Of all the forces that have shaped the financial-services industry over the last 40 years, Sandy Weill is one of the most powerful.
His just-published autobiography,
The Real Deal
, is a must-read for anyone who wants to understand the history of this industry -- and the kind of person it takes to battle the establishment, change the landscape and marshal giant transactions like the $60 billion merger of Travelers and Citicorp.
This is a story of big vision, big deals and big egos. In fact, I think many people will read this book backward -- starting with the index, which is replete with entries about Weill's associates, including Jamie Dimon (who garners the most space), Peter Cohen, John Reed, Deryck Maughan, Arthur Levitt, Bob Greenhill and Frank Zarb.
The book's co-author, former Wall Street banking analyst Judah Kraushaar, was tasked with challenging Weill's memory of events by interviewing all of these people, some many times. The result, though written from Weill's point of view, contains interesting revelations that are bound to stir gossip and discussion.
In an interview in Chicago last week, Weill eagerly recounted many of the stories in his book. But when I pressed him to explain the emotions and discipline involved in commandeering multibillion-dollar deals, he paused, as if not quite understanding my question. Finally, he smiled, and said: "Well, it's just a few more zeros!"
That's your first clue to this fascinating personality: The way Weill takes complex concepts and envisions them in a clear and cogent manner. And his book pulls you along, as if it was fiction -- a sort of Horatio Alger story of the poor young man who through hard work and brilliant, creative thinking becomes a megamillionaire. But it's true.
Weill's tale begins in 1960, when, at age 27, he formed, with a few friends, a small securities brokerage firm named Carter, Berlind, Potoma & Weill.
The firm thrived, and all along Weill mastered the art of the back office. He and his partners set about consolidating larger, failing firms -- legendary Wall Street names that included Hayden Stone, Shearson Hamill, Faulkner Dawkins, and Loeb Rhoades, Hornblower & Co.
Weill served as the firm's chairman from 1965 to 1984, a period in which it completed over 15 acquisitions to become the nation's second-largest securities brokerage firm.
In 1981, Weill sold the combined firm -- now known as Shearson Loeb Rhoades -- to
, for the then eye-popping price of $1 billion. He points out it was a pretty good return on an initial investment of $250,000, most of which was borrowed.
Famously, he and American Express Chairman Jim Robinson could never integrate their two distinctive backgrounds and corporate cultures. So, Weill resigned four years later, in June 1985, at age 52.
But Weill's story gets even more incredible: After sitting out a year -- with enough money to retire in a grand manner -- he started all over again and built something even larger.
For his second act, Weill took a small consumer-finance company, Commercial Credit, and in the next 20 years, acquired Primerica (including Smith Barney and A.L. Williams insurance brokerage), Travelers Group (the red umbrella), Aetna's property and casualty business, and then Salomon Brothers.
Finally, in October of 1998, Weill pulled off the biggest deal of all -- the $60 billion dollar "merger of equals" with the venerable global banking company Citicorp.
Weill's tale of how the deal was struck in only weeks by a small group of top executives is a fascinating one -- including how the new name,
, and the logo using that red umbrella were created just in time to break the news -- first to President Clinton, and then to Wall Street and the world.
This time around, Weill was the survivor of the merged company, as co-CEO John Reed, the Citibanker, was subsequently forced by the board to bow out. But the story doesn't end there.
Along came Sept. 11, 2001, and then Enron and Worldcom and the revelations of Wall Street excess.
Weill details how he attempted to get ahead of the scandals by introducing new corporate-governance practices. But Citigroup security analyst Jack Grubman dragged the firm's name -- and Weill's -- into the Elliot Spitzer fray in 2002.
Ultimately, Weill was personally exonerated, though Citigroup paid a huge settlement and Weill made a public apology. The lesson, according to the author: "Reputation risk holds importance equal to other forms of business risk."
The Latest Chapter
Three years ago, in 2003, Weill turned 70 and retired from Citigroup. He has, however, continued his philanthropic efforts -- for Carnegie Hall, the Weill Cornell Medical Center and other organizations to which he has been a major donor of money and attention.
The Real Deal
brings him back into the spotlight, where he belongs. With blurbs on the cover from President Ford, Henry Kissinger and Alan Greenspan, the book is clearly destined to be a best-seller.
And Weill's on the book tour, willing to sign copies for the long lines that form and exhorting people to buy a case of books for holiday presents and send them to his office, where he will personalize them!
One final note: The true heroine of the Sandy Weill saga, in my mind, is his wife of 51 years, Joan Weill. In a short chapter at the end of the book, she recounts her memories and impressions of this larger-than-life man, as well as their very successful children. Though carefully edited, her insights complete the picture -- at least from the Weill point of view.
But this story is not over. If you've followed Sandy Weill's career, you know it has long been intertwined with that of Jamie Dimon, the young man who had a summer job working for Weill at Shearson, then joined him full-time right out of Harvard Business School. Their relationship has been controversial, to say the least. Dimon stood by Weill when he left American Express and was at his side when he built his second empire.
Ultimately, Dimon was forced out after the merger that created Citigoup. And in a story that parallels that of his mentor, Dimon came to Chicago to run BankOne, and then merged it to create
, where he is now chairman and CEO.
Today, Dimon's bank is giving Citigroup (and its Weill-picked successor CEO Charles Prince) a good run for the money. JPMorgan has seen a 25% rise in its share price so far in 2006, while Citigroup is up only 7% and trails the 14% gain of the banking-industry benchmark.
Weill commented carefully when I asked if he's "proud" of his one-time protégée. A small smile escaped, as Weill nodded his assent. "We'll see what happens next."
And so, as with those other legendary banking institutions, the House of Rothschild and the House of Morgan, the story continues. Weill's wife is hoping he'll truly retire this time. But I wouldn't bet on it. And that's The Savage Truth.
Terry Savage is an expert on personal finance and also appears as a commentator on national television on issues related to investing and the financial markets. Savage's personal finance column in the Chicago Sun-Times is nationally syndicated, and she released her fourth book,
The Savage Number: How Much Money Do You Need?
in June 2005. Savage was the first woman trader on the Chicago Board Options Exchange and is a registered investment adviser for stocks and futures. A Phi Beta Kappa graduate of the University of Michigan, Savage currently serves as a director of the Chicago Mercantile Exchange Corp. She also has served on the boards of McDonald's and Pennzoil.