Opening Belle (20 page)

“Combine a wiggle dress with cold blowing air, Ballsy, and this girl is thinking of something more satisfying than balancing your stupid trades.”

Marcus and Tiffany seem locked in some sort of domestic spat. It's like she isn't able to distract the man of her choice anymore, so she tries to retaliate by not answering his ringing phone lines or dishing out sexy talk he doesn't respond to.

From the arc of sweat I see spreading beneath Ballsbridge's Thomas Pink shirt, I assume he's losing money. He can't sit still, taps his computer mercilessly, and has several graphs on his screen with dramatic downward slopes.

Marcus is big in every area of his body. His fingers are so wide they mistakenly press two computer keys at once, the necks of his shirts are custom widths, and the thigh areas of his slacks strain from the muscles beneath. He was a defensive lineman at the University of Texas and it shows. While I'm tempted to turn his fan off and tell Naked Girl she wouldn't be so cold if she actually wore clothes to work, I put a hard drive on my papers to protect them from the hurricane behind me and keep my lips together.

My papers are more lists of collateralized debt obligations, the jargon-laden stuff that Henry has been buying. I've been getting Kathryn to tutor me on these things on slow afternoons like this.

My heels clack across the granite lobby to the elevator as I head to the eleventh floor, where the goddess of mortgages works. Kathryn is a senior managing director, an intense, robotic human frightening in her perfection and beauty who generates stratospheric commissions. Bond Girl sits in a central spot amid the chaotic row of attached desks, and exudes an almost ethereal calm. Her nails are never chipped, there's never a paper on her desk, her garbage can has none of the banana-peeled, coffee-cupped, ripped-ticket remnants that most mortals slough off. Kathryn's garbage remains mysteriously nonexistent.

Dressing sensibly in St. John knit suits and low-heeled pumps, she's the most senior woman in bond land and the only person the traders on this rowdy desk seem afraid of.

As I walk toward her, I note that she's the only employee on this floor of 180 people who never removes her blazer. She stares straight at the triply stacked screens on her desk even when I'm within inches of her. I'm still not comfortable just plopping next to her. I wait to be acknowledged.

I'm not.

I roll a chair beside her and sit myself down, busting into her space. She seems to be meditating on the intricate rows of numbers in front of her with the devotion of a nun.

“Hey, Kathryn,” I say, and wait.

Each year, Feagin has a meeting for women who are managing directors and senior managing directors. Out of 13,566 employees worldwide, we are a 1 percent club. Kathryn Peterson has met me at these meetings and yet every time I've come to visit her here, and even though we've been having lots of phone time together putting merchandise up for Henry, she still gazes over my shoulder as if she's trying to place me.

I tell her again that I want to speak more intelligently about the mortgage-backed securities market. I tell her that some of these synthetic products that roll across my desk lately make me feel like a three-card monte guy in Times Square. She doesn't smile or laugh or turn. She simply tolerates me because together we're finding a windfall with Cheetah and we need each other to keep this going.

“Tell me what you know, Isabelle,” she says deliberately. This is how our sessions always begin. Like a shrink trying to get the conversation going, figuring out where to start, she waits.

“This is what I know,” I say. “Everyone who has ever borrowed money has a credit score. The range goes from three hundred to eight-fifty. If someone's late to pay a debt the score falls. Once below six-twenty you're considered a riskier person to lend to, you've become subprime. Any mortgage issued to you is a subprime mortgage.”

“Well, yes?” Kathryn murmurs, unimpressed.

I interpret this comment as, “Duhhh.”

So I continue, “The interest rate on that mortgage will be less attractive or higher than a rate available to a person with good credit. Most risky mortgages balloon, making their payback more expensive. If the borrower can't pay the inflated amount she'll have to refinance the house or sell it. Even though many banks lend to people who can't possibly pay them back, the banks figure the value of the real estate will rise, so if they stop getting paid back, they foreclose, leaving them with a property that's gone up in value. That makes the banks' risk minimal.” I pause for air.

Bond Girl stifles a yawn and keeps her eyes forward so I plug onward, conversing to the side of her head. “To get investors involved and to lower the risk to the banks even further, Freddie Mac designed a type of bond called a CMO, a collateralized mortgage obligation, which is a pooled piece of debt. The mortgages themselves are the collateral. These bonds are put into tranches or categories that are rated based on how risky the underlying debt is.”

“Okay,” Kathryn says softly, “so thank you for my history lesson. It was a little boring but you're probably one of the only people here who could tell me all that. What else?”

“Here is where I get into muck,” I continue. “So then the banks came up with a clever way to have others invest in the mortgage market. They invented CDOs, or collateralized debt obligations. Instead of just bunching mortgages together that were all in the same risk category, the CDOs take actual mortgage
bonds
, the CMOs, pool them together, and add another layer of complexity to an already hard-to-understand market.”

“Unclear,” Kathryn says simply.

“Well,” I sigh, “some yahoo figured out that by taking the
bonds
on crappy mortgages, instead of the mortgages themselves, sending them back to the rating agencies so the same stuff could be rerated more favorably, he could sell them more easily. A lot of deadbeat loans could appear to be as good as AAA and investors who before would never touch them now buy them like they're at the year-end clearance sale at Barneys.” I exhale.

Kathryn Peterson turns to me and smirks. “You got it.”

Before I started pitching this stuff, I tried to explain it to humans who didn't work on Wall Street. I started with my daughter, Brigid, who initially listened with great intensity, bulging her eyes in concentration while stroking our dog, Woof Woof. Within a minute she was grinning and within two she was giggling and blurting out, “Gobbly gobbly poo poo!” Because that's what it sounded like to her. Woof looked intrigued.

I moved on to Bruce and spoke the mystical, mythical language of Gobbly Gobbly Poo Poo to him. This time I did it with feeling. But he kept looking past me, hoping to catch sight of the television on the wall in the far room. He scratched his middle and yawned. The dog walked out of the room.

Today I'm still not certain what I've been selling. The only thing I see being created is debt and then derivations of that same debt, explained away as somehow more valuable than the original debt. The fact that this market is so far removed from anything tangible isn't lost on me. Cheetah Global had been hungry to own this stuff and now has begun selling. I need to know why. I admit the whole thing feels wrong, but how can it be wrong when so many smart people think it's right?

Kathryn briefs me. “We've got six lots of these ten-year triple-As. Who can we sell them to?” she asks, scanning her screens and comparing them to the papers I've brought upstairs with me. The fact that she is even speaking to me is something to note. She doesn't seem to work with, or be chummy with, any of the guys surrounding her. She's the one who has fewer friends than me.

King must be worried about the mortgage desk too. I see him across the room here on the bond floor away from his usual territory, and sense his curiosity peak when he sees me sitting with Bond Girl. He beelines over and casually looks at the papers in my hand, the tranches I intend to evaluate today for Cheetah. I tense myself, waiting to be touched. Without fail King lowers his head onto my shoulder and sniffs my neck like a dog. He smells like he hasn't had a shower since last night and I'm highly aware I smell like cheap candles. I've used my kid's smelly shampoos again and King finds this intriguing.

“Marjorie's Mango?” he inquires.

“Slime Lime,” I correct. “Gets you clean, won't turn you green.”

King lifts the tranche papers with one hand and rests the other on my shoulder. I want to slap it away. “Triple-A, my big nose,” he mutters as he sees the bond ratings. He tosses the papers on Kathryn's desk and gives my shoulder a squeeze before walking away.

“Guess he doesn't believe these ratings,” I say, trying to be as cool as Kathryn but feeling a little panicked.

“He's on the risk committee now,” Kathryn says. “And he obviously didn't get this memo.”

She turns her screen so it faces me, allowing me to read the latest email from Metis.

To:
All Employees

From:
Metis

Subject:
Appropriate Relationships

While I'm growing tired of being your nanny, please note that one shouldn't sleep with a subordinate. Remember, the only thing that's making you attractive to someone younger and cuter than yourself is your superior position and your bank account. Once you get sued, your position, account balance, and body parts will deflate. Grow up.

There have been eleven memos by now. Still nobody has been caught and nobody has claimed to be Metis. I'm amazed that Kathryn even admits to having opened a Metis memo, never mind openly showing one to me, all girlfriend-like.

“You shouldn't let him touch you like that,” she says simply.

“How do I get someone so senior to leave me alone, and not get fired?” I ask. “And besides, if this mortgage stuff is as messed up as it appears to be, we all have bigger problems than lecherous men.” I go right back to talking about why I'm at her desk in the first place.

“I hear some guys on the executive board aren't happy with the loads of merchandise we sit with overnight.”

Kathryn half smiles, taking note that I'm sticking with the original subject. “It's a mind-blowing liability if those obligations begin to default,” she admits. “But the truth is that if we default, the whole United States banking system will be on its head so that won't happen.”

“Yeah,” I say wearily, thinking of how much Feagin stock I'm forced to hold. Getting wiped out by my own firm would be the ultimate touché. “But as long as they go north, we're okay,” I mutter, uncertain as to whom I'm trying to reassure.

“As fast as we invent these mortgage products we sell them,” she says almost sadly. “It's only recently that we've seen any blip in them at all. And besides, this is our job. Every other bank is doing it so I guess we should be too.”

“To stay competitive,” I mutter.

“To stay competitive,” she states, and this time we look right at each other.

A trader named Monty interrupts the action on the floor. Monty is a short, overweight maniac who is screaming into the phone.

“Recognize the trade, bitch.”

His face is an interesting shade of purple and the girth in his middle heaves when he screams.

“And he is bothered why?” I ask Kathryn, trying to be calm and more like her. I feel like I'm in junior high again, where I tried to be a different person than myself just to make someone like me.

She brushes her elegantly coiffed hair out of her face with one of her perfectly manicured hands.

“Third day. D-day of not having a trade recognized by an account.”

“Hmm.”

This is when on settlement and payment day an account just won't agree with a trade, disputing the price or the fact that it ever happened. This can be an expensive problem if the trader and account can't figure it out, but Monty has a terrible method of seeking unity.

“Recognize this trade, you lesbian whore, before I come over there and staple your tits together!”

Monty is now wheezing. He hurls the phone at the turret and jumps from his seat. The other men are doubled over in laughter. Kathryn glances over at Monty, then me, and then back at her screen. Her eyes are a deep, sad brown and I wonder if pharmaceuticals are involved.

I know I'm on a speed date but I have to get all my mortgage-backed securities questions addressed. I ignore the guys' noise.

“So how does all this made-up money translate to the guy on the street?” I ask. “If they're making something from nothing, making money from embellished value, how does this affect regular people?”

“To the guy on the sidewalk,” Kathryn says, “who sees Wall Street being greedy? That person wants in on the action and is borrowing money at almost negative interest rates. He's not entirely innocent. People who never thought they could own a vacation home are now taking two. The lady buying dinner food at Wal-Mart is throwing an iPad in her cart, and maybe even a dining room set.”

These are the longest sentences I've ever heard her speak. “Everyone is just heady with money,” she continues, “money that they're borrowing.”

“But does that make them bad or greedy people? Someone is giving them the advice that they can afford this stuff. Someone they trust to know more about this than themselves is telling them to go for it,” I note.

Kathryn shrugs and taps away at her keyboards, completing small electronic trades with the ambidextrous skill of a concert pianist.

•  •  •

When I return to my seat, Ballsbridge is barking into his phone while some stock of his swan-dives. Naked Girl has found a rerun of
Barney
on television. She sways in her narrow clothes, arms wrapped around herself like a tilting column, sassing Marcus, “I love you, you love me. We're a happy family.”

He catches me looking over his shoulder at his crashing investment idea and is pissed.