‘Dave, are you comfortable with the role the firm has played in this?’ Paul’s staring at me quite intently. Not challenging me, but putting the spotlight firmly on me. Oh yeah? Haven’t you learnt yet? Don’t get cocky, pal. We may have history, and you might be a bright cookie, but no one out-Dave’s Dave Hart. Why ask me this now, in front of a room full of witnesses? Is he lining me up as the fall guy if the crisis really does spin out of control – on the grounds that I spun the crisis in the first place to get us out of the shit?
‘Totally.’ I look around the room, and they all nod in agreement. As if they count for jack shit. But they are here and they are witnesses. ‘This firm took a stand on an issue that no one was talking about. We’ve cleaned up our own act and we expect others to do the same.’
‘But, Dave – the sheer size of the exposures some of these firms are coming out with is huge. Their share prices are tumbling. People are resigning. The whole market’s down. There are casualties out there, Dave. Real people.’
Nah, not real people. Not people like us. It’s true that Frank Hagan, head of National Mutual, had to resign following the collapse of their share price and their inability to carry on funding the bank’s operations in the wholesale market. It looks like there’ll be a government bail-out, and it will cost a small fortune – probably several tens of billions. The trouble is the whole SPIV issue caught them hopping. Even the regulators say they had no idea just how vulnerable the firm was, because everything was hidden offshore – as if anyone serious really expected the regulators to know anything about anything. But I don’t count Frank Hagan and the team at National Mutual as real people.
‘They aren’t real people.’ I say it casually, a throw-away remark, but a warning bell sounds at the back of my head. This type of conversation – like any significant conversation – shouldn’t really take place in the management committee. In theory the management committee is the forum where decisions are taken on how the firm is run, but in practice everyone knows that all it does is bless whatever the two or three most powerful people have already cooked up between them or been lobbied on and agreed to elsewhere. And I’m certainly not going to talk turkey in front of these people. Real conversations take place in the privacy of my office. Without any witnesses.
‘What do you mean?’ There he goes again. Paul Ryan is actually trying to challenge my authority and he’s being tenacious.
Well, I’m not going to back down now. I can’t. This is my firm, and anyway I’m indestructible. I can say or do anything I want.
‘Isn’t it obvious? These people who are getting fired are commercial bankers, building society mortgage lenders, not investment bankers. They don’t count. They shouldn’t be doing all this complicated stuff that we do anyway. They’re out of their depth, little leaguers who ought to have known better. So a few of them get fired, who cares? They’re pond life.’ This is fun. Normally I might think this stuff but only share it privately with Paul or Two Livers. Now I look at the startled faces round the table and feel a rush.
But Paul won’t let it drop. ‘Dave, the regulators care. The government cares. Their customers care. Did you see the news last night? There were queues in the street outside branches of National Mutual. There could be a run on the banks. Public confidence is being shattered.’
‘Really? Is it that serious? I haven’t caught up with the news lately. I was out last night.’ I smile conspiratorially around the table. ‘Four girls.’ To emphasis the point I raise four fingers. ‘Four. All at the same time. Picture that – if you can. Anyone here done four at the same time?’ No one replies, or even catches my eye. They’re all good family men. Yeah, right. I look at my watch. ‘And still I get in here for 10 a.m.’ Out of the corner of my eye I can see Paul raising his eyes to the ceiling. I actually made it at 11.30, and called to tell them to go ahead without me, but he held up the meeting so I could be here. Now I know why.
‘Dave, this is important. We’re being inundated with press enquiries. We broke this story – you broke this story – and the media expect us to give a lead on it. A lot of firms, all of whom now hate us, have coughed up all kinds of exposures these past weeks, and as a result the financial system is on the verge of meltdown. There’s no confidence in the system any more, no trust, and it’s not confined to this country. The situation in the US is even worse.’
‘Well, thank God we didn’t hire that real estate team.’ I can’t resist a little retaliation. ‘The ones you wanted – those financial engineers who were going to repackage mortgage debt. The sub-prime specialists. As I recall, you threw a hissy fit because I couldn’t meet them to massage their egos, and they ended up being love-bombed and staying at Schleppenheim. Now their toxic waste might be about to bring that whole firm to its knees. Good miss, I’d say.’
Funnily enough, the nodding heads around the table aren’t nodding when I expect them to any more. They almost seem a little embarrassed, staring at their papers and avoiding my glance. I have a sudden, uncomfortable twinge. They can’t have found me out? Nah, impossible. But what if they have? I’m still in charge. Aren’t I? But for how long?
Paul sighs with frustration. ‘Dave, we need to say something. You need to say something. Something that helps to draw a line under this crisis.’
‘Bullshit. Why should I? I’m just starting to enjoy myself.’
‘Dave, with respect, I disagree.’
You can hear a pin drop. ‘Paul, I hate conflict. You know that.’ I clench my fist and slam it down on the table. ‘SO DON’T FUCKING ARGUE WITH ME!’
If silence could become even more absolute, it just did. Not only is there silence, but no movement around the table either. It’s like one of those old Bond movies where the first person to move around the conference room table gets zapped. Paul looks stunned. Stunned and humiliated. Good. And the others are absolutely cowed, which is no surprise. I nod to the faces around the room. No need to say anything further. They understand. But there is a point here, a real point, about my not saying anything further in public. It’s an oversight that I’m about to put right.
‘Gentlemen, in case anyone here thought I was totally out of touch, let me reassure you. I will be taking a public stance on what’s happening. A very public stance. I’m going to appear in front of the Treasury select committee on Wednesday. It’ll be televised. Live.’
Strangely they don’t seem reassured at all.
PARLIAMENT CAN wait. Today my priority is to see another old friend. Ian Masters and I go back to my early days in the City. As brand-new entrants to our old firm, Bartons, we both suffered the hell of investment banking boot camp together. We got drunk together, went whoring together and did drugs together. No finer bonding could ever take place in the Square Mile, and neither of us has ever forgotten some of the great moments we shared.
Our first boss was a man called Mike Smiley. He was a bully and a tyrant in the finest tradition of investment banks everywhere. And like all senior investment bankers, he had at least one serious weakness. In his particular case his big weakness was for the fairer sex – or so it seemed – and it eventually proved his undoing. Every year on his birthday he took the team out for drinks – naturally on expenses – got everyone drunk, then made it clear he expected them to arrange a girl or two for him, so he could disappear for the afternoon to get laid. And we did. Year after year we’d have a whip round, send someone off to Soho to one of the clubs, and the next day he’d either be pleasant and relaxed with us – if the girl had performed well – or would rip us all new arseholes at the slightest excuse – if, for some reason, he’d been less than properly serviced.
So when the time finally came for Ian to jump ship and go to a US firm, he decided that, before he told Mike Smiley, he’d wait for Mike’s birthday. That year Ian organised the girl, and made sure she was special. She was so special, in fact, that she had something no other birthday girl had ever had before. She had a penis. A real one.
With her clothes on you’d never t
ell. ‘She’ was a stunner. Cute, blonde, full-breasted, a slightly husky voice and killer eyes. Mike went off with her and we waited for the explosion next day. But instead he came in smiling in a way we’d never seen before. He was a truly happy man. And different. He was calmer, nicer, somehow softer round the edges.
Until the photos appeared. The photos were a cruel twist. And they were everywhere. No one knew how it happened, but incriminating photographs were left in the photocopying machines. All the photocopying machines. Everywhere in the building. We didn’t have email in those days, so photocopies were the next best thing.
Naturally Mike had to leave the firm, his reputation in the City shattered for ever, followed a few days later by a grimly smirking Ian Masters, who went to work for Hardman Stoney.
Ian’s own career was in the ascendant until he overstepped the mark in the tiniest, most trivial manner, and his puritanical American bosses showed their full lack of any sense of humour. Ian did something which at a British firm would have been perfectly normal. He got the firm to buy him a couple of tickets for Wimbledon, for the men’s singles final, saying he was going to take a client. In fact he took his secretary, who he was having an affair with. So far, so good, and all perfectly normal. But on the day of the final, the men’s champion leapt over the railings into the crowd and strode up through the fans to embrace his father, who was sitting next to – that’s right – Ian Masters and his secretary. Naturally they leant away as the world’s TV cameras caught the magic moment, and relayed it live to the large-screen TVs on the trading floor at Hardman Stoney, where a great cheer went up, and to his wife who was watching television at home in Essex, and who gave a roar of a different kind.
The firm and the wife both fired him, which shows a lack of understanding on both their parts, but then it was made worse when Kool Beer made the TV clip and accompanying photographs the centrepiece for an ad campaign based around a Kool Beer moment. On a billboard on the road out to Heathrow, investment bankers from every firm in the City saw a picture of Ian and his secretary cowering to get out of shot as a historic tennis moment unfolded next to them.
Anyway, bankers are nothing if not resilient, and today Ian is back, presenting a new idea to Grossbank, having reinvented himself as an independent consultant advising City firms on the green business environment and how to make themselves carbon neutral.
He knows nothing about environmentalism, has no actual relevant qualifications and no track record, but as he himself admits, that makes him no different from any of the other charlatans who spend their lives peddling environmentalism, and it’s actually a good thing to come at a subject fresh and without any of the baggage or inhibitions that might accompany knowledge or experience.
Since we’re friends and have history together, I’ve agreed to see him with members of Grossbank’s Environmental Responsibility Working Party. The ERWP are half a dozen of my acolytes – all men, and all as ignorant of environmental issues as I am myself – who have so far done three exploratory trips to Brazil. Up to now we’ve never made it beyond Rio, not because we’re afraid of hot sticky areas – we get to explore plenty of those in Rio – but because getting laid is more fun, and Brazilian girls are in a league of their own.
From a business perspective, Grossbank has done all the usual things that big firms do when they want to pay lip service to any of the big trends of the moment, namely the minimum that we can get away with, except where it looks good as window dressing or we stand to make money out of exploiting people who are even more ignorant than we are.
So we’ve launched a whole range of green and environmental funds which underperform the market because they miss out on hot stocks like tobacco companies and the defence sector, but who cares because it’s not our money we’re managing. We’re ‘investigating’ putting solar panels and windmills on the roofs of our buildings, but won’t actually do it because it’s not cost effective, and we’re adding to the mountains of unwanted recycled materials – shredded paper, cardboard, old computers – that are piling up at dumps all around the country before being shipped off in carbon-unfriendly, polluting freighters to Third World countries to be reprocessed or simply abandoned. Yes, it’s another great fad, or I think it is anyway. In reality I’m too shallow to care, which is good because otherwise I might be troubled.
When Ian sits down I decide it’s only right to start with an open book. ‘Ian, we think it’s all bullshit. At least I do.’ I look at the others and they all nod on cue. ‘You see? We all think it’s bullshit. We don’t need wind farms or wave power. If you want to fix the energy crisis, build nuclear. Britain needs ten nuclear power plants, and Grossbank loves the nuclear industry.’ I look at my colleagues. ‘Don’t we just love Big Nuclear?’ They all nod again. ‘You see? We just solved the energy crisis, and with it climate change, global warming and all the other bullshit. Easy.’ I look around and they all nod again.
Ian’s an old pro. He might be selling Green, but if he has to repackage it as Red, that’s fine with him, just as long as he gets the business. ‘Dave, you’re right. I can’t tell you how encouraging it is for someone like me to come into a major institution like Grossbank and hear what you’ve just said. It’s music to my ears. A breath of fresh air.’
‘It is?’
‘Sure. And the great thing is, you’re right. And of course there are opportunities out there. Big ones, like you say, whether it’s nuclear, which is clearly the biggie, or coal – anyone here remember coal? – or good old-fashioned oil and gas. Sooner or later the Americans will have to decide if they really care so much about the Alaskan caribou that they’re willing to drive around in wimpish electric cars. And when they make their minds up, which they will, there’ll be an oilfield bonanza. We all need to think Big Nuclear, Big Oil and Big Coal. And that’s where I come in.’
‘It is?’
‘Sure. And in exactly the way you just outlined.’
‘What way is that?’
‘Differentiation. Telling the wood from the trees. That’s where Masters Associates will come in, working alongside your own people but very happy to do as much of the heavy lifting as you want – we’re very flexible, we work around the home team, we don’t get in anyone’s way.’
‘OK … but what exactly do you do? And how many are you?’
‘Well, Dave, at the moment the principal effort is largely me. I don’t believe in bait and switch. I don’t go in to a future client, pitch for an advisory assignment, then hand it over to a bunch of junior associates. What you see is what you get. On the other hand, I can bring in all kinds of additional expertise if it’s needed, according to the scope of the assignment and the size of the budget.’
‘I see. I think. And how would you help Grossbank?’
‘In lots of ways, Dave. Let’s talk specifics. First, we’d review everything you’ve done so far. Comprehensive and from the bottom up. Then we’d contextualise it, fitting it to the aims and aspirations of the firm and its core values. Then we’d produce a schedule of specific actions the firm might take to achieve its goals. All fully costed and contextualised, of course, top down and bottom up, with industry-wide and national comparisons.’
‘OK …’ I look around at the team. Ian is a true master and we could all learn from him. No one understands a word he’s said. ‘Any questions from anyone?’
One of my ERWP colleagues raises his hand. ‘Yes, if I may. I’ve been wondering whether the firm should buy up tracts of Brazilian rainforest to claim the carbon credits. Clearly the bank could benefit in PR terms from becoming a carbon-neutral firm, but do you think that would be a worthwhile investment in a strict financial sense, and do you see the carbon-credit market gaining true liquidity over the next few years?’
Ian looks completely gobsmacked. Whatever homework he’s done in his new role as expert consultant on all things green clearly doesn’t extend to anything as tedious as the market for carbon credits.
‘In theory you’re absolutely right to be
thinking on these lines. But with respect, the thrust of the question is actually wrong. Carbon credits and the depth of the market for them isn’t the issue.’ He pauses and nods emphatically, and I can almost feel the rush of adrenaline he must be experiencing as he dances as deftly as he can across impossibly thin ice. We’re investment bankers. We sympathise. We’ve all been there. ‘The issue is forest management.’ He looks around as if he’s just shared with us some piece of ultimate inside information, something that only the chosen few in the most privileged circles ever get to hear.
‘Forest management?’
‘Exactly. There are people in these forests and they can be a problem. Local people. Some of them from indigenous tribes that have lived there for thousands of years. Others who’ve taken squatters’ rights, but again may have been there for generations. Clearing them out can be a problem. Bad PR.’
‘But why would we clear them out?’
‘Why? Are you asking why you’d clear them out?’
‘Yes. Couldn’t we just leave them there?’
‘On the bank’s land? Are you kidding? These people could do anything. Illegal logging, uncontrolled fires, hunting endangered species of wildlife … they’re savages.’
‘Savages? But isn’t it their land?’
‘Not once we’ve bought it. But let’s not get bogged down now in the detail of all this. Masters Associates can look at this as part of our overall assignment for the bank. And in Brazil I’m sure there are private security companies we could hire to clear these people out. Quietly, of course. Any other questions?’
After a performance like that, it goes without saying that we hire him. We don’t actually want a report from him, because then we’d have to read it and possibly even act on it, but it’s good in the meantime to say that we’ve hired expert outside consultants to assess the bank’s strategy and ensure that we stick to best practice environmentally as we do in every other field of activity. It’ll be expensive, and the full study could take a year or more, but we have to be patient and prepared to dig deep.
Dave Hart Omnibus II Page 7