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

141 He also went about slashing costs: Susanne Craig, “The Weekend That Wall Street Died,” Wall Street Journal, December 29, 2008.

141 flowers that were costing the firm some $200,000: Ibid.

142 a signing bonus of $39.4 million, even though Montag wouldn’t begin work: An SEC filing revealed that in addition to Montag’s $600,000 annual salary, Merrill agreed to pay him a bonus of $39.4 million in cash and stock-based compensation for fiscal year 2008, which he would receive in January 2009. “Merrill Lynch to Pay New EVP Montag $600,000 Salary,” Dow Jones Corporate Filings Alert, May 2, 2008.

142 Thain would hire Peter Kraus: Kevin Kingsbury, “Kraus the Latest Ex-Goldman Hire at Merrill,” Dow Jones, May 5, 2008; Heidi N. Moore, “Merrill’s K raus Gets $25M, Then Leaves,” Dow Jones, December 22, 2008.

142 And then there was his office: Charlie Gasparino, “John Thain’s $87,000 Rug,” Daily Beast, January 22, 2009 .

142 angling for the Treasury Secretary post if John McCain: Louise Story and Julie Creswell, “Love Was Blind,” New York Times, February 8, 2009.

143 “It’s kind of ‘Raise as you go’ ”: Fair Disclosure Wire, June 11, 2008.

143 Thain and O’Neal breakfast: During break fast between John Thain and Stan O’Neal, Thain pressed him to give him some guidance about his views on the management team. O’Neal replied, “The only person you ought to watch out for is Bob McCann.” McCann was the head of the firm’s brokerage business and the two had a long-standing mutual distrust.

144 Merrill’s $27 billion in CDO and subprime: In November 2007, Merrill announced that its total exposure to subprime mortgages and collateralized debt obligation was $27.2 billion. UBS analyst Glenn Schorr said that hiring Thain “doesn’t change the fact that Merrill has $27 billion of CDO/subprime exposure and is likely facing further write-downs in the near term.” “Thain to the Rescue,” Investment Dealers Digest, November 19, 2007.

144 [O’Neal rise]: John Cassidy, “Subprime Suspect: The Rise and Fall of Wall Street’s First Black C.E.O,” New Yorker , March 31, 2008; David Rynecki, “Can Stan O’Neal Save Merrill?” Fortune, September 30, 2002.

144 Merrill’s beginnings, Wheaties, “Bullish on America”: “Charles Merrill, Broker, Dies, Founder of Merrill Lynch Firm,” New York Times, October 7, 1956; “Advertising: Jackpot,” Time, August 20, 1951; Joseph Nocera, “Charles Merrill,” Time, December 7, 1998; Suzanne Woolley, “A New Bull at Merrill Lynch,” Money, March 1, 2002; Helen Avery, “Merrill Shrugs Off the Herd Mentality,” Euromoney , August 1, 2004.

145 “I think this is a great firm”: Charles Gasparino, “Bull by the Horns,” Wall Street Journal, November 2, 2001.1.

146 “Ruthless,” O’Neal would tell associates, “ isn’t always that bad ”: David Rynecki, “Putting the Muscle Back in the Bull,” Fortune, April 5, 2004.

146 O’Neal’s top management team as “the Taliban” and calling O’Neal “Mullah Omar”: Ibid.

147 acquired one of the biggest subprime mortgage lenders in the nation, First Franklin: Erick Bergquist, “Merrill Wins Bidding for First Franklin,” American Banker , September 6, 2006.

147 left Merrill in February 2006: Avital Hahn, “Leading CDO Team Breaks into Two; Ricciardi Joins Cohen Brothers as CEO,” Investment Dealers Digest, February 27, 2006.

147 “whatever it takes”: Kim, as three people heard and remembered him saying. Serena Ng and Carrick Mollenkamp, “Merrill Takes $8.4 Billion Credit Hit,” Wall Street Journal, October 25, 2007.

147 replaced by thirty-nine-year-old executive Osman Semerci: Bradley Keoun, “Merrill Names Semerci, D’Souza to Run FICC, Equities,” Bloomberg, July 25, 2006.

148 Kim took home $37 million: SEC filing disclosed a $14.45 million cash bonus and a $22.2 million stock incentive bonus, in addition to his salary of $350,000. See Nicolas Brulliard, “Merrill Lynch Exec VP Fleming Gets $20.4M Stk Bonus,” Dow Jones Corporate Filings Alert, January 24, 2007.

148 Semerci, more than $20 million: Louise Story, “Bonuses Soared on Wall Street Even as Earnings Were Starting to Crumble,” New York Times, December 19, 2008.

148 Fleming and Fakahany sent a letter to Merrill’s directors: Cassidy, “Subprime Suspect,” New Yorker .

148 O’Neal sent an overture to Wachovia about a merger: Jenny Anderson and Landon Thomas Jr., “Merrill’s Chief Is Said to Float a Bid to Merge,” New York Times, October 26, 2007.

149 “I wouldn’t hire Stan to wash windows”: Cassidy, “Subprime Suspect,” New Yorker .

CHAPTER EIGHT

151 remained close in the decade since Dimon had been forced out: Regarding Citigroup, Dimon told New York magazine: “I left ten years ago… . No, I didn’t leave, I was fired. I was kicked out of the nest.” Duff McDonald, “The Heist,” New York , March 24, 2008.

151 A glass cabinet displayed replicas of two wood-handled pistols: Crisaf ulli, “Replicas of the famous pistols are displayed in the JPMorgan lobby, while the originals—curious icons of the bank ’s storied past—are displayed on the executive floor,” The House of Dimon , 7.

151 Like Dimon, Willumstad had been outmaneuvered by Weill: He announced his departure in July but didn’t officially step down until September 5, 2005. David Enrich, “Citigroup Pres Willumstad to Step Down in Sept,” Dow Jones, July 14, 2005.

151 Brysam Global Partners: Brysam began business at the end of January 2007. “Willumstad and Magner Establish Private Equity Firm that Will Focus on Financial Services Investments in Emerging Markets,” Business Wire, January 22, 2007.

151 His partner, Marge Magner, was another Citigroup exile: With Citigroup since 1987, Magner had most recently been chairman and CEO of the company’s Global Consumer Group. Mark McSherry and Jonathan Stempel, “Citigroup’s Consumer Chief Magner to Leave,” Reuters, August 22, 2005.

151 He was the chairman of the board of American International Group: Willumstad first joined AIG’s board as a director in early 2006. Later that year Frank Zarb, acting as interim chairman, suggested him for the job. Emily Thornton and Jena McGregor, “A Tepid Welcome for AIG’s New Boss,” BusinessWeek , June 30, 2008.

152 Willumstad’s beginnings: Lynnley Browning, “A Quiet Banker in a Big Shadow,” New York Times, March 10, 2002.

152 at a conference in Boca Raton: Gillian Tett, “The Dream Machine,” Financial Times, March 25, 2008.

152 blitzkrieg of acquisitions: Commercial Credit acquired Primerica, Shearson, and Travelers in 1993, Aetna’s property and casualty business in 1996, Salomon Brothers in 1997, culminating with Citigroup in 1998. Shawn Tully, “The Jamie Dimon Show,” Fortune, July 22, 2002.

154 Removing Sullivan, installing Willumstad: Liam Pleven, Randall Smith, and Monica Langley, “AIG Ousts Sullivan, Taps Willumstad as Losses Mount,” Wall Street Journal, June 16, 2008.

154 in a small office in Shanghai: Shelp, Fallen Giant , 17-28, 153-60; Brian Bremner, “AIG’s Asian Connection; Can It Maintain Its Strong Growth in the Region?” BusinessWeek, September 15, 2003.

154 market value of $300 million: Carol J. Loomis, “AIG: Aggressive. Inscrutable. Greenberg,” Fortune, April 27, 1998.

154 with a market value of just under $80 billion: At the end of AIG’s second quarter (August 2008), it had over $1 trillion in assets and about $78 billion in shareholders equity. Matthew Karnitschnig, Liam Pleven, and Peter Lattman, “AIG Scrambles to Raise Cash, Talks to Fed,” Wall Street Journal, September 15, 2008.