All the Presidents' Bankers
Page 66
26. Woodward, The Maestro, 20.
27. Alan Greenspan, The Age of Turbulence (New York, NY: Penguin, 2008), 28.
28. Ibid.
29. “Interview with Charles Geisst,” Frontline (PBS), February 5, 2003, at www.pbs.org/wgbh/pages/frontline/shows/wallstreet/interviews/geisst.html.
30. Woodward, The Maestro, 25.
31. Swearing-in Ceremony for Alan Greenspan as Chairman of the Federal Reserve Board, August 11, 1987, WHORM, PHF: Box 28, Presidential Speeches, Folder 572, No. 5187295C, Reagan Library.
32. Ibid.
33. “Fed Boss Urges Bank Changes,” Associated Press (Boston Globe), October 6, 1987.
34. Economic Briefing for the President, “Record-Breaking Peacetime Expansion: A Summary of Economic Accomplishments,” October 15, 1987, BE Business-Economics (50000–533999), Case No. 527983SS, Reagan Library.
35. Ibid.
36. Adam M. Zaretsky, “Learning the Lessons of History: The Federal Reserve and the Payments System,” The Regional Economist, July 1996, at www.stlouisfed.org/publications/re/articles/?id=1805.
37. Woodward, The Maestro, 45.
38. Alan Murray, “Fed’s New Chairman Wins a Lot of Praise Handling the Crash,” Wall Street Journal, November 5, 1987, at http://online.wsj.com/article/SB112404015636012610.html.
39. Susan F. Rasky, “Blue-Chip Leader for Task Force: Nicholas Brady,” New York Times, October 23, 1987, at www.nytimes.com/1987/10/23/business/man-in-the-news-blue-chip-leader-for-task-force-nicholas-frederick-brady.html?pagewanted=all&src=pm.
40. “Report of the Presidential Task Force on Market Mechanisms,” January 1988, Internet Archives, at http://archive.org/stream/reportofpresiden01unit/reportofpresiden01unit_djvu.txt.
41. Woodward, The Maestro, 48.
42. Executive Order 12631: Working Group on Financial Markets, March 8, 1988, at Reagan Library, at www.reagan.utexas.edu/archives/speeches/1988/031888d.htm.
43. Ibid.
44. Report from the Working Group on Financial Markets, May 1988, Sprinkel, Beryl Box 6, OA17742, Folder: Working Group on Financial Markets (2 of 2), Reagan Library.
45. Ronald Reagan, “Remarks Announcing the Resignation of James A. Baker III as Secretary of the Treasury and the Nomination of Nicholas F. Brady,” August 5, 1988, American Presidency Project, at www.presidency.ucsb.edu/ws/?pid=36215.
46. Michael Quint, “The Financier ‘Who Knows What Is Going On,’” New York Times, August 6, 1988, at www.nytimes.com/1988/08/06/us/the-financier-who-knows-what-is-going-on.html.
47. Tom Redburn, “Overhaul of Bank System Indicated: Deregulation,” Los Angeles Times, July 26, 1990, at http://articles.latimes.com/1990-07-26/news/mn-944_1_federal-deposit-insurance.
48. According to the Bush archives in College Station, Texas, the banker relationships within archival material had been unexplored until I visited them. Many files will remain unopened until my FOIA requests are processed.
49. George Bush, “Remarks at the Swearing-in Ceremony for James A. Baker III as Secretary of State,” January 27, 1989, American Presidency Project, at www.presidency.ucsb.edu/ws/?pid=16630.
50. David E. Rosenbaum, “The Treasury’s ‘Mr. Diffident,’” New York Times, November 19, 1989, at www.nytimes.com/1989/11/19/business/the-treasury-s-mr-diffident.html?pagewanted=all&src=pm.
51. “The Official Confidant,” Washington Post, April 22, 1986, WHORM, Files, Alpha File, B: Folder: Brady, Nicholas, F., Reagan Library. Brady was a member of the Armed Services Committee and the Banking, Housing and Urban Affairs Committee.
52. White House Office of Media Affairs, Subject File: Nicholas Brady, September 21, 1988, Treasury News Press Release, Reagan Library.
53. Bush Presidential Records: Staff and Office Files, Category FG134, Richard Breeden Files, Issues and Analysis, Folder: Notebook: United States Chamber of Commerce Meeting—Economic Policy Committee and Task Force on the Thrift Industry, March 10, 1989, at http://archive.org/stream/blueprintforrefo01unit#page/n1/mode/2up.
54. WHORM, Alpha File, Folder: Greenspan, Alan (1), Reagan Library.
55. John M. Berry, “Fed’s Greenspan Disagrees with Bush Economic Forecast; Strong Growth Is Called Not ‘Probable,’” Washington Post, February 1, 1989.
56. FDIC, “The S&L Crisis: A Chrono-Biography,” at www.fdic.gov/bank/historical/s&l/.
57. US Chamber of Commerce meeting, Economic Policy Committee and Task Force on the Thrift Industry, March 10, 1989, Staff and Office Files, Category FG134, Richard Breeden Files: Issues and Analysis, George H. W. Bush Presidential Library and Museum.
58. Remarks by Nicholas F. Brady, Dallas Chamber of Commerce, Sheraton Park Central Hotel, Dallas, Texas, March 28, 1989, Staff and Office Files, Category FG134, Richard Breeden Files, Folder: S&L Rescue, Brady’s Statement, Bush Library.
59. “Fed Gives Moran Subsidiary Permission to Underwrite Corporate Debt,” Associated Press, June 20, 1989, Associated Press News Archives at www.apnewsarchive.com/1989/Fed-Gives-Morgan-Subsidiary-Permission-to-Underwrite-Corporate-Debt/id-7070c63aa99efb3c913d7dc66e897ecd, http://www.riskglossary.com/link/united_states_financial_regulation.htm.
60. “J. P. Morgan Unit Wins Lead in Savannah Electric Offer,” New York Times, October 11, 1989.
61. Nomi Prins, Other People’s Money, paperback ed. (New York, NY: New Press, 2006), 35.
62. Stephen P. Farrar files, Folder: Debt, Files: Brady Plan, White House Office of Policy Development.
63. Remarks by Treasury Secretary Nicholas F. Brady to the Brookings Institution and the Bretton Woods Committee conference on third world debt, Treasury News, US Treasury Department, March, 10 1989.
64. Redraft of Bretton Woods Committee speech, sent from Brady to Sununu, March 9, 1989, WHORM, Subject File: C.F., FO 0004-02, Folder: Loans—Funds, Bush Library.
65. Robert Devlin, “From Baker to Brady: Can the New Plan Work?,” Revista de Economia Politica 10, no. 2 (38): April–June, 1990.
66. Haluk Unal, Asli Demirguc-Kunt, and Kwok-Wai Leung, “The Brady Plan, the 1989 Mexican Debt Reduction Agreement, and Bank Stock Returns in the United States and Japan,” Policy Research Working Papers, Debt and International Finance, World Bank, November 1992, WPS 1012, at www-wds.worldbank.org/servlet/WDSContentServer/WDSP/IB/1992/11/01/000009265_3961003160143/Rendered/PDF/multi_page.pdf.
67. Hobart Rowen, “Is It Time for a ‘Debt Czar’?” Washington Post, December 28, 1989.
68. Peter T. Kilborn, “Mexico and Banks Reach Accord to Lower Debt; Pact Includes Big Cut in Amount Owed—New Loans Are Set,” New York Times, July 24, 1989, at www.nytimes.com/1989/07/24/world/mexico-banks-reach-accord-lower-debt-pact-includes-big-cut-amount-owed-new-loans.html?pagewanted=all&src=pm.
69. Ibid. See also “Participants in the Marathon Talks,” New York Times, July 31, 1989, at www.nytimes.com/1989/07/31/business/international-report-participants-in-the-marathon-talks.html.
70. Letter to John S. Reed from John H. Sununu, March 31, 1989, WHORM, FI 009, Box 49, Document 021813, Bush Library.
71. Paul Blustein and Hobart Rowen, “Brady Urges New Debt Policy; Some Forgiveness Sought on 3rd World Loans,” Washington Post, March 11, 1989.
72. Letter from William F. Gorog, of Arbor International in Virginia, forwarding Moore’s thoughts to Roger Porter, assistant to the president for economic and domestic affairs, April 1, 1989, WHORM, Bush Library.
73. The LDC Debt Problem and the Banks, a supplement to the “Banker Initiative” by George S. Moore sent to Roger Porter, April 14, 1989, WHORM, Box FI 002, Folder: 021324-032804, Document 029414, Bush Library.
74. Ibid.
75. Richard Lawrence, “World Bank Unveils Three-Year Program for LDC Debt Relief,” Journal of Commerce, June 2, 1989, White House Office of Policy Development, Stephen P. Farrar Files, Folder: Debt Files: Brady Plan, Bush Library.
76. Steven Mufson, “Morgan Adds $2 Billion to Loss Reserves; Largest Set-Aside of 3 Banks in Week,” Washington Post, September 22, 1989.
77. Testimo
ny by Alan Greenspan Before the Subcommittee on Securities of the Committee on Banking, Housing, and Urban Affairs, US Senate, June 14, 1989, at http://fraser.stlouisfed.org/docs/historical/greenspan/Greenspan_19890614.pdf.
78. “Citicorp Chairman Recommends Cut in Deposit Insurance,” Albany Times Union, July 14, 1989.
79. “Banking Officials Call for Restructuring of U.S. Financial System,” Deseret News, July 17, 1989.
80. Statement of Citicorp Chairman John S. Reed Before the Committee on Banking, Housing, and Urban Affairs, US Senate, July 13, 1989. Summary of Testimony, Reed, WHORM, FI 002, Document 58025, Bush Library.
81. Timothy Curry and Lynn Shibut, “The Cost of the Savings and Loan Crisis: Truth and Consequences,” FDIC Banking Review, December 2000, at www.fdic.gov/bank/analytical/banking/2000dec/brv13n2_2.pdf.
82. Ibid.
83. Withdrawal/Redaction Sheet, WHORM, FI 002 112877-119799, Bush Library.
84. Michael K. Frisby, “Bush Sons’ Ventures Expose Him to Scrutiny,” Austin American-Statesman, May 17, 1992.
85. “Keating Five” (Times Topics), New York Times, at http://topics.nytimes.com/topics/reference/timestopics/subjects/k/keating_five/index.html.
86. FDIC, “The S&L Crisis: A Chrono-Bibliography.”
87. Nathaniel C. Nash, “Showdown Time for Danny Wall,” New York Times, July 9, 1989, at www.nytimes.com/1989/07/09/business/showdown-time-for-danny-wall.html.
88. Brady to Republican Leader Robert H. Michel, US House of Representatives, June 14, 1989, Staff and Office Files, Category FG134, Richard Breeden Files, Folder: S&L Rescue, Bush Library.
89. Internationalization of Securities Markets, June 14, 1989, Senate Committee on Banking, Housing, Urban Affairs, Subcommittee Hearings, C-SPAN Video Library, at www.c-spanvideo.org/program/Securiti (beginning at 47.30). See also “Greenspan Says Bank Law Dated Urges Wider Securities Business to Help U.S. Compete,” Albany Times Union, June 15, 1989.
90. “Banks in Insurance Reports,” January 1989, Staff and Office Files, Banking and Insurance 1989, Category FG134, Files: Richard Breeden, Folder: S&L Rescue, Bush Library.
91. Ibid., Economic Policy Committee and Task Force. The plan entailed merging the New Deal–created FSLIC into the FDIC, increasing S&L capital requirements, and increasing commercial bank and thrift insurance premiums to the FDIC insurance fund for the first time since 1935.
92. Bill Summary and Status, 101st Congress (1989–1990), H. R. 1278, Financial Institutions Reform, Recovery, and Enforcement Act of 1989, Library of Congress, at http://thomas.loc.gov/cgi-bin/bdquery/z?d101:h.r.01278.
93. The act also abolished the Federal Home Loan Bank Board (FHLBB) and created both the Federal Housing Finance Board (FHFB) and the Office of Thrift Supervision (OTS) to take its place.
94. Mayer, Greatest-Ever Bank Robbery, 276.
95. Curry and Shibut, “The Cost of the Savings and Loan Crisis.”
96. Ibid.
97. Ibid.
98. Federal Open Market Committee, Federal Reserve Bulletin A96, June 1989, at http://fraser.stlouisfed.org/download-page/page.pdf?pid=62&id=308766.
99. “Venezuela’s Creditors Are Unlikely to Agree,” New York Times, July 29, 1989, at www.nytimes.com/1989/07/29/opinion/l-venezuela-s-creditors-are-unlikely-to-agree-329689.html. See also “Brady to the Banks: Stop Stonewalling,” New York Times, July 21, 1989, at www.nytimes.com/1989/07/21/opinion/brady-to-the-banks-stop-stonewalling.html.
100. Willard C. Butcher, “Venezuela’s Creditors Are Unlikely to Agree” (letter), New York Times, July 25, 1989.
101. “Venezuelan Debt Payment,” New York Times, October 7, 1989, at www.nytimes.com/1989/10/07/business/venezuelan-debt-payment.html.
102. Butcher, “Venezuela’s Creditors Are Unlikely to Agree.”
103. The senators were Christopher Bond, Orrin Hatch, Larry Pressler, Bob Dole, and Trent Lott.
104. Letter from five senators to major American banks urging their cooperation with Venezuela debt restructuring, December 18, 1989, WHORM, General FO-004-02, Folder: Loans–Funds, Bush Library. The other bankers were Walter Shipley, chairman of Chemical Bank; Charles Sanford Jr. of Bankers Trust; John McGillicuddy, chairman and CEO of Manufacturers Hanover Trust; and Barry Sullivan, chairman of First Chicago.
105. Rowen, “Is it Time for a Debt Czar?”
106. Paul Craig Roberts, “Beneath the ‘Twin Towers of Debt,’” Wall Street Journal, October 28, 1986, Folder: Paul Craig Roberts [2 of 2], Reagan Library.
107. Ibid.
108. Curry and Shibut, “The Cost of the Savings and Loan Crisis.”
Chapter 17. The Early to Mid-1990s: Killer Instinct, Bank Wars, and the Rise of Goldman Sachs
1. Alan Greenspan, “The Challenge of Central Banking in a Democratic Society,” Federal Reserve Board, December 5, 1996, at www.federalreserve.gov/boarddocs/speeches/1996/19961205.htm.
2. Document 142712, May 26, 1990, Presidential Files, WHORM FG 001-07, Bush Library.
3. Document 201298, June 9, 1990, WHORM, FI 002, Bush Library. See also www.hks.harvard.edu/about/faculty-staff-directory/roger-porter.
4. Document 140558CU, Letter to C. Boyden Gray from John G. Aldridge, May 7, 1990, WHORM, BE Box 4, Folder 302736 [2], Bush Library.
5. Ibid.
6. Mark D. Fefer, Wilton Woods, and John Labate, “Favorite S&L Felonies,” CNN Money, November 5, 1990, at money.cnn.com/magazines/fortune/fortune_archive/1990/11/05/74309/index.htm.
7. Justice Department Release, “How Prosecutions Have Fared in S&L Area During Past Two Years,” White-Collar Crime Reporter 17, September 6, 1990.
8. Barnaby J. Feder, “Chase Manhattan to Cut 5,000 Jobs and Trim Dividend,” New York Times, September 22, 1990.
9. Michael Quint, “Citicorp Sees Payout Likely Again by 1994,” New York Times, October 9, 1992.
10. John Authers, “Engineer Behind the Bank’s Global Quest,” Financial Times, April 14, 1998.
11. Robert Lenzner, “N.Y. Banks’ Bailout Proposal Would Buy Time for Trump,” Boston Globe, June 12, 1990.
12. “Forgive and Forget (Brazil’s Debt),” The Economist, September 1, 1990.
13. Robert Guenther and Douglas R. Sease, “Chase Manhattan’s Labrecque, Ryan Face Investors’ ‘Show-Me Attitude,’” Wall Street Journal, June 29, 1990.
14. Michael Quint, “Chase to Consider Ties to Non-Bank Partners,” New York Times, October 23, 1990.
15. Louise Glass, “Taking Stock (and Other Securities),” ABA Banking Journal, 1990.
16. US Senate, Daily Digest, April 3, 1990, Topic: Financial Service Industry, Congressional Record, 101st Congress, at http://thomas.loc.gov/cgi-bin/query/B?r101:@FIELD(FLD003+d)+@FIELD(DDATE+19900403).
17. Michael Quint, “Regulatory Shift Allows U.S. Banks to Trade Stocks,” New York Times, September 21, 1990, at www.nytimes.com/1990/09/21/business/regulatory-shift-allows-us-banks-to-trade-stocks.html?pagewanted=all&src=pm. In March 1991, J. P. Morgan underwrote a $56 million equity issue by AMSCO International, the first common stock underwriting by a commercial bank since the Glass-Steagall Act.
18. Document 213358, February 5, 1991, WHORM, FI 002, Bush Library.
19. Steve Lohr, “Banking’s Real Estate Miseries,” New York Times, January 13, 1991.
20. Robert J. McCartney. “Citicorp’s Earnings Fall 81%; Profits Also Decline at 4 Other Big Banks,” Washington Post, April 17, 1991.
21. “White House Threat on Banking Bill,” New York Times, September 18, 1991.
22. “Federal Reserve Bulletin,” St. Louis Federal Reserve 75, no. 5 (1987), at http://fraser.stlouisfed.org/docs/publications/FRB/1980s/frb_051987.pdf and http://fraser.stlouisfed.org/docs/publications/FRB/1980s/frb_111984.pdf. See also Hobart Rowen, “Conable Says He’ll Retire as World Bank President; Bush to Name Lewis T. Preston as Successor,” Washington Post, March 7, 1991.
23. Lewis Thomas Preston, “World Bank Archives,” at http://web.worldbank.org/WBSITE/EXTERNAL/EXTABOUTUS/EXTARCHIVES/0,,contentMDK:20505265~pagePK
:36726~piPK:437378~theSitePK:29506,00.html. See also “Banks Led Way in Easing Crisis on Mexican Debt,” Los Angeles Times, January 10, 1998, at http://articles.latimes.com/1988-01-10/business/fi-34708_1_commercial-bank.
24. Hobart Rowen, “Preston Facing Big Job As Head of World Bank,” Washington Post, March 17, 1991.
25. Preston, “World Bank Archives.”
26. Stephen Labaton, “Wall Street’s Ambitious Top Cop,” New York Times, March 24, 1991.
27. Ivan C. Roten and Donald J. Mullineaux, “Debt Underwriting by Commercial Bank-Affiliated Firms and Investment Banks: More Evidence,” Journal of Banking and Finance, November 27, 2000, at http://pages.stern.nyu.edu/~eofek/InvBank/papers/DebtUnder_JBF.pdf. Section 20 of the Glass-Steagall Act prohibited banks from affiliating with companies “engaged principally” in the underwriting or dealing with securities.
28. Labaton, “Wall Street’s Ambitious Top Cop.”
29. Ronald Reagan, “Remarks at a Republican Party Fundraising Dinner in Houston, Texas,” September 22, 1998, American Presidency Project, at www.presidency.ucsb.edu/ws/index.php?pid=34876.
30. Document 15164001-159070, WHORM, BE Box 2, Folder BE 000, Bush Library.
31. Ibid.
32. Ibid.
33. Document 241932, From Robert T. Swanson, April 12, 1991, WHORM, FI 002, Box 12, Bush Library.
34. US Commodity Futures Trading Commission, “E9-6187,” Law & Regulation: Proposed Rules, March 24, 2009, at www.cftc.gov/LawRegulation/FederalRegister/ProposedRules/e9–6187.
35. Robert Barone, “Commodity Bubble Redux in Full Effect,” Forbes, April 25, 2011.
36. George W. Bush, “Statement on Signing the Futures Trading Practices Act of 1992,” October 28, 1992, American Presidency Project, at www.presidency.ucsb.edu/ws/index.php?pid=21696.
37. Stephen A. Rhoades, “Bank Mergers and Industry Wide Structure,” Board of Governors of the Federal Reserve System, January 1996, 6, at www.federalreserve.gov/pubs/staffstudies/1990–99/ss169.pdf.
38. “Manufacturers Hanover, Chemical Banks to Merge Transaction, Biggest Ever in Industry, Worth $2 Billion,” Post-Tribune (Indiana), July 16, 1991.