Crash Page 12

  “Some people said it was George M. Cohan, or W. C. Fields, but I’ve always preferred to believe it was Mae West. I think I’m something like her.”

  “When it suits you.”

  “They say that you take no prisoners.”

  “Business isn’t a kid’s game.”

  “I particularly liked the story about Ted Partridge, who it was said had the inside track of becoming BP’s head of senior client investing but instead ended up being indicted for front-running. He went to jail, and you got the job instead.”

  “He was a crook, and I found out about his scheme and reported it.”

  “One of the financial newspapers hinted that you set him up. That he wasn’t guilty.”

  “And when I threatened to sue if they couldn’t come up with the proof, they retracted the piece.”

  “I read about that too. But you were on the way up, and no one was going to stop you,” Heather said.

  “Just like you?”

  “Just like me.”

  In fact Partridge was innocent, charged with the crime of front-running, which meant using secret, inside information from his Burnham Pike job to buy shares of stock cheaply just before big positive news about it went public, and cleaning up when the price surged. But the evidence that Dammerman had planted was so well done and so overwhelming that no one had believed the man.

  Marcelle brought the Chasselas, made a show of uncorking it, and poured a sample for Treadwell.

  “Superb,” Treadwell said.

  Heather studied him the entire time, with such an enigmatic smile on her lips that he had to wonder what her game was.

  Marcelle filled both of their glasses, left menus, and when he departed, Heather raised her glass. “A toast to you, Reid.”

  “Why?” Treadwell asked.

  “For being a man I admire a great deal.”

  “I’m glad you said that.”

  “My father taught me that to get ahead you sometimes had to break a few heads. It’s something we’ve both done.”

  “Why would you need to do something like that when your father is the boss?”

  “Are you kidding?” Heather said, her laugh harsh. “The old guys who were with my father from the beginning had reached their shelf life. They blocked every idea I came up with, so I convinced Daddy to offer them buyouts. These guys were stubborn but they weren’t stupid, so they accepted. All but one of them.”

  “What happened to him?” Treadwell asked.

  “Supposedly he was dipping his finger in the till, and when he was arrested, he died of a heart attack.” She drank some wine. “He didn’t have what it takes. “Tant pis,” she said in French. Too bad.

  “Entendu,” Treadwell said. Agreed. He raised his glass. “To Heather Rockingham, hard-nosed businesswoman definitely on her way to the top.”

  33

  An hour later, after they’d finished their lunch—blackfoot chicken in morel sauce for him and dry-aged Swiss pork in sherry sauce for her—and were drinking their port, she pressed her knee against his.

  “I’m going to need your help,” she said.

  “You have my attention,” Treadwell said.

  “I’ve taken steps to clean out the board of directors, who were getting as old as the execs I forced out. The new board is solidly on my side. Sound familiar?”

  “I’ve done the identical—”

  “I know you have. Now shut up and listen, there’s money to be made in what I’m going to tell you. Money for both of us.”

  Treadwell sat back and nodded. Lunch was definitely looking up.

  “My father wants to stay in place as CEO until he dies. We’ve made some real strides, but I want a lot more. I want to take on more debt—something he definitely doesn’t want us to do—to buy up our top three competitors, so we’re number one. And right now Justice under Farmer doesn’t give a damn about antitrust. Plus all that extra debt will mean big fees for BP.”

  The kid had no idea that after tomorrow Rockingham wouldn’t be able to pay its electric bill, let alone become the champ of down jackets. Or that the money BP was going to rake in as one of the sole survivors of a worldwide economic meltdown would make the fees she figured BP was going to make nothing but chump change.

  But Treadwell smiled and nodded. “First things first. What to do about your father?”

  “I’ll have the board impose an age limit of sixty-five for our CEO. Daddy just turned sixty-five three months ago. He’ll fight it, of course, because he won’t think it’s fair—which it won’t be. But I’ll want you to back me up when it comes to a knock-down-drag-’em-out.”

  Treadwell raised his glass to her. “Done.”

  “Then let’s go to that apartment I’ve heard about. I need to tear your clothes off.”

  * * *

  The weather was pleasant, and Treadwell decided to walk the couple of blocks to his apartment, his limo driver following a discreet distance behind them.

  “Anticipation, is that what this walk is all about?” Heather asked. She wasn’t happy.

  “You’ll get what you want, sweetheart, but indulge me this time,” Treadwell said. “It’ll be worth it.”

  “If you say so.”

  His cell phone vibrated in his pocket. He glanced at Heather. “Excuse me a sec, I need to take this.” He answered the call. “Yes.”

  It was Julia O’Connell. “Sorry to bother you, Reid, but this is important.”

  “I’m busy, make it quick.”

  “The woman I mentioned this morning from my department by the name of Cassy Levin says she has created a countermeasure to what she thinks is a worm in our system. It’s Abacus.”

  Treadwell held himself in check. “How credible is this?”

  “She’s loading it on a flash drive for me to beta test.”

  “Is Hardy ready?”

  “Yes.”

  “Then get the material and make the problem disappear.”

  “Christ,” O’Connell said. “Abacus is one thing, but what I think you’re suggesting is something completely different.”

  “I don’t care. I want you to make it happen. Now. This afternoon. Do you understand me?”

  O’Connell hesitated.

  “Goddamnit, Julia, just make sure Butch takes care of it.”

  “I’ll see what we can do,” she said and hung up.

  “A problem?” Heather asked.

  Treadwell smiled. “Just business as usual.”

  SEVEN

  GLIMMERINGS

  34

  Joseph Miller’s secretary buzzed him a couple of minutes before noon. He had just been thinking about heading over to the Hay-Adams for lunch, alone this time because he had a lot on his mind after his chat this morning with Bob Nichols.

  He answered. “Yes.”

  “Mr. Nichols wishes to have a word with you, Mr. Chairman.”

  “Put him on.”

  “No, sir, he’s here in person.”

  Miller was flustered for just a moment. This wasn’t good. “Send him in,” he said.

  Nichols barged in, out of breath, his face red. He tossed a sheaf of papers on Miller’s desk and sat down across from him. “It looks like it might be starting sooner than we thought.”

  Miller held up a hand for him to stop as he scanned the papers, which appeared to show the early result of an auction in progress of $50 billion in ten-year notes.

  He looked up. It was unusual enough for the secretary of the Treasury to show up unannounced, but what he had brought with him was over the top. “Can this be accurate, Bob?”

  “I’m afraid it is. But it just came out of the blue.”

  “Isn’t this what we talked about this morning?”

  “Yes, but goddamnit, that was theory, this is fact, and it’s happening a lot sooner than I’d feared.”

  “Not enough bidders,” Miller said half under his breath. “Has anything like this happened before?”

  “No, Mr. Chairman, not even during the Great Depression. Our b
ond auctions have always been oversubscribed, never under.”

  “Well you wrote the definitive work on depressions. So what do you suggest? Do we call off the auction?”

  “It’s in progress, no way to stop it now. But no matter what, it’s going to be a major embarrassment for us. You never see undersubscriptions except in small, emerging-market nations. Places like Tanzania, Ghana, or lately, even Greece.”

  At that moment Treasury was auctioning off the block of bonds, the money from which was needed to finance the operation of the U.S. government. In the past such offerings had never failed to attract hordes of bidders from around the world—including China, which was the largest holder. But now, if Miller was reading the preliminary summary report correctly, only half the usual number of bidders had made offers, which was depressing the value so seriously that it seemed unlikely the auction would raise the $50 billion needed.

  It was a clear signal that investors no longer accepted the full faith and credit of the American government, of the largest economy on earth. They didn’t trust the U.S. to pay the interest on the bonds, much less repay the debt when the bonds came due.

  U.S. securities were issued for terms ranging from four weeks to thirty years, with higher interest paid the longer the maturity stretched. The ten-year Treasury note was the linchpin of the entire debt market. Corporate bonds, city and state municipal bonds, home mortgages, and many others used the ten-year as a benchmark. And many employed the T-note as collateral for other borrowings.

  The secretary of the Treasury and the chairman of the Federal Reserve looked at each other, each wanting the other to say something. But nothing was to be said. The situation was what it was—unprecedented.

  Miller’s secretary buzzed him. “President Farmer has asked that you speak with him on video.”

  “Me?” Miller asked.

  “No, Mr. Chairman, you and Mr. Nichols.”

  * * *

  Miller and Nichols went into the adjacent conference room, which was also used for video links, a large flat-screen monitor on the wall facing the head of the table with seating for twelve. The image of the president’s study came up, and Sam Kolberg, his chief of staff, came in view.

  “Is there any truth to what we’re hearing over here?” he asked.

  “Afraid so,” Nichols said.

  Kolberg moved away as President Farmer, in shirtsleeves, showed up and sat down behind his desk. “Glad I caught the two of you together. So what the hell is going on with our market?”

  “To this point only half the number of bidders we needed to sell out the bond issue have shown up.”

  “Are you suggesting I’m going to shut down the government because we’ve run out of cash?”

  “No, Mr. President,” Nichols said. “We’re good for several months yet. And our revenue stream from payroll withholding is steady.”

  “Give me the long run.”

  “We could be in trouble, Mr. President,” Miller said. “But we’ve weathered other storms, and I expect that we’ll weather this one, if it comes to that.”

  “I’m up for fucking reelection in sixteen months; what do you want me to tell the good people of Iowa? That I’ve bankrupted Washington?”

  “We’ll sell what we need to sell if we offer higher interest rates,” Nichols said. “Right now the ten-year is at three percent. We can bump it to four.”

  “Maybe even five percent, if need be, Mr. President,” Miller said.

  “We kick the can down the road, and pay the piper later,” Farmer said, his voice rising. “Is that all you guys can come up with? You want us to start acting like some fucking banana republic?”

  “It may be our only recourse at this point, Mr. President,” Nichols said.

  Farmer looked away for a moment, and when he turned back to the camera he had visibly calmed down. “How did this happen to us?”

  “Our debt, which used to be around seventy-five percent of our gross domestic product, has doubled in recent years,” Nichols said. “Investors are becoming concerned.”

  “We’re the richest, most powerful nation on the entire planet.”

  “Yes, sir, but a huge number of baby boomers are retiring. They’re starting to draw on Social Security, which ran out of money last year. We used to be able to pay it from payroll deductions, but the boomer generation is so large that its need for Social Security is overwhelming the system. Added to that, Medicare is in the same boat, and there’s no end in sight.”

  “Maybe we should start killing off our senior citizens,” Farmer said, but then he passed a hand across his forehead. “It’s a goddamn joke.”

  “Used to be that we could count on a demographic of age expectancy,” Nichols said. “But modern medicine is keeping people alive much longer so that they can continue collecting Social Security and Medicare.”

  “Maybe we should start killing the doctors instead,” Farmer said half under his breath, but he waved that away too.

  “That’s not the problem right now, Mr. President,” Miller said.

  “I’m listening.”

  “The word is circulating that the Chinese might start dumping the two trillion in our bonds they’re holding to bail out their commercial banks if Liu and the PBOC refuse to do so.”

  “Liu is a power-mad son of a bitch. And trust me, I can spot one a mile away. He’d throw his country, not to mention the entire world, in front of the bus. Marcus is trying to make contact with Hua in Beijing, plus Liu, but there’s been no response so far.” Marcus Conwell was the U.S. secretary of state and a tough but respected negotiator.

  “We’re in a serious situation, Mr. President, there’s no doubt about it,” Miller said. “But I think we can manage through.”

  “How, Joe?” Farmer asked. “We’re playing with boys who don’t give a damn about anyone except themselves.” He looked off-camera for a moment. “Spencer is up in New York. I’m getting him back down here pronto, and the four of us are going to put our heads together to figure a way out of this mess. A shit train is coming down the tracks, gentlemen, and we need to stop it before it gets here.”

  35

  Butch Hardy was just finishing his report on the extra money he’d sent over to the Russian team with Charlene along with the photographs of Cassy Levin he’d included on Dammerman’s orders when his phone rang.

  He picked up. “Yes?”

  “Meet me at the Nassau Street door,” Dammerman said. “We’re going for a little walk.”

  “When?”

  “Now.”

  “Yes, sir,” Hardy said, but Dammerman had already hung up.

  He printed out the brief report, erased the file from his computer, and put the hard copy in his locked file cabinet before he grabbed his jacket and went upstairs to the reception desk on the main floor.

  “Good morning, sir,” one of the big men at the desk said, nodding respectfully as he passed. The entire security crew in the building, including the guys on reception, had been his hires after he’d thoroughly vetted them.

  It was nearly a year ago when Dammerman had called him into his office and ordered the replacement of everyone on security.

  “Sure thing, sir,” Hardy had said. “But can you tell me why?”

  “Security is shit around here. I want it tightened up. Good enough?”

  “You’re the boss.”

  “And never forget it,” Dammerman had said darkly.

  And Hardy hadn’t.

  Dammerman seemed to be in another of his dark moods, which had been happening more frequently over the past month or so, when Hardy joined him at the front door.

  “Let’s go,” BP’s COO said. He headed up Nassau Street at a brisk pace, and Hardy fell in beside him.

  It was just past noon and time for lunch, which was what Hardy figured this meeting was all about—going to lunch to discuss things too sensitive to cover in the building. Later, if or when the shit hit the fan, they would have plausible deniability: We never had any discussion of that nature
in either of our offices so far as I can recall.

  Time was when Wall Street players would take a break for long liquid lunches. That wasn’t done much anymore. A mostly sober, stay-at-your-desk work ethic reigned. Even the traders on the floor, who were rough-around-the-edges frat boy types, no longer hit the bars during the day.

  In the digital age nobody dared to be away from a trading terminal—everything happened in split seconds. If you didn’t notice a price aberration and act on it at once, you could lose millions for your firm. Even going to the john was a high-risk proposition for a trader.

  Of course Dammerman was above any such restrictions. He’d spent a lot of high-stress years at the trading posts as a swinging dick, bellowing profanities and trading at a manic speed.

  “Trade or quit, I don’t give a fuck, just get out of my way!”

  But right now, as number two at BP, he was the master of his universe, and everyone, including Hardy, knew it.

  36

  The dimly lit bar was called Mongo, and at this hour it was beginning to fill up, but a table for four in one corner was empty, and Dammerman steered them over. As soon as they were seated, a beetle-browed bartender came over with a double scotch-rocks, which Dammerman drank down immediately, and the bartender took the glass.

  “For you, sir?” he asked Hardy.

  “A Diet Coke.”

  “Why don’t you get a real drink?” Dammerman demanded.

  “I’m still an on-duty cop at heart,” Hardy said, after the bartender left. “And we’ve got a big day tomorrow. I’ll drink later.”

  ”Suit yourself,” Dammerman said. “Did you have Reid and the Rockingham broad followed like I asked?”

  “They left the restaurant early and went to the apartment about thirty minutes ago. Looked chummy, my man said.”

  “Okay. What about Levin?”

  “O’Connell is waiting for her to deliver the flash drive. Soon as that happens she’s almost certainly going to leave the building for lunch somewhere. It’s what she usually does. And as soon as she clears the building, my Brighton Beach people are going to grab her.”