The Snowball_ Warren Buffett and the Business of Life - Alice Schroeder [346]
Maughan had been deeply concerned even before hearing all this new information from Snow. Seven days had passed since the first press release—seven days that included a salvo of stories in the media, the firm’s falling stock price, trouble rolling over the commercial paper, the discovery of new false bids, and Gutfreund and Strauss feeding baked Alaska to the troops at an internal meeting. By the time Snow finished telling him all of this additional history of what Mozer had done and what others had not done, Maughan blew up and started pounding Snow to make sure there was nothing else. Then he went down to the trading floor and confronted Meriwether, Mozer’s boss. “What the hell is going on, John?” he asked.
Meriwether hung his head. “It’s too late,” he said. He refused to talk further.44
Too late or not, Snow and McIntosh had to spend the evening drafting a second press release to try to explain things. That same night, Strauss and Gutfreund called Corrigan to respond in some fashion to the Sternlight “cocked gun” letter, which the firm had received that morning. Realizing that he was on a speakerphone, Corrigan assumed that a room full of undisclosed lawyers was listening to everything he said. The conversation started out with Corrigan being told that the firm had done an investigation and that “industry practice” of other firms was to pad their bids for new issuances of municipals and agency securities to get a bigger share. Corrigan viewed this opener as “a diversion, or worse.” It had nothing to do with the squeeze, nor with the more serious issue of phony bids—in fact, nothing to do with the Treasury market. His Irish temper ignited. He yelled into the phone at Strauss and Gutfreund: “I’m sure you’ve got a room full of [bleeping] lawyers. This is your last chance. Is there anything else you have to tell me?” They began to describe the other violations.
Corrigan meant to put an end to the obfuscations and rationalizations. “Well, goddammit,” he said, “get yourselves together and release all of this information to the public immediately. I don’t want to hear anything else from you, just get that goddamn press release out.”45
Late that evening, the lawyers met with senior management to go over the press release. Gutfreund and Strauss arrived. McIntosh said there needed to be heads on a plate. This idea was quickly dismissed, but other people, including a board member, Gedale Horowitz, and Steve Bell, who ran Salomon’s Washington office, pressed for fuller disclosure. Nobody could get hold of Buffett, but they reached Munger on the phone, who said, Look, you can’t put this second press release out without names. Gutfreund’s name went in automatically. Everyone knew that Strauss was not in charge and had not made any of these decisions; he had simply been present in the room. But he had gone along with his boss. His name went in. Feuerstein had tried to get Gutfreund to report it. Munger said that his name should stay out.
Meriwether was known as a brilliant, careful manager who was unusually close to his team and rarely left the desk. He had reported the matter exactly as he should.46 On the other hand, he had vouched for Mozer, pleaded his cause, then left Mozer’s responsibilities unchanged. When Munger said Meriwether’s name should go in, says McIntosh, Meriwether, listening and seeing the lawyers write down his name, said, “Oh, my God, I’m doomed.”47
The next day, Wednesday, August 14, a telephone meeting took place in which the board heard some of the story that was given to Corrigan the night before. Two board