The Snowball_ Warren Buffett and the Business of Life - Alice Schroeder [574]
82. Interview with Philip Howard.
83. Warren Buffett testimony, “In the Matter of Arbitration Between John H. Gutfreund against Salomon Inc., and Salomon Brothers Inc.,” Sessions 13 & 14.
84. Warren Buffett, Charles T. Munger, testimonies, “In the Matter of Arbitration Between John H. Gutfreund against Salomon Inc., and Salomon Brothers Inc.,” Sessions 13 & 14, 33 & 34.
85. Charles T. Munger testimony, “In the Matter of Arbitration Between John H. Gutfreund against Salomon Inc., and Salomon Brothers Inc.,” Sessions 33 & 34, December 22, 1993.
86. Interview with Gedale Horowitz.
87. The Japanese bond market would not open until 7:30 P.M. EST, but Japanese over-the-counter trading would begin as early as 5 P.M., at which point lenders would start selling Salomon’s paper, effectively calling its loans.
88. Interview with John Macfarlane.
89. Warren Buffett testimony, “In the Matter of Arbitration Between John H. Gutfreund against Salomon Inc., and Salomon Brothers Inc.,” Sessions 13 & 14, November 29, 1993.
90. Interview with Jerry Corrigan.
91. Jerry Corrigan and Paul Volcker contributed insight to this topic.
92. At the time, it was well understood that Buffett had “parlayed his considerable reputation into a partial rescission of the order,” although what that meant to him was not obvious. (Saul Hansell, Beth Selby, Henny Sender, “Who Should Run Salomon Brothers?” Institutional Investor, Vol. 25, No. 10, September 1, 1991.)
93. Interview with Deryck Maughan.
94. Interview with Charlie Munger.
95. Interview with Deryck Maughan.
96. Hansell, Selby, and Sender, “Who Should Run Salomon?”
97. Ibid.
Chapter 49
1. Interview with Paula Orlowski Blair.
2. Interview with Bill McLucas.
3. This is Buffett’s recollection of the quote, but Brady’s view that Buffett would not leave was corroborated by other regulators.
4. Interview with Paula Orlowski Blair. She thought it funny that her new boss wanted to turn her into a private eye.
5. Interviews with Donald Feuerstein, Bob Denham. Denham says only that they agreed a change was needed.
6. Warren Buffett testified to this in “In the Matter of Arbitration Between John H. Gutfreund against Salomon Inc., and Salomon Brothers Inc.,” Sessions 13 & 14, November 29, 1993.
7. During John Gutfreund’s arbitration hearing.
8. A number of sources said this to the author but were afraid to be quoted.
9. The firm became Munger, Tolles & Olson in 1986.
10. Law-firm sources and former employees give Buffett all of the credit for this idea, despite the law firm’s putative role.
11. Drexel Burnham Lambert had failed after its indictment. Kidder, Peabody was sold to PaineWebber. Salomon’s highly leveraged balance sheet put the firm in even greater jeopardy.
12. Interview with Ron Olson.
13. Ibid.
14. Ibid.
15. Interview with Frank Barron. Rudolph Giuliani, U.S. Attorney for the Southern District of New York, had pressed for Drexel Burnham Lambert to waive the privilege, but the firm did not.
16. Charlie Munger later acknowledged the morally fraught—at best, ambiguous—situation, saying he and Buffett had no choice but to assist in criminal investigation and prosecution of potentially innocent employees. “When the final chapter is written, the behavior evinced by Salomon will be followed in other, similar cases,” he said. “People will be smart enough to realize this is the response we want—super-prompt—even if it means cashiering some people who may not deserve it.” Lawrie P. Cohen, “Buffett Shows Tough Side to Salomon and Gutfreund,” Wall Street Journal, November 8, 1991.
17. Warren Buffett letter to Norman Pearlstine, November 18, 1991.
18. Buffett testified to this in “In the Matter of Arbitration Between John H. Gutfreund against Salomon Inc., and Salomon Brothers Inc.,” Sessions 13 and 14, November 29, 1993.
19. “I didn’t fire them on the spot,” said Olson in an interview. “I was a little more subtle than that.”
20. Interviews with Carolyn Smith, Warren Buffett. He added Smith to his collection of people,