Too Big to Fail [207]
“Either Barclays was duped or they were part of the charade,” he told McDade. “I have no interest in working for a company that’s either the dupe or is part of this charade. And I have no interest in working for a highly leveraged financial institution with regulators who behave like I just saw. So I’m out on this whole thing.”
McDade was disappointed but sympathetic. “I get it, I understand, you do whatever you want,” he told Kirk but asked if he would stay at least through the week to help manage the trading floor as they tried to arrange a deal. Kirk reluctantly agreed.
McDade then assigned Skip McGee and Mark Shafir to find a way to execute a deal with Barclays.
In the corner conference room, meanwhile, Harvey Miller was holding court with Barclays’ management arrayed around the table. Jay Clayton of Sullivan & Cromwell, who had previously been Lehman’s lawyer with his colleague Rodgin Cohen, had been hired by Barclays that morning. “I think I’m switching from shirts to skins,” he said awkwardly as he sat down next to the Barclays team.
Miller was trying to sort out how quickly they could sell the company, aware that in a business based on the confidence and trust of its trading partners, every second the firm remained on its own, it was losing value.
Michael Klein, Barclays’ adviser, announced, “We are only doing this deal if we’re not bringing any liabilities with us.”
“What do you mean by that?” Miller asked.
“Well, we’re not going to buy any of these assets unless it is an absolutely ‘clean deal,’” he explained.
Barclays’ Archie Cox jumped in and added, “And we have to close tomorrow.”
Miller shot a black stare at him. “Well, if that’s the case, we should just discontinue this right now. Generally, a sale of even perishable assets takes twenty-one to thirty days.”
“We can’t wait that long,” Cox insisted. “By that time the business will be gone.”
“The only thing I can think of right now is you get the court to accelerate the time lines,” Miller offered. “We get an agreement in principle with the Securities Investor Protection Corporation, and it will commence a separate proceeding to coincide with this sale. But that’s never been done before.”
“Can you do that?” Cox asked.
“Until we try, we won’t know,” Miller replied.
Timothy Geithner was sitting at his desk at the NY Fed with Jamie Dimon on the speakerphone, waiting to be conferenced in with Lloyd Blankfein, who was just returning from the firm’s Monday-morning internal meeting.
It had been Geithner who had decided the night before, after consulting briefly with Paulson, to pair JP Morgan and Goldman to help AIG. By his logic, JP Morgan knew AIG inside-out as a result of having worked for it for the past six months and could get everyone up to speed quickly on the depth of its problems. Goldman, he thought, could help value the assets and syndicate the loans. “They’re freakin’ smart!” he liked to tell his staff. He knew that Goldman had advised AIG in the past and had spent the weekend looking to buy assets themselves, so they were aware of what was going on.
“Lloyd, I’m on with Jamie,” Geithner said when Blankfein finally came to the phone. He explained that he was hoping to find a private-market solution for AIG and wanted Goldman to help them.
“JP Morgan’s coming down here,” Geithner told him. “Can you get a team together and come over here?”
“Okay,” Blankfein said. “What time?”
“Can you be here by eleven a.m.?”
“We’ll be there,” Blankfein replied, even though it was already past 10:15.
Blankfein immediately went to work organizing a small army of the firm’s top bankers: Jon “Winks” Winkelried, the co-president; David Solomon, the co-head of investment banking; Richard Friedman, who ran the principal investment area; and Chris Cole, who had spent the weekend over at AIG. They all met downstairs to walk over to the Fed.
Chris Flowers, after the relatively uneventful