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

362 “All trades conducted will be done”: Author obtained copy of Fed memo.

362 “The extraordinary trading session held today”: Jennifer Ablan, “Pimco’s Gross Sees Tsunami of Risk if Lehman Fails,” Reuters, September 14, 2008.

363 “a group of global commercial and investment banks”: From Morgan Stanley press release, issued September 14, 2008.

364 He had received bids for it on Friday from two separate private-equity firms, Bain Capital and TPG: Christine Williamson, “Walker Rises from Ashes of Lehman Brothers Firestorm,” Pensions & Investments, October 13, 2008.

365 Diamond ’s cell phone rang: First reported by Aleksandrs Rozens, “Who Dares Wins; Barclays’ Diamond Leads Team to Snare One of Wall Street’s Most Storied Investment Banks,” Investment Dealers Digest, January 19, 2009.

369 Thomas Cruikshank, who had led the oil services company Halliburton: Cruikshank served as the chairman and CEO of Houston-based Halliburton from 1989 to 1995, after which Dick Cheney assumed his position. He had been on Lehman’s board of directors for twelve years when the company filed for bankruptcy. Hillary Durgin , “Halliburton—On the Offensive,” Houston Chronicle, October 5, 1997.

370 Known as “Dr. Doom”: Karen Pennar, “Dr. Doom and Dr. Gloom Are Still Prescribing Caution,” BusinessWeek, October 17, 1988.

370 “providing only tepid oversight”: From a speech Kaufman gave at a conference in Philadelphia in April 2008. “Credit Crisis a ‘Global Calamity’—Kaufman,” Reuters, April 18, 2008.

371 Mayor Michael Bloomberg: Azi Paybarah, “Bloomberg and Schwarzenegger (and Sheekey?) Together Again,” New York Observer, January 16, 2008.

372 “My goodness. I’ve been in the business”: Andrew Ross Sorkin, Jenny Anderson, and Eric Dash, “A Buyer for Merrill,” New York Times, September 16, 2008.

372 “Words cannot express the sadness”: Carrick Mollenkamp, Susanne Craig, Jeffrey McCracken, and Jon Hilsenrath, “The Two Faces of Lehman’s Fall,” Wall Street Journal, October 6, 2008.

372 $5.8 billion in “incentive compensation”: A complaint later filed by the SEC against Bank of America revealed that the bank had “contractually authorized ” Merrill to pay billions in discretionary bonuses—not to exceed $5.8 billion—to its employees. SEC press release, “SEC Charges Bank of America for Failing to Disclose Merrill Lynch Bonus Payments,” Washington, D.C., August 3, 2009. See http://www.sec.gov/news/press/2009/2009-177.htm.

373 “BAC Update”: http://online.wsj.com/public/resources/documents/FedbofaDocs.pdf.

374 “fairness opinion”: Zachary R. Mider, “Lewis Turns to Tomato-Growing ‘Unknown Genius’ on Merrill Deal,” Bloomberg, September 24, 2008.

374 Flowers and Fox-Pitt would earn a combined $20 million: From Bank of America’s SEC filing .

CHAPTER SIXTEEN

376 “CRISIS ON WALL STREET AS LEHMAN TOTTERS”: Carrick Mollenkamp, Susanne Craig, Serena Ng, and Aaron Lucchetti, “Crisis on Wall Street as Lehman Totters, Merrill Is Sold, AIG Seeks to Raise Cash,” Wall Street Journal, September 15, 2008.

376 Lehman formally filed for bankruptcy at exactly 1:45 that morning: Legal documents show that Lehman filed a voluntary petition under Chapter 11 with the United States Bankruptcy Court for the Southern District of New York on Monday morning at 1:45 a.m. See www.lehman-docket.com; Peg Brickley, “Lehman Makes It Official in Overnight Chapter 11 Filing,” Wall Street Journal, September 15, 2008.

376 “Everybody’s prepared this time”: Annelena Lobb, “A Chaotic Sunday Opens Wall Street’s Week,” Wall Street Journal, September 15, 2008.

377 sent out a note to his clients: “Analysts’ View 3—Lehman Files for Bankruptcy, Merrill to be Sold,” Reuters, September 15, 2008.

379 a mogul unto himself: Landon Thomas Jr., “Banker, Loan Maestro Jimmy Lee Switched Suspenders for Sweaters,” New York Observer, December 24, 2001.

379 finance some of the biggest deals in history: Ibid. Beginning in the late seventies at Chemical Bank, Lee raised hundreds of billions for companies on the brink, such as IBM, General Motors, Seagram, Nextel, and AT&T, to name a few. Robert Lenzner, “Jimmy’s List,” Forbes, April 17, 2000.

381 they were angry: Aleksandrs Rozens, “Death of an Era: Within the Span of Several Days, Wall Street Loses Two Titans,” Investment Dealers Digest, September 22, 2008.

381 Wall of Shame: Ibid.; McDonald and Robinson, A Colossal Failure of Common Sense, 317.

381 “Dumb and Dumber,” “Voting in Braille Only”: Ibid.

382 Geithner’s phone conference with Dimon, Blankfein: According to Geithner’s calendar, the call was scheduled from 10:00 to 10:15 a.m. that Monday.

383 relatively uneventful press conference of Bank of America and Merrill Lynch: A press release on Bank of America’s Web site early Monday morning announced the merger with Merrill Lynch, and also that Lewis and Thain would be hosting a press conference at 10:00 a.m. in the auditorium at Bank of America’s New York City headquarters. See http://www.bankofamerica.com/merrill/.

384 formally agreed to allow AIG to use some of its regulated insurance company assets: In a press conference at noon on Monday, September 15, New York governor Paterson said that he had given Eric Dinallo “authorization, such that AIG can access $20 billion of its assets through its subsidiaries for the purpose of posting these assets as collateral to provide liquid cash in order to run the day-to-day operations of the parent company.” States News Service, “Transcript: Governor Paterson Press Conference on AIG—September 15, 2008,” September 15, 2008.

385 Geithner called and told him he should be at this meeting instead: Paterson thanked Dinallo in his speech, acknowledging that he was presently meeting with Federal Reserve officials.

385 to discuss the fate of the insurers Ambac and MBIA: Susanne Craig and Liam Pleven, “Credit Crunch: Good Plan, but Who Will Pay?” Wall Street Journal, January 30, 2008.

388 “I hope you all had an enjoyable weekend”: Paulson’s comments to the press, and their questions, were taken from transcripts released by the White House. “White House Conducts Press Briefing, Sept. 15,” 1:42 p.m. EDT. US Fed News, September 15, 2008.

392 “It is oddly reassuring that the Treasury Department … let Lehman Brothers fail”: “Wall Street Casualties,” New York Times, September 16, 2008.

393 “Stocks Plunge as Crisis Intensifies”: Glenn Kessler and David S. Hilzenrath, “Stocks Plunge as Crisis Intensifies; AIG at Risk; $700 Billion in Shareholder Value Vanishes,” Washington Post, September 16, 2008.

393 The Dow Jones Industrial Average had slumped 504.48 points: The Dow dropped 504.5 points on Monday . Alex Berenson, “Wall St.’s Turmoil Sends Stocks Reeling,” New York Times, September 16, 2008.

396 Fed had kept Lehman’s broker-dealer in the United States open: According to Lehman’s official press release issued that Monday, the company was “exploring the sale of its broker-dealer operations” and its subsidiaries, including Neuberger Berman, LLC, and Lehman Brothers Asset Management, would “not be subject to the bankruptcy case of its parent.” See http://www.lehman.com/press/pdf_2008/091508_lbhi_Chapter11_announce.pdf.

397 as was the case with Ramius Capital: Cassell Bryan-Low, “Crisis on Wall Street: Funds Assess Lehman (Gulp!) Exposure,” Wall Street Journal, September 26, 2008.

397 he presided over the FOMC meeting at the Federal Reserve in Washington: The meeting was held in the offices of the Board of Governors of the Federal Reserve System in Washington, D.C., on Tuesday, September 16, 2008 at 8:30 a.m. See http://www.federalreserve.gov/FOMC.