CHAPTER FIVE
96 breakfast meeting with Dick Fuld: Took place on Thursday, April 2, 2008.
97 counted as one of his best friends Eliot Spitzer: When the prostitution scandal broke, Cramer had this to say about his Harvard Law School paclass="underline" “Eliot’s one of my oldest friends, so is Silda. You know, look, I hope it’s not true. You know, I read it like you did—I hope it’s not true… . Eliot’s my friend. So he’s my friend, he’ll be my friend after.” “DealBook: Wall Street on Spitzer: ‘There Is a God,’ ” New York Times, March 10, 2008.
97 the uptick rule: After the rule’s repeal on July 6, 2007, Cramer continuously lamented the loss on his show Mad Money. “Cramer Is Uptick ’d Off ” and “Out with Cox, in with Uptick Rule,” Mad Money, CNBC, May 4, 2009, November 21, 2008.
99 “unbelievable portfolio from Peloton”: Founded in 2005 by Ron Beller and Geoffrey Grant, the London hedge f und Peloton Partners was forced into a fire sale in February 2008. Cassell Bryan-Low, Carrick Mollenkamp, and Gregory Zuckerman, “Peloton Flew High, Fell Fast,” Wall Street Journal, May 12, 2008.
101 people pay as much as $3,250: Hugo Lindgren, “The Confidence Man,” New York, June 23, 2008.
101 Tomorrow’s Children Fund: Ira W. Sohn conference proceeds go to this fund, which helps children with serious blood disorders and cancer (Sohn, a trader, died of cancer at twenty-nine). See http://www.atcfkid.com/.
101 “We start by asking why a security is likely to be misvalued in the market”: Einhorn, Fooling Some of the People All of the Time, 14.
101 “The Nonrecurring Room”: Jesse Eisinger, “Diary of a Short-Seller,” Condé Nast Portfolio, May 12, 2008.
102 had announced that it was stopping investors: At 2:30 a.m. on August 9, Dow Jones posted a press release from BNP Paribas: “The complete evaporation of liquidity in certain market segments of the US securitisation [sic] market has made it impossible to value certain assets fairly regardless of their quality or credit rating. The situation is such that it is no longer possible to value fairly the underlying US ABS assets in the three above-mentioned funds. We are therefore unable to calculate a reliable net asset value (‘NAV’) for the funds.” See “BNP Paribas Unit to Suspend NAV Calculation of Some Funds,” Dow Jones, August 9, 2007.
102 code named “The Credit Basket”: Lindgren, “The Confidence Man,” New York.
102 “It is early, and we don’t give guidance on future periods”: Chris O’Meara, Lehman’s Chief Financial Officer, from the “Q3 2007 Lehman Brothers Holdings Inc. Earnings Conference Call,” September 18, 2007.
103 “This is crazy accounting”: Lindgren, “The Confidence Man,” New York.
104 “Lehman is not that materially different from Bear Stearns”: David Einhorn, “Private Profits and Socialized Risk,” Grant’s Spring Investment Conference, April 8, 2008. 105 “I can only feel that you set me up”: Einhorn’s exchange with Callan reported by Susanne
Craig, “Finance Chief Is Demoted,” Wall Street Journal, June 13, 2008. 105 “This is classic value”: “Stock Picks from Sohn Investment Conference,” Reuters, May 23, 2008.
106 shares of Allied plunged nearly 11 percent: Stephen Taub, “Speaking Candidly,” Alpha, May 2005.
106 the Securities and Exchange Commission started investigating him: Lindgren, “The Confidence Man,” New York.
106 “One of the key issues I raised about Allied ”: This and all succeeding speech quotes by David Einhorn of Greenlight Capital are from his “Accounting Ingenuity” speech at the Ira W. Sohn Investment Research Conference, May 21, 2008.
CHAPTER SIX
109 “Who talked?”: Susanne Craig, “Lehman Struggles to Shore Up Confidence,” Wall Street Journal, September 11, 2008.
109 “Losses Push Lehman to Weigh Raising New Capital”: Susanne Craig, “Losses Push Lehman to Weigh Raising New Capital,” Wall Street Journal, June 3, 2008. 110 it had tapped the Federal Reserve’s discount window: Lehman emphatically denied the rumors on June 3, 2008, referencing its previous quarter, which had ended with more than $40 billion of liquidity. Joe Bel Bruno, “Lehman Brothers Treasurer: Firm Did Not Tap Fed Discount Window to Avert Cash Problems,” Associated Press, June 3, 2008.
110 stock was pummeled: Ibid. Lehman’s shares fell 15 percent in the afternoon of Tuesday, June 3, after Lehman liquidity rumors surfaced.
112 “Lehman’s straight shooter”: Susanne Craig, “Lehman’s Straight Shooter,” Wall Street Journal, May 17, 2008.
112 “The Most Powerful Woman on Wall Street”: Jesse Eisinger, “Diary of a Short-Seller,” Condé Nast Portfolio, April 2008.
113 Lehman’s deal with Woori: Hae Won Choi, “Woori Sets Pact with Lehman to Cut Bad Debt,” Wall Street Journal Asia, September 6, 2002; Donald Kirk, “No Pause for Woori,” Institutional Investor, July 1, 2002.
113 having judged his credentials inadequate, had tried unsuccessfully to stop it: In June 2008, instead of settling in to his new office at KDB, Min spent several days addressing complaints and protests from K DB trade union workers enraged about his appointment. Song Jung-A, “Man Behind Doubts Rise over KDB’s Push for Global Status,” Financial Times, September 2, 2008.
113 he sang a song called “Leopard in Mt. Kilimanjaro”: K im Yeon-hee, “K DB’s CEO: A Leopard on the Hunt for Lehman,” Reuters, September 5, 2008.
114 “Korea situation sounds promising”: Goldfarb’s e-mail, sent May 26, 2008, was made available from the House Oversight and Government Reform Committee’s investigation on the “Causes and Effects of the Lehman Brothers Bank ruptcy.” See “Lehman Brothers Email Regarding Punishing Short Seller,” http://oversight.house.gov/storyasp?ID=2208.
114 set off for Korea: According to flight records obtained by the Wall Street Journal. See Craig, “Lehman Struggles to Shore Up Confidence,” Wall Street Journal, September 11, 2008.
114 The Shilla: http://www.shilla.net/en/seoul/.
114 Hana Financial, which was also considering an investment: Hana Financial Group was one of several top South Korean banks (Shinhan, Woori) reportedly contemplating a Lehman bid. The company, however, publicly “denied any interest in joining a consortium bidding for Lehman Shares.” K im Yeon-hee, “K DB Confirms Lehman Talks; Korea Bank Shares Fall,” Reuters, September 1, 2008.
116 Matthew Lee … sent a letter: Report of the Examiner in the Chapter 11 proceedings of Lehman Brothers Holdings by Anton R. Valukas, chairman of Jenner & Block. See: http://lehmanreport.jenner.com/.
117 “Basically window dressing”: Report of the Examiner in the Chapter 11 proceedings of Lehman Brothers Holdings by Anton R. Valukas, chairman of Jenner & Block. See: http://lehmanreport.jenner.com/.
117 “I am very aware… . It is another drug we r on”: Report of the Examiner in the Chapter 11 proceedings of Lehman Brothers Holdings by Anton R. Valukas, chairman of Jenner & Block. See: http://lehmanreport.jenner.com/.
117 “not to make any remarks”: Lehman’s five-page severance agreement with Matthew Lee was signed on June 18.
118 bringing in $3.9 billion in revenue: Lehman’s investment banking net revenues rose from $3.2 billion in 2006 to $3.9 billion in 2007, a 24 percent increase, according to the company’s 10-K filing with the Securities and Exchange Commission on January 29, 2008.
120 Over at Neuberger Berman: Lehman sealed its $2.6 billion purchase of Neuberger Berman on October 31, 2003.