One grim night before Lehman Brothers Holdings Inc. imploded, trader Jared Dillian drank himself into a frenzied scream, hugged his cat and downed half a bottle of the only drug on hand: Tylenol PM, he says.
“I could not even kill myself properly,” he rages in his disturbingly candid memoir, “Street Freak: Money and Madness at Lehman Brothers.”
The cause of Dillian’s distress wasn’t Lehman’s collapse; that drama unfolded about six years later. His despair reflected something much more common and corrosive about markets. His job, index arbitraging, was being done by a computer program.
“The diabolical index arb robots had taken over my trade,” he writes in the mocking voice familiar to readers of his financial newsletter, the Daily Dirtnap.
Like many desk warriors, Dillian had learned that trading is a brutal battle in which every soldier is expendable. Self-pity would get him nowhere; he had to find a new way to make money. His struggle is what “Street Freak” is all about.
The dust jacket compares the book, perhaps inevitably, to Michael Lewis’ classic take on Salomon Brothers Inc., “Liar’s Poker.” That does Dillian a disservice, prompting readers to expect his book to widen out into a picaresque portrait of Lehman and the grotesquely inflated egos that flipped the 158-year-old firm into the graveyard.
What we get instead is the highly personal journal of a poor kid who quit the Coast Guard to chase his dream of becoming a trader. Though his story traces the arc of Lehman’s last years, from the terrorist fireballs that engulfed its World Trade Center offices to its bankruptcy, the focus from start to finish is on Dillian’s trade-to-trade conflict. It’s a business that brings out the worst in humans, as he says. It also can threaten their sanity.
Not long after his over-the-counter overdose, Dillian opted for proprietary trading, placing bets on futures contracts. Soon, he was back in the game, buying, selling, cursing and, on one rough afternoon, smashing his desk phone to smithereens. Those on the trading floor roared in approval, granting him “a long, lusty standing ovation,” he says.
Memoirs are like bonds: You don’t necessarily buy them at face value. Our recollections are fickle, and Dillian has changed “some names and identifying characteristics,” as the book says in a stealth note buried on the copyright page.
Yet his narrative crackles with authenticity. Though he can get boastful and vulgar — obscenities and crude sexual allusions punctuate his patter — the dominant tone is unsparingly confessional and even modest. He doesn’t pretend he was a big wheel. At Lehman, he rose from raw recruit to head trader of exchange-traded funds. Fancy titles, even senior vice president, eluded him.
“I went into trading to become a rock star,” Dillian says early on. “What I was, in effect, was one of the snails that cleaned the fish tank of the financial markets.”
Dillian had no special knowledge of what Richard Fuld Jr. was plotting in “Club 31,” as the 31st executive floor was known. He didn’t realize Lehman’s real estate portfolio had become “absolutely pornographic,” as he puts it. The only glimpse he gives of Fuld is on the bizarre day in September 2008 when the chief executive made a rare visit to the trading floor to rant about short-sellers.
Yet Dillian’s snail’s-eye view is what makes his book a valuable companion to previous volumes on Lehman, including Lawrence McDonald’s “A Colossal Failure of Common Sense: The Inside Story of the Collapse of Lehman Brothers.” From hair-trigger decisions to trashy banter, Dillian captures how the market feels from inside the belly of a trading room.
The market possesses “a malignant omniscience,” he says. “You are a sinner in the hands of an angry God, and your positions are going to pay.”
In this environment, common norms of behavior fall away. On Wall Street, you can call a guy a jerk, or worse, without provoking him, Dillian says, because jerks often make bags of money. The real insult is to call someone a bad trader.
“It implies that there is something fundamentally wrong with that person,” he says. “He’s unfit. He’s weak. And worst of all, he’s a mook. A loser.”
Judging from this blunt and sometimes hilarious account, Dillian was a good trader. He also was so unhinged that you wonder why Lehman allowed him past the front desk, let alone trusted him to execute billions of dollars of trades.
“Street Freak” is published by Touchstone (368 pages, $26).
