Nothing Personal: A Novel of Wall Street

by Offit, Mike

  Weldon Brothers sponsored an annual outing at Pebble Beach for some of its best clients. Warren had invited John Conklin from Wisconsin, and the two senior investment managers from Warner Savings, the large savings and loan Warren had been assigned when he started selling.

  Warner had grown from a $300 million institution in LA that no one on Wall Street cared about, to one of the four largest savings and loans in California, at $11 billion in assets, in just a few years. Most of this growth had come about by selling certificates of deposit to their customers, and that money had been invested largely in junk bonds and mortgage-backed securities. Two men, Karlheinz Beker and Pete Largeman, were in charge of picking how the money was put to work. Warner’s profits were determined by the spread in interest rates between those on the money they borrowed—the CDs and their deposits—and those on their investments. When the US Government insured all bank CDs up to $100,000 per bank, they suddenly gave investors motivation to buy whatever bank’s CDs had the highest rates, regardless of the risks they took. If the bank failed, as long as you held no more than $100,000 of any one bank’s debt, you were safe.

  As the bank increased its liabilities by raising money selling CDs, it had to increase its assets by investing. Eleven billion dollars is a lot of money to invest, and suddenly Wall Street was in love with Warner. Every firm courted its investment business, trying to sell it anything they could dream up. In addition, the bank originated a lot of mortgage loans through its branches and often sold off packages of them to reinvest in higher-yielding assets or to diversify its holdings. The higher the rates on what it bought, the more the bank earned, and the more Karlheinz and Pete made in bonus and stock options. Warren had won more than a fair share of both types of business, and he was surprised when Anson Combes called a meeting with Warren, Malcolm Conover, and Paul Jacobs, the head of the junk area at Weldon. Anson said he wanted to devise a strategy to get more of Warner’s investment business and wanted to strategize before a big group of Weldon sales and finance people headed out to California.

  “Look, they’re a huge thrift, and we’re missing a ton of opportunities,” Anson had started. “Warren, you’re doing a good job, but, let’s face it, you’re still pretty new at this. We need to hit these guys hard, bring in the big guns. I want to get out there and find out what’s going on. I think I can persuade them to open up some of their mortgage deals to us, and the junk will follow.” Anson pushed his glasses, which continually slipped down, back up onto the bridge of his nose.

  “Well, Anson, I’d say that Drexel’s got pretty much of a lock on their high-yield corporate business. You know, Mike Milken…” Paul Jacobs was an older man for Wall Street, in his late forties, and he spoke in measured tones. He had been a bit slow in developing Weldon’s non-investment-grade corporate department, or junk-bond trading area, because he didn’t really believe in it. Weldon had always been a top investment bank for the major corporations and governments of the world. The explosion of the mergers and acquisitions business had made Weldon a force in bringing new deals to the markets. By selling bonds, and creating clever new ways to finance takeovers, the acquiring companies could borrow money to finance their spending sprees. These bonds were risky—if a company went too deep into debt, it could fail and default on its obligations.

  All this had forced the trading area to become a major factor in the firm’s business flow, as several billion dollars of new bond issues were fed into the markets by their M&A department from their deal flow. Jacobs had constantly argued that many of the deals were shaky and had insisted that Weldon only handle well-structured ones.

  Combes cut him off. “Milken? What is it with this guy? All you junk guys talk about him like he’s God or something. Hasn’t Warren been getting you good feedback on what they’re doing? Malcolm? I mean, this is a major account. We’ve got product, research, deals. I want their mortgage business. They let Drexel sell a three-hundred-million-dollar package of loans last week that had to have a point in it. That’s three million, minimum. We could have done that deal. My department could have structured that in their sleep. We need to be all over them.” Anson had smacked the table a few times.

  “Um, Anson, I appreciate your feelings. We all want to do more of Warner’s business. But you’ve got to understand the nature of their relationship with Drexel.” Malcolm’s diplomatic tone had visibly irritated Combes, who hunched his shoulders and looked up at Conover in a pose that had reminded Warren of Richard Nixon. “It’s not that simple.”

  “Oh, Christ, I’m sick of this garbage. How am I going to tell Gustave Haupt and Mack Carter that we can’t get in the door with Warner?” Anson brought in the names of the chairman and the CEO of Weldon. Warren knew that they both disliked Combes, even feared him a little, but respected the revenues he brought in.

  “Hey, Anson, hang on a second.” Warren’s temper had begun to get the best of him. “We’re not exactly getting shut out. First off, our Investment Banking Committee decided that we wouldn’t sell Warner’s CDs. That’s strike one. Drexel sells ninety percent of them in the money markets, and one hundred percent of their commercial paper and debt. Strikes two and three. That means that Drexel basically raises all their money for them, and then sells them junk bonds as part of the deal. Still, I did two million gross with them last year, which isn’t zero, despite all that. I opened them up to mortgage derivatives, and they do more of that business with us than with anyone—”

  “Two million is nothing. We should do that on one trade. I’m telling you, we need to really put the press on these guys. I’m ready to do it.” Anson was rolling. “You haven’t been listening to a word I’m saying.” That was actually Anson’s code for his not caring what anyone else had to say.

  Anson had then suggested setting up a meeting on their way to Pebble Beach. Warren explained that Pete and Karlheinz were coming on the trip—they were never ones to miss a free meal or golf game. The appropriately named Pete Largeman was one of the dumbest, heaviest, laziest investment managers Warren had ever met, so much so that his nickname around the Street was the Load. His partner, Karlheinz Beker, was one of the smartest and oiliest portfolio managers around and had masterminded Warner’s growth on an inverted pyramid of debt and equity.

  In asking Warren to set up an appointment at their offices in LA, Anson explained that he wanted to see their facilities and meet them in a business setting, not at some “boondoggle” such as the golf outing. Warren knew that Anson often used “business” trips to get to his house on a golf course or to visit his family in New Orleans. Only other people’s trips were “boondoggles.” Anson’s were always important client calls.

  The meeting adjourned, with an agreement that Warren and Anson would visit Warner, and then go on to Pebble Beach for the outing. Even though it meant dealing with Anson, Warren was glad to get away from his apartment and everything that reminded him constantly of Larisa. It had been almost two months, but the wound felt fresh. The closest he’d come to a date was when a stunning woman from Salomon Brothers had come in for an interview to join Weldon’s sales desk, and she had openly hit on him. He’d resisted the temptation, and when Weldon didn’t bite, she’d quit and moved in with a rock star.

  As he left the office, Warren idly contemplated what the first meeting between Beker and Combes would be like. Sharks were generally loners, and a confrontation would be a rare and dangerous event. These two were flesh eaters of the first order.

  The travel department had tried to book Warren on the same flight out of JFK as Anson, their normal practice, but Warren changed his flight to Continental out of Newark. Five hours alone with Anson, even in American’s awesome first-class cabin, was a terrifying concept.

  twenty-seven

  On his arrival at LAX, Warren was met by a pleasant man from the car-rental company, who had been standing at the baggage-claim exit with a small name sign. The Weldon salesman in Los Angeles who covered the largest money managers and pension funds, Howard Steinman, had
booked a car for Warren and told him only that he’d be surprised. That was an understatement.

  The Bentley Turbo R cost over $150,000 new, and was unbelievably ostentatious, but Warren had always been curious to drive one. A dark blue sedan sat gleaming at the curb, with a rich tan leather interior. Inside, the solidity and sumptuousness of the car was remarkable. The surfaces were all deeply polished burled walnut, the gauges beautifully arranged and labeled. Off the line, the car seemed like a rocket, albeit a velvet-lined one. In LA, he had been told by Howard, you are what you drive. If so, to other drivers Warren Hament was now a playful and self-indulgent English lord, motoring about in his new Bentley.

  Evidently, the doormen at the hotel believed in the same auto-existentialism Steinman espoused. Warren got an incredibly warm reception, especially from the parking valet. Warren had driven directly to the Hotel Bel-Air, his memory of the route from the airport intact after all these years. He and his father had eaten lunch here once, and Warren remembered it as the most beautiful place he had ever been as a child. Steinman, who had once spent four months at the hotel after a gas explosion at his house, had put in a word for him. Warren had been given the hotel’s most coveted room, a large one-bedroom suite, with a walled-off private garden that included a Jacuzzi, disguised as a round, tiled fountain, filled by a marble lion’s head spigot, and strewn with petals from the bougainvillea that climbed the trellises around it. It was incredibly romantic, and it seemed like a waste to be here alone.

  After tipping the bellman, he stripped down for a quick soak in the Jacuzzi, then took a shower and changed into casual clothes. It was only two o’clock, and Combes wouldn’t be looking for him until the next morning. They had a seven-thirty breakfast scheduled. Although it was only the savings and loan, Warren mused that “breakfast at Warner” sounded perfectly Hollywood. He threw a blazer over his polo shirt and went to retrieve the car. He thought an exploration of Beverly Hills might be interesting, and he put on his sunglasses, hoping they helped him look the part.

  twenty-eight

  Warren admitted to himself, cruising down Canon Drive, just off Rodeo, the car was kind of embarrassing. It was sort of discreet, but in an obvious way. He thought the car made him look as if he were trying too hard to be something he wasn’t. By Wilshire Boulevard, he had made up his mind. He made a quick turn and zipped into the luxury-car rental lot just a few blocks down. In the tiny office, an extremely pretty girl was behind the counter, wearing the company uniform shirt draped over her own, with a name tag pinned to the pocket, labeled SAM. She was tall and thin, with straight, dark brown hair.

  When Warren walked in, she put down a book and looked up.” Hi. What can I do for you?” She had the twangy Southern California accent, but delivered the greeting almost deadpan, without the usual fake perkiness. Her green eyes were mesmerizing.

  “I … uh … I wanted to trade in the car?” Warren tossed the keys on the counter. His eyes were riveted to the clerk, and his voice was a little tremulous. The woman was a complete knockout.

  “The Turbo R?” She sounded surprised and looked over his shoulder at the car, which seemed to absorb the sunshine.

  “Yeah. Maybe for a Chevy or a Lincoln.” He couldn’t help but sound a little wistful.

  “Is something wrong with it? It was running fine when we sent it out to the airport.” She sounded concerned, and Warren figured repairs must be unbelievably expensive.

  “No, not at all. It’s great. I just want something simpler. It’s kind of embarrassing.” Warren shrugged.

  “Well, I’ve gotta charge you for it. It’s the most in-demand car we’ve got. I’ve got to hit you for the one day.” She actually sounded apologetic.

  “Yeah, I figured. That’s okay. I just don’t feel right in it. It’s not the money. And I could never drive it to my meeting tomorrow anyway. That car needs a movie star, or a chauffeur or something. Not me.”

  “You just a Chevy kind of guy? You don’t look it.” She smiled at him.

  “I hope that’s a compliment. Anything low-key will do.” Warren smiled back.

  “Well, whatever you say, but the simplest thing we’ve got here is like a Jaguar or a Mustang convertible. I think Hertz has Caddys or maybe a Marquis.” She put her elbows on the counter and rested her chin on her hands. “You sure about the Turbo?”

  “Nah. I can’t keep it. Just bill me for it, and I’ll figure something out.” Warren felt bad about wasting six hundred bucks, but was resigned to it. Besides, Steinman had promised him that he had a way to get Weldon to pay for it. “Maybe you can get one of the guys to give me a lift over to the Hertz lot. Or Avis. I don’t care.”

  ‘Tell you what. I’ll drive you over. In the Turbo. But I’m going to go real fast.” She picked the keys up off the counter.

  Warren was surprised and reacted quickly. “Hey, if you’re going to be my chauffeur, why don’t I buy you a drink or something? Like dinner, after you get off work. It’d be the least I could do. I could come pick you up in my Citation.” Warren had a nervous grin on his face. He’d never been good at delivering pickup lines, and he realized to his horror that he’d actually used the words pick and up in his pitch.

  She gave him a long look and pulled out the rental form he had filled out at the airport. She nodded a few times. “New York … Weldon Brothers? Is that like Warner Brothers?”

  “No. It’s Wall Street, not show biz.”

  “Oh, it’s different? I didn’t know.”

  Warren laughed. “Well, you may have a point.”

  “I like the way you laugh. Plus, you’re not in movies or TV.… Okay! We’ll have a drink, then I’ll drop you at Hertz.” She yelled into the office behind her, “Carlos! I’ll be out a while! Watch the desk!”—then came out from behind the counter.

  “Sounds good to me! Let’s go. Should I ride in back? Where’s your hat?” Sam slipped off the striped uniform shirt, which she tossed on the counter. In her jeans, boots, and T-shirt, she looked like a magazine ad. Warren couldn’t believe she was actually coming with him. They headed out the door. “You’ll hold the door open for me, right?” Warren said. “And call me sir?”

  “Don’t push it, Warren.” She punched him lightly on the shoulder, then waited elaborately for him to open the driver’s door for her.

  When she heard he was staying at the Bel-Air, she wanted to have a drink there. She said she loved the patio, then kept up a solid stream of small talk during the short trip down Sunset Drive to Stone Canyon, mostly about how she’d negotiated the deal for the Bentley originally, buying it from the girlfriend of a producer for less than 40 percent of its cost just three months before. The car valet was even more impressed the second time when he got a look at Sam, who Warren had decided looked better driving it than he ever could.

  The outdoor terrace was beautiful, shaded by tall trees, and fragrant with bougainvillea and eucalyptus. While they waited for the drinks, which were martinis, they filled each other in a bit on who they were. Warren described himself as a failed athlete and Wall Street geek, and Sam described herself as a former actress who actually owned the car rental lot. Her business manager had put some of her earnings from a season on a sitcom and two national commercials into it. He’d stolen the rest of her money, along with most of the investment of a few studio guys who had also financed the lot. They had been arrested for drug dealing, and she wound up managing the place while they did time and she looked for a partner or a buyer. She didn’t mind working there, and the lot was making good money, most of which she got to keep. She lived in Santa Monica, but came from San Diego. Her father was a surgeon, and her mother a nurse. They’d spent her junior high school years in Landstuhl, where he was a trauma surgeon at the big army hospital. To prove it, she ordered the next round in perfect German: “Zwei weitere martinis, mein lieber!”

  She had one brother who was a golf pro, and another who flew F-14s for the navy. She had gone to UCLA film school, but discovered she hated everything about show busines
s and wasn’t too sad to leave it behind.

  “Well, that’s interesting. Do you not get enough to eat on the lot?” He pointed to the empty tray of olives and nuts, which she had completely demolished.

  She smiled. “Fast metabolism. Gotta feed the fire!”

  When Warren told her that he was in town to meet with Warner, her eyebrows arched; then he told her it was the bank, not the studio.

  “Hey, aren’t they the sleazeballs who buy all those crap bonds, or jerk bonds, or something?”

  “Junk bonds. Yeah. How’d you know that?” Warren was genuinely surprised.

  “I read about them. Plus, my crook business manager was in bed with the guy that runs that place and the old man who owns it. They did some big deal with this guy with a ridiculous hairpiece and dentures who was evidently a billionaire.” She was looking at the bottom of her glass, which was empty.

  “Sounds like Mike Milken. Ugh! Man, those were strong drinks. Where to next?” Warren stretched and yawned.

  “You know what I’d really like to do?” She was tilting a little bit to her left, and the glass in her right hand was sideways.

  “Please don’t say go for a drive. There’s no way I can get behind the wheel.” Warren was spinning a bit himself. He rarely drank, and never martinis. The thought of a moving vehicle made him slightly nauseous.

  “Nah. I wanna go for a swim in their pool. That’s what I wanna do.”

  “Great idea. But I don’t think they’re big on skinny-dipping here. Maybe we can buy you a suit at the gift shop?” Just at that moment, the idea of seeing her naked made Warren’s blood boil.

  “Well, I’ve got on black underwear. Looks kind of like a bikini. I’m up for it if you are.” She was serious, and no way was he going to offer any resistance to seeing her in her underwear.

  “Okay. Let’s go to the room, get robes. I’ve got a suit. Towels too. Then swim.” His mouth was working slowly, and his mind had creaked to a stop, as another part of him took over the thinking.