There have been numerous commemorations marking the passage of time from Sept. 11, but there is one hero of the aftermath who remains unsung. Richard Grasso, then-CEO of the New York Stock Exchange, made the reopening of the U.S. stock market possible only six days after the terrorist bombings. And for this he deserves America’s praise.
Many financial-industry executives doubted the reopening was possible in such a short period of time. But Grasso wouldn’t take no for an answer. Somehow, working round-the-clock, he managed to get the job done.
Grasso, a 35-year veteran of the exchange, climbed through the NYSE ranks and was appointed chairman and CEO in 1994. In September 2001, he displayed his clear understanding of the larger meaning of the U.S. stock market. Reopening it without unnecessary delay would send out two strong messages: First, Grasso believed the American public needed to see a quick restoration of the symbolic epicenter of our free-market capitalist system. Second, he believed it was crucial to show the terrorist enemy that it had failed to shut down the American economy.
Grasso is the sort of guy who insists on giving credit to others. In an interview, he told me about the instrumental efforts of Verizon, which set up alternative systems for voice and data transmission, and Con Ed, which restored the power needed to support stock-exchange activity.
The NYSE’s communications and power systems were located below 7 World Trade Center, which sat in the shadow of the Twin Towers. Along with the NYSE, major stock-market firms such as Merrill Lynch, Lehman Brothers, Salomon Smith Barney, and parts of Goldman Sachs and Morgan Stanley were crippled when the building collapsed on Sept. 11. But Grasso related how the utility workers risked their lives by going down into the Trade Center basement to assess damages and formulate substitute plans.
Grasso also cites the helpful efforts of Treasury Secretary Paul O’Neill and SEC chairman Harvey Pitt, as well as the big brokerage firms that created a new spirit of cooperation during that fateful week. "It was a rare moment in our industry when everyone put aside their competitive juices in order to get the job done," Grasso told me.
NYSE historians can find only two other periods in the last century when the exchange was closed for other than weather-related reasons. In April 1933, when president Franklin Roosevelt declared a national bank holiday, the exchange was shut down for eight days. A generation earlier, the exchange was closed for five months following the advent of World War I.
Despite the skeptics, the NYSE resumed trading on Sept. 17 and made history again. That day, it registered a record 2.3 billion in shares traded, its largest volume by more than 150 million shares.
During that bumpy reopening week, as equity prices temporarily plunged, share volume averaged 2 billion per day. Since then, of course, the market has experienced a remarkable rebound. In 2002, the Dow Jones was up 29 percent, the S&P 500 was up 21 percent, and the Nasdaq Composite was up 36 percent. In other words, investor confidence in the future of the U.S. economy and American business recovered quickly after Grasso, et. al., plugged us back in.
The stock market remains a leading indicator of the direction of the economy, and its top-five advancing groups — information technology, consumer spending, industrial manufacturing, basic materials and financial firms — are signaling a strong economic rebound ahead. The vile terrorist enemy has failed utterly in its effort to cripple the United States, and the American model of free-market capitalism is alive and well.
This is America’s bull market, but surely Dick Grasso deserves credit as one of its key drivers.