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.