Too Big to Fail [94]
There was a moment of painful silence. “Well, congratulations, Bob,” Greenberg finally said, almost faintly. “It was good of you to call and let me know.”
“Look, Hank. I know that there have been a lot of issues between you and the company. But I’m willing to make a fresh start and see if there’s some way we can’t resolve these issues.”
“I am willing to listen,” Greenberg replied. “I do want to help the company with its problems.”
The two men agreed to have dinner together that week. As he hung up the phone, Willumstad was further convinced that settling with Greenberg had been a necessary step. It would even help the stock price. But Greenberg was a hard-ass negotiator, and any deal would take time and patience.
The problem was, Willumstad wasn’t at all sure just how much time he had.
CHAPTER NINE
On Friday, June 27, 2008, Lloyd Blankfein, exhausted after a nine-hour flight to Russia, took a stroll around the square outside his hotel in St. Petersburg. He had just arrived in the city on a Gulfstream, along with his wife, Laura, and Gary D. Cohn, Goldman’s president and chief operating officer. A history buff, Blankfein had finished David Fromkin’s A Peace to End All Peace: The Fall of the Ottoman Empire and the Creation of the Modern Middle East during the flight.
The other members of the Goldman board weren’t due to land for several hours, so Blankfein had some time to himself. It was a pleasantly warm afternoon, so he decided to take in the sights. Towering above him across the square, the gold dome of St. Isaac’s Cathedral was radiant against the overcast sky. That night the Goldman board and their spouses would be treated to a private tour of the State Hermitage Museum, which was housed in six buildings of the former imperial palace along the Neva River.
If all around him the financial world was in a state of chaos, Blankfein had reason to feel contented about Goldman on the eve of its board meeting. The firm was once again proving itself to be the best on Wall Street, weathering—so far, at least—the toughest market anyone could remember.
And what better place to be gathering than in Russia? What China was to manufacturing, Russia was to commodities, and commodities were king at the moment. Oil, most crucially, was going for $140 a barrel, and Russia was pumping out millions of barrels a day. For a moment, it could make anyone forget about the problems back in the United States.
Every year the board of Goldman took a four-day working trip abroad, and since being handed the reins of the firm from Hank Paulson two years earlier, Blankfein had insisted that they meet in one of the new emerging economic giants, one of the BRIC nations: Brazil, Russia, India, or China. It seemed only appropriate: It had been one of Goldman’s economists who had coined the appellation for those four economies, to which the world’s wealth and power were now shifting. To Blankfein it was a matter of walking the talk.
St. Petersburg was only the first part of the trip, where’d they’d be given an update on the firm’s finances and have a strategy-review session; it would be followed by two days in Moscow. Goldman’s chief of staff, John F. W. Rogers, had used his pull to set up the board meeting with Russia’s tough prime minister, Vladimir Putin, whose anticapitalist ideology made it clear that he would be no patsy to the United States.
As Blankfein ambled back to the Hotel Astoria, past the massive equestrian monument to Nicholas I, he pondered his fears: What if oil prices were to slide, say, to $70 a barrel? What then? And what about Goldman itself? Despite his proven success, Blankfein admitted to being “paranoid,” as he often described himself.
Being in Russia did bring back some anxious memories. It was here in 1998 that things went very wrong for Goldman when the Kremlin caught the world unawares by suddenly defaulting on the nation’s debt, sending markets around the world into a tailspin. They called it a contagion: Soon afterward, Long-Term Capital Management was struck.
The chain of