“W hat I am, ladies and gentlemen, is a salesman. I am it. I am the cutting edge. When they talk about Merrill Lynch and our strengths, they talk about a lot of things. But what is the first thing they talk about? What do they say about us that is really great?”
Uh, I give up.
Not that the answer matters much to Orange County, which bought into bravado like that and rode it right over the financial cliff in December 1994. But there’s a certain macabre comic value in noting that the speaker quoted above in a Merrill Lynch sales-training video is Michael Stamenson, the super-salesman who handled hundreds of millions of dollars in transactions for Orange County Treasurer Robert L. Citron until the county declared bankruptcy in 1994, forcing Citron to resign under pressure.
Somehow, the same Stamenson who said, “I am the cutting edge” in 1992 turned magically into the Stamenson who a few years later told county attorneys suing Merrill that he didn’t consider himself an expert in municipal finance. That sounds like Citron’s post-bankruptcy remarks that he wasn’t an expert in municipal finance either.
Perhaps when you’ve combined to lose $1.64 billion in portfolio assets, something forces you to disqualify yourself as an expert.
But in 1992, with Orange County a huge client and Citron his pet municipal treasurer, Stamenson was more than happy to explain exactly how he did it.
If nothing else, Stamenson’s seminar illuminates how Citron, a tax collector who had never invested a cent in his life until he began managing Orange County’s assets, got in so far over his head.
“Across the country, there’s about a handful of Masters of the Universe,” Stamenson says on the videotape. “And, folks, I am. Now, what is a Master of the Universe? A Master of the Universe is somebody that can make something happen. That takes an idea off the trading desk or out of product origination, percolate it down into 25 words or less, go into an account, get in his face, convince him to do something that he wouldn’t normally do on his own. And make it happen for big size. That’s a Master of the Universe.”
From that, it doesn’t take much imagination to picture the first time Michael Stamenson, Master of the Universe, met Robert Citron, who favored turquoise jewelry and the soup-and-sandwich at the Elks Lodge in Santa Ana.
The look on Stamenson’s face must have resembled that of Sylvester the first time he laid eyes on Tweety Bird.
Of dealing with potential clients, Stamenson told the wannabe Masters in the audience: “You need to find out what his goals are, where he wants to go. You need to find out what he’s afraid of. You know what somebody’s afraid of, you also own him too. If he’s afraid of the dark, you need to know that.”
It’s all about friendships, Stamenson said. Friends do business with friends, he said. You need to know how they think, he said. “What kind of logic [do] they use or are they logical or are they emotional? Do they take action because of emotional motivation, or do they really logically think things out . . . ? Do they respond to broad-brush perspective or do they respond to reading the charts last night or the horoscope in the New York Times? Whatever that may be--and believe me, you are going to encounter all of them--whatever that may be, you need to find it out.”
Citron once told an interviewer he talked almost daily with the financial houses on Wall Street. He testified in 1995 that he considered Merrill Lynch as, in effect, the county’s financial advisor. He probably thought the company was his pal.
There’s nothing necessarily venal in Stamenson’s approach. In a sense, he sounds no different from Cadillac dealers a generation ago who convinced the average Joe that a used Caddie made him look like a big shot. So Joe, eager to impress his neighbors, bought a used Cadillac.
Citron, who never got a college degree and never studied much finance, wanted to be a big shot. He wanted to show people he could make money when more conservative treasurers couldn’t.
He met Stamenson, and it was a match made in sales heaven.
For a while, Stamenson helped Citron look good. In the end, he and his firm helped ruin Citron’s career.
Which leaves us with one little discrepancy from the Stamenson sales video: “How do you make him [the client] look like a hero? You’ve got to remember one thing about this business: All the good trades are the client’s idea. All the bad trades are our ideas. It’s the way it works. We get paid lots of money, they get the glory. Just fine with me.”
Dana Parsons’ column appears Wednesday, Friday and Sunday. Readers may reach Parsons by calling (714) 966-7821 or by writing to him at the Times Orange County Edition, 1375 Sunflower Ave., Costa Mesa, CA 92626, or by e-mail to firstname.lastname@example.org.