by Monte Burke
But he did see some football during those years. His son, Kevin, the youngest of his brood, played football at Lebanon High School in New Hampshire. He was a fullback and a linebacker. Joe attended a handful of Kevin’s games each year. And it was apparent to Kevin that his father clearly missed football. “Dad would sit all by himself in the stands. He had a Dictaphone and he would chronicle every one of my plays. ‘Second and ten, you made the tackle. Third and three, you shot the wrong gap.’ Things like that.”
After every game he attended, Joe would take Kevin back to his hotel room. “We would sit there and go over every single play I had in the game,” says Kevin. “Sometimes, this would take longer than the game itself.”
Kevin was a good athlete. He was going to attend Bentley University, outside of Boston, where he’d decided to play ice hockey—his best sport—instead of football. Joe went to Kevin’s final football game as a senior in high school, the last one Kevin would ever play. “I came out of the locker room after the game and I thanked Dad for coming and then told him that I was going to hang out with my boys,” says Kevin. “I’ll never forget the look that came over his face when I said it. It was like I had ruined the family name or something. I said, ‘Are you all right?’”
Then Kevin noticed that Joe had the Dictaphone in his hand. “We’re going to the hotel room, right? To listen to the tape?” Joe asked.
Kevin told his father that his football career was officially over, and that what he really wanted to do was go out and celebrate with his teammates instead.
“He just looked so sad and disappointed,” says Kevin.
At around this time, it began to sink in on Joe just how tough it had been on his kids since he’d left New Hampshire. He had of course made trips to see them over the years, but they were sporadic, and there never seemed to be enough time for him to really focus on each one of the children. So he decided he would change the way they spent time together. Rather than taking the whole gang out when he visited them in New Hampshire, he would concentrate on one kid at a time. He would schedule one visit around, say, Kim, and take her out for pizza. “This was great and a lot of fun when it was your turn,” says Kelly. “But it wasn’t when you had to wait a month or two before you saw him again.”
As they got older, his children started to demand more of his time and attention. He’d missed a huge chunk of their childhood, and they had little sense of what he had done with his life since leaving them. That changed when Joe decided he needed to find a way to make up for his absence from their lives, and began flying his kids down for weekends in New York. “We really had no idea what he was doing or how successful he’d been until we started going to New York,” says Kim. “He didn’t talk much about things like money.” Kathe knew, of course, because he still supported them, but she didn’t talk much about it, either. When the kids visited him, they started to understand. This had nothing to do with his apartment. By then Joe had long since moved out of his parents’ house, but he lived in a studio apartment in Battery Park—quite a modest dwelling for a man now worth millions. It was the things they did together in the city—Yankees games, good restaurants, private cars—and the respect he commanded at his office that hinted at how changed his circumstances were. Although Joe was never extravagant, he was certainly different from the penny-pinching coach they’d known in New Hampshire.
He was also different from the man who had been so focused on his career that he didn’t have time for his children. “Once he started to realize that we needed more, he was there for us,” says Kim. Indeed, he happened to be out of the office—making a rare weekday visit to one of his children, who had called out to him in a moment of need—on the day that he suffered the biggest disaster of his business career.
Joe was put in charge of all municipal lending in 1993. It was by far the toughest assignment he’d faced as a manager at Merrill. He had to rebuild a division that had been absolutely devastated.
Earlier that year Merrill Lynch had gone through an episode that, until its complete meltdown in the 2008 financial crisis, was the most embarrassing in the firm’s history. A trader in the munis division convinced the government of California’s prosperous Orange County to place risky, highly leveraged bets with its municipal fund. When interest rates unexpectedly rose, Orange County went bankrupt, then eventually sued Merrill for getting them into the mess to begin with. (Merrill ultimately paid the county a settlement of $400 million.)
The disgrace left Merrill’s municipal division in shambles—disheartened, embarrassed, unmotivated, and unproductive. Dave Komansky, who led the institutional side of Merrill at the time, thought he had exactly the right guy to turn it around.
“Joe didn’t know a thing about muni bonds, but he knew how to manage people,” says Komansky. “The division needed a charge of get-up-and-go.”
When Joe looked at the municipals division he saw a risk-averse group of people stuck in a rut of doing things the way they’d always done them, not unlike those fixed-income salesmen he’d roiled a few years earlier. At the time the munis division made bids for trades in partnerships with other Wall Street firms. Doing the trades in this manner helped spread the risk. But it also pinched the gains. Joe decided he needed to change that approach and push them to become bolder. He brought in the muni managers and coached them up: “These other firms aren’t your friends. Gimme a break. What, you don’t have the brains to do these trades on your own? You either know what the hell you’re doing or you don’t.”
Dave Andersen, a senior munis manager, remembers making the calls to his peers at Salomon, Goldman, and JP Morgan and telling them that he would no longer be making bids with them, but against them. “It was painful. I felt like they’d been partners. We’d all been doing this the same way for years. They were livid.”
The heads of the municipal divisions at the rival firms called Joe and told him that if Andersen followed through on his intentions, what he was doing was going to take down Merrill. Joe used their threats to his advantage. He called Andersen into his office. “Dave, I just got a call from your buddies at Salomon and Goldman,” he said. “They told me I should fire you.”
“That pissed me off,” says Andersen. “It also got me very fired up.”
Still, Joe believed he had to make an even bigger splash to get the rest of the team on board. He wanted them to think bigger, to take more risks. He decided he would show the way.
Municipals at the time were trading at historically cheap levels. Joe thought they had to rise in price sometime, so he placed a $1 billion bet that they would (called “going long”). But with that much money at risk, he needed to make a hedge. So he decided to make a bet that Treasuries would go down (“shorting”). Joe had to clear the trade with the risk management desk, which took a week or so, but one gray winter day, the trade went through.
It so happened that Joe was leaving the office early that day. His youngest daughter, Kara, who was at Taft, a boarding school in Connecticut, had called to tell him that she was terribly homesick. “I don’t know why I called him and not my mom,” says Kara. “I just needed my dad.” She was the captain of the basketball team. She had a game at Choate. Could he possibly come?
Hearing his daughter in pain on the phone crushed him. Despite the big trade he had just put through, Joe knew that he had to go see Kara.
When he left the office that afternoon, the trade was stable. All seemed well. Outside, the first few flakes of a gathering snowstorm had begun to fall. Joe jumped into a rental car and started the two-hour drive to the game in Wallingford, Connecticut.
At this point in time losing $200,000 in a day in the munis division was considered horrible, possibly grounds for being fired.
The traffic on the road was slow because of the intermittent snow. Joe eventually made it to Choate, just in time for the last ten minutes of Kara’s game. “I looked up in the stands and saw that he came,” says Kara. “It was a very big deal. It was probably the first time that I felt my dad
was there for me.” After the game, Kara had to leave on the team bus. Joe kissed her good-bye.
When he got back in the car, there was a message on his phone. It was from one of his muni guys. The man sounded panicked. “Um, Joe, we’ve got a problem.” The hedge had blown up. Munis had gotten crushed and plummeted. Treasuries had had a phenomenal day and shot up. It was the exact opposite of Joe’s supposedly hedged bet. “I was a wishbone,” says Joe. “And I just got ripped apart.”
Meanwhile, the few flakes of snow from a few hours ago had become a full-blown blizzard. The wipers on the car couldn’t go fast enough to clear the windshield of the snow. Joe’s headlights were useless, serving only to blind him further by illuminating the white flakes. He crawled down I-95 at twenty-five miles an hour.
After a sleepless night, Joe was the first one in the office the next morning. He checked the damage on the trade. It was staggering. Joe had lost the company $14 million. It was, by far, the biggest loss on a single trade in the municipal division’s history. “It was unheard of, virtually considered impossible,” says Joe. And what made it even worse: There was no way to get out of it immediately. There was still more serious blood to be shed.
Joe leaned back in his chair. He was devastated.
A few hours later, Joe saw Dave Komansky lumber into his office. Komansky is a big man with a Marlon Brando-in-The Godfather growl. As the person in charge of the entire institutional side, and the one who had put Joe into his current position, he was Joe’s immediate boss. Joe knocked on his door.
Komansky was well aware of the disaster. He sat behind his desk and smiled at Joe. Komansky himself had grown up in a tenement building in the Bronx. He was a sympathetic ear. That probably saved Joe’s job. “I liked Joe a lot,” says Komansky. “He was different. He was loud and bellicose and very rough around the edges, not like a lot of guys walking around Merrill in those days, the Ivy Leaguers. The big difference between Joe and the other guys in similar jobs was that Joe was getting things done. A lot of those guys who seemed like the perfect package couldn’t find their ass with a road map.”
Komansky asked Joe what had happened. Joe laid out the logic behind the trade, then admitted that “we got our balls ripped off.” Then he explained that selling out now would make it even more catastrophic.
Komansky admired the fact that Joe was courageous enough to take risks. It was why he’d put him in charge of municipals in the first place. And he trusted that Joe was smart enough to learn from his mistakes. “In the trading business, if you have guys who never lose money, they aren’t doing their jobs,” says Komansky. “You just have to hope that they win more than they lose.”
Joe would lose more—a lot more—before he could even begin to win again. Because of the aftershocks of the trade, Merrill lost another $8 million on the second day. But Joe learned a lesson that would come in very handy during the rest of his business career: “I never wanted to be in a position where you had to sit and hope the markets will take care of you.”
Joe continued to tweak new and different hedges on the munis desk, eventually figuring out that hedging municipals and mortgages was a winner. And just as Komansky had hoped, Joe started to win more than he lost.
After Joe’s very rocky beginning with the municipals division, Merrill ended 1993 as the largest bond underwriter in the world, a streak that has continued, unabated, to this day. Beginning in 1993 and at the end of every year from then on, Joe would have a large banner made up, proclaiming the wins of the previous twelve months. He had them hung from the tall ceilings on the trading floor, and as the banners proliferated over the years, their presence enhanced the sporting arena feel of the space. “It was like being in the Boston Garden,” says Andersen.
When Merrill Lynch blew up during the 2008 financial crisis and lost $28 billion as a firm, the municipals division—still largely Joe’s team, though he himself was no longer there—actually made $500 million. Bank of America bought Merrill on the cheap that same year. They laid off entire divisions and absorbed others. But one of the few they left wholly intact was munis.
By insisting that Merrill make its own bids against—and not with—the Street, Joe revolutionized the municipals business. He did it against some pretty strong headwinds. “Without him, we never would have changed the way we did things,” says Andersen, who is still with the division now in its new home at Bank of America. “All these years later we still bid exactly the way he changed it, and now so do most of our competitors.”
In just a decade, after starting basically from scratch, Joe had become unbelievably successful at Merrill. But football, as much as he tried to forget it, never seemed to let him go. In 1994—out of the blue—Joe received a call from the University of Buffalo. The athletic director wanted to know if Joe had any interest in the vacant head-coaching position.
Now in his forties, Joe had been out of football for eleven years. He had fast-tracked his way through Merrill. He had huge responsibilities as a corporate leader and was finally making serious money, with even more serious money on the near horizon. But the call from Buffalo awakened something within him that had been dormant for so long that he had been unaware that it was still alive. “All of a sudden I couldn’t breathe,” he says. “I didn’t realize that I still had all of this desire to coach.”
He did a four-hour interview with the athletic director. He started making calls to potential staff members, including Olivadotti and Chuck Johnson, the head coach at Ridgewood High School in New Jersey. He even let a few colleagues know that he was considering going after the job. “I was pretty shocked,” says Quinn. “He was on track to do anything he wanted at Merrill. He was doing great, making great money. And we didn’t want to lose him.”
Joe thought about it for a week. But as much as he wanted to entertain the thought of coaching again, Joe realized he would have to pass. Things were going too well at Merrill to quit then. And there happened to be another reason he wanted to stick around.
That reason was a woman, a pretty, petite, brown-eyed divorcee and mother of two boys named Amy Jardine.
In 1992 Amy was living with her young sons in the oceanfront town of Rumson, New Jersey, an hour south of Manhattan. Fresh off her divorce, she was slowly wading back into the dating pool, dipping in one toe at a time. Her friends Dave and Ginny Bauer believed she needed to dive in, head first. And they believed they had the perfect person to help with that in Joe, whom Dave knew from Merrill Lynch. “They asked me if I wanted to go on a date with this guy. Ginny said she had no idea if I would like him, but she said I’d have a blast at dinner,” says Amy. She agreed to meet him only if the four of them double-dated.
But the foursome had a difficult time finding a time when they were all free. Joe eventually took the initiative and called Amy. He proceeded to call her weekly for the next three months before he finally convinced her to come to the city for a date. Joe wanted to take her to Cellar in the Sky, a fancy restaurant located on the top of the north tower of the World Trade Center. She agreed. He asked her what she’d be wearing so he’d know how to recognize her. A blue dress, she replied. “I’ll be the short, fat, dumpy one,” he told her.
On the evening of their date, Amy decided to take the ferryboat from Rumson to the city. She got to the dock and waited. And waited. She finally saw a man standing on an adjacent dock. She asked him when the next boat would be along. “Next year, ma’am,” he replied. “The last ferry of the season was last week.”
Amy was supposed to meet Joe for the restaurant’s prix fixe dinner, which was served at 7:00 p.m. It was now 6:00 p.m.
She called Joe and told him that she couldn’t make it. “That’s not okay,” he told her. Amy got in a cab headed for Manhattan. When they finally got to the city, Amy jumped from the cab and ran the last three blocks to the World Trade Center. Walking into the foyer, she was greeted by an elevator man who said: “Oh, you’re the lady in the blue dress.” When she handed her coat over to be checked, the man in the cloakr
oom said: “So you’re the lady in the blue dress.” The maitre’d said the same thing. “Finally, I ran smack into Joe,” says Amy. “I must have downed a bottle of wine that night.”
Her first impression: “Joe was really energetic, very strong and to the point. And he wasn’t that short, fat, or dumpy.”
They ended up dating for three years. “It was a long courtship, but it was very intense,” she says. “That made it fun for me.”
Joe and Amy were already engaged when Joe got the call from Buffalo. And Amy “would have rather plucked her eyes out than go live there,” says Joe. He wanted desperately to coach again. But in his heart he knew the time wasn’t right.
Amy and Joe were married in 1995 on a boat that cruised around the island of Manhattan. They—along with Amy’s two boys, John and Jeff—moved to Chatham, New Jersey, thirty miles west of the city. Dave and Ginny remained their close friends for years. But Dave would be killed in the 2001 terrorist attacks. By then, he was working in the north tower of the World Trade Center, the same place where Joe and Amy had had their first date.
After getting married to Amy, Joe continued to scramble up the corporate ladder. By 2001, he had led two core parts of Merrill Lynch and was on the executive committee on both the retail and institutional sides. He also was the head of the firm’s investment products, insurance, retirement and midsized companies (and two of his kids, Kara and Kevin, were working there). “Each step up he took was just more and more unlikely,” says Quinn. He was perhaps just one layer removed from the very top.