I swear on a stack of Bibles that the following story is absolutely true.
Derivatives -- the things that nearly broke the back of our economy a few years ago -- were not a regulated thing during the first few years of their existence, in the early 1980s. And no one, outside a select few in the financial sector, had the vaguest idea of what they were. I first bumped into them shortly after they were thought of, in an amazing way.
I was a member of the Burlington County, New Jersey, Bar Association. A gay guy in Absecon, Atlantic County, New Jersey called the Burlington County Bar Association to ask for a referral of a lawyer who handled estates. My name was the next on the list for a referral. So, I got the referral, just by random motion. I made an appointment to meet the gay guy at his apartment in Absecon, because that is where the paperwork could be found.
When I went to the apartment, I saw that it was a walk-down, into a below-the-water-table musty, dirty basement apartment. The gay guy explained that the apartment was that of his boyfriend. "I'm sorry about the dirt and the roaches," he said, "But my boyfriend, while he was a very good guy, was distracted by his hard work. As he laid in his bed, dying of AIDS a few weeks ago, he told me that in the papers on the kitchen table there was something very, very, very valuable."
He ushered me into the kitchen, and there, on the kitchen table, was a mound of papers, completely disorganized, about 3 feet high. A roach "parachuted" from the ceiling of the kitchen to the pile. I said, "Do you have a Will?"
And he said, "Yes, and I am the Executor."
I said, "Okay, then, let's you and I take the Will to the Atlantic County Surrogate in Mays Landing and commence the probate process. Tomorrow, meet me here and we'll sort out these papers, on the kitchen floor."
We got the Will admitted to probate and acquired what are called "Letters Testamentary" authorizing the decedent's boyfriend to be an Executor.
The next day I returned to the apartment in dungarees, tee-shirt and sneakers with about twenty paper shopping bags, for sorting.
I spent 8 full hours sorting.
The paperwork I was looking at was astonishing -- just beyond belief, like that scene in "The Count of Monte Cristo" when the main character opens the enormous treasure chest in the cave. I reported, "The major debit in the pile of papers that was on the kitchen table is an unpaid $16,000 telephone bill. Most of the calls on the phone bill are to bankers in Japan.
"The major credit in the pile of papers -- in other words, the major Estate asset -- is something that challenges the wildest imagination in the history of the world.
"Your boyfriend, from his kitchen wall phone in his dirty little walk-down in Absecon, New Jersey, managed to sell to Japanese bankers 435 BILLION dollars worth of something called 'derivatives.' His commission for doing so was one-twentieth of one percent. That doesn't sound like much, does it?
"But one-twentieth of one percent of $435 billion is $217,500,000.
"Here is my offer to you: I will try to save that asset for the Estate if you sign an agreement paying me one-third of what I recover."
The gay guy, the Executor and only heir, agreed.
So, assuming that I succeeded, my fee was to have been $72,500,000.
I started-out by calling the IRS, the State Department, the Commerce Department, the Comptroller of Currency, the Federal Reserve, the FDIC, the FBI and the CIA. I asked, "Do you regulate, or care about, such a transaction?" All of them -- believe me, ALL of them -- denied any interest in controlling a $435,000,000,000 transaction.
I asked them, "How is that possible? I'm about to engage in ONE transaction, equal to the volume (in 1983) of the entire American economy in one day!"
No one cared!
So, for $2,000, I hired a man in Alabama who was a derivatives "expert" to guide me, and I hired a Japanese translator from the Japanese embassy and called Japan and, through the translator, invited a dozen representatives of Japanese banks to a closing on $435 BILLION worth of these things called "derivatives," with an Estate Executor representing the Decedent.
I did not know it, then, but my translator had no idea what an "Estate Executor" or "Decedent" were. She translated badly.
I went to New York. We met in a conference room (with my Alabama advisor) in a New York hotel with the representatives of the Japanese banks, all of whom clearly knew each other.
The fish was on the hook.
I gave an opening speech from a podium, introducing myself. I explained that since Mr. X, the Decedent, had died, the bankers would be dealing with the Executor, his heir, through me.
The Japanese looked puzzled at the translation. A few of them raised their hands, and spoke in Japanese to the translator, and the translator, red-faced, said, "They want to know if the Decedent is dead." Puzzled, I said, "Of course! That's why he is called 'a decedent.' Didn't you explain that to them when we invited them to New York?"
The girl from the embassy translating for me just turned red.
I thought, "Ah, damn!"
The Japanese bankers began acting angry and a few of them threw their papers to the floor.
I said, "NO! NO! IT DOESN'T MAKE ANY DIFFERENCE! A CONTRACT SIGNED BY THE EXECUTOR IS JUST AS GOOD!" I yelled to the translator, "MAKE SURE THAT THEY UNDERSTAND THAT!"
She spoke very fast Japanese to the bankers, but they did not care. They packed-up and stomped out, taking my $72,500,000 with them!
I tried, in vain, to call them back to New York the following week.
It didn't matter. They were simply too upset to listen to me, and so my $72,500,000 attorney fee became a $2,000 loss!