December 23, 2007

“I Can Assure You, You Will Be Going Through a Metal Detector”

The credit meltdown took a strange turn when Sallie Mae lost $3 billion in market value after an apparently ad hoc Wednesday conference call between CEO Alfred Lord — who had already begun selling his own stock — and analysts. The New York Times described it as perhaps the worst performance since Enron CEO Jeffrey Skilling called a financial analyst an anus for having the temerity to ask for a balance sheet.

Among Mr. Lord’s choice responses, as selected by the New York Times:

• Responding to his first question, on how Sallie Mae would restore its credit rating: “You’re talking to the wrong guy… I don’t know that answer.”
• On announcing a shareholder meeting next month: “I would suggest maybe you get there early because I can assure you, you will be going through a metal detector.”

The best exchange that the Times did not have space to cover was a question from Bill Cavalier of Société Genéralé, who had to explain to the CEO how banks sell Sallie Mae’s loans, and why financial analysts would want to know if there’s a market for selling those loans.

Cavalier: …you’ve got to give us some guidance, you’ve got to give us some numbers. I don’t even see a margin number here for the stuff that you’ve done. Can you give us some handle on what your stock is worth?

Lord: You should give Steve [McGarry, Managing Director Sallie Mae Investor Relations] a call.

Cavalier: But you’re the CEO. You’re the guy who just took over the company.

Lord: Yeah, that’s exactly right. I’m the CEO. You should give Steve a call. Next question.

The call ended with the operator asking if there were more questions, followed by Lord saying, “How good is this? Steve, let’s go. There’s no — no questions.” Then came the expletive.

Thanks to a Friend of Redfin for sending us the New York Times article, and to all our friends who have supported us in 2007. Happy holidays!

Bonus link: Redfin co-leads a USA Today story about real estate and the Internet.