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

103 “This is crazy accounting”: Lindgren, “The Confidence Man,” New York .

104 “Lehman is not that materially different from Bear Stearns”: David Einhorn, “Private Profits and Socialized Risk,” Grant’s Spring Investment Conference, April 8, 2008. 105 “I can only feel that you set me up”: Einhorn’s exchange with Callan reported by Susanne

Craig, “Finance Chief Is Demoted,” Wall Street Journal , June 13, 2008. 105 “This is classic value”: “Stock Picks from Sohn Investment Conference,” Reuters, May 23, 2008.

106 shares of Allied plunged nearly 11 percent: Stephen Taub, “Speaking Candidly,” Alpha , May 2005.

106 the Securities and Exchange Commission started investigating him: Lindgren, “The Confidence Man,” New York .

106 “One of the key issues I raised about Allied ”: This and all succeeding speech quotes by David Einhorn of Greenlight Capital are from his “Accounting Ingenuity” speech at the Ira W. Sohn Investment Research Conference, May 21, 2008.

CHAPTER SIX

109 “Who talked?”: Susanne Craig, “Lehman Struggles to Shore Up Confidence,” Wall Street Journal, September 11, 2008.

109 “Losses Push Lehman to Weigh Raising New Capital”: Susanne Craig, “Losses Push Lehman to Weigh Raising New Capital,” Wall Street Journal, June 3, 2008. 110 it had tapped the Federal Reserve’s discount window: Lehman emphatically denied the rumors on June 3, 2008, referencing its previous quarter, which had ended with more than $40 billion of liquidity. Joe Bel Bruno, “Lehman Brothers Treasurer: Firm Did Not Tap Fed Discount Window to Avert Cash Problems,” Associated Press, June 3, 2008.

110 stock was pummeled: Ibid. Lehman’s shares fell 15 percent in the afternoon of Tuesday, June 3, after Lehman liquidity rumors surfaced.

112 “Lehman’s straight shooter”: Susanne Craig, “Lehman’s Straight Shooter,” Wall Street Journal, May 17, 2008.

112 “The Most Powerful Woman on Wall Street”: Jesse Eisinger, “Diary of a Short-Seller,” Condé Nast Portfolio , April 2008.

113 Lehman’s deal with Woori: Hae Won Choi, “Woori Sets Pact with Lehman to Cut Bad Debt,” Wall Street Journal Asia, September 6, 2002; Donald Kirk, “No Pause for Woori,” Institutional Investor , July 1, 2002.

113 having judged his credentials inadequate, had tried unsuccessfully to stop it: In June 2008, instead of settling in to his new office at KDB, Min spent several days addressing complaints and protests from K DB trade union workers enraged about his appointment. Song Jung-A, “Man Behind Doubts Rise over KDB’s Push for Global Status,” Financial Times, September 2, 2008.

113 he sang a song called “Leopard in Mt. Kilimanjaro”: K im Yeon-hee, “K DB’s CEO: A Leopard on the Hunt for Lehman,” Reuters, September 5, 2008.

114 “Korea situation sounds promising”: Goldfarb’s e-mail, sent May 26, 2008, was made available from the House Oversight and Government Reform Committee’s investigation on the “Causes and Effects of the Lehman Brothers Bank ruptcy.” See “Lehman Brothers Email Regarding Punishing Short Seller,” http://oversight.house.gov/storyasp?ID=2208.

114 set off for Korea: According to flight records obtained by the Wall Street Journal . See Craig, “Lehman Struggles to Shore Up Confidence,” Wall Street Journal, September 11, 2008.

114 The Shilla: http://www.shilla.net/en/seoul/.

114 Hana Financial, which was also considering an investment: Hana Financial Group was one of several top South Korean banks (Shinhan, Woori) reportedly contemplating a Lehman bid. The company, however, publicly “denied any interest in joining a consortium bidding for Lehman Shares.” K im Yeon-hee, “K DB Confirms Lehman Talks; Korea Bank Shares Fall,” Reuters, September 1, 2008.

116 Matthew Lee … sent a letter: Report of the Examiner in the Chapter 11 proceedings of Lehman Brothers Holdings by Anton R. Valukas, chairman of Jenner & Block. See: http://lehmanreport.jenner.com/.

117 “Basically window dressing”: Report of the Examiner in the Chapter 11 proceedings of Lehman Brothers Holdings by Anton R. Valukas, chairman of Jenner & Block. See: http://lehmanreport.jenner.com/.

117 “I am very aware… . It is another drug we r on”: Report of the Examiner in the Chapter 11 proceedings of Lehman Brothers Holdings by Anton R. Valukas, chairman of Jenner & Block. See: http://lehmanreport.jenner.com/.

117 “not to make any remarks”: Lehman’s five-page severance agreement with Matthew Lee was signed on June 18.

118 bringing in $3.9 billion in revenue: Lehman’s investment banking net revenues rose from $3.2 billion in 2006 to $3.9 billion in 2007, a 24 percent increase, according to the company’s 10-K filing with the Securities and Exchange Commission on January 29, 2008.

120 Over at Neuberger Berman: Lehman sealed its $2.6 billion purchase of Neuberger Berman on October 31, 2003.

120 demanding that top Lehman managers forgo bonuses: Vale, Walker, and Fuld’s e-mail string is available under “Lehman Brothers Email Regarding Suspending Executive Compensation,” House Oversight and Government Reform Committee’s investigation, http://oversight.house.gov/story.asp?ID=2208.

121 Few seemed to flaunt their personal wealth as much as he did: Michael Shnayerson, “Profiles in Panic,” Vanity Fair, January 2009; Christina S. N. Lewis, “Hot Words in Finance: ‘For Sale,’ ” Wall Street Journal, January 16, 2009.

122 He gave generously to charities: Shnayerson, “Profiles in Panic,” Vanity Fair ; “Spelman Receives $10 Million Gift,” Jet , November 19, 2007.

123 he used it to ram through deals much more quickly: About Walsh, Aby Rosen told the New York Times : “He was fast… . He doesn’t try to kill you or retrade. To be honest, there are very few people in the industry you can say that about.” See Devin Leonard, “How Lehman Brothers Got Its Real Estate Fix,” New York Times, May 3, 2009; Dana Rubinstein, “Mark Walsh, Lehman’s Unluckiest Gambler,” New York Observer, October 1, 2008.

124 her input was virtually nil: See Nick Mathiason, Heather Connon, and Richard Wachman, “Banking’s Big Question: Why Didn’t Anyone Stop Them?” Observer (London), February 15, 2009.

125 Lehman paid nearly $100 million for Grange Securities: Chris Wright, “Can Lehman Build on Grange?” Euromoney , July 2007.

125 Had there been a sound reason for acquiring Eagle Energy: In 2006, Lehman purchased one third of Eagle Energy and agreed to buy the remaining two thirds a year later. “Lehman Buys Rest of Energy Marketing Co. Eagle Energy,” Reuters, May 9, 2007.

125 deals that did concern him were the ones that Lehman had failed to get: Leonard, “How Lehman Brothers Got Its Real Estate Fix,” New York Times .

126 “I am very disappointed ”: On the morning of June 9, Fuld said: “I am very disappointed in this quarter’s results. Notwithstanding the solid underlying performance of our client franchise, we had our first-ever quarterly loss as a public company. However, with our strengthened balance sheet and the improvement in the financial markets since March, we are well-positioned to serve our clients and execute our strategy.” See “Lehman Brothers Announces Expected Second Quarter Results,” Reuters, June 9, 2008.

126 Lehman’s second-quarter earnings: Susanne Craig and Tom Lauricella, “Big Loss at Lehman Intensifies Crisis Jitters,” Wall Street Journal, June 10, 2008; “Preliminary 2008 Lehman Brothers Holdings Inc. Earnings Conference Call,” June 9, 2008.