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Authors: Adam Haslett
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bleating phone, the grid of the present regaining administration of his mind, leveling in an instant the fading kingdom of dreams.
He was in a suite on the Atlantic coast of Florida and it was one fifteen in the morning.
“Mr. Graves? Is this Mr. Henry Graves?”
“Yes. Who is this?”
“Sir, my name is Vincent Cannistro. I’m vice president of market operations at Taconic Bank.”
“Hold on a moment.”
He reached up to switch on the light.
“This better be serious,” he said. “In which case, why am I talking to you?”
“That’s a perfectly fair question, sir. Fred Premley, our CEO, is currently in Idaho and we have been trying to reach him by cell phone for a number of hours now. I have a car headed to his location at this time and we expect to be in contact with him shortly.”
“And your chairman?”
“Our chairman, sir, he’s in that same location.”
Henry sat upright and reached for his glasses, bringing the room into focus. Briefing books for the conference were piled on the desk opposite.
“So you’re in a bind and your management’s gone fishing. Have I got it right so far?”
“Sir, I would have to say that is more or less correct, yes.”
“All right, then, Mr. Cannistro. What’s your situation?”
There was a pause on the line. Even in his groggy state, Henry could sense the fellow’s unease. He’d heard men’s voices like this before, taut as a drum, overly formal, restraining with effort the profanitythey’d been hurling at their subordinates for hours or even days. This man was making a call well above his pay grade. If things didn’t turn out right, he could lose his job.
“We’ve got a liquidity problem,” he said.
“Well, you don’t call at this hour if you’re unhappy with the examiners. What’s your position?”
“We’re on the short end of an interest-rate swap. We owe a hundred and seventy million. Payment was due nine hours ago.”
“A hundred and seventy? Whose rates were you betting?”
“Venezuelan to rise.”
“Jesus. That was stupid. I assume you hedged it. You covered it with something, right?”
“Sir, that’s the problem. The model had us covering the position with oil futures. They were supposed to drop if Chávez trimmed his rates. They didn’t drop.”
Henry rested his head back against the wall. For a moment he’d thought maybe his caller had jumped the gun and done nothing more than further damage his bank’s reputation with the Federal Reserve, in which case he could go back to sleep. Pulling the covers aside, he rose, took a pad of paper and pen from the coffee table, and settled himself into an armchair.
“Mr. Graves, are you there?”
“I’m here. That’s the most inane hedge I’ve ever heard of. And you’re telling me you can’t raise the money for the payment?”
“As of this hour, no.”
“I see,” Henry said, nodding to himself. Under normal circumstances even a small retail operation like Taconic would have credit enough with the market to cover such incompetent trading. But they had been carrying a lot of bad tech loans for a year or more now andtheir retail base was being squeezed on one end by Chase and on the other by the national discounters. In the last few weeks they’d begun borrowing heavily to cover their own trading positions.
As president of the Federal Reserve Bank of New York, Henry Graves had oversight responsibility for all the banks in his district, including Taconic. He also regulated the large bank holding companies that had come to dominate the industry. But the New York Fed, unlike the other regional Federal Reserve banks, was more than simply a supervisory institution. It was the operational hub of the whole Fed System. It acted as the Treasury’s agent in the market, buying and selling T-bills. Nearly every country in the world held some portion of their sovereign assets in accounts at the New York Fed. The wire service the bank ran cleared a trillion dollars in transactions
He was in a suite on the Atlantic coast of Florida and it was one fifteen in the morning.
“Mr. Graves? Is this Mr. Henry Graves?”
“Yes. Who is this?”
“Sir, my name is Vincent Cannistro. I’m vice president of market operations at Taconic Bank.”
“Hold on a moment.”
He reached up to switch on the light.
“This better be serious,” he said. “In which case, why am I talking to you?”
“That’s a perfectly fair question, sir. Fred Premley, our CEO, is currently in Idaho and we have been trying to reach him by cell phone for a number of hours now. I have a car headed to his location at this time and we expect to be in contact with him shortly.”
“And your chairman?”
“Our chairman, sir, he’s in that same location.”
Henry sat upright and reached for his glasses, bringing the room into focus. Briefing books for the conference were piled on the desk opposite.
“So you’re in a bind and your management’s gone fishing. Have I got it right so far?”
“Sir, I would have to say that is more or less correct, yes.”
“All right, then, Mr. Cannistro. What’s your situation?”
There was a pause on the line. Even in his groggy state, Henry could sense the fellow’s unease. He’d heard men’s voices like this before, taut as a drum, overly formal, restraining with effort the profanitythey’d been hurling at their subordinates for hours or even days. This man was making a call well above his pay grade. If things didn’t turn out right, he could lose his job.
“We’ve got a liquidity problem,” he said.
“Well, you don’t call at this hour if you’re unhappy with the examiners. What’s your position?”
“We’re on the short end of an interest-rate swap. We owe a hundred and seventy million. Payment was due nine hours ago.”
“A hundred and seventy? Whose rates were you betting?”
“Venezuelan to rise.”
“Jesus. That was stupid. I assume you hedged it. You covered it with something, right?”
“Sir, that’s the problem. The model had us covering the position with oil futures. They were supposed to drop if Chávez trimmed his rates. They didn’t drop.”
Henry rested his head back against the wall. For a moment he’d thought maybe his caller had jumped the gun and done nothing more than further damage his bank’s reputation with the Federal Reserve, in which case he could go back to sleep. Pulling the covers aside, he rose, took a pad of paper and pen from the coffee table, and settled himself into an armchair.
“Mr. Graves, are you there?”
“I’m here. That’s the most inane hedge I’ve ever heard of. And you’re telling me you can’t raise the money for the payment?”
“As of this hour, no.”
“I see,” Henry said, nodding to himself. Under normal circumstances even a small retail operation like Taconic would have credit enough with the market to cover such incompetent trading. But they had been carrying a lot of bad tech loans for a year or more now andtheir retail base was being squeezed on one end by Chase and on the other by the national discounters. In the last few weeks they’d begun borrowing heavily to cover their own trading positions.
As president of the Federal Reserve Bank of New York, Henry Graves had oversight responsibility for all the banks in his district, including Taconic. He also regulated the large bank holding companies that had come to dominate the industry. But the New York Fed, unlike the other regional Federal Reserve banks, was more than simply a supervisory institution. It was the operational hub of the whole Fed System. It acted as the Treasury’s agent in the market, buying and selling T-bills. Nearly every country in the world held some portion of their sovereign assets in accounts at the New York Fed. The wire service the bank ran cleared a trillion dollars in transactions
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