Chapter 21: Department 4: Sales & Trading
June 1940. The air in New York was heavy and humid, a thick, close heat that pressed down on the city. Inside the Continental Investment Bank, the mood was just as heavy. Chapter 18 had ended with a defeat, and Chapter 19 had shown the enemy's true, deadly move. They were trying to bankrupt Boeing.
But Arthur Vance was not sweating. He was enjoying the heat, because he was finally ready to fight.
He called Elias Thorne and the small team of department heads into the large conference room. The room had a single, long table and a view of the street, but no one was looking outside. They were all looking at Arthur, who stood at the head of the table.
"Research found the target," Arthur began, his voice calm. "M&A gave us the leverage with the landing gear company. Capital Raising failed to close the deal, but their failure showed us the true enemy: National Metropolitan Bank. Now, the enemy has drawn the sword."
He tapped the table. "That sword is the Boeing loan. If they call it, Boeing dies. We die."
Elias, who had aged five years in five days, rubbed his temples. "We know this, Arthur. But what can we do? We are a small bank. We can't raise enough money to pay off the National Metropolitan loan. It's tens of millions of dollars, maybe more."
"You are still thinking like a bank, Elias," Arthur said gently. "You think in terms of lending, of debt, of rules. I think in terms of tools."
Arthur turned to face a new man sitting at the table. This was Mr. Wallace Sterling, the new head of the division Arthur was about to announce. Sterling was older, maybe forty-five, with a sharp, bird-like face and a quick, intelligent gaze. He had spent twenty years on the trading floor of a giant Wall Street firm, only to lose his job in the chaos of the Great Depression. He was hungry and had nothing left to lose. Arthur loved that kind of hunger.
"Mr. Sterling, you are here because you understand how to trade risk," Arthur said.
"I understand how to make money from risk, Mr. Vance," Sterling corrected him quickly.
Arthur smiled. "Perfect. Then let us create the fourth and final pillar of Continental. The one I call the sword. The one that acts quickly, the one that makes the rules for others."
He slapped a hand down on the table. "We are creating the Sales & Trading Division."
The Sword is Forged
Arthur explained the new department's job to the small group.
"Research finds facts. M&A buys physical assets—factories, companies. Capital Raising provides new money. But Sales & Trading—S&T—buys and sells things that only exist on paper. Stocks, bonds, corporate debt. This division is the quickest, most aggressive part of our bank. It can put immense pressure on other companies in hours, not weeks."
Elias leaned forward, his lawyer's caution fighting the banker's desire to win. "Arthur, you just told me we can't afford the Boeing loan. Even if we had the money, buying a loan that big is not a safe investment. The trust agreement—"
"The trust agreement is safe," Arthur cut in, holding up a finger. "The Continental Bank is not governed by the trust agreement. The bank is governed by its officers—you and me. And what we do with the bank's capital is our business, provided we follow banking law. And this move is perfectly legal."
He looked at Sterling. "Mr. Sterling, how does a bank treat a loan that they think is about to fail?"
Sterling's eyes lit up. This was his territory. "If National Metropolitan believes Boeing is going bankrupt, they have two goals. One, to seize assets. Two, to get the debt off their books. They want to remove the risk to their own balance sheet before the market turns against them."
Arthur nodded sharply. "Exactly. National Metropolitan doesn't see that loan as a gold mine anymore. They see it as a sickness. They are desperately trying to show their own investors that they are 'managing risk.' They want to sell it for a quick, clean exit."
"And you think they will sell it to us?" Elias asked, disbelief heavy in his voice. "To their rival? To the new bank they just voted against?"
"They don't know we are a rival, Elias," Arthur said, leaning back, the picture of composure. "They only see us as a small, clean, rich, new institution. We are the perfect buyer. We are a large, clean check. We are the answer to their problem. They want to sell their 'risky' asset to someone with zero baggage who can pay in cash."
"But the price will be terrible," Elias argued. "They'll demand full value, maybe more, because of the rumors of bankruptcy. Why would we pay a high price for a failing loan?"
Arthur smiled, a thin, cold expression that made Sterling nod in agreement. "Because the value of the loan is not the money we are buying, Elias. The value of the loan is the power it holds. It is the key to the entire kingdom. It's the gun pointed at Boeing's head. We are buying the gun."
The Mission and the Mandate
Arthur walked over to the bank's private vault door, though they had almost nothing inside. He was using the action to demonstrate the weight of the plan.
"The first, and most important, mission of Sales & Trading is this," Arthur stated clearly. "Mr. Sterling, you will put on your best suit. You will go to the headquarters of National Metropolitan Bank. You will walk in the front door. You will ask for the team managing the Boeing Commercial Loan portfolio."
Arthur's voice lowered, becoming a precise command. "Your job is to buy that loan. Buy the entire thing. All of it. Pay them in full. Offer them a price that is slightly above the current, depressed market rate, but below the loan's face value. Give them a quick profit to make them feel smart."
He turned to Elias. "Elias, you will authorize the transfer of the needed capital from Continental's main account. We will pay in cash—a direct wire transfer of cleared funds. No debt, no payment plans, no complexity. They will see the money immediately."
"How much is the loan, Arthur?" Elias asked, his heart pounding.
"We estimate the principal is around seventeen million dollars," Arthur stated.
Elias gasped. "Seventeen million? Arthur, we only have five! The bank is capitalized at five million!"
"Correct," Arthur said calmly. "That is why the S&T Division must be created now. We have spent money on the M&A purchase, on salaries, on setting up the bank. We have about $4.6 million left in liquid capital. We cannot buy the loan."
Elias threw his hands up in frustration. "Then what are we talking about?"
Arthur shook his head. "Elias, you are still thinking in absolutes. We can't buy the whole loan with our capital. But we can put a very large amount of our money into the deal and borrow the rest from a third party. We are a bank, Elias. We can take out a short-term, large loan from the Federal Reserve or another bank. We use our five million as collateral and borrow the remaining twelve million."
"And you think we can do that in one day?" Elias asked, aghast.
"No. We do it in four hours," Arthur corrected him. "National Metropolitan must not have time to think. They must not realize that the buyer of the loan is the same person they just denied a partnership to. Speed is our friend. Greed is their weakness."
He looked at Sterling. "Mr. Sterling, you leave today. You go with the authority to spend up to twenty million dollars. Get the paperwork signed. Get the wire transfer codes. The deal must be completed, settled, and recorded with the City before the close of business tomorrow."
Sterling stood up. He wasn't scared. He was excited. This was the kind of ruthless, large-scale deal-making he had been born for, the kind that had disappeared from the market.
"Mr. Vance, I will have that loan by the end of tomorrow," Sterling promised, a genuine light in his eyes.
The Silent Victory
The next day, the small team waited. Elias was a wreck. He paced his office like a caged animal. Arthur sat calmly in the conference room, reading a magazine, occasionally glancing at the telephone.
In the late afternoon, the call came. It was Wallace Sterling.
"Mr. Vance, it's done," Sterling's voice, though professional, held a triumphant edge. "They were happy to sell. They saw us as a small fish buying a heavy bag of rocks. They got an immediate cash infusion to make their own books look clean after the rumors. They signed the final transfer document an hour ago."
"The price?" Arthur asked, not moving.
"$17.5 million, all in," Sterling reported. "We got the rest from the First National Bank on a 48-hour term loan. They were thrilled to lend to a perfectly capitalized, low-risk new bank like Continental. Our five million paid for the collateral and a good chunk of the principal."
Arthur hung up the phone. He looked at Elias, who stood frozen in the doorway, waiting for the verdict.
"The deal is done, Elias," Arthur said, putting the magazine down. "The rival bank, National Metropolitan, no longer holds the gun pointed at Boeing's head. They sold their weapon for a minor profit, believing they had won. They believe Boeing is still doomed, and now we will go down with them."
Elias walked slowly into the room, his eyes wide with a mix of fear and admiration. "So the Continental Bank now owns a failing loan for seventeen and a half million dollars, and we are heavily indebted?"
"No," Arthur corrected him, standing up. He walked to the window. The hustle of Wall Street was beginning to slow for the evening.
"The Continental Investment Bank now owns the only leverage that matters in the entire aerospace industry. We are not just a supplier anymore. We are not just a failed partner. We are the creditor."
He turned to Elias, a genuine, powerful smile finally breaking his calm face.
"We have purchased the sword, Elias. Now, we use it to save our partner and destroy our enemy."
The Sales & Trading Division had completed its first, most vital mission. Continental, once a paper bank with five million dollars, was now a major debt holder, capable of playing with the biggest banks in New York. The field was set for the final meeting.