Brain Drain at the OCC
By Robert Hunter
Federal regulatory agencies have always served as the happy hunting grounds for Wall Street recruiters, but the Office of the Comptroller of the Currency
seems to have suffered more than its fair share of risk-management raids.
Three key officials that helped develop the agency's derivatives efforts have recently caught the Delta shuttle northward. Last year, Doug Harris
left his job as senior deputy comptroller for capital markets at the OCC
to become a consultant for various New York banks and hedge funds. A month
later, Ed Dumas, Harris' senior executive assistant at the OCC, became
the senior manager for market risk at the Bank of Boston and the chairman
of the corporation's global valuation committee. And in January, Barry
Schachter left his job in the agency's risk analysis division to become
market risk portfolio manager at Chase Manhattan Bank.
Is this evidence of horrid working conditions or sagging morale at the
agency? Hardly. If you listen to these former OCCers talk, you'd think the
acronym stands for the Office of the Completely Content.
Schachter says he agonized over his decision for weeks. "I hated
leaving the OCC," he confesses. "I was working with really smart
people doing really interesting things-like providing bank examiners backup
on technical issues like evaluating Value-at-Risk, stress-testing, back-testing
and option-pricing models." It took an offer from the largest bank
in the United States to woo Schachter from the OCC's homey environs. "I
cannot think of anywhere else that would have caused me to leave,"
For Harris, a New Yorker to the bone, leaving the OCC was harder than
he expected. "I found working at the OCC to be one of the most rewarding
professional experiences I've had," he says. "I originally went
to the OCC with the intention of only staying two years, but at the end
of the second year I decided to stay for a third because I hadn't accomplished
everything I set out to do."
Dumas is equally unequivocal in describing his stay at the OCC. "I
liked working at the OCC very much," he says. "It attracts some
very talented people." Much more of a quant than a policy wonk, Dumas
moved to the Bank of Boston because the new position allows him to focus
more on analytical issues than his OCC job allowed. Nevertheless, the former
physics major says "I wouldn't trade the opportunities I had there
According to Schachter, the rapid turnover at the OCC is a sign of strength, not weakness. "I'd much rather be at the OCC, a place that has smart
people that sometimes turn over frequently, than have the kind of stereotypical
government bureaucrats that just turn into deadwood over time."
Tail Wags Dog at BT
Lately, a number of derivatives groups have been trying to find ways
to integrate their operations better with other areas of their firms (see
"Islands No Longer," February). In some cases, formerly separate
derivatives sales groups have been placed under larger fixed-income or equity
Bankers Trust has recently turned that model around by making its government bond trading operation subservient to its interest rate derivatives group.
In February, it cut about 20 bond traders, merging bond trading with derivatives
trading as a single profit group and placing the former under the command
of Bill Hirschberg, managing director for interest rate derivatives.
Hirschberg will report to Alex Frick, senior managing director for
Although a number of overseas banks make cash bond trading secondary
to derivatives, it's less common among U.S. firms, which have substantial
Treasury trading groups. Although BT is still one of the 37 primary dealers,
its derivatives expertise clearly outshines its bond trading business. A
spokesman for BT says the move made sense as the bank is now looking at
bonds and derivatives as a single unit "in the way that clients look
Hagay Shefi Enters the Middleware Wars
Earlier this year, Hagay Shefi decided that what the derivatives
world really needed was better middleware. In case you've been in Pago Pago
for the last 10 years, middleware is the special software that allows different
programs and operating systems to talk to each other. As financial institutions
try to bolt new programs onto their aging legacy systems, they're bedeviled
by the seemingly simple problem of getting data from one place to another.
To capitalize on this problem, Shefi quit his job as managing director
at SunGard Capital Markets to become president of Mint Communication Systems
Inc., a middleware company that is a subsidiary of OSHAP, a publicly owned
company traded on the NASDAQ. "The middleware business is the hottest
thing in the market," says Shefi, 31, whose firm has already snagged
NatWest Markets and other high-profile investment banks as clients.
Although big players such as Digital Equipment Corp. and IBM are offering middleware products to the derivatives market, Shefi says his experience
at SunGard has helped him offer something different. "While other companies
require very specific interfaces either to the origin or the destination
of data, we allow banks to use the solution with any network type or application,"
he explains. "We do not require any additional code or any specific
interfaces." Shefi says his system goes beyond merely facilitating
the transfer of data across disparate operating systems and applications-it
allows pieces of information to be manipulated during the transfer based
on specific, user-defined rules, and it guarantees successful data transfer.
"As far as I know, we are the only company that intelligently provides
that," he says.
- John Neal has signed on with Princeton Financial Systems in Princeton, N.J., as managing director of technology. Previously, Neal served as president
of TCS, a New Jersey-based software-development company
- David Buchen left Citibank in February to become managing director responsible for global proprietary trading in foreign exchange for NatWest
Markets. According to Howard Kurz, Buchen's new boss at NatWest,
"this is a key hire for NatWest Markets. David's experience in proprietary
trading will significantly broaden our capabilities in the other major markets
in the world." Buchen had served as managing director of Citibank's
foreign exchange group since 1994
- Robert Samuel has been named senior managing director of Tech
Hackers, a New York-based international financial software engineering firm.
Samuel, who previously worked at Generic Trading/ Carlin Equities Corp.
as an equity portfolios manager focusing on interest rate derivatives and
products with correlation sensitivity, will manage the firm's consulting
- Henry Lichtenstein recently accepted a position with Fimat Futures USA as managing director of salesenergy. "Henry's depth of knowledge
and experience as an institutional energy broker and as a technical analyst
will be a great asset to our business," says Steve Bergan, Fimat's
- The Chicago Mercantile Exchange elected its 1997 officers. Jack Sander was elected chairman for a record 13th consecutive year. M. Scott Gordon
will serve as vice chairman for a third term. Joel Greenberg (second
vice chairman), Joel Stender (secretary) and Thomas A. Kloet
(treasurer) were elected to the board for the first time
- Abby Friedman has been named marketing director of Financial Sciences, a provider of integrated treasury systems. Previously, Friedman served as
vice president of marketing at Midas-Kapiti International
- Rick McCarthy, who previously served as director of business development at Renassaince Software Inc., has been promoted to president of the firm.
McCarthy succeeds Evard Van Hertsen, who has left the firm for personal
- Ron Lang has left Rational Software to become vice president of
marketing for Infinity Financial Technology Inc. According to Roger Lang,
Infinity's president (no relation to Ron Lang), "Ron's proven marketing
skills, developed at leading technology companies, will be integral to Infinity's
expanding market leadership in the United States, Asia-Pacific and Europe."