Gulag 401(k): Tales of a Modern Prisoner

By Richard A. Marin

“The author writes with a storyteller’s eye; his tales are rich in detail, his observations are noteworthy, and his prose is often filled with wry humor. The pictures he paints of colorful personalities are endlessly appealing. An insightful, often funny account of a man who follows a fiscally rewarding path but knows that life’s meaning involves more than money.” – Kirkus Reviews In this book, the author recalls his career and explores how to afford retiring while also coping with the existential crisis that so often goes along with leaving a job that’s defined you. Drawing on his career and personal experiences preparing for retirement, he reveals how the prospect of retirement compels us to ponder what to do with our time and often requires us to find a new identity. Join the author as he rises up the ranks of banking and finance, helps people navigate financial challenges, and shares how to avoid the retirement-saving missteps and mistakes made by so many others in Gulag 401k.

• Language: English
• Publisher: Lulu Publishing Services
• Release date: Jan 16, 2018
• ISBN: 9781483478784

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MARIN

Copyright © 2018 Richard A. Marin.

All rights reserved. No part of this book may be reproduced, stored, or transmitted by any means—whether auditory, graphic, mechanical, or electronic—without written permission of the author, except in the case of brief excerpts used in critical articles and reviews. Unauthorized reproduction of any part of this work is illegal and is punishable by law.

This is a work of fiction. All of the characters, names, incidents, organizations, and dialogue in this novel are either the products of the author’s imagination or are used fictitiously.

ISBN: 978-1-4834-7876-0 (sc)

ISBN: 978-1-4834-7877-7 (hc)

ISBN: 978-1-4834-7878-4 (e)

Library of Congress Control Number: 2017919728

Because of the dynamic nature of the Internet, any web addresses or links contained in this book may have changed since publication and may no longer be valid. The views expressed in this work are solely those of the author and do not necessarily reflect the views of the publisher, and the publisher hereby disclaims any responsibility for them.

Any people depicted in stock imagery provided by Thinkstock are models, and such images are being used for illustrative purposes only.

Certain stock imagery © Thinkstock.

Lulu Publishing Services rev. date: 12/29/2017

I would like to dedicate this book to all my mentors over my career. By my count that would total about twenty people who guided me to varying degrees. The person who taught me more about retirement than anyone was Ed Lesser. He taught me about the financial arena called retirement, an area he was extremely knowledgeable about. But mostly, Ed taught me about making a graceful exit, which he did as Vice Chairman of Bankers Trust. He showed me that being the best manager or the most cerebral was not necessarily a path to the top job. Strangely enough, I found myself more impressed by the righteous professionalism he displayed than the achievement of the top job.

Once again, thanks to my good friend and Provost of the College of Staten Island, Gary Reichard, who copy edited the book for me. He is heading into a well-earned and late retirement. And my dear and lovely wife Kim, who inspires me every day by giving me a reason to look forward to spending time with her, not working.

Also by This Author

Global Pension Crisis:

Unfunded Liabilities and How We Can Fill the Gap

Richard A. Marin

Foreword by Robert H. Frank, The Darwin Economy

John Wiley & Sons, 2013

Mater Gladiatrix

Richard A. Marin

Lulu Press, 2017

PREFACE

Riding the Yield Curve

I am a clinical professor of finance at Cornell University and have taught a pension course there for ten years. I worked at one of the largest trust banks in the world and once ran the retirement services department, where we administered (or record-kept) more 401(k) and other defined contribution plans than anyone else in the world at the time. The 401(k) is a direct outgrowth of the Employee Retirement Income Security Act (ERISA), promulgated in 1973 and arguably the granddaddy of all global pension regulations. However, the moniker 401(k) refers to a provision of the Internal Revenue Code that allows for the tax-free set-aside and accumulation of monies for retirement by employees and employers to replace the more traditional and slowly dying defined benefit plans we all know as pensions. This all sounds academic, or at least boring, but it is a fundamental part of life in the United States as our population ages and moves from productive members of the economy to net users of resources. There are very few demographic shifts in global history as profound as the aging of a population.

In my book Global Pension Crisis: Unfunded Liabilities and How We Can Fill the Gap, I explain all the financial elements of retirement and providing for that retirement. In a word, the outlook is bleak. But life goes on and is likely to continue to go on, I trust.

This book does nothing to explain or expand on the looming financial crisis. Instead, it is a series of stories that chronicle the baby boomer thought process on retirement. I was born in 1954, which places me precisely in the middle of the 1946–1964 generational cohort known as the baby boomers, in honor of our parents’ postwar coital spree in those years.

I am obsessed with retirement. I have been obsessed with retirement for forty years. I doubt I will be less obsessed with retirement as I age and as the pension crisis unfolds. And very few stages of life lend themselves to introspection as much as retirement does. In early life, it seems like a lovely goal with nothing but possibilities for leisure and meaning. In midlife, it turns into a grueling quest that comes in and out of focus and reach, tempting, tantalizing, and toying with us. In later life, the reality often is starker than we had expected. And, of course, this is all compounded by intergenerational family needs that extend the angst of security and sufficiency in both generational directions. Some poor souls must worry about their parents’ care in retirement, their own retirement needs and plans, and then the future for their children in retirement in an increasingly challenging world. I originally thought of this as gulag retirement but found myself feeling that what afflicted the greatest generation has been tweaked thanks to ERISA and the IRS and is now more likely Gulag 401(k).

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It came to me during my spring-semester business school course on money and banking. You probably assume I mean my decision to make a career in banking. It was this vivid image of a cowboy in a pin-striped suit, waving his briefcase in one hand while the other firmly gripped the ropelike beast he rode. Our professor was lecturing that day on the basic concept of how banks make money. It went something like this: Buy long bonds and sell them as you ride the yield curve down, taking advantage of the lower yield expectations and rising prices attached to those bonds. This sounds a lot like lending long and borrowing short. This second trick is called gapping or maturity mismatching. Most people assume that banks make money by simply charging higher rates than they pay … and keeping their loan losses low. This is not untrue, but the real money is extracted from the yield curve. This age-old concept, colloquially and broadly called riding the yield curve, works almost all the time, and gapping works enough of the time to lure many bankers into those murky waters. The yield curve is usually upward sloping, with short rates lower than long rates—but not always. Occasionally, the cowboy gets tossed off when the yield curve bucks, or inverts. The implication of this was earthshaking to those of us in money and banking: almost anyone can make money in banking … most of the time.

This may seem like an overstatement, but this was the clear message of our professor, David Ahlers. This professor had been a banker for a brief period at a place called Bankers Trust. We assumed that he must know what he was talking about. My buddy Paul and I were never sure how much validity to put on his always flippant, sometimes humorous, and rarely complimentary thoughts about the banking life. If it was so easy, why hadn’t he continued to ride that yield curve to fame, fortune, and a nice big house in Greenwich, Connecticut? We had fun envisioning him being thrown off the bronco in mid Yahoo! and having to settle for his little starter colonial in Darien.

He certainly did make banking sound like fun. He explained that his first big decision as a banker was Powdered or jelly? He described his first presentation to the board, where he flubbed the answer to a relatively simple question about the impact of his proposal. His boss explained that, from then on, he should answer such questions with a simple and authoritative Three cents a share. This, he went on to explain, was exact enough to be convincing and yet little enough not to require further inquiry. So much for management science.

We all secretly want to be cowboys, and this banking business sure sounded a lot more interesting than accounting or working in some buttoned-up corporate treasurer’s office. Banking had a flair to it and certainly didn’t sound difficult.

So, what’s an aspiring young businessman to do? I joined a bank. Not just any bank—the very same bank my professor told his tales about, the Bankers Trust Company. One of the white-shoe banking institutions. The one he’d said would not be there after the next round of industry consolidation. Call me crazy, or call me a contrarian in the making, but off I went to New York. I had two pin-striped suits (one blue, one gray), ten Brooks Brothers shirts, and just enough money to get me to the bank on day 1 so I could ask for an installment loan. I knew they would give it to me. After all, they couldn’t lose, right?

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Anyone who went to work in New York in the mid-1970s rented or shared an apartment on the Upper East Side, where the youth of Manhattan frolicked on nights and weekends. If you weren’t seen at the Red Blazer, you weren’t a mover and shaker. Starting my contrarian ways early, I headed instead for Bayside, Queens. It would be exaggerating to characterize myself as a man who marched to a different beat since the truth was that a certain girl who lived on Long Island and worked on the North Shore might find it easier to find me geographically desirable if I lived somewhere in between. So, I started my New York banking career having to choose between the Express Bus or the #7 train from Shea Stadium.

The HR department was on the lobby floor, just up the escalators and next to the newsstand. It felt like I was looking up the Hilary Step to the top of Mount Everest. The staggered crowd on the slow-moving stairs even looked like exhausted climbers approaching the summit. There was surely less oxygen in midsummer Midtown Manhattan than at twenty-two thousand feet. The peak loomed ahead as the last painful leg of a difficult journey. I had never climbed the Wall Street Himalayas before, so imagine how discouraged I was to learn that I wasn’t even at base camp yet.

I was gasping for air, nonetheless, since it was nearing 9:00 a.m. and I just couldn’t stand the thought of being late on the first morning of my real job. I had set two alarm clocks in my Bayside one-bedroom apartment. One was set for 6:00, and the other, across the room, was set for 6:05. Belt and suspenders all the way. Not unexpectedly, I awoke before the alarm at my bedside went off. I shut it down and rushed to shower and shave. Only after getting all dressed up did I realize that I had nowhere to go. I had misread the clock in my sleepy zeal, and it was now only 3:20 a.m. and still very dark outside. I kicked myself for my stupidity and stood there wondering what my next move should be. I opted for the stay dressed but try to nap program, which seemed better than the get undressed and do it all over again alternative. I carefully reset the alarm for 6:30 a.m., hung up my suit coat, and lay on my bedspread, careful not to crease my tie. I was too new to the working world to realize the fatal flaws in my plan.

To begin with, I had forgotten about the 6:05 a.m. alarm across the room. There’s nothing like a standing long jump from a prone starting position to get your heart pumping for the second time in one morning. Then there was the three-hour stubble on my chin. Who knew that a beard could grow that noticeably in three hours? Also, turns out that three hours of tossing doesn’t sit well with suit pants—even the best $150 wool/poly blend from Bancroft that I had in the closet. I stopped counting the extra creases in my slacks when I got into double digits. With one extra suit to my name to change into and only a few minutes to meet my pal Allen and catch the Express Bus to Midtown, I was much more rushed than an early riser deserved to be.

Allen was embarking on his career as well, except that he had chosen to start as an auditor for a small accounting firm on Madison Avenue. Allen was a bit of a geek, but he was an acquaintance from school who lived nearby and knew how to get to the Express Bus stop. Little did I realize when I made plans to ride in together that Allen had a mother who insisted that her twenty-two-year-old little darling had to finish his Cheerios before going to work. Allen was so casual about getting to work on time that he didn’t even care exactly which bus we caught. This was all starting to make me hyperventilate. Even with the special bus lane through the Midtown Tunnel, the bus crawled to a stop on Madison Avenue at 8:50 a.m. I sprinted the last two blocks to the Hilary Step and resolved to leave Allen, his mother, and the Cheerios to their own schedule on future mornings.

The nonchalant glance from the HR receptionist was mockery enough for my school bell angst. Being told to sit and wait over there with the others was damn close to dream destroying. The bull pen, as the HR staff referred to these six uncomfortable designer chair forgeries, was populated with two other eager beavers, strategically positioned at either end of the row. I sat randomly in the middle and used the break in the action to wipe my damp brow and open my brand-spanking-new Atlas five-inch briefcase (proudly made in Philadelphia for the last one hundred years). It was like the first day of school. I had three Bic pens, a spiral notebook, my trusty Bowmar four-function calculator, and my offer letter (just in case anyone tried to challenge me on the veracity of my claim of employment). I reread the short letter, keeping busy and reassuring myself that this was the appointed hour, date, and place of the start of my $17,000-per-year career.

At 9:10, the glass entry door opened, and in walked a tall, slender, young executive carrying a paper coffee cup, a slim Italian leather valise, and a refolded Wall Street Journal. He was wearing a well-cut Brooks Brothers suit, blue herringbone shirt with contrasting white collar and french cuffs, J. Press knotted cufflinks and matching J. Press foulard tie. His hair was stylishly long and was in distinct contrast to the buzz cuts sported by the three recruits cooling their heels. The receptionist also noted the sophisticated look and politely asked, May I help you, sir?

You may, he answered with a lilt of gentility. After a slow sip of his coffee, he added, I believe you’re expecting me. My name is William Blay. I have a nine o’clock appointment.

Even though the receptionist now realized that Mr. Blay was also a new employee, she didn’t switch into her nondeferential rookies sit in the bull pen tone, just in case Mr. Blay was a midcareer VP hire.

Please take a seat, and I’ll let Ms. Myers know you’re here, she said, motioning tentatively toward the open seats.

Mr. Blay handed her his empty coffee cup, which she took as naturally as a mother taking an apple core from her toddler. He thanked her and sauntered over to an empty chair to the right of me. He sat without notice of his fellow inductees, placed the valise on his lap, and took up where he had left off in the Marketplace section of the Journal, scanning the People column.

Just then, a stunning redheaded woman of about thirty backed through the door, also carrying a coffee cup (perhaps from the same deli as Mr. Blay’s, given the familiar blue Greek gods depicted on the sides), a burgundy briefcase, and a New York Times. She said a cheery Good morning, Lucy! as she breezed past the receptionist and into the first office on the corridor.

Good morning, Ms. Myers, Lucy the receptionist replied, this time with genuine deference.

The lights flickered on in the office, and a few papers rustled. A brush could be heard passing through thick, auburn, shoulder-length hair, and then the ever-more gorgeous Ms. Myers reemerged. She wore a taupe Saks business suit that fit her tall, athletic body like a wetsuit. She stood in front of the row of guest chairs with her right fist on her hitched, out-thrust hip and waggled a manila folder in her left hand. Before she spoke, she tossed her hair back so that everyone in the room could see her long, flawless neck. Nancy Myers, at thirty-four years old, knew she was a knockout and really enjoyed being the first point of contact for all these impressionable young kids, especially the young men. She looked up and down the row from her five-ten (plus two inches for the heels) vantage point. The GQ guy with the rakish smile and the power shirt did not impress her. The other three looked pretty typical—good in math, good at team sports, eager to please their bosses, and very eager to please Nancy. She liked her job.

From the perspective of the bull pen, Nancy Myers looked like a cross between a Vogue model and Shawna, queen of the jungle. The bull pen was at once titillated and awed. The collective thought as she scanned the row was, Please, God, let it be me! When she put on her best mistress librarian glasses, it only enhanced the pain/pleasure conundrum we all felt. And then she spoke.

Which one of you fine-looking gentlemen is Mr. Richard Marin?

I almost slid off my Naugahyde chair but managed instead to snap to attention onto my new, black wing tips. With the brougham welt on those babies, I could have leaned up to forty-five degrees too far forward and still self-corrected like a kid’s inflated punching bag.

I am … I mean me … I mean, I’m Rich Marin, I managed to spit out.

Nancy looked me up and down and turned with a flourish as she said back over her shoulder, Well, let’s get started then, Richard.

I couldn’t resist a smile toward my colleagues as I followed her down the hall like a puppy.

Before we reached the office door, William Blay stood and cleared his throat. Excuse me, Ms. Myers, but my name is William Blay … from Harvard Business School. I believe we had a nine o’clock appointment?

Nancy turned and gently guided me into her office and only then looked back toward Mr. Blay.

Everyone here has a nine o’clock appointment. Just sit down and wait your turn, and I’ll be with you just as soon as I finish with Mr. Marin … from Watsamata U. Right, Mr. Marin?

Yes, ma’am. I have an MBA in finance from there, I said, playing right along with her.

So, Mr. Bay … she said, fishing for a reaction.

That’s Blay, B-L-A-Y, he said emphatically, taking the bait right off the surface.

Well, Mr. Blay, so that you won’t be inconvenienced, I’ll have Mr. Schwartz, my assistant, get started with you right away. She turned to the receptionist and said with a smirk, Lucy, have Leo take care of Mr. Blay here while I spend some quality time with Mr. Marin.

She shut the office door while William Blay still had his mouth open. Blay probably bitterly wondered if he should have said he was from Princeton, Oxford, and Harvard. It wasn’t even nine thirty, day one, and already he was taking crap from some HR bitch. Blay was probably already starting to compile his shit list even sooner than he had expected. What a shame for him that it had to start with such an awesome-looking woman as Ms. Myers. Nevertheless, Blay just shrugged, flipped his tie over his shoulder, and sat back down, careful to hike his trousers up to preserve the crease. Just as if on cue, Leo Schwartz loped down the hall with his rumpled hair and tie to match, looking to collect his next inductee.

Meanwhile, Nancy Myers leaned up against her office door chuckling and shaking her head.

Harvard MBAs. Can’t live with them, can’t live without them, she said to me with a laugh. The better the pedigree, the greater the arrogance. He’s probably planning to be chairman by this time next year!

I was still standing in front of the desk, not sure whether to laugh or be serious. I chose to nod my acknowledgment and waited for Ms. Myers to take her seat before sitting down.

Well, Richard, welcome to Bankers Trust, she said with a genuine smile. You had better get used to people like Mr. Blay. Wall Street is as full of them as they are full of themselves.

Oh, I know what you mean, I said with a nod, belying the fact that I had precious little exposure to the type. In fact, I was still somewhat impressed with Blay’s show of self-confidence. I figured him for a street-smart guy whom I should probably get to know, despite Nancy Myers’s obvious disdain for him.

So, you come to us by way of Curt Reiss? Ms. Myers inquired, glancing through the interview reports on me.

That’s right. Mr. Reiss is a fellow alumnus, and we really seemed to hit it off. I got his name from the placement office. It seems we kind of spoke the same language, I said without a trace of shyness on the subject. He said Bankers Trust needed a better balance of ‘asphalt and ivy.’ I guess I qualified as asphalt.

Let me go over the program for the summer, she said, getting down to business again. You’ll start with what we call a pretraining assignment in one of the line units. For you, it will be our International Division, given your language skills. That’s better than our Metropolitan Division over at the Empire State office. You may want to take a finance and accounting primer to prepare you for the start of the real training program in September. At that time, you go to our training center downtown for five months of classroom work with BAs and MBAs all together, no-holds-barred. Do well, Richard, and you’ll get a good first assignment. Dog it, and you’ll be lucky to get a job rolling quarters at the Delancy Street branch.

This was a clever phrase that I sensed Ms. Myers had used before. Nevertheless, she said it with conviction, so I hung on every word.

While I took notes in my spiral notebook (an attentiveness indicator that Nancy took note of), she continued. You’ll start on your pretraining assignment this afternoon because this morning you’ll head downtown to meet the rest of your class and your training director. Your director is Bill Austin, a real rising star in the Energy Division. She looked up from her schedule. And lucky you! It seems Mr. Blay will be in your program. Kismet, I guess.

Great, I said, deciding to play it straight.

Start at the medical department upstairs on the ninth floor; they have a few vitals to get from you. Then be on the ten-thirty bus downstairs. It goes up and downtown on the half hour. Just introduce yourself to Sam or Joe, the drivers, and you will have allies for life.

I was scratching this all down in the notebook, trying not to miss a word.

Then use your new ID card, she said, handing me my first official Bankers Trust picture ID, and go up to the twenty-third floor in the downtown building to catch an eleven o’clock orientation meeting for your training class.

This was turning out to be a full morning for me, but I managed to remember to ask my critical question.

Ms. Myers, I know this is probably unorthodox, but is there any way to get an advance on my salary? You see, I used all my spare cash for my apartment deposit, and I didn’t realize …

Nancy Myers opened her top drawer and took out a preprinted card and, without looking up, said, How much do you need?

Even though I wasn’t sure what she was doing, I replied with a simple, Fifteen hundred?

She wrote the amount on the card, signed it, and handed it to me. It had the name Leo Lenane and an address at 1775 Broadway.

Leo is our installment loan guy. Go see him later today and give him this card. He will set you up, no questions asked. Here’s your first chance to test your creditworthiness.

She could see that I was a little sheepish about taking out a loan, so she added, "Mr. Marin, I have a