The last tycoons: the secret history of Lazard Frères & Co (31 page)

Governor Carey then turned to Robert Strauss, the ultimate Washington insider, to see if he could twist Ford's arm. Felix explained: "Strauss says, 'No, I can't do anything, but I know somebody who's very smart whose name is Felix Rohatyn. Why don't you ask to see him.' I know nothing about this." That's when Carey put in the urgent call to Felix and found him in Scoop Jackson's office. After Burke explained the dire situation, Carey asked Felix, "'What would you think would happen if the city went bankrupt?' I said, 'Well, I think it would be a terrible thing if the city went bankrupt, I mean, I think you have to try to avoid that at all costs, but I can't believe that that can happen.' 'Well,' he said, 'would you be willing to help us and take on the job of spearheading that?' I said, 'No, I can't do that. I don't know anything about city finances, but, you know, if you were to form a small group, a bipartisan group, including Republicans and Democrats, you know, four people, I'd be certainly willing to participate, but I have to clear it with my senior partner. And if you do that, I would urge you to have one of the people that you appoint be Judge Rifkind'"--Lazard's lawyer throughout the various pieces of ITT litigation. "Carey says yes, call Rifkind. I call Andre. I say I really have to see you tomorrow, or whenever it was, and I'd like Judge Rifkind to be there. And I thought, 'Andre will never let me do this'"--prompting the question of why Felix thought Andre would not allow him to step into the city's financial breach. "I had spent almost two years on the New York Stock Exchange, and then, oh, what else, on ITT, and Andre would just say no," Felix explained. "In 1975 Andre was pretty tired by then, and he said, 'How long do you think this will take?' I said, 'I have no idea, but I think we want to try to gear it to create something that would enable the city to finance, and at least to get back to the capital markets, and once that happens, I'm gone. You know, and that should be it. A month, two months, three months, max.'" And that is how Governor Carey created the so-called Crisis Panel, the precursor to the Municipal Assistance Corporation, or MAC, just as Felix had suggested.

The three other men on the panel were Simon Rifkind, Felix's lawyer and friend; Richard Shinn, the CEO of Metropolitan Life Insurance; and Donald Smiley, the CEO of R. H. Macy & Co. With the thirty-day drumbeat pounding, the four men began a round-the-clock effort to fashion a solution to the impending crisis. "For the last two weeks, life for the four men has been a succession of crises involving bill-drafting sessions until long after midnight, city-hopping trips starting as early as 7:30 a.m. on a helicopter from La Guardia Airport, and hurried conference phone calls to Governor Carey, Mayor Beame and other key officials," the
Times
reported, breathlessly, in June 1975. There were lots of helicopter trips between Albany and Manhattan, shuttling between meetings with legislative leaders and Mayor Beame at Gracie Mansion. "They may be new to the problem," one state official told the
Times.
"But they've quickly become comfortable with it. And most important of all, they have no evident political bias and no fear of speaking frankly. Why one of them simply told the legislative leaders: 'You're facing a financial Dunkirk. And you have to deal with it accordingly.'"

Felix said his involvement with MAC, which is generally credited with constructing a financing mechanism that allowed New York City to avoid bankruptcy, was his single proudest professional achievement. His image was that of the crisis's honest broker, prescribing the tough-love cure to all who would listen. "I didn't tell the Republicans one thing and the Democrats another," he said. "I just told them the unvarnished facts, as brutally as I knew how, but without being brutally rude. I just said, 'Look, the patient has cancer. It isn't my fault. You have the choice of letting him die or taking the cure. The cure will be painful, and it may not work. But the risk of not taking the cure is far greater.'"

The MAC platform also provided the much-needed salve to begin to repair the wounds that Felix had suffered for more than six years as a result of his work with Geneen on the Hartford acquisition. He was now happily lionized on the streets of New York. And his courtship of the press accelerated, as he intentionally became the MAC official willing to take the time to explain the complicated financial machinations to the often clueless political reporters. After he had devised and sold a $2.3 billion financing plan, in September 1975, that saved New York from default, Felix's friend Mike Burke, then president of Madison Square Garden, sent him a note: "Congratulations, Sisyphus should have learned to roll with Rohatyn. He would have made it."

Now that Felix was becoming a public figure of international renown, details of his private life began creeping into the press. For the first time came word of his marital problems. Felix had married Jeannette Streit in 1956, and together they had three sons. She worked, at least for a time in the 1950s, at the United Nations in New York, translating long Spanish and French speeches into English virtually simultaneously with the spoken words. During periods of crises, as in the Middle East in November 1956, the hours were long and demanding. "Plays hob with my domestic life," she told the
Washington Post.
That Streit ended up working at the UN was probably no accident. Her father, Clarence Streit--a writer--joined the
New York Times
as a reporter in 1925 and, in 1929, was sent to Geneva as a foreign correspondent to cover the League of Nations. He stayed for ten years, and while there he developed his own plan for a union of fifteen democratic nations, including the United States, that would closely resemble today's European Union. He wrote a book on the eve of World War II, in 1938,
Union Now,
that detailed his thinking about how the union of nations would work. It "electrified the nation," became a best seller, and was hugely influential on college campuses.

In the late 1960s--when he was still married to Streit--Felix began a long affair with Helene Gaillet de Barcza, now Helene Gaillet de Neergaard. He had grown apart from his wife even before his public profile soared. "Jeannette was very intelligent, genteel and decent," a friend recalled, "but she was also very introverted." Added Felix: "She was an extraordinarily bright, intelligent, very high-quality person." (Streit declined to be interviewed.) Felix met Gaillet, by then separated from a Hungarian count, at a dinner party he and Jeannette had been invited to in 1967 in Greenwich Village. Gaillet was seated between the host and Felix, without giving him much thought. Toward the end of the evening, as music was played, Felix asked her to dance. He was quite taken with her from the start. At the time, she was said to closely resemble the beautiful French actress Anouk Aimee. Gaillet had emigrated from France to the United States in 1946; supposedly her family of eight was the first to fly commercially as a family across the Atlantic.

A week later, Felix called Gaillet and asked her out for a drink. She declined. He called the following week, and again Gaillet declined; just over a difficult marriage and with two young children to raise on her own, she had no interest in dating a married man. Felix proceeded to call her every week for the next six weeks until she agreed to go out with him. "At some point six or eight weeks after I originally met him, I said yes," she explained. "Now, don't ask me why I said yes. I suppose his persistence and his charm. He was not a physically very attractive man, but he was extremely charming and, of course, brilliant. But at the time I didn't know he was brilliant. I just knew that, I suppose, his persistence broke down my wish to not go out with a married man. And I went out for a drink with him." After the drink, Felix asked her to dinner. They tended to stay in the Yorkville section of Manhattan, where there were lots of bars and ethnic restaurants. Even though Felix was not particularly well known at this time, he wanted to be discreet, so they would frequent the same three local restaurants of Polish, Hungarian, and German extraction. In each restaurant, they had the same meal every time. After these dinners, Felix would ask to go back to her apartment. But Gaillet said no, until finally her resistance broke down once again and she agreed. They became intimate. "We would meet, and then he would leave right after for the country"--he and his family had a house in Mount Kisco. "But at that time, I did wonder to myself why am I doing this, knowing that he was very, very much married and knowing that it was never going to lead to anything for me. And I wasn't in love with him. He was not in love with me. It was not even a great affair. You know what I'm saying? It was just something that was happening. But in a sense, I enjoyed having an affair with him, because we always had dinner, and that was always the interesting part, the conversation."

Several months into the affair, Felix decided they should rent a pied-a-terre where they could meet regularly. He paid in advance, in cash, for a year's rental on the small apartment in a brownstone on East Sixty-second Street, between Park and Lexington avenues. They stopped having dinner and would just meet at the pied-a-terre for an hour or two, and then go their separate ways. Gaillet did not have a key to the apartment and, over time, began to notice she was not the only woman to be there with Felix. On occasion, she would see someone else's earrings or lipstick lying around.

According to Gaillet, one of the other women he was seeing at the same time--a married woman--tried to blackmail Felix, demanding that he buy her a fur coat in exchange for her not telling his wife about their affair. But Gaillet said she didn't much care about these other women. "I didn't have any kind of reason to be possessive about him or him of me," she said. "And we liked what that situation was like." One late afternoon, about a year into the affair, Gaillet and Felix had agreed to meet at the apartment. But Gaillet was uncharacteristically delayed by the fact that her apartment at Madison and Ninety-sixth had been all but destroyed by a fire. Fortunately, neither she nor her children were in the apartment at the time. In all the commotion, she remembered she had agreed to meet Felix (Gaillet pronounces his name with a slight French accent,
Fay-leex).
She scurried down to East Sixty-second Street and found Felix, who, while sympathetic, was not particularly happy that his evening had been ruined. He offered to help her financially. She accepted from him, right then and there, a check for several thousand dollars, made out to cash, to see her through this very rough patch. "Which I thought was incredibly generous," she said. But at that very moment, he also stopped calling her. The affair was over until, six months later, Felix called her "out of the blue" and asked her to meet him at the pied-a-terre. They resumed the affair "as if we had seen each other the week before."

Four weeks later, he announced to her: "I am madly in love with you. I have to live with you. I'm going to separate from my wife, and we're going to live together." Gaillet was surprised by this declaration, for she was not particularly in love with Felix since their relationship had become fairly one-dimensional. "I actually fell madly in love with him once we started living together," she said. He told her to find an apartment to rent, and he would move in with her and get a separation from his wife. Gaillet quickly found and rented a sixteen-hundred-square-foot penthouse apartment, with a wraparound terrace and a fireplace, at the Hotel Alrae, at 37 East Sixty-fourth Street (now the luxurious Plaza Athenee). There were round-the-clock doormen and room service available from the Henry IV restaurant.

At the time Felix and Helene were living at the hotel, newspaper and magazine articles about Felix made no mention of his affair. Rather, he was described as living the life of the somewhat disheveled bachelor in a rundown "residential" hotel. The articles clearly conveyed a sense that Felix did not care about money or particularly how he lived. His accommodations at the Alrae were often described as "less than sumptuous" and "small," and no mention was ever made of his infidelities. He was portrayed as living a modest and cerebral bachelor life, with time spent reading mysteries and histories and chatting with his friends in art, publishing, and political circles--an image that served his purpose in the middle of the excruciatingly difficult negotiations with the New York City unions during the fiscal crisis. His "humble" abode at the Alrae was, according to a 1976 profile of him in the
Times,

stuffed with books, magazines, camping and sports equipment belonging to him and his three sons, and bikes. The wines in the front closet are humble Cotes du Rhone. His car is a four-year-old BMW station wagon, also stuffed with camping gear. Rohatyn's suits are anything but modish. To the disgust of Lazard's senior partner, Andre Meyer, Rohatyn appeared at the Governor's side during a weekend of particularly momentous meetings on the city's fate last fall, wearing a black turtleneck sweater. His trench coat with button-in lining is the only overcoat he owns and his safari hat from Hunting World is the result of a sudden revelation, walking past that 53rd Street store in the rain, that "my head was getting both cold and bald." He travels with a small vinyl flight bag, the kind the airlines give away free or for next to nothing.

But the
Times
article was one big head fake. Yes, Felix lived at the Alrae, but not alone. He lived there with Gaillet, and it was plenty luxurious, she said, although these facts were never reported. He certainly was not living the life of a bachelor, because she was with him there from the beginning of the affair until its end. Although not as opulent as the Plaza Athenee today, she said, their penthouse apartment was actually quite elegant. The hotel was filled with an international money crowd. "It was a very, very, very subtle, private hotel in the middle of New York," Gaillet explained. They entertained often there the likes of Harold Geneen and other rich and powerful people. (Her children were away at boarding school during this time.) And of course, Felix was becoming fabulously rich at Lazard.

They also rented a studio apartment next door and broke down the wall for Helene to have a photography studio. They paid $6,000 a month for the space, a tidy sum in those days. Felix covered all their costs and encouraged her to stop working at her day job so that she could be free to travel with him wherever he went. She did as he wished. "And I therefore started my photography career, and as I evolved and became more and more of a successful photographer, he, in his own way, became more and more a public figure, because he was then working with the City of New York, with the finances," she said. "He also got Lazard Freres to move from Wall Street to Rockefeller Center, because he was sick and tired of commuting to Wall Street. He used to drive his BMW down to Wall Street every day, and he got sick and tired of that. And so when we moved into the Alrae, the first thing he did was to get Andre Meyer to move the firm to Rockefeller Center so he could walk to work."