Too Big to Fail [160]
“No, no, no. You don’t understand. I can’t walk out of here,” Fuld insisted. “There’s photographers all over the place. Why don’t you come over here? We can sneak you in the back. I’ll send my car for you.”
“AIG Shares Fall 20 Percent on Mortgage Woes” proclaimed the Reuters headline at 10:14 a.m.
Catherine Seifert, a Standard & Poor’s analyst, had just released a research note saying that the stock was falling on “concerns about AIG’s ability to shed its troubled mortgage-related assets, and we expect the shares to remain volatile as investors await news from the company.”
As he followed these stories with increasing alarm, Bob Willumstad decided to call Jamie Dimon. He was increasingly frusterated with the JP Morgan team and needed assurances.
“Jamie, we’re going to get downgraded,” he told him. “You need to help me figure out how to get $18 billion. There’s no plan for the end of September anymore,” he added, reffering to his plan to announce the results of his firmwide review and a new strategy at the end of the month. He stopped to let that sink in and then continued, “You know, if you guys can’t help us, tell me now, but we’ve got to do something this weekend. We hired you guys to do this,” he said, his voice rising ever so slightly. “Listen, just tell me if you can’t, just tell me now.”
“Look, we want to make this work,” Dimon said, sounding a contrite note. “Give me five minutes and I’ll call you back.”
When he phoned back he apologized on behalf of the firm and said that he would take Black off the case; his other lieutenant, Doug Braunstein, who ran the firm’s investment banking practice, would now be in charge. Braunstein, a no-nonsense deal maker, had been entrusted with some of the firm’s biggest transactions after working his way up the ranks, initially at First Boston in the 1980s, and then at Chase. He helped negotiate the firm’s acquisition of JP Morgan, its purchase of Bank One (bringing Dimon with it), and then the Bear Stearns deal. “We’re going to send Braunstein down with the team, and we’re going to see what we can do about raising capital for you over the weekend.” Dimon promised him that he’d keep “the trains on the tracks.”
As he ended the conversation with Dimon, another call came in—Tim Geithner, who was finally getting back to Willumstad.
“So, where are we?” Geithner asked.
“We’re working on a capital raise,” Willumstad explained. “And we’re talking to some bidders for assets that may come in this weekend. We expect to have some more information later in the day.”
“We’re going to send over some of our market guys this morning to help,” Geithner told him in a tone that made it clear that this was not an offer but an order. “Keep me posted,” Geithner said before hanging up.
The conversation had lasted no more than thirty seconds.
By now Hank Paulson had become so agitated by the problems at Lehman that he scarcely noticed his assistant, Christal West, trying to get his attention. Alistair Darling, the chancellor of the Exchequer of Britain, was on the line.
Paulson had gotten to know Darling over the past two years, and though they had visited each other on both sides of the Atlantic, they had not grown close. Paulson considered Darling more a politician than a businessman, and he had nothing like the experience that Paulson himself had had in financial markets. But he respected Darling’s judgment and admired the quick and decisive action he had taken a year earlier when Northern Rock, one of Britain’s biggest mortgage lenders, was on the brink of failing. Darling has prevented a run on the bank by authorizing the Bank of England to lend Northern Rock billions of dollars to guarantee its deposits. That incident had been an early wake-up call for Paulson.
Darling, who had just ended a daylong meeting in Nice with other European finance ministers, made a bit of chitchat and, after an awkward pause, said that he was calling about Barclays. “You should know that we have serious concerns about this deal,” he told Paulson sternly.
Paulson tried