Quotes "Owing to the relatively high cost of living in New York, the annual salary of the New York Fed president is double that of the Federal Reserve...moreQuotes "Owing to the relatively high cost of living in New York, the annual salary of the New York Fed president is double that of the Federal Reserve chairman."
He was effectively serving as the office’s fire marshal. Nothing was burning, but it was his responsibility to identify all the emergency exits.
Goldman's dispute with AIG over how it was valuing or, in Wall Street parlance, “marking to market,” its portfolio. Goldman executives considered AIG was “marking to make-believe,”
“When I picked up my newspaper yesterday, I thought I woke up in France,” said Senator Jim Bunning, the Kentucky Republican. “But no, it turned out it was socialism here in the United States of America.
Secretary Paulson, I know you’re very sincere in your proposal,” Bunning continued. “But come January, you will be gone, and the rest of us will be sitting at these tables—or at least most of us—and we all have to be responsible to the taxpayer for what we have done.”
Lehman’s board was a strange mix of both the financially sophisticated and the truly naive; most had been old friends of Fuld’s or had been clients of the firm.
“Liquidity can change faster than you can imagine,” suggesting they should not think Bear Stearns was a once-in-a-lifetime event. “Rating agencies are dangerous,” he went on. “Wherever you think you stand with the rating agencies, it’s worse. . . .
“What the hell are you doing trying to scare my board and advertising yourself to them like that? I should fire you!”
For a moment Parr didn’t respond. Frustrated that Lehman hadn’t yet signed an engagement letter, Parr snidely fired back, “Dick, that might be difficult because you haven’t hired us yet.” Then, collecting himself, he said, “I’m sorry. I didn’t mean to go down a path you didn’t want me to go.”
“You’ll never do that again,” Fuld said, and the phone went dead. “Have you recovered from the phone call?” Fuld asked contritely.
“I cannot advise a bank not to protect itself,” Geithner said
An hour later, Buffett was back on the phone, politely rejecting the proposal: “It’s too big a deal; $25 billion is too big.” Willumstad never thought he’d hear Buffett call any prospective deal too big.“I’d have to use all my cash and can’t do anything to jeopardize Berkshire’s triple-A rating,” Buffett explained. For a moment, he alluded to the possibility of raising the money, but then acknowledged that he “didn’t want to have that kind of debt on my balance sheet.”
As he had always warned his troops before entering talks, “Once you initiate, you’re in motion.” Negotiations could quickly spiral beyond your control.
He probably knew more than Paulson. He just hoped he was wrong.
Goldman had had a jump start as a result of its mini-diligence session earlier in the week, and both Vikram Pandit and Gary Shedlin of Citigroup were so nervous that Goldman would try to buy the assets themselves on the cheap that they attached themselves to their group.
Lloyd Blankfein raised a question: “Tim, I understand what you want to do, but how do I get in the other room?” In other words, he wanted to know how he could become a buyer subsidized by his competitors. Blankfein wasn’t serious—he had no interest in buying Lehman, but he was clearly trying to make a point. Why are we helping our competition?
Thain sat quietly, sipping a coffee, with every reason to think, This could be me.
Ah, Willumstad thought as he greeted Maughan with a wide smile, life is rich with irony.
“Well, can you get Thain to call Lewis?” Herlihy asked.
“Not now,” Fleming said. “Thain can’t speak to him because he’s in a meeting with Paulson.” Herlihy rolled his eyes. “No, he’s not, Greg. I’m in a meeting at the Fed with Paulson. I just stepped out of the room and can see him. He’s down the hall from me.”
Just after noon he sent out an e-mail to a handful of colleagues with an apocalyptic subject line: “Urgent. Code name: Equinox. Have desperate need for help on an emergency situation.”
“We should talk,” Mack said quietly. He didn’t have to elaborate—the phrase was accepted code for, We should talk about doing a deal together.
But then, just past 2:00 p.m., Diamond had an indication that his bid might be taken seriously when someone at the Fed taped a piece of paper on Barclays’ conference room door that said “Bidder.” The Fed’s kitchen staff had also finally shown up with food. All small gestures, but encouraging signals, nonetheless.
“What about Buffett?” “Yeah, but Buffett only does deals if it’s a fantastic deal for Buffett,”
He tried to orchestrate a deal between himself, Goldman, and AIG, but failed. It was a big waste of time and energy. Maybe he had to stop being so polite to these Wall Street boys.
In one corner a number of executives, trying to pass the time, were doing vicious imitations of Paulson, Geithner, and Cox. “Ahhhh, ummm, ahhhh, ummm,” one banker muttered, adopting Paulson’s stammer. “Work harder, get smarter!” another shouted, mocking Geithner’s Boy Scoutish exhortations. A third did his best impression of Christopher Cox, whom they were all convinced had little understanding of high finance: “Two plus two? Um—could I have a calculator?” In another corner, Colm Kelleher, Morgan’s CFO, had begun playing BrickBreaker on his BlackBerry, and soon an unofficial tournament was under way, with everyone competitively comparing scores.
Warren Buffett, just back in Omaha from Edmonton, had received word of Lehman’s pending bankruptcy before he arrived at the Happy Hollow Country Club for a late dinner with Sergey Brin, the co-founder of Google, and his wife, Ann. “You may have saved me a lot of money,” he said to the Brins with a laugh in the grand dining room. “If it wasn’t for getting here on time, I might have bought something.”
Words cannot express the sadness in the franchise that has been destroyed over the last few weeks, but I wanted to assure you that we will reappear in one form or another, stronger than ever.
A fairness opinion is usually touted as an independent, unconflicted seal of approval for a deal. But on Wall Street, they are often seen as little more than paid rubber stamps.
Barclays was mainly interested in Lehman’s U.S. broker-dealer and its buildings, and this time around both the FSA and the British government had given him their support. Another plus: There was no need for a shareholder vote. HOOOOOOOOW?
The firm had conducted what it internally called a “WOW analysis”—a worst-of-the-worst case scenario—and it was quickly coming true.
For the next ten minutes the meeting turned into a cacophony of competing voices as the bankers tossed out their suggestions: Can we get the rating agencies to hold off on a downgrade? Can we get other state regulators of AIG’s insurance subsidiaries to allow the firm to use those assets as collateral?