I describe myself as a often-grumpy, seventy-five-year-old, retired single man. I joined the US Air Force at the age of seventeen. After a few feeble attempts at jobs, I took a clerical position with a Wall Street firm. I remained on Wall Street for the rest of my working career (roughly thirty-three years). I retired unwillingly at the age of fifty-eight due to a disability.

My military experience had no value in the business world. I held a clerical position for my entire three-and-a-half years at E. F. Hutton. I was in my fifth year of a twenty-year stint at Paine Webber before I was given my first supervisory position. About five years after that, I became a methods and procedures analyst. My job was to look at the way many departments in the firm performed their functions and devise procedural changes that would cut costs. Ironically, senior management found another way to cut costs, and that was to eliminate the methods and procedures department.
A few years later, I became a credit analyst at Paine Webber and eventually became an assistant vice president and co-manager of the credit department, which was staffed by six MBAs. I was responsible for setting trading limits (credit lines) for institutional accounts that traded in Treasury and mortgage-backed securities. The company’s institutional customer base consisted mostly of broker dealers, commercial banks, mortgage bankers, and savings-and-loan institutions.
Credit limits are a regulatory requirement that served to protect Paine Webber from losses in case an institutional customer walked away from its trades. Transactions in mortgage-backed securities were usually made for multiple millions of dollars and were completed on a forward basis—that is, buy now, pay later. Some of these trades took many months to settle. The firm traded billions in securities every week.
Credit limits were extended based on the financial strength of the institution. A determination was made as to how much of a loss the institutional customer could absorb without putting itself at risk. In order to determine a credit limit, we would complete a thorough review of the institution’s financial statements. Needless to say, this required extensive knowledge of how these institutions functioned.
After leaving Paine Webber, I joined Nomura Securities, the US subsidiary of the giant Japanese broker. At the time, Nomura Securities was one of about thirty-five primary dealers through which the government sold newly issued Treasury securities to institutions. I managed the reporting function that the Federal Reserve required of dealers.
I don’t know exactly how accurately the other primary dealers were in their reporting, but when I performed this function for Nomura, I found that two of the reporting requirements were in fact not doable. When Nomura challenged the Fed on this, it responded that we must be wrong because the other primary dealers did not have the same problem. After a few letters to and meetings with the Fed, we were ultimately proven correct, and the bank changed both of the reporting requirements.