• Choose a category
• All
• Classic-Fiction

As the minutes passed, a white and shaken Meriwether arrived. He had gone, as instructed, to see Dick Breeden, chairman of the SEC, asking for help. Meriwether reported that Breeden had turned them down flat. Twice in the conversation, Breeden had said Salomon was “rotten to the core.”

“Rotten to the core,” Meriwether repeated in shock, “rotten to the core.” All of them suddenly realized that the Treasury’s move had been a joint decision among the Federal Reserve, the Treasury, and the SEC, their condemnation a sudden reversal of the world’s opinion of Salomon, a dramatic payback for years of pride and arrogance.

The hour of the press conference came and went, while the reporters fidgeted and grew more irritable downstairs. Brady did not call. The phone sat unblinking.

Finally, Jerome Powell, assistant secretary of the Treasury, called. The Treasury would not fully reverse itself, he said. Salomon could not bid in Treasury auctions for customers. Yet it would compromise on Salomon’s most important point: The firm could bid for its own accounts.

“Will that do?” Powell asked.

“I think it will,” Buffett said.

He loped back into the boardroom and told them. The room erupted with relief and joy. As rapidly as he could talk, Buffett oversaw the election of himself as interim chairman and Deryck Maughan as director and operating head of Salomon Brothers. At about a quarter to three, he walked outside and had somebody call downstairs to the trading floor.

Maughan was sitting with the traders, watching the clock. At a nearby desk, John Macfarlane’s team was working on a contingency plan to dump the firm’s assets in Japan as fast as they could work the phones. Somebody called from upstairs and told Maughan to meet Buffett at the elevator bank for a talk. Maughan was uncertain whether he was about to be made the boss—or told he had a new one. He walked over to the elevator. The door opened, and he saw Buffett standing inside. “You’ve been tagged,” Buffett said, and motioned for Maughan to get in. Instead of riding back up to the boardroom, they descended two more floors into the jaws of the waiting press.93

“The press was unruly. They were like animals. Every question was a trick question. It was a big story, and they wouldn’t have minded if it had gotten bigger. It was their chance to shine. The TV people were particularly obnoxious. They wanted us to hurry up for the five o’clock news, or the six o’ clock news, and I wouldn’t cooperate with them. And I could just feel it. I could just tell it. I had to fall on my face. I had to be found a phony. They wanted it to develop that way. There were all kinds of book contracts floating around that room, but only if somehow Salomon failed.”

Sitting on the dais, Buffett crossed his arms; he looked weary. Maughan, his light brown hair brushed into a neat pouf, stared wide-eyed at the crowd like the proverbial deer caught in the headlights. Both were clad in navy suits, white shirts, and funereal ties. “I had no preparation, zero,” Maughan says. “‘You’re tagged’ was my complete set of instructions.” He did not know a single detail that had transpired upstairs. They began.

What happened? the reporters wanted to know.

Buffett, suit jacket bunched up around his ears, explained: “The failure to report is, in my view, inexplicable and inexcusable. I have seen similar dumb things happen in other operations that I am more intimately involved in but not with such consequences.”

Had the culture contributed to the scandal? “I don’t think the same thing would have happened in a monastery,” Buffett said.

Somebody asked him what he would get paid. “I’m going to do this for a dollar,” he said. The board, sitting in the audience, was dumbfounded. This was the first they had heard of it.

The reporters declined to be soothed. Were records altered? Who altered them? Was there a cover-up? Who participated in the cover-up?

Yes, some records had been altered. There had been something resembling a cover-up. At that, the pack grew excited, throwing