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John Gutfreund

Discussion in 'Roll of Honor & Memories - All Other Conflicts' started by GRW, Mar 13, 2016.

  1. GRW

    GRW Pillboxologist WW2|ORG Editor

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    "John Gutfreund, the former chairman of Salomon Brothers, who has died aged 86, was probably the most successful and aggressive banker on Wall Street until he was brought low by the bond-rigging scandal in 1991.


    In his heyday in the 1980s Gutfreund (pronounced Good Friend) told his traders that he expected them to wake up in the morning “ready to bite the ass off a bear”; his office cushion was embroidered with the motto “No Guts, Go Glory”.


    More than $20 billion worth of securities flowed each day through Salomon’s massive trading floor overlooking New York harbour, a sum greater than that of the entire New York Stock Exchange. In 1985 Business Week declared Gutfreund the “King of Wall Street” and while he was in charge of Salomon its employees earned more than those at any other company in the world.


    As the money poured into Gutfreund’s own account, his previously drab existence was transformed into that of a prominent Manhattan socialite by his second wife Susan, a former Pan-Am stewardess whom he married in 1981. Susan Gutfreund sealed their rise in New York society by throwing a 60th birthday party for Henry Kissinger. Months later, guests were still talking about the green apples of spun sugar that her chef had prepared for pudding.


    It was widely assumed that the Gutfreunds were prototypes of the characters Leon and Inez Bavardage in Tom Wolfe’s novel Bonfire of the Vanities, though Wolfe denied it. Newspapers could not resist itemising the Gutfreunds’ indulgences, which included a fridge in Susan Gutfreund’s bathroom so that her scent would be chilled when she emerged from the bath.


    One Christmas it was arranged that a crane would haul a 22-ft Douglas fir up the outside of their building to their 24th floor duplex – and it swung in through a neighbour’s window on the way up, leading to a well-publicised lawsuit.
    When Salomon Brothers first encountered problems in the mid-1980s, there were mutterings that Susan Gutfreund had diverted her husband’s attention; that the Gutfreunds had appeared in the pages of Women’s Wear Daily did not inspire the confidence of Salomon Brothers’ clients.
    “When older guys discover their sexuality, they’re gone,” one friend told New York magazine in 1988. Such gloomy prognostications were vindicated in August 1991, when it came to light that two senior Salomon Brothers traders had repeatedly exceeded the firm’s limit in government bond auctions – enabling the firm to generate a squeeze in the market from which, as chief source, it could profit hugely.
    Gutfreund stood accused of omitting to report the fact that he had known since April that one such breach had occurred and felt obliged to resign (to be replaced by Warren Buffett). In the aftermath he was fined $100,000 and subsequently lost a $55 million lawsuit against Salomon Brothers – claiming, among other things, $35 million for his 1991 bonus.
    Gutfreund’s downfall created bigger ripples for occurring not long after the publication of Michael Lewis’s bestseller Liar’s Poker (1989) – of which Gutfreund was the somewhat resentful star. Lewis, a former Salomon trader, recalled how Gutfreund “seemed able to smell money being lost” and how an eerie sixth sense guided him to wherever a crisis was unfolding. “Often as not,” wrote Lewis, “our chairman just hovered quietly for a bit, then left. You might never have seen him. The only trace I found of him on two of these occasions was a turdlike ash on the floor by my chair, left, I suppose as a calling card. Gutfreund’s cigar droppings were longer and better formed than those of the average Salomon boss.”
    John Halle Gutfreund was born on September 14 1929. His father was in the meat business and young John grew up in the suburbs of New York. After Oberlin College, Ohio, where he ran the drama club, he was drafted into the US army in 1951 and volunteered to go to Korea as a private.
    He spent a year guarding Chinese prisoners of war on a remote island in the China Sea. On his return he toyed with teaching, but thought better of it: “there was no money in it”. His acting also suggested a career on Broadway, but he decided that being anything but the best in such a pursuit “would be a painful life”."
    http://www.telegraph.co.uk/news/obituaries/12190134/John-Gutfreund-banker-obituary.html
     

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