Too Big to Fail [137]
McDade, though never much of a Goldman conspiracy theorist, found Fuld’s report discomfiting, but moments later was on the phone with Harvey Schwartz, Goldman’s head of capital markets. “I’m following up on Hank’s request,” he began.
After another perplexing conversation, McDade walked down the hall and told Alex Kirk to immediately call Schwartz at Goldman, instructing him to set up a meeting and get them to sign a confidentiality agreement.
“This is coming directly from Paulson,” he explained.
At 4:30 p.m. Paulson asked Christal West, his assistant, to get Ken Lewis on the phone. Ken Wilson had just briefed Paulson on his most recent call with Fuld—his seventh of the day—about Bank of America again. Now, Wilson told Paulson that all he needed to do was to make the case directly to its CEO. Paulson and Lewis did not know each other well, and the only real time they had spent together was a lunch in Charlotte several years back, when Paulson was still at Goldman. Ken Wilson had brought Paulson down to meet Lewis then to demonstrate Goldman’s loyalty to their acquisitive client.
“I’ve got Lewis on the line,” West finally called out to Paulson, who picked up the receiver.
“Ken,” he began gravely, “I’m calling about Lehman Brothers,” and after pausing said, “I’d like you to take another look at it.”
The receiver was silent for a few seconds. Lewis agreed to consider it, but added: “I don’t know how much it will do for us strategically.” He made it clear, however, that the price would have to be right. “If there’s a good financial deal there, I could see doing it.”
Lewis’s biggest concern about a potential deal, as he told Paulson, was Fuld, who Lewis worried would be unrealistic about his asking price. He recounted to Paulson how badly their meeting had gone back in July.
“This is out of Dick’s hands,” Paulson assured him. It was a powerful statement that could be interpreted only one way: You can negotiate directly with me.
By 7:30 p.m., the conference room on the thirtieth floor of Simpson Thacher was packed with executives from JP Morgan and Citigroup, who were milling about impatiently. “This is going be a waste of two hours of our time,” John Hogan of JP Morgan whispered to his colleague, Doug Braunstein, who just smiled wryly.
Larry Wieseneck greeted Gary Shedlin—co-head of global financial institutions M&A of Citigroup and one of his closest friends and regular golf partners at Crestmont, their club in New Jersey—then assessed the crowd. Realizing that he wasn’t even certain who everyone was, he passed around a piece of paper asking them all to sign in. If he was going to share confidential information with them, he wanted to know precisely with whom he’d be dealing.
Wieseneck was particularly worried about the imbalance of people from JP Morgan’s risk department, compared to the deal-making bankers he had expected would be coming to help them think through their options. “These are all risk guys,” he told his colleague Brad Whitman, as the two chatted in the corner, plotting strategy. This was supposed to be a meeting on how to save Lehman, he thought, not a due diligence session for JP Morgan to figure out the extent of its exposure if Lehman failed.
Apologizing for the delay, Wieseneck announced to the room that they were waiting for Skip McGee, Lehman’s head of investment banking, to arrive.
“We’ve got a lot of people here,” Braunstein, who had brought his whole team along, complained. “We can’t wait here all night.”
As tension in the room continued to rise, Whitman finally received an e-mail from McGee, who told him to go ahead and begin, as it was unlikely that he would be able to make it at all.
After calling the group to order, Wieseneck walked it through Lehman’s plan to spin off its real estate assets as a “bad bank.” Everyone agreed the plan was a good one, but there was general concern that it might have come too late, given