Stuff Matters: Genius, Risk and the Secret of Capitalism. Harry Bingham

would come down. All would be for the best in the best of all financial worlds.

      At the same time, everyone involved in the deal knew that spreadsheets are simply the world’s most complicated way for converting Garbage In to Garbage Out. They’re a way, if you like, not so much of predicting the future as specifying exactly what would happen if various different futures unfolded. And nobody knew what the future held.

      The J.P. Morgan team divided two ways. On the one hand, there was the group of people putting the deal together, the Structured Finance team, who were representatives of the New Way. They were young, smart, driven, and they wanted to make money. The fees that banks can earn on transactions of this sort are huge, and although I forget what the precise percentages concerned were in this instance, quite likely there was an entire percentage point available to play with, probably even more in the case of the junior debt. The interest rate on the debt would also generate large annual margins for the bank. If all went well, there would be big bonuses for the bankers who had put the package together.

      On the other side of the divide stood just one person: the Chief Credit Officer, Europe. He didn’t look anything like an investment banker. He wasn’t young and wasn’t hungry. He looked, indeed, exactly like what he was: a middle-aged British banker, complete with dark suit, receding hairline, big old-fashioned glasses.

      When my spreadsheets were completed, and the Structured Finance team was ready, a meeting was set up at which credit approval would be formally requested. The Chief Credit Officer, I assumed, would be a kind of spreadsheet dynamo, ripping into suspect figures, attacking inappropriate ratio calculations, challenging my working capital assumptions. I couldn’t have been more wrong. I imagine he knew how to turn his computer on in the morning, but I wouldn’t be totally surprised if his secretary had performed that chore for him. Certainly he’d never created a complex financial spreadsheet in his life. His career had begun long before such things came along. Nor was he chock full of the kind of faux-expertise that investment bankers rapidly acquire about any new industry. The Chief Credit Officer didn’t have a headful of difficult facts about the shaving industry: frightening new data about the popularity of beards in Germany or the rise of disposable razors in Scandinavian bathrooms.

      On the contrary, his technique was simpler and more dazzling. He listened to the rest of us make our case, armed only with common sense and a kind of relentless scepticism. Any team working hard on a major project goes through waves of communal emotion before settling on a consensus position. In the case of this project, the Structured Finance team had come to be Believers and individual doubts faded away in the presence of so much confidence. The Chief Credit Officer, however, hadn’t been a part of the project team and even if he had been he was genetically inoculated against flightiness. He just sat and listened and disbelieved. In his presence all the stuff which had looked so good in a spreadsheet or loan prospectus simply sounded contrived and implausible.