76 the Internet retailer Amazon: Duff McDonald, “The Heist,” New York, March 24, 2008.
76 Dimon brought in his own team of expense cutters: Shawn Tully, “In This Corner! The Contender,” Fortune, March 29, 2006.
76 “fortress balance sheet”: Jamie Dimon representing JP Morgan Chase at the Credit Suisse Group Financial Services Forum, February 7, 2008.
77 celebrating his fifty-second birthday over dinner: A listair Barr, “Dimon Steers J.P. Morgan Through Financial Storm,” MarketWatch.com, December 4, 2008.
78 “This wasn’t a negotiating posture”: “Panel II of a Hearing of the Senate Banking, Housing and Urban Affairs Committee,” Federal News Service, April 3, 2008.
78 “I am very troubled by the failure of Bear Stearns”: “Panel I of a Hearing of the Senate Banking, Housing and Urban Affairs Committee,” Federal News Service, April 3, 2008.
CHAPTER FOUR
79 private dinner to mark the end of a G7 summit: Treasury provided a list of dinner attendees to the press that Friday. Lehman’s Fuld was listed alphabetically between Larry Fink of BlackRock and John Mack of Morgan Stanley. “Attendees for G7 Outreach Dinner with Banks,” Reuters, April 11, 2008.
79 it would raise $4 billion: Jenny Anderson, “Trying to Quell Rumors of Trouble, Lehman Raises $4 Billion,” New York Times, April 2, 2008.
79 “We’re closer to the end than the beginning”: Joseph A. Giannone, “Goldman CEO Says Credit Crisis in Later Stages,” Reuters, April 10, 2008.
81 a new IMF Report: International Monetary Fund, “Global Financial Stability Report,” April 2008, 50.
81 staggering amount of leverage—the amount of debt to equity: “At the end of the first quarter in 2008, the leverage ratios at Morgan Stanley, Lehman Brothers, Merrill Lynch, and Goldman Sachs were 31.8, 30.7, 27.5, and 26.9, respectively, compared with an average of 8.8 for all U.S. commercial banks and savings institutions.” Senate Joint Economic Committee, “Financial Meltdown and Policy Response,” September 2008.
81 “Isn’t there something you can do to order us not to take all of these risks?”: Paulson, On the Brink, 70.
82 “You are all bright people”: Paulson, On the Brink, 130.
82 “Just finished the Paulson dinner”: “Hearing on Causes and Effects of the Lehman Brothers Bank ruptcy,” House of Representatives Committee on Oversight and Government, October 6, 2008. See http://oversight.house.gov/story.asp?ID=2208.
84 “Break the Glass: Bank Recapitalization Plan”: Author obtained a copy of the proposal from a confidential source.
84 Kashkari background: Deborah Solomon, “U.S. News: Paulson to Tap Adviser to Run Rescue Program,” Wall Street Journal, October 6, 2008.
85 chairman of the Federal Reserve on February 1, 2006: Bernanke’s first day fell on the first of the month; his swearing-in ceremony took place the following Monday. “Our mission as set forth by the Congress is a critical one,” Bernanke said at his Fed ceremony. Jeannine Aversa, “At Ceremonial Swearing-in, New Fed Chief Bernanke Vows to Work with Congress,” Associated Press, February 6, 2006.
85 Bernanke’s beginnings: John Cassidy, “Anatomy of a Meltdown,” New Yorker, December 1, 2008; Roger Lowenstein, “The Education of Ben Bernanke,” New York Times Magazine, January 20, 2008; Larry Elliott, “Ben Bernanke,” Guardian, June 16, 2006; Mark Trumbull, “Backstory: Banking on Bernanke,” Christian Science Monitor, February 1, 2006; Ben White, “Bernanke Unwrapped,” Washington Post, November 15, 2005.
86 Anna Friedmann, a Wellesley College student whom he married: John Cassidy, New Yorker, December 1, 2008.
87 “econometrics” research: Lowenstein, “The Education of Ben Bernanke,” New York Times Magazine, January 20, 2008.
87 planned to take a vacation: Ibid.
87 interest rate unchanged at 5.25 percent: “Fed Keeps Rates Steady,” Dow Jones, August 7, 2007.
87 “The committee’s predominant policy concern”: “Text of Federal Reserve’s Interest Rate Decision,” Dow Jones Capital Markets Report, August 7, 2007.
87 “They’re nuts! They know nothing!”: “Ben Bernanke needs to open the discount window… . He is being an academic! This is no time to be an academic. Open the darn discount window! … My people have been in this game for 25 years. And they are losing their jobs and these firms are going to go out of business, and he’s nuts! They’re nuts! They know nothing! … The Fed is asleep.” Jim Cramer, Street Signs, CNBC, August 3, 2007.
88 BNP Paribas announced that it was halting investors from withdrawing: As of August 7, after declining 20 percent in just under two weeks, the funds had some €1.6 billion ($2.2 billion) left in assets. Sebastian Boyd, “BNP Paribas Freezes Funds as Loan Losses Roil Markets,” Bloomberg News, August 9, 2007.
88 “The complete evaporation of liquidity”: Ibid.
88 bigger cash infusion than the one that had followed: On September 12, 2001, a day after the attacks, the European Central Bank (ECB) injected a record €69.3 billion. “ECB Injects 95 billion Euros Into Money Supply Amid US Subprime Worries,” Agence France-Presse, August 9, 2007.
88 “unprecedented disruptions”: Countrywide’s SEC filing late Thursday said it had adequate funding liquidity but added, “[T]he situation is rapidly evolving and the impact on the company is unk nown.” Randall W. Forsyth, “Why the Blowup May Get Worse,” Barron’s, August 13, 2007.
88 “Every banker knows that if he has to prove”: Bagehot, Lombard Street, 69.
89 reversed his earlier decision: On Friday, August 17, 2001, the Fed issued a statement lowering the rate on discount window borrowings, which buoyed the market. “S&P 500 Futures Sharply Higher on Fed Statement,” Dow Jones, August 17, 2007.
89 “at this point, the troubles in the subprime sector”: Bernanke delivered this speech via satellite to attendees of the 2007 International Monetary Conference in Cape Town, South Africa. See Ben Bernanke, “The Housing Market and Subprime Lending,” June 5, 2007. See http://www.federalreserve.gov/newsevents/speech/bernanke20070605a.htm.
90 “I’ve got some fairly heavy background in mathematics”: Faber, And Then the Roof Caved In, 95.
93 was also a die-hard Sox fan: Stanley Reed, “Barclays: Anything But Stodgy President Bob Diamond has turned the once-troubled investment banking unit into a powerhouse,” BusinessWeek , April 10, 2006.
93 they joined the board of Barclays at the same time: On June 1, 2005, Robert Diamond Jr., chief executive of investment banking and investment management, joined the board as an executive director, while Robert Steel, former vice chairman of Goldman Sachs, joined as a nonexecutive director. “Barclays PLC—Directorate Change,” Regulatory News Service, May 27, 2005.
95 Diamond had so abruptly left Morgan Stanley … in 1992: “ ‘ Coach’ Proud of His Trading Floor Origins,” Financial News, December 4, 2000.
95 losing an expensive bidding war for Dutch bank ABN AMRO: Seven months after its initial bid for ABN AMRO, and following a battle involving investors in China, Singapore, the Royal Bank of Scotland, and even Bank of America, Barclays withdrew its bid for the Dutch bank on October 5, 2007. Carrick Mollenkamp, “Barclays’s CEO Shifts to Plan B—U.K. Bank Pursues Emerging Markets as ABN Bid Fails,” Wall Street Journal, October 6, 2007.