Too Big to Fail [161]
Nonetheless, with characteristic British understatement, Darling continued to express apprehension about any potential purchase, and said adamantly, “Barclays shouldn’t take on any more risk than they could possibly manage.”
Paulson, confidently dismissing his concerns, promised him he’d keep him updated throughout the weekend.
Bob Diamond arrived at Lehman’s headquarters in Fuld’s Mercedes and was taken through the back entrance, avoiding the battalion of cameras stationed out front. Hoping to keep any of Lehman’s staff from seeing the visitor, the firm’s security team shuttled him up in the building’s freight elevator and hurriedly led him to Fuld’s office.
Fuld offered him a cup of coffee, and between Fuld’s anxiety and Diamond’s not having slept, they both looked like hell.
Diamond was clearly in a rush to get to Simpson Thacher, where his team of bankers had just begun diligence, and he wanted to dig into the numbers himself. He walked Fuld through the day’s plan and then discussed the various synergies and overlaps between the two firms.
In the middle of Diamond’s presentation, Fuld interrupted him and told him there was something he wanted to get off his chest. An almost frightening intensity came over him as he began to speak.
“Look into the whites of my eyes,” he said. “There isn’t enough room for both of us at the top here. We both know that.” He paused and stared at Diamond intently. “I’m willing to step aside to make this work for the firm”.
For Fuld, it was the biggest concession he could offer: to give up the firm he loved.
For Diamond, the moment was somewhat baffling. He had never imagined Fuld would stay; he didn’t want him to.
“If there’s a way for me to help with a transition, help with clients, you know, I will do that,” Fuld offered.
“I’ve always heard you were a good man,” Diamond told Fuld consolingly. “Now you’ve proven that.”
After a twenty-minute crawl through traffic on the FDR Drive, Chris Flowers finally arrived at AIG’s offices just before noon. He was led to a meeting room where Willumstad, Schreiber, Steven J. Bensinger (the firm’s CFO), and a team of others were waiting. Schreiber immediately passed around a one-page summary of the firm’s cash outflows that was set up like a calendar: Each day from Friday through the next Wednesday was marked with various scenarios, depending on the outcome of Moody’s decision about its credit rating. If the executives hadn’t yet come to appreciate the full extent of the conundrum in which they now found themselves, Schreiber’s document put it into stark relief. By next Wednesday, the calendar indicated, the parent company would be negative $5 billion, with the shortfall each successive day only growing worse.
Flowers’s eyes widened as he studied the numbers. “You guys have a real problem here.”
“Yes. But we should be okay if we can make the capital raise work,” Willumstad said.
“Have you guys thought about Chapter 11?” Flowers blurted out. It was as if he had touched the third rail.
“Why are you using words like that?” Bensinger asked, clearly upset.
“Um, I can assure you,” Flowers told him, “that if you don’t pay people $5 billion on Wednesday, they’re going to be really, really upset, so you can call it whatever you want, but they are not going to be happy if you don’t pay them on Wednesday.”
Just then Jamie Dimon called back and was patched into the conference room’s speakerphone.
Schreiber described the potential cash-flow problems and their plans to fix them. “I’ve begun putting together a process for the weekend,” he said, explaining how they’d reach out to possible suitors