“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.