Too Big to Fail Page #4

We lock them in a room at the Fed

and we don't let them out

until they have a solution on Lehman.

Your oatmeal's getting cold.

They'll figure it out.

They'll all throw in some money.

Tim is advocating strongly

that we reconsider some kind of Fed support.

Tim wants us to pick up the tab on everyone.

I can't be Mr. Bailout.

The Lehman hole is twice what Bear's was.

Investors are pulling their accounts.

You want to lend into a run?

What about Barclays?

Are they still interested?

They can't afford the risk

any more than B of A can.

I don't doubt your ability

to talk anybody into submission,

but it is still a long shot.

And there's a very real possibility

that Lehman goes under.

There's a deal to be made here.

I'm gonna make the deal.

With just a little more than an hour left

until the market closes,

shares of Lehman Brothers

have taken another tumble.

The stock is now trading at a new low,

under $4 a share.

And judging from the selling, there

doesn't appear to be a bottom in sight.

So, Blankfein has a speech

he's trying to get out of,

but the rest have confirmed.

- Tell him it's not optional.

- Yeah.

Good afternoon, Chairman.

Thank you so much for joining us.

- Whose plane is this?

- That's a rental.

Hank put it on his card.

Sir, you know Neel and Michele Davis,

Public Affairs.

Hi. Pleasure.

- This is Dan Jester, our new numbers guy.

- Hi.

I talked him into coming out of retirement.

- Excuse me? Retirement?

- He was with us at Goldman.

Got anybody at Treasury

who wasn't at Goldman?

Chairman, just to be clear,

there's no question of conflict of interest.

Hank sold all of his Goldman stock

before he took office.

- I wasn't implying anything.

- Sorry.

We're a little touchy

about the whole "Government Sachs" thing.

Shall we?

B of A keeps finding more toxic assets.

They want you to reconsider a Jamie deal.

They'll split the first billion in losses, but

they want you on the hook for the next 40.

You did it for Bear.

Greg, let me get back to you.

What, do I have to tattoo it on my forehead?

We are not bailing out Lehman.

Wall Street has a gambling problem.

If government keeps covering their losses,

they never learn anything.

- What?

- I didn't know if you wanted

to keep lecturing me on moral hazard

or if I should just call B of A back.

We need to keep them at the table until

they come up with a private-sector solution.

Tell them to stay with us.

- Alistair, hello.

- Hello, Henry.

Hold on one second.

Chancellor of the Exchequer.

I understand Barclays is one

of your potential buyers for Lehman.

My banks are already under

a great deal of stress.

I don't want to become overextended.

Lehman is problematic,

but there's value there.

We will find a way to make it attractive.

Just stay with us.

Talk soon then.

Bye.

We'll keep Barclays in the mix,

but B of A is still our best bet.

We've got the CEOs of every

major bank coming here tonight.

We have to make it clear

that this is their problem,

that we are their advisors and their allies,

but we are not their safety net.

What should we expect from these guys?

Jamie is smart.

He doesn't have as much cash to work with

since he bought Bear.

Lloyd's a superstar.

Goldman's the smartest shop on the block.

And just because I used to be his boss,

it doesn't mean he's gonna listen to me.

John Mack, he used to run

around the floor screaming,

"There's blood in the water!

Let's go kill someone!"

He's a fighter.

Thain was my number two at Goldman.

He's selfish. He's a pragmatist.

He knows if Lehman goes, Merrill's next.

Vikram Pandit is the new guy at Citigroup.

No one knows if he's running Citi

or if Citi's running him.

Thanks for coming down here

on such short notice.

Monday morning, Lehman will no longer

be able to honor its obligations.

We have two potential buyers.

B of A and Barclays.

Neither will take the company unless

someone else finances part of the deal.

The government is not

in a position to step in.

I did the last one.

You're gonna do this one.

Where's Dick Fuld?

Dick's in no condition

to make any decisions.

We're breaking you into three groups.

The first one will try to value

Lehman's toxic assets.

The second one will work on some sort of

structure for you all to invest in Lehman.

And the third one works

on the lights-out plan.

If Lehman files for bankruptcy,

we need to figure out

how to contain the

damage to the rest of you.

Christ.

We've all seen this coming for miles.

I don't think a Lehman bankruptcy

takes down our firms.

What, are we crossing our fingers?

You're asking us to save a competitor.

Let's not act like you're doing us a favor.

Gentlemen, gentlemen,

you are great Americans

undertaking a patriotic duty.

Your travail will earn you the love

and gratitude of your country.

I think it was Thomas Paine

who said, "These are..."

Lehman is a trading partner

for every bank in this room.

Their failure will be

a massive blow to all of you.

This is your problem.

We can all argue about how we got here.

Deregulation, derivatives,

Dick Fuld made bad decisions.

We're all responsible.

It's a catastrophic mess.

The government's done whatever it can do.

It's on you now.

You need to fix it and

you need to pay for it.

Let me be clear.

We will remember anyone who is not helpful.

Do you notice a little pattern here?

We don't deal with things until there's

some kind of emergency on the table.

Yeah, we don't

deal with things until Friday.

Some kind of a weekend thing.

When were we gonna figure out

exactly how to handle

the failure of an investment bank?

Let's do it over a weekend.

I talked to a person who is

monitoring the situation out there,

and the person said they all want

the same deal Jamie Dimon got,

and they're not going to get it.

Just a heads up,

Chris Flowers is in the lobby.

He's consulting for B of A on Lehman.

Hank pushed Flowers out of Goldman.

Yesterday, we thought Lehman was holding

30 billion in crap. Today it's 70.

$70 billion in assets

that we're valuing with a dartboard.

No, we're gonna work this out.

Unless you step in, we're ending this.

Don't forget about Dick.

Yeah, Dick Fuld keeps calling,

hammering us to raise the price.

Excuse me.

70 f***ing billion and no collateral?

If Lehman Brothers fails this weekend,

there's little doubt amongst the people

I speak to that Merrill Lynch will be next.

Confidence is a very fragile thing.

And in our financial markets,

it is eroding very quickly.

Lehman's not gonna make it. We're next.

We need to do something right now.

B of A's the only one out there.

I can put in a call.

- It screws Lehman, but...

- Lehman screwed themselves.

Paulson has drawn a line in the sand.

Lehman is dead. Make the call.

We'd like you guys to look

at taking a stake in Merrill,

something in the neighborhood of 10%.

I don't know if I can generate

any interest in 10%,

but if the whole company's in play,

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