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

234 annual banking conference: The Lehman Brothers Global Finance Services Conference was held at New York ’s Hilton Hotel from September 8-10, 2008. Wachovia CEO Robert Steel presented on Tuesday, September 9, according to the press release: “Wachovia CEO Robert K. Steel to Present at Lehman Conference,” PR Newswire, September 3, 2008.

234 “Here we go again”: Fuld, as quoted in an article by John Helyar and Yalman Onaran, “Fuld Sought Buffett Offer He Refused as Lehman Sank,” Bloomberg News, November 10, 2008.

234 “Time Running Out for Lehman”: “Stocks to Watch,” CNBC, September 9, 2008.

235 “We’ve got to act fast”: John Helyar and Yalman Onaran, “Fuld Sought Buffett Offer He Refused as Lehman Sank,” Bloomberg News, November 10, 2008.

235 meeting with Jamie Dimon: According to official calendars obtained from the Department of the Treasury, this meeting was scheduled for 8:30 a.m. on September 9, 2008, and was one of several listed on Paulson’s calendar.

236 “[A]ll he wanted was the bazooka”: Alison Vekshin, “Dodd Plans Senate Hearing on Fannie, Freddie Takeover,” Bloomberg News, September 8, 2008.

236 “Secretary Paulson knew more than he was telling us”: From a statement issued by Bunning on September 8, 2008, titled “Bunning Rips Bailout of Fannie and Freddie.”

238 Lehman’s stock had plunged 38 percent: Joe Bel Bruno, “Lehman Shares Plunge 30 Percent on Report That Talks with Korea Development Bank Ended,” Associated Press, September 9, 2008.

239 AIG’s lawyers and advisers: Scott Pegram, “Davis Polk, Weil Gotshal, Sullivan, Simpson Work on AIG Restructuring,” New York Law Journal , March 5, 2009.

239 including Rodgin Cohen: Matthew Karnitschnig and David Enrich, “A Lawyer for All Wall Street Navigates Tempestuous Times,” Wall Street Journal, October 9, 2008.

239 Two documents given to Geithner: Obtained by author from confidential source.

240 Jester hadn’t been required to sell all his Goldman stock: Greg Farrell and Stephanie Kirchgaessner, “Goldman links to US Treasury Raise Questions,” Financial Times, October 12, 2008.

240 $3.9 billion loss: On the morning of Wednesday, September 10, Lehman announced its preliminary third-quarter earnings and an estimated net loss of $3.9 billion. See “Lehman Brothers Announces Preliminary Third Quarter Results and Strategic Restructuring,” PR Newswire, September 10, 2008.

241 “‘I would much rather have partners that are really, really smart motherfuckers than guys that I like’ ”: Mr. Briger confirmed making such an observation but disputes using the word “motherfucker” despite the accounts of several other sources who either heard it directly or in the retelling from Alex Kirk after he ran down the hall.

247 “The stock is coming down”: Dick Bove to Erin Burnett, Streets Signs, “LEH Shares Down,” CNBC, September 9, 2008.

248 “This is coming directly from Paulson”: This quote is one of only a few that caused confusion and consternation among various sources. All the sources for this scene agree that this was the comment that McDade made at the time, based on his conversation with Fuld. It is also clear that Paulson spoke to both Blankfein and Fuld about how the two firms should talk to each other and about a sale of Lehman’s real estate assets. It is also clear that David Viniar, Goldman’s CFO, placed a call to Dan Jester earlier in the day seeking help to orchestrate negotiations, which is detailed in an earlier scene. Paulson’s calendar cites a series of phone calls between Paulson and Fuld and Paulson and Blankfein that day, with at least one in rapid succession back to back from each other. Furthermore, multiple sources privy to both of those conversations say that Paulson suggested that Fuld hold discussions with Goldman, as one of many options. So far, nothing is in dispute. What is confusing is why Fuld is under the impression that Goldman is working for the government. There is no evidence that was the case and no evidence that Paulson said so directly. What appears most likely is that there was a miscommunication, with Fuld making certain assumptions and Goldman, during its phone calls with McDade and Kirk, doing little to disavow these views until Wednesday morning, when clarity was required to execute the confidentiality agreement to begin due diligence.

248 Ken Lewis: Shawn Tully, “Meanwhile, Down in Charlotte … ,” Fortune, October 13, 2008.

CHAPTER THIRTEEN

253 The lead of the New York Times: Jenny Anderson and Ben White, “Wall Street’s Fears on Lehman Bros. Batter Markets,” New York Times, September 10, 2008.

253 “Some may worry that Treasury”: Ibid.

253 Wall Street Journal noted: “The firm’s situation differs markedly from that of Bear Stearns, which was taken over earlier this year after it ran into a liquidity crisis. Unlike Bear Stearns, Lehman has access to new Federal Reserve facilities that can provide short-term funding when the markets won’t, in addition to the ability to exchange illiquid assets for safer securities such as Treasurys.” Susanne Craig, Randall Smith, Serena Ng, and Matthew Karnitschnig, Wall Street Journal , September 10, 2008.

253 reduced the amount of business: On September 16, 2008, GLG Partners issued the following statement regarding Lehman Brothers: “With respect to Lehman, GLG last week transferred substantially all of the remaining positions of the GLG Funds to other prime brokers. The majority of these transfers have already settled and we expect the remainder to settle shortly. We believe the residual exposure of the GLG Funds to Lehman will not be material. Lehman is also a shareholder in GLG, owning approximately 33.7 million shares, through Lehman (Cayman Islands), a Cayman Islands company, about 13.7 per cent of the total GLG stock outstanding.”

255 “That’s it? That’s fucking it?”: McDonald and Robinson, A Colossal Failure of Common Sense , 314.

255 “The firm remains committed”: From a press release issued by Lehman that morning. “Lehman Brothers Announces Preliminary Third Quarter Results and Strategic Restructuring,” September 10, 2008.

256 Herlihy had worked on nearly every deal Bank of America had orchestrated: “Bailout Lawyer Optimistic Worst Is Over,” WSJ Blog/Deal Journal, October 16, 2008.

257 forecast a third-quarter loss of $3.9 billion: Ben White, “With Big Loss Forecast, Lehman to Spin Off Assets,” New York Times, September 11, 2008.

257 “In light of these last two days”: Lehman Brothers preliminary F3Q08 Earnings Call Transcript, September 10, 2008.

258 “The real estate held-for-sale portfolio”: Ibid.

259 “To the extent you might need $7 billion”: Ibid.

260 “The Bungalow”: “HSBC’s Canary Wharf headquarters towers over that of Barclays. So much so that HSBC workers have christened their neighbour’s building ‘the bungalow.’ A spokesman for Barclays retorts: ‘Size is not our objective—growth is.’ Touche.” Dominic Walsh, “Barclays Bungalow; City Diary,” Times (London), July 8, 2006.

261 having both vied for the top job in 2003: Grant Ringshaw, “Barclays’ Odd Couple John Varley and Bob Diamond,” Sunday Times , (London), February 17, 2008.

261 In 2007, Diamond earned $42 million to Varley’s $8.4 million: “Barclays’ Diamond Gets 21 Million Pounds in Pay and Bonus,” Reuters, March 27, 2008; Ben Livesey and Jon Menon, “Barclays Pays Diamond Five Times More than CEO Varley,” March 26, 2007.

261 “Bob Diamond 3, John Varley 0”: Ringshaw, “Barclays’ Odd Couple,” Sunday Times (London).

263 trying to buy ABN AMRO: After a harrowing nine-month takeover battle, Barclays withdrew its bid of €67.5 billion for ABN AMRO in October 2007, finally conceding to a consortium led by the Royal Bank of Scotland. Julia Werdigier, “Barclays Withdraws Bid to Take Over ABN Amro,” New York Times, October 6, 2007.