I checked the call, let it go to voice mail, and peered through the beveled glass door. Eric was pacing from one end of his silk Sarouk rug to the other, speaking into the headset of his hands-free phone. The signs of stress were all over his face.
Eric was my mentor, the man who had hired me out of business school. Two years ago, when ditching Wall Street and changing careers had seemed like a good idea, it was Eric who’d convinced the firm to let me split my time between production and management. It sounded like two jobs, but it was more like twenty. In theory, putting Saxton Silvers’ Green Division on the map meant training investment advisors across the country to “think green,” but all the training in the world wasn’t going to convince them to make less money for the pension funds, retirees, and other investors who counted on the brilliant minds at Saxton Silvers to maximize their returns. Expanding “green” beyond charitable trusts and other special investor groups that were either required or predisposed to go green meant assembling and supervising an investment strategy team like no other, and then traveling across the globe to identify and nail down socially responsible opportunities that would actually make money—lots of money. “Show them—don’t tell them—that green belongs in their portfolio,” was Eric’s charge to me. His own career had soared since then, and for the past thirteen months he’d served as president of Saxton Silvers. Subprime fallout had made the last three hell.
“Does he know I’m here?” I asked his assistant.
“Yes. It’ll be just a few minutes more. Mr. Volke wants to see you as soon as he hangs up.”
I returned to my seat, and my phone buzzed again. It was Mallory, who was still at the Pierre Hotel. This was the third time she’d speed-dialed me since I’d called to tell her about “a little mishap” in the elevator.
“Why is there a security guard outside my door?” she asked.
I could hear the strain in her voice, and I tried to reassure her. “Honey, it’s like I explained earlier: The lawyer thinks somebody might be trying to even an old score with me. It’s better to be safe than sorry, so I asked the firm to arrange for a bodyguard.”
“Michael, you’re not telling me everything. Juan called over here from the front desk to see if I needed a ride home. According to him, everyone in our building is talking about the package that burst into flames and almost burned you alive in the elevator. The FBI was even there.”
It had been a mistake not to tell Mallory the whole story, but my intentions had been good. “I’m sorry. I didn’t want to freak you out. I’ve already talked with the FBI, and the security guard outside your door is just a precaution. This is going to be okay.”
“How can you say that? Somebody tried to kill you!”
“Nobody was trying to kill me. Even the FBI said so.”
“What?”
“It was just a stunt. The only reason it was dangerous was because I happened to open the package inside the elevator, where the smoke got to me. There was no way the sender knew where I was going to open it.”
“Well, I suppose that’s true. But it could have killed you. And whatever it was, it sure wasn’t a love note.”
“You’re right. Someone is definitely trying to scare us.”
“And doing a damn fine job of it. This is all too crazy. Why is this happening?”
“We don’t know yet. But we have the best of the best working on it. I’m meeting with Eric as soon as—wait. He just got off the phone. I have to go, okay?”
“Call me just as soon as you know anything more.”
I promised I would and hung up.
Nancy opened the glass doors and escorted me into the president’s office. Eric was a handsome man with a touch of gray hair at the temples, the strong handshake of a former Olympic rower (Munich ’72), and impeccable taste in custom-tailored suits from Hong Kong. Decorating the walls of his spacious office were a dozen large underwater photographs that he had taken while scuba diving the most spectacular reefs in the world. He was the one senior manager who consistently took the time to talk one-on-one with up-and-comers like me to make sure we weren’t getting too wound up and heading toward burnout—which was amazing, given the constant pressure he worked under. He was president of an institution that derived 40 percent of its annual revenue and 70 percent of its profit from its most risky and volatile line of business: trading and investing. Even in bull markets, the firm’s trading desk spent forty days a year operating in the red. In other words, Saxton Silvers’ Investment Banking Division could arrange the biggest deals in town, its Asset Management Division could manage client portfolios with precision, and one boneheaded call by a single group of traders could still land the entire firm in the toilet.
This morning, the stress had tightened its grip on Eric’s facial muscles beyond normal. Before he could even try to flash a semblance of a smile and greet me, he was on another phone call and speaking into the headset. He motioned for me to sit on the couch by the window. Listening to Eric, I quickly realized that he was talking to our CEO, who, as usual for this time of year, was in Palm Beach. It was the first time I’d witnessed Eric in what appeared to be the financial equivalent of code blue. He spoke clipped, rapid-fire sentences into his headset.
“As of this morning cash reserves were at twenty-nine billion,” Eric said. “I’ve checked with the finance desk, the repo desk, the treasurer and asked each of them point-blank—has anyone heard of any margin calls from our major lenders? No. A trade gone bad? No. Anything out of the normal course? Across the board the answer was absolutely not. No problems.”
The call lasted another two or three minutes, and it was abundantly clear that my identity theft and personal financial problems were not on the president’s radar. Eric ended the call by ripping off his headset and throwing it on the floor. He was seething, apparently in desperate need of a punching bag. But he was the ultimate multitasker, never missing anything out of the ordinary.
“What the hell happened to your hand?”
I looked down and saw it was turning lobster red. I told him quickly about the package.
“Shit like that happens when people lose money. We’ve had nuts walk into branch offices and start shooting. Be careful. Did you call the police?”
“Sonya’s got the FBI on it,” I said. “But this is just the latest in a much larger problem.”
“No shit,” he said, and suddenly we were no longer talking about me. “Biggest financial crisis Saxton Silvers has faced in its hundred-fifty-seven-year history, and I can’t get our CEO to cancel his tee time and deal with it.”
I said nothing. I knew by now when to shut up and let him process his anger. Finally he looked at me and said, “It’s going to hit the fan today—huge.”
“What’s wrong?”
Eric went to the window and looked off into the distance. The morning sun gave a warm glow to the new leaves and blossoms in Central Park, confirming that April showers really do bring May flowers. Eric seemed oblivious to the spectacular view, still stuck in the icy grip of winter.
He said, “The plan had been to hold the bad news until after the close of trading today. But it leaked. Nothing we can do now but watch the big board and hold on to our asses.”
“How bad is it?” I asked.
He shook his head and said, “Another subprime write down.”
I swallowed hard. At the start of the housing slump last autumn, Eric had been forced to confirm a leak to the media that Saxton Silvers would burn $1.6 billion of its cash reserves to bail out two of its wholly owned hedge funds that were on the brink of bankruptcy from subprime losses. The firm still managed to report a profit of $9.3 billion for the year, even after payment of $16.5 billion in compensation and benefits.
“How big is this one?” I asked.
Eric turned and looked at me. “Twenty-two.”
The number hit me like a five iron to the forehead. “I assume you don’t mean million.”
“If only,” he said with a mirthless chuckle.
It was a staggering sum, but it was what happened when mortgage originators linked up with an unregulated Wall Street—two wires you really don’t want to cross. The irony was that since 9/11, most of the federal dollars that had gone toward regulation of financial institutions had been redirected to Homeland Security. Now, in the absence of that regulation, Saxton Silvers was writing down another $22 billion in losses—nearly half the entire annual budget for Homeland Security.
“Is it all subprime?” I asked.
“Every penny.”
Eric turned away again and looked out the window. His gaze swept across Midtown from Madison to Seventh Avenue, where in turn he could literally see the shining world headquarters of Bear Stearns and then Lehman Brothers. Sandwiched between the two, painted on the side of a building, was a big blue-and-white ad for AIG.
“And who the hell knows where it really ends?” he said.
11
CHUCK BELL GOT TO WORK EARLY—EIGHT HOURS BEFORE HE USUALLY checked in for his talk-and-analysis program, Bell Ringer, the top-rated television show on Financial News Network.
“Morning, Chrissie,” he said on his way through the FNN lobby.
Bell called the receptionist Chrissie only because everyone knew that he hated to be called anything but Christopher. Bell continued through the lobby, slowing only to rub the hoof on a miniature replica of the famous seven-thousand-pound bronze sculpture of a charging bull that sits in the Financial District two blocks from the New York Stock Exchange. Bulls are good on Wall Street. Bears are bad. The financial world is big on animal references, most of which come from the nineteenth-century London Stock Exchange, including “lame duck,” which originally meant a debtor who couldn’t pay his debts.
This morning, Bell was poised to break a story that would turn plenty of bull riders into lame ducks in the classic sense.
Bell had made his mark as a hugely successful hedge-fund manager, and then he retired at the age of thirty-seven to pursue a second career in journalism. His first show on FNN—a serious attempt at market analysis—was a total flop. His research was suspect, his predictions were usually wrong, and the “nice-guy” demeanor the network foisted upon him just didn’t fit. Bell had been notorious for his temper in the business world, and finally the geniuses at FNN realized that he came across as someone who knew what he was talking about only when shouting angrily at the top of his lungs. They renamed the show Bell Ringer, created a set that looked more like a boxing ring than the stock exchange, and let Bell just be himself. The show was an instant hit. “Suze Orman meets Jerry Springer,” critics called it. Viewers especially loved his stunts—like the time Bell rolled up his shirtsleeves, pulled on a pair of boxing gloves, and beat the living crap out of two guys dressed up as Smokey and Yogi the last time the market went from bull to bear. Whenever something good happened—a stock catching fire, or a bear hitting the canvas—it drew the same reaction from the host:
“That’s a Bell Ringer!” he would shout.
Normally Bell’s show didn’t air until five P.M., but today’s big news was happening before breakfast. Bell wanted a piece of the story in real time.
“Go home, Chuck.”
Bell turned to find Rosario Reynolds standing two feet away from him. Rosario was the female half of FNN’s popular morning duo—the young, energetic, and gorgeous counterpart to the stodgy old Wall Street fat cat who, bloggers said, couldn’t keep his dirty-old-man eyes off her breasts.
“Rrrrrosario,” Bell said, trilling the R for added annoyance. “How’s my international superstar this morning?”
“Back off, Bell. If you think you’re going on the air this morning to scoop the Saxton Silvers news, dream on. Roger and I are live in ten minutes.”
“Rosario, Rosario,” he said with a condescending shake of the head. “Don’t you know that at FNN the Money Honey is always the last to know?”
“This Money Honey has a bigger set of balls than you do. So like I said: Back off. This story is mine.”
“You don’t have a story.”
“I broke it this morning. Another twenty-two billion in subprime write-downs.”
“That’s not the story,” he said, smiling thinly. “That’s the tip of the iceberg.”
Her eyes narrowed. “What do you know?”
He laughed way too hard, then snagged an assistant producer as she was trying to sneak past the two clashing stars in the hallway.
“Sandra,” said Bell, “how are we coming on the Palm Beach connection?”
Sandra checked her clip board. “Shooting for nine forty, maybe nine forty-five at the latest.”
“That’s during my show!” said Rosario
The assistant producer hurried away without a word. Rosario shoved Bell so hard that his shoulder blades bumped against the wall.
“What are you trying to pull?” she said sharply.
“I’m not trying to do anything. It’s done. FNN is bumping you for a special edition of Bell Ringer.”
“That’s not fair! I worked hard on this story.”
“Aww,” he said, patting her head. “Poor Money Honey.”
She knocked his hand away. “You’re such an asshole.”
“Thank you.”
“I am not going to let this happen,” she said.
“You don’t have a choice,” said Bell. “If these subprime write downs create the kind of liquidity problems that people are talking about, this could be the beginning of the end for one of the oldest investment banks on Wall Street. But all you’ve got are rumors. I’ve got a source.”
She gave him an assessing look. “You’re lying.”
“Maybe I am. Maybe I’m not.”
“I’ll have your ass if you bump my show and don’t have someone on the inside.”
He smiled thinly. “Under normal circumstances, I might be worried. But you’re overlooking one crucial fact, Rosario.”
“What?”
He leaned closer, as if to share a secret. “There really is no adult supervision at FNN.”
12
THE THUMB AND INDEX FINGER ON MY LEFT HAND WERE STARTING to blister. I didn’t think I needed a doctor, but it hurt enough to make me reconsider the sender’s agenda. Maybe the FBI was wrong. Maybe it wasn’t just a warning.
Maybe he did want to see me dead.
I was still in Eric’s office waiting for a chance to fill him in on my situation, and he was still on the phone talking through his headset. He suddenly stopped pacing long enough to grab the remote control from his desk and switch on the flat screen that was mounted on the wall above the wet bar. Like everyone else on Wall Street, Eric’s television was pre-set to FNN. The only thing worse than a business news network spreading rumors was being the only financial player in New York who hadn’t heard them. Chuck Bell was on the air, which caused me to do a double take. I’d been awake all night and my internal clock was off, but I was pretty sure it was just coming up on nine-thirty A.M., not Bell’s regular time slot.
“Good morning, all you mavericks and moneymakers,” he said, his usual greeting. “And welcome to the second half hour of this special edition of Bell Ringer.”
The familiar ding-ding-ding-ding of the NYSE opening and closing bell pulsated over the television, followed by a streaming banner at the bottom of the screen that proclaimed the reason for the special edition of Bell’s show:
LIQUIDITY PROBLEMS AT SAXTON SILVERS?
It was classic FNN: report something outrageous and potentially libelous to grab the viewers’ attention, and then put a question mark after it to keep from being sued.
Eric was red faced with anger. “Bell, you son of a bitch.”
Bell continued on the air. “Rumors, rumors, rumors. Such a vicious thing on Wall Street.”
“Then why do you start them?” Eric shouted at the screen.
Bell said, “We here at FNN are dedicated to bringing you only the facts. Unfortunately, the facts have investors, lenders, and players at every corner of the financial wor
ld nervous about one of the most prestigious institutions on Wall Street: the investment banking firm Saxton Silvers.”
Eric took a seat, glancing nervously back and forth from the television to the NYSE ticker that streamed across the wall behind his desk. As always, trading had started at nine-thirty A.M., and we were keeping an eye on the price of Saxton Silvers’ stock.
“Here is what we know as trading begins this morning,” said Bell.
“God help us,” said Eric.
“Fact: Saxton Silvers reported last fall that a write-down of one-point-six billion in subprime losses would stop the bleeding. Fact: FNN has confirmed that Saxton Silvers will announce another twenty-two billion in subprime losses later today.”
Bell paused, and Eric looked at me, as if to will Bell to stop right there. It was merely a pregnant pause, however, and Bell proceeded to do what he did best, throw gasoline on smoldering embers.
“The question becomes: Can Saxton Silvers take a hit of this magnitude to its capital reserves? Is this latest write-down of twenty-two billion dollars really the end of the downward spiral? Why should investors think so when management told us six months ago that one-point-six billion was the real number? Could Saxton Silvers face charges from regulatory authorities for misleading investors about the full extent of its worthless mortgage-backed securities? Rightly or wrongly, can multibillion-dollar class actions alleging fraud and mismanagement be far behind?”
Bell kept talking, but I was watching Eric, who truly looked to be on the verge of an aneurysm.
“Somebody needs to shut that lunatic up,” said Eric.
Bell said, “Joining me now from Palm Beach is Saxton Silvers chief executive officer Stuart Wyle. What better person is there to address these issues? Sir, thank you very much for joining us on Bell Ringer.”
James Grippando Page 6