"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.


  • Carol

    Cavalier isn’t cavalier but Lord is, almighty!

  • http://blog.redfin.com/blog/author/glenn%20kelman Glenn Kelman

    The names were the best part. I’m glad you noticed that too.

  • Scott Calvert

    I have been shorting SLM for awhile now and ALL the home builders KBH, LEN, BZH and many lenders including NFI and CFC. That CC doesn’t shock me. MY QUESTION!

    How is Red Fin holding up on cash. I can’t imagine you making any in this environment. Not alot of buying going on for the next few years. Will you burn through the cash?

    How are you going to compete with the 500 Realty model thats opening offices in Kent, Lynnwood, and Des Moines next year? They give 75% to the consumer and only 500 to list. Who’s backing them? Just like Zip realty both of your models seem to be inferior. Will you be giving more then 66% soon? Will there be additional funding to Red Fin. ??

    an Avid Investor

  • http://www.eresummit.com Breckenridge

    3 Billion dollars! Considering the declined value of the US dollar that would be more like 3b + 1.2b = 4.2 billion dollars.

  • http://blog.redfin.com/blog/author/glenn%20kelman Glenn Kelman

    Scott, thanks for asking but we have plenty of cash, and business is good. And almost from the beginning, our service hasn’t been the least expensive, just the best.

  • http://www.expertrealtorweb.com Elmo The Real Estate Expert

    Great article on the real estate happenings, I really enjoy reading your posts. Just for your information, Donald Trump is in big trouble right now with his real estate empire. I hope everyone can pull through this slump!!


    Real Estate Professional

  • http://www.jasonhartman.com Tony Bauer

    Looks like all the big-wigs of finance are desperately clutching at straws. Good analysis Glenn.