The Weekend That Changed Wall Street by Maria Bartiromo

Author:Maria Bartiromo
Language: eng
Format: epub
Publisher: Penguin Group US
Published: 2011-09-09T16:00:00+00:00

The canniness of Bob Diamond was never more evident than on Tuesday, September 16. Diamond had gone into the weekend wanting Lehman, and now he was on a scavenger hunt. Even as pictures of stockbrokers forming a funeral procession out the building doors filled the television screens, Diamond and his Barclays team were at Lehman looking at what they could buy postbankruptcy. Although this was an incredibly sad day for many people, it also represented a great opportunity for Diamond, and he was not going to let it pass him by.

On Wednesday, Barclays announced a $1.75 billion purchase of Lehman’s North American investment banking business, which would potentially save the jobs of up to ten thousand Lehman workers. Included in the price was Lehman’s Time Square building, a dazzling thirty-two-floor structure whose flashing LED screens often stopped passersby in their tracks. The facility had trading floors and technology ready to open for business immediately. Prior to purchasing the Times Square building, Lehman was housed in the World Financial Center, a complex across from the World Trade Center that suffered substantial damage on 9/11. Lehman’s data center and trading floor were destroyed. Rather than waiting to see what would happen with the location, Lehman moved quickly to purchase the building at 745 Seventh Avenue in October 2001. Originally built by Morgan Stanley, it had the advantage of being prefitted with state-of-the-art technology and architecture for the trading business. Now it would belong to Barclays, and it was ready for a seamless transaction—just turn on the lights and go. Like it or not, it was an amazing coup for Diamond and for Barclays.

Diamond and Lehman president Bart McDade (who was offered a job with Barclays) visited the trading floors and met personally with the staff, calming jangled nerves and urging everyone to put emotions behind them.

On Wednesday I sat down with Diamond to ask him some questions about the surprising Barclays deal. “I’m trying to figure out how this all plays out,” I said to him. “Let me ask you this: Do you feel any guilt at not rescuing all of Lehman?” It was an uncomfortable question, and Diamond conceded, “We were—we were, you know, quite fortunate. Because of the bank we were able to just select those assets and liabilities that fit with the business we were taking.” He added that Barclays rightly did not want to take on any risk, and without a federal backstop, a deal for the whole purchase was just out of the question. But this limited purchase allowed Barclays to get a foothold in the United States. In many respects it was a brilliant deal. As we spoke, just days after Lehman declared bankruptcy, the Lehman sign was coming off the building and a Barclays sign was going up.

The immediate fallout of the weekend’s events—at least where Merrill and Lehman were concerned—was starting to wrap up. But anyone who believed that the crisis was about the future of a couple of investment banking firms wasn’t seeing the bigger picture.

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