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both Blankfein and Fuld about how the two firms should talk to each other and about a sale of Lehman’s real estate assets. It is also clear that David Viniar, Goldman’s CFO, placed a call to Dan Jester earlier in the day seeking help to orchestrate negotiations, which is detailed in an earlier scene. Paulson’s calendar cites a series of phone calls between Paulson and Fuld and Paulson and Blankfein that day, with at least one in rapid succession back to back from each other. Furthermore, multiple sources privy to both of those conversations say that Paulson suggested that Fuld hold discussions with Goldman, as one of many options. So far, nothing is in dispute. What is confusing is why Fuld is under the impression that Goldman is working for the government. There is no evidence that was the case and no evidence that Paulson said so directly. What appears most likely is that there was a miscommunication, with Fuld making certain assumptions and Goldman, during its phone calls with McDade and Kirk, doing little to disavow these views until Wednesday morning, when clarity was required to execute the confidentiality agreement to begin due diligence.

Ken Lewis: Shawn Tully, “Meanwhile, Down in Charlotte…,” Fortune, October 13, 2008.

CHAPTER THIRTEEN

The lead of the New York Times: Jenny Anderson and Ben White, “Wall Street’s Fears on Lehman Bros. Batter Markets,” New York Times, September 10, 2008.

“Some may worry that Treasury”: Ibid.

Wall Street Journal noted: “The firm’s situation differs markedly from that of Bear Stearns, which was taken over earlier this year after it ran into a liquidity crisis. Unlike Bear Stearns, Lehman has access to new Federal Reserve facilities that can provide short-term funding when the markets won’t, in addition to the ability to exchange illiquid assets for safer securities such as Treasurys.” Susanne Craig, Randall Smith, Serena Ng, and Matthew Karnitschnig, Wall Street Journal, September 10, 2008.

reduced the amount of business: On September 16, 2008, GLG Partners issued the following statement regarding Lehman Brothers: “With respect to Lehman, GLG last week transferred substantially all of the remaining positions of the GLG Funds to other prime brokers. The majority of these transfers have already settled and we expect the remainder to settle shortly. We believe the residual exposure of the GLG Funds to Lehman will not be material. Lehman is also a shareholder in GLG, owning approximately 33.7 million shares, through Lehman (Cayman Islands), a Cayman Islands company, about 13.7 per cent of the total GLG stock outstanding.”

See note in Chapter 12 on page 245.

“That’s it? That’s fucking it?”: McDonald and Robinson, A Colossal Failure of Common Sense, 314.

“The firm remains committed”: From press release issued by Lehman that morning. “Lehman Brothers Announces Preliminary Third Quarter Results and Strategic Restructuring,” September 10, 2008.

Herlihy had worked on nearly every deal Bank of America had orchestrated: “Bailout Lawyer Optimistic Worst Is Over,” Wall Street Journal Blog/Deal Journal, October 16, 2008.

forecasted a third-quarter loss of $3.9 billion: Ben White, “With Big Loss Forecast, Lehman to Spin Off Assets,” New York Times, September 11, 2008.

“In light of these last two days”: Lehman Brothers preliminary F3Q08 Earnings Call Transcript, September 10, 2008.

“The real estate held-for-sale portfolio”: Ibid.

“To the extent you might need $7 billion”: Ibid.

“The Bungalow”: “HSBC’s Canary Wharf headquarters towers over that of Barclays. So much so that HSBC workers have christened their neighbour’s building ‘the bungalow.’ A spokesman for Barclays retorts: ‘Size is not our objective—growth is.’ Touche.” Dominic Walsh, “Barclays Bungalow; City Diary,” The Times (London), July 8, 2006.

having both vied for the top job in 2003: Grant Ringshaw, “Barclays’ Odd Couple John Varley and Bob Diamond,” Sunday Times, February 17, 2008.

(In 2007, Diamond earned $42 million to Varley’s $8.4 million): “Barclays’ Diamond Gets 21 Million Pounds in Pay and Bonus,” Reuters, March 27,