Nothing Personal: A Novel of Wall Street

by Offit, Mike

  “Well, I understand that Drexel is really a top-notch firm in many of the markets you need access to, and that they can offer you certain products and opportunities that we cannot. But I think, if you consider it, that a broader relationship with Weldon will benefit Warner over the longer term, in terms of perception and bottom line, when markets and needs change. That’s why I think that, if you give us your next residential whole-loan deal, you’ll find that you have not only gotten great service from a superior firm, but you have also put one of the key blocks in the foundation of a long and mutually beneficial cooperative effort.” Anson sounded like some kind of canned-tape player. Warren could practically envision slides of Weldon’s board of directors, as dried out a bunch of Swiss as you could ever find, flashing up behind Anson. If there were a firm anthem, Warren would have expected it to be playing. It was about as subtle a pitch as “Do you come here often?” The thought brought an image of Sam to his mind, and he had to will it away to focus on Anson, who had gathered his papers into a pile and was looking down at them as he spoke.

  Warren decided to jump in. “Karlheinz, I think what Anson’s trying to say is that we are really pleased with the time you’ve given to our ideas, and with the willingness to work with us you have shown. Weldon just wants to be certain that you understand how anxious we are to take this to a new level, so that you can have the next generation of analytics and execution on line, with us. Drexel’s great, but they are actually pretty far behind in many sectors. Working with a firm with the reputation and status of Weldon means something in the marketpace. Drexel is Drexel.”

  “Thanks, Warren. I appreciate your translation.” Karlheinz gave him a cold, purely Aryan smile and turned to Anson. “I’ll tell you what. I will give Warren the computer tape for our next loan transaction. We can discuss it after our little outing. I hope, Mr. Combes, that you feel the trip has been worthwhile.” Beker nodded slightly to Anson.

  “Absolutely. I think you’ll be pleased with the results we give you, don’t you, Warren?” Anson had that killer look in his eyes. The one he usually got just before he humiliated someone or fired one of his people.

  “Yeah. That’s great, Karlheinz.” Warren was absolutely stunned. Anson had given one of the most simplistic sales pitches he’d ever heard, offered nothing new to Warner, handed them about $10 million worth of research, and Karlheinz, who never returned a favor if it would cost him twenty cents, had just opened the door to a new relationship. Something didn’t add up, and Warren’s suspicions were not eased by the fact that Anson and Karlheinz had spoken on the telephone privately, or that Anson had sent the reports to Karlheinz, obviously with a fair amount of lead time.

  The rest of the meeting went uneventfully, with Warren recapping the performance of some of the trades he had put Warner into. Largeman pitched in from time to time to take credit for the big winners, and after another half hour, Warren and Anson were back in the elevator.

  “Still think it was a waste of time, Hament?” Anson had his teeth out. He called it a smile.

  “Anson, you’re amazing. I mean totally. You just absolutely bowled them over. Wow. I can’t believe I didn’t have you out here six months ago. You’re like a cruise missile—a secret weapon. You should be in sales. You…” Warren was laying it on as thick as he could, but started to choke on his own sarcasm. To hell with it, he didn’t report to Anson Combes, and this whole meeting had been bullshit. “You know, come to think of it, you are in sales. You must be, because you called my fucking account without letting me in on it. Hey, Anson, maybe I could hear a tape of that call? I’d love to hear how a pro greases the skids.” Warren’s voice was shaking a bit.

  “Hey, calm down, buddy boy. It was just a courtesy call. Malcolm knew all about it.” Anson was serious now, and he pushed his glasses up. “Anyway, I bet we get that deal.”

  If he’s so cocky, then he knows it’s in the bag. I wonder how he arranged that? Warren thought to himself. They walked in silence to the door, past the depositors’ big investment in rare woods. Warren caught himself. Maybe this business was getting to him a little bit. The one thing that consistently amazed him was how driven people such as Combes were over nothing more than ego gratification. When you thought of it, it was rare for a trader or a salesman to take home more than a relatively small fraction of his or her total production on Wall Street. Five to 10 percent was the norm, with an occasional 15 here and there. The other 85 covered the costs of office space, telephones, computers, and clerks … and, of course, senior management. They got a cut for just one particular talent—being especially good pricks.

  “Well, Anson, I’m just not used to having anyone call my accounts without letting me in on it. There’s usually something I can help with to make things easier. You know, like telling you that giving Warner a copy of the BIGS proposal’d be like sending out working drafts to Drexel and Salomon for comments.” They had reached the lot where Anson’s car was parked.

  “Well, I think it’s going to get us our first client for the program. You ought to relax. Go get laid or something. You’ll never hit ’em straight at Pebble with all that tension in your shoulders.” Anson slipped on a pair of sunglasses and opened the door to a Fleetwood with an Avis sticker on the bumper.

  “Hey, Anson, what do I need to get laid for? I just got fucked, and I didn’t even have to take off my clothes.”

  thirty

  The drive from Los Angeles up to the Monterey Peninsula is one of the most dramatic in the world. Warren had decided to drive rather than fly so he could take some time to sort out his thoughts, and to see the coast. Sam lent him a Ferrari convertible, a two-year-old, black Mondial she’d bought from the federal Drug Enforcement Administration for about half price. They had seized it from a Hollywood lawyer who had been stopped for speeding with a kilo of coke in the wheel well.

  The car hummed along, and soon Warren fell into a rhythm of shifting gears, accelerating, and braking, watching the sights slide by in the warm air. The hills that swept to the ocean from the desert fell away in sheer drops to the surf, and every few miles Warren would pass a few lonely horses or cattle grazing the dry grass of immense and deserted coastline tracts basking in the salt haze.

  The past few months had been a whirlwind. After Dougherty’s death, he had not only filled his shoes as a salesman, but improved the production dramatically. He had been working hard, and most of the portfolio managers he covered found dealing with Warren easier than with Bill. Warren was more state-of-the-art, conversant with the new derivative products and sophisticated investment strategies that Dougherty had not learned in depth. The business of managing institutional money was growing more complex by the day, as the amounts of capital to be invested ballooned almost beyond belief. Pension funds were growing by leaps and bounds, not just from an influx of new contributions from the weekly paychecks of a bigger workforce, but also from the staggering amount of income being generated by the existing investments. The California Public Employees’ Retirement System, for example, had almost $45 billion in funds. This threw off almost $2 billion per year in interest and dividends to be invested, in addition to another $2 billion in new contributions. That was almost $100 million a week to invest, just for one pension fund in one state. Soon big pension funds would be pushing above $100 billion or $200 billion. And they needed to earn high investment returns to meet the unsupportable retirement benefits that public unions with their clout had forced politicians to give them. That meant the funds would have to take lots more risk every year.

  Many pension funds had so much cash under management they would hire investment management companies to invest portions of it. One such manager, Warren’s client Modern Investment Management, or MIMCO, ran almost $40 billion in assets for pension funds, universities, municipalities, and so on. At their fee of just over one-quarter of 1 percent per year, MIMCO earned almost $100 million per year. Almost 80 percent of that was pure profit. Pete Young, the senior partner, earned about $12 million per
year and had some $125 million in equity in MIMCO by 1982.

  Warren had to admit, driving an $80,000 car on a beautiful day, that the rewards of this business came fast and furious. But the rewards didn’t just materialize out of nowhere. All that money being made by the investment managers and the Wall Street firms had to originate somewhere. Generally, it came from the pockets of the beneficiaries of the pension plans, the holders of the insurance policies, the buyer of mutual fund shares. The little guy who was too busy earning a living to pay attention to what stocks to buy or what bonds to own. Warren understood why stock managers got paid if they performed—it was like having an ace poker player on your side in the casino, and stocks were understandable to most people. Of course, most of the managers had a good year or two and then “reverted to the mean,” in Giambi’s parlance. But the bond managers were largely a different story. If one outperformed “the markets” by a percentage point per year, he was a guru. Two and he was a god. Most were measured in fractions of a percent. This brutal business required an increasingly sophisticated mind to master it as bond structures got more complicated.

  Nevertheless, Warren was nonplussed by everything he saw in the business. It was filled with young men who had virtually no focus or desire in the world except to make money. He had watched an almost endless stream of PhDs in engineering or physics fritter away their educations on building things like binary bivariate option contracts, which used unbelievably complex computer architectures to demonstrate the efficiency of Newton’s First Law of the Capital Markets: “If almost nobody understands it, it will probably make you rich.” Wizened deans of finance and academe were trotted out to herald the dawn of a new age of global capitalism, in which binomial trees somehow accounted for every possible outcome and could allow you to hedge your pension fund’s exposure to fluctuations in the Polish zloty with a basket of options on other lesser developed countries’ nondollar debt. Of course, the only reason any of this was relevant was that investment managers pushed into new areas desperately seeking performance. America was undoubtedly at the cutting edge of financial science. An image of the comedian “Professor” Irwin Corey, with his big wig and nonsensical babble, flashed into Warren’s mind and made him smile. Perfect candidate for treasury secretary in the next administration.

  Warren shifted down a couple gears for a hairpin turn that opened out to a massive vista of surf pounding a rock formation stranded offshore. The ozone tang in the air and majestic views couldn’t rid him of the vague sense of guilt and hypocrisy that nagged at him whenever he had thoughts of superiority. Wasn’t he just as guilty as the rest of them? Hadn’t he sold his soul to mammon just as surely as Anson Combes or Bill Pike, who had given him such a hard time in his interview and turned out to be just as sour and nasty all the time? Maybe Warren was worse than them—he was always being told he was articulate, creative, sensitive, and talented—at least by his teachers right before they asked him why he didn’t work harder. His parents had loved him, and he wasn’t abused as a child. He could easily have found a way to bring happiness or joy into people’s lives instead of kickout options on Fannie Mae 8s. He knew his father didn’t understand the drive that had pushed Warren to business school or to the Street. Ken had always told Warren that medicine or entertainment were the most honorable professions. His uncle Buckley had dedicated his life to drug research, ignoring the lure of private practice and spending thirty years in laboratories and clinics that paid next to nothing. The man spent his free time delivering presents to children in his hospital’s wards and had arranged a wholesale deal with a German stuffed-animal maker so he could afford to buy in quantity. Warren had to remember to send him another check.

  As it had during all the other times that Warren’s thoughts ran down this path, his mind slowly shuttered to the dilemma. The money was good, he tried to avoid screwing his clients, and he was always courteous to waiters and cabdrivers unless they attacked first. In the words of Bill Pike, Warren ate what he killed and packed out what he carried in. Simple rules, but ones that helped survival in the jungles, or on the fairways, as the case might be.

  thirty-one

  After about three hours, Warren pulled into a small deli/gas station perched alongside the narrow Coast Highway. He bought a Pepsi and a bag of pretzels, then went outside to sit on the hood of the car and feel the sunshine. It was always a relief to get away from the office, and the setting was superb. As he started to climb back into the driver’s seat, his jacket caught his eye.

  He remembered the message from Wittlin. It was a bit late, six thirty back in New York, but he grabbed the paper and went to the phone booth that stood across from the gas pumps.

  Wittlin answered on the second ring. Warren introduced himself and asked what the detective needed. Wittlin didn’t respond immediately, but wanted to know where Warren was calling from, the connection was a bit weak.

  “Right now, I am standing in a phone booth with a great view of the Pacific Ocean. I’m in the middle of nowhere, about an hour north of San Simeon, on my way to Monterey, California.” Warren reflexively looked around as he spoke, a New Yorker’s motion, squinting as if to read the numbers on street signs.

  “Well, then I guess I’ll have to wait to see you until you get back. When you coming back to the city?”

  “A couple of days. Why? What’s up?”

  “Not much, unfortunately. But there are some questions I wanted to ask you, some things you might be able to help with.”

  “You can’t ask me on the phone?”

  “No. Not really.”

  “Could you give me a hint?”

  “Not really. Just a couple questions about your family, and other things.”

  “Gee, you’re being communicative. I’ll call you when I get back.” Warren couldn’t help being a little testy, even though he figured it wasn’t a great idea to be rude to a policeman.

  “I’ll be here.”

  Warren grunted and hung up. The conversation struck him as odd. He pondered it as he drove away, shifting gears automatically. Why wouldn’t Wittlin tell him what the questions were about? His family? Maybe he thought Warren would get nervous. But why? After all, Wittlin had absolutely no reason to think Warren had anything to do with Dougherty’s death. He had a perfect alibi, and Wittlin knew it. No, Warren had nothing to be nervous about, but he was annoyed. Great. The call would probably stay in his mind and give him anxiety for the rest of the trip, he thought. Anxiety is not a good thing when you’re hitting little white balls along the cliffsides. Combes had that right. Golf and tension don’t mix.

  He decided not to think about it if he could and sped up a bit to keep his concentration on the blacktop ahead. He was out on his own, on a narrow ribbon of highway twisting above the surf, with the sun low on the horizon, setting into an ocean on the wrong side of the road. The engine whined and the wind drove the worry from his head as the miles spun out behind him through the late afternoon, until the cypress forest sprang up from the blasted coastline, and he turned onto the lush peninsula at Carmel.

  thirty-two

  The eighth hole at Pebble Beach is a golfing shrine, a mecca that inspires dreams and nightmares, joy and despair. The tee shot is blind and uphill, the target the corner of a house that is visible above the crest of the rise. A good drive will bring you to the edge of the abyss, a hundred-foot-deep crescent chasm that falls off to a charming aquamarine cove with sweeping surf and a pale sand beach. One hundred and seventy-five yards across this valley is a steeply pitched green, surrounded by powdery white-sand bunkers. The view is the grandest on any golf course in the world, and the hole is described by Nicklaus as the greatest par four in the game. The verdant green of the grass, deep blue sky, and boiling ocean water combine with the misty sea spray, salt-infused air, sunshine, and puffy clouds to make a tableau so rich and inspiring that a well-struck shot reverberates with the harmony of something divine. A par or birdie is a moment of pure ecstatic bliss.

  When the designer s
culpted this masterpiece, Pete Largeman from Warner was nowhere in his mind. From his pull hook off the tee to his second, third, and fourth shots into the water, he spewed a vile stream of obscenities while thumping his iron into the turf. His immense body was swathed in stretchy polyester of distinctly excremental hues, and he jiggled as he swore, with a cigarette clamped in his bovine jaws. Warren was waiting for Pete to enter cardiac arrest so he could compose himself for the four-iron attempt at the green, after a decent three-wood from the tee box. Finally, Pete’s seizure abated, and Warren stroked the ball crisply, but to the left, and he saw a distant puff of white as the ball landed in a bunker.

  “Hey, tough shot, Warren. It’s a hard par from there.” Pete was alluding to the sand shot that had to carry the sticky rough and stop on a slick green, or that risked a flier that cleared the green and went for a swim seventy feet below. Pete’s comment made certain that, by the time Warren reached his ball, he would be terrified of the shot he faced.

  “Thanks for the tip, Pete. Yours is a tough twelve from down there.” Warren gestured to the beach far below. “Just hang out here. There’ll be a chopper along any minute to take you down. I’d say it’s a stiff 105-millimeter howitzer from there. Or a lob mortar. You’re a prince.”