Too Big to Fail [206]
“I am energized and you ought to be energized, too,” Mack said encouragingly. He acknowledged that the market had come under tremendous pressure after Lehman’s “lost weekend”—United States stock index futures and bank shares in Europe were already tumbling—but the good news for them was that Morgan Stanley had survived.
Mack proceeded to summarize the discussions about Lehman and Merrill that had taken place at the New York Fed over the weekend, calling Lehman’s demise “very unfortunate.
“I mean, I wish I could come in here and say, you know, this is a great opportunity, kick back, we’re going to do great, all of the competitors have basically been eliminated. I’m not going to say that,” he allowed. “What I want to say is: Kick it up. Work harder. Think about what has happened this year. And what has happened is that all of a sudden, three of our competitors are no longer in business.”
Mack added: “I understand that all of you, and not just all of you here, but I think in the industry, are shaken. You should be shaken. But that doesn’t mean that we crawl back in and we shake….
“We’re here to do business, to serve our clients, to take market share. Just think about this: Every 1 percent in equity market share we gain is a billion dollars in revenues….
“I think that once this turmoil abates, and it will settle down, the opportunities going forward are unbelievable. Now I am a positive guy but I am not a Pollyanna, and I believe with all my heart that this firm and our competitor, Goldman, have unique opportunities now. And I am sorry that we got to these unique opportunities the way we did. I don’t want my competitors out of business, I just want to beat them.”
His chief financial officer, Colm Kelleher, chimed in to punctuate that point: “There is Darwinism here…. Weak people are being taken out. Strong people, I believe, are going to do very, very well.”
Over at Lehman Brothers, the thirty-second floor conference center was a beehive of activity, with hundreds of dazed people streaming in and out—bankruptcy lawyers, restructuring experts, outside consultants. Fuld, who had been escorted upstairs by Lehman’s security detail for fear that employees might actually attack him, wandered in and out of the conference rooms in shock. He had already placed a call that morning to Geithner, pleading with him to undo the bankruptcy filing, as if it had all been just a bad dream.
Down on Lehman Brothers’ massive trading floor, the mood was grim. The staff wasn’t just devastated, they were angry. And while that anger was at first directed toward the government, it had quickly shifted to management. A Wall of Shame had been erected on the south side of the building containing, among other exhibits, photos of Fuld and Gregory with the caption, “Dumb and Dumber.”
With Lehman’s holding company now officially in bankruptcy, Barclays’ Bob Diamond arrived with a team to pick over the assets it wanted and leave the worst ones behind. To Diamond, it was the perfect opportunity to obtain only Lehman’s choicest parts at a bargain price and with the blessing of a judge. Barclays was mainly interested in Lehman’s U.S. broker-dealer and its buildings, and this time around both the FSA and the British government had given him their support. Another plus: There was no need for a shareholder vote.
Bart McDade had assembled a team to begin negotiations with Barclays. He believed there was a chance that he could save the ten thousand jobs that were likely to disappear, even if shareholders themselves had already been wiped out by the bankruptcy. Before that meeting began, however, Alex Kirk pulled McDade aside. Kirk, emotionally drained from the past week, was becoming increasingly suspicious that Barclays