Reborn in Tokyo: From Heiress to Global Tycoon

Chapter 238 The Power of Capital

(Two chapters today~)

Lower Manhattan, New York.

Salomon Brothers headquarters building, top floor CEO's office.

Morning light pierced through the huge floor-to-ceiling glass curtain wall, shining unreservedly onto the sleek walnut wood desk.

John Goodfred sat upright in his leather office chair. Today he wore a perfectly tailored navy blue striped suit. His tie was impeccably tied. His silver cufflinks gleamed in the sunlight.

Last night's cross-border confrontation left no trace of fatigue on the face of this Wall Street oligarch. He held a freshly brewed cup of black coffee in his hand, calmly looking at the chief actuary standing across his desk.

David's situation was completely different. The chief actuary had deep bags under his eyes, and his eyes behind his gold-rimmed glasses were bloodshot. Because of a single sentence from Gutfred, he and his team had worked through the night.

He was holding a stress test report that was a hundred pages thick.

"President, the stress test results for the Japanese banking system are in."

"The actuarial department has verified all the data anchors provided by Ms. Saionji."

He turned to the third page of the report and pointed to a set of data models highlighted in red.

"Absolutely accurate. Moreover, the model uncovered even deeper vulnerabilities."

Gutfred sat in the leather chair, took a sip of his freshly brewed black coffee, and focused his gaze on the report.

"Japanese banks have long used 'Tobashi' accounts to conceal massive wealth management losses off-balance sheet. To keep their books looking good, they also included unrealized gains from cross-shareholdings between companies in the core capital required by the Basel Accords."

David paused for half a second, giving his boss time to process the information.

"Now that the Nikkei index has fallen below 30,000 points, the unrealized gains used as a support level are evaporating at lightning speed. Once the market falls below the 28,000-point threshold, this defensive network of cross-shareholdings will become a trigger for a series of margin calls."

"The chain reaction after the chassis collapsed?" Gutfred put down his coffee cup, the porcelain bottom making a soft sound as it collided with the tray.

"Yes, indiscriminate withdrawal of loans."

David flipped directly to the last page of the report.

"To fill the capital adequacy gap, banks have no choice but to drain funds from the underlying real economy. Japan's core manufacturing and real estate companies will face widespread cash flow disruptions. To repay their debts, these companies will be forced to sell off their hard assets at a 90% discount or even lower."

David looked at the final calculated number, and his breathing became slightly heavier.

"The model shows that the entire Japanese market will generate trillions of dollars in high-quality non-performing assets (NPLs)."

Trillions of dollars. A liquidation price of 10% of the original price.

He leaned back in his leather chair. His gaze passed over David and landed on the unsigned agreement on the edge of the marble coffee table.

A 20% commission on the transaction. A staggering seven billion dollar bill.

Saionji Satsuki agreed too readily at the card table last night.

Now, as the actuarial model laid out that grand blueprint of the hunting grounds clearly before him, Gutfred finally understood the true intentions behind the other party's offer of this enormous sum of money.

Making a profit of seven billion US dollars is certainly lucrative. However, compared to the ultimate windfall profits from dividing up the core assets of the world's second-largest economy and acquiring trillions of dollars in non-performing loans, this seven billion is merely a trivial appetizer.

The Saionji family readily paid this exorbitant bridging fee. Essentially, they were using real money to forcibly buy the Salomon Brothers' entry into the scheme. The other party needed the Salomon Brothers' cross-border financial management capabilities, and even more so, their political lobbying machine in Washington, to act as a legal bulwark for their transnational profiteering.

But how could such huge profits be obtained so easily... Would a capitalist like Saionji be so kind? Or do they have other motives?

The thought flashed through Gutfred's mind.

The Ministry of Finance's xenophobic iron curtain has always been impenetrable. The Saionji family not only proactively offered domestic political channels, but also readily paid a bridge fee of seven billion US dollars. This overly submissive attitude itself exudes an extremely dangerous aura—the other party may very well be trying to use the Salomon Brothers as a shield against regulatory backlash.

but……

He lowered his gaze, his eyes landing on the actuarial report on the marble coffee table.

Trillions of dollars worth of high-quality non-performing assets. Liquidation price at 90% of the original price.

Risk and profit are always commensurate; wanting only profit without taking on risk fundamentally violates the basic principles of investing.

As long as the profits are sufficient, what does it matter if a Far Eastern family takes advantage of the situation?

"Swish, swish, swish." The ink seeped into the texture of the paper. John Goodfred's name was signed smoothly.

He closed the file and looked up.

"Your report is valuable, David," Gutfred said calmly. "Go and rest. I'll have the liquidation department take over the rest of the process."

David nodded slightly, then turned and left the office.

Gutfred pressed the intercom button on his desk.

"Notify the liquidation manager to immediately initiate the settlement process for SA Investment's $35 billion investment. Use the proprietary trading desk's internal hedging channel."

He released the button and then grabbed the red direct line phone on the corner of the table. His finger pressed the single-key dialer for the K Street lobbying group in Washington.

A few seconds later, the line was connected.

"It's me." Gutfred's tone turned low. "Which member of Capitol Hill you use, and no matter how much political donations you need."

"Pressuring senior officials at the U.S. Securities and Exchange Commission (SEC)."

"The freeze and related investigations on SA's offshore investment funds must be lifted before sunset today."

"If anyone tries to stop us, tell them that the Solomon Brotherhood is withdrawing its sponsorship of their campaign funds this quarter."

……

Washington, D.C. The headquarters of the U.S. Securities and Exchange Commission (SEC).

In Arthur Vance's office, the air conditioning was set extremely low.

Thousands of transaction logs and settlement slips were scattered haphazardly on the table. The liquid in the coffee cup had long since dried up, leaving only a ring of dark brown stains.

Arthur had a bluish-black stubble on his chin, and his eyes were bloodshot as he stared intently at the cathode ray tube monitor in front of him.

The freeze order from the U.S. District Court for the Southern District of New York remains in effect. The billion dollars are securely locked in the underlying accounts of the clearinghouse.

On the surface, Arthur won. The Seventh Investigation Team successfully cut off this transnational fund.

However, in the ensuing legal battles, the Manhattan legal team raised numerous jurisdictional disputes and hearing requests, seemingly deliberately delaying their proceedings.

Soon, Arthur sensed something was amiss.

The other party lost a billion dollars, and their reaction was too... muted.

The top lawyers' arguments, though fierce, seemed more like a deliberate attempt to waste his administrative time.

That leaves only two possibilities. One is that the other party doesn't see this billion dollars as a significant amount, and it's not worth the fuss.

Secondly, they have other motives; this billion dollars is just bait to lure people in.

Arthur gritted his teeth, his hands flying across the keyboard.

These opportunists must be brought to justice.

No matter how sophisticated the algorithm's disguise, or how robust the offshore company's firewall, as long as the other party attempts to pocket the hidden profits...

Ultimately, money must be physically transferred.

He bypassed the securities trading process checks. Using the low-level privileges of a senior SEC investigator, he accessed the abnormal settlement logs from the North American Clearing House. The green data stream on the screen scrolled rapidly downwards. His pupils scanned every line of code.

"Stop." Arthur pressed the Enter key. The scrolling data stream instantly stopped.

In the center of the screen, a line of over-the-counter derivatives settlement applications highlighted in red appears.

Amount: $35 billion. Status: Level 2 Anti-Money Laundering (AML) alert triggered. Currently in the clearing node queue.

Arthur's breathing became heavy. He grabbed the magnifying glass from the table and pressed it against the screen.

The remittance of this massive sum of money involved a complex series of redirects. The final destination was the Cayman Islands offshore trust gateway, shrouded in secrecy. At the crucial juncture of the underlying physical settlement process, the legal firewall had finally revealed a tiny crack.

I found it!

Arthur abruptly stood up from his chair. The leather swivel chair slid backward due to the reaction force, crashing into the filing cabinet behind him with a dull thud.

He grabbed a blank sheet of paper from the table. He picked up a fountain pen. The nib scribbled rapidly across the paper, leaving messy streaks of ink.

Offshore trust barriers and jurisdictional disputes are all worthless in the face of physical money laundering that triggers anti-money laundering laws.

If this underlying data is presented to a federal judge in exchange for a comprehensive freeze order, then the $35 billion will become stagnant. The adversaries lurking in the shadows will have no choice but to stick their necks out.

A dot-matrix printer in the corner buzzed. An investigation report bearing the SEC logo emerged from the output tray.

Arthur grabbed the still-warm stack of documents and stuffed them into his briefcase. He grabbed the windbreaker draped over the back of the chair and threw it haphazardly over his shoulders. His gaze was fixed on the clock on the wall.

It was 2:15 PM. Less than three hours before the federal courthouse closed.

These three hours were a race against time between Washington's administrative machinery and multinational capital. Even a minute's delay could mean the entire massive sum of money slipping away through clearinghouse channels. He wanted to personally put that noose around the judge's neck before the judge left his desk.

Arthur reached out and grasped the brass handle of the office's oak door. Just as his wrist was about to exert force, "Bang!" The heavy oak door was violently pushed open.

Arthur was caught off guard. He stumbled back two steps as the door slammed against the edge of the desk. The SEC's top enforcement officer strode into the office, his face ashen, clutching a document bearing the seal of a lobbying group on K Street, Washington.

"Sir?" Arthur steadied himself, clutching his briefcase. "I'm preparing to apply for a freezing order at the federal court. Anomalies have been detected in the underlying data of the North American Clearing House. There are a full 35 billion in offshore clearings..."

The moment the manager heard the figure of 35 billion US dollars, he instinctively wanted to cover his ears, but then realized with despair that he had already memorized that damn number.

Damn it! I don't want to hear it! If you're going to get yourself killed, don't drag me down with you!

"Put the file down, Arthur." The supervisor's voice was icy, and his face grew even more grim.

"Sir! This money involves market manipulation through offshore accounts!"

Arthur demanded loudly, veins bulging on his forehead.

"Once we get the judge's signature, we can stop this transaction!"

The supervisor, not intending to listen to Arthur, silently told himself he couldn't understand English, and strode over to Arthur. He extended his right hand and placed it on the briefcase Arthur was tightly clutching.

"I told you to put the files down." The supervisor stared into Arthur's eyes. "You think you've uncovered some secret that nobody knows?"

The supervisor's voice was low and heavy.

"An hour ago, the phone rang on the committee chairman's desk on Capitol Hill. Several senators personally inquired about the ownership of this liquidation channel."

Arthur's pupils contracted.

"The exclusive prime broker for this $35 billion transaction is Salomon Brothers."

The supervisor's fingers gradually increased pressure on the briefcase, forcibly pulling it from Arthur's arms.

"The top brass in Washington don't need to know who the money originally came from. All they know is that Salomon Brothers' lobbying group just submitted a compliance memorandum."

The supervisor casually tossed his briefcase onto the walnut desk.

"This money is now classified as a legitimate institutional transaction for Salomon Brothers. Salomon can extract an astronomical sum of money as a channel fee from this bridging settlement."

"You are now blocking the Wall Street oligarchs' path to their vaults."

Arthur's lips trembled. "This...this is betraying the bottom line of regulation!"

He growled hoarsely, his hands clenched into fists.

"Immediately destroy all backups of the reports you have."

The supervisor turned around and walked towards the door.

"If you want to keep your federal retirement pension, or the safety of your family, forget about this case."

The oak door slowly closed behind the manager. The latch clicked crisply. The office fell silent again, save for the running air conditioner.

Arthur Vance stood there dejectedly, as if all his strength had been drained away.

He slowly turned his head, his gaze peering out the window through the gaps in the blinds.

Beneath the Washington Obelisk, a symbol of power, the shadow of super-capital blocks out all the sunlight.