The End of Wall Street by Roger Lowenstein

Author:Roger Lowenstein
Language: ru
Format: mobi, epub
Publisher: Penguin USA, Inc.
Published: 2010-05-23T20:00:00+00:00

While AIG remained largely out of view, Lehman’s drama had attained the aspect of public theater. Reporters staked out its headquarters, television pundits opined on the odds of its survival, and worried investors called to check their holdings. (The Reserve Primary Fund, which owned Lehman’s debt, assured its clients that Lehman paper was safe.)7 Hedge funds were trying to move securities from Lehman to other brokers. All the while, Lehman executives, believing a deal would be reached, seemed preternaturally calm. Tonucci, the treasurer, spirited data to Lehman’s two suitors, Barclays and Bank of America. Each had serious questions about the quality of Lehman’s assets, especially its troublesome commercial loans. The more urgent issue was whether Wall Street would continue to fund the embattled company until a deal was hatched.

Thursday night, Tonucci was at Sullivan & Cromwell, helping Bank of America conduct due diligence. He was yanked out of the room to take a call from Jane Buyers Russo, the head of JPMorgan’s broker-dealer unit. Buyers Russo and Tonucci spoke almost daily, and were on collegial terms. This time, her news was grave, her tone almost apologetic. Morgan had yet to receive $5 billion in collateral; it needed the money Friday morning. She added that if anyone at Lehman wanted to discuss it, it would have to be with “Jamie.”8

Tonucci immediately called his superiors. A short while later, Rodgin Cohen, the soft-spoken Sullivan & Cromwell attorney, whose influence in such matters was peerless, called the New York Fed to see if it might urge Morgan to grant Lehman a reprieve. Geithner’s office icily replied that Morgan’s demand was “appropriate.” Although, as a banking matter, Morgan was clearly within its rights, Cohen was shocked by the unsympathetic tone of the Fed’s response.

Geithner and Paulson certainly wanted Lehman to survive, but they viewed JPMorgan, one of the strongest banks extant, as the cornerstone of a solution, not as an obstacle. Late that evening, the officials conferred. They agreed the time had come to spring into action and settled on a plan. It was to be kept secret until markets closed on Friday.

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