507 Increasing FDIC insurance on new bailout bilclass="underline" Meena Thiruvengadam, “Some Ex-FDIC Officials See No Reason to Hike Insurance Limit,” Dow Jones Newswires, October 3, 2008.
507 “We have shown the world that the United States”: David M. Herszenhorn, “Bailout Plan Wins Approval; Democrats Vow Tighter Rules,” New York Times, October 3, 2008.
509 “If you haven’t discovered your role”: “The Guilty Men of Wall Street,” Economist, October 14, 2008.
509 “I want to be very clear”: From transcripts of Fuld’s testimony on the causes and effects of the Lehman Brothers bankruptcy, Hearing of the House Oversight and Government Reform Committee, chaired by Representative Henry Waxman, Monday, October 6, 2008.
509 “Your company is now bankrupt”: Ibid.
509 “the majority of my compensation”: Ibid.
510 “Not that anybody on this committee cares about this”: Ibid.
511 “Some critics have worried that Treasury”: Author obtained Buffett’s letter to Paulson from a confidential source.
513 “We have been made aware of rumors”: “MUFG Issues Statement Regarding Transaction with Morgan Stanley,” Business Wire, October 8, 2008.
513 “We can buy these preferred shares”: Representative Barney Frank said to taxpayers in Providence, Rhode Island, on October 8, 2008. Glenn Somerville, “Treasury Says Has Power to Inject Bank Capital,” Reuters, October 9, 2008.
513 UK to invest $87 billion in Barclays: Banks eligible to participate included Abbey, Barclays Plc, HSBC Holdings Plc, Lloyds TSB Group Plc, Royal Bank of Scotland (RBS, HBOS), Nationwide Building Society, and Standard Chartered Plc. Ben Livesey and Jon Menon, “U.K. to Inject About $87 Billion in Country’s Banks,” Bloomberg News, October 8, 2008.
514 “The Brown government has shown itself ”: Paul Krugman, “Gordon Does Good,” October 12, 2008.
521 “We Have The Check!!!” Author obtained copy of Kindler’s e-mail to Morgan Stanley staffers from a confidential source.
CHAPTER TWENTY
522 “Nick Calio just called me”: This and all following e-mails cited were obtained by Judicial Watch, a public interest group, in response to Freedom of Information Act requests it filed on October 16, 2008. For the first batch of e-mails see http://www.judicialwatch.org/files/documents/2009/Treasur yDocsPart1.pdf.
524 A little after 2:00 p.m.: Confirmed by Christal West’s e-mail, sent at 10:55 a.m. on Monday, October 13, 2008: “There will be a principals only Meeting today prior to the 3:00 pm meeting with CEOs… . Principals Meeting 2:15 pm-3:00 pm Hank’s Office (Room 3330).”
524 “To encourage wide participation”: From “Talking Points” documents, also obtained by Judicial Watch.
524 Meeting background: Nina Easton, “How the Bailout Bashed the Banks,” Fortune, June 22, 2009.
526 “They’re all in”: This and all succeeding e-mails to the end of this chapter come from the second batch of FOIA-requested e-mails, courtesy of Judicial Watch. See http://www.judicialwatch.org/files/documents/2009/TreasuryDocsPart2.pdf
527 Geithner now read off the amounts: In its FOIA request, Judicial Watch also obtained signed contracts from the banks, with accepted allotments written in ink by the CEOs. See http://www.judicialwatch.org/files/documents/2009/Treasury-ParticipationCommitment.pdf.
EPILOGUE
533 “animal spirits”: In his 1936 book, The General Theory of Employment, Interest and Money, John Maynard Keynes wrote: “Even apart from the instability due to speculation, there is the instability due to the characteristic of human nature that a large proportion of our positive activities depend on spontaneous optimism rather than mathematical expectations, whether moral or hedonistic or economic. Most, probably, of our decisions to do something positive, the full consequences of which will be drawn out over many days to come, can only be taken as the result of animal spirits—a spontaneous urge to action rather than inaction, and not as the outcome of a weighted average of quantitative benefits multiplied by quantitative probabilities,” p. 161.
534 “pay czar”: On June 10, in lieu of his much contested pay caps, Obama appointed Kenneth Feinberg to oversee and modify executive salaries and bonuses. Deborah Solomon, “Pay Czar Gets Broad Authority over Executive Compensation,” Wall Street Journal, June 11, 2009.
534 “The government intervention is not a government takeover”: President George W. Bush, “Remarks to the United States Chamber of Commerce,” Weekly Compilation of Presidential Documents, October 17, 2008.
534 Government increasing Citigroup stake/funds: Eric Dash, “U.S. Agrees to Raise Its Stake in Citigroup,” New York Times, February 28, 2009.
535 “the turd in the punchbowl”: According to an undisclosed official’s handwritten notes taken during a conference call in January 2009. Michael R. Crittenden and Jon Hilsenrath, “Bernanke Blasted in House—Political Heat Mounts on Fed as Grilling over BofA Shows Ire at Its Interventions,” Wall Street Journal, June 26, 2009.
535 Shareholders voting for BofA-Merrill deaclass="underline" Ieva M. Augstums and Stephen Bernard, “Merrill Lynch, Bank of America Shareholders Approve BofA’s Purchase of the Investment Bank,” Associated Press, December 5, 2008.
536 “How do they justify this outrage?”: Michael D. Shear and Paul Kane, “Anger Over Firm Depletes Obama’s Political Capital,” Washington Post, March 17, 2009.
536 “We should hound them in the supermarket”: A few days after Cramer’s rant, AIG’s new chief, Edward Liddy, sent him a letter demanding a retraction and an apology to AIG employees. “It is one thing to criticize the executive leadership of AIG—that’s fair commentary,” he wrote. “But it is way out of bounds to incite people to confront and harass other AIG employees.” Shortly after, Cramer apologized on his show: “Sorry, regular AIG guys. I did not mean you.” Heidi N. Moore, “AIG CEO Demands Apology from Mad Money’s Jim Cramer,” WSJ/ Deal Journal, October 20, 2008.
537 “Is Goldman Sachs Evil?” Joe Hagen, “Is Goldman Sachs Evil? Or Just Too Good?” New York, July 26, 2009.
537 “great vampire squid wrapped ”: Matt Taibbi, “The Great American Bubble Machine,” Rolling Stone, July 13, 2009.
537 Goldman reported a profit of $5.2 billion: On April 13, Goldman reported net earnings of $1.81 billion for its first quarter. Three months later, its second-quarter earnings soared to $3.44 billion. See http://www2.goldmansachs.com.
537 Goldman’s VaR rising to record high: Christine Harper, “Goldman Sachs VaR Reaches Record on Risks Led by Equity Trading,” Bloomberg, July 15, 2009.
539 “emergency actions meant to provide confidence”: Department of the Treasury press release, “Secretary Geithner Introduces Financial Stability Plan,” February 10, 2009. See http://www.treasury.gov/press/releases/tg18.htm.
539 Alan Blinder: “After the fact, it is extremely clear that everything fell apart on the day Lehman went under.”
540 “policy by deal ”: Simon Johnson, “Systemic Risk: Are Some Institutions Too Big to Fail and If So, What Should We Do About It?” Testimony before the U.S. House of Representatives Committee on Financial Services during hearing held July 21, 2009. The phrase was originally coined as “regulation by deal” by Steven Davidoff and David Zaring in their paper Regulation by Deaclass="underline" The Government’s Response to the Financial Crisis. 61 Admin, L. Rev. 463, 2009.
540 “At first, the Treasury”: Michael Lewis and David Einhorn, “The End of the Financial World as We Know It,” New York Times, January 4, 2009.