From Here is the City
Andrew Ross Sorkin's new book, 'Too Big To Fail', is the first real account that clearly reveals the sheer panic Wall Street was experiencing after the fall of Lehman Brothers in September last year.
Excerpts from the book are being run in Vanity Fair, and the reader is presented with a picture of pandemonium, as Wall Street CEOs, senior US government officials and regulators run around like headless chickens attempting to save Wall Street and the financial system as a whole.
And Tim Geithner (then President of the New York Fed, and now Treasury Secretary) appears to have spent much of his time aimlessly calling up firm CEOs and suggesting endless merger options, as he clearly thought that the future of the industry could only be secured if 'too big to fail' firms joined forces to become even bigger.
According to Sorkin's sources, one morning soon after Lehman went belly-up, Geithner started to write down a series of possible industry mergers, which he believed might save the system from financial armageddon - Morgan Stanley and Citi, Morgan Stanley and JPMorgan, Morgan Stanley and Mitsubishi, Morgan Stanley and CIC, Morgan Stanley and an outside investor, Goldman and Citi, Goldman and Wachovia, Goldman and an outside investor, Fortress Goldman and Fortress Morgan Stanley.
And here's a note of some of the classic telephone exchanges which are said to have occurred between the main players:
Goldman CEO Lloyd Blankfein calls Citi boss Vikram Pandit:
Blankfein (who Geithner had apparently asked to make the call): 'Well, I guess you know why I'm calling'.
Pandit: 'No, I don't'.
Blankfein: 'Well, I'm calling you because at least some people in the world might be thinking that combining our firms would be a good idea'.
Pandit: 'I want you to know I'm flattered by the call'.
Blankfein: 'Well Vikram, I'm not calling with any flattery in mind!'.
Geithner calls JPMorgan CEO Jamie Dimon about taking over Morgan Stanley
Dimon: 'You've got to be kidding me. I did Bear. I can't do this'.
Geithner: 'You'll be getting a call from John Mack'. He hangs up.
Morgan Stanley CEO John Mack, Geithner, Fed Chief Ben Bernanke and US Treasury Secretary Hank Paulson on a conference call
Geithner (to Mack): 'We've spent a lot of time working on this, and we think you need to call Jamie'.
Mack: 'Tim, I called Jamie. He doesn't want this bank'.
Geithner: 'No, he'll buy it'.
Mack: 'Yeah, for one dollar! That makes no sense'.
Geithner: 'We want you to do this'.
After some more tooing and froing, Mack: 'Well look, I have the utmost respect for the three of you and what you are doing.....But I won't do it. I just won't do it. I won't do it to the 45,000 people that work here'.
And as the crisis reached its climax, Mack was busy on the phone putting the finishing touches on a deal that would result in a $9bn cash injection into Morgan Stanley from Mitsubishi UFJ Financial. Geithner called, and was told he couldn't be put through to Mack. Paulson called and was told the same thing. Geithner then called a second time, insisting that he be connected to Mack immediately. Mack, who is said to have been minutes away from reaching agreement with the Japanese bank, finally snapped:
'Tell him to get F...ed. I'm trying to save my firm'.
Excerpts from the book are being run in Vanity Fair, and the reader is presented with a picture of pandemonium, as Wall Street CEOs, senior US government officials and regulators run around like headless chickens attempting to save Wall Street and the financial system as a whole.
And Tim Geithner (then President of the New York Fed, and now Treasury Secretary) appears to have spent much of his time aimlessly calling up firm CEOs and suggesting endless merger options, as he clearly thought that the future of the industry could only be secured if 'too big to fail' firms joined forces to become even bigger.
According to Sorkin's sources, one morning soon after Lehman went belly-up, Geithner started to write down a series of possible industry mergers, which he believed might save the system from financial armageddon - Morgan Stanley and Citi, Morgan Stanley and JPMorgan, Morgan Stanley and Mitsubishi, Morgan Stanley and CIC, Morgan Stanley and an outside investor, Goldman and Citi, Goldman and Wachovia, Goldman and an outside investor, Fortress Goldman and Fortress Morgan Stanley.
And here's a note of some of the classic telephone exchanges which are said to have occurred between the main players:
Goldman CEO Lloyd Blankfein calls Citi boss Vikram Pandit:
Blankfein (who Geithner had apparently asked to make the call): 'Well, I guess you know why I'm calling'.
Pandit: 'No, I don't'.
Blankfein: 'Well, I'm calling you because at least some people in the world might be thinking that combining our firms would be a good idea'.
Pandit: 'I want you to know I'm flattered by the call'.
Blankfein: 'Well Vikram, I'm not calling with any flattery in mind!'.
Geithner calls JPMorgan CEO Jamie Dimon about taking over Morgan Stanley
Dimon: 'You've got to be kidding me. I did Bear. I can't do this'.
Geithner: 'You'll be getting a call from John Mack'. He hangs up.
Morgan Stanley CEO John Mack, Geithner, Fed Chief Ben Bernanke and US Treasury Secretary Hank Paulson on a conference call
Geithner (to Mack): 'We've spent a lot of time working on this, and we think you need to call Jamie'.
Mack: 'Tim, I called Jamie. He doesn't want this bank'.
Geithner: 'No, he'll buy it'.
Mack: 'Yeah, for one dollar! That makes no sense'.
Geithner: 'We want you to do this'.
After some more tooing and froing, Mack: 'Well look, I have the utmost respect for the three of you and what you are doing.....But I won't do it. I just won't do it. I won't do it to the 45,000 people that work here'.
And as the crisis reached its climax, Mack was busy on the phone putting the finishing touches on a deal that would result in a $9bn cash injection into Morgan Stanley from Mitsubishi UFJ Financial. Geithner called, and was told he couldn't be put through to Mack. Paulson called and was told the same thing. Geithner then called a second time, insisting that he be connected to Mack immediately. Mack, who is said to have been minutes away from reaching agreement with the Japanese bank, finally snapped:
'Tell him to get F...ed. I'm trying to save my firm'.
