The Weekend That Changed Wall Street
Page 21
156 “Merrill paid out”: Author interview with John Thain, January 26, 2009; transcript.
158 “Clearly, the losses”: Author interview with Ken Lewis, February 10, 2009; transcript.
159 “We believe”: Author interview with Andrew Cuomo.
160 “I was in Charlotte”: Author interview with Brian Moynihan, December 18, 2009; transcript.
161 “In six months”: Paulson told me this privately during a commercial break in our January 12, 2009, interview.
162 “We discussed the promise”: Author interview with Prince Alwaleed, April 3, 2006, as recorded in my BusinessWeek column “Facetime with Maria Bartiromo.”
163 “Frankly speaking”: Author interview with Prince Alwaleed, November 24, 2008; transcript.
163 “How much heat”: Author interview with Vikram Pandit, December 12, 2007; transcript.
164 “They all took”: Author interview with Jim Rogers, February 2009; transcript.
164 A year after the weekend that changed Wall Street: a description of my television special, One Year Later: Reflections from the Street; www.cnbc.com.
165 “It has been”: Author interview with Mohamed El-Erian, March 15, 2010; transcript.
166 “Dick Fuld should publicly”: Author interview with Larry McDonald, April 2008; transcript.
167 Description of House Financial Services Committee Lehman Brothers autopsy: Fuld testimony, April 20, 2010.
168 Discussion of “Repo 105-type issues”: Author interview with Mary Schapiro, March 29, 2010; transcript.
169 “The key point”: Author interview with Tim Geithner, March 29, 2010; transcript.
CHAPTER NINE: A GREEK TRAGEDY
172 Statistics about foreign ownership of U.S. debt: Council on Foreign Relations report, June 22, 2010.
172 “Russian officials had [earlier] made”: Henry Paulson, On the Brink: Inside the Race to Stop the Collapse of the Financial System (New York: Business Plus, 2010).
173 “Government money”: Ken Rogoff’s statements are in my panel discussion at the World Economic Forum in Davos, titled “The Next Global Crisis,” January 2010; tape.
176 “The American people”: Interview with Bill Clinton, May 2010; transcript.
176 It was questionable if even in the midst of failure Greece was getting the message: Interview with Giorgos Papaconstantinou, March 19, 2010 (transcript).
177 “It’s like putting”: Interview with Nassim Taleb, Wall Street Journal Report, June 18, 2010.
177 “I’m sorry Greece”: Author interview with Ace Greenberg, June 11, 2010; portions aired on Wall Street Journal Report with Maria Bartiromo; transcript.
178 “One thing that is clear”: Interview with Axel Weber, April 28, 2010; transcript.
179 Bloomberg report on Goldman Sachs and Greece, February 17, 2010.
180 “The Guys from ‘Government Sachs’”: New York Times, October 17, 2008.
181 “doing God’s work”: John Arlidge, “I’m Doing God’s Work. Meet Mr. Goldman Sachs,” Times (London), November 8, 2009. Blankfein also made the comment “I know I could slit my wrists and people would cheer.”
184 “Let me just say point-blank”: Author interview with Mary Schapiro, June 14, 2010; transcript.
186 Description of Goldman Sachs testimony: April 16, 2010, the Senate Permanent Subcommittee on Investigations, chaired by Senator Carl Levin; media reports.
CHAPTER TEN: CAPITALISM IN THE BALANCE
190 “For so long”: Author interview with Bob Hormats, June 18, 2010; transcript.
193 “Where has the TARP money gone?”: Author interview with Elizabeth Warren, March 29, 2010; transcript.
193 Conversation about the merits of TARP and the stimulus: Informal author interview with Alan Greenspan, March 29, 2010; notes.
194 In March I traveled to Washington and met with Barney Frank: Author interview with Barney Frank, March 29, 2010; notes.
198 “You’re not leaving this room”: Author interview with Mary Schapiro, June 14, 2010; transcript.
201 “So now we’re going”: Author interview with Richard Bove, June 1, 2010; transcript.
201 “This provision”: A financial industry lawyer speaking on background, in an interview June 3, 2010; transcript.
202 “I’m concerned about the Basel rules”: Author interview with Vikram Pandit, June 18, 2010; transcript.
203 “How will the SEC manage”: Author conversation with a former chairman of the SEC, unattributed; notes.
203 “We do need more people”: Author interview with Mary Schapiro, June 14, 2010; transcript.
204 My panel at the Aspen Ideas Festival, July 9, 2010, was titled “Views on America’s Economy: At Home and Abroad.”
INDEX
The page numbers in this index refer to the printed version of this book. To find the corresponding locations in the text of this digital version, please use the “search” function on your e-reader. Note that not all terms may be searchable.
Abacus 2007-ACI, 182
Abdullah, king of Saudi Arabia, 162
Accenture, 197
Ackermann, Josef, 13
adjustable rate mortgages (ARMs), 36, 39, 41
option, 148
Agius, Marcus, 87
AIU Holdings, 91
Allstate, 123
Alwaleed, prince of Saudi Arabia, 162–63, 164
American dream:
Blankfein and, 182
home ownership and, 36, 74, 144–45
sovereign debt crisis and, 176
American Express, 51–52
American Home Mortgage Investment Corporation, 43
American International Group (AIG), 13, 90–98, 105, 118, 120–23, 134, 136, 144, 150, 164, 169, 181, 194, 206, 209, 210, 211, 212
Angelides, Philip, 214
Asian markets, 21, 32, 100, 103–4
AT&T, 140
auto companies, bailouts for, 142
avian flu, 13
Bair, Sheila, 163
Bank of America, 99
Countrywide bought by, 42–43
in Merrill buyout, 89–90, 96, 100, 103, 105–6, 107, 110–14, 118, 128–29, 134, 152–61, 212, 215
as potential Lehman suitor, 17–18, 24, 69, 80–81, 83, 85–86, 90, 94, 96, 97, 124
bank holding companies, 124
Bank of New York Mellon, 16
Bank One, 53
bank rescues, 178–79
bankruptcy:
auto companies and, 142
Bear Stearns and fear of, 53–54
of Lehman, 21, 24, 26, 34, 59, 97, 102, 103–6, 118–20, 128, 168
subprime lenders and, 43
banks, banking, 58, 144, 147, 201–3
commercial vs. investment, 138–39, 153
consolidation of, 137
crises in, 142, 173
failures of, 137, 151
risk to, 13
separation of securities from, 5
small, 170
Barclays, 26
Lehman investment banking bought by, 118–20
as potential Lehman suitor, 17–18, 24, 29–30, 87, 96–97, 100–102, 105, 115, 124
Barclays Capital, 29–30
barriers of entry, to credit markets, 12
Bartiromo, Maria:
interviews conducted by, 7, 9, 12–13, 14, 39, 63, 79, 94–95, 99, 112, 127, 147, 151, 158–59, 161, 169–70
at NYSE, 3
Basel Accords, 202–3
Bear Stearns, 10–11, 18, 26, 44, 169, 177
bailout of, 15, 19, 21, 24, 29–30, 133
sale to JPMorgan of, 24, 32, 55–58, 63, 80, 87, 212
stock ownership of, 22
trouble at, 47–51, 53–55, 65, 86, 120, 210, 211
Belgium, 136
Benmosche, Bob, 210
Berkshire Hathaway, 214
Bernanke, Benjamin, 38, 44, 55, 77, 130, 131, 173
Bhidé, Amar, 137
Bibliowicz, Jessica, 52
Black Monday (1987), 177
Black Monday (2008), 117
BlackRock, 31, 50, 72, 102
Blackstone Group, 7, 9
Black Swan, The (Taleb), 177
Blankfein, Lloyd, 11, 16, 32, 34, 88, 120, 129–30, 179–82, 185–87, 215
blogosphere, 180
Bloomberg reports, 179
Boies, David, 120–22
Bolten, Josh, 180–81
Bond, James (char.), 10–11
bonds, 10, 109, 197
bonuses:
at Goldman Sachs, 181–82
at Merrill, 153–57
Wall Street, 143–44, 164
boom, difficulty of slowing down during, 13
Bove, Richard, 201
Brin, Sergey, 13
Broad, Eli, 94
Brown, Scott, 200–201
Brown, Tina, 11
Buffett, Warren, 129, 142, 150, 214
Bundesbank, 178
Bush, George W., 23, 37, 127, 131–32, 135–36
Bush administration, 135, 142, 151, 169
business loans, 3
Byrd, Robert, 200
Callan, Erin, 63–68, 70–72, 167
capital, 123, 124, 165, 202
capitalism, 5, 12, 16, 182, 183, 190–91
free-market, 126, 136, 189–94, 204–7
capital markets, 67
Carlyle Group, 9, 14, 204
Cayne, Jimmy, 10, 11, 26, 47–49
Chase, 26
checking accounts, 199
Chiang, Lulu, 103
chief executives, as congressional targets, 141–42
China, 93, 122, 128, 129, 190, 204, 207
U.S. debt held by, 172–73, 175
Chrysler, 211
Chu, Victor, 13
CIC, 128
Cioffi, Ralph, 47
CIT Group, 158
Citibank, 114, 164
Travelers’ Insurance merger with, 139–40
Citicorp, 163
Citigroup, 8, 11, 16, 31, 33, 52, 94, 114, 129, 140–41, 149–50, 160, 169, 175, 210, 211, 212
insolvency of, 161–64
Citi Holdings, 163
Clinton, Bill, 138–40, 145, 176
Clinton, Hillary, 181
Clinton administration, 74, 138
Closing Bell, 3, 19–20, 63, 112–14, 117, 120, 137
CME Global Financial Leadership Conference, 84, 99
CNBC, 22, 49, 50–51, 129, 133, 150, 158, 164–65
Coach, 174
Cohen, Kerrie, 71
collateral, 29
collateralized debt obligations (CDOs), 176
Colossal Failure of Common Sense, A (McDonald), 27
commercial banks, 138–39, 206
commercial paper traders, 27, 206
Commodities Futures Trading Commission, 181
Condé Nast Portfolio, 64
confidence:
crisis of, 190–91
renewal of, 193–94, 206
Congress, U.S., 54, 58, 140–42, 143, 151, 154
Fannie Mae and, 73
financial reform in, 183–84, 194–207
TARP authorized by, 105
watchdogs at, 35
see also House of Representatives, U.S.; Senate, U.S.
Congressional Oversight Panel, 193
construction, 91
consumer deposits, 131, 195
Consumer Financial Protection Agency, 195, 199, 201
Corzine, Jon, 180, 182–83
Council of Economic Advisors, 37, 44
Council on Foreign Relations, 23, 172
Countrywide Financial, 39–44, 161, 211, 212, 215
Cox, Christopher, 22, 24–25, 167
Bear Stearns crisis and, 54
Lehman crisis and, 16, 26, 102–3
on short-selling, 128
Craig, Sue, 70–71
credit, 12
creation of, 202
credit cards, 195, 199, 201
credit default swaps, 92, 153
credit markets, 109
barriers of entry to, 12
credit ratings, 36
Credit Suisse, 16, 72
Cuba, 207
Cuomo, Andrew, 128, 145, 159–60
C. V. Starr & Co., 92, 94
Darling, Alistair, 101
Davos, Switzerland, 12, 156, 171, 173–74
debt, 13, 190
debt entitlement, 12
Democratic party, 149, 200, 201–2
derivatives, 176
transparency on, 195, 199
Deutsche Bank, 13, 202
Diamond, Robert, 29–30, 87, 97, 100, 118–19
Diller, Barry, 11
Dimon, Jamie, 11, 16, 34, 51–53, 56–58, 120, 129–30, 139, 211, 213–14
Dodd, Chris, 169, 196, 198–201
Dodd Amendment, 169
Dodd-Frank, 212
dollar, value of, 173
domino theory, 133
Dougan, Brady, 16
Dow, 19, 197–98
down payments, cash, 36
Dubai, 88, 190
Dudley, William, 181
due diligence, 43, 101, 158
Duffy, Terrence, 99
Durbin amendment, 212
eBay, 167
economy, recovery and, 151–52
Egan, Edward, Cardinal, 11
Einhorn, David, 66–68
Enron, 164
environmental issues, 13
equity, 124
Equity Office Properties Trust, 9
El-Erian, Mohamed, 12, 21, 78, 115–17, 165
euro, 171, 174, 177
Europe, 190
financial stability of, 174–75
sovereign debt in, 174
European Central Bank, 177
Governing Council of, 178
European Union, 171, 175, 178–79
Everquest Financial, 47
executive pay, 200
Fannie Mae, 73–79, 120, 134, 150, 164, 169, 173, 196–97, 206, 210, 211
conservatorship of, 77–79, 197
FBI, 214–15
Federal Deposit Insurance Corporation (FDIC), 149, 163, 201
Federal Home Loan Mortgage Corporation, see Freddie Mac
Federal Housing Finance Agency (FHFA), 77
Federal National Mortgage Association, see Fannie Mae
Federal Reserve Bank of New York, 15, 16, 18–20, 22, 24, 25, 29, 33, 44, 54–55, 58, 59, 68, 85, 90, 100, 103, 118, 131, 138, 139, 141, 159, 165, 173, 180, 181, 195
board of governors of, 55
CEO working groups at, 34, 59, 79, 80–81, 83, 85, 87–89, 96, 102, 105
oversight capacity for, 199–200
Feingold, Russ, 200
Feldstein, Martin, 21
Financial Crisis Inquiry Commission, 214
financial reform bill, 201
financial services industry:
market share in, 112
meltdown not seen by, 4–5
Financial Services Oversight Panel, 199
financial system, globalization of, 44
Fink, Larry, 31, 50, 72, 102
First Eastern Investment Group, 13
fiscal responsibility, 178
fixed income market, 109
flash crash, 197
Fleet Bank, 43
Flowers, Chris, 90–91
Fooling Some of the People All of the Time (Einhorn), 66
Forbes 400 wealthiest list, 91
foreign markets, 110
Fortune, 148
401(k)s, 143
foreclosures, 212, 215
France, 61–62, 136
Frank, Barney, 143–44, 194–96, 198–99
Freddie Mac, 73–74, 77–79, 120, 134, 150, 164, 169, 173, 196–97, 206, 210, 211
conservatorship of, 77–79, 197
Friedheim, Isabelle, 62
Friedheim, Scott, 60–63, 70–71
Friedman, Milton, 191–92
Friedman, Stephen, 180
Friedman, Thomas, 189
Fuld, Dick, 10–11, 17, 20, 25–28, 33, 59–63,
67–71, 80–81, 83–84, 86, 89, 94, 96, 101–4, 115, 124–26, 166–68
Galleon Group, 214–15
Gasparino, Charlie, 49
GE, 215
GE Capital Asia-Pacific, 73
GE Capital-Japan, 73
Geithner, Timothy, 22–23, 181
AIG crisis and, 105
Bear Stearns crisis and, 53–55
Lehman crisis and, 16, 20–21, 25–26, 32–34, 59, 87, 100–102, 175
Morgan Stanley and, 129–30
as new Treasury head, 152, 169–70
General Motors (GM), 211
Gensler, Gary, 181
Germany, 174–75, 178
Glass, Cantor, 138
Glass-Steagall Act, repeal of, 138–40, 206
GMAC, 211
Golden West Financial, 148
Goldilocks economy, 12
Goldman Sachs, 11, 16, 23, 26, 31, 32, 59, 80, 88–89, 120, 124, 147, 175, 179–83, 215
alumni of, 91, 180–81
SEC charges against, 182, 183–87
transformation to bank holding company of, 124, 128, 130–31
Google, 13
Gore, Al, 120
government-sponsored entities (GSEs), 173, 196
Gramm, Phil, 138, 139
Great Britain, 17, 29, 136
Financial Services Authority of, 18, 30, 97, 100
government of, 100–102
Great Depression, 5, 132, 134–35, 138, 173, 206, 214
Greece, 171, 174–79
Greenberg, Alan “Ace,” 48, 58, 177–78
Greenberg, Hank, 92–95, 120–22, 164
Greenlight Capital, 66
Greenspan, Alan, 44, 107, 138–39, 141, 193–94, 204, 216
Gregory, Joe, 64, 70, 167
Grubman, Jack, 140
Hale, David, 204
Harvard Business School, 51
Harvard Law School, 193
Harvard University, 21, 137, 171, 173, 182
health insurance, 166
hedge funds, 25, 33, 48, 69, 72, 182
Hennessey, Keith, 136
Hewlett-Packard, 174
Hilton, Paris, 10
Hintz, Brad, 67–68, 72–73
home loans, 3
homeowners, bailout for, 144–45
home ownership, American dream and, 36, 74, 144–45
Hormats, Bob, 181, 190
House of Representatives, U.S.:
Committee on Oversight and Government Reform of, 125, 141
financial reform proposals in, 194–95, 198–200
Financial Services Committee of, 136, 143, 167, 194–95, 198
see also Congress, U.S.; Senate, U.S.
housing, 212, 215
HUD, 145
Hurricane Ike, 110
Iceland, 136
Immelt, Jeff, 215
insider trading, 43
insurance, 91–92, 120
Integrity Protecting the Works of Man, 208
interest rates, 175