407 “He’s going on Charlie Rose to talk about AIG”: During that week, Hank Greenberg appeared on two consecutive episodes of Charlie Rose. The first was simply to discuss AIG’s crisis, and the second to speak about the federal bailout. See The Charlie Rose Show, “More Crises on Wall Street,” September 16, 2008, and “Former AIG Chair Discusses Bail Out,” September 17, 2008.
409 The gathering had been hastily organized: Langley, Solomon, and Karnitschnig, “Bad Bets and Cash Crunch,” Wall Street Journal.
410 had sent him an e-maiclass="underline" A facsimile of Herzog’s e-mail appeared in Fortune, where this was first reported. Carol J. Loomis, “AIG’s Rescue Has a Long Way to Go,” Fortune, December 29, 2008.
CHAPTER SEVENTEEN
412 “Reserve Primary Fund, had broken the buck ”: It was the first time in fourteen years that a fund’s net asset value had fallen below $1, or “broken the buck.” Particularly unsettling was the fact that the Primary Fund ’s owner, the Reserve Management Corporation, invented the money fund in 1970. See Christopher Condon, “Reserve Primary Money Fund Falls Below $1 a Share,” Bloomberg, September 16, 2008.
413 4.04 percent annual return: According to Morningstar Inc., the Reserve Primary Fund posted a return of 4.04 percent over a twelve-month period, versus a 2.75 percent average among more than twenty-one hundred money market funds it tracks. See Binyamin Appelbaum, “Beyond Wall St., Losses Spill Over,” Washington Post, September 18, 2008; Eleanor Laise, “Market Rescue: Money Funds Offer More Detail,” Wall Street Journal, September 20, 2008.
413 $785 million in Lehman paper: Steve Stecklow and Diya Gullapalli, “A Money-Fund Manager’s Fateful Shift: Bruce Bent Shunned Corporate Debt for Years—Then Bought Some of Lehman’s,” Wall Street Journal, December 8, 2008.
413 “Goldman, Morgan Now Stand Alone”: Aaron Lucchetti and Robin Sidel, “Dow Industrials Take a 504.48-Point Dive—Goldman, Morgan Now Stand Alone; Fight On or Fold?,” Wall Street Journal, September 16, 2008.
415 “For seven years, I’ve said”: Lewis, during a conference call that Monday to discuss the Merrill merger. Joseph A. Giannone, “Goldman, Morgan Stanley Face Biggest Market Test,” Reuters, September 16, 2008.
415 had been given a big promotion by Mack: Pandit joined Morgan Stanley as an associate in 1983. Seventeen years later, with Mack at the helm, he became president of investment banking. Joe Hagan, “The Most Powerless Powerful Man on Wall Street,” New York, March 9, 2009.
415 With $62.6 billion in assets: On Friday, September 12, 2008, the Primary Fund’s assets had been about $62 billion. Diya Gullapalli, Shefali Anand, and Daisy Maxey, “Money Fund, Hurt by Debt Tied to Lehman, Breaks the Buck,” Wall Street Journal, September 17, 2008.
416 “They pretended they were drawing a line in the sand ”: Nouriel Roubini, quoted in Emily Kaiser, “After AIG Rescue, Fed May Find More at Its Door,” Reuters, September 17, 2008.
417 Wachovia’s 2006 acquisition of Golden West: On May 7, 2006, Wachovia announced plans to purchase Golden West Financial Corp., based in Oakland, California, for $25.5 billion. Investors, however, failed to embrace the merger, and Wachovia’s shares took a dive. Jonathan Stempel, “Wachovia CEO—No More Big Mergers After Golden West,” Reuters, June 14, 2006.
417 “The past several months have been”: Serena Saitto and Yalman Onaran, “Fuld Tells Lehman Employees He Feels ‘Horrible’ for Their Pain,” Bloomberg, September 17, 2008.
418 “the war situation has developed ”: Broadcast at noon on August 15, 1945, Hirohito continued with, “while the general trends of the world have turned against her interest.’ ” Andrew Roberts, “The Debt Japan Owes These Men,” Daily Mail (London), September 17, 1993.
418 graduates of Duke and members of the university board: Steel retired from the board in May 2009. See http://trustees.duke.edu/.
419 “One Firm, One Team, Bribe a Leader”: See http://www.dealbreaker.com/robert_kindler/.
420 portrait of Alexander Hamilton: Andy Serwer, “Mr. Paulson Goes to Washington,” Fortune, November 27, 2006.
420 Duer could not cover his debts, setting off a panic: Chernow, Alexander Hamilton, 293.
421 “Nothing is breaking our way”: James. B. Stewart, “Eight Days: The Battle to Save the Financial System,” The New Yorker, September 21, 2009.
421 “Free Market Day”: Frank quipped at a hearing held on Wednesday, two days after Lehman filed for bankruptcy. “Barney Frank Celebrates Free Market Day,” Wall Street Journal, September 17, 2008.
421 Senator Jim Bunning, a Republican from Kentucky: Ted Barrett, Deirdre Walsh, and Brianna Keilar, “AIG Bailout upsets Republican lawmakers,” CNN.com, September 17, 2008.
421 Richard Shelby, Republican from Alabama: Ibid.
421 The Gold Reserve Act of 1934: See http://www.treas.gov/offices/international-affairs/esf/.
423 “DB: A Solid Counterparty”: Aaron Lucchetti, Randall Smith, and Jenny Strasburg, “Morgan Stanley in Talks with Wachovia, Others,” Wall Street Journal, September 18, 2008.
425 set up a series of phone calls for Mack, who also contacted Chuck Schumer and Hillary Clinton: First reported by Emily Thornton, “Morgan Stanley’s John Mack Swings into Action,” BusinessWeek.com, September 17, 2008.
426 “I know all of you are watching our stock price today”: “Morgan Stanley Memo: ‘There Is No Rational Basis for the Movements in Our Stock,’ ” WSJ Blog/Deal Journal, September 17, 2008.
427 “This memorandum provides a waiver… .”: Author obtained copy of memo from a FOIA request. Paulson disclosed receiving a waiver for the first time during a congressional hearing on July 16, 2009. “Paulson’s Calls to Goldman Tested Ethics,” New York Times, August 9, 2009.
428 “Stop the insanity—we need a time out”: Author obtained copy of Schorr’s e-mail.
430 “It’s one thing to complain”: Susan Pulliam, Liz Rappaport, Aaron Lucchetti, Jenny Strasburg, and Tom McGinty, “Anatomy of the Morgan Stanley Panic,” Wall Street Journal, November 24, 2008.
431 “Morgan Stanley applauds Attorney General Cuomo”: Press release, September 18, 2008. Find full text in Press section of Morgan Stanley’s company Web site, http://www.morganstanley.com.
432 “There are no atheists in foxholes”: Peter Baker, “A Professor and a Wall Street Deal Maker Bury Old Dogma on Free Markets,” New York Times, September 21, 2008.
432 Resolution Trust Corporation: Lee Davidson, “The Resolution Trust Corporation and Congress, 1989-1993,” 18, no. 2, FDIC Banking Review, 2006.
432 L. William Seidman: Greenspan, The Age of Turbulence, 116.
432 “This new governmental body”: Excerpt of an editorial written by Nicholas F. Brady, Eugene A. Ludwig, and Paul A. Volcker, “Resurrect the Resolution Trust Corp.,” Wall Street Journal, September 17, 2008.
433 “As Fears Grow, Wall St. Titans”: Ben White and Eric Dash, “As Fears Grow, Wall St. Titans See Shares Fall,” New York Times, September 17, 2008.
433 “We need a merger or we’re not going to make it”: An appended editors’ note in the New York Times on September 17, 2008, said that both Morgan Stanley and Citigroup “vigorously” denied that Mack had ever made this comment.
433 Sulzberger family pulled its money from Morgan Stanley: Sarah Ellison, “New York Times Controlling Family Moves Assets from Morgan Stanley,” Wall Street Journal, February 3, 2007.