Liar's Poker

by Michael Lewis

  Anyway, there wasn’t really any place else to go. The trading room was about a third the length of a football field and was lined with connected desks. Traders sitting elbow to elbow formed a human chain. Between the rows of desks there was not enough space for two people to pass each other without first turning sideways. Once he started wandering aimlessly, a trainee risked disturbing the gods at play. All the senior people, from Chairman Gutfreund down, stalked the trading floor. It was not a normal corporation, in which trainees were smiled benevolently upon by middle-aged executives because they represented the future of the organization. Salomon trainees were freeloaders, guilty until proven innocent. With this rap on your head, you were not particularly eager to meet the boss. Sadly you had no choice. The boss was everywhere. He saw you in your red suspenders with gold dollar signs and knew instantly who you were. A cost center.

  Even if you shed your red suspenders and adopted protective coloration, you were easily identifiable as a trainee. Trainees were impossibly out of step with the rhythm of the place. The movements of the trading floor respond to the movements of the markets as if roped together. The American bond market, for example, lurches whenever important economic data are released by the U. S. Department of Commerce. The bond trading floor lurches with it. The markets decide what are important data and what are not. One month it is the U.S. trade deficit, the next month the consumer price index. The point is that the traders know what economic number is the flavor of the month and the trainees don’t. The entire Salomon Brothers trading floor might be poised for a number at 8:30 A.M., gripped by suspense and a great deal of hope, ready to leap and shout, to buy or sell billions of dollars’ worth of bonds, to make or lose millions of dollars for the firm, when a trainee arrives, suspecting nothing, and says, “Excuse me, I’m going to the cafeteria, does anybody want anything?” Trainees, in short, were idiots.

  One lucky trainee was spared the rite of passage. His name was Myron Samuels, and he had cut such a deal with the head of municipal bond trading that by the time I arrived at Salomon Brothers, he was carpooling to work with two managing directors and a senior trader. He was rumored to have family connections in the higher reaches of the firm; the alternative explanation is that he was a genius. Anyway, he did not fail to exploit his exalted status. He walked around the trading floor with a confidence seen in few of the people who were actually working. Since Samuels didn’t work, he could enjoy himself, like a kid who had been let into Daddy’s office. He would make his way to the municipal bond desk, take a seat, call for the shoeshine man, phone a friend long distance, light up a cigar, and put the shoe that wasn’t being shined up on the desk. He’d holler at passing managing directors like old friends. No one but no one dreamed of doing this—except Samuels.

  In general, the more senior the figure, the more amusing he found Samuels; I think this was because the more senior people were more aware of Samuels’s connections. Nevertheless, a few were furious. But on the municipal trading desk Samuels could not be touched. I walked by once and overheard two vice-presidents whispering about him. “I can’t stand that fuckin’ guy,” said one to the other. “Yeah,” said the other, “but what are you going to do about it?”

  To avoid being squashed on my visits to the floor, I tried to keep still, preferably in some corner. Except for Gutfreund, whom I knew from magazine pictures and thought of as more a celebrity than a businessman, the faces were foreign to me. That made it hard to know whom to avoid. Many of them looked the same, in that most were white, most were male, and all wore the same all-cotton button-down shirts (one of our Japanese told me he couldn’t for the life of him tell them apart). The forty-first floor of Salomon New York was Power Central, holding not just the current senior management of the firm but its future management as well. You had to go by their strut to distinguish between who should be approached and who avoided.

  Did I grow more comfortable on the trading floor over time? I suppose. But even when I had established myself within the firm, I got the creepy crawlies each time I walked out onto 41. I could see certain developments in myself, however. One day I was out playing the Invisible Man, feeling the warmth of the whale shit and thinking that no one in life was lower than I. Onto the floor rushed a member of the corporate finance department wearing his jacket like a badge of dishonor. Nobody wore a jacket on the floor. It must have been his first trip down from his glass box office, and he looked one way and then the other in the midst of the bedlam. Someone bumped into him and sharply told him to watch his step. Watch his step? But he was just standing there. You could see him thinking that the gaze of the whole world was on him. And he started to panic, like a stage actor who had forgotten his lines. He’d probably forgotten why he’d come in the first place. And he left. Then I thought a nasty thought. A terrible thought. A truly unforgivable thought. But it showed I was coming along. What a wimp, I thought. He doesn’t have a fucking clue.

  Chapter Four

  Adult Education

  FOUR WEEKS had passed. The class had acquired a sense of its rights. The first inalienable right of a trainee was to dawdle and amuse himself before he settled into his chair for the morning. Cafeteria bagels and coffee were munched and swallowed throughout the room. People read the New York Post and laid bets on whatever game was to be played that evening. The New York Times crossword puzzle had been photocopied 126 times and distributed. Someone had telephoned one of New York’s sleazy porno recordings and linked the receiver to a loudspeaker on the table in the front of the classroom. Sex talk filled the air. I was, as was my habit at this hour, biting into a knish.

  Wappow! Max Johnson, former U.S. Navy fighter pilot, nailed Leonard Bublick, four-eyed M.B. A. from the University of Indiana, on the side of the head with a paper wad. Bublick could not have been surprised since this sort of thing happened often; nevertheless, he looked wounded and sought to identify the offender. “Nice haircut, Bublick!” shouted a back-row person with his feet up on the chair next to Johnson. “Oooooo, grow up, you guys!” said Bublick from his seat in the front.

  Susan James walked in to interrupt The Revenge of the Nerds II. James played a strange role. She was something between a baby-sitter and an organizer of the program. Her reward for a job well done was, perversely, to be admitted to a future training program. Like everyone else, she wanted to work on the trading floor; only she was one step farther removed than we were from realizing that ambition. Her distance from the moneymaking machine reduced her credibility as a disciplinarian to zero. She had only the power to tattle on us, and really not even that. Because we were her future bosses, she wanted to be our friend. Once we had moved to the trading floor and she to the training program, she would be pleading with us for a job. Trainees knew she had about as much clout as a substitute teacher, and so, when not abusing her, they ignored her. Now, however, she had an important message to deliver.

  “Quit fooling around, you guys,” she pleaded, like a camp counselor before parents’ day. “Jim Massey is going to be in here in a minute. This class already has a bad enough reputation,” which was true A couple of days before, a back-row person had beaned with a paper wad a managing director from bond market research, who had turned the color of raspberry sorbet and screamed for five minutes. He hadn’t been able to identify the culprit and, before leaving, had promised to have his revenge on us all.

  Susan James repeated for what must have been the tenth time that the impression formed of us by Jim Massey during his half hour appearance would affect our careers (paychecks!) until we retired or died. Massey, we all thought, was John Gutfreund’s hatchet man, an American corporate Odd Job. It didn’t require a triple jump of the imagination to picture him decapitating insolent trainees with a razor-edged bowler hat. He had what some people might consider an image problem. He never smiled. His formal position was member of the Salomon Brothers executive committee in charge of sales. He was also in charge of our futures. He presided over the job placement blackboard beside the trading floo
r. A flick of his wrist could send your name flying from New York to Atlanta. Trainees feared Massey. He seemed to prefer it that way.

  Ostensibly Massey had come to answer questions we might have about the firm. We were only a few weeks into program. Surely must have questions. Actually weren’t given much choice had damn well better be curious, said Susan. “And you guys ask some good questions. Remember, opinions are being formed.”

  Thus the bugle was sounded before the chairman’s keeper of the corporate culture arrived to answer our questions. He had a jawline lean and sharp enough to cut cake and short-cropped hair. He wore a gray suit with, unlike other board members, no pocket hankie. He had an economy of style and, like a gifted athlete, an economy of movement, as if he were conserving his energy for a meaningful explosion.

  He gave a short talk, the point of which was to stress how singular and laudable was the culture of Salomon Brothers. Yes, we knew it was the best trading firm in the world. Yes, we also knew that Salomon stressed teamwork (who doesn’t?). Yes, we realized that the quickest way to be fired was to appear in the press boasting about how much money we made (Salomon was modest and discreet). Perhaps we had heard the fate of the Salomon man in Los Angeles who appeared in Newsweek lounging beside a swimming pool and boasting about his good fortune? Yes, he had been sacked. Yes, we knew Salomon’s three billion dollars in capital made it the most powerful force in the financial markets. Yes, we knew that no matter what we had achieved in our small lives, we weren’t fit to get a cup of coffee for the men on the trading floor. Yes, we knew not to concern ourselves too much but rather let the firm (Massey) decide where on the trading floor we should be placed at the end of the training program.

  Like the other Salomon executives, Massey was flying high in 1985 on the back of a series of record earning quarters. These were not merely records for Salomon Brothers but records for all of Wall Street. He could do no wrong. From his description the firm could do no wrong. Yet when he called for questions, there was silence. We were too frightened to talk.

  I certainly wasn’t going to say anything. No doubt he knew many things I should like to have known, but I sensed that his call for questions was not genuine. In this I wasn’t alone. No one dared ask, for example, why, at the same time everyone else at Salomon was being told not to talk to the press, Gutfreund had his cherubic face plastered on the cover of every business magazine in the country. Nor was anyone going to ask what we really wanted to know: how much money we could make over the next few years. And the most obvious question no one asked was why Jim Massey, the man in charge of hiring trainees, the man directly responsible for the explosive growth of the firm, was not worried that the firm was expanding recklessly (yes, it was apparent even to trainees). No, we were stumped for questions to ask. This, I made a note at the time, is what distinguishes work from school. Curious minds were not what Massey was after. Massey was looking for cult followers. But he repulsed the most slobbering front-row people. Even they were reluctant to cater to such an obvious desire.

  Beside me in the front sat Susan James, looking like a frustrated baby-sitter. C’mon, you guys, ask questions! At last, to my right, the hand of an egregious front-row person rose. I saw who it was and shut my eyes, waiting to be embarrassed for him. He did not disappoint.

  “Could you tell us,” said the young fortune seeker, “whether the firm has considered opening an office in an Eastern European city? You know, like Prague.”

  Like Prague! Had the speaker been anyone beneath the level of executive committee member the room would have erupted in spitballs, paper wads, and howling. As it was, unnatural sounds came from the back row, as if a dozen young men were choking back their ridicule. The thought of Salomon Brothers in Prague had possibly never occurred to anyone in the seventy-five-year history of the firm. Such is the spark of creativity generated by the presence of a member of the executive committee demanding to be asked questions.

  Yet Massey took the question straight, like a State Department spokesman. He plainly would have preferred to be asked, “To what do you attribute your success at Salomon?” but today, he must have thought, just wasn’t his day.

  After Massey left, it was a month before anyone of his level in the company ventured into the training program. Perhaps he let them know that we weren’t very good at this game. But then suddenly, in rapid succession, we enjoyed visits from another executive committee member, Dale Horowitz, and then the chairman himself.

  Horowitz was an old-world investment banker in his middle fifties, a street-smart relationship man, a natural candidate to open and run the Prague office when the time came. His head bobbed on top of his big body and his face always reminded me of Yogi Bear. All I knew about him when he arrived was that he, like Gutfreund, had made his name in municipal bonds and that a few of my Jewish friends were devoted to him. He was the original rabbi: kind and wise, with a taste for large cigars. People called him Uncle Dale. He declined to stand at the podium and instead sat down at the table in the front of the room and spread his arms wide. He talked about how much more important it was to have a family than to have a career, which I think impressed most people as the strangest thing they had heard in the course of the training program. Then he said, in his deep, warm voice, he would answer any questions we cared to ask. Really, go on and ask. Anything.

  Several hands rose. I thought this was going to be the long-awaited Everything You Wanted to Know About Salomon but Were Afraid to Ask session. From somewhere in the middle of the room came the first good question all day. “Why,” asked the trainee, “is Salomon blacklisted by the Arabs?”

  Uncle Dale’s face wrinkled. “What do you want to know about that for?” he snapped. He looked pissed off, like an angry Yogi. The Arab blacklist was an unmentionable, although I can’t imagine why. You didn’t have to be Dick Tracy to discover we were on it (although you had to be James Bond to discover how to get off it. It apparently required a diplomatic mission to Damascus). The Arabs had severed relations with Salomon when it had merged with the commodity traders Phillips Brothers. Phillips Brothers, I was told, had ties to Israel. I thought the blacklist would have lost its sting with the collapse of the price of oil. The Arabs were now spending more than they were earning. At twelve dollars a barrel they were far less important as clients than they had once been. No corporate secrets here. Still, you could almost see the black mark being registered against the name of the man who had asked the question.

  The children had ceased to amuse Uncle. We had been lulled into a false sense of security. We sensed this all at once. Hands vanished around the room, yanked from the maws of a closing trap. But one poor guy was slow to catch on. Horowitz called on him.

  “Why,” asked the trainee, “do we tolerate a South African company as our largest shareholder? Does anyone in the firm consider the ethics of our owners?”

  Horowitz shot him this killer look that said, “You fucking trainees are too impudent for words.” By this time he was rolling a big fat cigar around in his mouth, and his eyes had narrowed to pillbox slits. A South African mining company called Minorco owned 12 percent of Salomon Inc. Uncle Dale’s answer was that yes, ethics were a consideration (can you imagine an investment banker ever saying ethics were not a consideration?) but that beyond that he wasn’t going to discuss the issue.

  So much for glasnost.

  A few mornings later John Gutfreund arrived. By this time we had grown weary of heart-to-heart chats with senior management. A few trainees planned to sleep in on the morning of Gutfreund’s talk. Susan James worried she wouldn’t produce enough of a crowd for the great man. She had secretaries call us in our homes in the wee hours of the morning before the event to threaten us with punishment if we didn’t show up. Her effort was wasted on me. I had no intention of missing it, just as if Joan Collins had come to speak, I wouldn’t miss her. I hardly expected to hear anything new. But I thought I might learn something indirectly. For here was a man who was said to have stamped his personality ont
o an institution; his faults as well as his virtues were those of Salomon Brothers.

  Gutfreund is often accused of affecting a British accent, but at this point in his career, he limited himself to calling other men fellows. As in “Jim Massey is a very talented fellow.” Even that, as far as I can determine, is not a British affectation but a northeastern American one. No, his only noticeable affectation was a statesmanlike calmness. He was so intensely calm and deliberate that he made you nervous. And suspicious. He paused interminably after each question we asked him. He really seemed to want to know what we were thinking. When a trainee asked him about Salomon Brothers’ policy toward charity, Gutfreund with furrowed brow, after standing silent for an uncomfortably long time, said that charity was a very difficult issue, and he would appreciate our input.

  The statesman’s veneer was a pleasant departure from the gruff foulmouthed trader that people expected John Gutfreund to be. And he not only sounded the part but looked the part. He was round like Churchill, with the thinning white hair of Harry Truman, and the grandeur, if not the height, of de Gaulle. But what had become of the man who claimed to stand ready each morning “to bite the ass off a bear”? Where was the man who was known around Wall Street for his brutal power plays? The man whose very name struck terror in the hearts of managing directors? We didn’t know. And I’m not sure we wanted to find out. The problem with his lofty sentiments and pregnant pauses was that they were completely eclipsed by his reputation. Because of what we had heard about him, it was impossible to imagine discussing the United Way with him over tea in his office. Who knew where he had picked up the wise statesman routine? But no one thought it was real. Just dangerous—like the mesmeric gaze of a cobra.