Too Big to Fail Page #2

- I don't care who he is,

I am not spending $360 million a year

for the pleasure of doing business with him.

Real estate will come back.

Koreans have been sniffing around.

There you go. And they won't steal us blind.

I've seen this before.

CEOs panic and they sell out cheap.

Right now, the Street's running around

with its hair on fire,

but the storm always passes.

We stand strong, and on the other side,

we'll eat Goldman's lunch.

So, what do we do about Buffett?

Screw Warren Buffett.

- He passed?

- Lehman dropped

to 28 and a half this morning.

What in the world is he thinking?

He's not thinking. He's delusional.

He thought the ask was too high.

He's gotta raise cash.

I told him that.

- I spoke to Greenspan.

- Really?

He says there's too much housing supply.

That's the problem.

So we should buy up all the vacant houses

and burn them.

Dick needs a buyer,

someone with a grip on reality.

Barclays expressed some interest

a couple of months ago,

but I don't think

the price is low enough for them.

- Bank of America?

- Possible.

Dick's put out feelers there before.

We have to keep it quiet, though.

'Cause if anyone hears

that they're trying to sell...

Lehman'll be dead within the hour.

The real estate investments

are killing the firm.

We have to admit publically

we've made some mistakes.

We need to make

a senior management change,

signal to the market that we get it.

- Meaning what?

- Meaning Joe Gregory.

Get the f*** out of here.

You are not gonna tell me

how to run my company.

Joe hasn't had your back on risk,

and everyone knows it.

Erin Callan's gotta go, too.

As far as the Street's concerned, she's a joke.

Joe Gregory has been with me for 30 years.

And you want me to kick him to the curb

because we had a bad quarter?

It's not just a bad quarter.

Stock hit 23.

Twenty-three. Most of our guys are paid

in stock they can't sell for years.

They've lost most of their net worth

over the last six months.

You don't stabilize the price,

your traders are gonna jump ship.

Selfish fucks.

It's not just bankers and traders, Dick.

Clients are pulling their money.

There's gonna be a run on this bank.

Sources tell CNBC that both

Erin Callan and Joseph Gregory

are out at Lehman Brothers.

In a statement,

the company's chairman, Dick Fuld, said

replacing Gregory

with 48-year-old Bart McDade

has been one of the most

difficult decisions he's had to make.

Dick, the Koreans just arrived at Sullivan.

Let's go make this happen.

My take is you'd be better off

staying here for now.

We need you to be our "missing man."

We'll go in and push the

deal as far as we can,

and then we'll bring you in at the end

to top it off.

All right, fine.

Okay. Okay.

We are committed

to our presence in New York.

But we need to know

that the underlying numbers make sense.

We realize how things look.

But our stock is getting hammered

by the shorts.

The value is still there.

We just started. Min's excited,

but we haven't heard the terms.

Where are you?

I just stepped out to take the call.

Get back in there. Don't be rude.

Okay.

We simply take the assets

you don't find appealing,

spin them off into a separate company.

- You don't buy that bank.

- I'm very sorry.

You buy the good bank.

Look, they don't like the real estate.

What do you mean, they don't like it?

Dick, we're making real progress here, okay?

Let me stay on it for now.

Min, how are you?

Great to see you.

I don't want to interrupt.

Dick, great timing.

We seem to be in sync

on the broad strokes of the deal.

Shall we get back to the letter of intent?

Min, I have to tell you,

I think you're making a big mistake here.

There's great value in

the real estate assets.

How about we walk through the portfolio

and I'll show you?

We have looked at them.

Then you must have looked at them

in the wrong way.

See, I just don't wanna see you

leave money on the table.

Perhaps we should take a break.

Min, I'm so sorry.

We have negotiated in good faith.

Now all of a sudden we are going backward?

We can work with you on the price.

It is not about the price.

It is about the way you have conducted this.

I'd like to thank you, all of you,

but I don't think we have

a structure that works.

What, that's it?

You're just gonna pack up

and go back to Korea?

- Hello?

- Neel, it's Dick Fuld.

Listen, you know,

if Hank wants me to find a buyer,

you guys need to step up and help.

The Koreans just walked out, okay?

Look, I'm just speaking for myself here,

but I think you need to do

what's right for the firm.

Do what's right?

What is that supposed to mean?

If your stock price keeps sliding,

you may get an offer at a price

that doesn't look all that compelling,

but you may have to take it

just to keep the company intact.

What kind of price are you talking about?

Could be...

I mean, it might be low single digits.

Last February, we were at 66 a share.

Lehman Brothers is not Bear Stearns.

We've got a great business.

Real estate's gonna come back.

I am not f***ing giving this company away!

While the real estate market has put

Lehman Brothers shares under pressure,

mortgage giants Fannie Mae

and Freddie Mac stocks

are suddenly plummeting this morning,

after reports the companies

may need to raise $75 billion

just to remain solvent.

Because they guarantee

such an enormous percentage

of the nation's mortgages,

there is renewed speculation

that the government

may have to step in and take them over,

a possibility Barack Obama has now raised

on the campaign trail.

If Fannie Mae and Freddie Mac collapsed,

then probably the financial system

would receive such a body blow

that it could be disastrous.

Freddie just dropped another 8%.

Fannie's down 5%.

There's no bottom here.

We need to do something. Now.

We're working on a proposal for Congress,

see if we can get the authority

to put some money in.

I'd rather not go that

way, but if we get there...

I think we're already there.

- How much are you gonna ask for?

- A blank check.

It has to be enough of a statement

to reassure the market.

They need to think I've got

a bazooka in my pocket.

I'm not saying that we use it,

but if we have the authority,

everyone who's dumping their shares

will calm down, back off.

Okay, if you're going to Congress,

why don't we give to the banks, too?

'Cause Lehman's looking like sh*t

and Merrill's not far behind.

We'll be lucky to get them to move

on Fannie and Freddie.

We do what we can do.

Secretary, Mrs. Paulson, over here.

Over here, please.

Mr. and Mrs. Paulson.

- Secretary Paulson, over here, please.

- Mrs. Paulson. Thank you.

Mrs. Paulson.

Mr. Paulson.

Mr. and Mrs. Paulson, this way, please.

Mr. Secretary, please.

- I've got her.

- You should take her.

- Right over here, Secretary Paulson, please.

- Secretary, over here.

Big smile. Thank you.

That's just what I need.

Press photos of the Treasury secretary

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