Too Big to Fail [134]
This, of course, was hardly news to Bernanke, who sat politely nodding in his best professorial manner.
Dimon then told the chairman—who had been joined by late-arriving Kevin Warsh, one of the Fed governors—that he was particularly worried about Lehman Brothers. He praised the decision to nationalize Fannie and Freddie, but noted the move had not helped calm the markets. “There’s confusion about the role government will play going forward,” he said, looking for the answer to the question on everyone’s mind: Would the Fed back additional bailouts?
Bernanke, however, wasn’t prepared to show his hand, and as the meeting came to an end would say only, “We’re working on a number of initiatives. We’re just trying to stay ahead of this thing.”
At Lehman, the air on the thirty-first floor seemed to only grow thicker as the day advanced. To some of his colleagues, Fuld looked as if he were having trouble breathing. He had been debating all weekend about whether to call Bank of America, and Treasury’s Ken Wilson had phoned him at least three times that morning, to press that case. “You gotta make the call,” Wilson instructed him. Wilson knew Bank of America well; during his stint at Goldman, he had been its banker for more than a decade. “It’s a good strategic fit,” Wilson urged. What Wilson hadn’t told Fuld was that he had already worked over Greg Curl of Bank of America to tee up the phone call. During an earlier conversation, Wilson had informed Fuld that the only way a deal was going to take place was if he was willing to take price off the table as a bargaining point. That was an indirect way of warning Fuld that he didn’t have much negotiating power—or time.
Rodgin Cohen, who has a bad back, was standing at the computer in his corner office on the thirtieth floor of Sullivan & Cromwell’s offices overlooking the New York Harbor when the phone rang. It was Dick Fuld, giving him the instructions to call Bank of America’s Curl. Cohen scribbled out a script for himself as Fuld was speaking; the stakes on this one were too high to do a presentation off the top of his head.
“Got it. I’ll call you back after I’ve talked to him.”
Cohen studied his script one final time and got Curl on the line. “Look,” he said amiably, “the world has moved a lot. We’d like to reengage.”
“O…kay,” Curl said slowly, making it clear that, while he agreed to listen to Cohen’s pitch on behalf of his client, he remained wary.
“We have two priorities. Preserving Lehman’s brand and reputation and doing well by the Lehman people,” Cohen said.
Then, checking the next sentence in the script, he paused for effect.
“You will notice price is not a priority,” he said, “but there is, of course, a price at which we could not do a transaction.”
“We could be interested,” Curl replied cautiously. “Let me talk to the boss and call you back.”
“Greg, we’d be looking to do something quickly,” Cohen told him.
“Got it.”
Dimon and Zubrow hopped out of their black Town Car in front of 601 Pennsylvania Avenue, a six-story modern limestone building northwest of the White House that serves as JP Morgan’s Washington headquarters. It was here that all of the government-relations people worked, so a constant stream of Gucci-clad lobbyists was a familiar sight.
By the time Dimon and Zubrow arrived most members of the operating committee had already finished their morning meetings and were eating lunch in a conference room on the second floor. Sandwiches and sodas were being passed around as Cavanagh was recounting how his conversation with Sheila Bair had gone and Black was regaling the group with anecdotes from his encounter with James Lockhart.
As the conversation inevitably turned to Lehman and its falling stock price, Dimon