Union Atlantic Page 0,17

the profanity they'd been hurling at their subordinates for hours or even days. This man was making a call well above his pay grade. If things didn't turn out right, he could lose his job.

"We've got a liquidity problem," he said.

"Well, you don't call at this hour if you're unhappy with the examiners. What's your position?"

"We're on the short end of an interest-rate swap. We owe a hundred and seventy million. Payment was due nine hours ago."

"A hundred and seventy? Whose rates were you betting?"

"Venezuelan to rise."

"Jesus. That was stupid. I assume you hedged it. You covered it with something, right?"

"Sir, that's the problem. The model had us covering the position with oil futures. They were supposed to drop if Chavez trimmed his rates. They didn't drop."

Henry rested his head back against the wall. For a moment he'd thought maybe his caller had jumped the gun and done nothing more than further damage his bank's reputation with the Federal Reserve, in which case he could go back to sleep. Pulling the covers aside, he rose, took a pad of paper and pen from the coffee table, and settled himself into an armchair.

"Mr. Graves, are you there?"

"I'm here. That's the most inane hedge I've ever heard of. And you're telling me you can't raise the money for the payment?"

"As of this hour, no."

"I see," Henry said, nodding to himself. Under normal circumstances even a small retail operation like Taconic would have credit enough with the market to cover such incompetent trading. But they had been carrying a lot of bad tech loans for a year or more now and their retail base was being squeezed on one end by Chase and on the other by the national discounters. In the last few weeks they'd begun borrowing heavily to cover their own trading positions.

As president of the Federal Reserve Bank of New York, Henry Graves had oversight responsibility for all the banks in his district, including Taconic. He also regulated the large bank holding companies that had come to dominate the industry. But the New York Fed, unlike the other regional Federal Reserve banks, was more than simply a supervisory institution. It was the operational hub of the whole Fed System. It acted as the Treasury's agent in the market, buying and selling T-bills. Nearly every country in the world held some portion of their sovereign assets in accounts at the New York Fed. The wire service the bank ran cleared a trillion dollars in transactions each day. Simply put, Henry Graves was in charge of the biggest pumping station in the plumbing of global finance. His most vital function was to keep money moving. To do it quickly. And, above all, to do it quietly.

Which meant making sure a situation didn't become a crisis. Taconic's problems, small as they were in the scheme of things, couldn't be allowed to spread. The bank's ultimate failure, if that's what it came to, would pose little systemic risk. In receivership, it would be broken up and sold. But in the short run, a nonpayment of this size could cause trouble for Taconic's creditors. A resolution, however temporary, was needed before the morning bell.

"Who do you owe the money to? Who's your counterparty?"

"Union Atlantic."

Henry's thought was one of relief. At least they were dealing with a known quantity, and a bank under his supervision. Union Atlantic meant Jeffrey Holland. A bit glib, a bit of a showman. In it for the sport of the deal. Not Henry's favorite banker, but he could be reasoned with. He and his wife, Glenda, had showed up at the same hotel in Bermuda where Henry had taken Betsy just after she'd gotten sick. The four of them had eaten dinner together out on the terrace one evening. They'd sent a huge arrangement of flowers to the funeral.

The other line started to ring and he told Cannistro to hold.

"Did that jackass get a hold of you yet? What an idiot, huh? An upstate strip-mall bank betting on Chavez! Did you get a load of that? What a goddamn mess."

Sid Brenner, head of payment systems. The master plumber, as they called him, the man with his fingers on the dials. You could count on two hands the number of people capable of programming the network that wired that trillion a day through the market. Most of them worked at IBM. Sid had been with the Fed thirty-five years, starting just a few months before Henry. Born in Crown Heights, he lived