The Banker's Dilemma: She promised him Paris in the spring

by Roman Klee

  At first, Phil Grenelund told his wife he did not want to jinx whatever good news she was expecting to report, but she waived his doubts to one side, saying she was so confident everything would turn out just as she expected, they could start counting the money. She was surprised he had lost confidence in her after all their years of marriage.

  Alva began by hiring the head chef from the Louis XVI restaurant in New York. In keeping with her sophisticated tastes, the food was mainly European and she had even attempted to write the first draft of the menu in French. She was sure it authentically referenced the past, and was very pleased her lessons with the French ambassador’s wife were finally paying dividends.

  There were truites au bleu with sauce verte. Naturally Alva remained unaware of how the trout were prepared. The secret involved the chef using only the freshest fish and throwing them while still alive, into a pan of boiling court bouillon to produce their distinctive curve. But had some of Alva’s more sensitive guests known as much, they would have certainly declined to eat them.

  One of the partner’s wives suggested some people might object to the menu on the grounds that it was not seasonal enough. So Alva included bouchées montglas, filled with turkey and ham, to silence potential critics.

  For the main course, she selected carré d’agneau—the lamb was raised under traditional range conditions. Legumes glace and asperges hollandaise—the vegetables were organically grown, the butter came from cows, massaged daily by milk maids, while listening to Mozart. The asparagus was handpicked at the crack of dawn and flown from France in one of the firm’s private jets. The eggs were from free roaming hens, certified organic.

  Next Alva selected a palate cleansing salade de cœurs de laitue à la riche, a description she thought very appropriate given the circumstances—the lettuce was organically grown on a farm in New Jersey.

  The champagne was Krug, definitely not Cristal—Alva Grenelund had gone off the brand ever since it became associated with the bling-bling, hip-hop crowd. She specified a 1898 no less.

  Some of the better informed oenophiles suggested that the label was a fake, because a vintage so old would have been consumed long ago. It was a minor point because everyone agreed the choice was an excellent one and the Krug would be the finest champagne anyone had ever drunk.

  One of the partners owned a stake in a winery based in the Napa Valley. He supplied cases of 2007 Screaming Eagle Cabernet Sauvignon and Marcassin Estate Chardonnay.

  Alva added a 1985 Dow’s port, a Henri IV Dudognon Heritage Cognac, a fine 2005 Chevalier-Montrachet Grand Cru, Domaine Leflaive and a powerful 2000 Château Lafite-Rothschild. For the committed smokers, there were specially selected Montecristo No. 2 cigars, complete with their own handcrafted mini-humidors.

  No one thought to count the cost of the evening, especially after the earlier heroics on the trading floor—there was no need. But whenever Wall Street workers congregated, inevitably someone started a rumor.

  Alva’s insistence on structural changes to the ballroom and the remodeling of a previously disused service elevator had more than doubled expenses.

  If challenged on the matter, Alva intended to point out they had employed a lot of cheap labor. Thanks to the still tough labor market, the hourly rate for drywallers was surprisingly low. She saw the Solomon Christmas party as one way of giving back to the community.

  Some of the rumormongers claimed there would be no change left from twenty-million dollars. Others put the figure as high as forty-million. Before long, they were making a book, with the highest bet at one hundred million.

  Whatever the true cost, no one would find it itemized in the Solomon P&L. Alva Grenelund had taken the advice of her accountants, who said the firm could write the cost off against tax as part of a new sweetheart deal with the IRS.

  The end of year party was a reward for those partners who had not jumped ship earlier in the year. In any case, the figure had become nothing more than a minor rounding error on the firm’s trading book.

  After cocktails, Alva’s big surprise would be revealed. She and her husband, performed one final check to make sure everything was in order. If Alva was not careful, someone would accuse her of suffering from obsessive-compulsive disorder. But she didn’t want a repeat of her last Christmas celebration, when naked candle flames set fire to the Frette tablecloths.

  The Maitre d’ supervised the measuring of the spaces between the gold-plated Ralph Lauren flatware, crystal glasses and Limoges porcelain. Alva only had to alter three place settings and because she liked them so much, she had ordered half a dozen for use in the couple’s various houses and apartments located in the most exclusive addresses across the globe.

  The gifts would be placed at the back of the ballroom when the waiters started clearing the final course. That way, Phil made sure his wife was guaranteed a packed room for her speech; no one was going to leave early when they knew they could pick up something for nothing at the end of the evening.

  The prize items were classic solid gold Jaeger-LeCoultre Reverso watches, in his and her styles. Phil removed one from its mushroom grey wooden box. He flipped over the art deco inspired rectangular dial and inspected the reverse side, where his wife had ordered the inscription:

  I was there on the day of the GT-OAT—thanks Alva.

  Phil thought it a little strange. Something was off, as he recalled giving Henry Winston the quantities he needed several months in advance.

  The jeweler must have started work on the engravings well before the close of business on December 24—unless of course he had taken to hiring elves.

  He dismissed the silly idea that had started to creep into his head. Everything was in order and his wife really was Solomon’s greatest ever CEO, no one could dispute the facts. They only had to consult the firm’s bottom line, it was proof beyond a shadow of a doubt.

  The numbers never lied.

  Δ = T +3

  Grand Army Plaza was starting to look like an emporium for executive limousines, but without the hard selling salesmen. The ultra impressive lineup included Lincoln Town Cars, Cadillacs, Maybacks, stretched S-Class Mercedes, Rolls-Royce Phantoms and Coupes plus the last ever Corniche Mark V and a 250 Testa Rossa Ferrari. A couple of partners (who were avid car collectors) drove themselves to the St. Marks, while the rest relied on chauffeurs to deposit them and their spouses on the red carpet.

  Ushers led guests to a private lobby, where a specially enlarged elevator took them up to the ballroom on the top-floor. They were received by waiters dressed in eighteenth-century footman’s livery, who served champagne cocktails, Sterling White Sturgeon caviar and Maldon oysters from silver platters.

  Solomon was a strong believer in family values (and there were few events more family friendly than the night before Christmas). So the Executive Management Committee ruled that no one was allowed to bring boyfriends, girlfriends or mistresses to the celebrations.

  Tradition would be upheld, even if a few people suspected that not everyone had taken notice of the directive. As the Solomon elite and their wives circulated around the room, one topic dominated the conversation—the astonishing trade to beat all trades that had taken place earlier in the day.

  Partners close to retirement were heard saying they could scarcely believe it, if only they could have their time again. Guys who had just recently obtained the right to occupy the top-floor library, displayed much greater confidence. They were part of the new intake, originally recruited fresh from the world’s most expensive business schools, where illustrious professors (who labored hard at the efficient frontiers of finance) had taught them everything they knew.

  This explained why the newer partners were convinced the firm’s profits were the product of hiring super smarts, guys who did superior quantitative analysis. They disapproved and mocked the out of date and immensely risky old school of investing, which relied solely on placing bets acco
rding to nothing better than gut instinct.

  Naturally, the smart quants backed everything up with long hours in the office. Hard work and discipline formed the building blocks of the Solomon Way.

  The old timers still had doubts. But what did they know anymore? Their skill sets were outdated. The best they could do was accept their lot in life and the stark reality they were well past their prime years.

  “Did you hear? There’s more great news,” said Franck Phipps, who was thinking of contesting the New Jersey gubernatorial election. “The rumor is … we’re getting our gold watches early!”

  Behind double gilded doors, Alva Grenelund’s big surprise awaited. She had planned everything down to the smallest detail, convinced her entrance would guarantee a memorable evening for all those privileged enough to be present.

  To the sound of trumpets, the doors opened to reveal Alva and eight members of the Management Committee seated on Arabian stallions. (Only members of Phil Grenelund’s polo club took part, because they needed considerable horsemanship to ride their mounts in the confined space of the ballroom.)

  Alva was dressed as Marie-Antoinette. But Phil rejected his wife’s idea to appear as Louis XIV and instead wore traditional riding clothes and a silk top hat.

  Grooms holding the gold-plated bridles, guided the horses along a freshly laid strip of sod, passed stunned guests, to the top table that had been specially prepared for them.

  Alva Grenelund had the perfect vantage point from which to look down on the partners who had cast doubt on her stewardship of the firm. Those who displayed so little faith had been exiled to the outer tables.

  Grenelund needed every drop of self-restraint to stop herself from flipping them the finger. Because it was difficult to take in the scale of what she had pulled off.

  Over the course of a few hours, on one of the dullest trading days of the year, Grenelund had achieved the astounding feat of multiplying the firm’s capital ten times—capital that had taken one hundred and twenty-nine years for partners past and present to accumulate. It was the ultimate triumph of leverage.

  Her achievement was one of the most significant in the history, not only of the firm, but of Wall Street. It didn’t qualify for a Nobel prize, but in Grenelund’s humble opinion it certainly should.

  When Alva announced to the packed trading floor the firm’s record profits, she claimed they would be at least ten times what any competitor had made. Once again, Solomon was ahead of the pack, taking its rightful place at the top table.

  Corporate communications suggested she tone down some of her remarks at the dinner, but Grenelund was having none of it.

  This was her moment. She knew Harriman would repeat his request and ask her to retire, after all, there was no way she could ever top the GT-OAT. But that was all for later.

  Grenelund began with standard business speak.

  “Our risk management framework is second to none. It discourages, prevents and detects excessive risk taking. We make it the responsibility of each employee and partner to act as a risk manager.”

  While the senior partner talked, a convenient moment had come to pull the crackers.

  The jokes were specially written for the evening. What do you call a rogue trader who wins big? … A boy genius! What’s a banker’s favorite song? … Do the Shuffle! What’s a banker’s favorite game? … Musical chairs! What’s an Italian banker’s favorite sexual position? … Duh … go figure! … Why do Latin ladies prefer dating commodities traders? Because at least they know the guys Con-Tango! What do you call a banker who can’t add up? … An auditor! What’s a banker’s favorite form of downside protection … A L.A.Y.D.E.E.

  Grenelund went on and on about her full confidence in the future; how the firm had the resources and expertise to manage its exposures; that the success of the DPG was not a one off and would be repeated.

  Then it was her turn to inject some humor into her self-aggrandizing speech.

  “You know, we wanted to start the New Year with a fresh corporate slogan. So with thanks to my husband, I came up with this: We SWAP, until you DROP! Let me know what you all think.” The audience laughed politely. Then Grenelund caught everyone by surprise, ending her speech with uncharacteristic humility.

  She said that the following lines were especially appropriate for the time of the year and she liked to repeat them to herself every night before bedtime:

  To give, and not to count the cost

  To fight, and not to heed the wounds

  To toil, and not to seek for rest

  To labor, and not to ask for any reward

  Save that of knowing that I do God’s work.

  And even though no one could say for sure who started the chanting (it seemed to have come from the back of the room) someone called out, “Grenelund for president! Grenelund for president!” It didn’t take long and the whole ballroom joined in.

  Well, why not? pondered Alva. Two of her predecessors had secured the post of Treasury secretary—nothing to be ashamed of for sure, but she could go one better and claim the ultimate prize, the ultimate power rush; the presidency of the United States. No one in the history of the firm had ever gone that high.

  Despite the occasion, it seemed awkward to mention it, but Grenelund’s horse was developing a bad case of flatulence.

  A couple of the grooms found it very amusing, as they exchanged knowing glances. The horses were normally given Loperamide, but possibly by mistake, one of the grooms had substituted a laxative.

  Alva Grenelund began to think the unthinkable. Her face grew longer and longer as she feared the worst, especially as the chanting could easily unsettle any one of her horses.

  The point of no return was fast approaching.

  The Solomon elite was now ready to consume its richly deserved final course. Naturally, this was an ideal time to get out cell phones again and adjust the table lighting, in preparation for taking a dozen photos of the grand finale. (Later these would be uploaded to a spouse’s Twitter page—there was a limit to how far the Solomon Loyalty Police could enforce its no social media ban.)

  With choreographed precision, waiters wheeled out serving carts and began placing the world’s most expensive and luxurious dessert in front of the impressed diners.

  Styled in the shape of a Fabergé Easter egg, it was covered in edible gold leaf. It contained four types of Belgium chocolate, flavored with peach and orange liquors. There were layers of champagne jelly, caviar and edible-gold-laced biscuits.

  The sound of digital camera phones clicking in unison, filled the room.

  And then the inevitable happened.

  Before anyone had a chance to pick up their golden spoons, Grenelund’s horse raised its tail, and with an energetic flexing of its bowel muscles, coated two entire serving carts with a copious quantity of hot, fresh horse crap.

  The diners sat in stunned silence.

  Then before Alva could give the order, the grooms leaped into action, producing shovels and buckets—someone was obviously thinking about their roses.

  Grenelund was mortified. Her carefully planned social event would be remembered for all the wrong reasons. She couldn’t bear to think what the sharp tongued partners’ wives would say. And she was sure Andy Kissam’s wife would enjoy the moment more than anyone else.

  Maybe when she reflected later, she would be thankful for the distraction her favorite horse had created. Because, immediately after the incident, a waiter handed Alva a note with instructions to call Bernie Billings.

  Billings was Solomon Brothers’ head of compliance. A man noted for his forensic like attention to detail, he had been informed of some unexpected bad news. He deeply regretted bringing the matter to the senior partner’s attention at the greatest moment in the firm’s history.

  But there was a serious problem with the L.A.Y.D.E.E.s trade.

  Δ = T +3.5<
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  Nathan sat alone in his Chinatown apartment, counting the lights in the rooms across the street. It was fast becoming a habit, though his attention usually wavered once he reached the number ninety-two.

  To brighten up his living space and provide evidence the holiday season really had begun, Nathan started to open Christmas cards addressed to previous tenants: Dear Captain, missing you, hope we can meet up in the New Year! Love Kathy and Randy. Dear Wanda, kids so excited, move back to Kansas, the BEST ever!!! Shaniece expecting number six!

  And just when he least expected it, an invitation to a Christmas dinner arrived. He noticed the out of state postmark, which made him more eager to open it. He intended accepting—only that was before the business with Solomon got in the way.

  The evening news was carrying the story of the Greatest Trade of All Time. It was the only talking point in all the places that mattered in Manhattan. When Nathan returned to his apartment, he retrieved his mail, slugged up the stairs, but instead of opening the letters and cards, tore up everything in sight.

  He poured out a full tumbler of neat Jack Daniels and was about to drink it, when he stopped. He placed the glass on a battered old table top and just stared at the amber liquid for hours.

  The dinner invite together with the cards, wishing Nathan all the best for the holiday season, would remain unappreciated and unacknowledged.

  With no appetite for watching any of the Happy Holidays themed movies, he picked up his smartphone, and noticed one of his former colleagues at Solomon had sent him an email with a video link attached. Nathan knew the guy wasn’t wishing him Happy Hanukkah or anything else good for that matter. He knew there was no point in looking at it, even if he was pretty certain it contained no virus threat.

  He didn’t need to get the picture. A few nights earlier, some of the guys from the Delta Zedd hedging desk had been at Strikes, celebrating the end of the trading season with a Christmas CEOs and HOEs party.