Too Big to Fail [315]
reporting a $708 million loss: After restating its first quarterly loss since 2001 (it had mistakenly reported $393 million), Wachovia ousted Ken Thompson as chairman and—a month later—as CEO. See David Mildenberg and Hugh Son, “Wachovia Ousts Thompson on Writedowns, Share Plunge,” Bloomberg News, June 2, 2008.
flown back home on a private chartered jet to Dulles Airport: According to his calendar, Paulson left Georgia at 2:00 p.m. on Monday, July 7, arriving back in Washington, D.C., at 3:42 p.m.
Freddie tumbled as much as 30 percent: On Monday, July 7, 2008, Fannie Mae shares fell $3.04, or 16.2 percent, to $15.74, their lowest since 1992, while Freddie stock was down $2.59, or 17.9 percent, to $11.91, its lowest since 1993. See James R. Hagerty and Serena Ng, “Mortgage Giants Take Beating On Fears Over Loan Defaults,” Wall Street Journal, July 8, 2008.
Fannie shares slid 16.2 percent: Ibid.
wrote that revised accounting rules might require Fannie and Freddie to raise: Harting Report released on Monday, July 7, 2008. Aaron Lucchetti, “How Fannie/Freddie Selldown Went Down,” Wall Street Journal, July 12, 2008.
“the closest thing I’ve seen to a holy war”: In February 2007, Paulson told the House of Representatives’ budget committee: “I feel very strongly that we need a regulator that’s independent, got more muscle, and a number of other changes…. I also know people feel very strongly on both sides of this issue. I’ve never witnessed anything quite like this. It’s the closest thing I’ve seen to a holy war.” “US House to Have GSE Bill by End-Mar,” Reuters, February 7, 2007.
“we are the equivalent of a Federal Reserve system for housing”: Franklin Raines, as reported by David A. Vise, “The Financial Giant That’s in Our Midst,” Washington Post, January 15, 1995.
55 percent of the $11 trillion US Mortgage market: Shannon D. Harrington and Dawn Kopecki, “Fannie, Freddie Downgraded by Derivatives Traders,” Bloomberg, July 9, 2008.
n moving, even tentatively, into this new area of lending: Steven A. Holmes, “Fannie Mae Eases Credit to Aid Mortgage Lending,” New York Times, September 30, 1999.
“[We] always won, we took no prisoners”: Mudd wrote this in a note to Franklin Raines in November 2004. See James Tyson, “Fannie, Freddie Retreat as Mortgage Bonds Mutate,” Bloomberg News, September 6, 2006.
Bush administration lowered the amount of capital: Damian Paletta and James R. Hagerty, “U.S. Puts Faith in Fannie, Freddie,” Wall Street Journal, March 20, 2008.
“Congress ought to recognize”: Dawn Kopecki and Shannon D. Harrington, “Fannie, Freddie Tumble on Bailout Concern, UBS Cut,” Bloomberg, July 10, 2008.
“You’re not going to like this conversation”: Portions of this exchange, including Fuld having heard “a lot of noise,” were first reported by Kate Kelly and Susanne Craig, “Goldman Is Queried About Bear’s Fall,” Wall Street Journal, July 16, 2008.
“There’s blood in the water, let’s go kill someone!”: According to a former Morgan Stanley trader, Frank Partnoy, from his book Fiasco, 99.
“I see that again, and you’re fired”: Michael Carroll, “Morgan Stanley’s global gamble,” Institutional Investor, March 1, 1995.
House Financial Services Committee hearing: “Systemic Risk and the Financial Markets” hearing, with witnesses Henry Paulson and Ben Bernanke, held on July 10, 2008. See http://financialservices.house.gov/hearing110/hr071008.shtml.
“We’re going to need broader emergency authorities”: Ibid.
some confusion about tracking down Greenspan’s home phone number: First reported by Deborah Solomon, “The Fannie & Freddie Question—Treasury’s Paulson Struggles with the Mortgage Crisis,” Wall Street Journal, August 30, 2008.
“considering a plan to have the government take over”: Stephen Labaton and Steven R. Weisman, “U.S. Weighs Takeover Plan for Two Mortgage Giants,” New York Times, July 11, 2008.
It had already been a long morning for Paulson: Paulson’s calendar.
“Today our primary focus is supporting Fannie Mae.