Zia Rahman - In the Light of What We Know

You’d fail to meet them, said Hapgood.

We did some research and formed the view that most people would want to hold on to their homes as long as they could; they would rather default on other things — first and foremost on credit card debt — than fall behind on mortgage repayments. So we kept an eye on credit card repayments, and when we saw a marked increase in defaults on credit card debt, we saw that mortgages were not far behind and so we pulled out of that market.

What do you mean by “pulled out of that market”?

I mean we eliminated our exposure to mortgages.

You weren’t holding on to mortgages?

Exactly. Make sense?

Was it really that simple?

It was really that simple.

Why didn’t other firms do this?

A few did. My firm, Goldman Sachs, and a couple of others.

Hapgood seemed to digest all this, but he wasn’t done. I should have known.

Do you think bankers are paid too much?

Oswyn! Oswyn’s wife, Maud, interjected.

Oh, dear, I’m sorry, he said.

Oswyn Hapgood, the classics professor, looked ridiculous. My father had dubbed him Oswyn Hapless. Of the two and for the two, Maud was evidently the social compass, if she intervened in time.

No, no, I said. It’s a perfectly reasonable question. Not all finance professionals are paid big bonuses, I said, addressing Hapgood, but when my firm does pay those bonuses, it does so because those bankers would otherwise run off to other firms.

Do we really need all this financial wizardry?

Finance does a lot of good—

Yes, but does there really have to be so much of it?

Some people ask how much we need classics professors and how many we need. I happen to think we need them a lot. But that’s not much help when you’re trying to figure out how much to pay professors, and it certainly doesn’t tell us what we have to pay to keep them from heading off to American universities.

Nathan Littwack had been silent until then.

How do we know that? he asked.

How do we know that we don’t know how much to pay professors?

No. How do we know that we have to pay bankers the bonuses we pay them in order to keep them at their firms?

When we don’t pay them enough, I replied a little wearily, we see them leave. It happens quite often.

When I joined the firm in July 1993 as an associate in sales in the fixed-income division, I believed — and I still believe this, notwithstanding what Zafar says — that I was hired because Zafar put in a good word for me. He had already been with the firm for some time, joining them in their headquarters in New York not long after Harvard, when I was beginning to look into finance while finishing my master’s thesis. I had other friends in the industry already, two of them from Eton, but they were all in European investment banks — the Eton boys at very staid English ones, not one of which, as it happens, would survive the 1990s American onslaught in the financial services sector, the aggressiveness of the U.S. banks and their innovativeness. It seemed to me in those days, as it still does today, that the most exciting names in finance were American: my firm, Goldman Sachs, Morgan Stanley, and the rest. So I sent Zafar an email. He suggested I write to Doug Hendricks in Structured Products, a rising star whose group, he said, was talking about some intriguing new ideas. Doug replied that he needed to hire more people in London and that he was going to be there the following week. I was called in for “just a couple of interviews,” but I faced a barrage of bankers over five hours, partners and senior professionals, before I met Doug.

A few days later, I asked Zafar if he’d heard anything. I called him from London, and I can now picture him, as he must have been, sitting there at work, leaning back in his seat, facing an array of screens, with his headset on, the microphone hanging by the side of his mouth. He explained that Doug had come over to him that morning and had asked him what he, Zafar, thought of me.

What did you say?

I said I wouldn’t recommend the work to you if I didn’t think you’d take to it.

What did he say?

I’ll tell you what he said: If that’s what you think, then it’s good enough for me.

Wow. They must think highly of you.

He’d already decided to hire you. He was just banking a favor from me.

That’s a bit cynical, don’t you think?

He’s a banker. It’s a free option.

If he was at your desk, everyone could have heard him.

He’s a smart guy. He doesn’t want people to think he can’t judge a good hire from a bad one and has to rely on a relatively new recruit.

Exactly. So why say it?

Because he knows that everyone else knows what he really means; everyone knows how stupid it would be to rely so much on the word of a newbie, and a friend of the applicant to boot. He wants me to think he’s doing me a favor. And he thinks I’m naïve enough to buy that or smart enough not to show I’m offended because I don’t.

You make the place sound like some kind of psychological theater.

Know a place that isn’t, do you? Anyhow, you got the job because he wants you.

Thanks.

Don’t thank me. I get a thousand dollars from the firm because I introduced a successful applicant.

Two weeks later, when I arrived in New York for orientation (before returning to join the London office), Zafar and I had supper in the West Village, around the corner from his apartment, at an Italian restaurant where he seemed to be known to the waitress. Once he’d answered a few questions I had about the firm, a silence opened up between us. Zafar seemed to drift off, his eyes apparently settling on the waitress, who smiled at him. But when he failed to return her smile, I perceived that he was somewhere else altogether.

How about you?

How about me?

How did you get into it?

Interview, like you.

But what was the process like? What put you on to it?

Call from a headhunter in the final year at Harvard, interview with a banker, and a job offer.

Interview with a banker? Doug Hendricks?

Zafar seemed to consider his response.

Not Hendricks. A huge man — he’d been a linebacker in college — this huge man strode into the office, fell back into the sofa, and looked at me for an eternity without saying a word. I’ve seen your résumé, he said, and you can do this shit. Question is, do you have the fight in you? Do you?

What did you say? I asked.

I have more fight than anyone needs for any job, I said. I’ve come a long way, from a mud hut in the rainy season in a part of the world you only know as a basket case of misery. I spent a year of childhood in the basement of a derelict house in two rooms and an outside lavatory, and when I try to remember the kitchen, I can only picture the half that didn’t have rats. I’ve grown up in some of the worst projects in London. I’ve been kicked and spat at because of my race, I’ve had teachers send me to remedial classes because they thought I was stupid when I was just silent, I’ve been beaten black and blue my whole short life and I’ve made it here. Have I got the fight? You tell me.

I was astonished. Once again, I felt, as I have often felt in his company, a strange feeling of envy. It doesn’t make sense to envy another human being for his hardships, but envy is what it was. I can find nothing heroic in my own story.

Did you seriously say that? I asked.

Zafar was smiling.

No.

What did you actually say? I asked.

Well, he didn’t actually ask me much. Instead he wanted to show me some things about his work, so we talked finance for a couple of hours.

A two-hour interview?

More like a tutorial.

You mean he was trying to sell it to you?