Andrew Sorkin - Too Big to Fail - The Inside Story of How Wall Street and Washington Fought to Save the FinancialSystem--and Themselves

She called the Secret Service to see if they would close down Hamilton Place, for with all the photographers expected to show up, the event could well turn into a zoo. She got a firm no.

At 9:19 a.m., she sent an e-mail to the assistants of all nine Wall Street CEOs, with instructions about what they should do after being dropped off at Fifteenth Street and Hamilton Place: “They should proceed on foot down Hamilton Place to the Gate to enter the building. They will need to show photo id (a driver’s license would be fine).” As she raced through what she needed to get done, West realized that she was missing one last thing. She had gotten the Social Security numbers and dates of birth of everyone but Ken Lewis, which she needed to get him cleared through Secret Service. She tried his office three times, but when no one picked up she decided to call his home. “I just spoke with Mr. Lewis’s wife and have his DOB and SSN,” she wrote moments later to Lewis’s assistant.

To almost no one’s surprise but everyone’s disappointment, news of the secret meeting started to leak. “I guess my invitation got lost in the mail,” Cam Fine, president of the Independent Community Bankers of America, wrote to Jeb Mason, the handsome Texan who was the Treasury Department’s liaison to the business community. “We do represent 5,000 banks with over one trillion in assets,” he wrote, adding a smiley emoticon. “A little financial humor Jeb—laugh a little.”

Despite West’s best efforts, confusion still reigned. “Do you have a list of market participants attending the 3pm meeting?” Calvin Mitchell, head of communications for Geithner, wrote Wilkinson. “Are you guys confirming yet who’s invited?”

Even an hour before the meeting the CEOs were still trying to sniff out what was really up. “Any ideas what the topics will be for the 3pm meeting with the CEOs?” Steven Berry, Merrill’s government relations person, e-mailed Wilkinson. “Thain was asking. Also room number? I will see Thain in about 15 min.”

A little after 2:00 p.m., Ben Bernanke, Tim Geithner, and Sheila Bair assembled in Paulson’s office, their last chance to get on the same page before the big meeting. Paulson, his sleeves rolled up, took up in his usual chair in the corner, slumping just enough to suggest that he was pining for an ottoman. Geithner took the seat next to him; Bair settled on the blue velvet sofa; and Bernanke found a chair across from him. They were about to do what Paulson had been describing as “the unthinkable,” and their tension in the face of it was evident. Paulson himself looked visibly pained.

“Okay,” he said, “has everyone seen the talking points?” Paulson waved the printed page with its half dozen bulleted items before them all, and continued, “Let’s run through this.”

First, he explained, he would introduce everyone. Then, he said, he’d highlight the three pieces of the program: commercial paper; FDIC; and TARP, the acronym that would soon become synonymous with the word “ bailout,” and one that he clearly had a hard time saying.

“Then I’ll hand it over to you guys,” Paulson said, nodding in the direction of Bernanke and Geithner, who then rehearsed their lines about the commercial paper program. “From there, Sheila will take it,” he instructed, still annoyed with her for all of her complaining the night before about the loan-guarantee program.

Finally, they got to the key provision: the equivalent of welfare checks, earmarked for the biggest banks in the nation.

Paulson read the talking point aloud: “To encourage wide participation, the program is designed to provide an attractive source of capital, on identical terms, to all qualifying financial institutions. We plan to announce the program tomorrow—and that you nine firms will be the initial participants. We will state clearly that you are healthy institutions, participating in order to support the U.S. economy.”

They all knew that line was wishful thinking. Bernanke and Geithner had talked earlier in the day about whether the sum would be sufficient to sustain even one troubled bank, Citigroup, the nation’s largest, let alone solve a full-fledged financial crisis. Geithner, for one, had been especially anxious that Citigroup, as he had been saying for weeks, “was next.”

Then they got to the question that Geithner and Paulson had been debating all day: How forceful could they be? Geithner had prevailed upon Paulson earlier to make accepting the TARP money as close to a requirement for the participants as possible. “The language needs to be stronger,” Geithner urged him. “We need to make clear that this is not optional,” Paulson agreed.

The new talking-point language reflected Geithner’s changes. “This is a combined program (bank liability guarantee and capital purchase). Your firms need to agree to both,” it stated. “We don’t believe it is tenable to opt out because doing so would leave you vulnerable and exposed.”

Just to drive home the point, one of the talking points warned, “If a capital infusion is not appealing, you should be aware that your regulator will require it in any circumstance.”

They had already tried to game out which of the CEOs would be resistant. Pandit might be tough, but he’d take it, Paulson thought. Dimon was in the bag. Blankfein might get snippy, but he wouldn’t get in the way. Mack needed the money, so that should be easy. Lewis might put up a fight. The biggest wild card was Dick Kovacevich of Wells Fargo: Would he be the one to derail it?

Paulson recounted how much trouble it had been just trying to get him to show up. “I could hardly get him on the airplane,” he told the group, who looked at him with a mixture of amusement and astonishment. “I just said, ‘Listen, the secretary of Treasury, the chairman of the Fed, the FDIC want you here! You better get here!” Everyone laughed, but got right back to business.

“David,” Paulson said, pointing to David Nason, “will walk through the numbers.” And Bob “will go over the comp issues,” meaning the delicate conversation about the industry’s famously extravagant way of compensating, or paying, its medium to big producers.

After that, Paulson explained, the plan was to sequester all the CEOs in separate rooms. “We let them think it over. They can talk to their boards. And we can answer their questions if they have them,” he said. “And then we’ll reconvene at 6:30 p.m.”

“Let’s hope this works,” Paulson said encouragingly, as the group got ready to march down the hallway to, if not the biggest meeting of their careers, certainly the most historic.

Outside the Treasury building every attempt that had been made to keep tight control over the meeting had become moot. Jamie Dimon had arrived at 2:15 p.m., some forty-five minutes early, and casually ambled down Hamilton as the group of camped-out photographers snapped picture after picture. “He caught us off guard!” Brookly McLaughlin, one of the press staffers, wrote to her colleague, who was trying to coordinate the logistics from her BlackBerry. Ronald Logue of State Street Bank showed up ten minutes later; Robert Kelly of Bank of New York and Blankfein arrived at 2:43; then Mack and Pandit. At 2:53, Lewis was still missing. Christal West was getting nervous until he finally arrived, with five minutes to spare, sneaking in through Paulson’s private entrance at the side of the building.

At 2:59 Christal West sent an e-mail to the group: “They’re all in.”

The centerpiece of the secretary’s imposing conference room is a twenty-four-foot-long mahogany table buffed to a high shine, with a Gilbert Stuart portrait of George Washington looming over it from one side of the room and a portrait of Salmon P. Chase, the secretary of the Treasury during Lincoln’s administration and the man responsible for putting the words “In God We Trust” on U.S. currency, from the other. Five chandeliers, lit by gas, hang from the vaulted rose-and-green ceiling. On the back of each of the twenty leather and mahogany chairs positioned around the table is the U.S. insignia in the configuration of the sign for the dollar.