Now that this third and latest book on the fall of E.F. Hutton is out, maybe it’s time for the movie. How about Jack Nicholson portraying the maniacal Robert M. Fomon character, the CEO whose womanizing, drinking and plotting devours his time? Monty Python’s John Cleese could be cast in the Robert Rittereiser role of a befuddled executive addicted to sports metaphors. And Peter Ueberroth, the baseball commissioner and Hutton board member, with an uncanny ability to duck the dirt, could play himself.
Business books like “Burning Down the House” face the unhappy prospect of comparison to “Barbarians at the Gate,” the huge best seller about the RJR Nabisco takeover. This one, lacking the drama and color of “Barbarians,” falls a bit short, too. Yet author James Sterngold, a New York Times reporter, adroitly tells a chilling tale of one of America’s best-regarded Wall Street houses falling victim to corporate bungling, corruption, rampant self-interest and just plain revenge.
Started in 1903 by Ed Hutton, a New Yorker with a habit of marrying well (the second of his three wives was Marjorie Merriweather Post), the firm prospered by catering to a wealthy clientele. Yet even early on the firm was broken into warring fiefdoms. Into this potboiler stepped Robert Fomon, a Midwesterner who was named CEO in 1970. While Fomon managed to push up revenues, he poured money down the drain by allowing extraordinarily high commissions to brokers and hefty expense accounts. His biggest indulgence: a new $100 million Manhattan headquarters that featured a gym-sized boardroom–with the chairman’s seat elevated on a platform. By the 1980s, when most firms were catching the mergersand-acquisitions wave, Sterngold writes, Fomon was busy “combining business and pleasure, finding girlfriends within the firm or . . . placing them in comfortable jobs” A Hutton apartment was the “bordello,” he writes, convenient as it was for affairs.
If Hutton had anything going for it, it could thank its fabulously successful ad line: “When E.F. Hutton Talks, People Listen.” But that powerhouse image cracked, too, when Hutton pleaded guilty in 1985 to 2,000 counts involving check kiting, the practice of writing checks on the float to earn more interest income. Unfortunately Sterngold offers few insights on why the Reagan administration opted not to indict any individuals.
Where was the board of directors during all this? Sterngold points out that 18 of the firm’s 21 members were compliant company executives and the like. Dina Merrill, daughter of Ed Hutton, seemed over her head on Wall Street matters. “What’s an arb?” she asked at one board meeting, referring to arbitrageurs who were buying up Hutton’s stock. Ueberroth was “twofaced,” calling the shots while deftly avoiding public responsibility for the firm’s troubles. “You wimp,” Fomon snapped when Ueberroth declined the chairmanship. (Ueberroth’s proposal to add Bruce Springsteen to the board was laughed off.)
Fomon was eventually forced out and replaced by Rittereiser. But Fomon made life miserable for his successor, Sterngold writes, maneuvering on his own to sell the firm: “Fomon was determined that he would be the last on the throne of an independent E.F. Hutton.” The stock-market crash in October 1987 ensured Hutton’s end, and it was soon sold to Shearson Lehman Brothers. But Shearson found the firm too unwieldy to swallow and had to restructure. And finally Shearson exorcised Hutton totally: it dropped its name. All in all, not a pretty picture.
title: “Crimes And Misdemeanors” ShowToc: true date: “2022-12-16” author: “John Thomas”
But the memories are indelible, and with the 50th anniversary of the war’s end coming up next summer – and with controversies already raging over the atomic bombs – more and more of them are breaking to the surface. In the West, and in the Asian countries Japan invaded, people remember the vast and inhuman atrocities committed by the Japanese – the Rape of Nanking, the Bataan Death March, the ghastly medical experiments carried out by the infamous Unit 731 in Manchuria. In Japan, people are increasingly, reluctantly aware that their country did wrong during World War II. But they prefer to focus on what they see as the wrong done to them. In a speech to foreign correspondents in Tokyo last week, the mayor of Nagasaki equated the A-bomb attacks with Hitler’s slaughter of the Jews. ““I think that the atomic bombings were one of the two greatest crimes against humanity in the 20th century, along with the Holocaust,’’ said Mayor Hitoshi Motoshima, ignoring the fact that the Jews did nothing to deserve what happened to them.
Unit 731 wrote one of the ugliest chapters in Japan’s record of wartime dishonor. Under the direction of Gen. ShiroIshii, medical experimenters infected human guinea pigs with diseases like cholera, typhoid, anthrax and plague. Some victims were dissected alive, without anesthetic. Others were shot, burned, electrocuted, frozen, boiled or sealed into pressure chambers that popped their eyes out of their heads. California historian Sheldon Harris estimates that at least 12,000 people died in Ishii’s laboratories, and hundreds of thousands more in field tests of germ warfare on Chinese villages. The Japanese regarded both POWs and captive populations as contemptible, and therefore deserving of mistreatment. ““The idea that a soldier would surrender rather than die, or stay alive in a prison camp rather than kill himself, was just alien to the Japanese,’’ says Gavan Daws, author of a recent book on atrocities against POWs, ““Prisoners of the Japanese’’ (462 pages. Morrow. $25).
Present-day Japanese are finally coming to grips with some of the atrocities. More than 230,000 of them recently visited a traveling exhibition on the horrors of Unit 731. But it turns out that the American government could also be coldblooded in pursuit of its national interest. Like German rocket scientists, Ishii and his henchmen had useful military expertise. In what Harris describes as a ““Faustian bargain,’’ the Americans gave the experimenters salaries and exemption from war-crimes prosecution in exchange for the knowledgethey had accumulated on biological warfare. Ishii lived until 1959, when he diedof cancer. Now, when Americans are beginning to learn about their own government’s use of human guinea pigs in cold-war nuclear experiments, it is not difficult to believe that a Japanese Doctor Mengele could be allowed to get away with his crimes, in the name of U.S. national security. As the world approaches the last of its World War II commemorations, there seems to be plenty of blame to go around.
