NOBODY ASKED ME, BUT – AN UPDATE – WHO WAS JIMMY CANNON? WHAT WERE THOSE NEWSPAPERS? WHAT DID HE SAY ABOUT ACCOUNTABILITY? AND SOME THOUGHTS ON NEW YORK’S GREATEST DAYS OF DAILY NEWSPAPER PUBLISHING…

My last column in this space (July 16) began with sports writer and social commentator Jimmy Cannon’s famous [column] phrase, “Nobody Asked Me, But…”  So who was this guy, Jimmy Cannon, my younger colleagues asked?  And what were those newspapers you say he was writing for?  Oh, my – time does fleetly-fly-by!

 

Writer Jimmy Cannon was a quintessential New Yorker (Noo Yawkerif you grew up around here).  He covered sports (mostly) for a number of New York City-based newspapers in the days when there were eight (8) or more newspapers publishing from the wee hours of the morning and on into the evening.  He devoted his life to writing and social commentary (as he saw it), and loved other newspapers guys, authors, big-name sports stars, entertainers, Broadway’s up-all-night characters, the Little People, horseplayers, and more. As journalist Jack Newfield wrote on his passing…”…he was the most influential journalists of his generation…”

 

He seemed to have his pick of newspaper platforms for his 600-word columns. And how important it was to get your hands on the papers, especially if an important story was known to be breaking overnight. For the sake of continuing my news-focused reminiscing, I clearly remember earlier in my career running to the news stands to get the next day’s NY Daily News as the “lobster shift” of editors and others filed into the all-night bar and hot counter eatery (the steam table pot roast was great) at one in the morning.  (Louie’s, I seem to recall it was named, there on 41stStreet and Second Avenue; the News was steps away on 42ndStreet – you remember that building from that Superman movie – he climbed up the front.)  The Daily News building housed United Press International – a great wire, in the good old days – and in the 1950s a little PR agency start-up, Harold Burson & Associates. Also, WPIX-TV, Channel 11 – NY, where a newspaper man – John Tillman — sat and coolly read the headlines and brief copy on air, jump-starting the TV anchor business.)  (WPIX – “pixs” – get it?The Daily News was NY’s picture newspaper.  Owned by the Tribune Company.)

 

And on my way home on the train I would read The New York Post, oh-so-liberal as it was, for its great business coverage and editorials – it was hitting the newsstands at 4 pm or so.  When there was a newspaper strike (and more than anything, that regularly-occurring event was what helped to kill NY’s great papers), everyone read the night’s Post.  (They hid it if they read it on the commuter train to Connecticut on other nights.)

 

The New York News had wonderful headlines, bold and slashing:  When President Gerald Ford decided not go give financial aid of one kind or another to the City, the headline read:  “Ford to City:  Drop Dead!”  (I’m sure that cost him many critical votes in his re-election campaign.)  When Mayor John Lindsay decided that the February 1969 blizzard was so severe that Manhattan streets should be cleared first, and then “the outer boroughs”), which were the other four counties making up New York City, he seriously stumbled, said the News – the headline read:  “Queens [Boro] Calls the Mayor a Schmoball!”  Hey, how about this, for vertically-challenged actor Mickey Rooney’s marriage #5 (he was a serial marrying kind):  “Rooney, A Pint, Bares Marriage to a Fifth!” Or hitting a competitor below the belt as a man sues for divorce:  “Says Wife Made Time with a Newsweek Man!”  (You can’t this stuff up!)

 

When I was a young writer we had a groaning table of lively dailies: the New York Herald-Tribune (owned by the wealthy Whitneys); The World-Telegram & Sun combining three earlier papers including the great New York Sun); the Journal-American(William Randolph Hearst’s big city flagship –it had great columnists and business coverage); the Daily News (written for “Sweeney,” the archetype labor union member or a worker with a middling schooling, and it had almost no business coverage); theDaily Mirror (also Hearst, a lousy knockoff tabloid of the Daily News); the Gray Lady, our familiar The New York Times, of course, and a smaller paper that a growing number of guys were reading in Corporate America — The Wall Street Journal.  What a treasure house of morning and evening printed pages!  (This stuff was in my blood: My cousin was city editor of The New York Post and wrote a book about news-gathering – “America Goes to Press.”)

 

While I was still getting going as a young writer some of the familiar newspapers were also beginning to collapse (not a very promising career path, to choose, I guess). The 1960s “Widget” published for eight months and then collapsed after the owners had put together the very different (and often war-like in editorial competition) World Telegram & Sun, Herald-Tribune and Journal-American).  There was good news, too:  The wonderful Sunday magazine-like insert of the The Herald-Tribune, then the Flagship Newspaper of Wasp-NY and the Elites, “New York,” quickly revived under editor Clay Felker to become the famous New York magazine.  (He passed a few weeks ago.  A book will be out later this year about the magazine and its cast of luminescent writers.) The Herald-Tribune (daily) always had great writers.  As did the later New York magazine – Jimmy Breslin, Gaily Sheehy, Peter Maas, Tom Wolfe, Gay Talese, Richard Reeves, and many more.

 

And when NYC newspapers were still king of the streets, one of the key voices was Jimmy Cannon’s.  He dropped out of school in his teens and began as a copy boy at the largest circulation daily, The New York Daily News.  By his mid-20s he was a national journalistic star, and rubbed elbows with the folks today’s People magazine would put on the cover:  Heavyweight boxing champ Joe Louis; Broadway; Middleweight Champ Sugar Ray Robinson; cranky coach and wizard-like manager, Casey Stengel; Broadway Joe Namath, dazzling quarterback of the NY Jets; thoroughbred racing champ jockey Eddie Arcaro; the immortal Yankee Slugger Joe DiMaggio, and others who had large followings of their own.

 

Jimmy Cannon would write his columns on ordinary folk as well, something that another former sports writer (Jimmy Breslin) would do to near-perfection over the years. And when things were slow Cannon would write, NOBODY ASKED ME, BUT…

 

Guys who address me as “friend” have a hard time making me one.

 

Nothing improves an actress’s diction like marrying money.

 

On post-war military Leadership:  When I read a statement by[General of the Army] Douglas MacArthur I feel it was written in red ink with a quill pen (Gen. MacArthur was an imperious sort.)

 

On accountability of restaurant folk:  Only two things make a nightclub waiter civil:  A big tip…or bad business.

 

On accountability of airline flight crews (and this was in the great days of airline travel):  Airline hostesses seem to be thinking about something else when they talk to me.

 

On “business guys” of the 1950s:  Businessmen who tip big in nightclubs are odds-on to be stingy with their employees.

 

On standing your ground:  I never trust anyone who surrenders an opinion after a mild argument – even when they agree with me!  (Jimmy, you should be around today’s political candidates! Flip…flop…flip…hop…to the next subject.  It’s called staying on message.)

 

He had a keen eye for the Little People:  Homely waitresses give the best service.

 

Get his drift?  For a great beach read, if you can find the collection of Jimmy Cannon columns on a variety of topics, do so – I think you’ll become a fan.

 

Finally, as I write this on a very hot Saturday afternoon, I think – hey, doesn’t all this reminiscing and the business about the great Noo Yawk dailies that died remind us of the current debate about the present and future status of newspapers?  Yes – and no.  The great dailies that passed on were in some ways replaced by other mediums of communication (hence, today’s “media”) – Investor’s Business Daily is a great read; The New York Times adapted and is both a daily paper and a series of magazine inserts focused on lifestyle.  The News and Post are still very lively! We do see the same kinds of unkind cuts – en masse journalist layoffs, folks – as today’s Press Lord of the Kingdom (Rupert Murdoch, successor to the Patterson clan, Hearst et al) slashes away at his new trophy,The Wall Street Journal. But it still is a great read, yes?  Let’s hope it continues to be – we need the Journal at its best!

 

Hey, New York is still a great newspaper town – I think the dailies will be with us for a long time to come.  And we will see many more “media” coming on line, in cyberspace and in print. Think of this place for its uniqueness, which seems to signal success for tomorrow’s journalists and commentators:  One city that is the capitals of finance, print journalism, book publishing, broadcasting, global trade, theater, news-gathering (hail the Bloomberg), and more.  Lots to cover…and grist for tomorrow’sJimmy Cannons.  Do Stay Tuned!

 

# # #

 

Reading for more on this stuff:

 

“Nobody Asked Me, But…The World of Jimmy Cannon; published 1978 by Holt, Rinehart and Winston; edited by Jack and Tom Cannon.  Collection of his best work.

 

“The Kingdom and the Power” – The New York Times; by Gay Talese.

 

“The Trust – The New York Times (family)” – Susan E. Tifft and Alex S. Jones.

 

“The Paper – The Life and Death of the New York Herald Tribune” – Richard Kluger great read if you never read “The Trib”).

 

“The Paper’s Papers – A Journey Through The New York Times Archives” – Richard F. Shepard.

 

“The Powers That Be – Time, CBS, The Washington Post, The New York Times” – by David Halberstam.

 

“The New Journalism” – by Tom Wolfe (great anthology of stories by George Plimpton, Joan Didion, Hunter S. Thompson, Garry Wills, Normal Mailer, Michael Herr, and many other former journalists of their day).

 

“The News – First 50 Years of New York’s Picture Newspaper” – by Leo E. McGivena…and “others” – including top News writers of the past.

 

“A Day in the Life of the New York Times” – Ruth Adler

NOBODY ASKED ME – BUT! COMMENTARY ON SCARY HEADLINES THAT POINT TO LACK OF BIG LEAGUE LEADERSHIP IN MANY OF AMERICA’S POWER CENTERS…

NOBODY ASKED ME, BUT!  Does anyone recall the great sports writer and social commentator, Jimmy Cannon?  What a writer – when I was a teenager I devoured his newspaper columns here in New York, and they were in part an inspiration for me to pursue a writing career. Boy could he write!

 

 

Jimmy was born in 1910 and grew up in the Wonderful Era of Nonsense (when sports were first king in America, the Roaring 1920s).  He wrote for the New York Daily News (#1 paper in the USA back then), the very liberal New York PostNY Journal-American(Hearst), and the national King Features syndication service.  A lot of writers including Ernest Hemingway loved his work, too.  One of the memorable lines he wrote when I was a teen:  “…heavyweight champ Joe Louis was a credit to his race – the human race!”  Anyway, with apologies to Mr. Cannon (who passed in 1973), here goes –nobody asked me about these things, but —

 

 

Reading The New York Times today, the first paragraph in the lead right column above the fold reads: ”…A sense of economic gloom gripped Washington on Tuesday as President Bush urged Americans not to lose faith, the Federal Reserve Chairman offered a mostly bleak assessment of the difficulties ahead for the economy, and the Administration’s latest effort to help the housing sector faced tough questioning in Congress.”  Wow – are these the 1930s all over again?

 

 

Fannie Mae and Freddie Mac have about half the mortgages in this nation in their investment portfolios in some fashion or another – trillions’ of dollars worth.  (Freddie buys mortgages from banks and Fannie deals with consumers and their mortgage needs.) These are government–sponsored enterprises – GSEs – and they are owned by shareholders.  Very complicated enterprises, but they were established to help millions of us achieve our American Dream – owning our own home.

 

 

So these retrograde members of congress who “are tough questioners” are apparently concerned that the US Treasury plan to save our economy just might help Fannie and Freddie by buying their stock and lending them money. Screw the homeowner, present and future – don’t help those greedy GSEs!  (Even though past congresses created them. That’s Washington logic or lack thereof.)

 

 

I KEEP THINKING…where are the leaders…where is our national leadership…who is in charge…help!  Jimmy Cannon had views on this – I’ll share them here.

 

 

We have energy prices going through the roof, depositor runs on banks, rising concerns about many other banks staying afloat, several million home mortgages in hot water and either in default or skirting close to failure, consumers cutting out driving and even commuting, airlines facing bankruptcy, US auto production plants shutting down (some probably forever), escalating violence now in Afghanistan against our troops, and American jobs going out the door or perhaps out of the country (outsourced to distant lands).  But the guys and gals on the right – they seem to be more worried about preserving temporary tax cuts for their wealthy friends and supporters.  Hey, you gotta keep your priorities straight, right?

 

 

What else is happening that Nobody Asked Me About?  Let’s see…in The New York Times today…

 

 

Homes are at risk of going under, so homeowners are thinking about taking in boarders.  We did that a lot in this country in the Great Depression.  Some ideas never go out of style, huh?

 

General Motors, once the Crown King of American Automobile Manufacturing (with almost 50% market share) is thinking about how to stay afloat – the company cut dividends, salaries, healthcare and is closing plants.  Remember what won World War Two for the United Nations?  The Arsenal of Democracy!  Today we probably couldn’t build a good PT boat at home. (The US Air Force has decided to outsource our next most important aircraft contract, bypassing two American firms.)

 

 

Who is in charge here?  Where are our leaders?  Where is the leadership?  Who puts the People first? I can picture Jimmy Cannon asking in his unique ways…

 

 

We learn more in the media today about American government treatment of prisoners at Guantanamo Bay –what is revealed is un-American, in terms of upholding traditional American values as details of a secret report to the CIA are leaked to the media about secret interrogation methods.  We are a Nation of Laws, we all learned in school.  Nobody Asked Me But – this could spell t-r-o-u-b-l-e in the future for Americans captured in foreign lands.  What is a trickle now of bad news reports about US treatment of captives could become a flood in the weeks ahead. Down again goes US prestige and support abroad. And think about the brutalization of the Americans involved in such activities – is that what we want our young people to learn and internalize?

 

 

Add this to the horrendous cost of the armed conflicts we’ve launched; as our friend Judge Sol Wachtler recently pointed out, of the 750,000 men and women to serve in combat, we should expect 250,000 will suffer mental illness of some kind.  Are we doing all we can for them?  (The judge is now a powerful advocate for the mentally ill – and our veterans and service members need his advocacy.)

 

 

At the White House yesterday, President George W. Bush held a press briefing.  The economy was front and center – “I am not an economist,” the CEO told the journalists.  (He added he is an “optimist,” which my fellow hamlet dweller, Fox’s Bill O’Reilly quickly pointed out is easy to say if you are a rich guy!)  I do believe we are growing, sez the prez.  Oh, good!  I’m tired, too, Mr. President of things like you said:  “…at this press conference here, people yelling recession this, recession that, as if you are economists…”  Well that clears things up, doesn’t it?

 

 

As a commentator I frequently quote the man who saved American Capitalism and our very Freedoms – and if you don’t agree with my characterization, send me an email explaining why not – President Franklin Roosevelt.  By power of his confidence and oratory skills, and skill and ability – and he was a rich guy, a patrician, a spoiled Hudson River silk-hatter, a White Shoe lawyer – to buoy up his “fellow Americans” he helped this nation to overcome mighty challenges and to rise to the top of the Superpowers.   Boy do we need leadership like that now!  (Especially with bank runs reminiscent of the post-crash days of 1929.)

 

 

FDR said:  “…In the last war (1917-1918), I had seen some great factories, but until I saw some of the present-day plants, I had not thoroughly visualized our American war effort. I saw only a small portion, but that was a good cross-section, deeply impressive… the US has been at war for only ten months [this was his Fireside Chat, October 12, 1942] and I could not help but ask where would we be today if the Government of the US had not begun to build many of its factories for this huge increase more than two years ago, more than a year before war was forced on us at Pearl Harbor…?”  US factory output combined with the bravery of millions of American service members defeated powerful enemies around the globe – in December 1940 President Roosevelt delivered his powerful “Great Arsenal of Democracy” address – listen to it here (and compare this to present-day presidential rhetoric: http://www.americanrhetoric.com/speeches/fdrarsenalofdemocracy.html(Great radio drama!)

 

 

Oh, one solution the current Washington Weenies have for propping things up in the federal budget:  Slashing the meager fees paid to local doctors for Medicare – for the necessary treatment of seniors.  Stirred into action – hey, the whole House is up for grabs in November and one-third of the Senate seats – the folks on Capitol Hill moved quickly to restore the cuts.  Gotta count on those old geezer votes in November!

 

 

Missing:  a realistic plan for the long-term solvency and viability of Medicare and the state Medicaid programs, and also for Social Security. Hey, that’s the next office-holders’ issues, right?  I got my earmarks to worry about!

 

 

In St. Louis, America’s Arched Gateway City to the West, the vaunted family-owned business – Anheuser-Busch, King of Beermakers to the Nation, will become part of the world’s largest beer brewer, InBev of Belgium.  Sic transit Gloria – that’s the way it is, folks, in the Wonderful World of Globalization.  Bring in the A-B Clydesdales – oh, sorry, they are in retirement in California. What about the 6,000 jobs in St. Louis?  InBev says not to worry (and that’s when I usually start to worry big time).

 

 

Chickens – do they come home to roost, as everyone says?  Nobody Asked Me But – does anyone in positions of power stop to consider that every American manufacturing job that is lost or outsourced or downsized or whatever has a ripple effect?  Economists say it is 4-1 or 5-1 – lose one manufacturing job and four others go with it.   In the Automobile, beer, airline, and all those other industries – why do the workers feel the first pain?  “With warning,” the Times’headline today reads, “GM Takes Wide Cost Cuts.”  Big SUVS and trucks are disappearing off the production lines or sitting unsold in dealer lots – did anyone in Detroit see this coming?  Was there anything that could have been done?  Stay Tuned to the news stories to come…

 

 

Some good news:  VW (isn’t that a German brand?) is going to build a car factory in Tennessee and will create 2,000 jobs. That’ll be a one billion dollar investment and maybe 150,000 cars will flow to US dealer lots after 2011-2012 start-up.  (That’s in addition to Toyota’s new plant in Mississippi, and Kia Motors new plant in Georgia.) No UAW workers wanted, today’s newspaper story points out.  More union rank shrinkage.

 

 

Oh, and some more good news, or so it seems:  the Securities & Exchange Commission is moving on the naked short-selling tactics of predatory traders – the folks who may have been driving down the share prices of the GSEs and banks…amidst the negative headlines (such as the Times headline today:  “Seeing Bad Loans, Investors Flee from Bank Shares.”)  A little late, say some institutional investors, but perhaps better than never.

 

 

Remember September 28, 2006?  According to a little note above my desk, that was the day the Dow Jones Industrial Index reached 11,722 – after sliding down to real bear territory around 8,000 after the Dot-Bomb market collapse and the implosion of Enron, WorldCom et al.  We are now below 11,000 – having reached 14,000 and more just months ago.  I must remember to ask analyst Ralph Acampora (author of “Fourth Mega-Market”) when we are going to hit his target for the Dow of 16,000 — and more.

 

 

I have to stop reading all this – I’m offering answers or asking too many questions that nobody has asked me about.

 

 

“NOBODY ASKED ME, BUT” – thanks, Jimmy Cannon of New York City legend, for your years of inspiration and absolute devotion to the written word.  I wish you were around to turn a phrase today on what you would be seeing in the leadership crisis our nation is experiencing.  As you once wrote, “…the troubles with the Big Leagues is…that there aren’t enough Big Leaguers!”  How true.  But nobody asked me…but…I think you’re still right on.

COMMENTARY ON BANK FAILURE: THERE WENT INDYMAC – FDIC STEPS IN – WHERE ARE WE GOING WITH FANNIE AND FREDDIE – AND WHO KNOWS WHO ELSE WILL BE IN THE RESCUE LINE?

Summer 1929 – the warning signs were there and the smart money (think of investor Joseph Kennedy, father of the brothers John, Bobby and Teddy and the legendary Bernard Baruch, advisor to presidents) were moving to cash and off to the investment sidelines.  Then came October 1929 – the Great Stock Market Crash and what followed became known forever as the Great Depression.  Bank problems and a growing number of bank failures had a lot to do with both – – the crash and the rapidly declining economy.

 

As we’ve written before in this space, banks are the lifeblood of the American economy – without healthy banks we can’t have a healthy economy.

 

There were many (many!) reasons for the collapse of the stock market after a heady build up in the wildly speculative, “second Gilded Age” of the 1920s; and many more reasons why this nation and then most of the world slipped into a financial black hole and economic chaos that would last a decade or more.  Unfortunate consequences as the world’s economies faltered included the rapid rise of fascism in Italy and Germany and other countries, disrupted global trade and a tragic world war a decade later.  Here in the USA little banks in the rural areas frequently failed as their borrowers (farmers, growers, ranchers) couldn’t repay their loans, and big city banks called the rural bank loans.  (Two disastrous years in the heartland devastated agricultural interests.)

 

By the November 1932 national elections things were really bad; one in four households was unemployed.  Manufacturers’ output were piling up, unsold. Home foreclosures rose dramatically.  Many mortgages were unlike today’s, with our familiar fixed repayment rates (set in years) and were “callable” – no payment, give us your keys.  Deposits were uninsured – banks failed and depositors’ savings disappeared.

 

As things got bleaker, American voters turned to a patrician New Yorker, Franklin D. Roosevelt, who had managed New York (as governor) through the perilous years after the Wall Street meltdown. He took his oath in March 1933 and on March 12th, a Sunday night, he took the “the Radio” (then as new to Americans as the Internet and WWW is today), with the first of his “Fireside Chats” – just the President of the United States and his 40 million or so neighbors.

 

The important subject at hand:  The banking crisis!  The Congress called a special session to deal with banks collapsing and passed the Emergency Banking Act, and now the chief executive was chatting away telling “my fellow Americans” what was going on.  The banks were all now closed – on “holiday” (brilliant messaging, Mr. President), and for the next half hour plus President Roosevelt outlined his plan.  Why the urgency?

 

As FDR explained, “…because of undermined confidence on the part of the public, there was a general rush by a large portion of our population to turn bank deposits into [safe] gold…a rush so great that [even the] soundest banks could not get enough currency to meet the demand…by the afternoon of March 3 scarcely a bank in the country was open to do business…proclamations temporarily closed them in whole or in part had been issued by the Governors in almost all the states…”

 

Three things were now happening:  (1) President Roosevelt issued his proclamation for a national bank “holiday”; (2) the Democrat-dominated congress “promptly and patriotically” confirmed the proclamation and adopted various authorities to develop a comprehensive program of “rehabilitation” of banking facilities. And (3) a series of regulations permitting the banks to continue their functions to take care of the distribution of food and household necessities and payment of payrolls (quoting). Some banks never opened after the holiday; the stronger banks opened quickly.   New currency was distributed. All banks were thoroughly examined, beginning in the Federal Reserve [12] regional cities. Banks got assistance from the Reconstruction Finance Corporation.  Sweeping regulations were adopted to implement the major banking and financial / capital markets “corrective” legislation.  Over the decade of the 1930s American banking was dramatically changed and different.

 

All that was 75 years ago – and as the great philosopher Yogi Berra noted, it’s déjà vu all over again!  Or it seems like it.  Customers have been lining up to get their money out of the [now]failed IndyMac (nation’s largest thrift).  Bankers (no names here, let’s not spread the anxiety) are talking about the liquidity and safety of their institutions.  Some bank stocks are trading so low they are well into short-seller territory and there is cable chatter about stockholders getting shafted but bond holders are probably OK.

 

There was that little sleeper sentence in President Roosevelt’s speech those many years ago:  “The new law allows the Government to assist in making the reorganizations quickly and effectively and allows the Government to subscribe to at least a part of new capital which may be required…”  You bet!

 

Over this weekend we were reading the details of the need for a federal government rescue of the two important “GSEs” – government-sponsored enterprises – Freddie Mac and Fannie Mae.  These are government-sponsored, publicly-traded corporations with complex and unique missions that are believed by the smart money of Wall Street to be fully insured, assured and guaranteed by the feds…in the event they failed financially.  The cost of supporting these vital semi-public, semi-private organizations will be in the many billions, of course.  No institutions this large have ever had to be rescued…unless you count the entire banking industry of the 1930s.

 

During his Sunday night chat with his 40 million or so neighbors (40MM households were said to be tuned in to The Radio) in 1933, President Roosevelt said:  “We had a bad banking situation. Some of our bankers had shown themselves either incompetent or dishonest in their handling of the people’s funds. They had used the money entrusted to them in speculations and unwise loans. This was of course not true in the vast majority of our banks but it was true in enough of them to shock the people for a time into a sense of insecurity and to put them into a frame of mind where they did not differentiate – but seemed to assume that the acts of a comparative few had tainted them all. It was the Government’s job to straighten out this situation and do it as quickly as possible…”

 

Yup, it’s as Larry “Yogi” Berra would say all over again, sounds like déjà vu, no?

 

Before we all panic too much (a little panic is OK and really healthy), let’s keep in mind that there is now FDIC insurance for depositors and IRA accounts; SIPC insurance for brokerage accounts; all arms of the Federal Reserve are on the alert (critics charge the Fed waited far too long to respond after the Great Crash); the capital markets (debt and equity) are very globalized and risk is fairly well spread out; there are “discount windows” and interbank loans and all sorts of structured smoothing mechanisms for bankers; the US Treasury Department under Henry Paulson – a brilliant former Goldman Sachs partner —  is fully engaged in the current crisis; and there are all kinds of safety nets not in place 75 years ago.

 

And there are experienced hands at the wheel:  Our current Fed chairman, Ben Bernanke, edited a book – Essays on The Great Depression – and in his introduction he said: “…I guess I am a Great Depression buff, the way some people are Civil War buffs…I don’t know why there aren’t more Depression buffs.  The Great Depression was an incredibly dramatic episode – an era of stock market crashes, bread lines, bank runs, and wild currency speculation, with the storm clouds gathering ominously in the background all the while…”

 

He goes on:  “Fascinating  and often tragic figures abound, from hapless policymaker trying to make sense of events for which their experience had not prepared them to ordinary people coping heroically with the effects of the economic catastrophe.  For my money, few periods are so replete with human interest…”

 

Wow – calling Professor Berra – Yogi – Yogi – you out there, pal? You hearing this?

 

Folks, do stay tuned – this is also a dramatic episode were are living through and fascinating and tragic figures certainly do abound! (Most of them making far, far more money than their counterparts in the drama of 75 years back.)  As for me, now  I’m going home for a glass of North Fork red and to turn off the news for the day!  Gotta read President Roosevelt’s speeches as the 1930s unfolded.  Right, Yogi?

 

# # #

 

Quotes from “essays on the The Great Depression,” Ben S. Bernanke; Princeton University Press; © 2000; ISBN 0-691-01698-4 – see www.pub.princeton.edu

COMMENTARY ON DICK GRASSO’S PAY PACKAGE – AND EVERYONE MOVING ON … THE NEW YORK STOCK EXCHANGE — THE HOUSE THAT DICK BUILT — ALREADY HAS MOVED ON!

The stuff of Legends:  The High Drama in the Canyons of Lower Manhattan seems to be coming to an end – the New York State Appellate Court ruled 3-to-1 this week that Richard Grasso, former high-wattage Chairman and CEO of the New York Stock Exchange from 1995 to 2003, can now keep his $190 million in compensation. And he can begin to get on with the rest of his life, after a fabled only-in-America life story, with a narrative reminiscent of Horatio Alger tales (but the Alger-kids didn’t grow up to be fabulously wealthy, as Dick did).

 

His former employer, the New York Stock Exchange, has already moved way beyond Dick’s years – since he left, the Exchange became a private company (publicly-traded), an electronic platform with global reach, with more electronic than floor-based trading, and many of Dick’s old colleagues have moved on.  It’s a very different place now.

 

Dick Grasso was long held in high regard by rank and file stock exchange employees; he was the first CEO to rise from the lowest ranks (he started as a clerk) and succeeded to the highest levels of Wall Street’s arguably most important institution.  When asked his background, Dick was known to quip…my family was in steel, oil and rubber – they owned a gas station!  No one knew the Exchange like Dick Grasso; he knew every tic of the market and the reasons behind same. He literally grew up there, the only place he ever really worked, moving steadily through the chairs and into the top operating slot under Chairman Bill Donaldson, and then on to chairman and CEO.

 

Disclosure: I worked with Dick years back and consider him a good friend and former close colleague, and we saw each other regularly over the years since I left the NYSE. (The “Big Board” in those days, as compared to the “littler boards” – American Stock Exchange, NASDAQ and all the other exchanges around the country.)  To illustrate my point about Dick’s knowledge, one day a few years back I was in his office with a client in tow when Dick kept looking up at the giant ticker on the opposite wall.  He excused himself and went to a phone – came back and said, “…there is something wrong with Company X…they shouldn’t be trading at that volume at this hour of the morning…and with those price fluctuations…”  He was right; a call to the company revealed the reasons why – so I would ask you:  Could you track this kind of action for up to 3,000 different companies trading on the floor?  Naahhh…that’s why Dick Grasso was, well, Dick Grasso!  A New York original.

 

Most folks don’t really understand the NYSE, which has been a very complex organization over the decades (and still is, now that it also is a publicly-traded corporation and merged with Archipelago).  The Exchange is an auction marketplace; people come to buy and sell and a thousand different forces exert themselves to shape the price of the transaction.

 

The NYSE was founded almost as soon as the new federal government of these United States of America.  Merchants in those days gathered on the streets and in nearby coffee houses to do business.  They especially gathered under a buttonwood tree near the corner of Broad and Wall streets in 1792 to trade the bonds that represented the indebtedness of the U.S.A. (Broad Street was laid out by the Dutch founders as a canal with thoroughfares on each side; Wall Street was marked by the wall built by settlers to keep Native Americans, wolves and the nearby English out of the little outpost of New Amsterdam.)

 

In 1790 the new federal government began issuing bonds ($80 million worth) to pay the debts left over from the American Revolution – these were the first publicly-traded securities in the USA and these transactions birthed the American securities industry and financial marketplace.  Two years later the NYSE was created by the 24 brokers – every type of security was a “stock” in those days. (Their binding document was “The Buttonwood Agreement.”)  They moved their business inside as well, there near the corners of Broad and Wall.

 

The NYSE is about money but also all about legends and tales and myths and story-telling. And what interesting characters have occupied (and perhaps still haunt) the old corner – Alexander Hamilton, the treasury secretary who created the original bonds to be sold, created our financial markets and tragically died young in a duel with the vice president of the United States across the Hudson River in Weehawken, New Jersey!  (Wall Streeters walks past his grave on Rector Place in the Trinity Church graveyard. Sometimes they are heard to whistle…past the gravesite…on days the market is down.) Aaron Burr, the straight-shooting VP who left the field victorious, founded what would become the familiar Chase Bank (it goes like this: originally Bank of the Manhattan Company / then Chase Bank / Chase Manhattan / JPMorgan Chase, headed by another colorful fellow today, Jamie Dimon. And before him was David Rockefeller, grandson of the famous John D., founder of Standard Oil and a force on Wall Street.)

 

Great robber baron and swashbuckling railroad entrepreneurs camped out here:  Jay Gould, James Fisk, Commodore Cornelius Vanderbilt, and more. Andrew Carnegie’s original company morphed into the first billion-dollar (market cap) American industrial company: US Steel. Hetty Green, the “Witch of Wall Street,” haunted the canyons and built a fortune worth hundreds of millions’ of dollars – when the dollar was really worth something!

 

In 1896 Mr. Dow of the Dow Jones Company created the first stock index made up of NYSE-traded stocks – 12 in all, and General Electric is the survivor – and the company’s little newspaper for insiders (The Wall Street Journal) had begun publication in 1889…with the majority of coverage centering on NYSE affairs and Wall Street activities.  Bernard Baruch, advisor to US presidents, and the wise man of Lafayette Park (where he held forth on a bench opposite the White House), was once a seat-holder of the NYSE.

 

NYSE history includes JP Morgan, richest man in America, who almost single-handedly saved the markets in the 1907 panic (which led directly to formation of the Federal Reserve System). Anarchists went after him and his bank, opposite the Exchange, and the façade still contains shrapnel scars almost 100 yeas later.   There were many more strong personalities in the parade of the NYSE through American life over the past two-plus centuries.  Dick Grasso is perhaps the latest “colorful character” in the life of the NYSE. In so many ways in recent years he was The NYSE!  Before the fall in 2003.

 

The Exchange was central to the US securities markets; as more Americans began to invest in securities the “brand” became better known and we could argue, more respected here and abroad.  The NYSE had long been a membership-owned organization, actually owned by individual members and “member firms,” such as floor-based brokers and traders. In 1972 the NYSE, in part to head off pesky congressional intervention in its affairs, became a not-for-profit under New York State laws.  (Many other changes were taking place at this time, including “the Big Bang,” when fixed commission rates were eliminated.  Enter Charles Schwab & Co and discount brokerages. Member firms themselves went public and Merrill Lynch began issuing stock.)

 

This is about the time Dick Grasso entered the hallowed halls of 11 Wall Street – Mecca of the American financial markets. He took the subway to work from his home in Queens County. The year he arrived the Exchange eliminated paper transfer of stock certificates and switched to electronic record-keeping.  The next year the “Blue Room” trading floor opened. Soon after the first African-American member was admitted – big changes were coming to the NYSE!  And those changes included escalating volumes of share trading; the shift of ownership to institutional investors (now three-quarters or more of the market); massive deployment of very expensive technology; the launch of the Intermarket Trading System, with all trades linked on all exchanges, which really marked the emergence of today’s National Market System (NMS).

 

And through all these changes Dick Grasso kept making his contributions, helping to make the NYSE progress and grow stronger, and keeping himself on the rise up through the ranks, in time coming to personify the grand institution to many Americans.  He understood the importance of the three constituencies that kept the NYSE at the top of the heap:  (1) the Wall Street community (brokers); (2) the listed companies whose shares were traded; and the (3) investors whose commissions kept the broker-members happy and flush.  A delicate balance, and Dick Grasso worked to keep the key players happy.  (The fourth and fifth forces in The NYSE’s life are Congress, dispenser of securities laws and the Securities & Exchange Commission, regulators of Wall Street.)

 

In 1914 when the Great War broke out in Europe, the NYSE suspended all activities…not for days…or weeks – but from July 31 to December 15th of that year!  The American financial markets, led by the NYSE, would be the dominant global players from 1915 on – the New World had surpassed the Old in still one more way.  (There is still only one “New York Stock Exchange,” right? How many exchanges can you name in Europe? Oh yes, there is that London Stock Exchange.)

 

In November 1963 the tragic events in Dallas – President John F. Kennedy was assassinated – created panic at the NYSE and the institution stopped trading again, re- opening after the Day of National Mourning. And then came the morning of September 11, 2001 – and the terrorist attacks on downtown Manhattan.  Ground Zero at the World Trade Centers was a quick walk from the vast complex at Broad and Wall streets.  Dust and dirt – and panic — engulfed the corner of Broad and Wall streets. The Exchange closed that Tuesday, for the remainder of the week.

 

The opening the following Monday was the signal that Americans were going back to work – the nation looked on as Dick Grasso and uniformed responders gathered around him banged that opening bell.  Cheers went up that could be heard across America on CNN, CNBC etc. The stories have been told and re told about how hard everyone worked behind the scenes to open the Exchange for business – while the world looked on and cheered.  Chairman Dick Grasso led the efforts, or so the stories go until the recent troubles.  (Symbol of the Fall: The NYSE has taken down a plaque recognizing Dick’s efforts; it was celebrated at the time by Governor George Pataki and Mayor Rudy Giuliani and other well-knowns.)

 

So now we come to the end of the Grasso Era, too soon after the heroics of the September 2001 events.  Now Secretary of the Treasury Henry Paulson (then at Goldman Sachs) was according to public accounts a leader in the denouement of the chairman. Other powerful men on the board agreed it was the end of Dick’s time.  The Exchange had made public the extent of Richard Grasso’s compensation (and especially the dazzling total of all comp owed – wow!)  Even the faithful at the corner of Wall and Broad were shocked and expressing disappointment at the size of the comp package.

 

Then-Attorney General Eliot Spitzer, who later moved on to the governor’s office and on to his own fall from fame and grace, didn’t like what he was seeing – this was a New York State not-for-profit!  Under his jurisdiction!  This cannot stand!  I am the Sheriff of Wall Street!  This is reverse Robin Hood!  (And then there were the reported personal feud details – the adjoining urinal standoff etc.)  This did become personal – for Dick, of course. And expensive – The Wall Street Journal’s story today by Aaron Lucchetti noted the affair cost some $70 million or more.  Not to mention the bruises and humiliation for the man in the center of it all who grew his career from lowly clerk to the most powerful post of the most powerful financial institution in America, if not on the world stage!

 

And here we are in early July 2008 – Dick Grasso gets to keep his money.  Eliot Spitzer has been de-camped from the powerful post of Governor of New York and is nowhere to be seen – it was his lawsuit that Dick just won on appeal. The new attorney general, the very able Andrew Cuomo, probably won’t pursue the case in appeal.  Smart move, Andrew.  There are really no winners here. Rudy Giuliani, Dick’s downtown buddy, is back in the private security business after a run for the presidency.  John Thain, who moved from Goldman Sachs to succeed Dick at the NYSE, has moved on to the top job at Merrill Lynch.  He did his thing:  He carried out Dick’s grand dream of taking the Exchange public, and left the corner of Broad and Wall victorious.

 

The one important question that will be raised by bobbling heads on cable TV tonight will be:  What does this say about the salaries in Corporate America – is this a free pass now for greedy CEOs?  (Let’s not forget that the powerful tend to take care of their own – Dick was paid as much as $31 million in some years by his board, made up of the most powerful forces on Wall Street and in Corporate America.  Dick had earned his pay, the most influential of the most powerful argued as the board comp committee approved this and that in rewards.  But times have changed for CEOs and CEO pay over the past few years. This will probably not be a “go – green light” for outsize pay packages.  Like so many other aspects of life at Broad and Wall, this was uniquely about the NYSE.)

 

All this shall come to pass: Dick Grasso will join the long parade of truly legendary characters who have given Wall Street and the New York Stock Exchange the special flavor and curious appeal that fascinate Americans and even folks in distant lands.  (Did we mention yet poor Richard Whitney, NYSE president, who served a prison term at Sing Sing for fraud?) Unfortunately for Dick, he will always have certain adjectives precede his name in news stories.  His story will be told again and again. But at least he gets to keep his money.

 

Oh, speaking of legends — about that original buttonwood tree (a kind of sycamore).  Of course, the tree was itself a legend. (As I’ve said, Wall Streeters love legends and myths and creation stories and powerful narratives about heroes and folklore about winning and losing great fortunes!) The famed tree stood on the corner until June 14, 1865 when a powerful storm blew it over. “Today, the buttonwood is remembered as the site of the founding of The NYSE.  Whether it actually happened that way is less important than the buttonwood’s symbolizing a time when the original NYSE trading post was a living tree on a busy commercial thoroughfare…(1).”

 

As the great Kurt Vonnegut would say…and so it goes…the old buttonwood is long gone…those post traders are fast disappearing from the NYSE floor…the Exchange itself has changed dramatically…flying digits carry trades ‘round the world…and now, the legend of Dick Grasso winning his $190 million fight will be added to the lore at the corner of Broad and Wall!  What a place, Wall Street – it’s got a thousand stories, and now one fascinating tale more for future generations!

 

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(Footnotes:  (1) We quoted liberally here from the great history of The New York Stock Exchange edited by its former senior VP and corporate secretary Jim Buck, another valued colleague of ours at The NYSE.  Another great leader, but a quieter man of his time. It’s worth reading: published by Greenwich Publishing, Lyme, Connecticut. For great reading of the drama of Dick Grasso and the Exchange, see the current book by Charlie Gasparino – “King of the Club.”  Speaking personally, it was good to “grow up” at the corner of Broad and Wall, and to learn so many fascinating things about the world’s capital markets.  I am indebted to all of my former colleagues there for their patient teaching, and camaraderie friendship – especially including one Richard Grasso, formerly of Queens, New York!)

 

 

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Follow this link for the relevant stories to this blog post:

 

Court Says Grasso Can Keep his $190 M Packag

 

 

Appeals Court Makes Grasso Case Tougher To Prove; Ruling Upholds Dismissal Of 4 Of 6 Claims Against Former NYSE CEO

 

 

Court To Decide If Spitzer Overreached On Grasso