Fixers

by Michael M. Thomas

  Outside, while we waited for Lucia’s driver—she was deadheading on a client’s jet scheduled to depart White Plains for London at midnight—I asked her about Hardcastle. “The guy strikes me as epitomizing everything that’s wrong with so-called ‘crony capitalism,’ ” I said.

  Lucia didn’t disagree. She filled me in. It turns out the guy’s Old Money—or the next thing to it, although he sells himself as a modern Horatio Alger. He was born and brought up in Wilmington, where his lawyer father took care of a branch of the DuPont family. He went to Saint Andrews prep and Princeton, and then, thanks to a fellow member of Ivy, the “eating club” to which he belonged, got a job in Tulsa after graduation and went west to enlarge his fortune. Along the way he made a socially strategic marriage to a daughter of an old Boston-Maine banking family named Longstreth. The name sounded vaguely familiar.

  “I shouldn’t be surprised,” Lucia said. “They’re people like you, Chauncey: born to be painted by Sargent. I gather his in-laws loathe him.”

  She added that for all his loathsome qualities, Hardcastle’s a big deal, a member of many boards and councils in addition to STST, where he’s the fourth- or fifth-largest stockholder. Lucia says he’s Rosenweis’s guardian angel.

  That pretty much told me all I cared to know. Lucia’s car pulled up, and we embraced and went our separate ways.

  I couldn’t help feeling depressed. Christmas is maybe the one time of the year in this cruel, usurious country that we’re supposed to think of others, people less fortunate or advantaged, which if you’re in the upper echelons of Wall Street means maybe 99.9 percent of the world’s population. To glorify wealth at a time when it’s clear that a lot of people are in trouble seems vulgar and coldhearted. I found myself wondering if the Street ever shows what we used to call noblesse oblige. Is it such a luxury, a moral pearl beyond price? Is it a sign of weakness? And don’t even start asking whether what they do to make all that money is socially useful in any meaningful way.

  Then I told myself that this is the way we live now—so deal with it. The Rosenweises and Hardcastles are what they are, Wall Street is what it is—so just shut up and take the money. And the foie gras.

  DECEMBER 22, 2007

  I rolled out of bed early, shuffled into my bathrobe, made a light breakfast, read the papers, got dressed, and decided to walk uptown to 60th Street, where I’m meeting Scaramouche at the Veau d’Or for our annual Christmas lunch. It’s my favorite Manhattan restaurant. I’m very fond of M. Treboux, who owns the place—and if I should ever think of getting married, his charming daughter Catherine, who runs it for him, will be near the top of my list. Scaramouche’s been going there forever. So long that he boasts that he’s on his third set of owners.

  When I got there he was already halfway through a bottle of champagne. He looked ruddy, content, and prosperous; there’s a kind of sparkle to the man that makes one instantly glad to see him.

  A fresh glass was poured for me and we clinked toasts to the season and each other.

  “So what’s new?” I asked.

  “All I can say, Chauncey my boy, is beware of old age. It has little to recommend it.”

  I promised to age cautiously. We ordered—tripe for him, kidneys for me: a common passion for offal is another cord that binds us—and chatted about cabbages and kings right through lunch, but I couldn’t help thinking he had something larger on his mind. He waited until we were served the Île flottante, the restaurant’s signature, then turned serious. “Not to put a pall on this splendid occasion, but I don’t suppose you’ve heard of something called ‘the Santorini Shuffle’?”

  I shook my head.

  “I must say, every time I think the Street can’t pull a faster one, it does. This Santorini gambit is very hush-hush, and no wonder, because if you ask me, it stinks to high heaven.”

  “Do tell.”

  “The sordid tale begins around 2001. Greece wanted into the eurozone, to open up certain markets, and the eurozone—the Germans especially—wanted to admit Greece, in order to stimulate trade the other way round. Trouble was, Athens’s balance sheet didn’t meet the standards for admission. Too much going out, too little coming in: the usual problem.

  “So, roll the drums, maestro, if you please. Wall Street was summoned to the rescue! A top-secret confab of major Wall Street houses, the Greek government, and some ex officio EU types from Brussels was held on the volcanic island of Santorini, far from prying eyes and ears, and they came up with a scheme that used options and overnight repurchase agreements and all sorts of other now-you-see-it-now-you-don’t to cover up the shortfall long enough to satisfy the EU’s standards for admission. It was a simple affair of cooking the books. The firms, ours among them, earned a handsome fee and have continued to profit ever since.”

  “Isn’t that the Wall Street way?”

  He smiled. “Well, of course it is. The trouble is that it never seems to have occurred to the parties concerned that the essence of a nation’s sovereignty is control of its currency, and you give that up, and with it the power to adjust exchange rates, when you join something like the eurozone. Now, predictably, Greece’s economy is imploding and it looks like they won’t be able to meet their obligations.”

  “Wow. I thought nations didn’t go broke. Wasn’t that Walter Wriston’s great claim?”

  Scaramouche twinkled. “It was, and it’s absolute twaddle. But it gets better. One reason Greece is falling apart financially is that the Street baked all sorts of self-serving options into the cake, and when those kicked in, Greece suddenly found itself in the hole for tens of billions of euros with no way out. And it’s only gotten worse, thanks to the idiotic notion that you can borrow your way out of debt. Does the name Harley Winters mean anything to you?”

  “Sure,” I said, trying to keep my voice level.

  “It’s the same kind of mess he got my alma mater into when he was head of the endowment committee. It looks as if it’s going to cost the university the better part of a half-billion dollars to extricate itself from the tangle.”

  “So what’s going to happen to the Wall Street firms that cooked this deal up?”

  “If history is any guide: nothing. They’ll just whine that they were only serving the needs of a valued client, just doing what they were asked to do. That’s the way the Street works nowadays; hell, it’s the way the world does. It’s always the other person’s fault. Up to him to realize that what he was being sold is junk. Up to him to recognize that the merger he’s being pitched is pointless. Where were his lawyers when our lawyers were writing up the terms? If you look at the record, nothing ever happens to the Street in such affairs. This wouldn’t be the first time Wall Street’s involved itself in a massive swindle that literally involves the fate of nations, and they’ve always come out untouched. Why should this time be different?”

  He shook his head at the thought, refilled his glass, and raised it. “Well, my boy, here’s to finance capitalism. Long may it prosper. What a world!”

  A few minutes later, we shook hands on the sidewalk and wished each other the best of the season. He’s off to visit his daughter and her family in Oregon; I’ll be here through Christmas Day, which I’ll spend making the rounds, as Manhattan bachelors have always done.

  DECEMBER 24, 2007

  Well, here we are: Christmas Eve. Quite a year, a terrible year actually—but 2008 promises to be even more scary, what with the election added to Wall Street’s troubles and the world’s uncertainties. OG’s looking strong; Orteig sounds as jubilant as Orteig can. Iowa is only days away.

  I’m keeping my usual footloose, casual Christmas. In my loft, the décor is modest: a small tree, a couple of wreaths, and a sprig of mistletoe just in case. In a couple of hours I’ll head for Riverside Drive to spend Christmas Eve with a couple who extend the hospitality of their grand Tweed-era apartment to me and assorted other “orphans” every year. On Christmas Day, I’ll stop by friends for eggnong, then others for brunch, and around 5:00 p
.m. I’ll meet some chums for our annual Christmas movie at Film Forum or the Angelika, and afterward, a burger or plate of red-sauce spaghetti somewhere easy.

  On Wednesday the 26th, Boxing Day, in what has evolved into an annual custom as regular as the sunrise, I’ll pick up a rental car and drive up to the Berkshires, where I’ll stay until New Year’s Day with Rex and Millie Hastings. It’ll be a good time for long snowy rambles with their three Labrador retrievers, while I ponder my misspent middle age and reflect on the eternal question posed by Wordsworth: whether, getting and spending, I’ve laid waste my powers, whatever they might be. I can’t escape a growing suspicion that I may have. And what’s true for me may also be true for the entire country.

  Enough of this. It’s Christmas Eve, goddamn it! God bless us, every one. And to all, a good night! See you next year.

  JANUARY 1, 2008

  I left the Hastings’ after breakfast, dropped one of the other houseguests off on West End Avenue around noon, returned the rental car to a garage near my apartment, and was home in time for a late lunch and a cheering glass of bubbly and some special smoked salmon from a fish caught and cured at a client’s “camp” on a river in New Brunswick.

  The routine in the Berkshires had been the same as always: home-and-away dinner parties; visits exchanged; rambles in the woods and fields with the dogs; time for myself alone in a fat armchair in a fire-warmed corner with a book; a trip into Williamstown to see an interesting exhibition at the Clark Institute and have a coffee with the chief curator to discuss his plans; a matinee at the Playhouse; the New Year’s Eve feast: same food and drink, same people as the year before and the year before that and the year before that.

  There’s something wonderfully comforting and consoling about this kind of year in, year out continuity. My hosts and the circle they move in are decent, old-fashioned people. Intelligent, overeducated, bookish, commonsensical, a bit naïve really, not sure that they understand the way we live now, somewhat worried about money (but who isn’t), which is one reason they’ve ended up several hours distant from the blazing lights and frantic, chattering, costly pace of Manhattan and Boston.

  My passenger on the ride back to New York was a former professor at Pace, now head of economics research at a big private foundation. He’s part of a study group—journalists and academics—who are pursuing conclusive evidence that what Hillary Clinton has called “the vast right-wing conspiracy” actually exists. Their thesis is that starting at various points between 1968 and 1980, the United States has been the target of a concerted and coordinated effort by Wall Street and Corporate America to undermine our particular form of social democracy and convert our political economy to a closed system controlled and owned by a web of financial interests and their political courtiers.

  According to the professor, this theoretical conspiracy had its roots in 1973–75 when, to quote him, “the three legs of the perch from which we ruled the world were kicked out from under us.” Our economic hegemony was overthrown by the OPEC price increases and the stagflation; military hegemony came to an end in Vietnam and Carter’s disaster in the Iran desert; our moral hegemony was killed off by Watergate and Nixon’s resignation. This left the national mood susceptible to Reagan’s soporific mix of palliatives and platitudes, which provided cover for a conservative coup far more extreme than anything Goldwater had stood for in 1964.

  “You’d have to say this,” he told me as we whizzed by the sign for the Tappan Zee Bridge, “the project has succeeded beyond anyone’s wildest expectations. It’s a Gilded Age all over again. Money rules absolutely. Corporatism and finance have totally taken over American politics. There isn’t a pore of the body politic that doesn’t stink of corruption and rot and bribery! This is what living in France must have felt like on the eve of the revolution. Or Germany just before Hitler.”

  His words hit home, pricking concerns I’ve managed to keep at a distance. Fenced off mentally where conscience can’t get at them. Just for a second, I found myself wondering if there might be more at stake in this mission for Mankoff than simply keeping Wall Street out of jail. Am I just a tiny cog in a giant conspiracy intent on turning America into a fascist oligarchy? If my Groton history teacher, the one who worshipped FDR and the New Deal, were still alive and knew what I’ve been up to, he’d kick my ass and cross me off the list of his favorite ex-pupils. As it is, maybe he’ll come back to haunt my slumbers, the way Marley’s ghost did to Scrooge. I find the notion very troubling to think about, but the die is cast, the money’s been moved. Only $8 million left to play with. I must say that in terms of political bang for the buck, there’s never been anything like the Internet.

  As for the other stuff: like Scarlett O’Hara, I’ll think about it tomorrow.

  JANUARY 3, 2008

  Did someone say “Game on!”?

  Well, you better believe it, because OG has swept the Iowa caucuses. The competition’s putting on a brave face, but based on what Orteig told me last night, this is the beginning of the end. Obviously this kills Hillary’s hopes for a political blitzkrieg. She won’t go easy, of course; there’s no quit in her. Orteig expects her to redouble her efforts, and that she’ll probably do well on Primary Day, when a bunch of states go to the polls, but that’ll be her last hurrah. In other words, the lady is toast.

  Naturally, OG’s Iowa victory speech, which I just finished listening to, was a combination cock-of-the-walk and cock-a-hoop. Awfully confident, considering where we are, with a long way to go between now and the convention in Denver in August. There’s no quit in Hillary, and she can be expected to drop the gloves and let it all hang out. Still, I like OG’s chances, especially if the Wall Street apocalypse lighting up Mankoff’s crystal ball comes to pass.

  Ooops! The phone’s ringing. It’s Mankoff. This late, he can only be calling about Iowa, and he’s got to be pleased. Gotta take this call. More anon. On to New Hampshire!

  JANUARY 8, 2008

  The final tally in New Hampshire primary is in. There was a huge turnout. OG came second: 38 percent to Hillary’s 39 percent.

  Orteig’s not surprised—or all that disappointed. He tells me it was to be expected that Clinton would win a round or two before OG finally puts her down for the count. Orteig left no doubt that it’s our contribution that’s made the difference, and I must say, to judge by the results, he’s leveraged the money I’ve injected into OG’s campaign—$71 million so far—with an efficiency you have to admire. When Mankoff and I spoke after the final New Hampshire numbers were in, he told me that the investment in OG may ultimately reap returns as great as any in STST’s storied history. From the way he said that, I couldn’t escape the feeling, no more than a glimmer, really, that there’s more at stake here than simply the Winters-Holloway “insurance policy.” He also said that when this is over, he may ask Orteig to come on board to run STST’s wealth-management business.

  Enough of politics. According to Lucia, what’s on the mind of everyone on Wall Street right now is, first, the rumor that Bank of America (BofA) is going to acquire Countrywide and, second, that Bear Stearns may finally go bust.

  “The unspeakable acquiring the uneatable.” Scaramouche paraphrased Oscar Wilde’s sarcastic definition of foxhunting when I asked him about the rumored BofA-Countrywide deal at lunch today. The San Calisto consensus is that this is the stupidest deal ever. Apart from the fact that its CEO looks and sounds like an extra on The Sopranos, Countrywide is apparently a mess of bad assets, crummy governance, hard-sell sales techniques that verge on the criminal, and very suspicious Washington interfaces (especially at Fannie Mae, whose management is well into a second generation of bonus-seeking corruption): all in all, a recipe for huge financial and regulatory headaches down the road.

  As regards Bear Stearns, the consensus seems to be that by Easter Bear will be extinct, either in a bankruptcy chapter, taken over by one of the big banks, or absorbed and dismembered by the dripping jaws of vultures and hyenas: a joint here, a chop or a limb t
here. Regarding this, one of my clients claims that the New York Fed’s been sounding out the Street to see who might participate in a you-get-this-and-I-get-that breakup of Bear.

  The problem is that no one will want to take on the garbage on Bear’s balance sheet with a make-whole from Uncle Sam, and that’s not in the cards. Not yet, at least. People are calling in loans, asking for better collateral, and generally making life miserable for whoever it is—Jimmy Cayne’s apparently indicated—who’s running the show in Bear’s new trophy building at 383 Madison Avenue. So far the consensus favors a “good bank, bad bank” solution. The good stuff stays in “old Bear” and the crap goes into “new Bear,” which then files for bankruptcy, where it can be profitably looted by attorneys, accountants and workout specialists. I hate to sound sacrilegious, but I can’t help being reminded of the Roman soldiers dicing for Christ’s garments at the foot of the cross.

  And so it goes. Was it John Donne who said, “The new religion casts all in doubt”? Something like that.

  JANUARY 9, 2008

  “A lot of people wouldn’t mind seeing Bear out of business,” Mankoff mused this afternoon when I was in his office reviewing a list of proposals. “They’ve been tough competitors, although not so much with Cayne running things as when Ace Greenberg was in charge. Jimmy’s taken his eye off the ball every now and then; Ace never did. There’s a lot of fast-and-loose going on over there that Ace would never have tolerated.”

  What worries him is that if Bear Stearns tanks, the contagion will spread—and rapidly. The signs are already there. “We’ve reached the point where people are taking a much harder look at each other’s balance sheets and collateral, although so far no one’s pulled the plug. But if one does, the rest of us may.”