In 1986, it lost $100 million trading government bonds. In 1987, it lost $60 million trading stocks. In 1988, it lost Bruce Wasserstein and Joseph Perella, the co-heads of its lucrative mergers-and-acquisitions group. In 1989, it lost $1 billion on loans to companies involved in takeovers.1 In one late 1980s deal, First Boston had foolishly loaned $450 million—40 percent of its equity—to just one firm, Ohio Mattress, in a deal later dubbed “the burning bed.”2 Finally, in 1990, Credit Suisse, the huge Swiss commercial bank, bailed out First Boston with $300 million of its own capital in exchange for a 45 percent stake3—the most it could own under Glass-Steagall, the law that separated investment and commercial banking. Ultimately, First Boston got a new name, too: CS First Boston (the CS stood for Credit Suisse). Not surprisingly, several awful years had turned First Boston into a nasty place, with low morale and vicious infighting. So many people were leaving that some called the firm “Second Boston.”
