As I write, gold is flirting with $1,000 an ounce, the US dollar does a daily dance lower, the Federal Reserve is propping up a Bear Stearns – worth just $270 million according to JPMorgan Chase; OK make that $1.2 billion – and everyone I speak to is pessimistic.
This is a contrarian indicator, so I’m starting to feel a little perkier. But I don’t think any of us involved in finance will forget the first quarter of 2008 in much the same way as we haven’t forgotten August 1998 (when Russia defaulted and the hedge fund LTCM floundered).
How sad it is, therefore, that Ian Kerr, one of the great financial chroniclers of our age, died in March. Kerr wrote about investment bankers and investment banking for more than 20 years in various magazines. His columns could be caustic, but they were also amusing, insightful and widely read. It would often seem as if Ian was inside the institutions he was writing about. Bespectacled Kerr, always sartorially elegant, could sometimes be difficult. “I only come down to the City to see Anshu Jain,” he snapped at some hapless PR peon. Alex Bridport of Bridport & cie, who was a close friend, told me: “Ian was a gossip journalist without the dirty side of gossip. He might savage someone professionally but he would never touch their personal life.”
I met Ian when I was a banker. I can’t remember exactly how we became acquainted. I think he told (Ian rarely asked) the corporate communications department that he wanted to have lunch with me and so he entered my life. Ian was always delightful to me. He approved of female financiers attempting to infiltrate the monopoly of male “suits”, maybe because he had a lovely young daughter, Georgina.
Ian polarized people. However, even those whom he criticized often had a grudging respect for someone who was regarded as a pillar of the international capital markets. At Ian’s memorial service, journalists mingled with friends, family and City stars. I glimpsed Stuart Gulliver, chief executive of HSBC’s investment bank; Jonathan Moulds, president of Bank of America in Europe; Viscount Bridport; Peter Meinertzhagen (formerly Hoare Govett); Kevin Regan (formerly Merrill Lynch); Andrew Pisker (formerly Dresdner); Len Harwood (formerly UBS); Simon Hussey (formerly Nomura); Stephen West (formerly Paribas). I also met for the first time the legendary John Walsh, who used to run debt capital markets at CSFB.
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"The wolves are circling for John Mack. His problem is that he has made enemies. Former colleagues at Credit Suisse hyperventilate with rage when I mention Mack’s name" |
And talking of the dear departed, what has happened to May Busch, the energetic and fragrant Morgan Stanley managing director about whom everyone speaks so highly? May made her name as a front-line coverage officer. But then, in 2006, she was given the job of head of firm relationship management, which later became chief operating officer for Europe. And now May is no more (well at least not at Morgan Stanley). A source murmurs that she might have been too closely associated with Jonathan Chenevix-Trench, a former chairman of Morgan Stanley International, who left Morgan Stanley in late 2007 after two decades. This is not true: “I am leaving on the best possible terms,” May told me. “I’ve been at Morgan Stanley 22 years and I love the firm. I’ve had the opportunity to do eight different jobs on two different continents. But now it’s time to seek new professional challenges, maybe something more entrepreneurial.” I will be fascinated to see what Ms Bush does next.
Morgan Stanley is not distinguishing itself in this crisis, which must be acutely annoying for John Mack, the chief executive, and his senior colleagues. How galling to see Goldman Sachs floating like a butterfly on the crest of the sub-prime wave (although investors in Goldman’s poorly performing Alpha hedge fund might have a different view). The wolves are circling for Mr Mack himself. Mack’s problem is that he has made enemies. Former colleagues at Credit Suisse hyperventilate with rage when I mention Mack’s name. Nevertheless, he has his fans. A Morgan Stanley mole told me last autumn that Mack was worshipped within the firm and that however big the sub-prime losses were, he would not be forced out. I disagree: Mack is vulnerable. Unless the ship stabilizes (and first-quarter 2008 earnings indicate that this might be happening), the captain might have to walk the plank. It will be interesting to see the tone of the annual general meeting in April as CtW Investment Group, a union-backed activist investor group, has called for Mack’s leadership to be diluted with the appointment of an independent chairman.
Eliot Spitzer, the New York state governor, is another man who has made many enemies. Indeed, the Economist has invented a new word for his current discomfort: “Spitzenfreude”. The revelation that Spitzer had been calling call girls was greeted with cheers on Wall Street as traders battled with bellicose markets. Scintillating scandal has replaced stodgy sanctimony. Women don’t understand the thrill of dallying with harlots. So I will confine my comments to a few aspects of the modern-day Greek tragedy.
Why did he do it? Eliot’s lapse reveals a strong self-destructive impulse and maybe a subconscious desire for revenge on an over-achieving, demanding Jewish father. There’s a big difference between boasting about ‘My son the scourge of Wall Street’, and ‘My son the hirer of whores’. A girlfriend who has had a successful 20-year career in finance commented: “Why did he need to pay for it? There are hundreds of women who are happy to have an affair with a powerful, well-connected man.”
Is Spitzer alone? I doubt it. A lot of financiers shop for sex. “It’s endemic among the men we know,” an elegant I-banker wife sniffed. “And these girls are gorgeous. You can take them to cocktail parties.” A male banker, Barry, demurred. “Maybe a group of traders end up in a topless bar after a few drinks. But there’s a big difference between an evening in Wanchai that gets a bit out of hand and sitting at your desk during working hours dialing a brothel.” Catching my steely glare, Barry muttered unconvincingly: “Both are morally reprehensible, of course.”
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"The revelation that Eliot Spitzer had been calling call girls was greeted with cheers on Wall street as traders battled with bellicose markets. Scintillating scandal had replaced stodgy sanctimony" |
Why did Spitzer’s wife support him? I am at a loss to understand this. How could any self-respecting, educated woman stand on the podium, gazing doe-eyed at her philandering husband as he apologized for his behavior. Has supine Silda, a Harvard Law School graduate, taken leave of her senses? Some female columnists have berated Silda for not appearing alluring enough to Eliot when he returned home after a hard day tormenting investment bankers. Stay-at-home moms are urged, by such commentators, to take erotic dancing lessons and to ‘unleash their inner vixen’ (I’m quite keen to become better acquainted with my own inner vixen). A more prosaic view is that ‘Spitzer syndrome’ can cement rather than separate a couple. Think: ‘Mother’s little helper’ or ‘take-away dinner’. I’m with my dynamic girlfriend, Debbie, on this one. “If it had been my husband,” she said. “I would have hired the best lawyer in town and sued the bastard for every penny he had.”
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