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By Root 3565 0

FALLOUT—High-Level Resignations and Client Defections Feared—Firm’s Stock Drops.”53 The story featured prominent photographs of Gutfreund and Strauss. The two of them and Marty Lipton called Corrigan’s office in New York and were patched through to Federal Reserve Chairman Alan Greenspan’s office in Washington, where Corrigan and Greenspan had been on a conference call with Treasury Secretary Nick Brady since dawn “trying to figure out who the hell we’re going to get to come in and run the firm.”54 Strauss, a longtime friend, knew they were in trouble when Corrigan greeted him as “Mr. Strauss.”55 The irate Federal Reserve Bank president, assuming that the board knew about the Sternlight death-threat letter, had been shocked by the latest press release they had issued. He interpreted their failure to take any action—such as firing senior management—as a sign that Salomon’s board was defying him.56

Gutfreund said that he was going to resign. “What about Strauss?” asked Corrigan. With this, it became clear that, as far as the New York Federal Reserve was concerned, resigning was not optional, it was mandatory.57

Gutfreund then called Buffett. It was six forty-five a.m. Omaha time and Buffett was still asleep when the phone rang. But he came to consciousness rapidly as Gutfreund, with Marty Lipton and Tom Strauss on the line, laid out the problem. “I just read my own obituary,” Gutfreund said, referring to the New York Times. His picture on the front page had done what the sequence of events—until then—had not. A freighted pause ensued, as Buffett understood what they were really asking him. He told them that he would consider taking over the job of chairman on an interim basis but needed to see the Times story first. He wanted a few minutes to think but was pretty sure he needed to go to New York. He told them that he would be there as soon as he could that afternoon. Marty Lipton said that it was unthinkable for Meriwether not to be fired immediately. Buffett insisted that they do nothing until he could at least talk to Meriwether.

He hung up, called Gladys Kaiser at home, and told her to cancel a lunch with the president of Grinnell. Then he said, Call George Gillespie in Martha’s Vineyard. Cancel my trip for the weekend and put the pilot on alert that we may be going to New York.

By the time he arrived less than an hour later at the office, still empty of staff, to read the “obituary” on the fax machine, he had made up his mind.

Meanwhile, Gutfreund and Strauss had told Corrigan that Buffett was considering becoming interim chairman. “As far as I was concerned, they were both being less than candid with me,” Corrigan says. “I want to talk directly to Warren Buffett immediately,” he told them.58 “I didn’t know him personally, but I certainly knew his reputation.”

Buffett for his part needed to find out how Jerry Corrigan would feel if he did take the job. It took some time to track down Corrigan in Washington. He did not call Buffett back until after eight-thirty a.m. CST, after the market had opened. Salomon’s stock did not open for trading, which told investors that major news was pending.

When Corrigan talked to Buffett, he said something about his willingness to be a little more lenient about the “ten-day schedule” if Buffett took the job. Though Buffett did not grasp what Corrigan meant, he gathered that the Federal Reserve must have been asking for information about something. Corrigan sounded angry. He said that he would make no promises about anything if Buffett did take the job, and insisted that Buffett see him personally to talk about the role of interim chairman in New York that very night.

At Salomon, all that the trading floor knew was that Buffett was supposedly flying in to rescue the firm and that Salomon’s stock was not trading. People speculated that he was considering Meriwether as a possible replacement for Gutfreund. The arb boys were crying, “We can’t lose John.” J.M. himself was nowhere to be seen. The trading floor stewed and seethed, but the stock was unable to open for trading because Buffett