[NYT] The story of Cantor Fitzgerald

[Rohit Khare]

[I can't say why, but this is the one story that tears me up every
time... Rohit]
=20

September 15, 2001

Flinty Bond Trader Leads His Firm Out of the Rubble

By DIANA B. HENRIQUES and JENNIFER 8. LEE

rass-knuckled deals and stiletto insults are prized in normal times on
Wall Street. And by all accounts, Howard W. Lutnick of Cantor Fitzgerald
fit that world perfectly, edging out his rivals at other bond trading
firms and grabbing profits with the best of them.

But since Tuesday morning, Mr. Lutnick's open affection and tears have
softened his flinty edge, made him a television icon and shown how a
leader can find a new voice to get his firm and the nation's markets up
and running again.

Tuesday morning, more than 600 of the roughly 1,000 men and women who
worked in the New York offices of Cantor Fitzgerald vanished in the
pillar of smoke and fire that consumed the World Trade Center.

By 7 a.m. Thursday, Cantor's survivors =97 led by Mr. Lutnick, who had
been out of the office only because he was taking his son to school =97
had reopened the electronic bond trading network called eSpeed
(news/quote) that makes this small, specialized firm such a critical
link in the nation's Treasury markets.

"I did not make the decision to reopen," an exhausted Mr. Lutnick said
on Thursday. "I interviewed a broad range of my staff, and that is what
they wanted to do." In part, they simply "were not going to let somebody
defeat them," he said. But much stronger was the conviction that the
firm had to survive and prosper because so many bereaved people were now
depending on it.

His voice breaking, he added: "We have a new class of partners here =97
these families. I have to take care of these families."=20

Cantor managed to reopen for business so quickly among such anguish and
loss through a combination of luck =97 some of the most crucial people
survived =97 resiliency, commitment to the victims and leadership by Mr.
Lutnick.

Some employees from the technology department were meeting outside the
office on Tuesday, and a few others had slept in after working late the
night before. Since the disaster, about 50 employees have converged at
the company's bunkerlike backup computer center in Rochelle Park, N.J.,
23 miles from the destroyed towers. They have worked almost around the
clock, napping on floors, to devise an electronic bridge over the gaping
hole in the firm's computer systems.

The backup center was set up after the 1993 terrorist attack on the home
office, and the firm more recently arranged a second backup link through
its London office.

But the critical ingredient, Mr. Lutnick insisted, was the conviction
among the survivors that the best way to help the widows and families so
suddenly left in their care was to keep the firm alive and profitable.

Mr. Lutnick, 40, says he is not leading the Cantor employees in the
company's revival. "There is no such thing," he said. "All I can do is
follow."

Mr. Lutnick might not seem a likely candidate for such nurturing
leadership. During his tenure at the scrappy, sometimes sharp-elbowed
firm, regulators have more than once accused Cantor of cutting too close
to the edge of market rules. He consolidated his claim to the
chairmanship in a bitter battle with the widow of his mentor, B. Gerald
Cantor, the colorful founder of the firm, who died in 1996.

Before that fight was settled, lacerating insults had been hurled into
court by both sides and Wall Street was trading gossip about what some
saw as Mr. Lutnick's insensitive treatment of Mrs. Cantor.
But Mr. Lutnick is not being cited for insensitivity today =97 certainly
not by the anguished relatives gathered in the lavish family service
center he established in the second-floor ballroom of the Pierre Hotel
near Central Park on Wednesday.

The relatives gathered at the Pierre have commended Mr. Lutnick for
immediately providing his home telephone number and encouraging people
to call. "He's a very nice man, and very understanding," said Michele
Rosenberg, whose son Lloyd is missing.

Richard C. Breeden, former chairman of the Securities and Exchange
Commission and a director of eSpeed, said that Mr. Lutnick had always
seemed warm and caring to his family and his employees, "but that's a
side of the person that his competitors on Wall Street haven't seen as
clearly."

"To some degree," Mr. Breeden added, "the searing experience the entire
Cantor family has been through is bringing out the best in him."

Mr. Lutnick's own family is among the bereaved. His brother, Gary, 36,
made a telephone call Tuesday morning to his family saying he was "stuck
in a corner office, and that it was really black and really bad," Mr.
Lutnick said, brushing at his tears. Among his last words: "I'm not
going to make it."

Howard Lutnick was spared, he said, because he had taken his 5- year-old
son to his first day of "big- boy school" on Tuesday and arrived at the
World Trade Center just as the terrorist attack began. After searching
the faces of fleeing workers, he himself had to flee for his life when
the south tower collapsed.

At some point =97 he does not know how long he walked =97 he passed a =
bank
of pay phones where people were queued up. Dazed, he walked up to the
man using the phone and simply took the receiver and called home. Only
then did he learn that Stephen M. Merkel, Cantor's general counsel, had
also made it out safely.

Armed with that news, Mr. Lutnick walked on =97 44 blocks in all =97 to =
Mr.
Merkel's home on Jane Street, a quiet old lane just south of 14th Street
near the Hudson River. Another survivor was found, David Kravette, 40,
who had gone to the lobby just before the attack to escort a visitor.
Together, they walked more than two miles to Mr. Lutnick's apartment on
the Upper East Side and immediately began making and receiving calls to
try to trace missing workers.

By Tuesday evening, only 68 people were safely accounted for, he said.
The next day, the list grew to 270. It now lists some 350 people,
virtually all of whom had not been at their desks during the attack.

In addition to Mr. Lutnick, Mr. Merkel and Mr. Kravette, those include
Peter DaPuzzo and Philip Marber, co-presidents of institutional
equities; and Thomas Trillo, head of operations.

By Wednesday, Cantor's London office, which employs more than 700
people, had become the firm's linchpin, led by Lee Amaitis, chief of
Cantor's international operations.

But everyone in that faraway office was stunned and sleepless. Like
employees in Cantor's domestic offices, they had listened on Tuesday,
mute with horror, as a routine conference call on the firm's "squawk
box" was suddenly interrupted by the first signs of alarm and panic in
New York, followed by silence.

The London staff members had gone into action even before Mr. Lutnick
reached them, posting emergency numbers for families and employees on
the Web.

By Wednesday, pressure was building from the Federal Reserve to reopen
the bond market. Dozens of government regulators and executives from
major brokerage firms spoke with representatives of Cantor and other
important bond houses in a conference call to discuss whether the bond
market was ready to open. One question hung in the air: Would Cantor's
systems be prepared?=20

The human tragedy dwarfed the needs of the bond market in Mr. Lutnick's
view. "Someone from the Treasury or the Federal Reserve made the comment
that they preferred an open market as a sign of strength," Mr. Lutnick
said. "I didn't care. I mean, the stock exchange wasn't open. I asked my
staff, `Why should we open?' I told them I didn't want any bravado."

But his staff, galvanized to provide for its dependent families, made a
quick assessment. Fate had spared the executives who could knit the
London and New Jersey computer systems to provide the critical documents
to conduct business =97 order confirmations, settlement records and =
other
steps in the paper trail.

On a second conference call, at 2 o'clock, the Bond Market Association
decided that bond trading could resume Thursday in a shortened session =
=97
largely because Cantor's computer systems were ready.=20

Besides its own efforts, Cantor was aided in its revival by helping
hands from elsewhere in the business world =97 cooperation that =
executives
say will be an essential lubricant for Wall Street's reconstruction.

On Tuesday, Mr. Lutnick got a call from a childhood friend, Arthur
Bacall, an executive at the Pierre Hotel, who offered to help in any
way. "I called Arthur back and said, `I need your hotel =97 give me your
banquet room to take care of all these people,' " Mr. Lutnick recalled.

The family services center at the hotel opened its doors by 2:30 p.m. on
Wednesday and remains open from 9 a.m. to 9 p.m.=20

On that first day at the Pierre, Mr. Lutnick made an emotional
appearance dressed in a black suit, sharing hugs and weeping openly.
Rumors about rescued Cantor employees had all turned out to be untrue,
he bluntly told the families. No one from the floors had made it out.
The three Cantor employees who were in critical condition in hospitals
were almost certainly on lower floors when the plane hit.

As the harsh reality set in, people began sobbing. "It's all over, Mom,"
cried one woman into her cellular phone as she hunched on the floor.

But Mr. Lutnick encouraged them to hold on to tendrils of hope if they
needed it. Tuesday night, he had heard that his brother was at a
hospital, a rumor that later turned out to be untrue.=20

"But you know what?" he told his audience. "I liked it. The odds of
finding him are maybe one in a million. It may be a miracle, but I'll
take a miracle any day."

As Mr. Bacall helped shelter the Cantor families, Christopher Jensen, a
securities lawyer at Morgan, Lewis & Bockius, found room in his firm's
New York offices south of Grand Central Station for a command center for
Cantor's executives.

The telephone equipment links there are courtesy of the Williams
Companies (news/quote), a partner with Cantor in an energy trading
network, and ADP "gave us a huge amount of technology support," Mr.
Lutnick said on Thursday, his eyes once again filling with tears.

He also praised the work of his bankers at J. P. Morgan Chase. Besides
helping with the firm's own banking records, the bank put together
personal bank statements for all the Cantor employees =97 "so their
families will know how much money they have to manage on right now."

And CNA, which had provided the life insurance coverage for Cantor
employees, is considering treating the deaths as accidental, "to double
the benefits for everybody," Mr. Lutnick continued.
By Thursday evening, Cantor and eSpeed were up and running. Sales
executives from branch offices in Boston, Chicago and Los Angeles were
calling institutional customers to say they were back in business. The
eSpeed system "performed flawlessly," Mr. Lutnick said. The system
continued smoothly through Friday's trading.

And he would be willing to talk about Cantor's reopening, he told a
reporter on Thursday night, on one condition: that the story include
news about the creation, that same day, of the Cantor Fitzgerald
Foundation to aid the families of anybody who died in Tuesday's
disaster, no matter where they worked.

"I am donating $1 million to the foundation," Mr. Lutnick said. He
added, almost apologetically: "I want to give more =97 we all do =97 but =
we
don't know yet whether we will be able to. That depends on how our
business goes from here on."


September 15, 2001
ONE MAN'S ACCOUNT=20
The Sound Was 'Like a Jet Engine Right in My Ear'

Howard W. Lutnick, chairman of Cantor Fitzgerald, gave an interview to
the New York Times on Thursday evening at the Pierre Hotel. Here is an
excerpt:=20

I was standing by the door as people were streaming out. I was grabbing
everyone that came by, shaking them and asking them what floor they were
on. I got all the cops and the firemen to do the same.=20

The people, they're all wet because of the sprinklers. They're zombies,
walking straight. They have no idea what's going on.

I got to the 60's, 70's, then 80's. The last number I heard was 91.

They I heard this noise. It sounded like a jet engine coming. I looked
up. The sound was the loudest thing I had ever heard =97 like a jet =
engine
right in my ear.

As for evacuations, I'd been there, done that in 1993. But this was
something different.

I just started to run. I ran to the left of the Millenium hotel, running
as fast as I possibly can. The smoke is coming behind me. I'm staying
ahead of the smoke. I get to halfway between Trinity Church and the
World Trade Center and then I see smoke is coming at me from the side. I
remember a church, and some grass =97 definitely some grass, because I
remember the smoke coming across the grass.

It knocks me to the ground. Suddenly it's just black.

I crawl under a truck =97 no, it's smaller than a truck =97 it's like an
S.U.V. I don't crawl all the way underneath because I'm afraid that
something will fall and crush me under the truck. Of course, I don't
think that if something falls and I'm not under the truck I'll get
crushed anyway. This is not like a clever thing. So I'm halfway under
the S.U.V.

There are particles in the air this big. [He held his thumb and index
finger a half-inch apart.] I'm down on the ground.=20

I'm just breathing and it's black =97 I'm talking totally black. I think
I'm going to die of smoke inhalation, because you know, in fires most
people don't die of burning, they die of smoke inhalation.

This cop or somebody walks by with a flashlight. It's like a strange
movie. I grab the guy by the collar and walk with him. Then he goes to
the corner and sits down. So I start walking straight =97 for like four
hours.

I had my cell phone trying to call my wife, but I'm not getting through.
On the way I pass all these pay phones which have 50 people on line.=20

Eventually I pass a pay phone and I suddenly realize that the people on
line are clean. Me, I'm covered. They're looking at me. Someone asked:
Is that what happened down there? Like two buildings collapsed and no
one got dirty.

I walk up to the front of the line. I grabbed the phone out of someone's
hand. I don't care. I call my wife. She's crying.