Nicholas Lazares

Sept. 11 (Bloomberg) — During the squall of the Great Depression, super broker E.F. Hutton hoisted sail aboard his newly built $1.25 million luxury yacht and told the world that the 356-foot, four-masted barque Hussar V was a seafaring symbol for economic recovery.

«It is the intention of many owners of yachts not to put them into commission this year, for fear that they might offend in times like these, Hutton said a few hours before leaving on his 1931 summer vacation. «I believe the newspapers could create the right sort of sentiment so that nearly every yacht would be placed in commission. It would help the general situation which all of us are trying to relieve.

At sea some 77 summers later, off the Aegean island of Salamis, the erstwhile Wall Street jingle «when E.F. Hutton speaks, people listen continues to ring true as the chilled pomegranate martinis are poured aboard the 100-foot Caldera.

«I can tell you the view from here is much better than from Wall Street, says owner Nicholas Lazares. who earlier this year retired from his position as a managing director of Lehman Brothers Holdings Inc. the fourth-biggest U.S. securities firm, and started a new company that specializes in purchasing distressed financial institutions. With family, friends and four crew members, he then boarded his pilot house cutter for a five-week cruise of the Greek islands and Croatias Dalmatian coast.

Financial Volcanoes?

«Caldera is named after the volcanic explosion that Plato figured sank the lost continent of Atlantis, Lazares says with an uneasy laugh as lunch is being served. «But Ive never done my best business by making house calls on investment banks. I do it through sailing. Its an attractive venue.

And the 57-year-old chief executive officer of Lazares & Company LLC in Milton, Massachusetts, is not alone in charting a course out of the $506.1 billion subprime storm at the wheel of a luxury vessel.

Surveys by yacht brokers such as Camper & Nicholsons International show that orders for $10 million nautical chateaus are up 18 percent in 2008, and that theres a shortage of the 25,000 captains, engineers and crew required to handle demand.

«It was an aggressive schedule, Caldera Captain Ken Lannamann says of the vessels 800 nautical-mile odyssey through the Aegean and Ionian Seas. «Running out of croissants and coffee was the biggest hazard, and lots of crazy ski boats get in the way of swimming.

Jellyfish, BlackBerries

Other perils included dodging Albanian pirates in the northern Ionian; negotiating mini-tsunamis triggered by underwater earthquakes; avoiding jellyfish the size of apple pies in the eastern Aegean. And, Lazares says, handling the dozens of urgent phone calls and BlackBerry messages from colleagues in the U.S. on how to cope with the $8.2 billion of writedowns and credit losses posted by Lehman, the largest underwriter of mortgage bonds before the collapse of the subprime market.

Guests are important, too. This season, Lazares piped aboard a physician, a marine biologist and Christine Kondoleon, curator of the Greek and Roman collection at the Museum of Fine Arts in Boston.

«People like Christine make the voyage more interesting, Lazares says. «We had a running commentary on all the art and history we came across.

Lazares, who in 2006 sold his Boston-based Capital Crossing Bank to Lehman for $210 million, is no fair-weather seaman. He captained his first sloop, Arion, when he was 27 and in 2005 won the grueling St. Barths Bucket regatta. Lazares says sailors who prefer loading a yacht with diesel fuel over filling a spinnaker with wind «do nothing but sit there and drink.

Standing at Calderas wheel, waiting for the arrival of a Mediterranean breeze and a New York phone call, Lazares says «there are not many places like this, where you can go and clear your head. Or find a better cellular network.

Equity Seamen

«Theres stronger cell and BlackBerry reception off the Croatian coast than in any big U.S. city, Lazares says. «You also get to know people. Sometimes the guy working the winch across from you is dealing $3 billion in equity.

Lazares says he spent his summer vacation aboard Caldera managing 30 telephone conference calls on the subprime meltdown, including one that was four hours long. «Thats not true, says Lazaress wife, Pamela. «It was more like 90 business calls.

Lazares backs away from the disagreement, saying that he brings folks aboard to mesh business and entertainment when human contact is necessary. As a specialist in purchasing commercial loans and distressed banks, Lazaress inflatable rubber skiff was working overtime this summer, ferrying the likes of Thanasis Tsoukalas, chairman and chief executive officer of the privately held Greek investment firm Capital Partners SA aboard Caldera to review the opportunities the subprime crisis offers.

Bank Discussions

These confidential and wide-ranging discussions centered on the pros and cons of purchasing Lehman — which yesterday reported a $3.9 billion third-quarter loss on $5.6 billion of writedowns — or any of its units, as well as other U.S. financial institutions. These may include IndyMac Bancorp Inc. and First Heritage Bank in California; Integrity Bank in Georgia; Columbian Bank & Trust in Kansas; First Priority Bank in Florida; First National Bank of Nevada; First Integrity Bank in Minnesota; ANB Financial in Arkansas, and Hume Bank and Douglass Nation Bank in Missouri.

«Theres a dislocation in the banking market, Lazares says before hosting his sunset huddle with Tsoukalas. «Greed trumped everything at Lehman and I left in the nick of time. They were willing to make a loan to an orangutan. My plan now is to begin in California and start acquiring some of these distressed banks.

As Lazares sees the subprime churn, «more money is floating out there right now than there are people who know what to do with the money. The challenge of successfully navigating the chop, he reckons, is the same as the one he faces daily aboard Caldera.

«On a boat, nothing happens until something happens and its nothing you ever expected to have happened, Lazares explains.

Munching feta cheese and tubes of lamb rolled in grape leaves, Lazares describes Caldera as a «mental exercise, the ideal venue for him and his colleagues to track a channel out of the worst financial crisis since the Great Depression.

«You see and hear things at sea that you dont see and hear on Wall Street, he says.

«You can lose the rhythm of Wall Street and get upset about being restricted, but the sea is 300 feet deep here, Lazares warns, pointing a finger toward the deceptively calm Aegean. «When that happens, I walk up to the bow, take a look and, after a few moments, everything is great again.

To contact the reporter on this story: A. Craig Copetas in Paris at ccopetas@bloomberg.net.

To contact the editor responsible for this story: Jim Ruane at jruane1@bloomberg.net or.