Nothing Personal: A Novel of Wall Street

by Offit, Mike

  So Warren and Dougherty had stepped out of a taxi at the steps to the state building, in their crisp white shirts and expensive suits, standing out in the drab crowd on a cold, late-fall afternoon like a beacon. They’d brought Pete Giambi, from the Mortgage Research Department, since his Midwestern twang and polished, comprehensible presentation would make their suggestions totally credible. They had come to explain something called Portfolio Immunization and Optimization—essentially a computer program into which was fed the cash-flow payment characteristics of virtually every government, corporate, and mortgage bond in existence, and the cash-flow requirements of the client’s pension liabilities. After several hours of computer time, out would come the optimal portfolio—the magic combination of bonds that would meet the retirement system’s projected cash-flow obligations for the lowest possible cost. Warren and Pete did almost all the talking, while Conklin struggled even to pay attention.

  As they spoke and moved through the charts and graphs, Barbara felt herself floating into a state of almost euphoric bliss. She suddenly became aware that this was her opportunity to become the fulcrum around which the entire Investments Office turned. Her boss had never paid much attention to the liability schedule. He’d just bought whatever bonds seemed cheap and what the salesmen pushed the hardest. All the technical jargon had passed him by. Her CIO, Bob Mosely, was constantly jabbering about cash being king and liked to spend long lunches with his pals in the statehouse. Only Barbara saw what these Wall Streeters were after. If they were allowed to run this program for the state, their firm would get to buy and sell every single security in the entire portfolio, a huge and probably unbelievably profitable piece of business. This would happen not only once, but potentially several times a year, as the system “re-optimized” the portfolio. Barbara Hayes, if she played her cards right, could suddenly become one of Wall Street’s most important customers.

  “Tell me, Pete, if I were to send you a disk that contained our entire liability profile, do you think you would be able to tell us how much we are over- or underfunded at today’s rates?” Barbara had interrupted Giambi as he was answering an irrelevant question from Conklin about how the system had been set up.

  “Absolutely. It would simply be a matter of evaluating all the fund’s assets, determining what the optimal available return on the liability structure is in today’s environment, and allowing the program to tell us if there is enough value to meet the obligations. It will tell us the amount of any shortfall or any excess,” Warren answered for Pete, sensing they had suddenly gained an ally who spoke this odd language.

  “Well, I think I should give Warren that disk immediately, don’t you, John? Don’t you think the governor would want to know if the pension funds are in good shape, and to know it for sure instead of our usual estimates?” Warren saw Conklin recoil—her voice had taken on a sudden authority, and he quite evidently didn’t grasp what was going on.

  “If, if … if you think so, Barbara.” Conklin’s reply was timid, as he was out of his depth.

  “Well, I do. I’m going to make getting out that disk our number one priority. And, Warren, I think you all should call me as soon as you have a run of the recommended strategy. This may be a great opportunity for us.” Barbara knew that at the high interest rates prevailing at that time, the CIO’s conservative, almost scared approach had left the fund with cash at the most opportune moment. Not only was she certain they were adequately funded, she felt sure the pension fund was actually overfunded.

  Here was a chance to champion investing all that cash at high interest rates. She would explain that the governor could tell the press how he’d masterminded the high-tech restructuring of all the state workers’ pension funds and grab some great public relations. If they were overfunded, he could propose spending some of that money on education, law enforcement—whatever suited his reelection campaign the most. She would get all the credit for this fantastic idea. She also figured it couldn’t hurt to make a few pals on the Street. Her imagination jumped forward—this kind of thing could give her a shot at becoming State Treasurer. If it was big enough, she could even run for Governor!

  At the same time, Warren knew that Dougherty saw this trade as his shot at redemption, what with Anson Combes breathing down his neck. Combes had, for reasons seemingly only he understood, slowly mounted a campaign against Dougherty over the past few weeks. At first, Warren was relieved that he wasn’t the target, but then started to feel bad for his blue-blooded mentor. Dougherty may have defeated the North Vietnamese single-handedly, but Anson Combes’s form of warfare was unfamiliar to him. Combes had senior management’s ear, and he was whispering into it variations on a funeral dirge for the salesman’s career.

  After the five people exchanged handshakes at the portico to the state office building, Warren, Giambi, and Dougherty climbed into the waiting yellow cab.

  “Jesus, what did you think of that?” Dougherty had a big grin on his face.

  “I think you’re about to become Malcolm’s favorite salesman of the year.” Giambi’s tone was dry, but his eyes were dancing in his head.

  “Yeah, well, Conover may think I’m hot potatoes, but if that crazy bitch does this, you’re going to be an MD by the time your voice changes.” Conover was a managing director of the firm, one of its most senior officers. Giambi ran the Mortgage Research Department, the group that constantly analyzed the bond markets for moneymaking opportunities that were then presented to clients as trade ideas. Occasionally, someone in research would come up with a massive, structural concept that, if it caught on, could generate tens or even hundreds of millions of dollars in revenue for the firm. Other than playing politics for a long time, making the company lots of money was generally considered the best possible way to win the coveted MD title.

  “Yeah, right” was Giambi’s response, as he’d grown tired of the jokes about his youthful looks.

  “But, I wanna ask ya something, Petey boy. And it’s important. It could hold the key to this whole show here in lovely mini-noplace, son, and you better give the right answer.” Dougherty was getting the same cocky tone and Irish accent he usually got after a big-ticket sale, even though he had contributed little but his presence to the meeting.

  “What’s that?”

  Warren figured Dougherty was going to tell them one of his war stories about how the master salesman would have to play up to Conklin to make the trade happen, so that Warren and Giambi would stay in the background, allowing all the glory to go to Dougherty. Warren started to feel less sympathy for the man.

  “You might have to decide how many.” Dougherty looked deadly serious.

  “How many what?” Giambi was confused.

  “How many paper bags you’re going to need to put over her head when that tubby broad tells you you’re going to have to fuck her to get the portfolio. I’m telling you, she wants you bad, Petey boy, very bad. About eight-fucking-teen billion dollars bad.”

  nineteen

  When they got back to New York, Dougherty let Warren work nonstop for almost a month putting together the final proposal to the state. Pete Giambi assigned three people to the job full-time, and with the head start they had on the rest of the Street, their presentation was clearly the winner. It didn’t hurt that Warren, Bill, and Barbara Hayes had hit it off. She was continually feeding them tips on how to refine the program to meet concerns voiced in the internal meetings at the Investments Office. It seemed to Conklin and Mosely that Bill and Warren anticipated every worry or question Conklin had.

  The final version of the proposal suggested the optimization of $5.7 billion in long-term asset allocation. Over four hundred separate bond positions were analyzed, and the computer, conveniently, showed a complete overhaul would generate remarkable results.. It estimated the savings to the state would be close to $475 million. A great deal of this was simply reinvesting cash in longer-maturity bonds, which, at the high interest rates prevailing, retired the pension liabilities inexpensively. Basicall
y, Warren told Barbara, by doing exactly what Conklin had always eschewed—investing most of their money all at once, the state could show that it had retired all its pension liabilities for almost half a billion less than the state’s accountants were carrying the liabilities on the books. Besides, he argued, if they didn’t do it, and interest rates dropped, it could theoretically cost the state more to retire the liabilities than they had set aside. An underfunded pension plan was hardly a great re-election issue.

  The meeting took place in the governor’s office in Wisconsin. Pete ran the meeting, and even Warren’s manager, Malcolm Conover, and the head of Fixed Income, Kris Jameson, attended on behalf of Weldon. Giambi repeatedly asked Warren to join in, to describe how the transaction would benefit the state. Warren took the opportunity to hammer home the potential political downside if they decided not to do it. Bill Dougherty sat still and looked serious, nodding his head at key moments, letting the bright young men carry the day. Afterward, he took Conklin and Mosely out for a drink and told them how, with the state being so important to him, he would never recommend that they go along with this trade unless he believed in it. Fortunately for him, they didn’t ask any technical questions.

  It took only two days to get the governor’s approval. When the program started, it took almost two weeks to execute all the trades. Dougherty had Warren run around the floor to get levels from all the different traders and confirm them with Barbara. The traders doubled or tripled their usual spread, or profit, on each trade. At the end of each day, Dougherty would take Warren’s tickets, stack them up, and count the commissions Dougherty was earning. Warren also kept a running tally. By the end of the program, it added up to almost $7 million for Dougherty’s side of the trades, which meant he would earn in the vicinity of a million dollars for this single piece of business. A bump up in market rates before the trades made the savings to the state over $500 million, and Weldon’s profits were well disguised in the windfall.

  After the entire deal had been completed, Warren drafted a memorandum for Dougherty to sign. It thanked Pete Giambi and his team for their assistance and effort in convincing the state to proceed, Warren for his help, and gave a total of the estimated profits earned by Weldon—almost $15 million at minimum. Nobody ever wrote memos like this that shared credit for big deals. When Dougherty saw it, he pushed it under a stack of papers.

  “Warren, we don’t need to be wasting time on memos. There’s enough paperwork around here already. Look, I already thanked Pete, and I appreciate the work you’ve done. Everyone is aware of it. Who needs more paper?” Warren nodded his understanding and didn’t say anything. He had neglected his own accounts to make sure that this deal had gone smoothly, and Dougherty didn’t even have the decency to recognize him for it formally, even with Warren writing the memo for him!

  Warren had been obliged to help out, as the junior backup, but he had really busted his ass. He bit down, smiled at the older man, and grunted, “Sure. Whatever.”

  After a few minutes on the phone catching up with Karlheinz at Warner, who had been dealing with Kerry while Warren was busy with Wisconsin, Warren dialed Larisa’s extension. He was pretty wound up, and he needed to vent some steam.

  Larisa picked up the phone on speaker, a habit that annoyed Warren and really got to him now. Those fucking bankers, he thought, it makes them feel like big shots to sit back in their chairs and blabber, while I have to listen to their hollow, echoing voices. Plus, you never know if they’re alone.

  “Hey, sweetheart, could you turn off the fucking box?” Warren was pissed.

  He heard her fumble with the button and pick up the receiver. “Jesus, what’s bothering you?”

  “Nothing. It’s just that I hate feeling like I’m calling the goddamn boardroom at General Motors when I just want some solace from my girlfriend. You can’t tell me your clients like talking to you on that thing.”

  “Hey, most of them do it to me. It’s just my way of getting even. What do you need solace for? Is everything okay?” She perked up, obviously wanting to hear the dirt. Warren explained to her what had happened, embellishing his own role a bit, and making Dougherty out to be even more of a self-serving son of a bitch than he actually was.

  “Hey, Jocko, that’s the business we’re in. Come on, you’re the one who taught me this stuff. I didn’t like him at dinner that time. So, he’s a self-aggrandizing prick. So are half—make that three-quarters—of all the assholes in this firm. What’s the big deal? Just be sure that everyone who counts knows you did all the work. Dougherty’s days are numbered. He’s a fucking dinosaur. Lunches and football tickets aren’t enough anymore. You’ve got to know what you’re talking about. It’s like me with Temenosa. Those fucking assholes came in here like they knew everything about bankruptcy…” Larisa promptly took off on a full five-minute soliloquy on her dealings with Temenosa, pointing out to Warren her brilliant tactics with the court-appointed receiver, how she had negotiated a bigger fee, and even a piece of the upside for Weldon on certain asset sales. She threw in how the CEO, an extremely wealthy Texan, had tried to seduce her, and how she was now interviewing the auction houses, who were kissing her butt for a chance to sell off Temenosa’s corporate art collection. Warren could hardly squeeze in a grunt or a “Yup,” she was so engrossed in talking, and was disappointed that she’d turned his phone call into a chance to talk about herself.

  When she had played out the scenario, Warren told her she was right, that he should be patient, and Dougherty would go the way of the Brontosaurus. She suggested a few subtle ways to undermine him with management, and Warren agreed, then hung up. He barely ever saw her anymore, with the hours she was keeping. New Finance associates commonly worked ninety-hour weeks. She had been in Texas sixteen days the previous month. It wasn’t as if he had loads of free time, after all, but he did like some feminine company in the evenings.

  The last time he’d gone out to dinner with Larisa, she’d gotten unbelievably angry when he called Susan, a high school friend of Larisa’s, now a lawyer, a “smart girl.” She corrected him to “woman.” Warren said he still thought of females his age as “girls,” but Larisa responded that was demeaning, as if she called him a “nice boy.” He finally said that he thought of himself as a “guy,” and that “men” were generally at least in their late forties. “Women” were at least fifty.

  Larisa had called him a jerk and said he believed that women were incapable of being successful or powerful. He reminded her that his mother had been the smarter, better looking, more successful, and more accomplished of his two parents. She said it didn’t matter, and that he had better not refer to her as a “girl” again. He agreed, then asked if she knew whether Susan had gotten the job she wanted—to be an Assistant United States Attorney and prosecutor. He said he’d always thought she was “one sharp broad.” Larisa had actually gotten so mad she started crying, and nothing he could do seemed to convince her it was just a harmless joke. “Look, I have this compulsion to say the wrong thing at the wrong time,” he said. He was about to add, And I love my little girl anyway, but managed, for once, to catch the words before they popped out.

  * * *

  Warren flipped a pencil up in the air, and its point stung when it landed on his outstretched palm. He and Larisa had made up, although the sex had seemed almost functional, like mutual relief, a sort of stress-release valve. Most of the time now, they actually just had oral sex and then went to sleep. He had to admit she had a real talent for it and obviously responded just as well. It wasn’t particularly loving or intimate, but it left them both satisfied and sleepy. It was a sort of masculine thing—Warren couldn’t remember any other girl—woman!—he’d dated who liked sex that way. She did a lot of things that most women didn’t or wouldn’t and generally liked to be dominant in bed. He couldn’t imagine why someone so smart and attractive would want to be a man.

  He wouldn’t be seeing Larisa after work because he and Bill had dinner with Barbara Hayes scheduled at the Ne
w York Athletic Club. She was in town for meetings with the stock market guys over in equities, and tonight was a kind of victory dinner to celebrate the huge trade. He decided he needed a dose of something that would cheer him up, and he knew just where to get it. He dialed Dutch Goering’s extension, even though he sat about twenty feet away. The square-jawed salesman was always good for a laugh once you got him wound up.

  When Goering picked up, Warren got him started.

  “Hey, Dutchie, whadya think of that new sales assistant?” A young woman named Dawn had just been hired in the money markets sales area. She was reasonably attractive, and well-endowed.

  “Oohhhh fuuuuuckk! How’d you like to rub your fuckin’ dick between those big fuckin’ hootskies, eh?” Goering hardly missed a beat. No matter what time of day or where he might be, it was a safe bet Dutch’s mind was focused on one subject. The way he expressed himself was something of a legend among those who had heard him on a roll. “Man, I’d like to fuckin’ ride her like a fuckin’ carousel pony. Oohhhh fuuuuuckk! She’s hot. I’m going to fuck her too. Oh, yes indeedy, I am. And she’s going to fuckin’ love it. Uh-huh. Tomorrow night. It’s a date, Warren me boy. But, don’t worry, I’ll take pictures so you can fuckin’ beat your donkey next week. Oohhhh fuuuuuckk, I can hardly fuckin’ wait! Maybe you’d like to come and watch?” The obscene tirade paused for a response.

  “Jeez, Dutchie, I’ve got dinner with the state tonight. Do me a favor, okay? Just leave yourself out of the pictures, would you?” It didn’t surprise Warren that Goering already had plans for Dawn. Warren just wondered whom Goering had told his wife he was entertaining that night.