I did my best to sell it.
Lisa’s friend Amanda put her hand on my shoulder and asked, “How is the new guy treating you?”
I looked into her sincere brown eyes, and wonderfully pouty mouth, and told her.
“Better than the girls,” I said, referring to both my famously difficult wife, and my hardheaded daughter.
Sylvie’s angelic phase had lasted approximately thirty months. Somewhere around the time that we’d moved from the city, she’d started ripping the hair band out of her pigtails, refusing to wear dresses, and was basically never was the same kid again. The “terrible twos” would have been a monstrous upgrade. This was something else entirely. She was independent, immune to discipline, and at times nearly impossible. Although I was a college graduate, a CFA, and a lawyer—who had presumably, you know, thought about a lot of things—I was utterly out of ideas for how to handle her by the time she turned three. I read parenting book after parenting book. Nothing. If there were solutions out there, I had yet to find them.
It was a beautiful day in Greenwich. The sun was shining. After a miserable winter, it was finally starting to warm up. The party was a heavy drinking Greenwich-Rye crowd. For the first year after Syl had been born, Lisa had bonded with these women as they all shared the travails of a first child. The social roles were clear here: women watched the kids and orchestrated the parties. The men did what they did best at these events: drink beer, and talk hobbies and shop. At some point, the birthday kid’s dad gets yelled at by his wife because he is off drinking, or doing something other than filming pivotal events.
Right away, I saw a couple of familiar faces—Patrick and Jeff.
“Mike, how’s it going?” Patrick was an investment banker for SocGen’s Real Estate group, and Jeff was in mortgage origination at Bear Stearns. After a bit of small talk, they demanded that I go get myself a beer.
“You know what, let me get Syl and this little guy set up, and then I’ll definitely join you for a cold one,” I said with a smile.
I still had Cam in my arm, an oversized pink diaper bag over my shoulder, and Syl was clutching my hand like the was terrified to let go. Exactly which appendage did they envision me drinking a beer with?
Privately, I found drinking at these kids’ birthday parties overrated. You still had to drive home, and afternoon drinking made me tired. Not to mention that there was nothing worse in my humble opinion than one or two beers. Once I had one, I ached for another. And if I had another, I generally consumed six more. This was not exactly the way I wanted to spend my Saturday with my kids, so the obvious solution was to have none at all.
The central focus of this party was a real old-time fire engine with an open top that had been hired out for the kids. It was going to take them on a little tour of the neighborhood, and seated about ten kids at once. If I could get Syl to get on the fire engine and ride around with the other kids, I’d be home free for a while.
I took her over to the engine, watched her climb up the ladder in back and wait for a seat. She was biting her lip, a nervous habit, and putting on her brave face. I gave her a thumbs up and a smile, and then Cam and I both waved to her. The fire truck pulled away and I allowed myself a ray of hope.
According to Donnie the Firefighter (who, let’s say, must have normally been stationed in a Chelsea or Castro District firehouse), the ride would last approximately twelve minutes. There was a quarantined section of the house set up with lots of foam and toys designated for “babies,” and I happily dropped Cam into the middle of a foam pit filled with blue and red geometric shapes, toys, and other little kids. I said hello to a nearby mom that was watching her child, and asked her if she’d mind keeping an eye on Cam while I grabbed something to drink.
The answer—like it always was at these things—was “Of course!” I ventured off and found a Diet Coke, which I poured into a red plastic cup to confuse the beer swillers.
On the way back to baby pit, I ran into three more guys I knew from these things—Liam, Tom, and John. They worked for BAC Capital Markets, an SAC Capital spinoff, and Morgan Stanley Prime Brokerage, respectively.
There was a round of obligatory “I’d rather be playing golf” (after a careful glance around the room to make sure that the birthday boy’s dad wasn’t among us). Although watching the birthday boy’s father madly dashing around the yard, furiously snapping away with the camera, and refilling the ice chest with beers, I imagined that he probably felt the same way.
“Where’s your wife, Mike?” Liam asked me.
I looked down at the floor.
“Actually, we separated a few months ago. She found an email on my Blackberry from our Bloomberg rep that had nothing to do with the markets.”
I gave it my best deadpan, but they still saw through me. Part of Bloomberg’s business model seemed to involve sending hundreds of very young, attractive girls to testosterone-infused trading floors throughout the city under the guise of “tech help.”
I got a few smiles, followed by big gulps of their beers.
“Not really,” I assured them. “She’s just working. But a guy can dream, can’t he?”
They chuckled. The “other woman” humor played well in this kind of inebriated crowd, but also hit a bit close to home with many in our social set. “But for the kids” was a common refrain heard in bars, trains, and confessionals throughout the neighborhoods of people who worked in finance.
Despite doing everything we could to avoid the subject, the talk eventually turned to the carnage in the financial markets, and a series of horror stories began to flow. Most of these guys were only secondarily involved in markets, meaning they were investment bankers or some other arm of the Street. Their livelihoods didn’t depend on outsmarting the markets day in and day out. Many of them had multi-year guarantees, and didn’t feel the constant stress of those of us matching wits with the markets each morning. (Those of us who had less job security, less hair, and more circles under our eyes tended to drink a little more heavily than the rest of the crowd.)
“Well, I have to go check on the little guy,” I offered, looking for an excuse to break from the conversation.
“Why? Where’s he gonna go?” Jeff asked. “Can he walk yet? He’ll be fine.”
I was sure he was correct, but I didn’t like the idea of leaving my two-year- old alone in a strange house for very long. I also wanted to make sure we were waiting outside when the fire truck came back from its tour. The guys caught me looking over at Cam.
“That is a cute fucking kid,” Liam said. “Are you sure he’s not Irish?”
Cam had red hair, light freckles and green eyes.
“There’s only one way to be certain … and then what do I do if I find out she’s not the mother?” I joked to more laughter and demands that I return for another beer with them. The truth was, I knew who the mother was, having been in the delivery room from start to finish, and even performing the absurd fantasy surgeon ritual of cutting the umbilical cord. (I thought they might give us a discount on the hospital bill. No dice.)
Back at the foam pit, I found that Cam was fine. My impromptu babysitter was gushing over his eyes and hair. I hoisted Cam onto my hip, grabbed a few pretzel chips for the both of us, and snuck back out front just in time to hear the fire engine’s ancient duck horn in the distance.
“Come on, no tears,” I chanted, the way contestants of yesteryear implored the gods of chance for “no whammies” on The Joker’s Wild. A few similarly minded moms heard me and gave knowing smiles. The fire engine soon pulled into view. I found Syl’s face. No smile but no tears, either! I’d take that trade any day. I waved wildly, making sure she saw me, and went to help her off the fire engine. I stroked her head and asked her if it had been fun.
“Umm. It was OK. A little windy.”
“Did you guys fight any fires?”
“Nooo.” That got a small smile. Even at four, she knew her daddy could be a merry prankster.
I suppressed a giant smile of m
y own, and tried to disguise the pride spilling out of my heart. For a girl whose anxiety typically sent her to the nurse’s office twice a week with a stomach ache, this was a giant victory. Swallowing her nerves and climbing aboard an antique truck with a bunch of boys and girls she didn’t really know was a big step.
I could imagine how she must be feeling. This was a win for her, and I let her know it.
It was announced that there would be another ride. Parents and children could ride together, so I told Sylvie we would go again. That got another smile, and we climbed aboard. As the truck took us slowly around the neighborhood, I held my children’s hands and pointed out the white sailboats on the horizon, rocking their way across the Long Island Sound. The duck horn sounded and I jumped. This produced a hysterical laugh from Cam. The full chortle emanating from such a little redheaded body made me smile, and I joined him. The laughing was infectious, and soon Sylvie was laughing along with some of the other children aboard.
Xanax, Vitamin K, a bottle of Opus—these are the tried and true synthetic somas, but I’ll tell you something. Their palliative effects don’t compare to the powers of your own child’s laughter. It can’t be replicated or replaced. And no matter what pit of hell you are in, it has the power to find you there.
A couple of hours before, I’d been on the verge of staying home on the sofa for the rest of the day. It was the easy way out, but a way out nonetheless. Now, instead, I had a memory of a lifetime to cherish, and I fucking knew it. In a perfect world, I’d go round Ocean Avenue forever on top of this fire engine, with my two kids laughing and the Long Island Sound shimmering in the distance. Circling and laughing forever.
“Time for cake!” a thin, blonde Greenwich woman announced gleefully as we pulled back in the driveway.
“Oh boy,” I said. “Cake!”
I didn’t want to be overconfident, but I was beginning to feel there was a chance I might actually pull this trip off—disaster free.
I encouraged Syl to go find a seat at the table while there were still a few open places. After an off-key “Happy Birthday” (and the annoying modern-Greenwich additional verses “Are you one? Are you two?”), Patrick made the first cut, and cake was passed out to all. Noticing that there were extra slices, I furtively handed Cam a slice. I walked into the living room where the men were gathered, and positioned myself with a clear line of sight to my two cake-faces.
Since the “heavy lifting” of the party was winding down, beers were flowing more freely now, and a decidedly more festive atmosphere was building among the gents. On the outskirts of the cake tables, the women were now cracking into the beer chest themselves, and exchanging their own war stories. (I noticed how the women had the sense to linger just on the outskirts of the cake tables; close enough to intercept trouble, but distant enough not to be summoned for trivial help.)
After Liam shared the news that his wife was pregnant with their third, an informal straw poll broke out regarding who would be joining him at three. Surprisingly, almost every hand was raised, including my own. Several men offered five as their magic number. I was blown away. Half the guys here wanted a basketball team.
Back in Los Angeles, two had been the norm. The rare family that had three kids was considered “prolific,” and the subject of some good natured ribbing regarding “mistakes” and “insatiability.” Here, three was the new two.
Banter was light despite the gathering storm on the Street. I glanced into the dining room to make sure my children were still on board the happy cake train. Syl was eating quietly not speaking to anyone, and I suppressed a wave of sadness by recalling her bravery earlier in the day.
Cam had chocolate all over his face and was grinning wildly. His smile was only surpassed by my own. I was about to go over and wipe him down when I thought, “Who cares, let him enjoy it for a bit.” Also, I was curious to see if anyone else would take pity and wipe him down. Sure enough, a sweet gaggle of moms came over and fussed over him, wiping his face clean and then some. He didn’t even protest this unsolicited handling by strange females.
Then my phone started buzzing. I suddenly noticed that the conversations around me had died down, and that the rest of the men in the room had their phones out too. Blackberries were chiming all over. Every one of us had been sent a hot-off-the-presses release from the Treasury. The chatter ceased as we tried to digest it. Furrowed brows and poker faces quickly replaced toothy grins as we stared at our screens.
JPM to Buy Bear Stearns for $2 per Share: Federal Reserve to Provide Financing
JPMorgan Chase said Sunday it will acquire rival Bear Stearns for a bargain-basement $236.2 million—or $2 a share—a stunning collapse for one of the world’s largest and most storied investment banks. The last-minute buyout was aimed at averting a Bear Stearns bankruptcy and a spreading crisis of confidence in the global financial system. The Federal Reserve and the U.S. government swiftly approved the all-stock deal showing the urgency of completing the deal before world markets opened.
“Does that say $2?” John asked the room.
“That has to be a typo, doesn’t it?” a nervous, high-pitched voice followed. “There has to be a zero missing, right?”
“But even $20 is ridiculous,” John said. “This can’t be right.”
“It’s not $20,” Jeff said, a little louder and more definitively than everyone else, trying his best to erase the stunned look on his face. “It’s $2.”
That was the end of it. Jeff would know.
He worked for Bear Stearns.
From a birthday party to a funeral in the time it took to check a Blackberry. I don’t know how much stock Jeff owned in his employer, but whatever he thought he was “worth” had probably just been cut by more than half.
Star Trek IV flashed through my mind: The Undiscovered Country. There was nothing else to compare this to. No precedent to call upon. This was a financial 9/11. Capitalism, efficient market theory, our entire regulatory structure—all said that what had just happened to Bear Stearns was impossible. A 100-year-old investment bank doesn’t go from being worth $50 billion one week to a couple hundred mil a few days later.
But it just did. They just had. All of us had seen it.
We were no longer simply in a recession. Something far more serious was unfolding before our eyes. This was an entirely different animal, and it was simply not possible to know what the fallout would be, or how or where it would take place. We were living in strange, dangerous times. Only one thing was certain: Very few of us—if any—would get out of this one without a good deal of pain.
I thought about the coming week at work, and that was all I saw. Pain, and a lot of it. Stocks, commodities, P&Ls—all flashing red, all draining money out of the pockets of traders and investors worldwide. The collapse of Bear was either going to be the dramatic “thud” that creates a bottom—as Zvi and many others were arguing—or the beginning of the end for life as we knew it. Nobody had a grasp anymore on what was happening, or on what it all meant. This was uncharted territory: the place on the map “where dragons lie.”
The Undiscovered Country.
I kept asking myself the same questions. Who bought the Bear Stearns puts? Who made hundreds of millions of dollars while Bear collapsed? Was it Goldman? If not them … who?
Whenever there’s a rumor or conspiracy suggesting skulduggery, fingers always seem to get pointed at Goldman first. As the most powerful and ethically challenged of all the ethically challenged banks, Goldie was permanently parked in a gray zone and the ideal bogeyman. But that didn’t necessarily mean they were always the culpable party.
Whoever was shorting Bear off the initial bump from the headline and press release knew a lot more than the public. The press release didn’t tell you that Hank Paulson had given JPM the weekend to come up with a deal, but was quite prepared to write Bear’s obituary otherwise. Someone knew, though. And from the prints left on the corpse, it was more than one person or firm.
The only thing better than
having friends in high places, is having friends in the highest places.
It was beginning to look like a whole lot of people did.
CHAPTER THIRTEEN
OF BANKS AND ROYALTY
______________
WITH THE FALL OF BEAR, IT became more and more clear that we had been living on borrowed time. Nu, Zvi, and all the rest of us felt like we needed to get our shit together, and fast. No more pursuing rappers. No more following every lead. Certainly no more fucking up investor meetings at the last minute.
It was time to get back to basics.
Our playbook was sound. The phone calls from talented traders looking for a place to work were pouring in now that the world was falling apart, and the only thing keeping us from getting things rolling was the absence of a real-deal capital partner. The twin gutshots of Bear Stearns and CCU* prompted me to revisit an option I had already once turned down. The Monday after Bear went down in flames, I had called back Dave Abramson of RBC and told him we should talk.
“You and Deigs coming back in?” he asked, referring to John Deignan.
“Not Deigs. Just me. I opened up a firm with Nu Goffer.”
“Zvi’s little brother?”
“Ha! I’ve never heard Nu referred to as ‘little,’ but yes, Zvi’s younger brother.”
“Yeah, I heard you guys were doing something. Nu had a monster year last year, and Zvi is crushing it at Galleon.”
“All true. We’re in the right spot, Dave, and we’re putting together a firm that’s going after the First New Yorks and other big league prop firms. This is going to be big. At the moment, we’re deciding whether to partner up or raise private capital. From what I hear, you’re in business with the right people too, and they have deep pockets.”
“Some of the deepest. And you can ask Zvi; I love that kid. We were together at Carlin. I’ve wanted to be in the Zvi Goffer business for years—and you know I think extremely highly of you too. Been trying to get you to work for me for two whole years now.”
“Well, let’s sit. Office or bar?”
Confessions of a Wall Street Insider Page 18
