Death Benefit (10 page)

“So what do you know?”

Edmund poured two drinks and handed one to Russell, who stared into the fire, an elbow leaning on the mantel.

“I’m a big boy, Russell, I’ve heard bad news before. Out with it!”

“Gloria Croft,” Russell said, snatching a glance at Edmund, then throwing down all of his drink in one shot.

“Excuse me? I thought for a second you said Gloria Croft.”

“I did. That’s who it is, Edmund, Gloria freaking Croft. She’s doing it plain as day through BigSkies.”

“You’ve gotta be kidding me. You have
got
to be fucking
kidding
me!”

Edmund was yelling nearly at the top of his voice. This was why Russell had been concerned—he knew Edmund was going to flip out. There was a knock at the door, and Alice, Edmund’s wife, popped her pretty blond head in.

“Oh, hi, Russell. Edmund, Darius is going to bed. . . .”

Alice took one look at her husband’s face twisted in a rictus of unalloyed rage. She could see it would be a hopeless task to get anything out of him in this state.

“I’ll say good night for you, then. Bye, Russell,” Alice blurted, and withdrew, closing the door behind her.

The interlude cut short Edmund’s tirade. He poured himself another drink and then one for Russell, closed his eyes for a second, and took a deep breath. Why did it have to be Gloria Croft? “You’d better tell me everything.”

Russell sat down on a low padded stool by the fire. Edmund stayed standing.

“I made some calls. It only took two, actually. I called the guy who told Teddy Hill he heard about the shorting and the guy gave up his source. It was someone I’d met before, at some mortgage convention in Vegas. He runs this bullshit financial newsletter. He got it from the horse’s mouth.”

“The horse’s ass, more like. Did he say why she’s doing it?”

“Didn’t say much. I think once he’d told me he thought better of it and got off the phone pretty quick. He got nervous. She’s a big player. BigSkies has a lot of money.”

Edmund was experiencing a less-than-pleasant sense of déjà vu. Through her hedge fund, BigSkies, Gloria Croft had taken huge positions betting on the failure of the CDOs issued by, among others, Edmund and Russell’s desk. She’d taken the positions early, in 2006, when no one else was doing it and when it was cheap to do. Hundreds of thousands of dollars could turn into tens of millions. What she was indicating was that she thought the AAA-rated mortgage-backed bonds would fail and jeopardize the futures of Wall Street giants like Bear Stearns and Lehman Brothers. Almost no one agreed at the time: There was no chance their stock could go so low. But it did, and it went lower.

Russell and Edmund were quiet, Russell staring into the bottom of his glass, Edmund at the fire hissing and spitting in the grate. He held back the fire guard and popped another log into the flames.

“She’s got some balls,” Russell said finally.

“She does.”

“This is different, though.”

“You’re right about that.”

Russell and Edmund’s thinking was following the same track. Subprime mortgages were a disaster; as assets, they were just terrible. In their “Life Settlement” paradigm, the debtors were the nation’s largest insurance companies, some of the richest institutions in the country. The bottom line was solid, encapsulated in one of Edmund’s favorite sayings of recent months: What are the insurance policy holders going to do, not die?

“So what is she doing?” Edmund said after another long pause. “It doesn’t make sense. We know the numbers, right? We’re solid all round. Actuarially, we did the worst case—people living a little longer for God knows what reason—and we’ve taken those tolerances into account. Unless she’s shorting you and me personally. But she’s too smart for that. Way too smart. There’s gotta be something she sees in the numbers.”

“If there was anything in the numbers,
I’d
have seen it,” Russell said a little testily.

“I know that, Russell. She’s seeing something that isn’t there. It really doesn’t matter why she’s doing it, she’s doing it and we might be left standing in the rain with our dicks in our hands. God
damn
it.”

“So what do we do?”

“We have to talk to her, find out what she knows,” Edmund said. “Try to talk some sense into her. When she understands what the upside is, perhaps we can help her out.”

Edmund was talking about offering Gloria an inside track to invest in the company and share in the enormous windfall they were confident was coming.

“Maybe that’s what she wants,” Russell said. “She’s sending up a smoke signal.”

“She could call us on the telephone and ask,” Edmund said. He thought for a second. “Let’s call her right now.”

“Now? It’s after nine o’clock at night.”

“Call her anyway. She’s always working. I’m not sure I’ll be able to get to sleep tonight unless we talk to her. Do you have her cell?”

“Yes, but why me?”

“You did business with her. And she’s not going to take my call. Pure and simple.”

Years back, Gloria had worked for Edmund as a humble analyst two jobs before she went out on her own. Edmund’s desk was a boys’ club and women had to be very thick-skinned to work there. This much Russell knew. There was more he didn’t know, but the bottom line was that it hadn’t ended well. Russell happened to have been present the last time Edmund had seen Gloria, when she walked out of a bar full of about-to-be-former traders where she’d gone to commiserate with one of her friends who had been fired. She was walking out because Edmund, who was very drunk, was yelling at her.

“You’re the reason these people are out of work,” Edmund had shouted. Many people would contend that it was the products Edmund sold that ruined the firms and caused people to be fired rather than the shortsellers who saw an opportunity. But from Edmund’s perspective, his own participation was purely short-term expedient. Gloria’s role was more causative.

Russell scrolled through his BlackBerry for Gloria Croft’s number. He dialed, and Gloria picked up after a couple of rings.

“Gloria, it’s Russell Lefevre.”

“Russell, how are you?” Gloria’s voice was level and deliberate. She didn’t act surprised in the slightest to hear Russell’s voice despite the hour.

“Good, thank you. I trust you are too. Where are you? I hope you’re not still in the office at this hour.” Russell could hear background sounds that suggested she was.

“Just watching Asia open. I’ve been expecting your call. Is Edmund there with you? You can put me on speaker if you like.”

“Hang on a second, Gloria.”

As Edmund rolled his eyes, Russell fiddled with the buttons on his phone, then propped it up against the bottle of Talisker.

“Okay, Gloria,” Russell said.

“Hello, Edmund. How are
you
?”

“Okay, Gloria,” Edmund said, trying to sound carefree. He looked imploringly at Russell. This was his call, couldn’t he just get on with it?

“Gloria, we’d like to get together with you,” Russell interjected. “We have some things we’d like to discuss.”

“What types of things, Russell?” Her voice was carefree, as if she were enjoying herself.

“Stop screwing around, Gloria,” Edmund said, all lightness gone from his voice. “LifeDeals, as you know perfectly well.”

“Ah, the same charming Edmund Mathews I remember so well. If you want to talk, you’re welcome to come and see me at my office.”

This was a power move, and Edmund was making a vigorous throat-slashing gesture with his right hand. He didn’t want to go to her office and cede her the offensive.

“How about we meet for lunch?” Russell suggested. “You like Terrasini, I remember. And I haven’t been there in a while. Would that work for you?” He was suggesting the excellent midtown Italian restaurant, long a financiers’ favorite.

“Russell, I’m sorry, I’m booked solid. And I’m going out of town. It’s here or it’s nothing until next week.”

“Hold on, Gloria.”

Russell picked up the phone and quickly muted it, just in time.

“Jesus, who does she think she is?” The veins in Edmund’s neck were bulging. It was as if Gloria were still working for him, and she were talking back to him.

“Edmund, she’s got us over a barrel and she knows it. We need to know what she’s looking at. I’ll go, if you can’t stand it.”

“No, I’ll go. Like some damned supplicant. She’s going to pay for this. Somewhere down the road. And big-time.”

For once, Edmund’s curiosity had trumped his vanity. Russell got back on the line.

“Gloria, sorry about that. Any chance we can see you tomorrow?”

“How about nine o’clock?”

It was another raised middle finger as far as Edmund was concerned. Nine o’clock meant driving into Manhattan and battling all the commuters. Edmund had an aversion to public transportation so taking the train was out of the question. Edmund was making the throat-slashing motion again.

“Sorry, Gloria, I’ve got an appointment early on that I can’t break. How about ten-thirty?”

“Okay, Russell,” Gloria said with amusement. She could imagine how her request had been greeted by Edmund.

“See you tomorrow,” Russell said, ending the call. Edmund sighed, grateful for the one small concession.

 

 

E
dmund and Russell entered the midsize high-rise along Park Avenue in midtown Manhattan. Predictably, Edmund had been in a sour mood on the Town Car ride down from Greenwich. Russell had insisted on sharing the ride—he wanted to see if he could soften his partner’s mood before they met Gloria Croft. Edmund had been a bully all his life, and he felt uncomfortable in any situation where he wasn’t in charge. Not only was he not controlling events here, it seemed like he was being played, and by a woman, and by a woman who used to work for him. Russell doubted whether his calming words had had any effect.

When they arrived, Gloria used a script she had learned from Edmund, and Edmund knew it. The two men were buzzed into the suite and shown into a glass-walled conference room, where they were left to stew for fifteen minutes. The receptionist was very polite, and they were offered coffee or water. Outside the room, the office seemed calm and peaceful, with only the hum of the air-conditioning system breaking the silence. The image exuded was of quiet authority.

Then Gloria emerged. She’d changed her look since Edmund had last seen her. There was now a slight wave to her mid-length, lustrous brown hair. She wore a well-tailored business suit with a lavender blouse and black heels. There was just the right hint of décolletage. She looked like ten million dollars.

“Gentlemen, I’m very sorry, something going on in Singapore.” Russell and Edmund had stood up when Gloria entered, and she walked over to each man and shook his hand. There was a slight, almost imperceptible smile on her face. She was clearly enjoying herself.

“Follow me!” She walked out of the conference room quickly, and Edmund and Russell gathered up their coats and briefcases and hustled after her.

“She’s got us trotting along like a couple of poodles,” Edmund muttered under his breath.

Gloria was already sitting at her desk when the men entered her office. Some giant, abstract, and presumably very expensive painting hung on the wall behind her. The desk itself was bare save for several large telephones; carrels behind Gloria were strewn with prospectuses and various files. One entire mahogany wall was inset with the mandatory array of televisions carrying the financial channels. Gloria pressed a button on the underside of her desk, and the office door soundlessly closed. When she spoke, she sounded coy even if Edmund knew that was something she was incapable of.

“I feel like I’m twenty-five again. Back then I was like a suckerfish hanging around the great predators, looking for the little scraps of food they missed when they fed. The ocean was full of blood. It was a lot more fun then than it is now, don’t you agree?”

Edmund didn’t like the way this had started out. Even he wouldn’t have been this bold. Now she was the shark, and they were the suckerfish, and it was their blood she smelled in the water. He bit his tongue until Gloria started talking about the “opportunities” she had lucked into in the subprime field, opportunities she was grateful that the market (meaning Edmund and Russell) had made available to her.

“Well, Gloria,” Edmund said, trying to control himself, “you’re just not as smart as you think you are. That subprime stuff was never designed to succeed. We knew it was going to fail. We were shorting each other. We were shorting ourselves.”

“Maybe you were, but not till the very end. I was buying swaps five years before you”—Edmund snorted—“and you guys were still leveraging your position selling the worthless bonds right up until Lehman went down. Tell me you weren’t.”

Gloria had at least one of her gloves off now. She felt she held a winning hand against LifeDeals. It might make for a longer game if she held her cards, but she had Edmund and Russell right where she wanted them, and she could enjoy witnessing their reaction if she played her hand now. She’d probably make just as much money in the long run if LifeDeals wasn’t a public company. It depended on how far Edmund was going to push his luck. That morning before they arrived she’d looked at herself in the bathroom mirror and said, “Payback time.”

Gloria cleared her throat and went on: “The traders who sold those CDOs should have gone to jail. The whole of Wall Street was tarred with that brush. Immoral, greedy, selfish . . . it was
stealing
.”

“Nonsense,” Edmund said. “You said it yourself: it was an
opportunity
. You destroyed those companies. Your fingerprints are on the bodies. The government mandated that mortgage lenders make subprime deals. Everybody should have a home. No one held a gun to anyone’s head.... I don’t understand why we’re raking over all this again. We’ve moved on. You clearly haven’t, but I’d urge you in the strongest possible terms to
get over it
.”