Too Big to Fail: The Inside Story of How Wall Street and Washington Fought to Save the Financial System--And Themselves by Andrew Ross Sorkin

Author:Andrew Ross Sorkin
Language: eng
Format: mobi
Tags: United States, Financial crises - United States - History - 21st century, Financial crises, Finance, Economics, 21st century, General, Global Financial Crisis, Economic Conditions, Banks & Banking, History, 2008-2009, Business & Economics, Economic History
ISBN: 9780143118244
Publisher: Penguin
Published: 2010-09-07T05:03:16.576000+00:00

The sixteenth floor of AIG was already a beehive of activity, with hundreds of bankers and lawyers roaming the floors, darting into the various rooms that had been set up to perform due diligence on different AIG assets up for sale.

Before the high-end tire kickers arrived, Douglas Braunstein of JP Morgan, fresh off a conference call with Dimon, pulled Bob Willumstad aside to confide, “You need to think about more than the $20 or $30 billion we were talking about before, because Lehman could go bankrupt this weekend.

“The market’s going to be bad,” Braunstein warned. “We should probably be thinking about $40 billion.”

Willumstad was flabbergasted; the challenge he faced had almost immediately doubled in size.

A minute later, Sir Deryck Maughan, the former head of Salomon Brothers, emerged from an elevator. Maughan—who was working for KKR, one of the bidders in the AIG fire sale—and Willumstad had known each other well but hadn’t been in touch for years. The last time they had seen each other was in 2004, when Maughan was being fired by Charles Prince, literally in Willumstad’s presence. It was Maughan, too, who had snubbed Steve Black’s wife on the dance floor more than a decade ago, resulting in a confrontation with Dimon, and his eventual ousting by Sandy Weill.

And now, on a weekend when the entire financial system hung in the balance, Willumstad, Dimon, and Black were all looking to Maughan for help. Ah, Willumstad thought as he greeted Maughan with a wide smile, life is rich with irony.

A few minutes earlier David Bonderman of Texas Pacific Group, one of the wealthiest private-equity moguls in the nation, had arrived with his own team. Bonderman, who was known for turnarounds, thanks to successful projects like fixing Continental Airlines, had also become increasingly leery of financial companies. He had acquired a $1.35 billion stake in Washington Mutual in April 2008 and watched his investment lose virtually all of its value in less than half a year.

Willumstad was becoming increasingly anxious that all these bidders were there to suck AIG dry.

Perhaps sensing Willumstad’s anxiety, Dr. Paul Achleitner, a board member of the insurance giant Allianz who had cut short his vacation in Majorca, Spain, to fly in for the diligence session, approached him.

“Can I see you privately?” he asked.

“Sure,” Willumstad replied.

Achleitner had been invited to the diligence session by Chris Flowers, who had chartered a plane to fetch Achleitner and bring him across the Atlantic.

Willumstad and Achleitner found a quiet corner.

“I want you to know that I’m not here with all these vultures,” Achleitner said, pointing at the scrum of private-equity investors swirling about. “I’m here as Allianz. If we’re going to invest, we might invest alongside them, but we’re going to make our own decision.”

“Thank you, I appreciate that,” Willumstad said, before returning to the vultures.

Willumstad and the AIG team were quickly having a difficult time keeping track of everyone in the growing crowd and, as the weekend wore on, whom they actually represented.

When Christopher A. Cole from Goldman

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