Moral Hazard (7 page)

Derivatives-related scandals were piling up. Mike was keeping a running tally of the amounts involved: $12.2 billion.

“Where’s the Fed in all this?” I asked, wanting scuttlebutt. I already knew he wasn’t a fan of Alan Greenspan. (“He’s no god. He’s just been lucky. Analyzes data but ignores human behavior. Says that’s anecdotal.”)

“Complicit.
Entirely
supportive of the notion that we should be a self-policing industry. Which is fine and dandy, except in good times, we get greedy. We get
lax
.” He stopped, eyes unfocused, remembering something, then shook his skinny body as if to get rid of the thought. “Self-policing. Who are they kidding?”

“Why kill the goose? Where’s the incentive in that? You’d think we’d cosset it, protect it in every way possible?”

“Well you might ask. Three words: Short-term gain.”

“Two words, not three. Bankers are
that
stupid?”

“
That
stupid.”

I had grown up thinking bankers were conspiratorial, controlled, far-seeing. If they were motivated by self-interest, they were also prudent. As one of many enlisted to help put out the five-alarm fires that regularly threatened to consume Niedecker, I was coming to the conclusion that the opposite was true. Bankers operated by the seat of their pants, crossed their fingers, winged it—anything but “proactive.” They allowed markets and rogue traders to surprise them at every turn. They were as subject to fashion and flattery and incapable of objectivity or seeing the larger picture as ordinary mortals. As I’d quoted to Mike during one of our sessions,
Bankers are just like anybody else / Except richer.
Ogden Nash. Mike had snuffled his approval.

Mike turned the conversation to an item he’d seen in the
Times
about Iris Murdoch, who had developed Alzheimer’s. He was a fan of her novels: “Philosophical. Not afraid of ideas.” To my taste, Murdoch’s writing was too ripe, too contrived. Anyway, all I read now was the financial press. I suppose Mike thought I would be interested. In his way, he was throwing me a bone of empathy.

“It’s hard to imagine a mind like hers turning to Jell-O,” he said.

“Yeah. Hard.” Insensitive of him, but I didn’t take offense. Instead, I was remembering a lecture given by Dame Iris at my university years ago: Murdoch and her husband, John Bayley, sturdy, plate-faced, English, dressed in matching duffle coats, and my boyfriend of the time and I—how old were we, seventeen?—also in matching duffle coats. Our lives in front of us.

“Engagé. That’s what Murdoch was,” mused Mike.

Engag
é? I suppressed a snicker. Not a word you heard often in the hallways and cubicles at Niedecker. “Talking of engagement, why isn’t anyone upset about the revelations in today’s
Journal
?”

My fatalism had been shaken by a full-page article in the
Wall Street Journal
about a notorious racist who’d been a Niedecker client from the sixties up until a few years ago. Niedecker, which had funneled money for the client to a segregationist institute in the South, had defended itself with a specious argument, saying that the firm had taken the man on as a client in the sixties when attitudes about racism were different. “The clarity with which one sees issues today is different from thirty years ago,” Bart had told the press. (I could picture him, a model of patient understanding. Bart always told us never to get angry at the press. Instead, we should pity them: their annual salaries wouldn’t amount to a fraction of our bonuses.) Asked for complete records of transactions, Bart claimed they’d been destroyed in a fire. The dog ate the homework.

“Plenty of people were seeing racism with clarity in the sixties,” I said to Mike.

“You’re so naïve,” he replied. “Bankers are pimps, enablers. They’re”—he paused to find the exact word—“immoral. No, amoral. They hop on the money. What’s in the caboose and where it’s going, hey, who cares.” He shrugged and turned his palms face-up in the classic New York gesture of disengagement.

Whose side
was
he on? “Tobacco companies are immoral. Children are amoral. Bankers are feckless.” Sour.

“What on earth do you expect Niedecker to do?”

“How about starting with a full apology?”

“That would require bankers acknowledging a relationship between cause and effect. It would also leave the firm open to lawsuits.”

We walked across the plaza to the Winter Garden, Mike with his hands in his pockets and whistling the tune of “Everybody Knows,” which only succeeded in irritating me even further. I was tired of irony, of rue; we were cobwebbed with the stuff.

As a parting shot, I said, “We’re pathetic, both of us.” Mike just raised an eyebrow. He went back to his office to calculate how far Niedecker traders had gone out on a limb that day, and I to mine to finish a speech that Horace would give at Harvard to recruit MBAs to the firm and the free-market cause.

Bailey backed away from me, cowering in a corner of the bedroom. “I look after you! I cook! I sew! I iron! I polish your shoes!” He wept. He was crying because I was admitting him to a nursing home.

The call informing me of a vacant bed had come that morning at work as I was finishing my coffee and booting up the computer. I had been waiting on it for months, a packed suitcase at the ready in the back of a closet. The admissions officer gave me twenty-four hours to deliver Bailey or his bed would be taken. I stood at the window for a moment to summon courage, quell dread. From there I could see the Colgate clock on the Jersey side of the Hudson. The time dimly registered: 8.45. In front of it, a fireboat, testing its equipment, was spraying playful arcs of coruscating water high into the air.

What I was doing was against Bailey’s wishes—or the wishes he had expressed when of whole mind. I could not help him end his life as he had asked; I felt it would scar my soul. Not that I believed in souls. I hope never to live through a day like that again. Even now, as I try to reconstruct it, I fall into a sinkhole of regret. I feel as lost, alone, guilty, as if it had just happened. If only I had found some way to keep him at home until he was completely oblivious of his surroundings. No doubt I did the best given the circumstances, but that’s small consolation. I broke his heart. That damn disease.

The decision was made after consulting an assortment of professionals: a psychiatrist, a gerontologist, a social worker. They patiently pointed out that Bailey was as sick as his worst days, and the network of care I’d put together—a housekeeper, neighbors, students, hourly phone calls from me—was no longer sufficient. Nor could I afford or cope with round-the-clock homecare nursing.

I followed through with blinkered resolve: having him certified as needing nursing-home care; hiring an eldercare lawyer to place him on Medicaid; prepaying for his cremation as the law required; putting him on a waiting list at an institution near where we lived, run by nuns with scrubbed Irish faces and brisk demeanors. I tried to prepare him, repeatedly explaining the reasons, even gaining his approval. To no avail. His mind couldn’t hold the information. When I arrived home and told him what was about to happen, it was news to him.

An old friend of Bailey’s arrived to help. “Let’s have a cup of tea,” I said, and we coaxed him, whimpering, from his corner in the bedroom. Whimpering like Giulietta Masina in
La Strada.

By the time we finished our tea, he had forgotten the home. “How about a drive?” I suggested.

We sat on either side of him in the cab, each holding a hand. He was merry. A child on an outing. But when we entered the lobby of the home and he set eyes on its infirm inhabitants, some clamorous and distraught, others inert and broken, he recoiled in horror. “No! No!” he cried, scalding us with emotion.

It was suggested I bring some of his favorite things to help him settle. I produced photographs, a bronze casting of a cat. He tore up the photographs and threw the cat across the room. He was beyond comfort.

When it was time for us to go, he turned on me. “You did this! You!”

We left him surrounded by rude misery and the stink of failing bodies. I had consigned him to a place where behavior was infantile, instincts animal. A place of last things.

The phone rang. Horace’s name and extension appeared on the LED screen. I stiffened. Always pleased to hear from him; always put on notice not to twitter or be awed.

“Hello, Horace.”

“Hello, Cath. What’s this left-wing propaganda doing on my desk?” I had sent, via interoffice mail, an article by Felix Rohatyn from the
New York Review of Books.
Titled “World Capital: The Need and the Risks,” it was hardly radical in my estimation, but everything is relative.

“I can’t imagine who’d do that, Horace. What’ll people say?”

“They’ll say I’m broad-minded.”

The speech had gone well. Horace was a demon about punctuation and English usage, gleeful when he caught me out in a mistake. In this he was no different from other banking executives: picky about small things, nonchalant about the big ones. The anxiety of their jobs had to surface somewhere. Missing commas elicited tantrums, but when big bets, big deals, were in the offing, they appeared carefree as Caribbean tourists.

Horace had ferocious powers of concentration. Compared to him, I ground my gears, juddered, stalled. But as to the lives most of us led, as to cause and effect, he was clueless. Boardrooms, airplanes, Town Cars, benefit dinners, boxes at the ballet, court-side at the Knicks and Wimbledon, the pavilion at Ascot—his domain was Olympian and circumscribed. I felt like an emissary from another planet.

I queried him on this one day after we had finished discussing a speech. “Horace, as an investment banker, your job is to look to the future, to advise clients on the wisdom of this merger, that acquisition. But it’s been a long time since you rode the subway, went to a mall or a cineplex or a supermarket.” If ever. “How do you know what’s going on out there?” I pointed in the general direction of the world.

“I have analysts to tell me about trends.” His lack of curiosity staggered me. I remember that moment clearly. Horace had nicked himself shaving. A little piece of sticking plaster waggled above his upper lip. Swift’s Cecilia.

“If you are never out and about, how do you know if the information the analysts are feeding you is correct?” The analysts I’d met were as capable of insight as goldfish. This last comment earned me a withering look and ended the conversation; I had gone too far.

All the same, Horace was curiously honest. Every Friday, rumors that Niedecker was about to be bought forced the stock price up. This was of interest to me because I wrote speeches claiming the opposite: Niedecker would never merge. The rumors were silly, we had the size to be a major player, bigness wasn’t a virtue in itself, knowledge companies travel light. When I questioned Chuck about the truth of the rumors, he told me, smugness leavening his affability, that if anyone were to buy the company, it would be for our executive management, their intellectual capital. Of course, he added, executive management, mindful of Niedecker’s proud history of independence and tradition of excellence, would never permit a merger. (Of course, behind the scenes, the firm
was
in constant negotiations with suitors.)

Horace flat-out contradicted Chuck’s assumption about the value of our executive management. “There are thirty or so people in this firm who keep it going, who make the money. The rest is dross. That’s what an acquirer would be after, that small group of people. And the firm’s name. It’s worth something.”

“Are those thirty or so people executive management?”

Hearty laugh. “Goodness no! Executive management are
bureaucrats
.”

Early in 1997, the Thai baht was devalued, and economies started to implode.

“Horace, should we worry?” We were hurrying from his office to the auditorium where the CEO was to comfort and succor “his” people, urge them on to ever-greater feats of teamwork. Despite his bad back, Horace walked fast, and I always found myself a pace or two behind him, struggling to keep up. Every inch the court retainer.

“It’s just a blip. There will be pain, but the markets are efficient.”

“Yeah. Right. But American investors, American banks—the ones who caused the pain—are the least likely to feel it. Their losses will be covered.” Moral hazard. I wanted to bring up the role of foreign-exchange traders who had precipitated the crisis. The carrion birds of finance, they certainly weren’t feeling any pain. But I already knew the answer: Mahathir Mohammed, prime minister of Malaysia, who’d railed against forex traders at an International Monetary Fund meeting, had been the butt of jokes on Niedecker’s executive floor for days. The
gall
of the man. The
nerve.

“Markets overshoot. They correct.” Accompanied by one of his keep-to-what-you-know, don’t-bother-your-little-head smiles.

Mike had nailed the accent and the attitude. But I had to give this to Horace: Mike and I, flotsam from the sixties, weren’t the idealists, not by any stretch; he was. Horace idealized unfettered markets, which he genuinely believed had the power to create a brave new world. He also idealized Niedecker, which he saw as the last repository of honor on Wall Street. One got the impression from him that Wall Street in the past was made up of companies of knights errant bound by strict codes of behavior, saving not maidens but countries. In this regard, I could never tell if he was being disingenuous or naïve. Like any other Wall Street firm, Niedecker had its share of corner-cutters; money attracts them. But, again, everything is relative. If measured against some of its more relentless competitors, Niedecker could conceivably be called honorable.

“There will be pain.” Please! By my lights, my leanings, Horace, insulated by wealth, cocooned in privilege, should be taken out and shot. But I enjoyed him, our conversations. Unlike my immediate managers, he wasn’t a screamer, he wasn’t poorly socialized, although I steered clear of discussions of race, feminism, homosexuals, the disabled; there were some rocks I didn’t care to look under. He had intelligence and some wit. He had manners—he said thank you. He made my days easier. What can I say?