by David Lender
Yeah, Milner was acting strange today. But Jack would think about that later. Right now he was doing his own math. Walker & Company’s fees were close to $100 million for selling all of Southwest. That 100 million bucks would do a lot for his budget this year. Not to mention the 5% of Southwest that he and Mickey got as part of the fee for helping Milner buy it years ago. They’d each make 35 million bucks on that when it went public. Jack felt his fingers tingle, then his balls.
“Might be one of the year’s hottest deals if we play it right, Harold,” Jack said. He looked at Mickey. “The scarcity and exclusivity value of a Harold Milner deal.”
“Jack, I’m already sold. You trying to convince Mickey or yourself?”
Mickey said, “Not himself. You know Jack. He believes in everything.”
“God help us all. A man who still believes his own bullshit.”
Jack laughed along with them but he was thinking about the fees again. And what they would do to the bonus pool, and his bonus. And there wasn’t anything Sir Reginald Schoenfeld could do about the $35 million each he and Mickey would make. Sir Reginald had put an end to taking pieces of deals instead of cash fees shortly after the foreign partners invested their $250 million into Walker & Company four years earlier. Looking over at Milner, thinking about Sir Reginald struck him: what a contrast. Milner knew how to become somebody, big time, but still be a normal guy. He was someone you could have a mano-a-mano with. But this Brit, Sir Reginald, born into it, running Schoenfeld & Co. after his old man died. He was a fourth-generation idiot who inherited his living instead of hitting the streets to make one. But he walked around all haughty like he earned it and deserved it.
Milner sailed right through Jack’s Peter Luger Steak House test; Sir Reginald flunked it before he even got out of the car.
A year after doing the Caldor deal with Milner, Jack and Milner drove over the Williamsburg Bridge from Manhattan into Brooklyn and up to Peter Luger in Milner’s Mercedes 500 series. “They’ve got valet parking,” Jack said, as Milner pulled up to the restaurant. Milner watched the lead kid come around to the driver’s side. The kid was wearing a tan shirt, black slacks, black bow tie, same as Jack set it up when he was 16. Jack was watching Milner. Milner was looking at the kid, smiling, probably wondering is this kid even old enough to drive, and how’s he gonna see over the wheel of this big Mercedes?
Milner didn’t flinch, not even glancing at Jack with a questioning look like most guys. He rolled down the window. “Good evening, sir, welcome to Peter Luger,” the kid said. The kid had it down: polite and respectful, in the tradition, doing Jack proud even though the kid had no idea who he was. “You gentlemen can get out and we’ll take it from here.”
They got out, Jack still watching Milner, Milner handing the kid a few bucks, then seeing a different kid, the car hop, jog up and get into the car. Then Milner asking the lead kid, “Don’t I get a ticket?”
“No, sir, we take it to the lot and then bring your ticket back to you in the restaurant. After dinner you can pick your car up yourself or one of my boys will bring it back to you.”
Milner shrugged. “Alright, my man, we’ll be inside.” No fuss, no attitude, not talking down. Passed.
The valet parking routine was the same as when Jack hatched the idea with Mickey “Splits” Duncan, Lionel Preston, Booker T. Wilson and Moravian White, buddies from the neighborhood in Canarsie. It took Jack three weeks to work the deal out with the maitre d’ at Peter Luger, selling him on the virtues of a “seamless entry for his clients,” pitching himself as “in the process of earning my diploma.” Then he lined up the four surrounding parking lots. What a pain in the ass, three different parking companies, days to find the managers, get them to agree. One of them even insisted he meet the Peter Luger maitre d’, who was off that day, and came back three more times before clinching the deal. Then Booker T. saying, I ain’t wearing no bow tie. Jack telling him, Then you aren’t in the deal. Then Booker T., seeing that the other three car jockeys cleared 200 bucks between them the first weekend, even after Jack took his 25% off the top, finally joining in.
The lead kid trotted up to the front door as Milner and Jack walked toward it, held it open, Milner smiling back and thanking him. It was the same as when Jack used to hold the door and watch the mob guys pile out of their Cadillacs, the young ones flashy with gold chains and parading girls from New Jersey with big hair. The old mob bosses were quiet and classy except for their ugly ties and shirts and smelly one-dollar cigars, and sometimes those shiny sharkskin suits. And usually they had young babes on their arms chewing gum and looking cheap with their tits hanging out of skimpy dresses. Jack knew he didn’t want to be like them.
He didn’t want to be like the lawyers, either. The partners were abusive, never making eye contact, lousy tippers and their shoes scuffed and suits wrinkled. The young lawyers looked whipped, eyes lowered, cowed in front of the partners.
It was the Wall Street guys he liked to watch, learn from their subdued movements. Not the young ones, they were assholes—loud, like saying, “Look at me, see how much money I make, how big I tip,” making a display of it. They treated Jack and his boys like pieces of car parking machinery. And they always had newspapers and sweaty workout stuff on the back seat—loose, not even stuffed in gym bags—candy wrappers on the floor, some times cigarette ashes and butts, real slobs. You could tell a lot from how they kept their cars.
But the older ones from Wall Street, they were established and comfortable inside their skins, walking erect but relaxed, like they didn’t need to impress anybody. Suits with smooth fabrics that hung like silky elegance on their bodies: super lightweight worsteds in the spring and summer; lush, beautiful cashmere in the fall and winter. Their shoes were always shined like glass. Those were the guys he studied, went to school on. They had something to show him. They glided with the understatement of power. Sure, some of them were arrogant, barely noticed him. But the ones who did speak to him didn’t try to act all friendly and chummy like the young mob kids, or disdainful like the young Wall Streeters. And every once in a while one of them would stop and strike up a conversation, shoot the shit just to pass the time without being condescending. And always, always they were good tippers. Sometimes they arrived in cabs or limos, but usually because it was Brooklyn they drove. And those cars were clean; big Mercedes, BMWs, occasionally Cadillacs or Lincolns and even sometimes Rolls-Royces, but always spotless, chrome shining and no papers or shit lying around inside. And when they brought their wives, they were classy with good perfume, tasteful jewelry, modest but elegant dresses. And polite. Even when they were tight-assed bitches they were at least polite. That’s what Jack was shooting for: Wall Street.
And Sir Reginald, when they were negotiating the deal for the Brits and the Frogs to buy into Walker & Company, sitting in the passenger seat of Jack’s BMW 760, name-dropping all the way out to Brooklyn. And as they pulled up in front of Peter Luger, saying, “My goodness, they’re using child labor.” Then when Jack stopped the car and without hesitation got out, handed the lead kid his key and five bucks, then headed for the entrance, Sir Reginald saying, “You’re just going to leave the car with him?” Jack turning back to see Sir Reginald get out of the car, the lead kid already around to open his door, Sir Reginald looking through the kid like he didn’t exist; no “thank you,” nothing. Jack knew then that this guy Sir Reginald was a douchebag. But Sir Reginald Schoenfeld and Philippe Delecroix, Walker’s other foreign partner, just happened to have $250 million they were willing to invest in Walker & Company. Sometimes you just had to suck it up and live with it.
Jack came back to the moment, how strange Milner was behaving. Leaving over a quarter of a billion of value on the table just wasn’t like him. Clients acting out of character meant busted deals, usually at the eleventh hour. He looked over at Mickey, see if he noticed anything. Mickey and Harold had already started jawboning each other about stereo equipment, their perpetual argument. Solid state versus tubes.
Vinyl records versus CDs. Stereo schmereo. A couple a big kids.
Richard felt as if LeClaire’s question had given him his first opening, like this trip to New York hadn’t been a waste of time. “I was doing great in advertising, but…”
“Richard, my friend, I accept that. But why are you here?”
Richard glanced at his watch. This was his shot. “I told you I’ve been a student of deals. And deals guys. I’ve read just about everything on James J. Hill, Harold Milner, Carl Icahn, Sam Zell, even J.P. Morgan and Jimmy Walker.”
“What about Donald Trump?”
“A comb-over windbag who licenses his name to real developers. Are you kidding?” Richard saw LeClaire smile, a genuine smile this time that showed his teeth, his face losing its angular lines and dissolving into roundness. Richard went on, “The guys I mentioned were the ones that convinced me to go back to business school.”
LeClaire said, “But I’m still waiting to be convinced.” He lounged back in his chair, cradled his teacup in both hands and settled down as if to wait for Richard to make his case. “Just tell me about money.”
“I see money as the true medium of the financier. It has an allure and an intrigue of its own; money begetting other money, compounding upon itself. It’s a fascinating notion that almost defies the idea that matter can neither be created nor destroyed. You stick some in a little company, add brains and sweat and before you know it you’ve got a big company.”
“So how do you feel about making money yourself?”
“I’ve never had enough of it, and I can’t ever imagine having too much. If I get there I’ll let you know.”
“What do you know about being an investment banker?”
“From a day-to-day, get-the-job-done standpoint, not much. But on a broader level, I’m more a student of deals than anybody at Michigan, and that’s given me a grounding in reality for the concepts I’ve learned in my finance classes. I don’t think my classmates understand the idea of ripping a company apart and putting it back together as more than when you started. I do.”
LeClaire looked at his watch. Richard felt his stomach drop, thinking he was going to cut the interview off. Then LeClaire started talking. “I should tell you something about us. Starting with me. I’m a graduate of Ecole Polytechnique in France, was on a fast track at Groupe Credit Generale, then sent by GCG to Harvard Business School, graduating first in my class. I was then seconded by Philippe Delecroix himself to Walker shortly after the amalgamation of Walker, Schoenfeld & Co. and GCG. I am a living example of how a motivated, young banker can excel financially and in creative and career development at Walker. I am on track to be the youngest Managing Director ever elected at Walker, except for Jack Grass himself.”
Richard stayed quiet. Interviewers who did a lot of talking always felt the interview went well.
LeClaire continued, “And you know what? If you work hard and focus the intelligence you obviously have, you could be a member of this elite group.”
Richard felt a tickle of excitement. Now he’s selling me.
“Now let us take Walker & Company itself. We are one of the hottest firms on Wall Street today. Four years ago, streetsavvy Walker & Company amalgamated with Schoenfeld & Co. and Groupe Credit Generale. The old-school establishment English connections of Schoenfeld & Co., one of the last great English private merchant banks. The powerhouse financial clout of Groupe Credit Generale, my first employer and our French partner, the largest bank in France. The deal that Jack Grass and Mickey Steinberg put together was an amazing coup. They got Walker access to Schoenfeld’s and GCG’s prestige and capital without giving them control. They got them to put up 51% of the capital for 40% of the vote. In the four years since the amalgamation, Walker has catapulted from a mid-tier firm to a top ten rising star on the Street.”
LeClaire paused, as if to say, “What do you think of that?” Richard didn’t want to kill his momentum, just nodded.
“Look,” LeClaire said, leaning forward like he was letting Richard in on a secret. “Sir Reginald Schoenfeld runs Schoenfeld & Co. like a personal fiefdom, handpicking his people, preserving the unique culture of the firm. GCG, despite its scale, is carved into individual profit centers run by aggressive entrepreneurs. Philippe Delecroix is on GCG’s Board of Directors, and heads two of GCG’s most entrepreneurial profit centers: the investment banking business and the merchant banking subsidiary that holds GCG’s investment in Walker. Do you know why Sir Reginald and Philippe sought out Walker?”
A question LeClaire would obviously answer himself. Richard didn’t dare even nod this time, afraid he might stop.
“Because they wanted Walker’s DNA. Because they know it is their unique DNA that drives their own organizations. What we are looking for, Richard Blum, is exceptional people with that same DNA.”
“I know what you mean,” Richard said, seeing an opening for his final pitch. “I really believe I was born to this. I know I have it in me and I can make a major impact here at Walker. But I won’t come in here with the notion I’m entitled to it; I’ll work my butt off, learn the business from the bottom up. Give me a shot. I won’t let you down.”
Now LeClaire smiled again, broadly, his face rounding out.
Richard sensed it was coming to an end and didn’t want to screw it up at the last minute. He stayed silent.
“You are sharp,” LeClaire said. “You are not full of sheet and you seem to know how to work hard and you definitely have the business under your skin. I like you, Richard.”
Richard felt he’d scratched partway through the surface. LeClaire was still smiling. Close, shut up and leave. The guy just said he liked you.
“I like you too, François,” Richard said. He felt relieved when LeClaire looked at his watch again.
“Well, I need to get ready for my call. I will get back to you. It will be tough, but I will see what I can do.”
Richard got another toothy smile in the lobby as LeClaire escorted him to the elevator. Richard left with the feeling he’d passed the initial grilling, then connected. He felt a rush of relief, then a spasm of tension in his guts. It ended well; but well enough to be finally breaking in?
Richard got his callback to New York for a day of second-round interviews a week after he first met with LeClaire, and then didn’t hear anything until mid-April. When he did, LeClaire’s voice sounded ominous on the voicemail message. Richard’s heart was thumping as he called him back, sitting on one of the benches outside Sam Wyly Hall.
“Hello, my friend,” LeClaire said, “we are hoping you will join us as a member of Walker & Company. Tell me what we need to do to convince you.”
Richard felt his body go numb where it touched the bench, the sensation he was floating above it, and then a feeling like laughter rumbling up from his guts. He said, “You don’t have to do anything. I accept. I can’t tell you how happy I am.”
“Excellent. So let me just give you one element of our offer up front before I lay out all the details.”
Richard heard the change in LeClaire’s tone and now got a different sensation in his guts, like someone punched them. He was also aware that his butt had landed back on the hard slats of the bench and his legs were rubbery.
LeClaire continued, “I remember telling you in our first interview that it would be tough. I fought hard for you but got significant pushback. So here is what we propose: join us as an Associate in this year’s class on a probational basis. That means you have six months to prove yourself. If you accept, we will drive you hard. We will ask you to do things that may make you uncomfortable, even squeamish. We will test you to see if you are Walker material. But the other terms of your employment will be no different from any other Associate’s, and none of your classmates will be aware of your probational status.”
Richard cleared his throat, thinking on his feet, trying to put his interviewing hat back on. “I have no concerns about my ability to succeed. Of course, I accept.”
Richard listened to LeClaire
walk him through the other elements of the offer, feeling the strength coming back into his legs. Probation or not, he was going to Wall Street, even if they could throw him out again within six months. But as he told himself there was no way he was gonna let that happen, he couldn’t shake the sense of a dull thud in his stomach.
Washington, D.C. Roman Croonquist, Director, Division of Enforcement of the Securities and Exchange Commission, sat at his desk, feeling as if things couldn’t get any better. Yesterday he’d returned from New York, where he’d acted as government spokesperson at the sentencing hearing in his best insider trading bust since becoming the SEC’s top cop six years earlier. In the Ceremonial Courtroom of the U.S. Courthouse on Pearl Street, where Bernie Madoff got 150 years, 28-year-old investment banker Matthew Kowalski got the maximum: 15 years, plus disgorgement of his share of his 13-member ring’s $14 million in illegal gains, plus a $500,000 fine. Croonquist didn’t think it was enough for the slimebag, but that’s all the sentencing guidelines allowed. Kowalski, the little creep, had also passed inside information to his father, who traded on it through his niece’s brokerage account. Pathetic. At one point during the hearing Kowalski’s mother appealed to him with her eyes to help her son. Like hell. Croonquist had felt nothing but contempt. The kid knew exactly what he was doing. So did his old man. They’re only sorry after they’re caught.
And even better than that, today, the SEC’s new $780 million MarketWatch system was officially on-stream, finished with its two-month benchmarking process. He typed a few keys and watched the symbols appear on the LCD screen on top of his desk, new dots in a blizzard of market trading statistics. The screen was one of 250 new MarketWatch terminals. Croonquist had been handpicked by SEC Chairman Green and Croonquist’s old boss, Phil Johnson in Surveillance to get MarketWatch up and running. It monitored trading activity worldwide through electronic surveillance of all major stock exchanges.