NYSE’s Crisis Week Was Chairman’s ‘Finest Hour’
The New York Stock Exchange was thronged with dignitaries at its reopening Monday morning. But to many people on Wall Street, center stage in the struggle to relaunch stock trading has belonged to one man: Richard Grasso, the exchange’s chairman.
Through relentless optimism and blunt speech, the native New Yorker has won praise for helping to restore a sense of safety and confidence to badly shaken markets.
“Our economy is going to lead the world economy of the 21st century,” Grasso thundered from an NYSE podium Monday as traders returned to work after a four-day closure, the exchange’s longest since 1933.
Though stocks tumbled Monday and closed mostly lower Tuesday--extending the now 18-month-long bear market--Grasso is credited with leading herculean efforts to reopen trading of the world’s premier equity market, making an important statement about New York’s will to recover from last week’s terrorist attacks.
Grasso’s impassioned leadership has impressed many observers and even surprised some. For much of his career, he has been considered a technocrat with great inside knowledge of the NYSE but a deficit of vision and charisma.
With government and business leaders pressing for a quick reopening of the market, however, Grasso had a unique platform.
“I can’t think of a case before where the [NYSE] chairman has been so visible,” said Charles Geisst, a market historian and finance professor at Manhattan College’s business school. “They’ve had some notable chairmen, but no one who’s been so visible in a time of crisis.”
Grasso Always Seen as a Trouble-Shooter
In an interview Tuesday, Grasso downplayed his role, saying the financial community united to face extraordinary circumstances. He said he simply sought to “communicate a singular vision,” reminding people that the country had emerged from other catastrophes.
“One of the things you must do is restore people’s confidence,” said Grasso, who is married and has four children. “As heinous a crime as this was, it’s not going to stop America’s way of life, and you want to remind people of that.”
Many on Wall Street credit Grasso with soothing frayed nerves.
“His performance demonstrated that he’s the best chairman we’ve ever had,” said Michael LaBranche, chief executive of a large NYSE “specialist” trading firm.
Almost from the moment of the World Trade Center attacks last week, Grasso pledged to quickly resume stock trading--as long as it didn’t endanger workers or interfere with rescue attempts.
It was a daunting job: The exchange building is only a five-minute walk from the charred trade center site. And NYSE traders lost friends and associates in the attack.
The exchange’s building sustained no direct damage, but many communications links were destroyed. Lower Manhattan was heavily barricaded and dotted with police checkpoints. Many people questioned whether it was feasible to resume business even by Monday.
But Grasso, at news conferences during the weekend, refused to entertain the idea of delaying trading another day. He drew on an intimate knowledge of the exchange’s operations and people, acquired during 33 years there.
A college dropout from Queens, the 55-year-old climbed the rungs of the exchange in a series of management jobs. Always considered a trouble-shooter who could solve problems, Grasso was appointed president in 1988 by his mentor, former Chairman John Phelan.
But when Phelan stepped down in 1990, Grasso was bypassed in favor of William Donaldson, a high-profile brokerage industry veteran.
At the time, an NYSE board member labeled Grasso “a nice guy, a great technician, but not a chairman.”
Grasso makes light of the experience now. “It really wasn’t hard to overlook me at my height,” he joked. He lists himself at 5 feet, 7 inches “and getting shorter.”
Still, the rejection stung. By 1994, however, Donaldson had decided to leave. This time, Grasso got the nod, becoming the first NYSE staffer to rise to the top job.
Grasso “started at the bottom and worked his way up,” Geisst said. “He was never a celebrity appointee.”
Breaking Down Image of Wall St. Fortress
Though there was no precedent for the trade center attack, Grasso learned how to handle crises in part by watching Phelan respond to the October 1987 stock market crash, when the Dow Jones industrial average sank 23% in a single day.
Phelan was always “very calm and reassuring,” said Peter Sullivan, a former NYSE vice chairman and top executive at an NYSE trading firm. “The qualities of leadership that Dick demonstrated over this past week--I’m sure Dick learned them from John, and he learned well.”
When Grasso assumed the role of chairman and chief executive in 1995, the NYSE was at a crossroads. Though the best-known stock market in the world, the NYSE faced a growing challenge from the all-electronic Nasdaq Stock Market, which was beginning to boom with the rise of major technology stocks.
There also was persistent talk that in an era of computerized trading, the NYSE’s costly physical trading floor was an anachronism destined for the dustbin.
Grasso refused to cede anything. He worked furiously to lure new U.S. stock listings to the NYSE and to branch out by courting foreign companies.
He also had to negotiate among the exchange’s various factions, such as large brokerage firms and smaller trading operations, which sometimes have conflicting goals.
Perhaps most significant for small investors, Grasso pushed to make the NYSE more visible to the public, seeking to change its image as a Wall Street fortress. He let broadcasters such as CNBC report from the exchange floor.
Still, for many at the NYSE, little that Grasso has accomplished may be remembered as vividly as his leadership during the last week.
“This is his finest hour,” said Dave Humphreville, president of a group representing NYSE specialists. “He’s always been good, but he’s never been tested like this.”
