Return with us now to those thrilling days of yesterday — late 2007 — when Lloyd Blankbald, the CEO of Goldman Slacks summoned his senior sales VP to his 57th floor office.
“Bernie, we got $16 billion of sub prime crap in the basement and our econ freaks say the housing bubble is gonna burst soon. So, if we don’t dump this paper now, this shop is going to be dead meat.
“Lloyd, The only dummies we haven’t hit are our own clients. You want me to dump this crap on them?”
Blankbald reared up like the cobra he was.
“Do you like making $35 million dollars a year? Do you remember where my sister found you?
In the sub basement of Filene! Begging yenta’s to $9.99 dresses.
The sales calls started that morning and were as vicious as Blankbald’s climb to the top.
“California Teachers Pension Fund. Office of the administrator.”
“Larry, please. This is Winthrop Weinstein of Goldman Slacks.”
“Just a moment, Mr. Weinstein, he always has time for you.”
“Winthrop, what’s cooking?”
“Larry. We just got a very limited, and I mean limited, allocation of some Palm Beach AA 8.5% mumbo jumbo housing bonds and I can let you have $50 million, but I need an OK right now.”
“Winthrop, if I bought your crap, they would send me to the state asylum. If they bottled it as alcohol, I’d go blind.”
“Larry. OK, I admit it, they’re not my usual prime AAA’s but here’s the deal.
“In the last two years, I’ve broken my back to make you a fortune. Last May, you begged me to shave an eighth of a point off those $200 million worth of Chinese railroad bonds. Last fall, you had to get out of those Nigerian oil receipts that afternoon. Or when you screwed up and bought $100 million of St. Petersburg, Russia, not Florida, school bonds.
“Now, it’s payback time. You either take my Palm Beach $50’s or you’ll never hear from Goldman Slacks again. Capisce? ”
“All right, Winthrop, but if I need to get out of this deal, you’ll be there. OK?”
“You have my word, Larry. The email is on the way. Just confirm it back. And thanks.”
Across the Goldman desk, another trader phoned a favorite client directly: the Soda Fountain Pension Fund.
“Boris, have a I got deal for you.”
“Forget it Harvey, the word’s already on the Flash Wire. None of that sub prime stuff in my portfolio.”
Harvey was honored annually by the firm as its most ruthless broker. Institutional Investor had named him the one person not to bring home to your sister.
“Listen, you worthless piece of crap,” he screamed. “Who told you to buy a million calls – options to buy Ford when it was $2 a share. Who let you in on the IPO for KKK and CRAP, and who told you to short AIG and Fannie Mae?
“Therefore, this very second you’re going to buy $75 million of our crappy sub primes. Or you’re never going to hear from Goldman Slacks unless some idiot tries to sell you whole life.”
The soda jerk gagged an “OK.”
By the end of the week, Goldman Slacks’ bucket shop had unloaded $8 billion and its traders shorted the rest.
Larry, the California pension administrator, lost his job which surprised no one.
Bernie the sales VP made his $35 million, plus bonus, and was invited to join the Board.
Loyld Blankbald, only a year into his job as CEO, ordered a lavish, jewel encrusted crown. Reflecting, as Mel Brooks said, “It’s good to be the king.”