Too Big to Fail [268]
One of Schumer’s staffers proposed a different approach. “Well, why don’t you just block new golden parachutes?”
“We hadn’t thought of that,” Kashkari admitted sheepishly.
It was the eureka! moment that finally seemed to break the impasse the group had reached. For the first time in days it appeared that with a few other compromises they could be near agreement on the terms of a deal. While the Democrats had backed down on the oversight component, they could console themselves with a victory of sorts on the executive compensation issue.
As his staffers continued to perform shuttle diplomacy among the various factions, trying to find some language on which they could finally settle, Paulson, looking deathly pale, retreated to Pelosi’s office.
“You want us to go get the Hill doctor?” Harry Reid asked.
“No, no, no,” Paulson said groggily. “I’ll be fine.”
Hurriedly pulling a trash can before him, he began having dry heaves.
Bob Steel and his lieutenant, David Carroll, entered the elegant Art Deco lobby of the Carlyle Hotel at 8:00 on Sunday morning, making their way to the elevators and to the suite of Dick Kovacevich, the CEO of Wells Fargo.
With the TARP legislation still publicly unresolved, Steel and Carroll had come to see Kovacevich in hopes of convincing him to buy Wachovia. For Steel it was an especially bitter pill to swallow; having left Treasury only two months earlier to become the CEO of the firm, he was now resigned to selling it. Much like AIG’s Bob Willumstad, he simply had no good options available to him. Any attempt to turn around Wachovia in this environment, with its portfolio of subprime loans falling even more every day, was going to be increasingly difficult. Steel felt a deep sense of responsibility to find a buyer quickly, to obtain some value out of the business before the winds turned against him completely.
He was also under particular time pressure from the fact that both Standard & Poors and Moody’s had threatened to downgrade the firm’s debt the following day. A downgrade could put even more pressure on the bank, whose stock had fallen 27 percent on Friday, further eroding confidence among customers, who had withdrawn some $5 billion that same day.
In his effort to encourage an auction, Steel had met with Pandit on Friday and Saturday, but the night before had received the bad news: Like Goldman Sachs the prior weekend, Citigroup would only buy the firm with government assistance, and even then Pandit said he was prepared to pay only $1 a share for it.
As Steel and Carroll sat down for breakfast in Kovacevich’s suite, he could only hope he was going to get a more encouraging reception.
Kovacevich, a handsome sixty-four-year-old with silver just beginning to shade his temples, had built Wells Fargo into one of the best-managed banks in the country, establishing it as the dominant franchise on the West Coast and attracting Warren Buffett’s Berkshire Hathaway as his largest single shareholder.
After a waiter poured coffee for the group, Kovacevich, who had flown from his home in San Francisco to New York expressly for this meeting, said he was very interested in making a bid for Wachovia without any government assistance, and hoped to do so by the end of the day. But, he warned, in the straight-talking manner for which he was known, “This is not going have a ‘two handle’ in front of it.”
Steel smiled. “Listen, Dick, let’s not worry about price now,” he replied, satisfied that even while Kovacevich was rejecting a $20 offer, his interest was sufficient that Steel would likely end up with a final number in the teens. “Let’s see how this deal works, and once we know how it looks there will be a price that makes sense,” he added.
Kovacevich said that his team would continue its due diligence, and he hoped to be able to get back to him later that day.
Steel, still smiling as he left the hotel, called his adviser, Peter Weinberg, and reported, “It was a good meeting. I think.”
Sitting in his