Too Big to Fail [200]
Jim Wilkinson, Paulson’s chief of staff, trying to keep his boss’s spirits up, marveled, “This would be extremely interesting from an analytical perspective if it wasn’t happening to us.”
Neither Treasury nor the Federal Reserve had oversight over AIG, but if it was going to fall to someone, it would be Geithner, who seemed closest to the situation. But before Paulson washed his hands of the situation, Geithner asked him if he could “borrow” the services of Dan Jester, who had proved to be quite helpful over the weekend working through many of the practical issues around Lehman and Merrill. As a former deputy CFO of Goldman, Jester understood financial services companies better than virtually all of them, Paulson said. And he was one of the few people among them who appreciated the complexities of the problem that lay ahead of them: When he was at Goldman, one of his clients back in the 1990s was none other than AIG.
As the evening wore on, Jamie Dimon, now back at JP Morgan’s headquarters, rang Doug Braunstein for an update on AIG.
“It’s not good,” Braunstein told him, referring to AIG’s growing hole as a “snowball.”
Dimon understood that AIG might have immediate problems because of a “liquidity crisis,” but he continued to believe that there was enormous value in its underlying business. For a moment, he started to daydream. “Maybe we should be taking a look at it. There’s got to be value there. Got to be.”
“What do you mean? For us?” Braunstein asked in disbelief.
“Yeah,” Dimon replied.
“No, no, no,” Braunstein insisted, trying to talk Dimon out of it. “They don’t seem to have a handle on their own numbers.”
“I don’t know,” Dimon mused, still unconvinced that AIG could really be worthless. “It could be a good idea.”
Paulson checked his watch and saw that it was past 7:00 p.m., which meant the Asian markets were opening, and Lehman still hadn’t filed for bankruptcy.
“Has Cox talked to them yet?” he barked at his chief of staff, Jim Wilkinson.
Wilkinson said that he had been trying to get Cox to call Lehman directly, but that he had been resistant.
“He hasn’t done shit,” Wilkinson said dismissively. “I went in there and repeated what you said, and it’s like he’s frozen. Like a fucking deer in the headlights.”
Cox, for whom Paulson had had very little respect to begin with, was proving how over his head he really was. Paulson had assigned him the task of coordinating Lehman’s filing by, well, now. “This guy is useless,” he said, throwing his hands in the air and heading over to Cox’s temporary office himself.
After barging in and slamming the door, Paulson shouted, “What the hell are you doing? Why haven’t you called them?”
Cox, who was clearly reticent about using his position in government to direct a company to file for bankruptcy, sheepishly offered that he wasn’t certain if it was appropriate for him to make such a call.
“You guys are like the gang that can’t shoot straight!” Paulson bellowed. “This is your fucking job. You have to make the phone call.”
The Lehman board had already begun its meeting when the bankruptcy lawyers from Weil Gotshal, towing wheeled suitcases stuffed with documents, finally arrived. Speaking in a subdued voice, McDade gave the directors a detailed account of what had happened at the New York Fed. He was answering their questions when Fuld’s assistant came in and handed a slip of paper to her boss, who began to slump in his chair as he read it.
“Hold on a minute—sorry, Bart,” he blurted. “Chris Cox is calling and he wants to address us.”
The board members looked at one another, their surprise etched in their expressions. No one could recall a time when the chairman of the SEC had asked to address a corporate board. One director questioned whether they should even take the call, but he was overruled. What did they have to lose? The lawyers, however, cautioned that if there were any questions, only the directors themselves should speak.
Fuld leaned in toward the speakerphone and said in a weary voice, “Ah, Chris,