The Gods of Greenwich (6 page)

“No.” Cusack smiled crookedly, radiating charm waves through the receiver. “May I call you Alex?”

“I prefer Mr. Krause.”

“Does my mom know about the late payments?”

“Not to my knowledge.”

“Can we keep it that way?”

“Well, I suppose,” replied Krause, “the answer depends on you.” He had already smoked out Cusack’s weakness.

“I’ve been crushed at the office.”

“Tell your therapist. When do I get payment?”

“If the check’s not in the mail by Friday, Mr. Krause, I’ll call you.”

“What time?”

“Ten
A.M.
”

“That would be good. We have a situation here. I hope we can work together.” Krause hung up the phone without another word.

Car payments were one problem. Helen’s three-family house, a time-sucking money pit, was another. Two years ago it was the kitchen. Another year it was the roof. Or it was the porch. Or it was the electricity. The drafty old windows no longer opened, and the timber house desperately needed a new furnace. The existing system was forty years old and heated all three units. It chugged and clanged all winter long and belched ominous black clouds whenever the burners fired. The furnace might croak any day.

The family had discussed a financial contract for years. It was informal, no longer spoken, but one everybody understood. “We’ll pay your tuition,” Cusack’s dad used to say. “But take care of your mother, Jimmy. And your brothers, too, if they ever need help.”

“Deal.”

During his six years of college, business school, and horse-choking tuition, Cusack watched his parents go without comfortable furniture or reliable appliances. Without restaurants or vacations. Without creature comforts like new clothes or decent cars. Now his mother was an early widow, and Cusack insisted she live free of financial anxiety.

Money had never been a problem at Goldman. Cusack hated the place 364 days a year, but on day 365 he collected a fat, seven-figure bonus that turned the gulag into a resort. Historically, the investment bank had given him the capacity to say yes no matter what his family asked.

Things were different now. Cusack’s financial avalanche was gathering momentum. And the one person who mattered the most, his wife, probably knew the least.

*   *   *

The ancestors of Emily “Emi” Phelps had lived on Beacon Hill for five generations. Through successive waves of children, the Phelps of Boston swapped DNA with New England’s most prominent “wasperati.” They married into families with surnames like Saltonstall, Thorndike, and Blodgett. They coupled with Gardners at least three times before turning to “seeing eye” Gardiners, named for the letter
i
in their last name, for another two.

With each new batch of Phelps, the family conscripted names from their patrician marriages. Her great-grandfather was Lowell Crocker Phelps. It could have been Lowell, Crocker, and Phelps LLC. Her grandfather hit the mother lode with four names. He was Quincy Choate Peabody Phelps, but friends called him “Scooter” for reasons nobody remembered.

Not once had there been a Cusack among the dense raft of
Mayflower
Yankees. And forget about the sons of plumbers. The Phelps were not the kind to marry refugees from “Slummerville.”

Until now.

Driving north on I-95 toward LeeWell Capital, Jimmy tuned to Bloomberg radio and rubbed his sandy-brown hair, trimmed short on the sides. He subconsciously thumbed his jacket lapel and fidgeted with the flag-shaped pin, a gift from his mother that he always wore.

In a tradition dating to World War II, the stars represented the number of family members serving abroad in the military. His brother Jude was frying in the sand and 120-degree heat of Iraq. Jack was searching for a six-foot-four terrorist somewhere in the mountains of Afghanistan. The three
J
’s of Jude, Jack, and Jimmy had been inseparable as children.

Cusack also displayed the pin for Emi. But that was another matter. Right now, he wondered what to tell her about Litton. He already knew how their exchange would play out.

Emi: “Did you have a good day, sweetie?”

Cusack: “I talked with Smitty about our mortgage.”

Emi: “Is there a problem?”

It would be that quick. Emi’s face would cloud over, and she would press for details. Cusack always tried to protect her. She always sniffed out his bullshit, which triggered strategy sessions worthy of NATO.

I’m glad she’s not a spender.

For all the summers on Martha’s Vineyard and the weekends in Bermuda, Emi was a trash-and-treasure gal. Her idea of fun was rummaging for Prada at TJ Maxx on Saturdays. Cusack toyed with the two-star pin, his ever-present reminder, Emi’s too.

The two would sit down, and she would organize. He could almost hear Emi say, “We cut here, here, and here. We sell the condo. We plant St. Joseph upside down in one of the ficus pots. That’s what Catholics do, right?”

Emi had expressed her misgivings the first time they spotted their condominium in New York’s trendy Meatpacking District. “We can’t afford it.”

Jimmy had driven the $3 million mistake, partly from pride and partly from ambition. He refused to live anywhere resembling his childhood. The wooden floors of Helen’s home creaked something fierce, even now after being redone. And the steam pipes hissed all night during Boston’s bitter, gray winters.

“What’s wrong with a little racket?” Emi argued. “Steam pipes give New England character.”

In the end Cusack prevailed on the condo, but only after he conceded on the Beemer. “We don’t need a new car, James. Not until we pay down our mortgage.”

Since they bought the condo three years ago, their blue BMW had gone downhill. The engine seldom cranked the first time. It turned over and over, never firing until the key found just the right angle in the ignition cylinder. Or until Cusack gritted his teeth and groused, “Another adventure in precision physics.” Once the haggard engine choked to life, the rusty old clunker spewed great plumes of blue-black smoke and rattled like a ghost from the sleek phenom tooled a decade earlier. But at least there were no car payments, the Beemer’s only saving grace.

Pulling into Greenwich, Cusack rubbed his two-star pin one last time. Not so much for luck. The gesture was more of a tribute to his brothers, recognition of their different paths. Jude and Jack had excelled in school. Both were a step faster than him on the playing fields. Had things been different, had there been more money growing up, had his parents given either one of them the nudge, Jude or Jack could be the ones interviewing today.

Cusack’s crooked grin returned, radiant and unrelenting. He was far from wistful. The thought of his brothers fortified him. Jude and Jack faced tougher challenges than he would ever know in finance.

So did Emi. Maybe that was why Cusack never opened up to his wife completely. There was no need to upset her. Or perhaps he hid his thoughts from force of habit. He maintained his guard during the day, self-defense in an industry where everybody sported brass knuckles. Cusack was confident without being cocky. But he shut the door. His head was off-limits.

Same thing at night. For as much as Jimmy loved Emi, he never revealed his worries down deep. He never burdened her with his misgivings. He wanted a job, partly to avoid discussion of their money problems.

A face-to-face confession reminded him too much of the black-and-whites from parochial school. They were the nuns who still wore traditional habits, not the squad cars favored by the Boston police. Every Tuesday, the good sisters marched his classroom full of heathens off to see the priests for another round of absolution. That was not the kind of relationship he wanted with his wife.

CHAPTER EIGHT

THE INTERVIEW
 …

Greenwich, Connecticut, home to 62,000 people, is the ceremonial capital of Hedgistan. At first the community looks like many other wealthy seaside towns in New England. During sultry summer days, heat rises off the sidewalks like the double helix vapors from burning cigarettes. And convertibles become the hair dryers of choice. Towheaded kids with the occasional freckle wear faded designer colors, Nantucket red or lagoon blue, and they all look like sailors whether or not they take lessons at the Indian Harbor Yacht Club on Steamboat Road.

The town pays attention to details, perhaps nowhere more evident than Greenwich Avenue. Careful topiaries, the kind groomed with nail files, sit outside spotless shops with brands ranging from Prada to Lacoste. When the weather grows hot, baskets of pomegranate begonias hang from black lampposts that look like exclamation points for everything perfect. The street is squeaky clean and lined with hunter-green trash cans that contain one slot for recycling and one for everything else. It is the town’s soul, inviting and wide enough for a two-columned parade on the Fourth of July.

Greenwich could be Nantucket or Kennebunkport. It could be Newport or Marblehead. Town shuttles offer an early clue, however, that this place is different. So do a handful of black SUVs. They are more likely to carry the names of hedge funds than the logos from Holiday Inn, Hilton, or other hotels.

Somewhere around a hundred hedge funds are headquartered in Greenwich, just thirty-seven minutes from New York City by express train. And many hedge fund billionaires live in the tony community, even if they operate their empires somewhere else. There is Stevie Cohen, who runs SAC Capital a few exits up I-95 in Stamford. Ray Dalio is another. He lives in Greenwich and manages Bridgewater Associates in nearby Westport.

The Greenwich-based funds whip around $100 billion-plus in assets. They include the investment world’s nouveau elite, firms like Tudor, ESL, and AQR. Whether at the Greenwich train station or watering holes after work, there are always clusters of finance jocks swapping ideas and trading stories about payouts, spectacular divorces, or investments that returned many times their capital. Anything about money.

*   *   *

LeeWell Capital operated from Greenwich Plaza, part of a two-building complex that once housed lawyers, shippers, and manufacturing headquarters. In those days the two suburban buildings hardly ever bubbled with commercial frenzy. The activity, such as it was, resembled the rapid eye movement of an afternoon nap. The center stirred twice every day, when tenants strolled in around nine
A.M.
and when they rushed home at four
P.M.
That was before the hedge funds arrived.

They rolled in, and Greenwich Plaza mutated into the Mount Olympus of Hedgistan—a title subject to dispute in all fairness. Rivals might argue that 55 Railroad Avenue is the real home of the gods. “Fifty-five” sits across from the train station and is conveniently located next to a Rolls-Royce dealership that also sells classic Ferraris, Aston Martins, and other four-wheeled Viagra. Or maybe Pickwick Plaza is the epicenter of hedge funds. That’s the problem when everybody wants to be Zeus. There’s no consensus.

The superpowers at Greenwich Plaza included global macro, convertible arbitrage, and other obscure-sounding investment disciplines. The hedge funds stormed the building with Bloombergs and BlackBerrys and their Bluetooth headsets. They brought proprietary trading models and governed the capital markets with the proverbial two-and-twenty: 2 percent annual fees and 20 percent cuts of investment returns.

True to form, these gods of Greenwich used long-short disciplines to manage their waistlines. They installed wine cellars in their offices and amassed take-out menus. Requisite stuff to work late and get long a few extra pounds. They reserved space for elliptical trainers and stationary bikes, whatever it took to short fat and stay trim.

They arrived in limousines, chauffeured by full-time drivers in Lincoln Town Cars or full-time spouses in BMWs, Mercedes, and the occasional Lexus SUV. Or they drove performance cars of every size, shape, and color. Their Maseratis and Ferraris would never see action on the switchbacks of Monte Carlo. But the six-figure autos looked great, nesting discreetly in the parking lots underneath the two buildings of Greenwich Plaza.

Armed with fierce checkbooks, the hedge funds drove rents up and the old guard out. Only one resolute law firm remained. And now, a cryptic god patois dominated every corner of the two buildings.

Elevator bank: “I’m short volatility.”

Watercooler: “We thought we were buying alpha. Got beta instead.”

Men’s urinal: “We flushed synthetic CDOs long ago.”

Lobby: “Orthogonal GARCH is so fucked.”

It was here at Greenwich Plaza that LeeWell Capital had cranked out positive returns every year since 2000. Most years, the hedge fund was up 20 to 30 percent or more. Even during the frightful bear market from 2000 to 2002, when the Dow plunged three straight years, LeeWell made money.

Cusack parked his beat-up BMW next to a glacier-white Bentley convertible. Here at Greenwich Plaza, he sought a job, stable cash flow, and a little relief from Litton, Alex Krause, and all the other creditors standing in line.

*   *   *

You can hang meat in this place.

Cusack noticed the temperature first thing. He ignored CNBC’s newscasters, who ranted about some company missing its numbers. He overlooked the tiger-maple walls all around him. It was chilly inside LeeWell Capital, icebox cold, because the air conditioner was cranking way too early for the season.

Jimmy strode up to the receptionist, who was wearing a cashmere sweater and holding a cup of tea to warm her hands. He had read dozens of the ace-your-interview books, and they all advised the same thing: “Your job starts at the front counter.”

“You need a parka,” Cusack observed, bright and agreeable.

The receptionist, rosy and brunette under a high-tech headset, reflected Cusack’s cordial smile with a hundred watts of her own. “Cy sets the temperature at sixty-six. Says the brain functions better in the cold.”

“I can already feel the power,” he replied. “I’m Jimmy Cusack.”

“Amanda. We’ve been expecting you. I’ll let Shannon know you’re here.”

“Shannon?”