Financial History Issue 113 (Spring 2015) - Page 25

© Richard Levine/Demotix/Corbis John Whitehead and New York Senator Hillary Rodham Clinton at an LMDC press conference in 2002. historian Richard Sylla [now chairman of the Museum of American Finance], which was recorded as part of the Museum’s oral history project, Whitehead detailed his momentary but critical role in limiting the damage from the Crash of 1987. “The next day, after the Crash, was really a key decision-making day,” said Whitehead. “John Phelan, who was the chairman of the [New York] Stock Exchange, called the President. “Purely by coincidence I was having lunch with the President in the upstairs quarters of the White House that day. It was a meeting with the visiting president of Mali. In the middle of the luncheon a messenger came in and asked Reagan to leave the meeting. Soon the messenger came back and asked Howard Baker, Reagan’s chief of staff, to leave. A couple of minutes later, Baker appeared at the door of the dining room and beckoned me.” Whitehead continued, “This was very embarrassing, but I excused myself and went out. There was President Reagan on the phone with Phelan about whether or not he should close the stock exchange. Phelan had asked the President to announce he was closing the exchange.” Whitehead explained that it was already lunchtime, and Phelan’s problem was that many of the big stocks had not yet opened. “Therefore, there was no market at all. It was beginning to feel panicky, and nobody could get a quote because with no opening price, you couldn’t say whether the market was down more or up more,” he said. “Half the Dow Jones Industrial Average stocks hadn’t opened, so there was no average to announce. And his efforts to get the specialists to open the stocks were unavailing because the specialists weren’t very bold after losing all that money in their inventories the day before.” According to Whitehead, Phelan was giving an impassioned plea to the President to close the exchange, while Baker was trying to get the President back into the Mali meeting. “So Howard got the President off and said he’d take charge of it. I had been on the board of the stock exchange for a few months just before I went to Washington, and Phelan was a good friend. I was telling Howard what he should tell Phelan, which was to keep the market open. So when Phelan started arguing with Baker, Baker said to Phelan, ‘I don’t know anything about these things, but Whitehead is here, and I’m going to put him on.’ So I took the phone and told Phelan ‘I don’t know what you should do, [