Too Big to Fail [55]
Diamond was momentarily speechless; Treasury, he realized, was clearly trying to formulate strategic solutions in the event that Lehman found itself in a Bear Stearns–like situation. From long acquaintance he knew Steel to be a no-nonsense pragmatist, not someone who idly floated trial balloons.
“I’m going to have to think about that because I don’t have an answer,” Diamond said carefully.
“Yes, but do think about it,” Steel said.
“Never say never,” Diamond answered, and both men laughed. Diamond had always trotted out that line when reporters pressed him about possible acquisitions, though this was the first time that Steel had been on the receiving end of it.
Steel was well aware of Barclays Capital’s desire to increase its presence in the United States, an ambition that Diamond practically wore on the sleeve of his Saville Row suits. While he had built, from the ground up, a major investment bank that had been a London phenomenon, he had always yearned to be a major player on Wall Street. His restless pursuit of that goal explained why Diamond had so abruptly left Morgan Stanley for Credit Suisse First Boston in 1992, taking much of the repo trading desk with him and inciting the wrath of John Mack. Four years later, Diamond left for BZW, whose remnants were the foundation for Barclays Capital.
Lehman was a logical merger candidate if Diamond—and, of course, his boss and the board in London—wanted Barclays to become an overnight investment banking powerhouse in New York. But he knew it would be an expensive purchase so long as Dick Fuld was running it. Still, an opportunity like this hardly came up often.
What the rest of Wall Street didn’t know at the time was that Barclays had been contemplating another purchase: Diamond had been in conversation with UBS about buying its investment banking franchise and was planning to fly to Zurich later that week for further meetings. He now shared this information with Steel but cautioned him that the talks with UBS were very preliminary, and the last thing Diamond needed was word of them leaking out. As was always a possibility, the deal might not go anywhere.
Lehman, in any case, was in a different league altogether. It wouldn’t be easy selling an acquisition of this magnitude to his board, who were still feeling gun shy after losing an expensive bidding war for Dutch bank ABN AMRO months earlier. But Lehman was the fourth biggest investment house in the United States. If Lehman could be had for a major discount, he’d have to consider the prospect seriously, wouldn’t he?
“Yes,” Diamond said to Steel, “it’s definitely something to think about.”
CHAPTER FIVE
Surprisingly soft-spoken when not on the air, Jim Cramer, CNBC’s blustery market guru, politely told the security guard standing outside Lehman Brothers’ headquarters on Seventh Avenue and Fiftieth Street that he was expected for a breakfast meeting with Dick Fuld. He was ushered through the revolving door, past Lehman’s bomb-sniffing Labrador, Bella, and to the reception desk, where he made his way through the familiar security procedures. Looking rumpled as usual, he was received in the waiting area of the thirty-second floor as ceremoniously as if he were a major client who had arrived to negotiate a billion-dollar deal. Erin Callan, the CFO, was present, as was Gerald Donini, the head of global equities and a neighbor of Cramer’s in Summit, New Jersey.
Fuld, who was still zealously conducting his jihad against the short-sellers, had personally invited Cramer for the meeting. By now he had come to realize that he needed an ally in his struggle against the shorts, but so far, nobody had been willing to join the battle. Not Cox. Not Geithner. And not Paulson, despite their recent conversation at Treasury. But maybe Cramer, with his huge television audience and connections deep within the hedge fund world, could somehow help sway the debate and talk up Lehman’s stock price.
Fuld had known Cramer for a decade. After Long-Term Capital Management