Zoe Cruz Fired For Mortgage-related Losses
March 7, 2012 by staff
Zoe Cruz Fired For Mortgage-related Losses, Zoe Cruz Told Mortgage Traders To “Cut Losses,” But They Thought She Was Just High On Crack
Zoe Cruz is the subject of a long and kind of slow-boiling New York profile this week. Before she was sold out and thrown to the dogs by her old mentor at Morgan Stanley, Zoe Cruz was the most powerful woman on Wall Street. That is not saying much about her status in the ranks of powerful humans on Wall Street, of course, but it’s good enough to sell a cover of New York in a year when the whole “Women In Power: F**k This, There Really Is No Way To Win Is There?” meme is still relatively hot.
Okay. So Zoe is powerful and widely disliked, which happens to men too but with nowhere near the persistence as w/r/t women, and… business office politics market conditions blah blah blah whoa now here is something that absolutely would not go down the same way had Zoe been a dude: While giving a year-end management speech to her fixed-income division, a “mid-level executive” interrupted the speech to say: “”Are you high? Because I really don’t know what you’re talking about.”
“High?” Cruz asked. “You mean stoned?” “Yeah, exactly,” he said. “Smoking it.” Everyone in the room laughed—except Cruz.
She fired the assh*le for “unrelated reasons” six months later, but it probably won’t surprise you that this same division decided to make a risky bet into mortgage-backed securities — not the subprime ones, but the AAA ones that were supposed to be okay — in 2006, and Zoe kept an eye on the trade because it made her a little nervous, and asked them to calculate the potential loss in the occasion of a market meltdown, and when they came back with the number $3.5 billion she told them unequivocally to cut their losses, and they basically ignored her, and then the bank lost a shtload of money and she got blamed. They dispute that it happened exactly that way, but seriously, would you believe these fckers? They were probably high.
According to a person briefed on her story, Cruz told both Daula and Shear, “I don’t care what your view of probability is. Cut the position.” The risk was too great, even for her. But whether Cruz actually gave that order is in dispute. Shear and Daula have denied she told them to cut the position. And by August, with the market in free fall, the Hubler bet had gone badly sour. Shear and Daula had managed to extract the company from $1.8 billion of the trade but had missed a crucial window of opportunity to untangle another $1.5 billion, a position that would metastasize into much more severe losses. In Cruz’s view, the two men had ignored her orders and put the company in an untenable position. They “deferred to Howie [Hubler] instead of listening to Zoe,” says one Cruz ally. Jay Dweck, a former Goldman Sachs executive who had recently joined Morgan, was heard by three people to say, “At Goldman, this isn’t happening. When they say get out, they get out. At Morgan Stanley, when Zoe says get out, people start negotiating.”
The story casts Zoe in the Greek and scrappy and ambitious and pretty and “fierce” and smart irrepressible-overachiever Tracy Flick mold you hear about Hillary Clinton. This might have been true, or she might have had a sparkling worldly incandescent intellect everyone is overlooking because of institutionalized systemic sexism. (To be sure, she once used the term “enheartening,” which is not quite as bad as “embiggening” but is still not a word, in a public speech, so that was unfortunate.)
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