2008.
446 “I spent my career as an academic studying great depressions”: Bernanke, as quoted by Wessel,
446 noticeably gulped: As Schumer himself told the
446 “What about the home owner?”: Wessel,
446 Richard Shelby disapprovingly characterized: “If we say ‘whatever it takes,’ that means there’s a blank check of the treasury, future generations, to pay for the mistakes of a lot of people.”
446 “If it doesn’t pass, then heaven help us all”: Deborah Solomon, Liz Rappaport, Damian Paletta, and Jon Hilsenrath, “Shock Forced Paulson’s Hand,”
446 “Do you know what you are asking me to do?”:
447 “I think we need to do this”: McConnell, a Republican senator from Kentucky and Republican leader of the Senate, who often spars with Reid on the Senate floor, “reached over to assure his colleague they could work it out.”
447 put in place a ban on shorting financial stocks: The SEC issued a press release on the morning of Friday, September 19, that read: “Given the importance of confidence in financial markets, the SEC’s action halts short selling in 799 financial institutions. The SEC’s emergency order … will be immediately effective and will terminate at 11:59 p.m. ET on Oct. 2, 2008. The Commission may extend the order beyond 10 business days if it deems an extension necessary in the public interest and for the protection of investors, but will not extend the order for more than 30 calendar days in total duration.” See http://www.sec.gov/news/press/2008/2008-211.htm.
447 “While this is all politically pleasing”: Chanos, as reported by Kara Scannell, Deborah Solomon, Craig Karmin, and Gregory Zuckerman, “SEC Is Set to Issue Temporary Ban Against Short Selling,”
447 Merrill Lynch had bought insurance covering $150 million: On September 17, Merrill bought insurance to cover $106.2 million in Morgan Stanley debt and returned the following day, September 18, to buy protection on another $43 million of debt, according to trading documents obtained by the
447 Citigroup, Deutsche Bank, UBS, AllianceBernstein, and Royal Bank of Canada: Ibid.
448 Wei Sun Christianson: In December 2007, Christianson played a major role in negotiating Morgan Stanley’s $5.6 billion deal with China Investment Corp., which gave CIC a 9.9% percent stake in the company. See Jason Leow and Rick Carew, “Wei Sun Christianson and How Morgan Deal Got Boost in China—Longtime Mack Aide from Beijing Lends Stature, Ties to Region,”
448 CIC already held a 9.9 percent stake in Morgan Stanley: When Morgan Stanley announced a loss of $3.59 billion at the end of 2007, the state-owned China Investment Corp. (CIC) invested five-billion-dollars in the company, giving it a 9.9 percent stake. “China Fund Grabs Big Stake in Morgan Stanley,” AFP, December 2007.
448 he’d be interested in buying up to 49 percent of the firm: Christine Har per, “Morgan Stanley Said to Be in Talks with China’s CIC,” Bloomberg, September 18, 2008.
448 investments, in Blackstone: When Blackstone went public in June 2007, CIC invested $3 billion—giving it a 9.9 percent stake in the company. Since then shares had fallen by nearly 45 percent, to $17.13 in late August, giving CIC a paper loss of more than $1.3 billion. Allen T. Cheng, “Inside the CIC,”
CHAPTER EIGHTEEN
449 “the illiquid assets”: “Text of Paulson’s News Conference Friday,” Associated Press, September 19, 2008.
451 Wachovia’s $120 billion mortgage portfolio: As part of its 2006 purchase of Golden West Financial Corp., Wachovia inherited a $120 billion adjustable-rate home-loan portfolio, the bulk of which comes from California and Florida, two of the hardest-hit housing markets in the country. Dan Fitzpatrick, Alex Roth, and David Enrich, “With Wachovia Sale Looking Likely, a Makeover for Charlotte, U.S. Banking,”
451 Bob Steel had estimated that figure at 12 percent: Speaking at the Lehman Brothers Financial Services Conference on Tuesday, September 9, Steel said Wachovia still expects losses equal to 12 percent, though he said, “it’s still early days.” See “Wachovia Keeps Mortgage Loss View,” stock downgraded,
454 his firm would not be making any investments: “We won’t be investing in U.S. banks under current circumstances,” Ryosuke Tamakoshi said in Tokyo on Tuesday, September 16, 2008. Takahiko Hyuga, Shingo Kawamoto, and Komaki Ito, “Japan Banks, Insurers Have $2.4 Billion Lehman Risk,” Bloomberg, September 17, 2008.
456 Gao reiterated his interest in buying 49 percent of Morgan Stanley: Christine Harper, “Morgan Stanley Said to Be in Talks with China’s CIC,” Bloomberg, September 18, 2008.
457 the sale of Lehman Brothers to Barclays: Ben White and Eric Dash, “Barclays Reaches $1.75 Billion Deal for a Lehman Unit,”
457 “You may approach ”: The dialogue between Judge Peck and Harvey Miller was taken from the official court transcript, dated September 19, 2008.
463 Merging the “Houses of Morgan”: Chernow,
464 “URGENT and Confidential ”: Author obtained copy of e-mail.
466 chose Roger Altman: Morgan Stanley’s independent board members chose to hire Roger Altman as their adviser, but he only narrowly won the assignment over Christopher Lawrence, a banker at Rothschild.
