Too Big to Fail [304]
it would raise $4 billion: Jenny Anderson, “Trying to Quell Rumors of Trouble, Lehman Raises $4 Billion,” New York Times, April 2, 2008.
“We’re closer to the end than the beginning”: Joseph A. Giannone, “Goldman CEO Says Credit Crisis in Later Stages,” Reuters, April 10, 2008.
a new IMF Report: International Monetary Fund, “Global Financial Stability Report,” April 2008, 50.
staggering amount of leverage—the amount of debt to equity: “At the end of the first quarter in 2008, the leverage ratios at Morgan Stanley, Lehman Brothers, Merrill Lynch, and Goldman Sachs were 31.8, 30.7, 27.5, and 26.9, respectively, compared with an average of 8.8 for all U.S. commercial banks and savings institutions.” Senate Joint Economic Committee, “Financial Meltdown and Policy Response,” September 2008.
“Just finished the Paulson dinner”: “Hearing on Causes and Effects of the Lehman Brothers Bankruptcy,” House of Representatives Committee on Oversight and Government, October 6, 2008. See http://oversight.house.gov/story.asp?ID=2208.
“Break the Glass: Bank Recapitalization Plan”: Author obtained a copy of the proposal from a confidential source.
Kashkari background: Deborah Solomon, “U.S. News: Paulson to Tap Adviser to Run Rescue Program,” Wall Street Journal, October 6, 2008.
chairman of the Federal Reserve on February 1, 2006: Bernanke’s first day fell on the first of the month; his swearing-in ceremony took place the following Monday. “Our mission as set forth by the Congress is a critical one,” Bernanke said at his Fed ceremony. Jeannine Aversa, “At Ceremonial Swearing-in, New Fed Chief Bernanke Vows to Work with Congress,” Associated Press, February 6, 2006.
Bernanke’s beginnings: John Cassidy, “Anatomy of a Meltdown,” New Yorker, December 1, 2008; Roger Lowenstein, “The Education of Ben Bernanke,” New York Times Magazine, January 20, 2008; Larry Elliott, “Ben Bernanke,” Guardian, June 16, 2006; Mark Trumbull, “Back-story: Banking on Bernanke,” Christian Science Monitor, February 1, 2006; Ben White, “Bernanke Unwrapped,” Washington Post, November 15, 2005.
Anna Friedmann, a Wellesley College student whom he married: John Cassidy, New Yorker, December 1, 2008.
“Econometrics” research: Lowenstein, “The Education of Ben Bernanke,” New York Times Magazine, January 20, 2008.
planned to take a vacation: Ibid.
Interest rate left unchanged at 5.25 percent: “Fed Keeps Rates Steady,” Dow Jones, August 7, 2007.
“The committee’s predominant policy concern”: “Text of Federal Reserve’s Interest Rate Decision,” Dow Jones Capital Markets Report, August 7, 2007.
“They’re nuts! They know nothing!”: “Ben Bernanke needs to open the discount window…. He is being an academic! This is no time to be an academic. Open the darn discount window!…My people have been in this game for 25 years. And they are losing their jobs and these firms are going to go out of business, and he’s nuts! They’re nuts! They know nothing!…The Fed is asleep.” Jim Cramer, Mad Money, CNBC, August 3, 2007.
BNP Paribas announced that it was halting investors from withdrawing: As of August 7, after declining 20 percent in just under two weeks, the funds had some €1.6 billion ($2.2 billion) left in assets. Sebastian Boyd, “BNP Paribas Freezes Funds as Loan Losses Roil Markets,” Bloomberg News, August 9, 2007.
“The complete evaporation of liquidity”: Ibid.
Bigger cash infusion than after September 11: On September 12, 2001, a day after the attacks, the European Central Bank (ECB) injected a record €69.3 billion. “ECB Injects 95 billion Euros Into Money Supply Amid US Subprime Worries,” Agence-France Presse, August 9, 2007.
“unprecedented disruptions”: Countrywide’s SEC filing late Thursday said it had adequate funding liquidity but added, “[T]he situation is rapidly evolving and the impact on the company is unknown.” Randall W. Forsyth, “Why the Blowup May Get Worse,” Barron’s, August