To an outsider lacking any context, the fixed-income trading floor at Merrill Lynch on any given day in the spring of 1984 would have seemed like an insane asylum.
The scene:
A few adults, trying to get someone’s—anyone’s—attention, bounced up and down like school kids, frantically waving their arms above their heads while somehow managing to keep phone receivers pinched between their necks and shoulders.
Others sat, still as statues, staring fixedly at one of the hundreds of computers on the floor, trying to decipher the meanings of the constantly blinking, ever-updating numbers and symbols on their screens, the 32,000-year update of Paleolithic cave paintings.
Traders yelled into “hoot-n-hollers,” open lines connected with unseen faces on the other side of town or, perhaps, the world.
Phones pealed ceaselessly for attention.
And over the hive hum, distinct fragments of dialogue occasionally surfaced:
Salesman, with client on the phone, yelling to his trader: “Offer me $20 million long bonds.”
Trader shouting back to salesman: “At 17!”
Salesman to client on phone: “How’s 17?” Pause. “No? Sixteen, you say?”
Salesman, now with hand over phone receiver, back to trader: “He wants 16.”
Trader to salesman: “Tell him to go screw himself!”
Salesman to client on phone, hand now off receiver: “We’re staying at 17.”
This entire exchange would have taken maybe fifteen seconds. The floor was not a place for the timid, the weak, or anyone susceptible to seizures.
Mike Quinn, the head of the New York fixed-income desk, loved being on the floor. It provided a peek under the hood at the engine that made Wall Street purr, the high-rolling casino where both the house and the players won the majority of the time. Its manic energy was infectious.
One of Quinn’s favorite rituals was taking a new hire on a tour of the floor. The point of this “perp walk” was, ostensibly, to introduce the new hire to his or her future colleagues. But Quinn’s real intent was to give these raw recruits a taste of what, in a matter of months, lay in store for them.
After all, the floor would be very different from anything these new hires had ever experienced in their working lives. In fact, most of them had very little experience actually “working.” They’d gone to the country’s best undergraduate institutions, then continued their education in MBA programs at prestigious schools like Harvard, Stanford, Northwestern, Virginia, and Dartmouth. They were the best and the brightest.
In the early 1980s Wall Street firms like Merrill Lynch, Salomon Brothers, Goldman Sachs, and Morgan Stanley had begun to funnel their young new hires into training programs. These three- to seven-month finishing schools were the Wall Street equivalent of basic training in the military. There the recruits honed their skills and zeroed in on their expected specialties (equities, fixed income, etc.), after which, upon graduation, they joined a desk and a team.
Most of the recruiting for Merrill’s young hires was done by the firm’s human resources department. HR had all of the proper contacts within the top universities’ MBA programs, and had developed a tried-and-true formula for hiring, using metrics like class rank and grades, as well as less scientific measurables like pedigree.
On occasion, however, Mike Quinn, as the head of his division, used his clout to circumvent the HR department and would hire someone who didn’t necessarily fit the mold. “Sometimes you just had a gut feeling about a person,” says Quinn.
And sometimes that gut feeling was dead-on.
On a sunny day in the spring of 1984, Quinn walked on to Merrill’s fixed-income trading floor. At his hip was his latest hire. The perp walk was on.
The traders and salesmen on the floor paid as little attention as they could to these walks. After all, in just a few short months these newbies would be the competition, and they didn’t want to be bothered worrying about what was to come. When Quinn approached with a new hire, the traders and salesmen were generally cold, croaking out a hello, then quickly turning back to the flow of the floor and forgetting the encounter ever took place, like river water quickly repairing itself after the splash of a tossed pebble.
But on that day in 1984, something about this particular new guy made the normally remote folks on the floor pause for just a bit longer than usual, giving the new hire the once-over, nodding their heads in head-to-toe glances. When Quinn and the new guy moved on, they left a sea of sardonic smiles and smirks in their wake. This recruit was different. And not in a good way as far as anyone could tell.
Joe Petri was a trader who had been on the floor for three years. He’d seen Quinn’s dog-and-pony show countless times, and like the others, he generally ignored it. All of the recruits looked pretty much the same anyway—midtwenties, precise haircuts, gray Brooks Brothers suits (for men) and conservative white blouses (for women) that their parents had bought for them. The ripest fruit plucked from the nation’s best business schools.
But this guy…this guy made Petri lose his train of thought. He looked up from his computer screen, standing to get a better view as Quinn and the man came closer.
The new guy was nothing like the other recruits. First off, he appeared to be at least a decade older than the others. He was big. He held his chest out and walked in a slow swagger. He smiled, but with a look of utter confidence and not a trace of nervousness. He shook hands with force, like he was trying to pull elbows out of sockets.
But it was his clothes that really made him stick out. That wasn’t a Brooks Brothers suit he was wearing. That wasn’t even a suit.
That was a plaid jacket. And, yes, those were black pants with loud white stripes.
Petri said—out loud but only to himself—the very first words that popped into his head:
“Who the fuck is this guy?”
That guy was a football coach who had just given up on his dream, who had failed in his marriage, who had moved back into his parents’ house at the age of thirty-four, who no longer lived with his four children, who was now financially supporting six people. He was a man more desperate and more determined to succeed than anyone on the floor.
Quinn and the man walked over.
“Petri, this is Joe Moglia. He starts today.”
In 1984 the United States was running at full sprint. After the malaise of the 1970s and the misery of the recession that started the decade, there was an almost hyperactive optimism and eagerness in the country, a general feeling that Ronald Reagan captured brilliantly with his “Morning in America” campaign reelection slogan.
That optimism was felt with special force at Merrill Lynch, which was in the throes of a swift and dramatic transformation. In the 1950s and ’60s, the firm became the one of the biggest and best brokerage houses in the world, powered by its legions of stockbrokers, who signed up and shepherded the investment accounts of individuals (what’s known as “retail investing”). Those stockbrokers were known, collectively, as “the thundering herd.” They didn’t necessarily outsmart the rest of Wall Street, but by damn, they did overwhelm it through the sheer force of numbers.
But sometime in the mid-1970s, Merrill Lynch realized that in order to keep up with its competitors on the Street (Goldman Sachs, Salomon Brothers), it had to change its tactics. Investment banking—in which a financial institution could originate stock offerings and sell and distribute them through its own bank—was the best way to do that. The big money wasn’t with the individual stock investor. It was with the institutional investors—the massive companies—and the pension funds that had billions of dollars in assets.
Merrill began its transformation by acquiring White Weld, a Boston investment bank, in 1978. But the firm couldn’t just buy its way into the game; it also had to grow its investment bank from within. One of the primary architects of that strategy was a man named Roger Vasey. Under his guidance, the firm began to focus on the highly lucrative world of fixed income—that is, gathering interest on government, municipal, and corporate debt that was paid to the lender on a fixed, or regular, schedule. By 1984, that year of optimism, Merrill was rising fast, well on its way to catching up to Goldman and Salomon.
Oddly enough, the unlikely hiring of a thirty-four-year-old former football coach would help them get there.
But the journey to Wall Street was in no way easy for Joe, even though the move made perfect sense to him on a number of counts. It gave him the possibility of making big money, which would allow him to provide handsomely for his kids, and perhaps assuage some of the pain that leaving football would cause him. New York was close enough to his family that he would still be able to visit them fairly often. And while he was getting started on his new career, he could move back in with his parents in Yonkers, which would solve the problem of not having enough money for rent. (His mother was ecstatic to have him home; his father was proud of his attempt to get a “real” job.) It helped, too, that the financial world did actually interest him. He’d been an economics major at Fordham. So what little he knew about the Street seemed to jibe with his needs, his personality—and even his professional background.
Contrary to what others might have thought, Joe really did believe that being a football coach was actually a pretty good way to prepare for life on Wall Street. The problem, he knew, would be convincing others that that was the case. He realized that he wasn’t the typical candidate for a Wall Street job. His only degrees were a bachelor’s from Fordham and a master’s in education from Delaware. He didn’t have an MBA and had neither the time nor the money to get one. At thirty-four he was nearly a decade older than the typical recruit. Plus he lacked the pedigree: He was a poor kid from the inner city. He didn’t always speak the King’s English. He had a family of six. He didn’t know a soul on the Street.
But none of that would matter.
Joe had gone after a Wall Street job with everything he had. After studying up on it, he decided that he would focus on the institutional side rather than the retail one. The retail guys were part of the old-boy network that had been entrenched in their jobs forever. They had the family summer homes in the Hamptons. But the real money was now on the institutional side, in the selling and trading of bonds to corporations and governments. The institutional guys got dirt under their fingernails. Sure, they were still predominantly Ivy Leaguers, but Joe believed he had his best shot at breaking in there.
He started with a simple but typically well-thought-out game plan. He got all of the alumni books from the four colleges he’d been associated with, as either a student or a coach: Fordham, Delaware, Lafayette, and Dartmouth. He circled the names of anyone who worked on Wall Street who’d had anything to do with the individual school’s football program. Then he called every one of them.
He gave them all what he called his “one-minute pitch,” which he rehearsed endlessly in front of his bathroom mirror. The pitch went something like this:
“I grew up in a rough neighborhood in New York City. I got out. A lot of my peers didn’t. I’ve been coaching football for sixteen years. I started when I was nineteen years old. I won two Ivy League championships as the defensive coordinator at Dartmouth. I’ve written a book about coaching. I am now looking to change careers. I believe that the skill sets needed for coaching football are the same ones needed for Wall Street: You need to be intensely competitive, mentally tough, and exhaustively prepared. You need to perform well under pressure. You need to be able to sell yourself and your program. And the end goal is to win. Period.”
Joe was relentless. If a person took his call, he wouldn’t let him off the phone until he coughed up a contact. Joe believed that if could just get a face-to-face meeting with a decision maker, he could sell himself and his story. He told no one about his divorce, at least not on the phone. “That seemed like a weak card to play,” he says.
But, a few months in, his strategy just wasn’t working. Though he turned up a few Wall Street contacts on the phone, he couldn’t manage to land any crucial meetings.
And so, in the spring of 1984, Joe decided to take the matter into his own hands. One morning he took the train into the city from his parents’ house in Yonkers. He walked through the doors of Merrill Lynch at One Liberty Plaza unannounced (this was back in the day before corporate buildings had much in the way of strict security procedures). He was looking for Brian Barefoot, who was a bigwig in the fixed-income division.
Joe rode the elevator to the seventh floor and, after twenty minutes of searching and sweating, he finally found a door with Barefoot’s name on it. He walked in and was greeted by a secretary in the anteroom.
“I’m here to see Mr. Barefoot,” he told her.
“Your name?”
“Joe Moglia.”
“I’m sorry, sir. He’s in a meeting.”
Joe looked past her and saw Barefoot sitting at his desk.
“Isn’t that him right there?” Joe asked, pointing.
“I’m sorry, sir. He’s in a meeting.”
Joe didn’t want to make a scene. He took out his résumé and put it on her desk. “Please do me a favor and make sure he sees this. Please.”
She promised she would. As he was leaving, Joe glanced once more into Barefoot’s office. He hadn’t budged.
Joe followed up the next week with three phone calls to Barefoot’s office. They were never returned.
A month later, Joe finally caught a break. A Dartmouth alum put him in touch with a Merrill Lynch branch manager in Florida who happened to be friends with a man named Bill O’Connor, who ran the national sales desk in New York. Joe called O’Connor, but never got past his secretary. But she, out of pity it seemed, passed Joe on to the head of New York fixed income: Mike Quinn.
Quinn showed up for work one morning and saw Joe’s résumé on his desk. “It certainly stood out,” says Quinn. There was no MBA and no experience in finance. There really wasn’t much at all. Quinn agreed to see him anyway. “He walks in wearing this wine-colored shirt that has a white collar and these white striped pants. It was not the usual outfit. But I could tell immediately that he was very comfortable in his own skin, that he didn’t care a whit what he dressed like. To be honest, I was just impressed that he’d gotten himself in the door.” (For the record, Joe says he would never wear pants with white stripes. “They were yellow,” he says.)
Joe told Quinn his life story, this time including the divorce. Quinn was fascinated. “He was really a rough stone. It wasn’t just the way he dressed. He was from the streets. He had this street accent,” says Quinn. “And he really had no understanding of how the fixed-income business worked. At all.”
Joe wrapped up his story with one last thing:
“I am going to be the number one salesman at Merrill Lynch,” he said.
“That’s good,” replied Quinn. “We want people to aspire to that.”
“I don’t think you understand me,” said Joe. “I’m not going to try to do it. I am going to do it.”
Quinn smiled. “There was a point during the interview when I thought to myself, This guy is a complete lunatic. But his intensity was incredible. He wanted it so badly. And he couldn’t really afford to fail. I’m a big believer in appetite. He’d been through a lot. Sales was a business where you got beat up every day. You had to be a Weeble Wobble. And it was pretty clear that this guy could take a punch.”
Quinn hired him. He wanted to put Joe in the MBA training program to get him up to speed. The problem was that Merrill’s human resources department was in charge of filling those spots, and Joe didn’t have the MBA usually required for the program. But Quinn, as a division head, went around HR and placed Joe in the program. “They were like, ‘Are you sure?’ Those folks wanted to show well. They wanted people who looked good on paper, the well scrubbed, well-polished, well-schooled Stanford, Harvard, and Columbia guys. Then they got this thirty-four-year-old father of four with an inner-city accent and a Men’s Wearhouse closet.
“Joe had a lot of things to overcome here. Internal resistance was a serious one. But I had a lot of confidence in him,” says Quinn.
The human resources folks, however, did not. They resented the move from the get-go. And they let Joe know it.
Joe started in the Merrill Lynch MBA training program in the late spring of 1984. There were twenty-six people in the program at the time, most of them in their midtwenties. Twenty-five of those people had MBAs. Joe’s classmates, for the most part, embraced him, impressed by his story and his dogged work ethic. They called him “Coach Joe.”
But none of that seemed to matter much to the head of the program, a woman from HR. She had recruited and chosen the other twenty-five members of the class and seemed to resent the fact that Joe had been shoehorned into her class and that upon graduation, he would be in direct competition with her handpicked trainees for the best jobs.
During the first week of the program, she announced that there was to be a cocktail reception for the trainees with Jerome Kenney, who ran all of Merrill’s institutional businesses. These get-togethers with big shots were a regular part of the training program, meant to inspire the trainees and give them a little schmoozing time.
As she stood in front of the entire program and announced the party, she added: “Only the regular class is invited.” Joe, of course, was the only trainee who was not considered part of the “regular class.” He went to the reception anyway. But the program head never strayed from her message. From that point on, any time there was a trainee gathering, she made a distinction between the regular class and Joe.
Joe took it all in stride (and continued to go to the parties). “I got a kick out of it. I was a man by then. I’d gone through a lot of stuff and learned how to handle stress and read people.”
Still, Joe had to cram twelve to fourteen hours a day in an attempt to catch up to his better-educated peers. Everything he was being taught—from the math to the terminology—was entirely new to him. “I was so far behind the learning curve,” he says.
But Quinn’s assessment of Joe’s appetite had been spot on. “I knew I had to make this work,” says Joe. “I had so much on the line, I couldn’t fail.” Failure, he believed, meant going back to the fruit store.
In the fall of 1984 Joe went back to Dartmouth for a football game. The Big Green were playing the Quakers of the University of Pennsylvania. Joe wanted to check in on his old players, whom he’d coached and recruited. It was a perfect fall day in New Hampshire, sunny and brisk, the trees ablaze in a patchwork of yellows and reds. After saying hello to his former players on the field before the game, Joe took a seat in the stands by himself, soaking in the familiar sights and sounds. Shortly after the singing of the national anthem, the emotion hit him. “I just started weeping,” Joe says. He tried to hide his face in his hands.
That year—his first away from coaching in sixteen years—Joe had somehow made the transition from football to finance by talking his way into one of the most competitive industries on the planet. He was succeeding there already. And though he wasn’t yet making much money, it wasn’t hard to envision a time—maybe soon—when he would be making more money in a year than his father had made in his entire career.
But none of that mattered on that beautiful fall day as Joe sat in the stands and self-consciously wiped the tears from his cheeks with his sleeves. As he watched the nose tackle that he’d coached skip over a chop block and smother a running back; as he watched his old linebacker screw up his gap responsibility on a draw play; as he watched his slow cornerback take a perfect angle to knock down a pass; as the crowd rose in throaty roars after a good play and hunched over in disappointed moans after a bad one…
At that moment, none of that success at Merrill, none of the promising future mattered.
“I was put on this earth to be a football coach.”
When Joe got back to New York City, he decided he wouldn’t go to any more football games. He didn’t want to put himself through the torture.
In 1985 Joe became a junior fixed-income salesman. His job was basically to analyze the portfolios of large insurance companies and pension funds, figure out what their investment needs were, then cold-call them and try to interest them in doing business through Merrill. Graduates of the trainee program were always given the toughest accounts. “The new guys got the absolute crap—the companies that said they didn’t want to do business with Merrill or the ones who hadn’t returned a phone call in years,” says Quinn. “But you had to earn your stripes.”
And Joe still faced some prejudice. Despite the fact that he had successfully graduated from the training program, there was still a feeling among some senior salesmen that this football guy couldn’t hack it. They made jokes about his background. “Some senior guys would say things like ‘We should give that guy the pensions from the steamfitters and welders unions,’” says Jake Albright, a fellow trainee who became very close to Joe during their years together at Merrill. “I used to tell Joe, ‘They won’t be saying that when they report to you.’”
Joe kept up the fourteen-hour days, studying the portfolios of both his clients and potential clients, trying to figure out how he could help them—and thereby himself—make money. He honed a one-minute pitch for phone calls. He always believed—as he did during his job search—that if he could meet someone face-to-face, he could close the deal. “Sales back then was a people business,” says Quinn. “Joe used his charm.” Cathleen Ellsworth was a marketer for what was then known as Chemical Bank, which was one of Joe’s clients. “He always laid out his reasoning for a trade in such detail. He was earnest. It was like you could actually see him walking himself though it as well.”
Joe took nothing for granted. “Basically, the guy outworked everybody else,” says Seth Waugh, who was head of Merrill’s global debt market back then. “He wasn’t the most intellectual guy, but he was always so prepared. Other guys would be going out and having ten beers, then showing up late in the morning. Joe would work at night, then show up early.”
Joe spent hours rehearsing what he was going to say to his clients, partially because of his stutter, but more so because he wanted to deliver his pitch perfectly. “I remember going to the floor one Sunday because I had forgotten something,” says Thomas Hughes, another of Joe’s fellow trainees. “No one was around, just a few guards. I walk up to my desk and I hear someone talking. I look out and it’s Moags. He’s practicing his presentation.”
Joe thrived on the floor. With its constant thrum of activity and its vast physical dimensions—the ceilings were thirty feet up—it even felt a bit like a sporting arena. The traders sat in the center of the room, surrounded by salesmen. Adrenaline crackled through the floor. Big decisions were made in seconds under intense pressure. Back in those days before the Internet, the floor was a very loud place. “The only way to communicate was verbally, on the phone or through hoot-n-hollers or just by yelling,” says Walter Donovan, a trader who sat back-to-back with Joe. “People were crammed in together. You couldn’t hear yourself think. I just remember that Joe was always leaning forward in his chair, always ready.”
In sports parlance, Joe was back on the field, on this mental gridiron. He was no longer a coach. He was a player, a producer. Though he still believed his skills were best suited for management, for motivating and directing other people, he knew he would have to prove himself on the field first.
He got off to a helluva start. In his first year, Joe cracked some of those seemingly impossible accounts, raking in money for the firm. He became the most successful rookie salesman in Merrill Lynch’s history.
The next year, 1986, Joe got even better. In just his second year on the floor, Joe was inducted into Merrill’s “Circle of 30,” an intrafirm club composed of its top producers. “He got there because he was an animal,” says Albright. Members of the club received extra company stock, a trip to a sunny locale, and a significant boost to their stature within Merrill.
But that same year Joe suffered the biggest loss of his life. His mother had been diagnosed with colon cancer the year before. Though her smile never left her face, by 1986, she started to go downhill, fast. In June of that year, Frances McLarnon Moglia died. She was sixty-two.
Joe delivered the eulogy. He talked about the Rye Beach school trip, and the harsh disappointment his mother felt in her oldest child after he was caught with the bottles of liquor. He had vowed then never to let her down again, to make her proud one day.
Establishing and maintaining that pride was perhaps the single most motivating factor in Joe’s very driven life. It remains so to this day. Joe may have learned his work ethic from his father, but from his mother he learned something much more valuable: that life is about people, about respect, about love. Joe’s mother had sacrificed everything for her family. She had been his cornerstone, the shelter from his father’s frequent storms, the warm, gentle heart in a neighborhood and family life that was often cold, harsh, and hard.
“I think Jim [Joe] was heartbroken that our mother never got to see him as a really big financial success,” says Johnny. “But she was very proud of what he had done with his life. Very proud.”
The long working hours, the lack of exercise, and the stress of his mother’s death eventually took a physical toll on Joe. By the summer of 1986, two years into what was looking like a surefire starry career at Merrill, he’d fallen out of shape. “I saw him on the beach and said, ‘Joe, you’re gonna die, man,’” says Albright, a sinewy marathoner. “He got really mad and said, ‘Damn it, I’m going to do something about it.’”
Joe told Albright that he’d run the New York City Marathon if Albright would train him. Albright agreed. The two started to run every day after work. “I beat the living hell out of him,” says Albright. “But he never complained.”
The running was good for Joe. He lost weight. His colleagues at work all noticed that change. Still, they had no faith in his ability to run a 26.2-mile marathon. The over/under at the office on his predicted finish time was four hours. Everybody but Joe and Albright put their money on the over.
The two ran the marathon in early November. Joe was doing great for the first twenty miles. Then he hit a wall. For the last six miles, “he was friggin’ finished,” says Albright. “But he just kept going and never said a word.” They beat the four-hour mark by a few minutes. “We made a ton of money that day,” says Albright. Joe has a picture at home in Omaha of the two of them at the finish line that year. Their hands are raised together, a victory gesture. Albright looks like he’s holding up a dead man.
Joe later joined an over-forty baseball league. One day while fielding pregame grounders hit by Albright, a bad-hop ball popped over his glove and caught him in the mouth, knocking the top row of his teeth back into his gums. “Blood was everywhere,” says Albright. Joe wiped off the blood and proceeded to play the game before finally going to a dentist.
“Nothing is recreation for Joe,” says Albright.
In 1988 Joe became the number one producer in all of Merrill Lynch. In just four years on the floor he had fulfilled the promise he’d made to Quinn during their first meeting.
That year, Joe also helped change Wall Street.
Bob Bertoni, then a senior institutional salesman at Merrill, remembers the first time he heard about Joe, in 1985. Quinn called Bertoni into his office and told him that a trainee would be joining his sales team as the junior member. “He’s kind of a goofy guy,” Quinn told Bertoni. “He doesn’t make the best first impression, and he doesn’t know much. But if we let him hang around for a bit, he’s going to be running the place.”
Joe joined Bertoni and another senior salesman named Ed Sheridan on a fixed-income sales team. The two senior members of the team had both played football back in their school days. They took a shine to the coach immediately. And together, the trio came up with a radical new way to sell debt on Wall Street.
The sales teams on Wall Street were “teams” in name only. The Street at the time worked on a commission model, rewarding individuals for sales. That model was particularly ingrained at Merrill Lynch, which in the mid-1980s was still heavily influenced by its past as a brokerage firm, where individual commissions on sales made sense.
But there were a few big problems with the commission model on the institutional side. One was that it promoted individual glory and not teamwork. It was also an imperfect way of measuring the productivity and capability of a salesman. “We would have, say, the twelfth-best account on the Street with Prudential,” says Bertoni. “That would bring in some decent cash because Prudential was so big, and the salesman with that account would make a pretty good commission. The problem was that Merrill was still number twelve at Prudential, which was horrible. Commissions were a terrible way of judging how an individual was doing his job.”
But perhaps the biggest problem with commissions was that by the mid- to late 1980s, institutional products were becoming so numerous and so complicated that they were very hard to understand and sell. New derivatives of existing products were popping up overnight. A company like Prudential had billions of dollars in assets, and those assets were spread over many dozens of products, far too complex and too great in number for any one salesman to understand. The solution, Joe, Bertoni, and Sheridan believed, was to create a true team that would divvy up responsibility for mastering the key information they needed to know. The team concept fit the coach’s worldview perfectly.
The trio decided to tackle the market together and split their pooled commissions. They broke the market down into three distinct sections: mortgages, corporate bonds, and government bonds. They produced exhaustive reports on all three and shared them with each other. Then they went out and sold.
By the end of 1988 they were producing huge money for Merrill. “On the institutional side, if you started putting up big numbers, you started getting attention and earned some leverage within the firm and the industry,” says Bertoni. “Suddenly companies were actually coming to us.”
Senior management within Merrill began to take notice, too. In early 1990 the firm hosted a three-day conference in Chicago. All of the institutional traders and salesmen were required to attend. Joe’s team was asked to do a presentation on their new concept.
“You have to understand what we were walking into there,” says Bertoni. “This idea of individual commissions was firmly entrenched at Merrill, and on the Street for that matter. There were hundreds of salesmen at Merrill who had only known the commission model and, by damn, that’s the way they liked it. We were these punks who were threatening their entire way of life.”
They knew they’d face pushback. So Joe took the lead in getting them prepared for their moment in the spotlight. (The team now included Albright and a man named Dave McCarthy; Sheridan had been promoted.) In the month leading up to the conference, they enrolled in public-speaking classes and hired a speech coach. The men practiced their talks for hours after work.
When the big day came, four hundred restless traders and salesmen sat in the audience in a convention hall in Chicago. Bertoni, Albright, and McCarthy did the first presentations. “We did okay,” says Bertoni. “But we were nothing like what was coming next.”
When Joe took the stage, he had no notes and no slides. “He basically delivered a halftime speech,” says Bertoni. “His face was red, he was yelling, spit was flying all over the place.”
Joe told his four hundred colleagues in that room that the way they did business was going extinct, and that if they wanted to survive, they had to adapt and adjust to a new way. The traders and salesmen did not like what they were hearing. They felt threatened. They crossed their arms over their chests and shook their heads. Condescending smiles spread across their faces. “They were sitting there thinking, Who the fuck is this guy?” says Bertoni.
Some of them openly laughed at him. Others snickered behind his back. “Joe didn’t care at all,” says Bertoni. “The number one thing about Joe is that he is never afraid.”
Seth Waugh was in the audience that night. “Joe really put himself out there to be ridiculed. But you couldn’t walk away from that and not think, Wow, this guy is gutsy as hell.”
Joe was also right. Within a few years, Wall Street moved away from the commission model. Salesmen and traders began being paid a salary and a bonus that was based on how well their teams did. That model is still in place today.
By 1990, Merrill, basically starting from scratch, had surpassed Salomon Brothers and caught up to Goldman Sachs on the institutional side. No retail firm in history had ever so successfully transformed itself. “I give all the credit to the group we had there on the institutional side,” says Roger Vasey, who was head of the division. “And Joe was a huge part of that.”
In 1991 Vasey promoted Joe to the head of New York fixed-income sales, a position that Brian Barefoot—who by then had become friends with Joe—had once held, and that Mike Quinn was in when he hired Joe. The only thing Vasey asked of Joe was whether or not he had a plan in mind for taking over. Joe handed him a book of detailed documents three inches thick. His game plan. “I’d never seen anything like it,” says Vasey.
Yet there was still some skepticism about the move. “Everyone thought Joe was a great salesman, but no one thought he could be a manager,” says Thomas Hughes. But the doubters overlooked one crucial element: In becoming a manager of people, Joe was moving back into the role in which he was most comfortable. He was now in charge of hundreds of people. In essence he had been taken off the field of play, given the headset, and moved to the sidelines. He was a coach again.
Within a year, Joe was promoted to the head of global fixed-income sales.
Joe managed to keep the promise he’d made to himself on that fall day in 1984, after attending that Dartmouth game. Joe never went to a college football game during his tenure at Merrill. (It would be 2001 before he went back to one, and his attendance at that game would be more or less forced on him.) Plenty of his colleagues at Merrill had season tickets and box seats for New York Giants and Jets games. Super Bowl ticket offers made the rounds in the office every year. But Joe never went to a pro game, either. He didn’t even watch football on television during the weekends. “I just blocked it out,” says Joe. He was completely focused on his Merrill job. Thinking about football was looking backward and only produced heartache. And Joe is not one for wallowing in misery, or nostalgia.
But he did see some football during those years. His son, Kevin, the youngest of his brood, played football at Lebanon High School in New Hampshire. He was a fullback and a linebacker. Joe attended a handful of Kevin’s games each year. And it was apparent to Kevin that his father clearly missed football. “Dad would sit all by himself in the stands. He had a Dictaphone and he would chronicle every one of my plays. ‘Second and ten, you made the tackle. Third and three, you shot the wrong gap.’ Things like that.”
After every game he attended, Joe would take Kevin back to his hotel room. “We would sit there and go over every single play I had in the game,” says Kevin. “Sometimes, this would take longer than the game itself.”
Kevin was a good athlete. He was going to attend Bentley University, outside of Boston, where he’d decided to play ice hockey—his best sport—instead of football. Joe went to Kevin’s final football game as a senior in high school, the last one Kevin would ever play. “I came out of the locker room after the game and I thanked Dad for coming and then told him that I was going to hang out with my boys,” says Kevin. “I’ll never forget the look that came over his face when I said it. It was like I had ruined the family name or something. I said, ‘Are you all right?’”
Then Kevin noticed that Joe had the Dictaphone in his hand. “We’re going to the hotel room, right? To listen to the tape?” Joe asked.
Kevin told his father that his football career was officially over, and that what he really wanted to do was go out and celebrate with his teammates instead.
“He just looked so sad and disappointed,” says Kevin.
At around this time, it began to sink in on Joe just how tough it had been on his kids since he’d left New Hampshire. He had of course made trips to see them over the years, but they were sporadic, and there never seemed to be enough time for him to really focus on each one of the children. So he decided he would change the way they spent time together. Rather than taking the whole gang out when he visited them in New Hampshire, he would concentrate on one kid at a time. He would schedule one visit around, say, Kim, and take her out for pizza. “This was great and a lot of fun when it was your turn,” says Kelly. “But it wasn’t when you had to wait a month or two before you saw him again.”
As they got older, his children started to demand more of his time and attention. He’d missed a huge chunk of their childhood, and they had little sense of what he had done with his life since leaving them. That changed when Joe decided he needed to find a way to make up for his absence from their lives, and began flying his kids down for weekends in New York. “We really had no idea what he was doing or how successful he’d been until we started going to New York,” says Kim. “He didn’t talk much about things like money.” Kathe knew, of course, because he still supported them, but she didn’t talk much about it, either. When the kids visited him, they started to understand. This had nothing to do with his apartment. By then Joe had long since moved out of his parents’ house, but he lived in a studio apartment in Battery Park—quite a modest dwelling for a man now worth millions. It was the things they did together in the city—Yankees games, good restaurants, private cars—and the respect he commanded at his office that hinted at how changed his circumstances were. Although Joe was never extravagant, he was certainly different from the penny-pinching coach they’d known in New Hampshire.
He was also different from the man who had been so focused on his career that he didn’t have time for his children. “Once he started to realize that we needed more, he was there for us,” says Kim. Indeed, he happened to be out of the office—making a rare weekday visit to one of his children, who had called out to him in a moment of need—on the day that he suffered the biggest disaster of his business career.
Joe was put in charge of all municipal lending in 1993. It was by far the toughest assignment he’d faced as a manager at Merrill. He had to rebuild a division that had been absolutely devastated.
Earlier that year Merrill Lynch had gone through an episode that, until its complete meltdown in the 2008 financial crisis, was the most embarrassing in the firm’s history. A trader in the munis division convinced the government of California’s prosperous Orange County to place risky, highly leveraged bets with its municipal fund. When interest rates unexpectedly rose, Orange County went bankrupt, then eventually sued Merrill for getting them into the mess to begin with. (Merrill ultimately paid the county a settlement of $400 million.)
The disgrace left Merrill’s municipal division in shambles—disheartened, embarrassed, unmotivated, and unproductive. Dave Komansky, who led the institutional side of Merrill at the time, thought he had exactly the right guy to turn it around.
“Joe didn’t know a thing about muni bonds, but he knew how to manage people,” says Komansky. “The division needed a charge of get-up-and-go.”
When Joe looked at the municipals division he saw a risk-averse group of people stuck in a rut of doing things the way they’d always done them, not unlike those fixed-income salesmen he’d roiled a few years earlier. At the time the munis division made bids for trades in partnerships with other Wall Street firms. Doing the trades in this manner helped spread the risk. But it also pinched the gains. Joe decided he needed to change that approach and push them to become bolder. He brought in the muni managers and coached them up: “These other firms aren’t your friends. Gimme a break. What, you don’t have the brains to do these trades on your own? You either know what the hell you’re doing or you don’t.”
Dave Andersen, a senior munis manager, remembers making the calls to his peers at Salomon, Goldman, and JP Morgan and telling them that he would no longer be making bids with them, but against them. “It was painful. I felt like they’d been partners. We’d all been doing this the same way for years. They were livid.”
The heads of the municipal divisions at the rival firms called Joe and told him that if Andersen followed through on his intentions, what he was doing was going to take down Merrill. Joe used their threats to his advantage. He called Andersen into his office. “Dave, I just got a call from your buddies at Salomon and Goldman,” he said. “They told me I should fire you.”
“That pissed me off,” says Andersen. “It also got me very fired up.”
Still, Joe believed he had to make an even bigger splash to get the rest of the team on board. He wanted them to think bigger, to take more risks. He decided he would show the way.
Municipals at the time were trading at historically cheap levels. Joe thought they had to rise in price sometime, so he placed a $1 billion bet that they would (called “going long”). But with that much money at risk, he needed to make a hedge. So he decided to make a bet that Treasuries would go down (“shorting”). Joe had to clear the trade with the risk management desk, which took a week or so, but one gray winter day, the trade went through.
It so happened that Joe was leaving the office early that day. His youngest daughter, Kara, who was at Taft, a boarding school in Connecticut, had called to tell him that she was terribly homesick. “I don’t know why I called him and not my mom,” says Kara. “I just needed my dad.” She was the captain of the basketball team. She had a game at Choate. Could he possibly come?
Hearing his daughter in pain on the phone crushed him. Despite the big trade he had just put through, Joe knew that he had to go see Kara.
When he left the office that afternoon, the trade was stable. All seemed well. Outside, the first few flakes of a gathering snowstorm had begun to fall. Joe jumped into a rental car and started the two-hour drive to the game in Wallingford, Connecticut.
At this point in time losing $200,000 in a day in the munis division was considered horrible, possibly grounds for being fired.
The traffic on the road was slow because of the intermittent snow. Joe eventually made it to Choate, just in time for the last ten minutes of Kara’s game. “I looked up in the stands and saw that he came,” says Kara. “It was a very big deal. It was probably the first time that I felt my dad was there for me.” After the game, Kara had to leave on the team bus. Joe kissed her good-bye.
When he got back in the car, there was a message on his phone. It was from one of his muni guys. The man sounded panicked. “Um, Joe, we’ve got a problem.” The hedge had blown up. Munis had gotten crushed and plummeted. Treasuries had had a phenomenal day and shot up. It was the exact opposite of Joe’s supposedly hedged bet. “I was a wishbone,” says Joe. “And I just got ripped apart.”
Meanwhile, the few flakes of snow from a few hours ago had become a full-blown blizzard. The wipers on the car couldn’t go fast enough to clear the windshield of the snow. Joe’s headlights were useless, serving only to blind him further by illuminating the white flakes. He crawled down I-95 at twenty-five miles an hour.
After a sleepless night, Joe was the first one in the office the next morning. He checked the damage on the trade. It was staggering. Joe had lost the company $14 million. It was, by far, the biggest loss on a single trade in the municipal division’s history. “It was unheard of, virtually considered impossible,” says Joe. And what made it even worse: There was no way to get out of it immediately. There was still more serious blood to be shed.
Joe leaned back in his chair. He was devastated.
A few hours later, Joe saw Dave Komansky lumber into his office. Komansky is a big man with a Marlon Brando-in-The Godfather growl. As the person in charge of the entire institutional side, and the one who had put Joe into his current position, he was Joe’s immediate boss. Joe knocked on his door.
Komansky was well aware of the disaster. He sat behind his desk and smiled at Joe. Komansky himself had grown up in a tenement building in the Bronx. He was a sympathetic ear. That probably saved Joe’s job. “I liked Joe a lot,” says Komansky. “He was different. He was loud and bellicose and very rough around the edges, not like a lot of guys walking around Merrill in those days, the Ivy Leaguers. The big difference between Joe and the other guys in similar jobs was that Joe was getting things done. A lot of those guys who seemed like the perfect package couldn’t find their ass with a road map.”
Komansky asked Joe what had happened. Joe laid out the logic behind the trade, then admitted that “we got our balls ripped off.” Then he explained that selling out now would make it even more catastrophic.
Komansky admired the fact that Joe was courageous enough to take risks. It was why he’d put him in charge of municipals in the first place. And he trusted that Joe was smart enough to learn from his mistakes. “In the trading business, if you have guys who never lose money, they aren’t doing their jobs,” says Komansky. “You just have to hope that they win more than they lose.”
Joe would lose more—a lot more—before he could even begin to win again. Because of the aftershocks of the trade, Merrill lost another $8 million on the second day. But Joe learned a lesson that would come in very handy during the rest of his business career: “I never wanted to be in a position where you had to sit and hope the markets will take care of you.”
Joe continued to tweak new and different hedges on the munis desk, eventually figuring out that hedging municipals and mortgages was a winner. And just as Komansky had hoped, Joe started to win more than he lost.
After Joe’s very rocky beginning with the municipals division, Merrill ended 1993 as the largest bond underwriter in the world, a streak that has continued, unabated, to this day. Beginning in 1993 and at the end of every year from then on, Joe would have a large banner made up, proclaiming the wins of the previous twelve months. He had them hung from the tall ceilings on the trading floor, and as the banners proliferated over the years, their presence enhanced the sporting arena feel of the space. “It was like being in the Boston Garden,” says Andersen.
When Merrill Lynch blew up during the 2008 financial crisis and lost $28 billion as a firm, the municipals division—still largely Joe’s team, though he himself was no longer there—actually made $500 million. Bank of America bought Merrill on the cheap that same year. They laid off entire divisions and absorbed others. But one of the few they left wholly intact was munis.
By insisting that Merrill make its own bids against—and not with—the Street, Joe revolutionized the municipals business. He did it against some pretty strong headwinds. “Without him, we never would have changed the way we did things,” says Andersen, who is still with the division now in its new home at Bank of America. “All these years later we still bid exactly the way he changed it, and now so do most of our competitors.”
In just a decade, after starting basically from scratch, Joe had become unbelievably successful at Merrill. But football, as much as he tried to forget it, never seemed to let him go. In 1994—out of the blue—Joe received a call from the University of Buffalo. The athletic director wanted to know if Joe had any interest in the vacant head-coaching position.
Now in his forties, Joe had been out of football for eleven years. He had fast-tracked his way through Merrill. He had huge responsibilities as a corporate leader and was finally making serious money, with even more serious money on the near horizon. But the call from Buffalo awakened something within him that had been dormant for so long that he had been unaware that it was still alive. “All of a sudden I couldn’t breathe,” he says. “I didn’t realize that I still had all of this desire to coach.”
He did a four-hour interview with the athletic director. He started making calls to potential staff members, including Olivadotti and Chuck Johnson, the head coach at Ridgewood High School in New Jersey. He even let a few colleagues know that he was considering going after the job. “I was pretty shocked,” says Quinn. “He was on track to do anything he wanted at Merrill. He was doing great, making great money. And we didn’t want to lose him.”
Joe thought about it for a week. But as much as he wanted to entertain the thought of coaching again, Joe realized he would have to pass. Things were going too well at Merrill to quit then. And there happened to be another reason he wanted to stick around.
That reason was a woman, a pretty, petite, brown-eyed divorcee and mother of two boys named Amy Jardine.
In 1992 Amy was living with her young sons in the oceanfront town of Rumson, New Jersey, an hour south of Manhattan. Fresh off her divorce, she was slowly wading back into the dating pool, dipping in one toe at a time. Her friends Dave and Ginny Bauer believed she needed to dive in, head first. And they believed they had the perfect person to help with that in Joe, whom Dave knew from Merrill Lynch. “They asked me if I wanted to go on a date with this guy. Ginny said she had no idea if I would like him, but she said I’d have a blast at dinner,” says Amy. She agreed to meet him only if the four of them double-dated.
But the foursome had a difficult time finding a time when they were all free. Joe eventually took the initiative and called Amy. He proceeded to call her weekly for the next three months before he finally convinced her to come to the city for a date. Joe wanted to take her to Cellar in the Sky, a fancy restaurant located on the top of the north tower of the World Trade Center. She agreed. He asked her what she’d be wearing so he’d know how to recognize her. A blue dress, she replied. “I’ll be the short, fat, dumpy one,” he told her.
On the evening of their date, Amy decided to take the ferryboat from Rumson to the city. She got to the dock and waited. And waited. She finally saw a man standing on an adjacent dock. She asked him when the next boat would be along. “Next year, ma’am,” he replied. “The last ferry of the season was last week.”
Amy was supposed to meet Joe for the restaurant’s prix fixe dinner, which was served at 7:00 p.m. It was now 6:00 p.m.
She called Joe and told him that she couldn’t make it. “That’s not okay,” he told her. Amy got in a cab headed for Manhattan. When they finally got to the city, Amy jumped from the cab and ran the last three blocks to the World Trade Center. Walking into the foyer, she was greeted by an elevator man who said: “Oh, you’re the lady in the blue dress.” When she handed her coat over to be checked, the man in the cloakroom said: “So you’re the lady in the blue dress.” The maitre’d said the same thing. “Finally, I ran smack into Joe,” says Amy. “I must have downed a bottle of wine that night.”
Her first impression: “Joe was really energetic, very strong and to the point. And he wasn’t that short, fat, or dumpy.”
They ended up dating for three years. “It was a long courtship, but it was very intense,” she says. “That made it fun for me.”
Joe and Amy were already engaged when Joe got the call from Buffalo. And Amy “would have rather plucked her eyes out than go live there,” says Joe. He wanted desperately to coach again. But in his heart he knew the time wasn’t right.
Amy and Joe were married in 1995 on a boat that cruised around the island of Manhattan. They—along with Amy’s two boys, John and Jeff—moved to Chatham, New Jersey, thirty miles west of the city. Dave and Ginny remained their close friends for years. But Dave would be killed in the 2001 terrorist attacks. By then, he was working in the north tower of the World Trade Center, the same place where Joe and Amy had had their first date.
After getting married to Amy, Joe continued to scramble up the corporate ladder. By 2001, he had led two core parts of Merrill Lynch and was on the executive committee on both the retail and institutional sides. He also was the head of the firm’s investment products, insurance, retirement and midsized companies (and two of his kids, Kara and Kevin, were working there). “Each step up he took was just more and more unlikely,” says Quinn. He was perhaps just one layer removed from the very top.
Joe’s era at Merrill—from the mid-1980s to the early 2000s—was its heyday, when the firm successfully transformed itself from a brokerage into one of the world’s leading investment banks. Those glory years produced Merrill’s “greatest generation,” who would become big shots all over Wall Street and beyond. Joe’s fellow trainee Thomas Hughes went on to become the CEO of the highly regarded boutique bank Gleacher & Company. Kelly Martin became the CEO of the biotech Elan. Seth Waugh has been the CEO of Deutsche Bank Americas since 2002. Roger Vasey retired from Merrill as a legend in institutional investing and founded his own private equity firm. Dave Andersen is in charge of risk management in Bank of America Merrill Lynch’s municipals division, one of the last vestiges of the old Merrill. James Gorman, who ran Merrill’s corporate sales when Joe was there, is the current CEO of Morgan Stanley.
And then there was Joe, who was right in the middle of Merrill’s rise, which was propelled in part due to the way he transformed how the company—and Wall Street—conducted business.
“The guy just willed it all to happen,” says Joe Petri, who became a good friend of Joe’s. Much of his success, Joe still believes, was built on his previous career as a football coach. It made him mentally strong and prepared him to lead and, maybe most important, motivate. “People who worked for him at Merrill responded to his rah-rah stuff,” says Dave Komansky, who became Merrill Lynch’s CEO in 1997 until he retired in 2002. “They would never admit it, but they did. He could get at people’s hearts.”
As fortunate as Merrill was to have Joe, the reverse was true as well. During his run there, Merrill was as close to a true meritocracy as has ever been seen on Wall Street, thanks to people like Quinn, Vasey, and Komansky, who were able to look past easy labels and so-called pedigree and polish. Joe got his chance there because of his personality. He made the most of that chance because his skills and productivity were duly rewarded. But at most other Wall Street firms at the time, Joe would likely have run into roadblocks of ingrained prejudice that would have proven insurmountable.
Merrill’s glory years ended in the mid-2000s, when the collegial team atmosphere that first made it great was fractured by the individual greed of some of its management. Though Joe had little shot at running Merrill, Vasey says given what he did later at TD Ameritrade, “There is no question that had Joe run Merrill for the last ten years, it would have been an entirely different outcome.”
But he wouldn’t get the chance. In 2008, the firm once known as the “thundering herd” would run right off a cliff.
By that time, Joe would be long gone.