The Snowball_ Warren Buffett and the Business of Life - Alice Schroeder [350]
By early afternoon, Buffett had appeared. Once in the opulent executive suite on the forty-fifth floor, he hit the button on the press release, and the traders opened Salomon’s stock.59 It traded furiously for the final part of the day, closing up a dollar to almost $28.
After the market closed, Buffett went down to the amphitheater for a meeting with the managing directors. Gutfreund and Strauss took the stage and Gutfreund said that they were prepared to resign.60 His face remained impassive, as usual. Strauss, noted Buffett, seemed shaken. Afterward, the senior management retired to the enormous conference room on the executive floor. Eric Rosenfeld and Larry Hilibrand, the key members of Meriwether’s team, bullied their way into the meeting.61 There, next to the wall of glass overlooking the two-story football-field-size trading floor where the trouble had begun, the top brass of Salomon began to thrash out what to do next.
People holding different viewpoints started kicking Meriwether around like a soccer ball. Nobody disputed that he had done the right thing by reporting Mozer’s actions. The debate was whether he should have done more. Some people felt, as McIntosh articulated, that he was simply too close to the flame.62 Meriwether had a reputation as a tight manager; in his areas, as one said, “no sparrow fell that Meriwether didn’t see it.” Meriwether had not been involved in the false bids, but how could Salomon expect clemency while keeping him on? It seemed obvious to them that the government would treat the firm more harshly if he stayed. Although Strauss and Gutfreund were not present, they, too, had told Buffett that they thought Meriwether should resign along with them.63
With uncanny timing, Meriwether himself arrived and leaned silently against a wall, watching as most of his peers demanded his head. Buffett had told Marty Lipton earlier that day that, unlike Strauss and Gutfreund, Meriwether must not be forced to resign (unless he chose to do so voluntarily). Buffett wanted time to deliberate. He did not agree with those who thought Meriwether had to go. Meriwether had not sucked his thumb; he had reported Mozer to Gutfreund and Strauss. It was not so much that they thought Meriwether had done anything wrong, Buffett decided. Rather, they were panicked. Their lives were simply going to be so much easier the next morning if Meriwether was gone. The consequences of putting his name in the press release now loomed large to Buffett.
After the meeting, he climbed into a waiting black Town Car with Gutfreund and Strauss and they wove their way through downtown rush-hour traffic to Corrigan’s office.
Corrigan had felt it necessary to maintain his previous schedule in the interest of secrecy. He arrived directly from playing in the Federal Reserve’s annual officers-versus-employees softball game, his tall frame clad in jeans, sneakers, and a Liberty Street Blues T-shirt.64 But the chill in the air was such that “he could have been wearing black tie and I wouldn’t have noticed, given my state of mind,” Tom Strauss later said. Buffett opened disarmingly: “Look, the only thing I owe personally is $70,000 on a second home I have in California because the interest rate is cheap.” He promised complete cooperation with the regulators. Corrigan refused to be charmed. Interim chairmanships usually didn’t work very well, he said. Buffett had better not seek help for Salomon from his “Washington friends.”
Corrigan demanded a thorough housecleaning. Buffett agreed to all sorts of fundamental changes to strengthen Salomon’s policies, controls, and documentation. “His verbal commitment to me was absolute,” says Corrigan, “and I trusted him.”
Nevertheless, Corrigan made no promises. Giving Buffett a steely