2. Tony Bowe on His Father the Judge, Education & Early Career

This interview continues the conversation between Bill Bowe (WJB) and his cousin Tony Bowe (TNB), picking up from their earlier discussion about the Tony Bowe’s parents, Judge John Edward Bowe and Katherine Pargellis Bowe and grandparents, Judge Augustine Joseph Bowe and Julia Lecour Bowe. This second session focuses on Tony’s childhood in Chicago, his education, and his career in banking and finance.

The conversation begins with Tony completing a story about commissioning a court artist named Andy Austin to sketch his father, Judge John Bowe, during the Greylord scandal. The gift initially alarmed the judge, who feared he was being documented for the evening news.

Tony then provides a detailed account of growing up on Orchard Street in Lincoln Park during the 1960s. He describes it as a neighborhood on the edge of safety at the time and he remembers growing up through the turbulence of the era, including the riots following Martin Luther King Jr.’s assassination and the disturbances around the 1968 Democratic National Convention.

He attended the Francis W. Parker School in the Lincoln Park neighborhood on Clark Street, where his mother Katherine (Kathie) Pargellis Bowe had also been a student. Financial pressures from his father’s judicial salary led to brief stints in public school before the family moved to Winnetka in 1971.

Tony describes his time at New Trier West High School as unmotivating, followed by a transformative experience at Connecticut College, where he graduated in 1979 with a history degree. A pivotal semester at the London School of Economics program broadened his intellectual horizons. After graduation, a family friend named Dave Parson helped connect him to the Walter E. Heller concern, a commercial finance company, where Tony began as an inventory analyst learning secured lending from the ground up.

The interview traces Tony’s career through the First National Bank of Chicago’s First Scholar Program, where he earned his MBA from Northwestern’s evening program while rotating through the bank’s trading and balance sheet management operations under mentor David Vitali. Tony provides a vivid account of Continental Illinois Bank’s collapse and the dynamics of the money markets during the Volcker era of extreme interest rate volatility.

Tony’s career then moved to New York, where he joined Bankers Trust Company in 1985—the same year he married Nancy Board, whom he had met at First Chicago. He spent thirteen years at Bankers Trust, rising through government securities trading to run the wholesale client service division of what was then one of America’s largest asset management operations.

He was then recruited to Donaldson, Lufkin & Jenrette (DLJ), which he describes as the finest firm he ever worked for, at the forefront of the emerging private equity industry. DLJ’s acquisition by Credit Suisse around 2001 brought a stark and more negative contrast in corporate culture.

Throughout, Tony reflects on the importance of corporate culture, comparing the franchise-oriented pride at Heller and DLJ with the predominantly self-interested environment at Credit Suisse, and the structural challenges facing First Chicago partly due to Illinois banking laws that prohibited branch banking.

Interview Transcript

The Greylord Court Sketch (0:00)

TNB: One story that I’d like to tell you is that it was after I was out of college when the Greylord scandal started to happen. And I had this idea that it would be fun to hire a court artist to go and sketch my father behind the bench. I identified a woman who went by the name of Andy Austin. She was one of the artists the newspapers would hire and use her drawings. I think it might have been my father’s 50th birthday or something like that. I wanted to get him this sketch. So she turns up in his courtroom, and this is in the middle of the whole Greylord scandal, and she’s back there sketching him.

TNB: A couple of months later, I gave him this drawing. I said, “I paid this woman—she was in your courtroom.” And he said, “Yeah, I saw her back there. And I was afraid that somehow I was going to be implicated in the Greylord scandal, and that she was drawing this up so that it could be put on the evening news.”

WJB: I wonder if I haven’t seen that—is it a pastel drawing?

TNB: Yeah, it is actually. It’s in color. She did a really nice job. I still have it, and it turned out perfectly. I think he was very happy to get it but also relieved. Not that he did anything wrong.

2/12/2025 TNB JEB 2422 Colony Court, Northbrook, IL Judge John Edward Bowe drawn on the bench by courtroom artist Andy Austin, and given to his father as a birthday present by his son Tony Bowe, Northbrook, IL 2026

Judge John E. Bowe

Growing Up on Orchard Street in Lincoln Park (1:34)

TNB: Anyway, we talked a little bit about that Lakeview apartment. I have almost no memories of it whatsoever. But in 1960, my folks bought a townhouse on Orchard Street and they paid $10,000 for it. It was a three-story townhouse in a beautiful row of houses—a gorgeous street. We lived there for eleven years and they sold it in 1971 for $40,000, which was a lot of money in 1971. We had many close friends in the neighborhood.

TNB: Orchard Street was really kind of almost at the western edge of what was a safe neighborhood in the 1960s in Chicago. As I mentioned when we talked last, Chicago was a tough place in the sixties. I remember routinely getting beaten up on the way to and from school, getting mugged, having my bicycle stolen out from underneath me. And of course, later in the sixties, we had the riots around the King assassination. And then that same year, the disturbances associated with the Democratic National Convention, all of which really happened in Lincoln Park, or a lot of it anyway. But it was a fascinating place to grow up.

The Francis W. Parker School (3:07)

TNB: I went to school at the Francis W. Parker School, which was on Clark Street.

WJB: And that’s where your mother had gone, is that right?

TNB: That’s correct. My mother had gone there. Sandy and I were students there. But the fact of the matter is that private schools in big cities are expensive. My father was a judge, my mother didn’t work, and by this time they had four children who they needed to put through school.

TNB: Sandy ended up going to the public schools in Chicago for one year.

WJB: That probably was the Lincoln School, very nearby where you lived, maybe?

TNB: That’s precisely correct, the Lincoln School. I actually went there for one day. My parents had withdrawn us because they thought we were going to move, and they withdrew us from Parker at the end of my seventh-grade year. Then the house didn’t sell, we didn’t move, and we were back in the city. When I went into eighth grade, I went to Lincoln for one day. Parker called up and said, “Hey, by the way, we do have a spot if you want Tony to come back here for a year.” So I went back to Parker and had my eighth-grade year there. Sandy spent that year at Lincoln School because there wasn’t a slot in his class. I think Charlie and Robert, my other two brothers, had not yet matriculated. Robert was only about four.

In any event, in 1971, we moved to Winnetka.

Church of Our Savior (4:44)

WJB: Before you leave Lincoln Park for a moment—there’s an Episcopal church, I think within a block or two of Orchard. Was the family regularly attending? I know that there is that Episcopal strain on your mother’s side.

TNB: Yes, there was one right on Fullerton, actually, just a little bit west of Clark Street. It was called Church of Our Savior. Sandy and I were altar boys there. It was high Episcopalian—they was communion, and like in the Catholic Church, in this high Episcopalian church they had these bells that you ring when the pastor raises the sacrament. I could never get straight when you were supposed to ring these bells. Basically, every time the guy put his hands up in the air, I’m ringing the bell, but there’s at least one time when he does something with his hands that you’re not supposed to ring the bell. I remember him glaring at me over the altar.

But it was a great church. I got confirmed there. The pastor was an openly gay Episcopalian minister, and that was not common in the late 1960s. He was an incredibly nice person who was a reasonably close friend of the family. I recall him coming over to dinner at our house on Orchard Street.

Christmas Eve on Orchard Street (6:26)

WJB: I certainly have memories of the family on Orchard. The Christmas gatherings—

That big Christmas Eve party, and I think Phoebe Thompson would hit the piano upright.

TNB: Yeah, those were big nights in my childhood, because Uncle Stan always used to show up with the most spectacular toys. He and Dodie were fantastic gift givers, having no children of their own. I remember one year they gave us these really elaborate large models of sports cars that you had to assemble. I think Owen may have helped me assemble mine. This is happening on Christmas Eve—Owen was a kid, like we all were at that point, and you guys were all downstairs celebrating. We got to the point where the model was complete—it took a couple of hours to assemble—and it promptly rolled off the table onto the floor and busted into as many pieces as it came in originally, if not more.

New Trier West High School (7:46)

TNB: We moved to Winnetka in 1971. The address was 1324 Asbury Avenue. For me, that was a big change that I didn’t adapt to very well. I had been at Parker for ten years, starting in junior kindergarten at age four, and didn’t leave until the end of eighth grade. That was a small and insular place. I knew all those kids like I knew my siblings. I was unhappy about leaving, and pretty early on in Winnetka I fell in with the wrong crowd and was kind of unmotivated and uninterested. I can thankfully say that those four years in high school were probably the least interesting of my life.

WJB: How many students were at New Trier High School?

TNB: That was really at the peak of their enrollment. The original New Trier was what they now call New Trier East. Not too long before I got there, they had constructed a second campus, New Trier West, which was an absolutely beautiful campus with fantastic athletic facilities. New Trier was one of the best public high schools in the country. On the West side, there were about 2,800 students, roughly 700 in my class. Over at East, there were another 4,500 students at that time.

WJB: And you were at West?

TNB: I went to West. We lived on the western edge of Winnetka. It was an enormous school. They serviced Glencoe, Northfield, Winnetka, Wilmette, and Kenilworth, so there was a reasonably large geography from which they drew students. New Trier West was mostly Jewish, whereas East was the more traditional, older Christian part of the school district. Not that it really mattered—they were equally good, demanding schools with really high-quality education. I just didn’t apply myself and didn’t get much out of it.

WJB: Although you did make friends there, I think, because you introduced one to me—a software developer—later.

TNB: Yeah, I had friends who were largely unaccomplished people like myself, though some of them have done pretty well. I’m in touch with a few of my friends from New Trier. That said, I’m in touch with a lot of my classmates from Francis Parker. I went back over ten years ago for what would have been my 40th reunion from Parker, and there were about 15 or 20 of us. Most were the lifers who had been there since kindergarten, and many had left for high school like I did. We got together and it was like yesterday—we all knew each other’s parents, each other’s brothers and sisters. Parker was a small and insular place, but it was a real family of people. I keep in touch regularly with five or ten of my grammar school classmates.

Connecticut College (12:07)

WJB: Now, as you came into your senior year and were looking at colleges—your father had started his college years out East, and your mother had grown up in that environment, being a student when her father was teaching at Yale. You ended up going out East yourself, right?

TNB: I did. My parents had both gone to school for at least a part of their college time on the East Coast. I had also spent a lot of time on the East Coast because of our family place up in Maine, and I was very fond of New England. That’s why I ended up in that general part of the world.

I didn’t spend a lot of time trying to figure out where I wanted to go. I was a kind of average applicant. For some reason, Connecticut College came to New Trier to recruit students and interview them. I went in, met this person, and what they said sounded fine. So, I applied early decision, got in, and put the whole college search behind me.

WJB: As I recall, there was a school called the Connecticut College for Women?

TNB: That’s what it was. It became a co-educational institution in 1969.

WJB: And you got there in—?

TNB: I matriculated in 1975. My class was 60 percent women and 40 percent men. The classes before me were even more skewed toward women, so the ratio was quite favorable, which did a lot for my social life at Connecticut.

Connecticut was great. During that four-year period, I kind of learned to be a better student, a more interested student. I got involved in some extracurricular activities that were interesting and motivating. I met some really good people. I ended up as an editor of the college newspaper and then as the editor-in-chief of the college yearbook. Those were jobs I enjoyed—they had some management responsibility. I thrived at Connecticut and made a whole bunch of really close friends whom I’m still in touch with, like a dozen of my college buddies.

WJB: How big was it at the time in student numbers?

TNB: Approximately 1,600 students. Relative to New Trier, it was about half the size. It’s one of those NESCAC (New England Small College Athletic Conference) schools that include places like Williams, Amherst, and Trinity. Connecticut is probably the weakest of those from an academic and admissions standpoint, but the model is the same. It was a liberal arts college. I got a degree in history. I learned a lot—I learned how to write and how to communicate, which were very useful tools. The one thing I didn’t learn was anything of real vocational value.

The Value of a Liberal Arts Education (16:13)

WJB: I’m curious about the curriculum. Today we’re going through an interesting period with technology changing dramatically, having an effect on job opportunities. Over the last several decades, liberal arts and history majors have been in decline, and the whole focus on critical thinking has been set aside for other priorities. As you look back on your history focus and the liberal arts education, and you think about it with the perspective of an adult—should we think more about that? Or should we be focusing on technology and the jobs that are going to be out there?

TNB: I think the times have changed. The labor market demands some degree of specialization and frankly some really vocational skill. Now you probably want to learn how to code or learn how to be an accountant or something that has a real applicable skill, because the days in which you graduated from a liberal arts institution, whether it was Yale or Connecticut College, and got a job working at Goldman Sachs—that doesn’t happen that much any longer. If you’ve got an English degree now, I think it’s hard to find a job. Whereas that was not true when I graduated from college. There were a bunch of worthwhile employers that did think that having communication skills and critical thinking capability were important. It just seems to be less the case now.

Semester at the London School of Economics (18:48)

TNB: I had the great good fortune in my junior year at Connecticut to spend a semester with teachers from the London School of Economics. It was a program that recruited its faculty from LSE. Because everybody was paying U.S.-level tuition, the program could pay the professors far more than they could earn teaching at LSE. The impact was that the program recruited faculty members who were extraordinary experts in political science, economics, British history, and philosophy—often the best professors at the London School of Economics. We’d turn on the BBC at night and our professors would be providing political commentary on the radio.

WJB: That really sounds like quite a jolt of high-level teaching.

TNB: It was. The faculty at Connecticut wasn’t bad—actually quite good, to be honest—but these people were extraordinary. They tended to be the senior-most, older faculty members at LSE. It was a great experience, and I loved being in London.

TNB: After that semester, I spent time on the continent, which included about ten days with Betsy Lacombe and her family at a ski resort in France. I remember Jean Gwynn Riboud turned up to ski with us—he was serving in the French military at that time and showed up in uniform. All of Betsy’s kids were there. That’s when I first got to know Cecilia (Lacombe Kuhn). I spent a bunch of time skiing with Cecilia—she now lives in Brooklyn, and we see her somewhat regularly.

After Graduation: The Job Search (21:12)

TNB: I graduated from Connecticut in 1979 with a degree in history. I had no idea what I was going to do on the day I graduated—had no job. I had applied to a couple of law schools and been admitted, and I was thinking about going to law school. But in the end, I decided I shouldn’t do that right away. So, I went back to Chicago. It’s the middle of July and I have no job and no idea what I was going to do, which was a little bit jarring.

We had a family friend, a fellow named Dave Parson, who was a long-standing old friend from Lakeview. I ran into him and he said, “So what are you doing?” I said, “Well, I need to find a job.” He said, “How are you going to do that?” I said, “I don’t know.” He said, “Well, I’ll tell you how we’re going to do it.”

He was a very practical, well-connected person. He had my father and me over—he lived in Winnetka—and we sat down in his office. He had a legal pad and pencil and said, “Okay, we’re going to make a list of every large company in Chicago.” That included the banks, all of the advertising agencies, the big corporations. Then he said, “Now we’re going to put a name next to each one of these institutions.” Between my father and Dave, they came up with a name at seven out of ten of the large potential employers in downtown Chicago.

Over the next couple of days, Dave contacted the ones he knew and my father contacted the ones he knew. One of the names my father had was a guy named Maynard Wishner, who was president of a company called Walter E. Heller, a commercial finance company based in Chicago that also owned the American National Bank. Wishner had been a friend of Gus’s—they crossed paths through what I think was the National Council of Christians and Jews. My dad called up Maynard Wishner and said, “My son’s looking for a job. Do you have any ideas?” Wishner said, “Well, yeah—I’d send him down here.” Two weeks later, I started this job at Walter E. Heller.

Walter E. Heller: Inventory Analyst (24:11)

WJB: Now, the Walter E. Heller company—at Parker, there was a person I ran into years later named David Heller. Was he any relation?

TNB: No, he was not, and I don’t think there was any connection. What Heller was, was a secured lender. My first job was referred to as an inventory analyst. Heller would lend money against the assets of a company. Rather than make an unsecured corporate loan, Heller would go in and evaluate the assets of the company, figure out what they might be worth in liquidation, and lend less than that amount. So, if the company failed, they could seize the assets, sell them, and repay the loan by virtue of having control of the assets.

WJB: So that’s really setting the path for a whole long career.

TNB: Exactly. It was such a spectacular first job. The one thing they said was, “What do you know about accounting?” And I said, “Nothing.” They said, “Well, you’ve got to take an accounting course right now.” As it happened, I had applied to the business school at Northwestern University for the full-time program. All I did was change the application to enroll in the evening program, and I started my first accounting course that September.

WJB: Was the evening school on the Near North Side in that building?

TNB: Yes, where the medical center is, the law school, the ABA headquarters, the dental school—the evening program for the business school was there. Heller paid my tuition. I started taking courses at night, and I had this absolutely spectacular experience of going to work during the day trying to understand some issue of cost accounting or financial accounting, and then going to class at night and getting the answer. It was just the best way to learn. Very quickly, I developed an understanding of accounting because I was doing it all the time. I did a bunch of finance courses, and ultimately I got my MBA from Northwestern. I never paid for any of it—first Heller paid my tuition, and then subsequently First National did as well.

WJB: How long did it take at night school to get your MBA?

TNB: I started in September of 1979 and finished at the end of 1981, though I participated in a graduation ceremony up in Evanston in May of 1982.

The Inventory Analysis Work (27:42)

TNB: My job as an inventory analyst was to go out to companies. These companies were all over the United States. Literally, my second day on the job, I flew from O’Hare out to Portland, Oregon. I had never been west of the Mississippi River in my life. A limousine picked me up in front of my parents’ house in Winnetka, drove me to the airport, I flew to Portland, and toured a manufactured home manufacturing company and its facilities, then flew back to Chicago.

WJB: Describe the variety of assets you were lending against that you were eyeballing—invoices, paper assets, hard assets, and what kind of each?

TNB: My responsibility was inventory—hard goods. They fell into three categories, as does all inventory: raw materials, work in progress, and finished goods.

WJB: For inventory and hard goods, would you be looking at inventory receipts—paper evidence that the inventory existed? Or were you actually going out to eyeball hard assets and figuring out if they were properly counted?

TNB: All of those things. You want to make sure that if they say a particular piece of inventory is worth five dollars, then you need to prove it—either because they paid five dollars for it, or through some manufacturing process that created something worth that amount, which is all an accounting exercise. You needed to look at the invoices to determine that they had purchased it and what they paid for it. And then you needed to go out to the warehouse and make sure it was actually there.

WJB: It strikes me that what you’re learning in that exercise is also the complication of the supply chain—because the fact that there’s a piece of paper that says it came from here at this price, you have to have some sense that there’s nothing amiss from start to finish.

TNB: You’re exactly right. You have to validate everything about the existence, the quantity, and the value of whatever the inventory is. That inventory might have been a tank full of some raw material—oil or something. But it could also be, for instance, a company that dealt in copy machines. You needed to actually go out and find those copy machines in the warehouse, document and inspect them to make sure they were new and undamaged, then figure out what they paid. Only then could you say, “If I had to take possession of this and liquidate it in a distressed sale, how much could I get?” It’s not going to be 100 cents on the dollar. Some raw commodity where there’s a ready market—you’re going to get pretty close to 100 percent. But some finished good in a manufacturing process, where the company doesn’t have a sales force anymore because it doesn’t exist—it’s going to be much harder to sell. You might only lend 30 percent of the cost of that finished good.

Transition to Sales at Heller (32:00)

WJB: So by the time you got your MBA, you had had quite an in-depth experience and learning process at the day job.

TNB: Well, I actually only did the inventory analysis work for a couple of years. Then they asked me to become essentially a salesman. I had a territory, and we got most of our business from banks who had made unsecured or poorly monitored loans and needed help. If we could go in and identify that there were assets we could keep an eye on, we didn’t care that much if the company was losing money because we had the collateral. The banks were less comfortable with that scenario.

TNB: Most of our business came from bank referrals. My territory was terrible—the state of Wisconsin and the entire state of Illinois except for Cook County. The rest of Illinois was not a fertile territory, nor was Wisconsin really, though there was some activity in Milwaukee.

TNB: I started this job probably in 1981. Paul Volcker had become the Fed chairman and was trying to stamp out inflation. The prime rate went to 21 percent. Our method of lending was labor-intensive and somewhat risky, so we would ask for a premium of five percent over the prime rate. When the prime rate is 21 and you’re trying to get five over, you’re charging 26 percent. My job was to run around to these banks—the economy was in terrible shape because interest rates were at 26 percent. The bankers were distraught, the companies were all in bad shape. It wasn’t a lot of fun driving around Wisconsin and Illinois.

First National Bank of Chicago: The First Scholar Program (35:22)

TNB: I had a close friend who worked at the First National Bank of Chicago. The bank had a program called the First Scholar Program that, to your earlier question, specifically recruited liberal arts graduates. The deal was that you had to be an accepted student at either the University of Chicago or Northwestern. You went at night, Chicago paid, and you rotated around various operating parts of the bank. They understood you were getting an MBA at night, so during finals they’d cut back on the workload. But you were genuinely integrated into the operations of the bank with real jobs of three or six months’ duration.

WJB: So you switched from Heller over to the First National Bank of Chicago before you finished your MBA?

TNB: That’s precisely correct. The training program at First Chicago was great. First Chicago got a lot of their senior management out of the program over time. I was interested in financial markets and less interested in the traditional banking or consumer side of commercial banking. My first rotation was in money markets, where you’re sitting on a trading floor. There were a couple hundred people—a big foreign exchange trading operation, government bond operation, municipal securities operation.

WJB: Was this in the old First National Bank building or the new one?

TNB: The new one—the one that curves as it goes up. The trading floor was on the fourth floor, a big operation. I spent about three months working on the trading floor in money markets, which was buying and selling funds largely to fund the bank. A big money center bank has to fund itself every day.

I then ended up doing a stint in foreign exchange trading in New York City, which was my first taste of living there—the summer of 1982, I think. Then I came back to Chicago and got a job working for the guy who ran all the trading and managed the funding and interest rate sensitivity of the bank’s balance sheet. That was very important because interest rates were going up and down by two or three percent in a day. If you didn’t match the duration of your assets and liabilities, you’d end up with huge variations in the net interest margin—the difference between what you pay for money and what you earn on it.

Managing the Bank’s Balance Sheet with David Vitali (39:11)

TNB: Previously, before Volcker started moving interest rates around as frequently as he did, it didn’t really matter because rates didn’t change. But when interest rates started moving around, you had to balance it properly. My job was to understand the interest rate sensitivity of the bank’s balance sheet, which was about $30 billion at the time—not that much money now, but it was a lot then. It was one of the top ten banks in the country.

WJB: How many people were focused on that function? And was that where you met David Vitali?

TNB: Yes, I was working for David Vitali. He ran all the trading businesses at the bank and looked after the balance sheet. He was one of the most important people in the bank, an executive vice president, very smart, and had been a First Scholar himself. I ran this little unit of people who analyzed the bank’s balance sheet—that’s all we did all day long.

WJB: Was that the first time you had people reporting to you?

TNB: It was, yes. We had to account for every asset of the bank—mortgages, credit card loans, loans all over the world, securities. And all the liabilities—deposits, purchased money, commercial paper, CDs. We totaled it all up and figured out if they were balanced properly. But this was 1982, maybe 1983. We did this on ledger paper with pencils and calculators. The balance sheet was so complicated that regular ledger paper wasn’t wide enough. We would tape sheets together to make a piece four feet across and fill in all these little boxes.

WJB: That was just at the time that digital capability for this type of analysis was starting.

TNB: Right. We had a staff of three people. I ran the little group and there were two other analysts working with me. I learned a ton from David Vitali. Because of what was happening with the economy, inflation, and interest rates, it was a particularly interesting time to do that work.

David Vitali’s Later Career (42:24)

WJB: Just on David Vitali for a moment—years later, I had a chance to introduce him to speak at a group called the Wayfarers Club, a dinner club that I was president of at the time. It’s a group you grandfather Stanley Pargellis once headed as well. Vitali was talking about the status of the Chicago Public School system, which was in the middle of a terrible long teacher strike. In my brief exposure to him, he was quite something—he had a very sophisticated way of looking at a very complicated management problem in a crisis situation.

TNB: He’s an extraordinarily capable person. He ended up being vice chairman at First Chicago. I think he left about the time First Chicago was acquired by Bank One. He then became the chief executive officer of the Chicago Mercantile Exchange and ran that for a couple of years. After that, he was the chief operating officer of the Chicago Public School system when it was being run by Arne Duncan, who went on to become Obama’s Secretary of Education. David did all of those things. I learned a ton from him—it was a spectacular experience.

The beautiful thing is that I reconnected with him a couple of years ago. His daughter now lives in Brooklyn Heights. He and his wife and daughter came over and had dinner with Nancy and me and our kids. He’s now the chair of the board of the Museum of Science and Industry. Nancy and I were out in Chicago a couple of years ago, and I reached out to him. He said, “I’ll meet you at the museum.” If you want to go to a museum with the chairman of the board, he’s not a bad person to do it with.

The Collapse of Continental Illinois Bank (44:46)

WJB: As I recall, you told me once that you had a very significant education briefly with Vitali when you and he went over to visit with the Continental Bank’s treasurer as they were collapsing.

TNB: Continental Bank was a casualty of this really fraught period in the economy and financial markets. Continental got over its skis making loans to aggressive energy companies all over the country. In the early 1980s and late 1970s, Continental was one of the most successful banks in the country, referred to as “the Morgan of the Midwest.” Then they had terrible loan problems in the energy sector and failed. The Fed had to bail them out and was trying to find a buyer.

First Chicago was—we didn’t know it at the time—really in no position to be that buyer. We were close to our own issues and had, within a year, not dissimilar circumstances. But David was asked to be part of the team evaluating the possible acquisition. He said, “Hey, I’m going over to Continental to talk with the guy who runs the funding. Want to come with me?” I said yes.

We sat down with the man who basically had David’s role at Continental. It was just the three of us in his office. He described how the bank failed. Basically, they got to the end of their trading day in Europe and hadn’t raised enough money. They had this deficit that they passed on to the American marketplace, and they couldn’t raise enough money in the United States. They got out to California grabbing around for money to try to balance the assets and liabilities before the market closed there. Continental came up something like $4 billion short at the end of that day.

The Money Markets and “Hot Money” (47:09)

WJB: Who would they be going to, to get the money to correct a gap like that?

TNB: These big banks, particularly then, relied heavily on what was called purchased money—money they had to borrow on a day-to-day basis. They would take huge time deposits from people around the world who had dollars to invest. A lot of this money came through Cayman Islands branches, which had some regulatory and tax advantage. The long story short is that a big bank wasn’t lending out people’s checking or savings accounts. A lot of their funding came from basically hot money that they had to go out and get every day—the money market operation I was involved with when I first got to First Chicago.

Every day, every big bank had to go and get a slug of money in order to make things work. A lot of the money also came in the form of fed funds—reserves that banks trade amongst themselves. The big money center banks were always big buyers of fed funds. A small bank out in Decatur, Illinois, was a seller. That’s how the system worked: the bank in Decatur could take in a deposit from a farmer, and if it didn’t have a loan to put it out, it could lend to First Chicago, and First Chicago could figure out how to loan it.

WJB: So that’s the money markets.

TNB: That’s our work. But the bottom line is that that money is “hot” in the sense that if people lose confidence in your institution, for whatever reason, they just don’t have to sell you the money that night. Continental ended up with this huge deficit and failed as a result.

WJB: In that kind of crisis, how does the word get out that they’re teetering? What’s the noise like on the day it’s happening that makes the usual lenders say, “No way”?

TNB: It’s part rumor. You might see that all of a sudden Continental has to pay a little bit more money to get funded. A little bit more is fine. But when it becomes a lot, then it’s a sign of a real problem. Interestingly, I got a chance to watch another one of these things fail. I worked at Bankers Trust subsequently in New York, and Drexel Burnham Lambert was in the process of failing. The guy next to me on the trading floor was the guy who basically said “no more money for Drexel” at the end. They failed that day because Drexel deserved to fail—they were falling apart.

Government Bond Sales at First Chicago (51:21)

TNB: After the interest rate sensitivity analysis work with David Vitali, I ended up going back to the trading floor and became a government bond salesman, covering accounts all over the country, buying and selling government securities. First Chicago was what was referred to as a primary dealer in government securities, of which there were roughly 20 at the time.

WJB: Would you buy overnight funds from the Fed and resell to other banks?

TNB: No, not from the Fed. These were government bonds—treasury securities. They’re transferred from one buyer to another, typically via a primary dealer. The big banks and big securities firms were all primary dealers. You could buy those things in the open market from brokers, directly from the Treasury, and sell them to the little bank down in Decatur that usually holds a portfolio of treasury securities, or to a big pension fund or insurance company. I had a list of accounts that I dealt with. It was fascinating because interest rates were moving around all over the place, and the volatility meant huge price swings in fixed-income securities. It was exciting, but there was a lot of stress on these trading floors during that period.

First Chicago was only okay at it. The big players in the securities markets were mostly investment banks here in New York—firms like Merrill Lynch, Goldman Sachs, and Morgan Stanley. But there were a couple of banks that were big and active: JP Morgan, Citibank, and Bankers Trust Company.

Meeting Nancy Board and the Move to New York (53:58)

WJB: Explain how that transition went and what was going on in your personal life at the time.

TNB: I got several wonderful things out of First Chicago. One was my MBA. Another was the fantastic learning experience with people like Vitali. But during that period when I was running the little team of balance sheet analysts, I sat next to a woman named Nancy Board—Nancy Bowe now. We started dating. We were a few feet away from each other and dated surreptitiously for a while. In the early 1980s, you weren’t supposed to date people in the office. It’s still a little bit taboo, but less so than then.

We got up one weekend morning and were riding bicycles along the lakefront just north of Fullerton, right along the lake. It was about seven o’clock on a Sunday morning—you could tell because the shadows of the trees were really long. As we were riding along, I noticed a guy with a huge telephoto lens taking photographs as we rode by. I didn’t think anything of it. But about a week later, the New York Times travel section did a piece on Chicago—“spend a weekend in Chicago”—and the entire top half of the travel section was a photograph of Nancy and me riding our bikes together at dawn. Not that many people read the New York Times in Chicago at the time, but somebody in our office zip code did, because they left a copy on Nancy’s desk. So, we got kind of outed by virtue of that.

About that time, I got recruited to do exactly the same thing at Bankers Trust Company in New York. In 1985, about the time Nancy and I got married, I moved to New York. She stayed with First Chicago and commuted back and forth because a lot of her work was in New York anyway. That’s how we ended up in New York.

WJB: Were you married in Chicago?

TNB: We got married at St. Paul’s Church, which is at the corner of Orchard and Fullerton. Then we had our reception at The Cliff Dwellers.

WJB: How did that come about?

TNB: We were looking for a place to have the reception. Nancy had been married before, so we didn’t need a big wedding, and her parents weren’t going to fund it since they had funded the first one not too long before. A guy named Bob Houston, whom I’m sure you know, volunteered to help arrange it. So that’s how we ended up at The Cliff Dwellers and had a beautiful luncheon reception there. Nancy and I took off that evening for a honeymoon—two weeks in France.

WJB: I think your mother had dated Bob Houston when they were both at Yale—your grandfather was teaching there and Bob was a student.

TNB: Now that you mention it, I do recollect that they dated one another. I’d sort of forgotten about that. He was a lovely guy—good friends of ours in Chicago. They lived on Orchard Street not far from us for a while.

Bankers Trust Company (57:38)

TNB: Bankers Trust Company was a fantastic place to work. I ended up working there for thirteen years. I did a whole bunch of different things across the banking business. I started in government securities, but Bankers Trust was evolving its whole strategy, trying to become more of an investment bank and less of a commercial bank—a distinction that doesn’t really exist any longer but was important then and enforced by the Glass-Steagall Act.

I then ended up doing other things on the trading floor and eventually moved into the asset management business. Bankers Trust was actually the fourth-largest asset management firm in the United States. It had a huge trust and custody business, which meant we were the custodian for a huge cross-section of pension plans—both state and local pension plans and corporate pension plans. If you’re the custodian and trustee, you end up looking after cash balances, so we had a huge cash management business. We also had a big index fund operation creating passively managed portfolios of stocks replicating the S&P 500. Indexing is very common now, but it was at the cutting edge then, and Bankers Trust was at the forefront.

TNB: I ran the wholesale client service, sales, and marketing sides of that business at a pretty young age—in my late thirties and on the management committee.

WJB: If you started with three people reporting to you in your first manager role at First Chicago, how many ended up reporting to you in this period?

TNB: Between sales and all the related functions, roughly 75 to 100 people. To be candid, I was over my head professionally. I didn’t really know that much about the asset management business, and somebody thought I could learn on the job. And I think I actually did. But it’s a real business—you need to know what you’re doing, and I’m not sure I did at first.

It was also a time when Bankers Trust had gone through some scandals—not in my area, but on the trading floor—involving some fraudulent activity that ultimately resulted in Bankers Trust failing. Well, it didn’t fail the way Continental did—it got taken over before it failed, by Deutsche Bank, the big German bank. But if you’re in the asset management business, people need to trust you. It’s not an area where you want a lot of risk. Bankers Trust had these issues with regulators, bad press, and investigations. If you were out trying to be in the asset management business with that backdrop of scandal and fraud, it was pretty hard.

Donaldson, Lufkin & Jenrette (DLJ) (1:01:37)

TNB: I ultimately left Bankers Trust through an absolute stroke of luck. I got recruited by a friend inside Bankers Trust who was starting a business to raise money for illiquid asset management companies—what now includes private equity, venture capital, private credit, and private real estate. These were all just sort of burgeoning cottage activities at the time. Now some of the biggest asset management companies in the world are focused on these illiquid alternative assets—firms like Blackstone or Apollo that you read about every day.

At Bankers Trust, we had a business raising money for firms like that, all institutional money from pension funds, insurance companies, and sovereign wealth funds. The leading player in the industry was a firm called Donaldson, Lufkin & Jenrette. In 1998, because I was pretty good at doing this at Bankers Trust and DLJ wanted anybody they thought was good on their team, I got recruited to go there.

DLJ was the best firm at which I ever worked. The quality of the people was incredibly high, the businesses were really good, and the culture was exceptional. Everybody had a ton of integrity and they were really good at what they did. They operated in businesses at the cutting edge of finance—a big high-yield bond business, lots of merchant banking activity, big equity underwriting. It was an absolutely spectacular firm.

TNB: We were the best in the business. As the whole private equity sector gained momentum and grew, we were at the cutting edge. Everybody wanted to work with us because we were genuinely the best and everybody knew it. It was a great period—remarkably lucrative individually but also really interesting. We dealt with the leading firms in the industry. People like Steve Schwarzman, who’s now a multi-billionaire and started Blackstone—back in the beginning, he relied on people like us to raise capital. It was a ton of fun.

Credit Suisse and the Importance of Corporate Culture (1:05:43)

TNB: Unfortunately, DLJ was acquired by Credit Suisse in 2001 or so. Credit Suisse liked our business and pretty much left us alone. But Credit Suisse was no DLJ. It had a pretty bad culture.

WJB: You’ve developed throught quite a range of employers across the finance industry, and the cultures were all different. Starting from Heller, to First Chicago, to Bankers Trust, to DLJ, to Credit Suisse—tell me a little bit about why culture is so important if you’re managing a company.

TNB: That’s a great question. At the best firms, we were genuinely good at what we did, people took pride in working, and they were places where the employees had a healthy respect for the franchise and had a real interest in protecting it. That was definitely true at Heller—there were people who knew what they were doing and believed they were part of something bigger. And it was certainly true at DLJ.

At Credit Suisse, everybody was just out for themselves. The firm did a bad job of aligning individuals’ interests with the interests of the firm. At Credit Suisse, everybody was just trying to figure out how to maximize their own earnings and really couldn’t care less what was happening with Credit Suisse’s earnings. That was much less true at DLJ and at Heller.

TNB: First Chicago fell somewhere between all of that. It was being marginalized by some of the other large banks around the country. In addition, the banking laws in Illinois didn’t allow branch banking. As a result, First Chicago had to rely more heavily on that hot money I was talking about earlier, which made it fundamentally a riskier enterprise. Bank of America had branches on every street corner in California and didn’t need to buy so much money every night. Same with the New York banks—branch banking was legal there. First Chicago ultimately wasn’t as well run as some of these other places. I don’t think the people were as strong, and its franchise was imperfectly positioned.

2. Tony Bowe on His Father the Judge, Education & Early Career

1. Tony Bowe on His Father the Judge, Education & Early Career

Tony Bowe on His Father the Judge, Education & Early Career

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