Too Big to Fail [325]
Fed had kept Lehman’s broker-dealer in the United States open: According to Lehman’s official press release issued that Monday, the company was “exploring the sale of its broker-dealer operations” and that its subsidiaries, including Neuberger Berman, LLC, and Lehman Brothers Asset Management, would “not be subject to the bankruptcy case of its parent.” See http://www.lehman.com/press/pdf_2008/091508_lbhi_Chapter11_announce.pdf.
as was the case with Ramius Capital: Cassell Bryan-Low, “Crisis on Wall Street: Funds Assess Lehman (Gulp!) Exposure,” Wall Street Journal, September 26, 2008.
he presided over the FOMC meeting at the Federal Reserve in Washington: The meeting was held in the offices of the Board of Governors of the Federal Reserve System in Washington, D.C., on Tuesday, September 16, 2008 at 8:30 a.m. See http://www.federalreserve.gov/FOMC.
Federal Reserve Act, Section 13, point 3: www.federalreserve.gov/aboutthefed/section13.htm.
“regulatory capital relief”: From AIG’s 10-Q filing, August 6, 2008: “Approximately $307 billion of the $441 billion in notional exposure on AIGFP’s super senior credit default swap portfolio as of June 30, 2008 was written to facilitate regulatory capital relief for financial institutions primarily in Europe.”
AIG’s vast insurance empire: A “strictly confidential” AIG presentation draft, dated February 26, 2009, entitled, “AIG: Is the Risk Systemic?” states that “AIG has written more than 81 million life insurance policies to individuals worldwide” at a face value of $1.9 trillion, with more than $12 billion in claims paid in 2008.
he knew the top people in the industry: Susanne Craig, “In Ken Wilson, Paulson Gets Direction From the Go-To Banker of Wall Street,” Wall Street Journal, July 22, 2008.
telling the press that he planned to mount a proxy contest: “Hank Greenberg: Plans Fight for Control or Buyout of AIG,” Dow Jones Newswires, September 16, 2008.
“Dear Bob”: The full text of Hank Greenberg’s letter to Robert Willumstad, dated September 16, 2008, can be viewed online at http://online.wsj.com/public/resources/documents/AIG09162008.pdf.
He and Ben Bernanke had scheduled a meeting with President Bush: According to the Wall Street Journal, this meeting took place at 3:30 p.m. See Monica Langley, Deborah Solomon, and Matthew Karnitschnig, “Bad Bets and Cash Crunch Pushed Ailing AIG to Brink,” Wall Street Journal, September 18, 2008.
“Well, you finally get your chance”: Richard Beattie’s remarks to Robert Willumstad, as first reported in Fortune magazine. James Bandler, “Hank’s Last Stand,” Fortune, October 7, 2008.
the government was taking a large ownership stake—79.9 percent: Matthew Karnitschnig, Deborah Solomon, Liam Pleven. and Jon E. Hilsenrath, “U.S. to Take Over AIG in $85 Billion Bailout,” Wall Street Journal, September 16, 2008.
“Paulson is handling this the same way he did Fannie, Freddie and Bear”: Monica Langley, Deborah Solomon and Matthew Karnitschnig, “Bad Best and Cash Crunch,” Wall Street Journal, September 18, 2008.
the London Interbank offered rate: Known as LIBOR, this is the average interest rate charged when banks borrow unsecured funds from each other, whether it’s an overnight or long-term loan. In the United States, LIBOR maturities used in pricing loans most commonly include one, three, six, and twelve months. On Wednesday, September 17, 2008, the three-month LIBOR jumped 19 basis points, to 3.0625 percent, its biggest jump since September 1999. Lisa Twaronite, “Three-month Libor Marks Biggest Jump in Nine Years,” MarketWatch.com, September 17, 2008.
“I won’t be working for the federal government”: Willumstad, as quoted in Bandler, “Hank’s Last Stand,” Fortune..
a Maine insurer that had fought off an effort by Allstate: Laura Jereski, “We Understand Risk.” (UNUM Corp.), Forbes, March 20, 1989.
AIG had invested $1.35 billion in Blackstone: Peter Truell, “AIG Will Put $1.35 billion into Blackstone,