Union Atlantic Page 0,13

inflation under control by pegging the peso to the dollar. In the process, the bonds that the Argentinean government sold to finance its spending had become hugely popular with Western banks. They paid a higher rate of interest than the bonds of first-world countries, and given the IMF's ongoing support of the Argentinean economy, they seemed a safe bet, even after a deep recession in the late nineties.

Countries as economically mature and as connected to the global system as Argentina didn't walk away from their sovereign debt; it simply wasn't done. Or at least never had been until December 2001, when the new government, ushered in after riots in Buenos Aires, defaulted on $81 billion owed to creditors around the world.

Up to this point, the American financial press had been happy to more or less ignore the cash that Union Atlantic itself had burned through in its recent spree of acquisitions. Now, however, given their exposure to the Argentinean crisis, the breathless coverage gave way to jitters, and with those came a sharply falling stock price.

And so once again Holland, seeing his grand plan imperiled and impatient with his doubters, had turned to Doug and the Department of Special Plans and said: Fix it.

To do this the company had to beat the market's expectations for its earnings for at least two quarters in a row. The quickest way to accomplish that was to pump up the revenues at Atlantic Securities, especially in its futures and derivatives business. Attracting more clients, and thus earning more commissions from handling their trades, wouldn't be enough; they would have to trade with the firm's own money - proprietary trading as it was called - in order to enjoy the larger profit margins that came with such direct risk.

But there was a major obstacle to this strategy. In order to place such large, proprietary trades in the futures markets, Atlantic Securities had to post margins with the various exchanges it traded on. Enough cash, in fact, to cover any potential losses. This put a strain on Atlantic Securities' cash flow. Too much of its capital was being tied up in margin accounts.

The obvious solution was for Union Atlantic, the regular commercial bank with a strong capital base of customer deposits, to lend Atlantic Securities the money it needed. The two entities were, after all, owned by the same holding company. But federal regulations limited this "lending across the house." And the company's own internal policies set strict limits on the practice. Divisions within the group were supposed to negotiate with one another at arm's length. This was all well and fine when you had time on your hands. All very punctilious. One of those procedural safeguards in-house counsel derived such satisfaction from enforcing, never having generated a dime of profit in their lives. But a few more quarters of bad earnings reports, and a strategic plan years in the making could begin to crumble.

And so Doug had done what he'd been hired to do: he'd exercised his impatience. To get around the regulation, he had created a new corporation he dubbed Finden Holdings. Its sole purpose was to borrow cash from Union Atlantic and lend it to Atlantic Securities. This wasn't illegal, strictly speaking, but the lawyers and auditors knew enough to keep the details in the footnotes. With this invention, the big money had begun to flow into the accounts of Doug's foreign traders. Soon enough, profits were up.

In the first quarter of 2002, Union Atlantic Group exceeded Wall Street's earnings forecast by more than any other company in the sector. Once again, they had proven themselves agile and determined. And this satisfied Doug. It satisfied him a great deal. Not because of the likely size of his bonus or the further expansion of his informal dominion. The execution was what gratified him. The focus and precision and directedness of his will. At such times, his churning mind turned lucid and through it power flowed as frictionless as money down a fiber-optic line, the resistance of the physical world reduced to the vanishing point. He felt then like the living wonder of the most advanced machine, as if he'd been freed of all organic hindrance to glide on the plain of pure efficiency. A place of relief, even peace.

Having Sabrina around to fend off the nitpickers and cover for him when he let his lesser, administrative tasks slide had been a great help.

"We have an office in Madrid, right?" she asked now, sidling into