Too Big to Fail [145]
The gathering was arranged for that night at the apartment of Walid Chammah, Morgan Stanley’s co-president.
Bob Diamond drummed his fingers on the desk as he waited on hold for Tony Ryan at Treasury, whom Bob Steel had suggested he call. “Tony,” Diamond began, “do you recall the conversation I had with Steel?”
For a moment, Ryan was confused.
“Which?” he asked, trying to act as if he knew what Diamond was talking about.
“On Lehman.”
“Oh, yes, yes.”
“I wanted to call you because I thought it would it be worthwhile for me to talk to Hank. If not, no big thing, but my sense is that we should have a conversation.”
Ryan said he’d get Paulson to contact him as soon as he could.
An hour later Diamond’s secretary informed him that Tim Geithner was on the line. “What can I do to help this along?” he asked.
Diamond explained that he was very interested in buying Lehman, if it could be had at a distressed price.
“Why don’t you call Fuld?” Geithner asked.
“You don’t understand,” Diamond said. “I am not trying to be provocative here.” He told Geithner about their experience trying to buy ABN AMRO—how the deal had fallen apart and how big an embarrassment it had been for the firm. “We don’t want to be seen as dabbling around,” Diamond said. “It would be inappropriate.”
To Geithner, such unnecessary delicacy seemed characteristically British, even if Diamond was an American, and he just listened.
“We need to be seen, to be invited by you and shepherded by you,” Diamond insisted. “You guys asked me if there was a price at which we’d be interested and you asked me, if so, ‘What do you need?’ That doesn’t mean I’m gonna call Fuld. That’s completely different.”
Geithner, growing frustrated with his equivocation, asked again, “Why can’t you just call Fuld? Why can’t you do it?”
“I’m not going to ask a guy if I can buy him, you know, at a distressed price,” Diamond said. “It only works if you guys are looking to arrange a deal. If you’re not, fine, no hard feelings, we’re okay.”
However much Barclays may have wished to avoid giving the impression that they might be taking advantage of someone else’s misfortune, it was, of course, precisely what they were seeking to do.
Ben Bernanke was finding it hard to focus as he sat in a meeting Wednesday afternoon with the local board of the Federal Reserve. Despite the chaos on Wall Street, he had continued making his regular visits to the Fed’s regional offices, and this particular trip had brought him to its St. Louis branch, located in a squat limestone building on North Broadway in the city’s downtown.
The Lehman crisis, however, was never far away. He had already been on the phone with Tim Geithner and Hank Paulson twice about it, once at 8:30 a.m. and again at 1:00 p.m., with another conversation scheduled for 6:00 p.m.
On the last call, Geithner and Paulson had informed Bernanke of their latest headache: Bank of America’s demand to have its capital ratio relaxed. “They are pissed off bigtime because they thought when they closed on Countrywide, they closed like big boys,” Paulson explained.
Geithner argued that they needed to get Bank of America to New York by whatever means necessary so that they could begin their due diligence; he was concerned that they were losing critical time.
Paulson asked Bernanke to call Ken Lewis himself and see if he could smooth the situation over, stressing again, “We need to get them a glide path.”
From a temporary office at the St. Louis Fed, Bernanke dialed Lewis.
“You really ought to come look at Lehman,” Bernanke urged him, still slightly uncomfortable about his new role as deal maker. “We’ll work with you on capital relief and anything you might need.”
Lewis thanked him for the call and said he planned to send his men up to New York to start discussions with Lehman.
Believing he had solved that problem, Bernanke returned to the reason for his trip to St. Louis: to visit with the staffers and spend more time with the St. Louis branch’s