The Snowball_ Warren Buffett and the Business of Life - Alice Schroeder [537]
40. Haupt was a securities dealer who traded both stocks and commodities and was a member of the NYSE; thus, he was required to meet the exchange’s net capital rules (which state that capital must be ½0 of its total liabilities). SEC Rule 15c3-1 regulates broker-dealer net capital. Under the Aggregate Indebtedness Standard, 2% of net capital is required today, compared to 5% in the 1960s. The New York Stock Exchange paid $10 million to cover its customers’ losses. H. J. Maidenberg, “Lost Soybean Oil Puzzles Wall St.,” Wall Street Journal, November 20, 1963.
41. Equivalent to 2.9% of its value.
42. The Stock Exchange had closed mid-session on August 4, 1933, due to a tear-gas prank. Some consider the Kennedy assassination closing to be the first “real” closing of the market.
43. John M. Lee, “Financial and Commodities Markets Shaken; Federal Reserve Acts to Avert Panic,” New York Times, November 23, 1963.
44. H. J. Maidenberg, “Big Board Ends Ban on Williston, Walston and Merrill Lynch Are Instrumental in the Broker’s Reinstatement, Haupt Remains Shut, Effect of Move Is Swept Aside by Assassination of President Kennedy,” November 24, 1963. The soybean-oil drama, including the American Express role, peaked during a period of about a week following the assassination.
45. American Express at the time was the only major U.S. public company to be capitalized as a joint stock company rather than a limited liability corporation. This meant its shareholders could be assessed for deficiencies in capital. “So every trust department in the United States panicked,” recalls Buffett. “I remember the Continental Bank held over 5 percent of the company, and all of a sudden not only do they see that the trust accounts were going to have stock worth zero, but they could get assessed. The stock just poured out, of course, and the market got slightly inefficient for a short period of time.”
46. The Travelers Cheque was American Express’s main product. The company introduced the card defensively when banks developed credit cards as a countermeasure to the Travelers Cheque.
47. Warren Buffett letter to Howard L. Clark, American Express Company, June 16, 1964. Brandt sent Buffett a foot-high stack of material, according to Jim Robinson, former CEO of American Express, who saw it. “I remember seeing Henry’s stuff on American Express, just reams of it,” said Bill Ruane in an interview.
48. At the end of it all, De Angelis pleaded guilty to four federal counts of fraud and conspiracy, and was sentenced to ten years in prison. “The Man Who Fooled Everybody,” Time, June 4, 1965.
49. Howard Buffett, August 6, 1953, last will and testament.
50. Interviews with Patricia Dunn, Susie Buffett Jr., Warren Buffett.
51. In Grand Old Party (New York: Random House, 2003), Lewis L. Gould describes the way being a Republican became identified with racism in the minds of many people who changed parties during the civil-rights era.
52. Buffett cannot recall whether he initially registered as an independent or a Democrat. His preference would have been to register as an independent, but that would have precluded him from voting in primaries. Either immediately or within a few years, he did register as a Democrat.
53. Interview with Susie Buffett Jr.
54. Susan Goodwillie Stedman, recalling personal interview with Susan T. Buffett conducted November 2001, courtesy of Susan Goodwillie Stedman and Elizabeth Wheeler.
55. Dan Monen as quoted in Roger Lowenstein, Buffett: The Making of an American Capitalist. New York: Doubleday, 1996. Monen is now deceased.
56. Warren’s inability to deal with Howard’s death is the incident most widely cited by family members as indicative of his inner state during this period.
Chapter 27
1. Warren Buffett letter to Howard L. Clark, American Express Company, June 16, 1964.
2. L. J. Davis, “Buffett Takes Stock,” New York Times, April 1, 1990.
3. “I’m not a hundred percent sure