Page 599 - WhyAsInY

“resolvinG tHe Crisis; restorinG tHe ConfiDenCe”
The business of being a financial advisor must have been, it seems to me, a very lucrative one. This is easily demonstrated: At some point, the political decision was made that having been involved in an S&L- related loan default, no matter how remote or insignificant in scale the involvement, was a no-no. We could not tolerate a story that showed bad financial conduct by someone who worked for or with us. (Jerry Jacobs was actually forced to leave after it was disclosed that he had abandoned a very small vacation-home-losing investment to his local thrift in Ari- zona.) It transpires that Goldman Sachs had promoted the purchase of an S&L headquarters building in a tax shelter sale-leaseback transac- tion (similar to those that Integrated Resources had marketed). Unfortunately for Goldman’s investors, the S&L ultimately failed and therefore defaulted in its lease payments. That led (virtually automati- cally) to a default under the $30-million mortgage loan that encumbered the building, which was now held by the RTC (as successor to the failed institution). Lamar Kelly called me in to aid in negotiations with our very busy financial advisor. Lamar believed that, as a matter of political appearance, Goldman should pay off the mortgage loan in its entirety. I couldn’t believe it. Much as I did not love Goldman, I couldn’t under- stand why they would consider paying off the debt. It was a non-recourse loan, meaning that if there were a default, the building could be taken by the lender, but no one could be held personally liable. In no event would Goldman be even nominally liable; they were not a party to the transaction; they were just a facilitator.
What naiveté! We obtained a wired payment of $30 million, plus accrued and unpaid interest, from Goldman Sachs on the Monday that followed the Friday afternoon during which we “negotiated” with their partner-in-charge, whom we rudely interrupted while he was taking in the sun at his Southampton home. Goldman thereby retained its place on the lucky list of approved financial advisors, and the transaction was never mentioned again.
As you would expect, RTC employees were not permitted to accept gifts from “vendors,” such as financial advisors, or to permit vendors to
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