JOHN GUTFREUND: Nice to be here. 
     FREDERICK JOSEPH: Thanks, Lou. 
     LOU DOBBS: Let me ask you, that day. 
     GUTFREUND: Sure. The first thing was, it was very active. New ground. I think the concern from the outside was very great, and I think regulators -- both in the Federal Reserve operating basically through the banks after they instructed them, and then the administration -- were very interested. I think that the White House was totally involved. Our concern was that business keep going and that we not be sidetracked and stopped all of the sudden. We thought that would be very bad. 
     DOBBS: Fred? 
     JOSEPH: I agree with John's comments. You wanted -- we were...in new ground. We were trading new ground, and we were worrying about the implications, the possibility of margin calls for the clients that had bought on -- had borrowed to buy stocks. The Fed announced that they'd be a lender of last resort, and I think that was a calming influence, and I agree with John that the administration was constructively involved. 
     DOBBS: Constructively involved. 
     JOSEPH: Constructively. 
     DOBBS: And were they literally on the phone with you hour by hour as this market began to deteriorate? 
     JOSEPH: Yes. 
     GUTFREUND: They were, and the reason was that their information source was not dependent, with due deference, to what they get off the floor of the exchange. They needed to know the flow. Were institutions buying? Selling? What was going on? Frankly, the specialist system, which is the heart of the stock exchange, needed assistance, and we, the upstairs firms, offered that assistance with the encouragement and support of the banking system. 
     DOBBS: Now, how about concerned? They -- you know, it built up the positions and -- thought this would be a normal trading day. Everyone knew that the market was going to break on the opening, and at first, it was buying opportunities, and then they suddenly woke up to the fact that it wasn't just 200, it wasn't 300, it wasn't 400, it kept going, and they hauled back, and it took some encouragement from the senior management in all the firms for them to keep answering the phone, "We're still in business, keep working." 
     DOBBS: The same at Salomon? 
     GUTFREUND: Oh, it was our reputation. Granted, you might not like the price you'd hear from us, but we were there. 
     DOBBS: You were there. Now you talk about what -- the administration, obviously, concerned as we reported it that day. Internally, what were your innermost thoughts? Did you feel you were in control? 
     GUTFREUND: I thought it was kind of interesting and fun. Was I in control? No, the traders were in control, but I'm there to support them. That was my job, but I knew that -- to use a dreadful -- water seeks it own level, but we knew the market had gone a little farther than it should have. This was a very interesting opportunity. Unfortunately, most of us, because of liquidity concerns, couldn't take greater advantage. We went into the day with positions, and at the end of the day, we probably had the same or larger positions, but with a much-lower price level. So we had a markdown problem. 
     DOBBS: No fear in Fred Joseph that day? 
     JOSEPH: Perhaps we were too busy to be fearful, and I think most of us had been in the business long enough to understand markets fluctuate, they'll overdo what they're doing, but there is a viable market. There were values. They'd come back. They'd come back to a fair level. 
     DOBBS: Well, this market since 1987 has come back and -- has it ever come back. The question, obviously, is, with your perspective and your experience, could it happen again? We're hearing it time and time again. 
     GUTFREUND: Yes, it could. Obviously, it's possible. Is it probable? I think not, because of a couple of things. No. 1, the framework is different. You have -- institutions dominate the investing pattern. Institutions, even if they chose to, couldn't liquidate, so fundamentally they'd probably have to be buyers on a scale down. The only caveat is they would be buyers of the high-grade stocks on the way down. The high specs -- they're very tricky, and I think they could go from 50 to 4. 
     DOBBS: Fred? 
     JOSEPH: I think what they do is they slow the crash down, and I think, in many ways, this market is sort of Rollerblading on a balancing board, and if it goes off on one side, you get deflationary fears, you could really see some panic selling, and if you suddenly get an expectation that inflation and interest rates are picking up, you could get a very sharp reaction. As you said at the opening of the show, the equivalent market break is almost 2,000 points. Panic could set in again. I think at some point it will. 
     GUTFREUND: The problem in my mind with that is that the institutions now are 90, 95 percent of the market. They have a vested interest. They also have enormous inflows. A turn on that just can't happen that quickly. Now I don't think psychologically it means people are with due deference to -- the same age as you and I, maybe Lou - but they're not our age, and I don't think that they would be prepared for the kind of precipitous decline you and I might anticipate. 
     JOSEPH: I think they wouldn't be prepared, and that's why you could see it. 
     DOBBS: Well, I think we're on the verge of making another market, and in that case a healthy market. Gentlemen, it's good to have you with us. Thanks for being with us . 
     GUTFREUND: Thank you. 
     DOBBS: John Gutfreund and Fred Joseph. 
     JOSEPH: Nice to be here.