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Vanguard calms investors
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October 22, 2001: 9:20 a.m. ET
After tragedy, Vanguard moved fast to reassure fund investors.
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NEW YORK (CNNmoney) - Jack Brennan, chairman of Vanguard Funds, heard the news of the Sept. 11 attack while he was in Boston meeting with the managers of the Vanguard Growth & Income fund. Once the second plane hit, Brennan reckoned that terrorists might be targeting big cities.
Realizing that seven Vanguard employees were in another meeting across town, he jumped in a taxi, raced over to join them, then hired a van and driver to ferry them all back to Vanguard's headquarters on the outskirts of Philadelphia.
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Jack Brennan | |
They got on the road shortly after 10 a.m. For most of the seven-hour trip, Brennan had a cell phone to his ear, with the other Vanguard employees lending him a new one whenever his own phone's batteries dimmed or its service faltered.
By 11 a.m., Brennan had gotten a message out to all Vanguard employees over the company's intranet, urging them to remain calm and focus on addressing investors' concerns. Brennan also phoned in to each meeting of Vanguard's "contingency council," the team that coordinates the firm's response to emergencies.
The council met every two hours that day, contacting the custodial firms that hold Vanguard's $560 billion in fund assets to verify that the money was still there, posting updates for shareholders on the Vanguard Web site and ensuring that the firm's computer systems would still function despite the destruction in New York City.
Council member Gus Sauter, who oversees Vanguard's $200 billion in stock index funds, asked for continual updates on whether shareholders were calling to cash out of the funds; almost all, it turned out, stayed put on the first day and throughout the weeks to come. "Our investors haven't panicked," says Sauter.
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Gus Sauter | |
Brennan also arranged to mobilize Vanguard's group of top executives to field the extra phone calls sure to flood in from worried investors over the coming days. He personally took dozens of such calls, advising would-be buyers and sellers that the best plan was to "stay the course."
At midday, Brennan heard over the radio in his van that President Bush was about to address the nation. He asked the driver to exit the highway and pull into a Burger King so they could all watch the speech on television.
"We needed reassurance," recalls Brennan. "I needed reassurance." An hour or so later, as the van sped across the Hudson River on the Tappan Zee bridge, it flashed through Brennan's mind that the bridge itself might be a target. He looked out the left side of the van and could clearly see the black smoke rising from the Twin Towers, 30 miles to the south.
Brennan arrived back at headquarters shortly after 5 p.m., just in time to join the contingency council's final meeting of the day. He recalls: "I'm running through my head, 'Who do I know who might be dead? What will I tell my family?' But I knew I had to disperse the emotion to the outside of the businessman box and make clinical, rational, objective decisions. If I look nervous, if I look afraid or uncertain, people will pick up on that. I didn't even loosen my tie, so people would know it was game time." 
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