Salomon’s arbitrage desk closure later devastated LTCM through shared positions

Evidence

In the summer of 1998, imitation switched to become a disastrously negative factor because of two decisions, neither of which had anything directly to do with LTCM. In 1997, Salomon Brothers had been taken over by the Travelers Corporation, whose chairman, Sanford I. Weill, was building the world’s largest financial conglomerate, Citigroup (Booth 1998). According to Kaplanis, Salomon’s U.S. arbitrage desk had not consistently been successful since the departure of Meriwether and his group, and in the first half of 1998 it was loss making: by June, “U.S. was down about 200 [million dollars]. … So Sandy [Weill] … closed it [Salomon’s U.S. arbitrage desk] down” (Kaplanis interview). The closing of the desk was announced on July 7. — Donald MacKenzie, An Engine, Not a Camera, 1033

Categorization

• BMF: The collapse of Meriwether’s group after departing Salomon parallels the recurring finance-collapse set-piece; most directly this evokes the hedge fund dissolution arc in A Visit From The Goon Squad’s financial-age texture, though the match is thematic rather than a specific plot device.