• Choose a category
• All
• Classic-Fiction

By Root 3555 0

members called in from Europe, one from Alaska, Buffett from Omaha, and Munger from Minnesota to hear the first “orderly and halfway complete description” of the Mozer affair. Inside Salomon, a palace coup was well under way, with senior managers talking to one another on the assumption that Gutfreund and Strauss would have to resign.48 The arbs wanted Meriwether as CEO, which was clearly unacceptable to many people given that he was Mozer’s boss; the arbs then floated the idea that Deryck Maughan might serve as co-CEO with Meriwether. Meanwhile, no one on the board conference call said anything about management changes; they merely debated the wording of the new press release, which contained three pages of details and added the two additional violations that had been discovered by the investigators.

The draft release admitted that management had known about the February bids as far back as April but said that “the press of business” kept Salomon from reporting Mozer’s actions to the authorities. Buffett called this ridiculous, and as the board debated, Munger became incensed. Eventually, the press release was rewritten to say that the failure occurred due to “lack of sufficient attention to the matter,” leaving the impression that the names in the press release were the people who were not paying attention. Arrangements were made to put out the release that night.

As the meeting concluded, the board thought it had the full story. A number of things had not been mentioned, however. One was the “cocked gun” letter just received from Peter Sternlight at the Fed. Another was the June meeting with Bob Glauber at the Treasury Department, at which Gutfreund had failed to mention Mozer’s earlier activities.

That afternoon, Salomon held another all-hands-on-deck meeting in the auditorium. Bill McIntosh, who ran the daily sales meeting, stood at the front as usual and had the unenviable job of reading the new press release to the employees. With Gutfreund and Strauss in the front row, directly opposite him, McIntosh said, This is what happened. If customers call and want to know what’s going on, just tell them. Make no excuses for senior management, don’t apologize for them, they did what they did.

Afterward, the salespeople piled into McIntosh’s office. What are we supposed to say? they begged. Don’t make excuses for senior management, McIntosh repeated. In my view they’re not going to last very long; they’re gone; they’re yesterday’s news; we’ve got to keep this place together so we can survive and play another day. Focus on that.49

That evening the government-bond department showed up on the terrace of McIntosh’s duplex overlooking the Hudson River in the West Village for a previously scheduled barbecue. Eerily, Tom Strauss dropped by—and the temperature on the deck fell several degrees.50 Instead of hanging around until ten or eleven swigging beer as usual, everyone cleared out by eight o’clock.

The morning after the press release appeared, Thursday, August 15, rumors floated that the long knives were out and McIntosh was a goner. He stayed on the floor all day, figuring that Gutfreund and Strauss wouldn’t fire him for insubordination in front of the whole trading floor. Meanwhile, market confidence in Salomon cracked. The stock, which had been sinking all week from the previous Thursday’s close of almost $37, slumped to $27. It was trading down because shareholders were beginning to suspect a bigger problem than Mozer’s misdeeds: a “run on the bank.” And, indeed, one was beginning to take place.

Photo Insert Three

Image 48

Chuck Rickershauser, the lawyer who said around 1976 of the convoluted business created by Buffett: “There’s got to be an indictment in here somewhere.”

Image 49

Tooting a trumpet in his bathrobe. Ever since his boyhood fiasco at Rosehill Elementary, Buffett refuses to play the “echo.”

Image 50

Charlie Munger reading with his grandchildren.

Image 51

Buffett partnered with Sharon Osberg at his first bridge tournament, the 1994 world championships in Albuquerque, NM. They qualified