Too Big to Fail - Andrew Ross Sorkin [285]
The bankers sat stunned. If Paulson’s aim had been to shock and awe them, the tactic had worked spectacularly well.
“This is the right thing to do for the country,” he said in closing.
Geithner now read off the amounts that each bank would receive, in alphabetical order. Bank of America: $25 billion; Citigroup: $25 billion; Goldman Sachs: $10 billion; JP Morgan: $25 billion; Morgan Stanley: $10 billion; State Street: $10 billion; Wells Fargo: $25 billion.
“So where do I sign?” Dimon said to some laughter, trying to relieve the tension, which had not dissipated now that the bankers had learned why they had been summoned.
At 3:19 p.m. Wilkinson, who was sitting in the back of the room after inviting himself to the meeting, got an e-mail on his BlackBerry from Joel Kaplan, who was desperate to give President Bush some intelligence. “Gimme quick update—how is the reaction?”
He didn’t know how to reply, as the outcome was not at all certain.
Dick Kovacevich, for one, was obviously not pleased to have been given this ultimatum. He had had to get on a flight—a commercial flight, no less—to Washington, a place he had always found contemptible, only to be told he would have to take money he thought he didn’t need from the government, in some godforsaken effort to save all these other cowboys?
“I’m not one of you New York guys with your fancy products. Why am I in this room, talking about bailing you out?” he asked derisively.
For a moment no one said a word, and then the room suddenly broke out in pandemonium, with everyone talking over one another until Paulson finally broke in.
Staring sternly at Kovacevich, Paulson told him, “Your regulator is sitting right there.” John Dugan, comptroller of the currency, and FDIC chairwoman Sheila Bair were directly across the table from him. “And you’re going to get a call tomorrow telling you you’re undercapitalized and that you won’t be able to raise money in the private markets.”
Thain jumped in with his own question: “What kind of protections can you give us on changes in compensation policy?”
Although his new boss, Lewis, couldn’t believe Thain’s nerve in posing the question, it was nonetheless the one that everyone present wanted to ask. Would the government retroactively change compensation plans? Could they? What would happen if there was a populist outcry? After all, the government would now own stakes in their companies.
Bob Hoyt, Treasury’s general counsel, took the question. “We are going to be producing some rules so that the administration will not unilaterally change its view,” he said. “But you have no insulation if Congress wants to change the law.”
Lewis, increasingly frustrated, could see the conversation needed to move along, and stated, “I have three things to say. There’s obviously a lot to like and dislike about the program. I think given what’s happening, if we don’t have a healthy fear of the unknown, then we’re crazy.”
Second, “if we spend another second talking about compensation issues, we’ve lost our minds!”
And finally, he said adamantly, “I don’t think we need to be talking about this a whole lot more,” adding, “We all know that we are going to sign.”
Still, Kovacevich kept stirring in his seat. This is practically socialism!
As Bernanke cleared his throat, the room fell silent again.
“I don’t really understand why there needs to be so much tension about this,” he said in his professorial way. He explained how the country was facing the worst economy since the Great Depression and pleaded with them to think about “the collective good. Look, we’re not trying to be intimidating or pushy….”
Paulson gave him a look as if to suggest, Yes, in fact, I am being pushy!
John Mack, who had been sitting silently for most of the meeting, turned to Geithner and said, “Give me the paper.” Taking a pen from his