Since its rise to prominence in the late 1970s, Salomon Brothers has been the story of a band of renegades, less like conventional businessmen than any men who ever wore suits, dragged kicking into corporate America. People forget that there was a time in the early 1980s when Salomon Brothers was so much more profitable than the rest of Wall Street that it seemed to be in an entirely different business.
Its willingness to take risks in the bond market gave it something like a monopoly. But the firm was willing to take unusual risks because it was made up of unusual people.
The old Salomon Brothers was staffed by all those wonderful freaks: fat guys who refused to speak standard English, whippet-thin ulcer addicts as tense as steel rods. But every day men in grey suits from Harvard Business School seized a bit more control, leaving the odd balls with less room to manoeuvre. The 1991 Treasury-bond scandal accelerated a process well underway by the mid-1980s.
The firm that was sold to Travelers for twice its book value bore no relation to the firm I worked for and wrote about. Most of the characters have moved on: John Gutfreund and Lewie Ranieri and John Meriwether, but also a raft of lesser-known bond traders and salesmen who made the money: Larry Hilibrand, Tom Pura, Tom Bernard, Craig Coates, Mike Mortara.
The other way to understand the takeover is as a routine act of corporate madness: Investment bankers were never meant to be owned by larger corporations: they are too adept at taking advantage of their employers and putative shareholders. But the buyer of Salomon Brothers is to be pitied. Salomon's success has always hinged upon it remaining outside corporate culture. To be greatly profitable, the firm's traders must be allowed behaviour that no giant corporation would condone.
The one business in which Salomon retains its former money-making powers is proprietary trading. Trading the house account at Salomon Brothers is a bit like being striker at Manchester United: you are, by virtue of your position, destined for greatness.
Each year in the 1990s one of these traders (Larry Hilibrand, Rob Stavis, Victor Haghani, Hans Hufschmid, Shigeru Myojin) has made off with $20m- plus, and left Wall Street wondering about his peculiar gifts. His gifts were not peculiar. He was just permitted to bet the house on a hunch.
But there will come a time when Travelers chairman Sanford Weill will have to explain to his board that some geek dropped $400m in Chinese derivatives. And then what? This takeover is one of many transactions transforming global finance, so the buyer has the usual excuse that everyone else is doing it. But you can see where the creation of financial giants will end: with a financial market in which the biggest money is made, and the most interesting business is still done by people who are not in giant financial firms. With each day the most talented, ambitious (and lucky) traders are learning that the best thing they can do at Salomon Brothers (or Salomon Smith Barney) is to quit.