Hi Bob, I was a Management proprietary foreign Exchange trader for Chase Manhattan for a couple of
years at 1 Chase Manhattan Plaza right next to the NY FED Bank... we did all our FX trading and bond
trading .. and futures trading on the 35th floor..... this was many moons ago...
since I was "speculating" with the banks capital they had to designate me as senior management, even
though I was a proprietary trader...... having worked for the worlds biggest and best FX trading bank
and working developing technical analysis and trend trading systems with Tony Jalodoni, who was the
treasurer of Citi Sydney and had the second biggest position limit in FX for Citi world wide really helped
provided me a nice calling card when I went back to New York from Sydney.
I interviewed with the SVP who ran FX for Chemical Bank and he was really annoyed that I did not
give him the opportunity to counter the offer that Chase made....... but I had visions of working for
the Rockefeller Bank.... David Rockefeller had been the CEO for a number of years for Chase .....
my mentor at Chase, Joerg Schroder, was a very strongly opinionated colorful German born gentleman
who they initially had me sit next to on the trading floor and we bonded.... and when I had the opportunity
to move a little closer to the spot desks I didn't.
Joerg had a very strong German accent was in his early 40's, had been with the bank over 20 years...
he had taken assignments as the treasurer of Chase Canada and Chase Austria... and was now back
in NY running the Medium Term FX book..... which at Citibank we called the Long Dated FX book ...
and I had worked very closely with Henry Volquardsen, who was on the Citi Long Dated FX desk in
NY at 55 Water street... while I was working for Citi Sydney.
Joerg understood the concepts of the time value of money and he also was very dogmatic as Germans
can be... he would tell me that the senior management did not understand that the Long dated FX book
could be valued in several different ways and there the way they were valuing it was incorrect.
To start with you have an inventory of an array of bonds in various currencies in various maturities......
Do you value at the Bid price...... the Ask price.... and the bid ask spread were really darn massive on
these things as this was before the WWW and the market is just not that liquid.... and you have emerging
market bonds and currency positions in your book and as we can see from this week you can see how
there is a tremendous amount of wiggle room, in fact there is an actual vigorous debate as to what many
of these assets are worth... but they are all there in you book and you are running the book.
And the CEO and the guys on the board don't really understand the arcane products that are being created
and also they are not up at 3 AM getting the exact prices of a vast array of currencies...... currency
forwards, and notes and bonds all along the yield curve from many countries .... the price moves in
Singapore at 3 AM.... that's YOUR JOB!!!!!! That's why YOUR RUNNING the LONG DATED BOOK!!!
LOL
and then their is the Swaps Book..... that my English boss David Croft was running in Citi Sydney.....
that was well over 10 Billion in inventory and Mr. Croft came to me and asked me to write up a market
analysis that illustrated how market volatility had subsided and been reduced so that he could get more
"Risk Points" from HQ in New York to expand the size of the swaps book.
I was the only 1 in the entire dealing floor of 80 people who had a computer that generated live time
computer charts on all the markets and could also generate all the moving averages, technical studies,
different time frames..... plus I was into Elliott wave, Fibonacci retracements, time cycles.... momentum
divergences ... support and resistance.... this was brand new technology that I implemented as we
were using a similar system at the Futures Firm.... The Banks.... inherently were such cash machines that
they did not need to the latest tech... all every dealer and trader had was a reuters screen and we had
a bond quote provider..... So I would have an array of traders who would come around on occasion to
look at a chart or two and have me pontificate as to what might be happening....
What was amazing is that when I went to Chase Manhattan in 1987 it was
the exact same situation....
Henry would hang around in the early evening in New York when it was morning in Sydney and he would
be working with our bond and currency desks... and Australia was a complete mess back in 1986 and 1987
Australia, had a "Big Bang" where they opened up the banking systems to all the foreign banks, as
well as floated the currency in 1985... The AUD started out at !.15... went up to 1.18 and then collapsed in
a viscous decline all the way down to .5710 on a spike low in 1986....
There was lots of talk about the country becoming a banana republic... When I was at Richardson Mann
the Futures firm in the American Express building where I was working just prior to going to Citi... a few of
the more sardonic traders....got a black marker and drew out an Aussie Flag on the white board and
then taped an actual banana to it!.... LOL..... funny stuff.....
So with the AUD collapsing by 60% in 6 or 8 months the RBA had to dramatically raise short term interest
rates and dramatically invert the yield curve in a desperate central banking 101 maneuver to stem the
bleeding, stop the currency's slide.... and stop capital flight out of the country....
90 day bank accepted bill rates where at fluctuating between 14% and 15% while the 10 year AUD bond
was yielding 11% +..... so those were really great rates of return and there are ways of for bankers
to arbitrage those especially when you go several years out into the future where the market is not
that liquid..... you have a sea of institutional investors, insurance companies, pension funds, hedge funds,
endowments, foundations, Family Offices etc who want to purchase These Long dated AUD bonds.....
they may want the currency risk hedged... which us friendly bankers will gladly do for them for a fee....
others may feel feel that the currency will probably go up , so they don't need hedging but they don't know
exactly what the bonds are trading for..... thats why for years when you purchased bonds from say
Merrill Lynch for you personal account there was not commission when you bought the bond, it was built
into the price..... and it was up to the good graces of the banker / broker... how larger of a spread he
was going to make off of you.
This is capitalism..... and the spreads in the old days in many products and in Currency Swaps and Interest
rate swaps were big enough to drive a freight train through.....
In 1986 CitiBank made $800 milliion in FX dealing and most of it was simply on the bid/ask spread.....
no genius trading.... it was known as the cash cow business segment of the banking business.
It's Kind of the same reason that smart money gravitates to Insurance and Especially to Reinsurance....
In the Re Insurance business... You take risk, and long dated risk, and slice it up, and repackage it and
then resell it to another firm for a fee and thus the liability is no longer on your books / balance sheet,
however you are perpetually collecting recurring fee income while not creating risk on your balance sheet.
Some investors actively seek to take on risky assets and other investors actively work to mitigate and
lay off risk..... and reduce their risk profile..... the great thing about have a minimal or negative risk profile
is that it's pretty hard to blow up your balance sheet when there is no risky assets on it!!!!
Bob about JPM......
In the early 1970's.... there was lots of talk in books regarding who were the biggest money center banks
that owned the Fed. Manufacturers Hanover, Chemical Bank, Bankers Trust, Chase Manhattan, JP Morgan ,Bank of NY , Mellon Bank... which merged into Bank of NY Mellon
Bankers Trust which was one of the most sophisticated banks in terms of trading, developing products,
derivatives and really powerful next generation world class banking products was snapped up by
Deutsche Bank.... Hence.... DB's expertise and extensive derivatives and trading operations.
Chemical Bank bought Manny Hanny, then Chemical merged with Chase but decided to use the Chase
Name, and then continued on their acquisitive ways by buying out JP Morgan and thus we have the
Leviathan JP Morgan Chase. CitiCorp... the 1st national city bank of New York which was established in 1812... has not really merged .... James Stillman really built up the bank in the late 1800's and
Stillman forged very strong alliances with the Rockefellers and Kuhn, Loeb & Co , who were the
principle US bankers for the Rothschilld banking family......
and a few years ago the Rockefellers and the Rothschilds combined their Family Offices......
a valued consulting client -vbg- (like they need any guidance from me.......-g-)
-----------------------------------
James Jewett Stillman (June 9, 1850 – March 15, 1918) was an American businessman who invested in land, banking, and railroads in New York, Texas, and Mexico. He was chairman of the board of directors of the National City Bank. [2] He forged alliances with the Rockefeller family, Standard Oil and Kuhn, Loeb & Co. to lay a foundation that made it, arguably, "the greatest bank in the Western Hemisphere." [3] He engaged in an expansion policy that made National City the largest bank in the United States by 1894, the first to open foreign branches, and a leader in foreign exchange. [4] By 1902, the bank was able to pay any sum of money to any city in the world within 24 hours. [5] He was worth approximately $77 million at the time of his death in 1909, making him one of the wealthiest people in the country at the time.
Contents
1Biography 2Personal life 2.1Descendants 2.2Legacy 3References 4Further reading 5External links
Biography[ edit]Stillman was born on June 9, 1850 to Charles Stillman (1810–1875) and Elizabeth Pamela Goodrich in Brownsville, Texas, a town founded by his father. Both of his parents were born in Wethersfield, Connecticut. Charles Stillman had significant business interests which James acquired in 1872. He expanded those to control of sixteen Texas banks and a significant land holdings in the Rio Grande Valley, particularly Corpus Christi and Kerrville, Texas. [6]
Along with W. Averell Harriman, Jacob Henry Schiff and William Rockefeller, he controlled the most important Texas railroads (including the Texas and Pacific Railway, the Southern Pacific Railroad, the International-Great Northern Railroad, the Union Pacific Southern Railway, the St. Louis, Brownsville and Mexico Railway, and the Mexican National Railroad).
In 1876, Stillman supported Porfirio Díaz's overthrow of the government of Mexico by the Revolution of Tuxtepec.
He was chairman of the board of directors of the National City Bank and retired in 1908. [2]
He died on March 15, 1918 at his home on 9 East 72nd Street in Manhattan, New York. [2] His funeral was at St. Bartholomew's Episcopal Church, New York. [7]
Personal life[ edit]He married Sarah Elizabeth Rumrill (1855–1925). [8] Together they had:
Sarah Elizabeth "Elsie" Stillman (1872–1935), who married William Goodsell Rockefeller (1870–1922), the son of William Rockefeller, a senior executive of Standard Oil James Alexander Stillman (1873–1944), who married Anne Urquhart Potter. [9] He also served as president of National City Bank of New YorkIsabel Goodrich Stillman (1876–1935), who married Percy Avery Rockefeller (1878—1934) in 1901. Percy was another son of William RockefellerCharles Chauncey Stillman (1877–1926), who died aboard the RMS Aquitania [10] and who married Mary E. White (1870—1925). [11]Ernest Goodrich Stillman (1884–1949), who married Mildred Margaret Whitney (1890–1950) [12]Stillman was an intimate friends of James O. Bloss and John William Sterling. After the death of James Gordon Bennett Jr. it was learned by the administrators of his estate that he had appointed Stillman one of the administrators and trustees. Stillman had little or no opportunity to act under the authority of Bennett's will, as he died a few weeks after Bennett's death. Stillman named Sterling one of his executors. Sterling could hardly have begun his duties under Stillman's will when he too died suddenly. The Bennett estate, the Stillman estate and the Sterling estate totaled about $76,000,000. After Sterling's death it was learned that he had appointed his long time intimate companion, Bloss, one of the executors. And a few weeks after Sterling's death, Bloss died. [13]
Descendants[ edit]His grandchildren included Godfrey Stillman Rockefeller (1899–1983), a financier, and James Stillman Rockefeller (1902–2004), who married Nancy Carnegie (died 1994), grandniece of Andrew Carnegie. James also served as president of National City from 1952 to 1959 and was chairman from 1959 to 1967. [14] His great-grandson is the director, and Academy Award nominee, Whit Stillman (born 1952). [15]
Legacy[ edit]In 1928, the C.O. Stillman was named in his honor. At the time, it was the largest oil tanker in the World. [16] Stillman is considered to have been one of the 100 wealthiest Americans, having left an enormous fortune. [1]
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