Thomas Hoover - The samurai strategy

The way I figured it, Noda was probably more or less on schedule. By nightfall the stock exchanges had blood on the floor, a dollar was worth roughly two-thirds what it had been at sunup, and the U.S. Treasury couldn't have panhandled a nickel anywhere in the Free World.

I've mentioned Jack O'Donnell a time or so previously, the Columbia University professor turned politico. Jack was the junior senator from New York: Irish idealism goes to Washington. I'd gotten to know him reasonably well, thanks mainly to a series of rubber-chicken dinners I'd pitched in to help him with.

Needless to say, O'Donnell's well-known attitude toward fiscal sleight-of-hand in the corporate sector had made raising money on Wall Street a decidedly uphill endeavor. His Insider of the Month award was especially unpopular. That was a large gold-plated screw, suitable for mounting, which he regularly bestowed on any corporate board members who'd just happened to dump big blocks of their personal holdings about a week before a disappointing quarterly report sent their company's stock price through the floor. For some reason Jack never seemed to buy their collective "Gee, we had no idea" explanation.

Jack always assumed that corporate managements would walk off with anything not securely riveted to the floor. He also believed most of the corporate takeovers these days were about as helpful to America's competitiveness as masturbation was to population growth, a viewpoint I tended to share-which is one reason why I helped him raise money from time to time. More than that, though, I admired him immensely. The man was a real samurai. Unfortunately, however, he was his own worst enemy half the time when it came to soliciting campaign checks; he could never understand why executive dining rooms weren't necessarily the optimum terrain to start raising hell about shareholders' rights. I once sent him a dog muzzle for Christmas after he pulled just that trick at a CEO fundraiser I'd carefully set up in one of those private suites atop the World Trade Center.

He'd been especially busy this session. When he did come to New York, he spent most of his time up at the West Side apartment of a female aide of his, where they reportedly were polishing a lot of position papers these days. Monday, however, he had only one thing on his mind: how to keep the U.S. monetary system from going belly up. Trouble was, he had no idea what to do. Naturally he immediately canceled his subcommittee hearings for the day-an inquiry into how charge cards and the banks touting them (loving those wonderful loan-shark rates) were lofting consumer debt to dizzying heights. That afternoon he began working on a speech for the Senate floor, a hellfire preachment intended to shame the administration into some kind of action.

After thinking about it awhile, he'd decided that, since all the nervousness in the market was traceable to an apparently total Japanese loss of confidence in U.S. government obligations, he'd have his staff call around concerning what other Japanese moves were underway. He had questions such as: If they're pulling out of Treasuries, are they dumping corporate bonds too? Real estate? Where in blazes is it going to stop?

Simple questions, maybe, but tough ones to attack on short notice, given the clampdown at the source. So his people started making calls, and finally one of them got hold of Charlie Mercer, an Executive VP at Shearson. Purely chance. Did Charlie happen to know any big Japanese players in town?

Well, yes and no, replied Charlie. Strictly off the record, one of his biggest personal clients lately was an attorney here in New York, who always paid with corporate checks bearing the logo of a Japanese-sounding outfit. But it was a purely private arrangement and he was sure…

The staffer immediately told him to please hold while she switched the call to Senator O'Donnell.

Actually I'd known Charlie for years, and I also knew the poor guy's wife had some kind of esoteric bone cancer that meant ten thou a month in radiation therapy. So I'd let him set up an account on the side and do some full commission churning in the name of one of Dai Nippon's dummy fronts. Why not?

Then Jack came on the line. "Mr. Mercer, am I to understand you've been handling heavy trades for a Japanese firm?"

"Nothing illegal about that, is there, Senator?" Charlie was growing nervous, suddenly seeing himself under the hot glare of TV lights in Jack's finance committee. "Truthfully, the man I actually deal with is an American attorney here named Walton."

"Matt Walton?" roared Jack.

"You know Matthew, Senator?" inquired Charlie, stunned by the sound of the august public figure abruptly bellowing in his ear.

"Know him? I may kill the prick for not talking to me sooner."

Approximately five seconds after this conversation my phone erupted.

"Tell me, Judas," he yelled, "is it true you're helping them out? I want the goddamn truth and I want it now."

"Jack?" I finally recognized the voice. "Helping who?"

"You know who, you fucker. Our good friends the goddam Japs, that's who. They're-"

"Jack, calm down a second," I interrupted. "It's just possible this whole thing is some kind of scam. Not at all what it seems."

"Talk to me."

"Not over the phone. Client confidentiality. But if you're coming up anytime soon, I'm mad enough to give you a full rundown of all I know, strictly off the record."

"I'm scheduled in on the six o'clock shuttle. Where can we meet?"

"How about the club? I promise you an earful."

"The Centurion?" He inquired sourly. I knew how he hated it.

"Jack, wouldn't kill you to rub elbows now and then with an actual capitalist. Don't worry. There won't be any photos to sully your reputation."

I suggested the place partly to pay my respects to a wounded ward after the day's carnage and partly for Jack's convenience. It was a combined press hangout and "new money" convocation, located just around the corner from his New York office in one of those old mansions right off Fifth, midtown. They'd just begun allowing the fair sex to cross their hallowed doorstep (after a lawsuit), a move certain diehards felt signaled the curtain raiser on the West's Decline. For my own part I'd actually put up Donna for membership as pan of the test case. We eventually established that the Centurion's unwritten membership criteria were actually pretty simple: in addition to being white and male, you also needed to be either rich or well-known. Being all four made you a shoo-in.

A couple of us fortunate enough to have friends on the circuit bench called in a few favors and arranged for a black, female judge to hear the case. The proceeding was over in time for lunch.

"Is eight okay?"

"Done," he said. "I'll be there on the dot."

He was late as usual, but I managed to pass the time. It was enough just to sip a Perrier and observe the shell-shocked faces of golden boy brokers presently mainlining martinis down the bar. Fortunately the place was on the ground floor so nobody could take a dive out a high window, but the crowd had all the insouciance of hookers working a Salvation Army convention. I checked over the room-lots of designer suits topped off by long faces-and wondered how many millions had been dropped that day by those present. Booze was flowing across the mahogany bar as if there were no tomorrow. Maybe there wasn't.

At a quarter to nine Jack O'Donnell marched up the blue marble steps, a man in from the war front.

O'Donnell was a big guy who looked every inch a senator, right down to the thirty-dollar haircut and the eight-hundred-dollar suit. I think it was his overcompensation for being Irish and being crapped on by the Columbia University administration most of his days. A so-so academic, he'd blossomed as a politician-firm handshake and steel eye-and had easily devastated the smooth-talking Long Island party hack the big money had thrown against him. The man was a straight shooter who believed the purpose of capitalism was to make a better place for all Americans, not merely enrich the unscrupulous or crafty few. As a result, his Senate harangues were a lonesome cry in the takeover/arbitrage/leveraging/executive-perk wilderness. His contempt for overpaid investment bankers was exceeded only by his disdain for overpaid corporate CEOs.