Nothing Personal: A Novel of Wall Street (33 page)

Some investors were willing to take the risk of leveraged prepayment in exchange for higher yields. Others were willing to accept lower yields for less prepayment risk and bought the back pieces of the CMO pie. But by far the favorite customer of the Street was the one who didn’t know what the hell he was doing, but had lots of money to invest, and for some reason thought he was smarter than everybody else. As Leeds put it, generally, when the music stopped, the investment bankers and traders made lots of dough regardless.

On Warren’s way back to his chair from the interview with Wittlin and McDermott, Jed called Warren over to his desk. He’d been badgering Warren for weeks.

“Hey, hitter, they going to fry you for doing Anson?” Jed’s voice was nasal. His shoulders were dusted with dandruff.

“Nah. But they told me they’ll be putting a tail on you for a few weeks. They think you were in love with him.” Warren looked down at Jed’s feet, which were tapping wildly to a tune only audible inside the trader’s head.

“Well, they’ll wind up with some nice pictures of me and Holik at Chowfun, getting our puds pulled.” Jed was referring to an Oriental “massage parlor” frequented by Weldon’s elite traders.

“An ugly, ugly thought. What can I do for you?”

“I need you to sell the Met some of these Zs. I got fifty of these and seventy of those. It’s like a bakery. You want cookies? Cake? Whatever you want, I got. C’mon, can you get some of this shit out of here for me? I need you.” It was becoming increasingly obvious to the sales force that Leeds had a problem with his position. He owned a lot of so-called Z-bonds. These back pieces were CMO tranches supposedly completely safe from prepayment, since they were the last $50 million or $75 million of bonds to receive prepayments out of $1 billion or so in each deal. They only prepaid after the other $800 or $900 million of the issue was gone.

Leeds and Carl Dressler had kept creating CMO deals, taking pools of FNMA-backed mortgages and structuring them, even though no customers would buy the Z-bonds in the current environment of dropping interest rates. Every deal made a huge profit, on paper. But they had built up a big inventory of Z-bonds and kept them “marked” at their theoretical value based on average prepayment rates. But as interest rates dropped, those prepayment rates started to increase dramatically. On top of that, they hedged the positions, and their hedges kept losing money. Normally, the value of long maturity bonds would increase as rates fell, but Z-bond prices were rapidly decreasing because investors were worried they would prepay much faster. Just one position in Leeds’ book, $50 million of bonds from a deal backed by FNMA 10 percent mortgages, had been priced at $118 when the CMO was issued. Thanks to hedge losses, Leeds had marked the bond up to $142 on his books. In reality, the bonds were worth maybe $102 and would be almost totally prepaid at $100 within six months rather than eighteen or twenty years. That one position represented a $20 million loss. Leeds had dozens of similar positions.

No one except Jed, his clerk, and Carl Dressler knew the full extent of the problems, which were moving into the hundreds of millions in losses. It was already December, which meant there was no way to make back the losses before year’s end. The rumor around the firm was that Leeds and Dressler had figured out some way to defer or even offset the losses, so they wouldn’t affect the year’s bonuses for people not on commission.

Warren had repeatedly tried to get his clients to buy the least overpriced bonds in Leeds’s inventory. None of them were interested, and some responded by asking for bids on similar bonds they owned. It was a massacre. Warren tried not to think too much about it and concentrated on other areas. After all, Carl Dressler was the genius who had created the mortgage department, and the mortgage department had spun the profits that allowed Weldon Brothers to become a powerhouse in all the markets, competing with First Boston and Salomon. He would figure it out. In the meantime, Warren was focusing on Golden State.

“Hey, Jed, I’ve been trying.” Warren said to deflect Leeds’ pressure.” Maybe I can sell some of that Freddie deal you brought last week. Really, Emerson’s looking at it.” David Schiff at Emerson Insurance had laughed when Warren showed him the bond. He’d asked how much of it Leeds owned. When Warren had told him 27 million, Schiff had asked if there was any way to short the stock of a privately owned firm such as Weldon. He advised Warren to start interviewing at other companies.

Warren walked down to the sales area and tapped Goering on the shoulder. He looked up from his telephone handset, mildly peeved.

“Hey, Dutch, the cops want to talk to you. Over in the Syndicate conference room.” Warren jerked his thumb in that direction.

“What the fuck do they want?” Goering had covered the mouthpiece with his hand.

“Just to talk to you. Maybe about Sharon Tate. Or Jack Ruby. How the hell do I know?” Warren shrugged.

“I think they want my professional opinion on whether it was Bonnie’s blow job that blew Anson’s brains out, or some lawn jockey. That girl can drink soda through a garden hose.” Warren was not surprised that Goering managed to turn even someone’s death into an opportunity to boast of his broad experience and conquests while making a gratuitous racial slur. But it was funny.

“That must be it, buddy. You’re up.” Warren headed back to his seat.

He tried to focus on his afternoon calls, but had little success. He wound up staring at the blinking lights, with images of Anson and Larisa floating in front of him. He couldn’t figure it out. She was so strong willed, and independent. Anson was basically a low-life WASP prick. He treated most women like shit, both those that worked for him and those in his private life. In fact, he treated everyone like shit. He was a decent golfer, but took it way too seriously. Otherwise, he was a lousy athlete, though he spent hours on the exercise bike, and Warren couldn’t imagine that Anson had the patience to sit through Larisa’s endless play-by-play about the nuances of her day. Maybe it was the old, nasty line from high school—to get a great girl, you have to treat her like a dog, since most men were intimidated by them. Maybe she needed to feel debased and subservient, to be put in her place, to be happy. He had never believed that about any woman and never would. Plus, she clearly liked being in charge in bed. It just didn’t make any sense to him.

The longer he sat, the more he realized that his feelings toward her were unresolved. He was sure she had been sleeping with other men over the last month or two of their relationship—her disavowal was unconvincing, no matter how heartfelt it seemed. Somehow, her screwing Combes made Warren the loser in a contest that he didn’t even fully understand. He figured out the best thing he could do for himself right then and did it.

Sam picked up the phone on the second ring. For a few moments, he put on a Jamaican accent and asked if he could rent three Jaguars for a reggae band coming to Los Angeles the next week. Then he asked if she could arrange for women for the band, and if not, how about just her for him? She bought it and handled herself pretty well, cutting him off before he could get too explicit about what he was going to do with her, and redirecting him back to the cars. She was only mildly pissed when he stopped the act and asked if he could speak to the manager.

“You asshole. Damn. I wouldn’t have minded renting three cars for a week just now. Business is slow.” Warren could hear the radio in the background.

“Hey, if business is slow, I’ve got a proposition for you.”

“What’s that?” She sounded a little wary.

“I miss you. Let someone else handle the office and fly here for a few days. We’ll shop, talk, eat, and have fun. It’s snowing a little today. You could stay until New Year’s weekend. What do you say?” He really did want to see her.

“I don’t know. It’s been a while. Maybe you won’t like me anymore, and then you’ll be stuck with me.” Her throaty voice made Warren uncomfortable in his chair.

“Listen, I’ll get you the ticket. First class on American. Open return, whenever you want. I still like you. Lots.” He felt almost silly, but the pleading was real. He desperately wanted to see her.

“Oooh. Big sugar daddy. Will I get to keep the headphones from the flight?” She sounded coy.

“Absolutely.”

“Okay. I’ll take the one thirty tomorrow. Don’t sweat the ticket. I still like you too. Just be at that goddamn gate, or I’m going right home. You know, I haven’t been to New York in maybe five years.” Now she sounded happy.

“Pick you up at the airport? Are we that serious?”

“Well,
you
better be!”

“I’ll be there. This is great!” He signed off with her, not wanting anything to spoil the moment or change her mind. He felt totally exhilarated. He’d have to cancel a dinner with Malcolm, but figured Conover would be pleased to reschedule. There was hope for a happy New Year indeed.

Just as he was beginning to feel a little upbeat, Annlois, looking drawn and upset, came over to his desk. She was a tall, thin woman, surprisingly mature for a secretary. Warren had seen her on occasion wandering on Water Street during her lunch break, seemingly distraught, talking to herself, and looking ill. He had mentioned it once to Combes, who’d shrugged it off and looked at him as if he were nuts. At this moment, she seemed worse than ever.

“Oh, Warren, hi. Sorry to bother you…”

“It’s okay. Really. What can I do for you? Are you okay?” Warren realized she must be thinking about her job—no more Combes, no more Combes’s secretary. “Listen, I’m sure they’ll find a place for you. There’s got to be a new head of finance, right? You’re great.”

“Oh, thank you. No, I … I, um, wondered if you could help me. With some things. Anson’s things. You know, there are some things that should be sorted through.”

Warren was surprised she would ask him to help look through Anson’s papers. That was something he would have expected one of the other finance people to do. “Sure, Annlois, I’d be happy to.”

“Yes, you see … um, I thought that you … because you were … well, Mr. Conover asked me to take care of it, and there are so many things I’m not sure about. It would be a favor, and if you wouldn’t tell anyone … I don’t, I mean I wouldn’t want them to think that I couldn’t…” She seemed a bit nervous.

“I understand. It’s not a problem. Is everything in Anson’s office? I could take care of it this evening if you’d like. Will you stay to help?” Warren was curious to see what kind of stuff Anson kept around. He couldn’t turn down a chance to poke through them with Annlois.

“Oh, of course.… I didn’t mean to do it alone … I mean for you to do it all yourself.” She smiled, and Anson noticed how her lipstick was applied beyond the edges of her lips to make them appear fuller. The only woman he’d ever seen do that before was a friend’s grandmother.

“Okay, then. Maybe around six. I’ll come by when I’m all done.” Warren smiled back at her.

She thanked him again, then moved back across the floor. She moved deliberately, and Warren thought that her shoulders looked slightly more square, her step a bit less leaden.

forty

Managing directors’ offices at Weldon Brothers tended to feel like suites at English hotels. They were filled with mahogany tables, upholstered armchairs and a sofa, and usually had a few current magazines on their coffee tables and prints of sailboats hanging on the walls. The one mark that separated a finance office from a trading office was the proliferation of Lucite tombstones—small copies of the newspaper ads run to announce big new bond deals sealed in plastic as a status symbol. The more tombstones, the more seasoned and the bigger a hitter the finance person must be. Anson’s office had them everywheres, in all shapes and sizes, so many that he’d actually stacked maybe twenty on the floor in a corner. The view out the window was nothing particularly special, just the usual panorama of other office towers with a partial opening to the sky. Higher up in Weldon’s building, the views became breathtaking and vertiginous. The chairman’s office, on a corner, commanded a view from Connecticut to New Jersey, and on clear evenings, the late sun set it ablaze, seemingly turning it into a room of gold.

Warren came in through the open door to Combes’ office. Annlois followed him. They were carrying folded corrugated-cardboard cartons from a large pile by her desk. She closed the door behind them.

“Why don’t you start with the desk, Warren? I’ll go get us some coffee.” She opened up two of the cartons and set them by the left side of Anson’s desk. Out of her dress pocket she fished a small key and handed it to him. “Just use your own judgment.”

As she left, he noticed that she slipped the lock on and closed the door behind her. He stood there a moment, puzzled. Clearly, she wanted him to find something. Was it something that she was afraid of? Something she thought would embarrass Anson or hurt Weldon? Warren couldn’t figure it out. But, whatever it was, it was probably in one of the drawers on the left side of Anson’s desk, the only side that locked.

It took him just a few minutes to go through the large file drawer and two smaller ones. The files looked pretty routine. In the top drawer had been Anson’s portable computer. Warren knew that Anson carried it everywhere with him. He’d spent close to $10,000 for it, all personal money. It was the first one Warren had ever seen that could fit in a reasonable-size shoulder bag. Anson used it constantly, but Warren figured the night of the party he must have decided it was too heavy to lug up to the armory. He took it out of the drawer and set it on the table. Its power cord wasn’t connected, but Warren figured the battery might work. He opened the machine up and pressed the power key.

The machine was slow, but after about fifteen or twenty seconds, a log-on screen came up on the liquid crystal display, asking for a password. Warren turned the machine off. So much for that. He started on the rest of the desk. He hadn’t found anything yet. Maybe Annlois was just a little spotty right now. The right side of the desk held nothing of interest. Most of Anson’s files were in the long credenza. Warren figured that was his next stop.