Mike Offit - Nothing Personal - A Novel of Wall Street

Almost three months passed, and there had been no noise about any problems at Warner or Golden State. Warren noticed that some of their business started slipping away to other dealers, particularly Sacramento, the brokerage arm of the huge insurance company. They were raising a lot of money for Warner, and without Anson pushing, Warren hadn’t wanted to get Weldon involved. He knew that the two banks were not what they seemed, and while he wasn’t about to tell anyone, it was easy to let the business go elsewhere. When Malcolm questioned the drop in production, Warren attributed it to other firms’ being overly aggressive to get the banks’ business, and to Sacramento’s willingness to sell lousy credits to its dumb-money retail system. Philo Clarke, a business school classmate, told Warren an amazing story. Sacramento’s mortgage sales desk had knowingly misrepresented a big new deal they had sold to thousands of small investors through their retail brokerage system. The head trader, for whom Philo worked, had balked, insisting on a letter from the sales head acknowledging the head trader had nothing to do with the obvious lie. “He says, ‘You idiots are gonna get sued!’ So the head of sales says, ‘Fuck the moms and pops—we’re making seven goddamn points!’ and signs the letter,” Philo had told Warren. Within three months, all the small investors who’d bought it had lost over $50 million of the $75 million they’d invested and filed a huge lawsuit. Sacramento had been forced to make them whole, losing $53 million. It was par for the course at what Philo called “this fucking wire-house, black-Irish, boiler-room bucket shop.”

Warren had picked up the slack in production with Emerson Insurance, helping Schiff put together a whole restructuring of their asset base, and into a bullish stance on interest rates. Schiff felt strongly that the country was on the brink of a huge recession, if not in one already, and wanted to position to reap the maximum benefit if long-term interest rates declined to facilitate a recovery. Tax reform had began to hit, and Schiff was convinced things would get rough by mid 1989. Despite his usually conservative bent, they went on a shopping spree together, buying mortgage derivatives and treasury strips, and extending the maturity in every one of the firm’s accounts. Schiff reasoned that his company had a huge surplus, and if his bet was wrong, they would still be in a solid position. Warren concurred. Still, his own paranoia made him document Schiff’s full understanding of the risks he was taking with a comprehensive acknowledgment letter Warren had Weldon’s legal department prepare. Schiff had obtained his board’s consent—essentially he was risking only the gains he’d made by being right on the markets so far. It was a good gambler’s strategy.

One day, Schiff had taken Jed Leeds out of $157 million of principal-only strips. These were securities that paid no interest, but received all the principal from a pool of FNMA-guaranteed mortgages. They sold for fifty-two cents on the dollar. If interest rates went down, it would become easier for the homeowners whose mortgages were in the pool to refinance, and the prepayment rate on the pool would climb. This meant that Schiff would receive the principal back, at 100, much faster than projected, making him a big profit. If he was wrong, and repayments slowed down, he would be hurt, getting his money back more slowly. What made the mortgages attractive was that they were already prepaying so slowly that little room was left for them to get any slower.

Jed had been long in the position for two months as the markets had fallen during a lull in the building rally. The bonds had lost almost ten points in value, and he was desperate to sell them. When Schiff had agreed to buy them, Jed ran across the floor and kissed Warren on the top of his head. He paid Warren a $2 million gross commission. Malcolm called Warren into his office to congratulate him. It was the biggest single commission anyone could remember on one trade. Warren had to admit he was happy. Everyone on the floor was high-fiving him, and even Annlois came by to congratulate him.

“Say, Annlois,” he had said before she left, “have you got a second?” She looked to both sides and, seeing that no one was paying attention, bent over his desk. “What was it you wanted me to find in that computer?’ Warren couldn’t help it—she was the only link between him and Anson’s accounts.

She looked nervous and whispered to him, “I knew that Anson was seeing your girlfriend, and that he kept his dates on his calendar and some e-mails. I wanted you to find out for yourself, rather than from someone else. You’re a nice young man. I’m glad the two of you aren’t together anymore. I don’t like her very much. She’s pretty, but uses people.”

Warren nodded thoughtfully. “Thank you, Ann. I did find the calendar. But the police told me about Larisa first.”

“Oh. I’m sorry.”

“No, it was for the best. We had already broken up.”

“You know, Warren, it’s funny the way Anson would always ask Larisa about you. It was like he wanted to know what you were thinking about him all the time. He used her too, I think. He was a hateful man.” Annlois looked sad.

“I don’t think anyone could use Larisa Mueller without her knowledge and consent. Not her.” Warren smiled at Annlois, and she patted his hand warmly before she walked away.

Gossip. Interoffice romance. Not $200 million in a European vault. The woman had given him the secret to protect his feelings. He couldn’t help but chuckle. It had been completely personal. Not just business.

In the odd way things always seem to happen, Warren ran into Larisa the next day. He hadn’t spoken to her often since their parting tryst. He hadn’t told her that he knew about Anson, hadn’t let on that he knew her whole indignant scene about the pills had been a charade. Why start an argument? She knew the truth, and he didn’t mind her seeing him as a sap.

He had gone to the thirtieth floor for a short meeting with members of the Insurance Group. These analysts appraised the values of the stocks of all the major publicly held insurance companies, and they had decided to add Emerson to the list of companies they followed. If they gave it a harsh review, it could hurt Emerson’s stock price and their business, but a good one might help. Warren had been relieved that they were positive on the company.

Larisa worked on the thirty-second floor, but the copy center was one flight below. She ran into Warren as she headed for the staircase with a pile of reports. He stopped to talk, and the others continued on. She looked tired, and he could tell that she’d been working hard. She’d put on a few pounds too. It actually made her even prettier, softening some of the hard edges.

“So. How’re things?” she asked brightly. “I hear you’re setting all kinds of records down there.” She smiled at him.

“Yeah. Things are going pretty well. I can’t complain.” He shrugged.

“I always knew you’d be a star. And so fast.” She started her familiar gesture, a playful push on his shoulder, but caught herself and dropped her hand.

“Well, I think that karma—or fate, or whatever—has made things happen a little quicker than they might otherwise. But you gotta take what you can get, right?” That two men who had either stood in Warren’s way or disliked him had died was not lost on him. He had no illusions that his rise hadn’t been aided by their bad luck.

“I’ll say.” She stopped for a minute and looked into his eyes for a long moment. “You know, I miss you, Warren. Things are so different now.”

He looked at her and couldn’t hide his discomfort. “Well, I think it worked out for the best. You know what they say, ‘The truth will set you free.’” He regretted the shot. “I may have been wrong about what I said, but I do think things will be better for both of us.”