The Buy Side (33 page)

I move away from the counter and light a cigarette. Randy rips a big line and then comes over to talk with me. “We’re moving,” he says. Before I can ask why, James bursts into the conversation.

“Didn’t you hear?” he says, all coked up and manic. Obviously, I didn’t. “Remember Kenny?” he says. “I do,” I say. He wasn’t a Wall Street guy, but a half member, half dealer to the White House. He hung out here all the time. What about him? “He got pinched,” James says.

“Rumor is, he’s a snitch,” Randy adds. “He’s not allowed in here.”
It feels like the whole room starts to spin. My thoughts go to the lurker in the Baltimore Orioles hat, the dark sedans parked in front of the apartment. All the time I thought it was about underhanded dealings at Galleon. But maybe it was just the cops, looking to bust some junkie Wall Streeters. I have to leave immediately. I want to get back to Huntington Bay. I want to hold my baby.

A FEW
days later, I’m in the office and on the phone talking to Randy. He’s inviting me to the White House farewell party. It’s supposed to be the last hurrah. He tells me they’re having T-shirts made with a bloodshot eye on the front and a phrase I coined on the back: “We don’t wait in lines, we snort them.” Not sure I’m going to make the snort-fest, I say, but I’ll take a T-shirt. I hang up the phone. No way I’m going anywhere near the White House. Not with rumors of someone being busted who’s possibly a narc.

But the night of the party, the thought of it still resides in my head. After work, I’m in the parking garage near my office. When the attendant sees me, he flashes a smile, grabs my ticket, and runs to get my car. I get the same guy almost every day; I always tip him between three and five bucks, so he remembers me. With maybe one or two exceptions, I always exit on the Fifty-Sixth Street side of the garage so I can bang a right and jump on First Avenue and get immediately on the
Queensboro Bridge upper level. But when the car elevator doors open, the attendant, now behind the wheel, looks at me and then points to the Fifty-Fifth Street exit. Why would he do that? If I exit onto Fifty-Fifth Street, I can take a right and head over to Second Avenue, then I can drive downtown to the White House.

Despite the near certainty I will use cocaine if I go to the White House, and despite knowing that if I use cocaine my relationship with my girlfriend and daughter will disintegrate, I begin to consider it. Once the door of consideration is open, it quickly becomes an urge. I close my eyes and try to squeeze the thought from my head. Don’t do anything stupid, an inner voice warns. Just go home. When I open my eyes, the attendant is looking at me curiously. I slowly wag my head back and forth and point toward the Fifty-Sixth Street exit and home.

Though a part of my brain has made a prudent decision, the rest of my body is still in revolt. My hands grip the wheel like the car has just gone off a cliff. I can feel perspiration gather under my arms and drip down my sides. I light up a cigarette. I just need to get on the bridge. Once I get on the bridge, there’s no turning back. The traffic is thick. It takes me several red lights to get past Fifty-Seventh Street. I light up another cigarette. A hit of cocaine would be so nice right now, though. It would never be just a hit, I remind myself. Then my mini-fantasy goes where it always takes me: alone in a hotel room, with enough coke and porn for a short forever, and a bottle to even my world out. I look down at the keys to my house in the console. I grab them and pretend to dip them into a tiny imaginary bag of cocaine. I bring the key to my nose and snort it in one aggressive pull. My head snaps back, my eyes are closed. Then a horn sounds behind me. When I open my eyes, the cars ahead have moved along. I throw the keys back in the console. I just need to get home. At the moment of no return, just before I enter the ramp, I feel one last intense tug to peel out of the traffic flow and
head back downtown. But then I realize the cars that surround me have sealed my fate. I inch up the ramp and onto the bridge.

Later that same week, I stay in the city, at a hotel on Lexington Avenue. The commute is killing me. And with Lola at her grandmother’s and Jenn having plans to spend the night with a girlfriend, I take a much-needed break from the world’s longest parking lot. After I check in, I call my friend Kevin. We meet at an Upper West Side outdoor café and eat french fries and drink Cokes. “Have you found any meetings out there?” he asks.

“Not yet,” I tell him. “During the week, I get home so late, and my weekends are filled with Jenn, Lola, and doing things around the house. The weekend is the only time for us to really get stuff done.” Kevin nods, but his expression lies somewhere between helplessness and compassion.

When I leave Kevin, I cut through Central Park to get back to the East Side. I walk past Lexington Avenue and over to Second Avenue, passing bar after bar after bar. I never realized there were so many. I guess it’s only something you notice if you aren’t drinking. I find my gaze lingering on each bar front. Soon I’m looking through the windows and into the welcoming darkness. I come upon one that’s particularly enticing, your typical New York City dive bar. My kind of place … It pulls at me and I cave easily. I find an empty bar stool. A guy two seats down gives me a glance. He reminds me of Larry from all those years ago. The bartender comes and asks what I’d like. I look right into the bartender’s eyes, but my mouth doesn’t work. “I’ll go refill the ice,” the barman says. “You give it some thought.” When he bends to grab a bucket under the bar, I head for the door.

IN JUNE
, Jeff calls me into his office and says he wants to talk about the credit market. Credit market? I just got used to subprime, and now he wants to talk about credit? Since February, the talk on the Street has been all about subprime. I’d heard the term for the first time right after HSBC wrote down $10.5 billion of losses in subprime-related mortgage-backed securities. Then, over the next few months, subprime became part of just about every Wall Street conversation. The primary worry was that it would affect the homebuilder stocks and the financial sector. But by June the Street, at least my corner of it, isn’t that worried anymore. Everyone says it’s a housing problem for a certain group of borrowers. “It’s just the minorities,” I hear. “Has nothing to do with us.”

But it does bring volatility to the market. And with tons of volatility, there’s money to be made. I start trading the financials and homebuilders back and forth. I buy them on down days and sell them
on up days. I fall into the rhythm of it. I can feel it, and it begins to work for me. Meanwhile, subprime or not, the rest of the market is driven by mergers and acquisitions. The activity is insane. Wild. Triple-digit swings in the Dow. I’ve never seen anything like this in my whole trading career. M&A deals maybe happened once a month. Now they’re happening every day: Google buys Doubleclick; Yahoo buys RightMedia. We make a million dollars just on the rumors of Microsoft buying Yahoo. Potential takeover targets line up like dots on my old Ms. Pac-Man game. All I have to do is guide Sue (Ms. Pac-Man) through the maze. Then there’s a massive ad network consolidation. One of our analysts says a digital advertiser named aQuantive is prime for the taking. We think he’s right and buy it. A week later, news breaks that Microsoft is acquiring aQuantive for $6 billion. The day before the announcement, aQuantive had a market cap of just $2.8 billion. The trade makes our firm a couple million dollars. This is too easy.

But when Jeff calls me into the office, it isn’t about patting me on the back. Any success I’ve had is considered under his direction. I sit in the chair right in front of his desk. He tells me he sees a connection between subprime and credit. He starts talking about high-risk mortgages that were bundled and sold as asset-backed securities all over the world, particularly in Europe. I have no idea what he’s talking about. I think he means a derivative play on the underlying mortgages, but I’m not sure. But when he starts talking about collateralized debt obligations, I give up trying to figure it out. “What do you want me to do?” I ask.

“Start monitoring the credit markets,” he tells me. “I’m a little worried.” The only thing I’m worried about is how to beat the traffic on the Long Island Expressway.

Jenn and Lola are on the front porch when I get home. I beep a
few times as I pull in the driveway. Things still aren’t great with Jenn. Truth is, she doesn’t trust me, even though I haven’t had a drink or any coke in almost nine months. “I called a cover company for the pool,” she says as I walk up the front steps of the porch. Lola sprints over to me to give me a big hug. “Great,” I tell her, trying to sound authentically pleased. But every one of her words comes with a dollar sign. We’re both concerned about having an open pool and a wandering eighteen-month-old. Despite the relative success I’m having at work, the house is a huge drain.

Over the next weeks, I try to learn more about credit than I ever hoped. My computer screen is now filled with things like TED spreads, LIBOR OIS spreads, sovereign debt, and sovereign CDS. Lola knows as much about these things as I do. But I do understand this: credit is tightening, and if banks aren’t going to lend money like they have been, then the economy will suffer.

Jeff was a week or two ahead of the stampede of suits worrying about the credit crisis. But now he’s like Jamie Lee Curtis in
Halloween
. He knows Michael Myers is in the house, but he’s waiting patiently in the closet to poke him in the eye with a hanger. He’d rather do that than just get out of the house. Though we’re keeping our long exposure on the books, we can and will get short at any point. He’d rather sell the market after it’s already down a percent or two than try to be a hero and call the top.

In July we get short and Countrywide Financial, the biggest U.S. mortgage lender for single-family homes, reveals their delinquency rate has nearly doubled to almost 25 percent. As the housing prices plummet, more and more loans sink under sea level. Then, at the end of July, Bear Stearns announces that nearly all the value of two subprime hedge funds has vanished. The news is startling. It’s one thing when an overseas bank, such as HSBC, has problems, but another
thing altogether when a firm on the Street has them. It’s like the SARS epidemic in Hong Kong. You feel sorry for the Chinese, but you’d feel a whole lot different if your neighbors started wearing surgical masks. Still, three days later, the Dow climbs over 14,000 for the first time. The peak is short-lived, though. BNP Paribas, France’s largest bank, halts withdrawals from three funds while it sorts out the stateside subprime mess. Over the next two weeks, the Dow loses 10 percent. New home sales drop more than 20 percent. The market is schizophrenic.

Led by a cash infusion from the European banks and the Fed, credit steadies and the stock market corrects; by October it climbs to new highs. The rebound is driven by encouraging news from tech giants such as Microsoft, Google, Apple, and Intel. I’m not sure what to make of it. Everything around me seems to be in distress, yet the market continues to surge. I know something is wrong, but I don’t want to believe it. What’s wrong is that subprime isn’t contained like everyone had said months before. What
is
contained is the truth of what is happening inside of some of America’s biggest and most reputable banks—Citigroup, Merrill Lynch, and UBS among them. And the truth isn’t pretty.

The night before Halloween, Lola wears her Snow White costume to dinner. We’ve decided on hamburgers cooked on the grill. The weather is mild, and this might be our last chance to eat outside. Jenn has the porch decorated in friendly ghosts, jack-o’-lanterns, and a life-size witch, one with a happy smile so as not to spook Lola. The witch hangs from the porch roof and sways in the light breeze. As we sit, I can’t take my eyes off my little princess: the plastic diamond tiara in her dark hair, her skin the color of pearls. She pushes the meat out of the way; she’s much more interested in the potato chips and orange soda. After a few bites, she’s off to the yard to chase the dogs. Inside the white picket fence, the lawn is a carpet of red leaves from the
Japanese maple trees. Lola and the dogs run back and forth. Jenn sits across from me wearing a designer jean jacket with a fur collar.