The Salomon Diet Summary and Analysis

Dinner at Le Perigord at the end of 1985 when Gutfreund confronts the mortgage traders over their pay marks a beginning disintegration of the mortgage department. The money saved by refusing Rubin's million dollar demands can hire twelve others that look the same. Performance is not the same. As these competitive traders leave for higher pay at other firms Salomon loses its Wall Street mortgage monopoly. Eventually other firms become more competitive. Salomon's non-competitive policies let qualified traders go to other mortgage departments with skills and contacts learned from Ranieri & Co. Margins get slimmer as the market develops and Salomon loses its monopoly. The metaphor of a bicycle built for two ad run in the Wall Street Journal shows a fat man on the front seat slumping and exhausted and a thin man on the rear seat pedaling...