The Prince of Risk

22

Astor left the elevators on the sixtieth floor of the Standard Financial building to find Bradley Zarek waiting. “Bobby. Great to see you. Thanks for coming so quickly.”

“I was in the neighborhood,” said Astor.

“I know it’s a tough day. We’re all in shock about what happened last night. If I could have waited on this, I would have. But…” Zarek splayed his hands to show that events had overtaken them both. The market was their master. “Come on down to my office. Let’s chat.”

Zarek was a senior vice president in the bank’s prime direct brokerage division. Prime direct was a little-known but extremely profitable branch of banking, set up to deal with very high net worth individuals, private equity firms (or “sponsors,” as they were known in the business), and hedge funds like Comstock. In effect, prime direct was a bank for other bankers and traders. When Astor needed to borrow money, he went to Zarek or one of his clones at any of the banks where Comstock did business.

Zarek showed him into his office and shut the door. Investment banks place a premium on space, and even a big shot like Zarek commanded a glassed-in cubicle barely larger than Astor’s guest bathroom. From the memorabilia crowding the shelves and credenza, it was apparent that Zarek was one of the last Mets fans in the city. Astor picked up a worn mitt, slipped it on, and gave the pocket a few good thumps with his fist.

“That was Tom Seaver’s,” said Zarek nervously as he sat down at his desk. “He pitched with it in the ’69 World Series.”

“Some year.”

“Oh, yeah,” said Zarek, brightening as if he had lived it. He was chubby, average height, with a five o’clock shadow at 2 p.m. and a scrub of curly black hair. He was maybe forty years old, which meant he had been just a twinkle in his parents’ eyes when the Mets had made their miracle run. “They came from nine down in mid-August and won thirty-nine of their last fifty games to take the division. Looks like you’ve gotten yourself into the same kind of jam.”

Astor examined the glove, then leveled his gaze at the banker. “Way I see it, we’re favorites to win the Series.”

Zarek chuckled uncomfortably. “That’s not quite how we see it.”

Astor took a step toward Zarek. “Oh? How do you see it?” He had no intention of making Zarek’s job easier. For years Comstock had been one of Zarek’s best customers. When Comstock borrowed to leverage up a position, Astor could count on getting a call from Zarek and his cronies, asking much too politely if they might get a piece of the action. As a rule, Astor only accepted investments starting at $25 million (and preferably $100 million). He went further, limiting his clients to other hedge funds, sponsors, family offices, and sovereign wealth funds. But Astor knew how the game was played, and he always set aside a few scraps for Zarek and his fellow remoras.

“Look, Bobby, we know you have a track record-”

“That track record put your kids through elementary school.”

Zarek smiled even more uncomfortably than he had a minute before. “And I’m grateful. But you’re a little over your skis on this one.”

Astor punched the sacred mitt a few more times just to see Zarek wince. “Says who?”

“No one thinks the Chinese are going to devalue. Not when they’ve been letting the yuan increase for the past five years. The RMB is up thirty-one percent since 2006.”

RMB for renminbi.

“So?”

“So…” Zarek’s face creased into a single fold of disbelief. “What makes you think it’s going to change?”

Astor slammed his balled fist into the mitt again. “Tell you what, Brad. You want, I can still let you in on the fund.”

Zarek’s eyes widened like a virgin’s in a strip club. He rose a few inches out of his chair, only to sink back. “Not this time, Bobby. But if you’d like to tell me something you know about the currency that I can share with the loan committee…”

Astor was hardly about to reveal his investment strategy to Bradley Zarek. Zarek was a drone-a highly paid, expensively educated, whip-smart, hardworking drone, but a drone nonetheless. Astor shot him the mitt with a little mustard on it. “Okay, Brad, let me have it. What gives?”

Using both hands, Zarek gingerly replaced the mitt on his shelf, repositioning it several times until it was just so. Satisfied, he turned his attention to his monitor, then spun it around so Astor could see. “We’ve lent you four hundred million.”

“All collateralized.”

“When the market moved against you, you were down the eighty million and then some.”

“It came back.”

“Today. What if it happens tomorrow?”

“It’s called leverage. You were okay with the position going in.”

“You left leverage behind when you jacked up your bet to twenty times what you put down. As it is, you’re shooting craps.”

“Actually, Brad, I’d like to borrow some more.”

Zarek blinked as if he hadn’t heard correctly. “We don’t allow customers to leverage up above twenty times.”

“I’d like another hundred million.”

“Another hundred million dollars? You’re serious?”

Astor nodded.

“Without additional collateral?”

“You heard me.”

“We were thinking more along the lines of your either increasing your collateral or cutting your position.”

“You don’t think I can cover it?”

“It doesn’t matter what I think, Bobby. It is what it is. There are rules. It’s not 2008 anymore.”

“How much more collateral are we talking about?”

“If you could just transfer a hundred million, we’d all be more comfortable.”

“A hundred million?”

Zarek nodded. “Just a hundred.”

“That’s all?”

“Cash, or just pledge some equities, if you’d like. We’ll make sure word gets out. Look at it as a vote of confidence. It will calm a lot of nerves.” Zarek leaned forward. There was no mistaking the gleam in his eye. It was the gleam a man gets when he’s about to shove a dagger into another man’s gut and give it a nice, vicious twist for good measure. “Within twenty-four hours.”

Astor shrugged complacently, as if he were on board with the suggestion. “Hey, Brad, tell you what.”

“Yeah, Bobby?”

“Fuck you.”

“Excuse me?”

Astor approached the desk. He had a gleam in his eye, too. It was the kind he got when he was fighting his corner. “What? You need a hearing aid to go along with the balls you’re missing? You guys make me sick. Offer me an umbrella when the sun’s shining and want it back when it starts to rain. Typical.” Astor rapped the desk with his knuckles. “What’s my track record?”

“Stellar, Bobby. No one is disputing that.”

“I asked you, what is my track record?”

“You’ve been up over eight percent ten years running.”

“And three of those years we were up over twenty. Right?”

“Right,” said Zarek, backpedaling furiously. “Look, Bobby, the bank wants to be in business with you.”

“Really? Because it sounds to me like you want to put me out of business.”

“Nothing could be further from the truth.”

“Then give me another hundred million.”

“Impossible,” said Zarek, shaking his head adamantly. “Not going to happen. Be reasonable.”

“All right, all right,” said Astor, hands raised in a calming gesture. “I hear you. Fair enough.” He returned to his chair, shot his cuffs, composed himself. “Tell you what. Because I respect you and I respect Standard Financial, I can do twenty-five million.”

“You want me to lose my job?” Zarek shuddered, as if physically repulsed by the offer. “I can make seventy-five work.”

Astor considered this. He nodded, his eyes narrowed as if it just might work. Then abruptly he shook his head, a man coming to his senses in the nick of time. “Twenty-five.”

“Sixty.”

“Forty.”

“Fifty.”

“By end of business today?”

“Done.”

Zarek extended a hand. Astor grabbed it and shook. “Deal.”

Astor left before Zarek could change his mind.

Outside, Astor called Marv Shank. “Transfer fifty to Standard Financial.”

“Out of petty cash?”

“Very funny.”

“I’ve got to check with finance and see if we have that kind of cash.”

“We’ve got it.”

“If we do, it won’t be by much.”

“Just do it.”

“You talk to our guy?”

“Not yet.”

“What are you waiting for?”

“Don’t want to abuse the privilege. I’ll ask if and when I think we’re in trouble.”

“Then why the blip?”

“Calm down and transfer the money.”

“You sure there isn’t anything else wrong?”

“What do you mean?”

“I knew Zarek was going to hit you up for some dough. He mentioned a hundred mil.”

“Yeah, and I got him down to fifty.”

“That’s why I’m worried. Any other day, you wouldn’t have paid him a cent over twenty-five.”

Astor hung up. Suddenly his victory felt hollow. Shank was right. He’d given in much too early.

He looked up the street for Sully. There was no sign of the Audi. He checked his watch and calculated the time overseas. He slipped out his phone and brought up his old friend’s number. He thought of what he might ask and imagined his friend’s wonderful erudite voice telling him to stay calm. “Nothing has changed, Robert, has it? There is only one possible outcome.”

Astor spotted Sully barreling around the corner. Half the afternoon was already shot. He hoped the traffic to Greenwich wouldn’t be too bad. Astor forgot all about making the call to his friend. He wanted to talk to Penelope Evans.