At eleven minutes after five o’clock on the afternoon of September 14th 2005, she was proved right. It flashed onto my screen – DELTA AIRLINES FILES FOR BANKRUPTCY PROTECTION. And I swear to God, the collective heart of Lehman Brothers skipped about six beats. Larry McCarthy was not in, and as the principal Delta convertible bond trader, I had markets to make.

I was on my feet in an instant. Alex Kirk was walking directly toward me, fast. I opened up the line to Larry, and I could see Jane hurrying across the floor also making a bee-line for my desk. That’s what I just loved about her. She was right there. Right there when I really needed her. Because for the next hour there was going to be pandemonium, as millions of Delta bonds, crashing through the floor, were going to be launched onto the market by people trying to get the hell out of them, most of them our best clients.

We were duty bound and on our honor to purchase them, and the hits would be flying like cannon balls. Millions and millions of dollars worth of Delta Airline bonds which no one any longer wanted. Holy Shit ! My blood was pumping. Just for a few moments the floor was very quiet, and Alex Kirk standing right on my shoulder, said quietly, “Steady, Larry. We’re ready for this.”

I looked at Jane who was unsmiling. “Stay focused,” said brave, brave Jane, “They’re worth 52 cents each, no matter how many come up for sale.” It flashed through my mind what Larry had said about her – “She can tell you what Delta are serving for lunch on their morning flight to Berlin – and what it cost 170 them. There’s nothing she doesn’t know about that company.”

I understood the position of most of the bondholders. They’d do darn near anything to get out. But I had to make the market in what would be an avalanche of selling. Millions of dollars depended on my decision, which was I guess why every eye on the entire floor was trained on us, everyone waiting for my first call, on the price I’d buy, and the price I’d sell, though to whom God alone knew.

Vividly I remember the phones around me ringing, and then in the middle of this opening salvo, friggin’ Northwest Airlines also declared bankruptcy !

There was one of those audible loud gasps around the floor, the noise you hear in a big ballpark when a fastball rips past the batter on a full count in the ninth. Jesus Christ I thought the roof was going to fall in, since the skies has apparently collapsed on the airline industry. By now people were yelling because we could get hit by Northwest bondholders bailing out. But it was too late for strategy.

My heart was pounding, and then the boss of High-Yield Sales, Mike Pedone, hurled his right arm into the air and snapped, “Larry, I have AIG on the wire and what do you know, they’re a seller. Where are you on Delta ? Gimme a bid on five million. I need a bid right now.”

For a split second, I hesitated, and now Mike yelled, “They got five million to go ! Where are you ?” That’s when I called it. “SIXTEEN – EIGHTEEN !” And the moment those words were out of my mouth Lehman Brothers was committed to an $800,000 purchase of five million bonds at 16 cents on the dollar. Five times $160,000 were the numbers rushing through my head.

“You’re done !” I said, snapping out the trader’s no-going-back–phrase, and confirming our first trade in
Deltas was now cast in marble. I heard Mike fire out his own confirmation to the customer, “Okay, you’re done.”

And twenty seconds later, we got hit again – Terence Tucker on the line from coverts … “WHERE ARE YOU ON DELTA ? FIVE MILLION UP!” These people were desperate, trying to get rid of their holdings in the bankrupt airline. I called the same price, 16 cents, but the words were hardly out of my mouth when we got hit again. Another five million, and then again.

Instantly I dropped the price – “FIFTEEN-SEVENTEEN,” and our client took it. “You’re done!” I yelled. Maybe they’d settle, settle at 15. But they never did. Lisa Konrad called out, “I got Silver Point on the line – where are you on Delta right now ? Five up.”

In the middle of all this, someone wanted to sell about a zillion Northwest bonds. Joe and I were trying to cope with these twin issues. Larry was on the phone, and I was trying to talk to him. In the all-enveloping frenzy to sell, he bawled down the line, “IF DELTA GO TO 13, BUY ‘EM ALL !”

Three more sell orders came flashing in. Beside me, Joe Beggans was talking in all directions – “HIT ! BUY ! LIFT ! FIVE MILLION UP ! WHERE ARE YOU ON THE FOLLOW ?” Everyone was shouting now, the salesmen and the traders, and millions of dollars were changing hands, darn nearly all of them in the same direction, outward.

There was nothing we could do except buy, and hope to Christ Jane Castle knew what she was doing. You’ve heard of the trenches. I was in there. And right above me, the sellers were circling, trying to get in line for a landing, like big passenger jets in a stack somewhere above JFK.

I dropped Delta’s price again, to 13, and still the sell orders came in, I guessed the ratio sellers to buyers was about 10-1. I got ‘hit’ immediately for another seven million. Larry on the phone bought around $5 million worth. Then that crack salesmen, Terence bellowed at me, “I got a buyer at 15. Five up, you want to let some fly right here ?”

This was the only buy so far. It was the only lift I had all day. Way to go Terence. I took it. Then I dropped the price again, directly to 11 and two more huge sell orders came in and we bought yet again. Sitting right next to me, Jane said quietly, “We’re stealing them, Larry, we’re stealing them. Stay focused. They’re worth 52 cents, trust me.”

I trusted her because she knew the reality, not the far-removed fury of the investors and traders. She knew about the lines of gleaming aircraft, the value of the Delta fleet, their name, their reputation, the jet-fuel problem which was strangulating them, and the murderous debt.

But above all she understood the sanctity of the bankruptcy, which would allow them to re-group, and she knew there was an intrinsic value to those bonds, beyond the debt and into the future. Jane could probably have run the airline, and here she was right next to me, telling me to buy at the lowest possible price. Telling me I was stealing them as I blasted away at the Lehman balance sheet, in this outrageous spending spree.

When the dust finally cleared, Joe Beggans and McCarthy had bought $60 million worth of Delta Bonds, I’d bought $30 million, Peter Schellbach had bought $40 million. When we added all the orders up, we’d run through about $350 million, buying all the way down to 12 cents, from outfits like Putnam and Fidelity.

There’s an old traders’ rule – never, as long as you live, sell your holdings on a day of bad news, stay away from the exit door while the mob are trying to get through. Because there’s sure to be a bounce-back, just as soon as the panic-stricken sellers have all run for their lives. When the phones finally went quiet, Alex Kirk returned to his office. Jane said, jauntily, “Don’t worry about it. We’re golden.”