Too Big to Fail [264]
Blankfein, who always liked to review every last detail, asked, “Would you like me to just do a download for you on things that I’m concerned about?”
“No, it’s okay,” Buffett replied calmly. “If I were worried, I wouldn’t be doing this at all.” With that he rounded up his grandchildren and headed for Dairy Queen.
Back at Broad Street, however, there was still one provision that troubled the group, a provision that Buffett had indicated would be a deal breaker: Goldman’s top four officers could not sell more than 10 percent of their Goldman shares until 2011, or until Buffett sold his own, even if they left the firm. He had explained his rationale for this condition to Blankfein by saying, “If I’m buying the horse, I’m buying the jockey, too.”
That stipulation would not be an issue for himself, Cohn, or Viniar, Blankfein knew, but it would be a problem for Winkelried. Only forty-nine years old, he had recently been making noises about leaving Goldman and, while it was a secret within the firm, he was having his own personal liquidity crisis. Although Winkelried was debt-free, he was quickly running out of cash. Despite making $53.1 million in 2006 and about $71.5 million in 2007, most of it was in stock; in the meantime, he had been spending extraordinary sums. While he owned a 5.9-acre waterfront estate on Nantucket that he was preparing to put up for sale for $55 million, his real cash drain was Marvine Ranch, a horse farm he owned in Meeker, Colorado. Winkelried was a competitive “cutter” rider, and while the farm had won more than $1 million in prize money over the previous three years, it cost tens of millions of dollars to operate.
Blankfein called him personally and, after assuring him that the firm would help him find a way out of his financial troubles, Winkelried agreed to Buffett’s condition. He was unhappy with the restriction, but he knew that the Buffett deal was best for Goldman.
By the next morning Goldman had managed to sell an additional $5 billion of shares to investors on the news of the Buffett deal, and its stock rose more than 6 percent.
Blankfein could finally relax. The wolves were no longer at the door.
“Josh, I cannot believe this is happening!” Paulson shouted into his cell phone at Josh Bolten, the White House chief of staff and the man who had helped hire him. “No one checked with me on this. Ah, and, if we are going to keep doing bullshit like this, you, ah, you are going to need a new Treasury secretary!”
Paulson, who had just concluded an entire afternoon of hearings on the Hill trying to persuade skeptical lawmakers to pass his TARP legislation, had just learned that John McCain, the Republican candidate for president, had announced that he was suspending his campaign to return to Washington to help work on the financial rescue plan. The crisis, which seemed only to be deepening, was now becoming part of the tactics of the presidential elections.
To Paulson, as depressed as he was exhausted, it was just the latest reminder of the uphill battle he faced in getting his legislation approved. McCain’s return, he feared, would only galvanize the House Republicans opposed to the rescue proposal. If the Bush administration had no control over its presidential candidate—let alone the party itself—Paulson knew he was in trouble.
As Paulson paced in an anteroom at the Rayburn House Office Building, Bernanke, who had accompanied him to the hearings, became so uncomfortable with the tone of his conversation with Bolten that he left the room. He was hardly accustomed to officials screaming at each other, and worse, he couldn’t abide the bare-knuckled behind-the-scenes fighting that is a staple of politics, especially in an election year.
In truth, support for TARP—which Joshua Rosner, a managing director at Graham, Fisher & Company, told the New York Times should stand for “Total Abdication of Responsibility to the Public”—was quickly waning in both parties. Democrats charged that it was a way for Paulson to line the pockets