“From what I’ve read, derivatives were created to manage risk by reducing future uncertainties.
“According to an essay by a senior economist at the Federal Reserve of Dallas, derivatives can help banks contend with the volatility of financial markets; especially interest rate fluctuations.
“This seems to be exactly what we need. If Aristotle advocated options contracts, shouldn’t we? I vote to recommend that our New Products department develops a derivative instrument; probably interest rate swap contracts.
“If they agree, then I vote we support our boss’s outrageous demand…oops, his apt request.”
Even as Mark was addressing his friends so convincingly, he was struggling with doubts. Could it be that disaster was lurking in the same bushes that smelled so sweet? The mental battle was exhausting.
Mark thought: Why am I fighting against the inevitable? This policy change is going to go through and if we play the devil’s advocate, we lose.
“Maybe you should just forget about my suggestion and go with your instincts.” Mark poured himself another cup of coffee before measuring his friends’ reactions.
Mark saw disbelief written all over Steve’s face. Denise seemed relieved, but a shadow quickly passed across her features and stole that notion.
“Derivatives may have merit, but they may also be time bombs. Could you please be clearer about why we should feel secure?”
Mark nodded and launched into his explanation.
“It works this way: our bank agrees to pay a dealer a fixed rate for Treasury bills with the return based on a floating rate: the T-bill rate minus a percentage.
“If rates rise, the bank’s margin will still decline but not as badly as it would without the swap.
“We aren’t eliminating all risk, just managing its outer limits. The bank is, in essence, Aristotle’s olive-press owners.”
Realizing that he had failed to convince his friends, Mark opened his briefcase to retrieve the notes he had written the night before.
Maybe he had been too quick to take the word of his sources. How did he know that some of them might not be biased?
‘If only someone could tell me what to do,’ He thought, miserably. ‘I wish prophets existed in the 20th century!’
***
At that moment, the older Mark suddenly found himself looking into Zachri’s face.
“I... I thought I was with Steve and Denise. Where are they?”
“Let me explain why you’ve re-emerged into 2007. Young banker Mark is struggling with two distinct options: follow one’s conscience or take the fast road to wealth.
“Since he wants both, he’s looking for justification for doing well on the terms laid down by his boss.”
“Zachri, you nailed it. That decision was even harder than making my mind up whether to marry Peg. But I found a third way; by introducing derivatives into the proposal.
“Since they were an unknown quantity, I certainly could have been pleading for some assurance. Is that what you’re offering?”
“No, Mark, I could never tell you which choice to make. I can only give you the truth about specific factors. The truth may influence your decision but it doesn’t disrupt your free will.”
“All right, I’ll try to frame my questions so you CAN help me. First, are derivative contracts a rational solution or a bogus justification for the risks of deregulation?”
“It could be either. Many things that are created for a good purpose are corrupted. Consider Agent Orange.
“You know how it was used in the Vietnam War but that wasn’t the inventor’s intent. The mixture of two herbicides was meant to speed the growth of soybeans in regions with a short growing season.”
“That’s a horrible comparison! So, you’re saying that the proper use of derivatives reduces financing risk. I was right!
“Here’s my second question, one that’s haunted me for years. If I had not supported Jim, how would it have altered my future? Would I have been fired and maybe changed my mind about marrying Peg? If I hadn’t married her, would I still have become a father? If I didn’t have a son to push me into that matchmaking service, would I still have met Janie?”
“It wouldn’t have changed what was meant to be, Mark. You were meant to be a father to Martin and you were meant to meet Janie. A different route wouldn’t have altered that. They are your reality.”
“Zachri, how do you know so much about me? Do angels maintain some kind of celestial database to keep track of their subjects? ”
“I’m not an angel. I never said I was. But I am a spirit, sent by your Maker, and I’ve been assigned to you.”
“Assigned to me for how long? Why didn’t I know you sooner? I could have used your psychic powers a number of times.”
“You didn’t see me because you were preoccupied. Think of when you’re on the road and so engrossed in yourself that you miss the spectacles along your route.”
“You got me there. But even if I didn’t acknowledge your presence, couldn’t you have whispered instructions in my ear?”
“I would never usurp your will; that would alter your destiny and set off a domino effect.”
“Sounds like something out of ‘It’s a Wonderful Life!’ Are you saying that author Philip Van Doren Stern who wrote the short version of the 1946 film was prescient?”
Zachri replied, “Stern was given truth to work with.”
“I have to tell you; this is the most confusing situation I’ve ever been in. I’m talking to a spirit, not another person, about getting help with a decision I’ve long since made although, when I go back into the scene, it will be occurring in the present. Is that about right?”
“It may be a little easier to grasp if you consider those uncanny feelings you’ve had when you visited a place for the first time, the feeling you’d been there before; or when you were sure that you had already met a stranger you were meeting for the first time.
“Like when I said you looked familiar, the first time you appeared to me in the hospital?”
Zachri barely nodded and went on.
“A human body only occupies the present. For most of people’s lives, their spirits too, remain trapped like fireflies in jars. But a firefly can be confined to the jar only temporarily; it must either die or break free.
“You could think of your current situation this way: your jar has been opened. Your spirit has been temporarily freed to travel through time and into the minds of some of the people you meet.”
“I wanted to explore outer space ever since I saw the original Star Trek series but even in my most right-brained moments, I could never have conceived of a trip like this one.”
“It’s not a journey of your mind only, Mark. Your spirit, linked to me, is taking you to places to which your mind would deny you entrance.”
“Before you return me to that part of my past, could you give me a hint of the future, something that will help us to make this decision? I’m not asking for advice, just a peek. I’ll take it from there.”
“You don’t give up easily, do you, Mark? I can only reinforce what I’ve already said. Derivatives are not inherently bad, but when they’re misused, and when it’s easy to hide their abuse, the havoc can be enormous.
“The consequences can touch every level of society, throughout the world.”
“That’s a strong statement! But, provided our managers don’t succumb to greed, we have the guarantee we needed. Thank you, Zachri! I’m ready to announce my decision.”
“I wonder why you’re so quick to dismiss the probability of greed. Stay a few more minutes and I’ll give you that peek you requested. ”
From some place deep within, images forced their way into Mark’s consciousness: signing a note for a 38’ sailboat; swinging open the doors of spacious Swiss and Florida homes; sipping expensive liquor.
Impressions started to appear faster and less distinctly than the first few but produced direct hits to his conscience. Parking lots filled with super-sized
vehicles; food dumped in quantities so great that dumpsters take up much of the right of way along city streets; tons of bagged spent tickets stamped with the names of cities, concerts and lotteries.
Finally, the clothes: myriad masculine and feminine sizes, colors and styles; brand names that would sell for a great many times what their production cost. At last he cried out:
“Stop it. I’m getting a headache.”
The images disappeared as Zachri spoke again.
“Let me explain why I don’t think you or your colleagues are immune from these temptations. Avarice and greed—lust for material gain—are rampant among human beings, although they always lead to division and chaos.
“The Italian poet, Dante Alighieri, blamed avarice for ethical and political corruption in his society. In The Inferno, which he completed just before his death, he punished the greedy by placing them in the fourth circle of Hell, including even popes in that milieu.
“In a modern version of Dante’s vision of hell, authors Niven and Pournell chose a Playboy playmate married at twenty-six to an eighty-nine-year-old billionaire to inhabit that circle.”
Mark considered for a moment and responded.
“If I were writing the story, I wouldn’t condemn her to the fourth circle. She didn’t do anything illegal but was just a bit decadent.”
As Mark spoke, Zachri’s image faded and the younger Mark was once again in Denise’s apartment, listening to his friends evaluate derivatives.
“…our researcher here seems convinced that he can remain an honorable person and comply with the desire of our boss to get rich quickly, at the same time.” Steve remarked, without giving away his own position on the matter.
Denise was looking less than happy.
“I’m still not convinced and I’m worried that what we’re about to sign on to is a massive degradation of the philosophy our bank was founded on. I want to believe that Mark’s sources are unbiased and forecasting economic conditions correctly, but my stomach is churning. I need a little time to mull this over before I write up my verdict.”
After thanking Denise profusely for her hospitality, the two men separated. Mark went back to his apartment to spend a few minutes alone before facing the pivotal day ahead.
Just before stopping at the spacious office suite occupied by his boss to perform his last official act of the week, Mark submitted a carefully-crafted memo to Investment and Operations.
It was done; the next stop was the corner bar.
19
HARROWING CONSEQUENCES
The following week, business went on as usual until late on Thursday afternoon. Monday’s announcement was no surprise; over 95% of the loan officers and senior managers approved Jim’s requested 50%. The dissension of a small minority was to be expected.
Mark’s friends must, surely have agreed with his suggestion or he would have heard; but then his phone rang. The voice on the other end of the line sounded composed but with ragged edges.
Was it Denise? Her brief message was uttered slowly and in words of one syllable: “I need to talk. When can we meet?”
Replacing the receiver after they had arranged to meet in forty-five minutes, Mark put his head in his hands and closed his eyes. ‘Oh my God, don’t let her be a casualty’ he muttered under his breath. ‘It’s too soon for management to make cuts and, anyway, they would need a conclusive reason for axing a model employee to avoid pushing tension in the department even higher.’
At that instant, an image of the bank’s employment manual flashed into his mind, with the words ‘at will employer’ seeming to glow like a neon sign. Only a supreme effort of will held back a sudden attack of nausea.
The previous year Mark had done some research to help a former college roommate fight his termination by a competitor bank headquartered in Columbus. Mark had discovered that every employee who is not covered by an employment contract has no recourse in such a situation.
U.S. employees may be dismissed for good cause, for a morally indefensible cause or even without cause, without any laws being broken.
He had learned that Horace C. Wood introduced the doctrine in 1877, using four cases as the basis for his claim. Not one of those cases actually validated it.
In reality, Wood had invented the concept had justified it by creating the impression of courtroom acceptance. From that year to the present, any dissension had always been overruled by this support for employers.
These findings had offended Mark’s sense of justice but he had felt powerless to fight for what should have been his friend’s rights.
After all, how could one person fight the whole legal system?
***
Choking on her tears, Denise met Mark outside the neighborhood bar with the announcement he had intuited; her job had been terminated.
She described how Jim and the personnel manager had come to her cubicle earlier that day.
Within minutes, her desk was emptied and, as alarmed employees and inquisitive customers looked on, Denise had been escorted out, one adjudicator on either side.
The reason for her dismissal had been written up as ‘insufficient growth in her loan portfolio’ and ‘two loans past due’.
No more detail had been volunteered and Denise knew that no more would be given. She was just another ‘at will’ casualty.
As soon as the waitress had delivered their drinks, Mark asked what he had been anxious to know.
“How much did the growth figure you submitted on Friday differ from Jim’s request?”
Denise almost whispered the figure: “By forty percent.”
Mark felt like screaming at her but he knew she had not made her decision lightly. Her integrity was intact and his had been shattered.
Mark’s guilt made expressions of sympathy stick in his throat, almost choking him. The best he could manage was to brush a teardrop from his cheek and enfold her in his strong, masculine arms.
Surrendering to her pain, Denise reached out to the shelter—no matter how temporary—that those arms conveyed, and Mark responded to the acceptance of which he felt so undeserving.
The strength of their separate needs and the warmth of the physical contact set off a reaction neither had anticipated. As their arms tightened around each other, the fire of passion was lit. A quick walk to Mark’s apartment and they succumbed to it. Her lips were extraordinarily soft against his and tasted deliciously of the wine they had just shared. Their shared grief was transformed into an agony of pleasure, absorbing all rational thinking.
Their kissing and caressing, tasting and tantalizing of each other was mutually satisfying. Without knowing she was doing so, Denise pulled Mark into her and moved with him until her gasping and clutching were as tempestuous as his own.
Hours later Mark awoke and Denise was gone. A carefully-worded note vindicated him from all responsibility. He called immediately, hoping they could start over but it didn’t surprise him when Denise insisted they forget the previous night. She gave him two choices: a platonic friendship or none.
The next day Mark was called into Jim’s office and given a sizable bonus. For a fleeting moment, Mark thought of walking out of the office and out of the bank, leaving behind his bonus and advancement potential.
Then he imagined having to tell his parents and his girlfriend that he was unemployed. He accepted the bonus.
A week later, he announced his forthcoming marriage to the nurse he had been putting off for months.
Although he celebrated with his family and fiancée, Mark was finding it harder and harder to live with his conscience; he even began to fear for his sanity.
Daily at unexpected moments and nightly, interrupting his sleep, organisms seemed to gnaw on his brain and wrap themselves around his stomach muscles.
The pain in his gut would not go away. Ignoring it was impossible. He tried to assuage it with every potentially-addictive activity that was not totally illegal. At best, the relief was temporary.
The pounding in his hea
d alternated between the hooves of a single horse and a stampeding herd of wild mustangs.
Even intimate moments with his new bride brought little relief.
To hide from what he interpreted as judging eyes, Mark was becoming a recluse; although he was bodily where he was supposed to be, most of the time.
Normally a very neat person, Mark was beating himself up and it showed. Most days he came to work with facial stubble and wayward hair.
The pounds he had lost, a blessing had they fallen from his many overweight colleagues, had transformed his physique from muscular to anemic. The bags beneath his eyes were a distraction from the blue-water intensity of their color in which, under better conditions, members of the opposite sex could easily lose themselves.
Immersion in his work seemed to be Mark’s only salvation. The one bright spot in the policy changes was the capacity to approve commercial loans to decent clients. He would have been forced to refuse them under the earlier, far more stringent requirements.
Helping his friend Ron get the loan he needed to keep his candy store open lightened Mark’s burden of guilt for almost a full week.
***
One Thursday, several months later, Mark felt particularly at a loss; loans had started turning sour and rumors were circulating that his boss and the other four senior bank officers had worked out a deal to give themselves golden parachutes should the bank become insolvent. If this was true, the scoundrels would triumph by grabbing their ill-gotten gains before the FDIC confiscated whatever assets remained. Mark ardently prayed that the bank would outlive its senior management.
The other issue, equally deplorable, was his act of complete selfishness with Denise when all she had needed was a little human kindness. ‘I was starkly selfish! What can I possibly do to make amends?’
***
His comatose body was frozen in place, but Mark’s spirit folded into a sobbing, repentant heap. Zachri’s look was tender as he spoke.
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