From a friend of DB:

“Bess– [Redacted] was seated next to me at [Manhattan restaurant] last night.  I figured given the shitstorm Wall Street’s been through the last couple years he’d keep shop talk to a minimum. But, he didn’t hold back; I wasn’t making an effort to eavesdrop, but he’s not exactly the softest speaking gent in town and the tables are way too damn close. Anyway, his four main points I picked up:

1) The biggest systemic risk in the financial system is the Clearinghouse model.  Over the next 20 years, if the current system of trade clearing does not change, we will have an event that made the past three years seem minor.

2) Geithner is helpless. [Redacted] said he’s incredibly smart but he can’t help you.  Anytime anyone goes up to him with a problem, he’s incapable of giving an answer and is basically like an administrator at best.  [Redacted] said something like, “It is like talking to a third party.”

[Redacted] compared him to Paulson, said “Hank was just the opposite.”

3) While discussing Congress:  ”I don’t want to be around when the next financial crisis comes.”  These guys don’t know what they are doing and can’t decide on anything.  It will be much worse.  ”Nobody is too big to fail.”

4)  He’s as cool as the other side of the pillow. He said, “People always come up and ask me, ‘how are you doing?’”  I respond, “I was fine until you asked me.”"  ”Everyone expects me to be in pain after all that has gone on over the past couple of years, but to be honest with you, I don’t feel any of it.”

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Comments (121)

  1. Posted by PDB | October 12, 2010 at 4:25 PM

    1) Has to be someone who had access to Paulson when he was around, so Moynihan is out.
    2) Vikram doesn’t look like that loud of a guy.
    3) Lloyd would never, ever be that indescrete
    4) If it was JD Bess obviously would have spiked the shit out of this
    5) Clearly a hard-drinking out-spoken Aussie. Gorman it is.

    From a Deal Journal Interview:
    Money Quote: “I have a direct way of speaking. What I do is tend to lay out everything; I tend to tell people what I’m going to do and how I’m going to do it and what is success for us and what’s not. ….without being too parochial about it, I think Aussies are more direct. I find, having been here for 22 years, in this culture directness is well received but not practiced very much. It might not be just cultural, it might be just me. I think Americans are very verbal and Aussies are more circumspect and that can come across as being clearer. It can also come across as abrupt and cold. Some people find me to be abrupt and cold. That’s just my personal style.”

    DONE AND DONE

  2. Posted by guest | October 12, 2010 at 4:25 PM

    Hates the clearinghouse model, doesn’t mince words, sasses people who get too personal.
    Sounds like cool James.

  3. Posted by Guesticus | October 12, 2010 at 4:30 PM

    Vik or LB. Why would the other guys be feeling any pain? Moynihan probably gets on his knees every morning and thanks the Good Lord for sending us this shitstorm…ditto Gorman and Dimon.

  4. Posted by AIG Quant | October 12, 2010 at 4:32 PM

    Redacted? Never heard of him.

  5. Posted by guest | October 12, 2010 at 4:33 PM

    Jamie: he & BHO were once close.
    - guest @1

  6. Posted by InfiniteGuest | October 12, 2010 at 4:36 PM

    Which WS CEO thinks TG’s useful?

  7. Posted by Common Joe | October 12, 2010 at 4:35 PM

    1) He’s right about the clearinghouse model…..sssh
    2) Don’t expect govt to do anything but provide soundbites and collect pensions
    3) Glad he is comfortable on the 1st class deck of the Titanic

  8. Posted by CurrencyTrader | October 12, 2010 at 4:49 PM

    You know it’s so easy to get on the stage and bash Geithner, the fucking man has had a hell of an inheritance, show me empathy and examine the facts:

    http://nymag.com/news/businessfinance/bottomline/54304/

  9. Posted by Anonymous | October 12, 2010 at 5:02 PM

    Re:1 – Gorman wouldn’t have had access to Hank either, at least not in a CEO capacity. That being said, it wouldn’t stop him from thinking he did – so I say you’re right on the money.

  10. Posted by Texashedge | October 12, 2010 at 5:05 PM

    Since I’m just a hick from the oil patch, would someone care to explain the systemic risk posed by the clearinghouse model? (I assume this would be in contrast to some sort of mythical OTC model?)

    /guy who genuinely wants to know

  11. Posted by timmy sucks | October 12, 2010 at 5:06 PM

    Your point is exactly why a decisive leader is needed.

    no free pass

  12. Posted by BONYfied moron | October 12, 2010 at 5:09 PM

    Has to be the Titan of Wall Street, Bob Kelly

  13. Posted by BK sucks | October 12, 2010 at 5:11 PM

    Is it Bob Kelly? Oh wait, that stuttering prick is the only piece of shit more useless than Timmy G.

    BNY Mellon MD (which means dick, but you already know that)

  14. Posted by Anonymous | October 12, 2010 at 5:17 PM

    I was wondering that myself. Presumably the risk is that the clearinghouse itself is under-capitalized and a failure of a member institution could bring down the whole thing. Not sure though.

  15. Posted by Anonymous | October 12, 2010 at 5:22 PM

    I am the CEO of a very large derivates operation, what is a clearinghouse?

  16. Posted by BroMontana | October 12, 2010 at 5:25 PM

    Ladies love him

  17. Posted by Guest | October 12, 2010 at 5:27 PM

    Wall Street CEO who’s blind? I’m stumped.

  18. Posted by Anonymous | October 12, 2010 at 5:33 PM

    Was thinking John Stumpf from Wells Fargo, perhaps– he’s not exactly a retiring sort from what I hear. Or maybe John Thain from Merrill/CIT (although he doesn’t seem blunt enough to say something like that)?

  19. Posted by Josh | October 12, 2010 at 5:35 PM

    Why are we guessing who this was?

    The question is, Bess, why are you disguising his name? Unless your supposed source was someone well-known (questionable), one wonders why you keep the name secret.

  20. Posted by InfiniteGuest | October 12, 2010 at 5:36 PM

    The narrative is that bespoke derivatives are cheaper, more precise, less capital-intensive hedges.

    So in the clearinghouse model, if derivatives are properly priced and collateralized, corporates won’t hedge their risk because it’s too expensive. If not, the clearinghouse becomes a dumping ground for excess risk (as PemaGuest says).

  21. Posted by Bottom Bucket | October 12, 2010 at 5:42 PM

    Thomas Guerriero
    CEO Guerriero Wealth

  22. Posted by Guest | October 12, 2010 at 5:43 PM

    But I’ve always thought he looks a bit on the creepy side of things… not that that matters.

  23. Posted by irish.curse | October 12, 2010 at 6:03 PM

    phew! i thought they were talking about stocks/bonds… derivatives ain’t really my cup of chai.

    ~ Indian-outsourced front-office AIG quant

  24. Posted by Chief Dreyfus, from Bellevue | October 12, 2010 at 6:05 PM

    Better learn, Jacques. Here’s a link to the Dodd-Frank Act, all 2,300+ toilet sheets.

    http://docs.house.gov/rules/finserv/111_hr4173_finsrvcr.pdf

  25. Posted by Anonymous | October 12, 2010 at 6:07 PM

    I see my sarcasm was lost on you…where is the joke briefer when you need him?

  26. Posted by kcap | October 12, 2010 at 6:09 PM

    bill reed?

  27. Posted by Josh | October 12, 2010 at 6:21 PM

    Yes, and last time I checked, bad journalists just make up random BS stories which they attribute to “confidential” sources. Of course, for this to work, it requires unintelligent readers.

  28. Posted by STAR | October 12, 2010 at 6:28 PM

    WHIRR! BOOP! BEEP!
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  29. Posted by Anonymous | October 12, 2010 at 6:33 PM

    If Bess were making the story up it would be a hell of a lot juicier, bro.

  30. Posted by Anonymous | October 12, 2010 at 6:36 PM

    This.

  31. Posted by CallingDr Francis | October 12, 2010 at 6:56 PM

    Mack of Morgan Stanley, quite obviously

  32. Posted by Benton F Love | October 12, 2010 at 7:14 PM

    Thanks, that makes sense. Seems like it would certainly make right-way risk a lot more difficult.

  33. Posted by Balalaika0 | October 12, 2010 at 7:16 PM

    Geraldo Rivera?

  34. Posted by Doode | October 12, 2010 at 7:17 PM

    What is the name of this restraunt?

  35. Posted by Guest | October 12, 2010 at 7:32 PM

    It was probably Lewis Zabel

  36. Posted by Anonymous | October 12, 2010 at 9:07 PM

    I take offense to this

  37. Posted by Guest | October 12, 2010 at 9:25 PM

    Kenny G.

  38. Posted by Thanks For The Softball | October 12, 2010 at 9:39 PM

    Minetta Tavern.

  39. Posted by SUCKMYFATDICK | October 12, 2010 at 9:50 PM

    shut up whore. this is stupid.

  40. Posted by Vinnie the Guinea | October 12, 2010 at 11:03 PM

    RoboScumbag Thain hasn’t the IQ to make one of these points. Like Niederauer he has to be programmed by his Jedi masters.

  41. Posted by Guest | October 13, 2010 at 12:32 AM

    It’s clearly Mack.

  42. Posted by feesfeesnmorefees | October 13, 2010 at 2:39 AM

    This is Mack, through and through.

    Guy told the board of CSFB, those were the days huh, “look I’m asking for this for my people, this isnt about me, I dont need the money, I’m already rich”.

    Three months later Mack was fired, Ozzie became sole CEO and Dougie’s yellowbrick road of gold was laid.

    I went to Duke GawdDamIt!!!!!!!!!

  43. Posted by Sofa King | October 13, 2010 at 3:23 AM

    You in wind energy?

  44. Posted by UnemployedBanker | October 13, 2010 at 1:24 PM

    This sounds like Jamie Dimon holding court at his favorite corner table at San Pietro.

  45. Posted by Unemployed Banker | October 13, 2010 at 1:25 PM

    Mack likes take-out at San Pietro. I didn’t even know it was available until I saw him leaving with food (after several cocktails at the bar).

  46. Posted by Shallow Thinker | October 12, 2010 at 4:49 PM

    Exactly. I think the proper answer here is “all of them.”

  47. Posted by Shallow Thinker | October 12, 2010 at 4:49 PM

    Exactly. I think the proper answer here is “all of them.”

  48. Posted by Richard Cripples | October 12, 2010 at 5:36 PM

    Somebody with that much access and not afraid to discuss it in public can only be Jeffrey Leerink, CEO of Leerink Swann, the Kaiser Soze of Wall Street.

  49. Posted by Richard Cripples | October 12, 2010 at 5:36 PM

    Somebody with that much access and not afraid to discuss it in public can only be Jeffrey Leerink, CEO of Leerink Swann, the Kaiser Soze of Wall Street.

  50. Posted by Anonymous | October 12, 2010 at 6:03 PM

    Perhaps because the source works in the industry, is known to whichever CEO this is (or the CEO’s dinner companion), and would rather *not* be outed in Dealbreaker as the guy who reported somewhat of a PR nightmare of a conversation (“…I don’t feel any of it.”)

    Last I checked, good journalists go to pretty great lengths to protect sources…

  51. Posted by Anonymous | October 12, 2010 at 6:03 PM

    Perhaps because the source works in the industry, is known to whichever CEO this is (or the CEO’s dinner companion), and would rather *not* be outed in Dealbreaker as the guy who reported somewhat of a PR nightmare of a conversation (“…I don’t feel any of it.”)

    Last I checked, good journalists go to pretty great lengths to protect sources…

  52. Posted by Robert Burns | October 13, 2010 at 6:55 PM

    RB, that’s me, heard from JK that TS told MR that this was all BS.

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