Too Big to Fail [148]
Then, for a good hour, the bankers went over the numbers and the various assets that Lehman owned to determine if there was anything among its holdings that Morgan Stanley might want. But as the discussion went on and papers were passed back and forth, it became clear there was no common ground. Chammah then acknowledged that he didn’t think Morgan’s board could move quickly enough to be of any real assistance to Lehman in any case—a signal that everyone in the room recognized meant that he believed that Lehman Brothers was simply too far gone.
Soon after McDade’s team left, Gorman looked solemnly at his group, as if to remind them, It could be us, but said only, “We just watched guys who are staring into the abyss.”
Shortly after sunrise, Greg Curl walked across the plaza of the Seagram Building, the thirty-eight-story masterpiece of architectural modernism and a Park Avenue landmark. He entered the lobby, checked his watch, and waited for his go-to adviser to arrive.
Curl, Bank of America’s point man for a possible Lehman Brothers deal, had flown from Charlotte to New York with a team of over one hundred executives on Wednesday night to begin their diligence at Sullivan & Cromwell’s Midtown conference center. To assist them Curl had enlisted Chris Flowers, a private-equity investor whose specialty was the arcana of the banking industry. The two made for an odd couple, given that Curl was a Bank of America veteran with a low profile and had few Wall Street connections, while Flowers was a fast-talking, and often profane, former Goldman Sachs banker whose daring deals often landed him in the headlines.
But as Curl had considered what to do about Lehman, his first thought was that he wanted Flowers at his side. Flowers could read a balance sheet in less than thirty seconds and was bold enough to offer an articulate and well-reasoned judgment of it. He had left Goldman in the late 1990s and started his own private-equity firm to invest in banks, a business in which he had done very well indeed, personally pocketing some $540 million from an investment in Shinsei Bank in Japan. He was regularly listed as one of the wealthiest men in America, and when he purchased a town house on the Upper East Side for $53 million, it set a record for Manhattan real estate.
Curl trusted very few bankers, but Flowers was an exception. He particularly admired Flowers’s dispassionate, no-bullshit approach to deal making—and to life. In 2007, just before the credit crisis hit, they had bid together on Sallie Mae, the student-loan company. They soon realized the deal was a mistake, and for the rest of the year, they worked together to try to undo it. Curl hadn’t held the Sallie Mae investment against Flowers, largely because Flowers was ultimately able to get them out of it by invoking an escape hatch in the merger agreement, with ensuing legal fireworks.
Flowers could be useful for more than just providing advice, as Curl knew that he might be eager to invest in Lehman alongside Bank of America. Curl thought that he might even be willing to take Lehman’s riskiest assets.
When he had sought out Flowers just twenty-four hours earlier, Curl had found him in Tokyo, where Flowers had been in the middle of a board meeting of Shinsei. “You’ll want to look at Lehman Brothers, and we want to look at it in partnership with you,” Curl told him. “Can you get back to New York for this purpose?” Flowers hardly needed persuading and quickly arranged for a car to the airport to make the fourteen-hour flight back to Manhattan.
When Flowers arrived, clearly wearing the jetlag on his face, he had brought along Jacob Goldfield, a fellow Goldman alum. (Goldfield happened to be the banker depicted in Roger Lowenstein’s When Genius Failed as surreptitiously downloading all of Long-Term Capital Management’s information into a laptop during Goldman’s attempt to assist the beleaguered firm; it was Goldfield whom Alex Kirk of Lehman had mentioned in his nervous