Too Big to Fail [176]
“You know, no one cares what they think. Don’t worry about what they think,” Paulson told them. “At this point, it doesn’t matter what Dick Fuld thinks.”
In the middle of the meeting, Herlihy’s cell phone began ringing, and he saw that it was Fleming. After ignoring his first two calls, Herlihy whispered to Curl that it was Fleming and excused himself from the meeting.
“What’s up?” Herlihy asked impatiently.
“Okay. He’ll do the meeting at two thirty p.m.!” Fleming exclaimed.
“Well, can you get Thain to call Lewis?” Herlihy asked.
“Not now,” Fleming said. “Thain can’t speak to him because he’s in a meeting with Paulson.”
Herlihy rolled his eyes. “No, he’s not, Greg. I’m in a meeting at the Fed with Paulson. I just stepped out of the room and can see him. He’s down the hall from me.”
Herlihy was growing increasingly concerned that Fleming didn’t have Thain’s blessing, and repeated, “Listen, this isn’t going to work. He’s got to call. If I can step out to take your call, he can step out and call Lewis.”
“He’s going to be there, I promise. I’m not risking my reputation by having Lewis fly up here and go to an empty meeting,” Fleming insisted.
“He’s got to make the call,” Herlihy insisted again.
By the time Herlihy stepped back into the room, it was clear that the meeting was winding down, and while the government was still refusing to become involved, Paulson was trying to keep Bank of America from dropping out altogether.
As everyone stood up to leave, Chris Flowers pulled Paulson aside and said, “I’ve got to talk to you about AIG.” He paused to make certain they weren’t being overheard, and continued, “I’ve been over there working with them, and it’s just remarkable what we found.” He took out the same piece of paper that had been handed out the day before, showing the firm’s cash outflows and how by Wednesday it would be out of money.
“Here’s how big the hole is,” Flowers said, pointing to the negative $5 billion cash balance coming due that next week. “AIG is just totally out of control. They’re incompetent!” Flowers offered to come back to the Fed with Willumstad to go over the numbers in more detail, and while Paulson was shocked at the numbers, he tried not to give Flowers the satisfaction of knowing how unnerved he was.
When Flowers walked out of the meeting and rejoined the Bank of America team in the hallway, he smugly told them, “They’re not on top of it.”
As Paulson, Geithner, and Jester reassembled in Geithner’s office, Jester stressed that they had to somehow keep Bank of America “warm” so that it remained in the auction. And if Bank of America had dropped out, it had to be kept quiet—especially from Barclays.
Paulson, however, was focused on the AIG document that he had just seen, doing the math in his head. “It’s much worse than I thought,” he finally said. “These guys are in deep doo-doo.”
Geithner reached Willumstad on speakerphone and told him that they had just met with Chris Flowers, who had walked them through the numbers.
“He’s looking at buying some assets, putting together a deal,” Willumstad responded, and for a moment the confused government officials all looked at one another: Wasn’t Flowers advising AIG? But then Jester smiled knowingly at Paulson. This was classic Flowers, playing both sides. It quickly became evident to everyone that Flowers was likely trying to tee up a deal for his buyout shop with government assistance. “He’s frankly a troublemaker,” Paulson exclaimed. “He doesn’t want to save this country!”
The discussion returned to the numbers, and Willumstad explained that they had teams of bidders at his office and were hoping to sell enough assets over the weekend to cover the pending shortfall.
Geithner suggested Willumstad come over later that day to review the firm’s books and so that they could get a better handle on what its plans were.
“Okay,” Willumstad said. With a laugh, he added, “I won’t be bringing Flowers.”
Downstairs the CEOs were now summoned from the dining room to the conference room to