IN 1998, ELIAS Saal, president of Republic Bank, then the 13th-largest bank in the US, was invited to the office of a well-known hedge fund manager. The enormously successful fund needed capital. Yet not one of the great financial minds running it could explain the strategy or the risk in a simple manner. "I left that meeting knowing that the firm would receive no credit from Republic," says Saal. Three months later the same fund lost $4.6 billion. It was the way of Republic Bank – consistently heralded as the most creditworthy and best-capitalized bank in the US. Credit analysis was the bank’s core competency and it had a conservative stance towards credit loans....
