Too Big to Fail [251]
Geithner was by now seriously miffed. He had been trying to reach Pandit since eight in the morning and had just heard back from Blankfein, who had somehow actually managed to get through to Pandit again. The only problem was that Pandit had turned Goldman down, and Geithner hadn’t even had a chance to speak with him.
Finally, he got through to him.
“I haven’t been able to reach you for four hours,” Geithner barked into the phone. “That’s unacceptable on a day like today!”
Apologizing, Pandit explained that he had been talking to his team about the Goldman proposal, which they had ultimately rejected. “We’re concerned about taking on Goldman,” Pandit said, trying to explain his rationale for turning them down. “I don’t need another trillion dollars on my balance sheet.”
Geithner could only laugh to himself. “This is a bank,” Pandit said. “And a bank takes deposits and a bank has a prudency culture. I cannot envision a bank taking its deposits and investing them all in hedge funds. I know that’s not what Goldman is, but the perception is that they’d be taking deposits and putting them to work against a proprietary trade. That can’t be right philosophically!”
Having dispensed with pushing Goldman and Citigroup together, Geithner moved on to his next idea: merging Morgan Stanley and Citigroup.
Pandit had been considering that option, too, and while he was more predisposed to merging with Morgan Stanley, he still was reluctant. “It’s still not our choice to do this deal, but we could think about it,” he told Geithner.
By 2:00 p.m., John Mack was growing concerned that the talks with CIC were going nowhere. Gao hadn’t budged on what Mack was calling an “offensive” offer. He had no idea what Jamie Dimon would come up with, and he hadn’t heard anything from Mitsubishi.
Downstairs, Paul Taubman, the firm’s head of investment banking, was experiencing much the same panic as Mack. A disarmingly young-looking forty-eight-year-old, Taubman had worked his entire career at Morgan Stanley, rising to become one of the most trusted merger advisers in the nation, and could now only wonder if it was all going to come to an end this weekend.
Taubman and his colleague Ji-Yeun Lee were on the phone to Tokyo, where it was past midnight, with Kohei Yuki, his Morgan Stanley counterpart who was trying to coordinate talks with Mitsubishi.
“I think they’ve gone to bed for the night, we’ll pick it up in the morning,” Yuki said.
“That’s not going to work,” Taubman answered. “You need to call them at home and wake them up.”
There was a long pause; this was certainly a breach of Japanese protocol.
“O…kay,” he said.
“Listen, if you’re a senior executive, you’re not going to say, ‘You know what, I’m not going to wake my boss and I’ll just keep it to myself and then if it turns out that I missed the opportunity of a lifetime, how am I going to explain it to him if he wasn’t awakened?’”
Twenty minutes later, Yuki was back on the phone with Taubman. “I got him.” Mitsubishi was going to wake up its entire deal team and get working. In a conference room just two floors down, Morgan Stanley’s board had arrived, and things had grown tense quickly. Some had flown across the country to get there; others, like Sir Howard J. Davies, had flown in from London. The only person missing was Charles E. Phillips, president of the software giant Oracle (and a former Morgan Stanley technology analyst).
Kelleher had just finished giving a presentation on the firm’s finances, and it was not good. Charles Noski, a director and former chief financial officer of AT&T, asked him point-blank: “When do we run out of money?”
Kelleher paused, and then said somberly, “Well, depending on what happens Monday and Tuesday, it could be as early as middle of the week.”
It was a shot across the bow. If this weekend didn’t go well, they’d all end up the targets of shareholder lawsuits. The independent board members, led by the lead director, C. Robert Kidder, decided they needed to hire an independent adviser and, after a short conversation, chose