Chapter 14: The College of Cardinals
1. “I don’t think John”: Author interview with Peter Weinberg.
2. “European currency mechanism”: Author interview with Steve Friedman.
3. “I looked on it”: Ibid.
4. “a crucial thing to do”: Author interview with Jon Corzine.
5. “trading legs”: Author interview with Steve Friedman.
6. Goldman’s involvement in the Maxwell controversy is taken from the 2001 report “Mirror Group Newspapers plc” (volumes 1 and 2) by the Department of Trade and Industry and from contemporaneous press reports.
7. “a Czech-born Jewish immigrant”: NYT, December 20, 1991.
8. “never worry about”: Lisa Endlich, Goldman Sachs: The Culture of Success (New York: Touchstone, 2000), p. 139.
9. “What has happened now”: NYT, December 20, 1991.
10. “When most of my colleagues”: Ibid.
11. “I could see the Maxwell thing”: Author interview with Steve Friedman.
12. “I had no desire”: Ibid.
13. “Hank would be the first guy”: Ibid.
14. “Not because I wanted a promotion”: Author interview with Henry Paulson Jr.
15. “I would come to New York”: Ibid.
16. “I don’t like the feel of this”: Author interview with Steve Friedman.
17. “hardly lived up”: Steven Drobny, Inside the House of Money: Top Hedge Fund Traders on Profiting in the Global Markets (New York: Wiley, 2006), p. 87.
18. “Credit spreads just blew out”: Author interview with Henry Paulson Jr.
19. The account of Siva-Jothy’s experience at Goldman is from Drobny, pp. 71–103.
20. “Becerra was probably”: Author interview with David Schwartz.
21. “When the market went against us”: Author interview with Henry Paulson Jr.
22. “I was always very, very careful”: Author interview with Steve Friedman.
23. “ ‘Your job’s impossible’ ”: Author interview with Robert Hurst.
24. “But people weren’t as worried”: Author interview with Steve Friedman.
25. “We had a really bad dynamic”: Author interview with Jon Corzine.
26. “I wanted to avoid”: Institutional Investor, October 1994.
27. “I had no special call”: Author interview with Henry Paulson Jr.
28. “I knew something was up”: Ibid.
29. “You can’t leave”: Ibid.
30. “Mark had turned out”: Author interview with Robert Rubin.
31. “Our management committee”: Institutional Investor, “Inside Goldman’s College of Cardinals,” October 1994.
32. “You’ve got to recognize”: Author interview with Henry Paulson Jr.
33. The account of the wrestling match between Paulson and Friedman is from author interviews with both men.
34. “I wanted to see as pure”: Author interview with Steve Friedman.
35. “Corzine was a given”: Author interview with Robert Hurst.
36. “There was no one”: Author interview with Steve Friedman.
37. “It was pretty clear”: Author interview with Henry Paulson Jr.
38. “They nurtured me all along”: Author interview with Jon Corzine.
39. “We came to believe their chemistry”: Institutional Investor, October 1994.
40. “I really thank you”: Author interview with Steve Friedman.
41. “I remember afterwards”: Author interview with Henry Paulson Jr.
42. “On the other hand”: Ibid.
43. “As a Christian Scientist”: Ibid.
44. “I’m not going to tell you”: Author interview with Steve Friedman.
45. “the bejeezus out of him”: Author interview with Jon Corzine.
46. “My relationship with Mark”: Institutional Investor, October 1994.
47. Biographical information about Jon Corzine and Henry Paulson Jr. is from extensive author interviews with the two men.
48. “It was a strange place”: Henry Paulson Jr., On the Brink (New York: Business Plus, 2010), p. 25.
49. “He took us down to the station”: Author interview with Henry Paulson Jr.
50. “I did well enough”: Paulson, p. 25.
51. “My motive”: Author interview with Henry Paulson Jr.
52. “Johnny Weinberg used to say”: Author interview with Jim Gorter.
53. “I frequently felt crummy”: Author interview with Steve Friedman.
54. “And by God”: Ibid.
Chapter 15: $10 Billion or Bust
1. “Jon and I”: Author interview with Henry Paulson Jr.
2. “We just cut”: Author interview with Henry Paulson Jr.
3. “Winkelman, who has been”: NYT, November 15, 1994.
4. “If I had known”: Author interview with Steve Friedman.
5. “Until you’ve actually”: Author interview with Jon Corzine.
6. “There’s no difference”: Fortune, September 6, 2004.
7. “We were ready to drink”: Financial Times, November 22, 2010.
8. The accounts of the Arrowwood meetings in November 1994, January 1995, and January 1996 are from documents obtained by the author.
9. “Partners were looking”: Lisa Endlich, Goldman Sachs: The Culture of Success (New York: Touchstone, 2000), p. 209.
10. “I went through Europe”: Author interview with Henry Paulson Jr.
11. “The deal with the titles”: Ibid.
12. “if we were the plaintiffs”: Charles D. Ellis, The Partnership (New York: Penguin Press, 2008), p. 459.
13. “Assigning the costs”: NYT, April 15, 1995.
14. “Gene, I think you might”: Ellis, p. 458.
15. “I have one of these theories”: Author interview with Jon Corzine.
16. “There was a psychology”: Ibid.
17. “quietly raised”: WSJ, March 18, 1995.
18. Account of the Bishop Estate: Alix Freedman and Laurie Cohen, “Bishop’s Gambit: Hawaiians Who Own Goldman Sachs Stake Play Clever Tax Game,” WSJ, April 25, 1995.
19. “Jon is inspirational”: Author interview with David Schwartz.
20. “What came out of”: Author interview with Henry Paulson Jr.
21. “If you did not have this”: Financial Post, January 5, 1996.
22. “It’s not as strong”: Ibid.
23. “a shot at the golden carrot”: Ibid.
24. “Now would be a good time”: The Independent (U.K.), January 26, 1996.
25. “You got to be kidding me!”: Author interview with Peter Weinberg.
26. “You could have someone”: Author interview with Henry Paulson Jr.
27. “I got a little more preachy”: Author interview with Jon Corzine.
28. “He isn’t going to jam it”: WSJ, January 22, 1996.
Chapter 16: The Glorious Revolution
1. “just hit me like cold water”: Author interview with Henry Paulson Jr.
2. “I remember Sandy Weill”: Ibid.
3. “delegation”: Author interview with Jon Corzine.
4. “The differences between Corzine and me”: Author interview with Henry Paulson Jr.
5. “I said to him”: Ibid.
6. “I found people at Harvard”: Author interview with Chris Flowers.
7. “He was our franchise”: Author interview with Jon Corzine.
8. “It was one meeting”: Ibid.
9. “after he was pretty far along”: Author interview with Henry Paulson Jr.
10. “I got angry”: Ibid.
11. “We concluded”: Ibid.
12. “At a multiple of two times book”: NYT, June 6, 1998.
13. “I went from being the object”: Author interview with Jon Corzine.
14. “I believed we were going to need”: Author interview with Henry Paulson Jr.
15. “the firm’s prospects were steadily dimming”: Roger Lowenstein, When Genius Failed: The Rise and Fall of Long-Term Capital Manage
ment (New York: Random House, 2000), p. 112.
16. “Maybe if we hold”: Author interview with Henry Paulson Jr.
17. “Minute by minute”: Lowenstein, p. 145.
18. “We’ve had a serious markdown”: Ibid., p. 147.
19. “We aren’t getting”: Ibid., p. 152.
20. “The end of August”: Ibid., p. 151.
21. “Nothing that’s happening”: NYT, September 9, 1998.
22. “It was a very bitter”: Author interview with Chris Flowers.
23. “I asked if he had”: Author interview with Jimmy Cayne.
24. “Merely informing the world”: Lowenstein, p. 172.
25. “appeared to be downloading”: Ibid.
26. “If it were true”: Jacob Goldfield e-mail to the author.
27. “At the end of one day”: Lowenstein, p. 173.
28. “But by 1998”: Ibid., p. 175.
29. “did things in markets”: Ibid.
30. “He and Buffett”: Ibid., p. 183.
31. “the depths of”: Ibid., p. 190.
32. “[I]f Long-Term failed”: Ibid., p. 194.
33. “It was really a matter”: Author interview with Henry Paulson Jr.
34. “The point was to rescue Long-Term”: Lowenstein, p. 215.
35. “there is no polite way”: Ibid.
36. “One always has to indulge”: Ibid., p. 216.
37. “None of us liked”: Author interview with Henry Paulson Jr.
38. “I don’t think there was”: Author interview with John Thain.
39. “This was not a close decision”: Author interview with Henry Paulson Jr.
40. “He emerged as the real hero”: Ibid.
41. “Politically, it was probably”: Ibid.
42. “I decided the best thing”: NYT, October 23, 1998.
43. “You should be sure, Jon”: Charles D. Ellis, The Partnership (New York: Penguin Press, 2008), p. 606.
44. “He was more popular”: Author interview with Henry Paulson Jr.
45. “I couldn’t quite understand”: Author interview with Jon Corzine.
46. “I was devastated”: Ibid.
47. “Corzine and Paulson fought”: Author interview with John Thain.
48. “I may not be the smartest”: Author interview with Jon Corzine.
49. “The news that Jon Corzine”: Financial News, January 18, 1999.
Chapter 17: It’s Too Much Fun Being CEO of Goldman Sachs
1. Biographical details about John Thain: Author interviews with John Thain.
2. Biographical details about John Thornton: From press reports.
3. “He is a real dick”: New York Observer, January 14, 2001.
4. “John Thornton and I”: Author interview with John Thain.
5. “Kevin is very smart”: NYT, October 27, 2001.
6. “There is no equity in the equity markets”: WSJ, October 3, 2002, which also provides a useful summary of Representative Oxley’s report and Goldman’s role.
7. “Their conclusion”: Ibid.
8. “If an investment bank”: Author interview with Eliot Spitzer.
9. Nicholas W. Maier account of “spinning”: From his videotaped deposition, May 9, 2005, Brattleboro, Vermont, as a result of litigation in the U.S. District Court for the Southern District of New York, In Re: Initial Public Offering Securities Litigation.
10. “Hank, you’ve been cutting”: Transcript of January 2003 Goldman presentation at Salomon Smith Barney investor conference.
11. “News of that comment”: Author interview with David Schwartz.
12. “I’m the guy”: Author interview with Henry Paulson Jr.
13. “I really liked both guys”: Ibid.
14. “You know something?”: Ibid.
15. “John will be greatly missed”: NYT, March 25, 2003.
16. “John A. Thain”: Ibid.
17. “He thought it was unfair”: Author interview with Henry Paulson Jr.
18. “I actually thought”: Ibid.
19. “There’s no pretense”: Author interview with John Thain.
20. “There were a lot of public policy”: Ibid.
21. “didn’t say anything for several hours”: Forbes, November 11, 2005.
22. “I told him I thought”: Author interview with Henry Paulson Jr.
23. “These were not easy”: Ibid.
24. “We managed the transition”: Ibid.
25. “Our bankers travel on the same planes”: Boris Groysberg and Scott A. Snook, The Pine Street Initiative at Gold-man Sachs, Harvard Business School, Case 9-407-053, November 14, 2006.
26. “an interesting blend”: Ibid.
27. “I am happy to do business”: Author interview with Sam Zell.
28. The account of the NYSE/Archipelago merger was taken from the many public filings the companies made with the SEC as part of the merger.
29. “Wall Street has been buzzing”: WSJ, April 27, 2005.
30. “We needed someone”: Author interview with John Thain.
31. “We kept it from becoming irrelevant”: Ibid.
32. “The New York Stock Exchange”: Author interview with Henry Paulson Jr.
33. “I questioned whether”: Ibid.
34. “magical hold at the summit”: “Behind the Brass Plate,” The Economist, April 27, 2006.
35. “The idea of being Treasury secretary”: Todd Purdum, “Henry Paulson’s Longest Night,” Vanity Fair, October 2009.
36. “There are no dress rehearsals”: Henry Paulson Jr., On the Brink (New York: Business Plus, 2010), p. 39.
37. “I think I surprised and delighted him”: Purdum, October 2009.
38. Details from Paulson’s confirmation hearing are from the June 27, 2006, public transcript.
39. Biographical details about Lloyd Blankfein: Author interviews with Lloyd Blankfein.
40. “But Lloyd always teased”: Author interview with Richard Kalb.
41. “He was brilliant”: Author interview with Rabbi Abner German.
42. “He was very personable”: Author interview with Richard Kalb.
43. “You survive at either”: Author interview with Robert Steel.
44. “We were completely unprepared”: Author interview with David Drizzle.
45. “Many of the people”: Author interview with Roy Geronemus.
46. “As exam period approached”: Author interview with David Drizzle.
47. “became more studious”: Ibid.
48. “to keep certain large”: Lloyd Blankfein’s entry in Harvard University’s class of 1975 twenty-fifth reunion brochure, 2000.
49. “We were street fighters”: Fortune, March 2, 2008.
50. “He was clearly bright and energetic”: Charles D. Ellis, The Partnership (New York: Penguin Press, 2008), p. 265.
51. “That’s probably not”: Ibid., p. 266.
52. “It’s not about hanging onto”: Lloyd Blankfein comments at a breakfast sponsored by Fortune magazine on October 15, 2009.
53. “in order to gain credibility”: Author interview with Jacob Goldfield.
Chapter 18: Alchemy
1. “It’s all about IQ”: Rich Karlgaard, “Microsoft’s IQ Dividend,” WSJ, July 28, 2004.
2. Biographical details about Josh Birnbaum as well as his career at Goldman Sachs are from author interviews with Josh Birnbaum.
3. “When securitization arrived”: Author interview with Sandy Lewis.
4. “three I’s of new markets”: WSJ, July 5, 2008.
5. Information on the Markit investigation is from Robert Lenzner, Forbes, July 14, 2009.
6. E-mails and documents about the ratings agencies are from the October 2008 U.S. House of Representatives hearing by the Committee on Oversight and Government Reform.
Chapter 19: Getting Closer to Home
1. Except where noted, this account comes from numerous conversations with the Goldman traders involved, plus from nine hundred pages of documents released in April 2010 by the U.S. Senate Permanent
Subcommittee on Investigations as part of its investigation into the role Goldman Sachs played in the near collapse of the financial system in 2007 and 2008.
2. “When Paulson and [Paolo] Pellegrini”: Gregory Zuckerman, The Greatest Trade Ever (New York: Crown Business, 2009), p. 154.
3. “If you want to keep selling”: Ibid.
4. “heroic”: Author interview with Josh Birnbaum.
5. “It was a joke”: Time, July 27, 1981.
6. “I can give you one hundred”: Author interview with David Viniar.
7. “The world was good, right?”: Ibid.
8. “One of my jobs at the time”: Author interview with Dan Sparks.
9. “We were seeing signs”: Ibid.
10. “That was kind of a first sign”: Ibid.
11. “The words we used”: Author interview with David Viniar.
12. “trade Goldman’s own capital”: Kate Kelly, “How Goldman Won Big on Mortgage Meltdown,” WSJ, December 14, 2007.
13. “What you really needed”: Author interview with David Viniar.
14. “I had senior guys”: Author interview with Dan Sparks.
15. “It was tough, okay?”: Ibid.
Chapter 20: The Fabulous Fab
1. Unless otherwise indicated, information about Fabrice Tourre and Goldman’s involvement in the ABACUS transaction has been taken from the nine-hundred-plus pages released in April 2010 by the U.S. Senate Permanent Subcommittee on Investigations, from e-mails released publicly by Goldman Sachs, and from documents filed in the April 2010 SEC lawsuit against Goldman Sachs and Tourre.
2. “This was the trade”: Author interview with Dan Sparks.
3. he “briefly lost his cool”: WSJ, April 26, 2010.
Chapter 21: Selling to Widows and Orphans
1. Unless otherwise indicated, information about Fabrice Tourre and Goldman’s involvement in the ABACUS transaction has been taken from the nine-hundred-plus pages released in April 2010 by the U.S. Senate Permanent Subcommittee on Investigations, from e-mails released publicly by Goldman Sachs, and from documents filed in the April 2010 SEC lawsuit against Goldman Sachs and Tourre.
2. “bright line”: Author interview with Dan Sparks.
3. “I don’t think”: Ibid.
4. “We lost a ton”: Ibid.
5. 581-page report: Final report of Michael J. Missal Bankruptcy Court Examiner, February 29, 2008.
6. “In other words”: Matt Taibbi, Rolling Stone, July 9–23, 2009.
7. “The simultaneous selling”: Ibid.
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