Too Big to Fail [202]
Miller elaborated on her point: “You’re going to have to decide what to do with these assets. So it’s not good-bye. We’re going to be seeing each other for a while.”
Fuld looked at the lawyers for a moment, dazed. “Oh, really?” he said softly, and then slowly walked out of the room, alone.
Warren Buffett, just back in Omaha from Edmonton, had received word of Lehman’s pending bankruptcy before he arrived at the Happy Hollow Country Club for a late dinner with Sergey Brin, the co-founder of Google, and his wife, Ann.
“You may have saved me a lot of money,” he said to the Brins with a laugh in the grand dining room. “If it wasn’t for getting here on time, I might have bought something.”
Mayor Michael Bloomberg, who had been on the phone with Paulson, called Kevin Sheekey, his deputy mayor for government affairs, from his brownstone. “I think we have to cancel our trip to California,” he told Sheekey, who was already packing his bags for the high-profile event with Governor Arnold Schwarzenegger that he had been planning for months.
“The world is about to end tomorrow,” Bloomberg explained, without a hint of sarcasm.
“Are you sure you want to be in New York for that?” Sheekey deadpanned.
Peter G. Peterson, co-founder of the private-equity firm the Blackstone Group and the former CEO of Lehman in the 1970s before being ousted by Glucksman, was watching television with his wife, Joan Ganz Cooney, when she passed him the phone. It was a New York Times reporter asking him to comment on the day’s events.
After pausing for a moment to take it all in, he said: “My goodness. I’ve been in the business thirty-five years, and these are the most extraordinary events I’ve ever seen.”
Christian Lawless, a senior vice president in Lehman’s European mortgage operation in London, still at the office, e-mailed his clients Sunday night with a final signoff:
Words cannot express the sadness in the franchise that has been destroyed over the last few weeks, but I wanted to assure you that we will reappear in one form or another, stronger than ever.
At Wachtell Lipton, Ken Lewis, of Bank of America, had a wry smile on his face. “Wow!” he exclaimed.
The deal with Merrill had been concluded—both boards had approved it—and he was waiting to share a champagne toast.
But reaching the deal was not what he now found so amusing. Out of the blue, Stan O’Neal, Merrill’s former CEO, had sent an e-mail message to Herlihy that he read aloud: “I deeply regret my inability to convince the Merrill board a year ago,” O’Neal wrote, referring to their secret talks last September. Then he followed up: “While I would expect the answer is no, I would offer my advice and counsel to Ken Lewis Re: Merrill.”
That e-mail was perhaps the only moment of levity in an atmosphere that had grown increasingly sour. Lewis had grown frustrated waiting around for the lawyers to finish with the deal documents so that he could sign them.
Lewis himself hadn’t gotten involved in the specific details, but the merger agreement contained a handful of “side letters” and separate agreements covering compensation that seemed to be taking some extra time for the lawyers to hammer out. Fleming had convinced Curl to agree to pay as much as $5.8 billion in “incentive compensation,” which was considered an unusual arrangement, given that that was the amount Merrill had paid out a year earlier, before the market downturn. But both Curl and Fleming felt the sum was necessary to make certain they could retain the firm’s employees.
It was growing late, and the Federal Reserve was still trying to get a reading of where the Bank of America–Merrill deal stood. The Federal Reserve Bank of Richmond, which had been overruled by Bernanke and Geithner earlier in the week about Bank of America’s capital ratios, was particularly concerned.
At 9:49 p.m., Lisa A. White, assistant vice president at the Federal Reserve Bank of Richmond, concluded a conversation with Amy Brinkley, Bank of America’s chief risk officer. White immediately sent out an e-mail to her colleagues titled “BAC Update