I am propped up peacefully against a corner of the bar here, doing some field work as chair of the club's special sub-committee on martini mixes, but what happens next, these guys shanghai me, Herbie, they say, just the man we need, how much do you know about copper, as much as us, well, then, you can write us all a code of conduct.
What I know about copper is that this Mr Five Per Cent from Sumitomo turns out to be long of the world's stock of it and has options on Mars and goes down for $4 billion, well, so what if he does, Sumitomo can afford it, and copper is one fine mess even Holey Buckett never gets us into, tho' he tries.
Holey knows someone who makes £156 a year from trading it, the guy is out to lunch half the time and now retires to Monte Carlo, so it must be money for old rope, says Holey, and why do we not take the business on, I tell him to lie down until the feeling goes away, and now it turns out this guy fronts for Sumitomo, which explains why he has copper on his fingers.
I start to explain this to the posse in the club, but they take no persuasion, they just say this Five Per Cent San is one rogue trader too many, and if we are not careful some regulator comes along and makes trading illegal, and where do we all go for honey after that, so we figure the Bankers' Club must take the lead, and issue guidelines, it is something for that committee of yours to do, when it is not writing to Gordon's to ask for free samples, get on with it, Herbie.
Mom, I can see there is nothing for it, and at least we write the rules to suit ourselves, we make steady progress in our drafting sessions, here is where we are so far:
Drawers Sumitomo's guy has all his mail sent to his locker, and Barings gives Leeson a desk with a drawer in it, and a lock on the drawer, which makes it a good place for him to keep scissors and paste and letters with the signature cut out of them, and makes him a classic case of the TIDs Syndrome, standing for Tickets in Drawer, we recommend no drawers in desks in dealing rooms, and no locks on the lockers either.
Going and looking A star trader does not wish to have anyone looking over his shoulder, and for a rogue trader this goes double, so the managers stay far away, can draw their bonuses when all goes well, and when it all goes wrong they know nothing about it, just like Peter Baring and his head honcho, Andrew Turkey, but we do not recommend this.
Back office Yes, have one of these, and do not leave the star trader in charge of it, we are all of us brought up to believe that this is Rule One, it surprises us to find how many highly paid managements never get beyond Rule Zero.
Back office bonuses We recommend bonuses for clerks who figure there is something wrong, paid by way of commission on the money they save, say, a straight 5 per cent, even if they are little jerks from the back office who none of the top brass ever hear of, until it is too late.
Memories are made of this The committee adopts my Law of the Banking Cycle, which lays down how banks repeat their worst mistakes when the guy who can remember what happens last time retires, we figure the cycle is speeding up, and put this down to early retirements, on account of downsizing and flatter structures and all that, these policies have their costs and take their toll, so maybe we can all look forward to second careers as remembrancers.
Supervision by lunching around What we have now is supervision by box checking, which means every time something goes wrong the supervisors send us more boxes to check, we figure this for a process that reaches its limits, instead we recommend the appointment of non-executive supervisors, whose function it is to work round the lunch rooms and pick up the scuttlebutt, markets are sounding boards, someone has to listen to them, and some of us look forward to a second career in this, too.
Alchemy Every so often some smart guy will show up in a dealing room and undertake to turn lead into gold, but even if his name is not Joe Jett, if you cannot figure out what he is doing, tell him not to do it.
Down the line Like it says in Up The Organization, the difficulty of managing anything varies with the square of the distance, unless you cross water, in which case treble it, no wonder Sumitomo's guy loves doing business in London.
Matrix management This solution can be ordered off the peg from firms of consultants who charge bespoke fees, and is a proven way to make things worse and cross every wire and leave guys in the head office with distant profit center on their budget, until these turn out to be loss centers.
Peer group regulation The committee figures this works in the market the way it works on the race track, that is, no peer ever gets warned off, on account the stewards are at school with him, but his trainer's assistant and his schooling jockey take the high jump, this happens at Barings, Leeson is on the Changi fish head diet and the guys on his reporting line get three years walking exercise, all the way up to this Turkey, who passes the peer group test and is threatened with a well paid job at Crédit Lyonnais.
Anti-social behaviour We have trouble in defining this, long liquid lunches, no, sniffing prohibited substances, yes, mooning in Singapore girlie bars, maybe, some of us regard this as the sure sign of a dealer who is going off the rails, and some of us say single men in dealing rooms do not grow into plaster saints.
Old stagers The committee is split on this, too, some of us say it is rash to leave the same guy in the same posting for a long time, like that Daiwa guy or Mr Five Per Cent, it is no excuse for him to say he is dug in nicely where he is and does not plan to go home, but, Mom, I do not wish to see this appear among our guidelines, as I figure it may be misconstrued, much love from
Your durable son
Herbie's committee has co-opted Christopher Fildes |