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

197 “Okay, you can fight him”: Daniel S. Morrow, “Kenneth Lewis Oral History,” Computer-world Honors Program International Archives, May 3, 2004. See www.cwhonors.org/archives/histories/Lewis.pdf.

199 “No, we wouldn’t use our petty cash to buy an investment bank ”: Heidi N. Moore, “Ken Lewis Tells Investment Bankers All Is Forgiven,” WSJ Blog/Deal Journal, June 11, 2008.

200 Paulson, unshaven and wearing jeans, was pacing the halls and pestering his staff: This scene was first reported by Deborah Solomon, who quoted Wilkinson as saying: “[Y]ou need to leave us alone so we can do our jobs.” Author’s subsequent reporting revealed slightly different wording. See Deborah Solomon, “The Fannie & Freddie Question—Treasury’s Paulson Struggles with the Mortgage Crisis,” Wall Street Journal, August 30, 2008.

200 take a quick bike ride: Ibid.

201 “Fannie Mae and Freddie Mac play a central role”: “Paulson Announces GSE Initiatives,” press release, Department of the Treasury, July 13, 2008. See http://www.treas.gov/press/releases/hp1079.htm.

201 “Our proposal”: “Part I, Part II of a Hearing of the Senate Banking, Housing and Urban Affairs Committee,” Federal News Service, July 15, 2008.

203 SEC to begin cracking down on improper short selling: The SEC issued an emergency diktat to halt “unlawful manipulation through ‘naked ’ short selling,” which was set to start that Monday, July 21, 2008, and expire after thirty days. Kara Scannell and Jenny Strasburg, “SEC Moves to Curb Short-Selling,” Wall Street Journal, July 16, 2008.

204 Lehman’s board: Dennis K. Berman, “Where Was Lehman’s Board?” WSJ Blog/Deal Journal, September 15, 2008.

205 Ken Wilson was standing in line at Westchester County Airport: Susanne Craig, “In Ken Wilson, Paulson Gets Direction from the Go-To Banker of Wall Street,” Wall Street Journal, July 22, 2008.

206 On the evening of July 21, Paulson arrived for a dinner: From Paulson’s July calendar, with dinner scheduled from 6:45 to 8:30 p.m.

CHAPTER ELEVEN

209 “to conduct a thorough strategic”: “American International Group Names Robert B. Willumstad Chief Executive Officer,” transcript of an AIG board conference call, June 16, 2008.

210 reported $5.4 billion loss: Liam Pleven, “AIG Posts $5.4 Billion Loss as Housing Woes Continue,” Wall Street Journal, August 7, 2008.

210 Geithner had greeted him with his usual firm, athletic handshake: According to Geithner’s calendar, they were scheduled to meet from 9:30 to 10:30 a.m. on Tuesday, July 29, 2008.

212 Morgan Stanley would receive a token payment of $95,000: Aaron Lucchetti, “The Fannie-Freddie Takeover: Two Veterans Led Task for Morgan Stanley,” Wall Street Journal, September 8, 2008.

213 “Either investors are going to be massively diluted”: Al Yoon, “Freddie Posts 4th Straight Qtrly Loss, Slashes Dividend,” Reuters, August 6, 2008.

214 Freddie’s reported loss of $821 million: Ibid.

214 In the first week of August; On that Monday: These meetings took place on August 4 and 5.

214 Min Euoo Sung arrived in Manhattan from Seoul: Lehman’s “secret meetings” with K DB were reported by Henny Sender and Francesco Guerrera, “Lehman’s Secret Talks to Sell 50% Stake Stall,” Financial Times, August 20, 2008.

219 “In the event the slow erosion of confidence turns into a rout”: Donald Kohn’s e-mail to Ben Bernanke was released as part of the 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/.

219 Fuld owned ninety-seven acres in the area: “Lehman Brothers CEO Is Local Land Baron,” Idaho Mountain Express , September 24, 2008.

221 “A bubble, once ‘pricked’ ”: Ben Bernanke and Mark Gertler, “Monetary Policy and Asset Price Volatility,” Federal Reserve Bank of Kansas City’s Economic Symposium, Jackson Hole, Wyoming, 1999. See http://www.kc.frb.org/Publicat/sympos/1999/S99gert.pdf.

221 “the Bernanke doctrine”: John Cassidy, “Anatomy of a Meltdown,” New Yorker , December 1, 2008.

221 “It is not the responsibility of the Federal Reserve”: Ben Bernanke, “Housing, Housing Finance, and Monetary Policy,” Federal Reserve Bank of Kansas City’s Economic Symposium, Jackson Hole, Wyoming, August 31, 2007. See http://www.federalreserve.gov/newsevents/speech/bernanke20070831a.htm.

222 One day a little Dutch boy: Alan S. Blinder, “Discussion of Willem Buiter’s, ‘Central Banks and Financial Crises,’ ” Federal Reserve Bank of Kansas City’s Annual Economic Symposium,” Jackson Hole, Wyoming, August 23, 2008. See http://www.kc.frb.org/publicat/sympos/2008/blinder.08.25.08.pdf.

222 “statutory resolution regime for nonbanks”: Ben Bernanke, “Reducing Systemic Risk,” Federal Reserve Bank of Kansas City’s Annual Economic Symposium,” Jackson Hole, Wyoming, August 22, 2008.

223 Moody’s cut its ratings: Jody Shenn, “Fannie, Freddie Preferred Stock Downgraded by Moody’s,” Bloomberg News, August 22, 2008.

224 having shorted subprime before anyone else: Andy Kessler, “The Paulson Plan Will Make Money for Taxpayers,” Wall Street Journal, September 25, 2008.

224 Paulson had heard rumors when he was in China: Paulson, On the Brink, 161. Paulson’s account was later denied by a Russian spokesman. “Russia at that time was a country that invested huge funds in these organizations and was not interested in rocking these institutions,” Dmitry Peskov reportedly said to the Russian state-run news agency RIA Novosti.

228 analyst report issued by Goldman Sachs raising questions about the firm: Hugh Son, “AIG Falls as Goldman Says a Capital Raise Is ‘Likely,’ ” Bloomberg News, August 19, 2008.

228 As the company had warned in an SEC filing: Figures are from AIG’s 10-Q filing on August 6, 2008.

229 AIG owning seventy-one state-regulated insurance subsidiaries: AIG issued a press release on September 18, 2008, assuring policyholders that their protection was a top priority. “The 71 state-regulated insurance companies within AIG did not receive a bailout; they are financially solvent,” it said. “The federal bailout of the non-insurance portions of AIG does not negatively change the solvency strength of its insurance subsidiaries.” http://www.aig.com.

231 “rather than letting these conditions fester”: “The result has been that they have been unable to provide needed stability to the market. They also find themselves unable to meet their affordable housing mission. Rather than letting these conditions fester and worsen and put our markets in jeopardy, FHFA, after painstaking review, has decided to take action now.” “Fhfa Director Lockhart Issues Statement on Safety and Soundness Concerns,” U.S. Fed News, September 7, 2008.

231 Treasury’s takeover terms : Rebecca Christie and John Brinsley, “U.S. Takeover of Fannie, Freddie Offers ‘Stopgap,’ ” Bloomberg News, September 8, 2008.

232 “any action we take”: As Obama told reporters in Indiana on September 6, 2008. See http://www.msnbc.msn.com/id/26577811/.

CHAPTER TWELVE

234 Reuters headline: Kim Yeon-hee and Chris Wickham, “Eyes on Lehman Rescue as Korea Lifeline Drifts,” Reuters, September 8, 2008.

234 had held a briefing with reporters: Ibid.; Susanne Craig, Diya Gullapali, and Jin-Young Yook, “Korean Remarks Hit Lehman,” Wall Street Journal , September 9, 2008.

234 Shares of Lehman dropped precipitously: Joe Bel Bruno, “Lehman Shares Plunge 30 percent on Report that Talks with Korea Development Bank Ended,” Associated Press, September 9, 2008.