I’ve ever seen. He’s the best at the role of head of state and at the role of government management. He is so experienced, he cares so much about the community, and he has such credibility and respect within the community. All of those allow him the freedom to manage and move the community forward because trust is there. People rarely second-guess his motives.
I’m a real devotee and cheerleader for him and I think he’s wonderful. He is running for another term – I hope that’s not the last term that he runs for. I cannot imagine the community without him in governmental leadership.
EL: How cost effective is the Louisville Metro Government?
MH: There are enormous cost savings. Maximizing savings has taken longer to achieve than hoped because putting together two governments was more complex than anticipated – everything from a variety of union contracts, to the physical facilities, to the management. The cost savings opportunities and the streamlining of organizational efficiency will probably be, halfway through the mayor’s term, either completely or substantially achieved.
EL: How would you rate GLI and its CEO, Steve Higdon?
MH: I chaired Greater Louisville Inc. two years ago and was one of the original executive committee members when we formed it – seven or eight years ago. It was a great vision and it’s been executed perfectly. The first leader, an entrepreneur by the name of Doug Cobb, was the perfect person to round up the business community to support it. Steve, his successor, has done an excellent job.
There are three things going for Louisville, which are unmatched. The first is the merged Metro Government, the second is one school system, and the third is one representation of the business-political partnership for economic development and community issues – that’s Greater Louisville Inc. You rarely find all three in concert where you have the ability to execute cleanly and to keep people accountable for activities. I think organizationally, Louisville has never been in better shape.
EL: What do you feel is Louisville’s major economic challenge in the future?
MH: Its relationship with Frankfort. Louisville has now unified and is moving forward. It has become even more abundantly clear and more directly addressed, that Louisville, like Lexington and Northern Kentucky, is penalized economically by the amount of money that comes back from the state. I believe the agenda for the next five to 10 years will be for urban Kentucky to have a greater piece of the economic pie returned to it from Frankfort.
Absent economic investment in urban Kentucky, Kentucky will fall behind. I’m not sure the people in Frankfort get that, but it’s a reality. Louisville gets somewhere between $0.37 and $0.40 on its tax dollars returned from Frankfort. The equitable distribution of tax dollars will dominate the agenda of the state legislators from Louisville over the next handful of years. I think they’re prepared to have a hell of a fight over it.
EL: One of Kentucky’s problems is that it has 120 counties and there are a lot of rural interests throughout the state that are legislatively controlling where the tax dollars are being invested.
MH: There needs to be an update on the educational and road formulas. And there needs to be recognition that if urban Kentucky does not do well, rural Kentucky won’t do well. It’s not robbing Peter to pay Paul, it is an allocation of resources for the greater benefit of all. The people in the state of Kentucky are ahead of the General Assembly. They understand that the Bowling Greens and the Owensboros, as well as the Louisvilles, have to have the resources for success. If Frankfort doesn’t reallocate our tax dollars wisely, Kentucky is doomed to fall behind again in the economic race to be relevant in the country. Urban areas have to have the cooperation of Frankfort to be competitive. Frankly, I don’t think a lot of the people in Frankfort get that.
EL: Do you get the impression that Gov. Fletcher gets that? Do you think Rep. Anne Northup gets it?
MH: I do not know the governor well and I have not had a conversation about that with him directly. Anne Northup has been a great representative for Louisville in providing resources for the much-needed bridge activity. She’s been bold in community activities to make sure that infrastructure things were happening. Anne has been an enormously successful representative for Louisville in Washington in terms of resource utilization – so I think Anne gets it. She has been able to work with U.S. Congressman Hal Rogers, who is in a very powerful position to be able to bring bridge funds to keep that project going which is so integral to Louisville’s workforce needs because so much of our workforce lives in Indiana. I would give her an A+ mark for that.
EL: How has the Kentucky Center for the Arts benefited Louisville?
MH: The Kentucky Center for the Arts is – let me remind everybody – a Kentucky, not a Louisville, institution. Is a great example of what a Louisville and Kentucky partnership can be within a state agency. The Louisville people support it with private dollars. The vast majority of its attendees are from Louisville. But particularly for school children, it is their window into arts in Kentucky which for the most part they would not have exposure. The ballet, opera, orchestra, etc. – it is a very, very important venue for children to have their very first exposure to the arts. The Center was not adequately funded in the last General Assembly. It needs capital for constant refurbishing – it gets heavy use. It takes a continual flow of funding to keep it current technologically.
EL: Is the Speed Museum considering moving to the downtown area? Do you have any comment about the museum itself or about relocation?
MH: The Speed is a private organization, so it receives virtually no governmental support. It sits right in the middle of the UofL campus and it’s an expensive, complicated facility on which the board a few years ago just spent a good bit for remodeling and updating. It needs expansion and modernization and that called the question about whether Speed should stay in that location.
Here are some of the problems: There is a lot of money tied up in the present facility and in order to make the transition to a different location, someone has to acquire that facility and more than likely that would be the University of Louisville. The University would have to say, “It’s important to us, we need the facility, and we’re willing to give a fair price for it.”
Construction of an art museum is probably one of the most expensive types of facilities ever built. It can easily run $500 to $700 per square foot. We don’t have the kind of resources at the Speed to build a $200 million facility. So I think probably a modest expansion on the campus is more practical in the near term. The longer term is a lot more complex.
EL: While we’re talking about new museums, would you address the Frazier Arms Museum?
MH: The Frazier Arms Museum is primarily the dream of Owsley Brown Frazier. It marries some of his personal hobbies and interests with a keen interest in trying to make it one of the unique destination points in the middle part of the United States. People who have not been there will be simply stunned with both the quality of the displays, as well as this unique partnership with the Royal Armory out of London to lend some of their most intriguing and interesting arms and armor. It’s fabulous.
EL: How has riverfront development impacted downtown Louisville?
MH: Thirty-five years ago the riverfront was a bit shabby. One of the great visions of many government and private sector leaders has been the return to the riverfront. The statement we’ve made with Waterfront Development Park with the movement and rearranging of facilities down there makes it more user-friendly, more attractive. It’s been fun to watch and it’s been enormously successful.
EL: What’s your recommendation on where the new arena should be?
MH: The arena is bigger than the university. The arena is a community investment. I am delighted to see a task force put together, which can hopefully come up with a community decision. I was involved in the effort to bring a pro basketball team, a handful of years ago, which involved the university and the city and that was equally unproductive in its conversations and left some scars. I’ve seen those scars reemerge in this discourse. Everybody is arguing over something Louisville needs. Everybody’s got – perhaps legitimate – turf issues they need to put aside for the greater good. I’m hopeful they can do that. If not, the arena will degenerate into a hollow victory no matter where it goes.
The Louisville arena is bigger than a sports venue. The arena is an economic engine. It’s appropriate for conventions, for entertainment and sports. The vast majority of entertainment concerts that go on in this country bypass Kentucky entirely.
EL: As a UofL graduate, what comments do you have about your school’s service to the community?
MH: It’s been a terrific partnership. The business community has responded by making the university its most significant priority in the General Assembly in terms of the development of its medical centers. Through business deans and other folks, UofL has reengaged with the community. And the business community has been primarily responsible for increasing the endowment fund and leading the charge for the development of the university in Frankfort. That’s why I wince over the current discourse between the business community and the university over the arena. And I think the loss of that wonderfully productive relationship could be at risk.
EL: How would you compare UofL president James Ramsey to other presidents?
MH: Jim Ramsey has been a friend of mine since childhood. He is simply one of the most able individuals I have ever known. I admire him for surviving, I think, five governors and having the credibility of everyone in Frankfort forever. He is a great administrator, he is a wonderful human being. He is, like all university presidents, never prepared for the visibility and the complexity of inter-collegiate athletics. It has wreaked havoc on university presidents all across this country.
University athletics has the potential of causing you to lose your job more than anything else in a university. The passions are so strong about sports and the loyalties are so ingrained that it is the most difficult part of a university president’s job in the modern era. Sports engenders inflammatory passions. All university presidents – Don Swain, John Schumaker and now Jim Ramsey – have to deal with that. I have watched it, with all three, be the biggest bane of their existence.
EL: The Louisville police have been criticized frequently – is the criticism justified?
MH: Crime, particularly drug crime, in the country is just almost insoluble. Crime creates opportunities for missteps and abuse and very, very difficult situations for police officers to respond to. The appropriate use of force by the police is probably the most complex issue in running an urban government. It appears to me, simply as an observer, that Louisville has an excellent police chief who has dealt forthrightly with this issue while merging two police departments. He has the difficulty of trying to keep what’s essentially a paramilitary force in place and doing the appropriate things – which our community demands.
EL: How would you rate Sen. Mitch McConnell?
MH: Sen. McConnell and I have been friends since undergraduate days. He is clearly one of the most, if not the most, successful political individuals I have ever seen. He’s probably in line to be the majority leader of the U.S. Senate. I guess not since maybe the combination of Henry Clay and Alvin Barkley has Kentucky had that clout in Washington. He has represented Kentucky extraordinarily well. You have to give him enormous credit for his tenacity and his skill set as a politician. I have also found him to be a loyal and good friend.
EL: Has Louisville reached its potential in tourism?
MH: Louisville has growth potential in tourism, particularly when it comes to conventions. Convention business is extraordinarily important to Louisville and it’s wonderful business. People come and spend money. They don’t use much of your resources – they don’t go to school, they don’t use your roads hardly at all. They just come in, spend a lot of money for a few days, and then leave. It’s wonderful business.
EL: Is Louisville’s central U.S. location important to its economic success?
MH: Louisville has a major university, strong interstate access, and attracts a lot of convention business. If you’re in an urban community without any of those three or air service, you are facing an almost insurmountable obstacle to be relevant in this economy. Louisville has all of these things going for it.
EL: How important is it for Louisville and Kentucky to emphasize the growth of high technology employment opportunities?
MH: While the global economy has changed the workforce for all of us and technology is important, a love affair with any one thing in economic development is probably a mistake. You shouldn’t count entirely on an airport, conventions, manufacturing, the service sector, or health care. You need a good balance. Louisville was behind in its receptivity to the technology segment, but it has made great strides. Greater Louisville Inc. has been heavily involved with the new economy. I think it’s futile for Louisville to think that it’s going to compete with San Francisco or Massachusetts, or Northern Virginia, where there is an enormous technological development center. Louisville needs to be honest and realistic about what it wants to accomplish. Louisville is on the right track.
EL: How do you feel about the progress Louisville has made over the last 35 years?
MH: When I started at the bank, Louisville was a manufacturing community. It was a community of nearly all locally owned institutions – insurance companies, banks, and small manufacturing companies. Forget the Fords and GEs – there were tons of small companies. It was a community in which the interests of both ownership and management were local.
During my career, that has changed completely. Like many of the cities of Louisville’s size, local owners liquidated a lot of their capital and sold many of the home-owned institutions. Louisville struggled for a few years in the late ’80s and early ’90s. Then, with constantly good government leadership, an emerging group of new leaders in business, and the formation of GLI, new leadership has emerged that’s very hopeful and productive.
We have to work on increasing Louisville’s per capita personal income and the opportunity for our young people to come back and achieve notable economic success. Louisville is no different than most communities its size.
EL: Would you like to make a parting comment to Louisville and Kentucky?
MH: No matter how long I am gone from this state professionally, it’s always going to be home. It has given me everything in my life – my education, my career opportunities, my friends and, for 209 years, my family. So it is always home. I will follow with interest Kentucky and Louisville’s development – with great emotion about its successes. And hopefully I don’t have to be upset over any failures.
Ed G. Lane is chief executive of Lane Consultants Inc. and publisher
of The Lane Report.
edlane@lanereport.com
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