Michael Sears discusses how common corruption is on Wall Street and what laypeople don't get about it.
Though you have said that this novel is not autobiographical, you draw on personal experience in your portrayal of Wall Street. What did you do during your more than twenty-year career there?
Before I switched to trading bonds, I spent a couple of years in sales first in foreign exchange and later in financial futures, aka derivatives. Chase Bank gave me a chance to trade, and it was a great place to learn. I became a market maker, specializing in the debt of government-sponsored enterprises, like Fannie Mae and Freddie Mac. For the next eighteen years, I traded and underwrote umpteen trillions of dollars of these bonds, rising to managing director and overseeing a small group of traders. As I moved up the ladder, I expanded my role to marketing manager and relationship manager, traveling with the sales force and making presentations in twenty-five states and twenty countries. My least favorite airport? Caracas, Venezuela.
The scam at the center of Black Fridays is based on an actual conspiracy discovered by the FBI about ten years ago. Did you know any of the people involved in that? How did it play out?
Operation Wooden Nickel was the FBI investigation that busted up the conspiracy. If I were a non-fiction writer I would tell that tale. It is loaded with great characters an FBI man who becomes a Congressman, a fake count, and dozens of colorful brokers and traders. When the story broke it was front page news and I gobbled it up every day. When they posted the names, I realized that I had briefly known some of the actors from my early days in the foreign exchange market.
One of the things you try to do in your novel is explain in laymen's terms how certain aspects of Wall Street work. What is the scheme at the center of your novel, and how does it get people killed?
What Jason uncovers is a conspiracy a collusion that has been going for years, whereby a group of traders siphon money from their employers into their own pockets through a series of ongoing transactions. As far as I know, no one was murdered in the Wooden Nickel scheme on which this is based, but in fiction, a bit of raising-the-stakes never hurts. And it's always in the cover-up where the real dirt shows up, isn't it?
Your main character, Jason Stafford, has spent time in prison and been barred from working in the securities industry because of his own financial misdeeds, but he is not a fundamentally bad man. How did he slip up?
Not all of the pressure that traders deal with everyday comes from the market. Jason's story is far from unique. He let one mistake go by, and in covering it up, he caused it to grow, until it was way beyond his ability to handle it.
How common is corruption on Wall Street? Are most of the key players honest? How easy is it to slip up, like Jason, and cross the line from aggressive but legal practices over to illegality?
Wall Street is no different than any other industry in this regard. Most of the people I knew there were scrupulously honest, carefully guarding their client's wealth and privacy. But temptations are all around, and it's a zero-sum game. Someone wins, someone loses. When you think about the amount of money changing hands globally every day, it's rather amazing that fraud and theft happen so rarely.
All of the bad guys in your story don't get punished as much as some might hope, and some get punished perhaps too much, but would any other result be realistic?
Jason, like most of us, never gave much thought to his own honesty. He took it for granted until too late. He had already abandoned it. Then he had two long years to think about not much else. He may yet be figuring it all out.
Many people are fascinated by the culture of Wall Street the extravagant apartments and beach houses, the $10,000 dinners, the party scene and the frat-house humor. Did business school prepare you for all that? What's different about your take on Wall Street culture?
When I was a student in business school, I heard a visiting lecturer give a speech remarkably similar to the one Gordon Gecko delivers in the movie Wall Street. Greed is good. The man later went to prison. Maybe business schools could do more to promote ethical debate, but we live in a society that easily forgives the abusive actions and trappings of ostentatious wealth.
What do people least understand about Wall Street? What is the hardest thing to convey to outsiders?
I have come close to ruining any number of dinner parties by attempting to answer the question, "So, just what is a derivative, exactly?" I have vowed that in the future, I will quietly change the subject instead. And like ER doctors, cops, and middle-school teachers, traders develop a dark sense of humor, communicated in cant, that does not often translate well. Just ask my wife.
Jason's son in your novel, known as the Kid, has autism, how did you research that aspect of the story? Do you have personal experience with autism?
I am not the father of an autistic child, and out of respect for the privacy of my extended family I do not discuss specifics. But I have known children on various points along the autism scale, and I have done my research. When I began the book, the incidence of autism had recently been announced to be 1 in 105 nationally, a jump from the previous 1 in 115. As the book comes to press, we have just learned that it is now affecting 1 in every 88 children in America. And we still have no clear idea of why this is happening.
How does Jason's relationship with the Kid change over the course of the story?
Jason barely knew his son when he went away to prison, and he knows him no better, really, when he makes the commitment to take care of him. He has no idea of what he is taking on. But Mamma's advice that he must learn to hear is what saves them both in the end.
Why is Jason's budding relationship with Skeli, the sexy graduate student, so important to him? And how is it different from his relationship with his ex-wife, Angie?
Angie, as hard to like as she can be, was just what Jason needed at that point in his life. Skeli may be what he needs now. I hope so. I like her a lot.
Do you, like Jason, ever miss the adrenaline of working on Wall Street?
Adrenaline is a drug and it is easy to get addicted to it. I loved it when I was there and I love that I am not there anymore.
In your story, the internal controls set up by the firm to guard against corruption obviously do not work. And the SEC, the government's main Wall Street enforcement agency, as well as the FBI are slow to catch on. Would you recommend any changes in the way these agencies do their jobs?
The pendulum swing of watchdog enforcement on Wall Street encourages abuse. The mortgage and Madoff scandals of the last few years are, in my opinion, the result of a hands-off approach promoted by the previous two administrations. We have the greatest, free markets the world has ever known, but they depend upon trust to survive. The average investor has lost a lot of trust in the markets in recent years. We need the police to do their jobs, and rigorously root out the crooks.
What do you think of the financial reforms that are currently being debated in Congress, which are intended to prevent another huge economic disaster like the one we had in 2008? Do they go too far, or not far enough?
Congress cannot legislate boom and bust cycles, but maybe they can build in some buffers. If Congress can increase transparency and accountability without impacting liquidity, they will help the markets and we will all benefit. But there will be costs and unintended consequences. I applaud their slow deliberations. There's a lot riding on their getting it right.
Before going to graduate school at Columbia Business School, you worked as a professional actor on the stage. Why did you decide to move to business? How helpful was your acting experience in your Wall Street career?
I loved the theater. I still do. I also love to write. Someday, I might even write for the theater! Who knows? But I needed new challenges back then, and I traded the rewards of one career for the other. My people skills came in quite handy. There are just as many divas, drama queens, and self-promoting wannabes on Wall Street as there are on Broadway maybe more.
Your novel is set primarily in New York City, but also partly in Louisiana's Cajun country. Do you know that area well?
I've visited often enough to know that New Orleans and Louisiana are not the same thing at all. I'd like to take Jason back there some day. There's a hazy beauty to that part of the world along with the alligators, fire ants, and drive-through frozen daiquiri stands.
During the time you were writing this novel, the Bernie Madoff story broke. Your next novel will feature many of the same characters as this one, but it will focus on a Ponzi scheme much like Madoff's. What appeals to you about it as background for a novel?
Two things. The first is personal. I know people, some of whom I admire and like very much, whose lives were upended by Bernie Madoff. But, as an ex-actor a role player I have always been fascinated by con men, and Bernie was possibly the best ever. I can hate him for the pain he caused, and yet be in awe at the scope of his crime.
What do you hope readers take away from this book?
Keep rooting for the Kid.
Unless otherwise stated, this interview was conducted at the time the book was first published, and is reproduced with permission of the publisher.
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