01 Dec

The License Plate That Says It All: 2BG2FAIL

UPDATE: The original owner of the 2BG2FAIL license plate, Robert Kindler, a vice chairman at Morgan Stanley who is one of the firm’s top mergers and acquisitions advisors, has a new license plate! (He’s one of the many characters in “Too Big to Fail: How Wall Street and Washington Fought to Save the Financial System — and Themselves”.)

Kindler, whose brother is comedian Andy Kindler (formerly of “Everybody Loves Raymond” and a regular on “The Late Show with David Letterman”), is now riding around with a license plate that says “MNA GUY.” Kindler, whose jokes on Wall Street are legendary – when he worked at JPMorgan, he had shirts made up mocking the firm’s slogan: “One Firm. One Team. Bribe a Leader.” — sent me his old 2BG2FAIL license plate in the mail. It came with a note saying that he had ordered the plate as a satirical reminder that “no one is too big to fail.”

Here’s the new plate:

MNA GUY -- Too Big To Fail

Original Post:

In Too Big to Fail: How Wall Street and Washington Fought to Save the Financial System — and Themselves, this picture is included of a banker’s license plate that was made as a joke after the financial crisis:

Too Big To Fail Plate

29 Nov

Source Document: Treasury’s Confidential ‘Break The Glass’ Plan

treasuryIn Too Big to Fail: How Wall Street and Washington Fought to Save the Financial System — and Themselves, Andrew Ross Sorkin provides new details about what was then a secret Treasury plan to save the banking system presented on April 15, 2008 — five months before TARP was introduced — to Federal Reserve chairman Ben Bernanke. The plan, called the “Break the Glass” Bank Recapitalization Plan, was written by Treasury staffers Neel T. Kashkari and Phillip Swagel. The plan was the basis for the TARP proposal made in September 2008 after the financial panic began.

The “Break the Glass” plan contemplated that the government would buy toxic assets from the nation’s banks. It also discussed several other strategies for the government to help ailing banks using $500 billion of taxpayer money — including making direct capital injections into the banks. (The ultimate TARP plan called for $700 billion.)

Remarkably , the 10-page document discussed the pros and cons of buying toxic assets. Among the cons, the Treasury staffers identified two that continue to cause public outrage:

“Without a complimentary program, does nothing to help homeowners (for which there would be enormous political pressure)”

“No guarantee banks will resume lending.”

Up until now, the full “Break the Glass” document has never been discosed. The paper, which was obtained by the author during the course of his reporting for the book, was used as a source document in Chapter Five of Too Big to Fail: How Wall Street and Washington Fought to Save the Financial System — and Themselves.

Here it is: (more…)

20 Nov

Morgan Stanley’s $9,000,000,000.00 Check. That’s $9 Billion!

As detailed in Too Big to Fail: How Wall Street and Washington Fought to Save the Financial System — and Themselves, Morgan Stanley received a $9 billion investment from Mitsubishi UFJ in the fall of 2008 that kept the firm from collapsing. The payment was supposed to be wired electronically, but because it needed to be made on an emergency basis on a holiday, Mitsubishi cut a physical check, perhaps the largest ever written.

Below is a copy of the $9,000,000,000.00 check.

Too Big to Fail: The $9 Billion Japanese Check to Morgan Stanley

19 Oct

Paulson’s Secret Waiver to Work on Goldman Matters

hp waiver excerpt

“It’s ridiculous that I can’t deal with Goldman at a time like this!” Paulson complained to his general counsel, Bob Hoyt. It was September 17, 2008, just two days after Lehman Brothers collapsed and less the 24 hours after AIG was rescued with $85 billion. Paulson thought Goldman could be next.

In Too Big to Fail: How Wall Street and Washington Fought to Save the Financial System — and Themselves, Sorkin recounts how Paulson secretly sought a waiver from an ethics letter he signed when he first took office agreeing not to get involved in any matter related to Goldman, his former employer, during his entire term. The original letter voluntarily went beyond the usual one year requirement, but he now felt with the system in free-fall, he needed to be able to dsicuss options with the firm. Paulson was supposed to take part in a three p.m. call with Bernanke, Geithner, and S.E.C. chairman Christopher Cox to discuss Goldman Sachs and Morgan Stanley, but unless he could get a waiver, he would be unable to participate.

Within an hour, the waiver was granted. At the time, however, the waiver was not disclosed to the public, in part, out of fear it would raise more questions about the government’s actions and perhaps lead to a bank run on Goldman. (more…)

17 Oct

Paulson’s Call Logs: September 2008

hp calendar excerptBelow is a copy of Hank Paulson’s call logs and calendar from the all-important month of September 2008, perhaps the most tumultuous period during the financial crisis.

I obtained the records, along with every month he was in office, during the course of my reporting for Too Big to Fail: How Wall Street and Washington Fought to Save the Financial System — and Themselves. The call logs helped confirm much of the information I learned during dozens of interviews with people on both sides of the phone calls listed in these documents.

In the course of my reporting, I sought the calendars of many people on the receiving end of these phone calls to confirm the times and dates listed. Please note that I noticed many discrepancies between these calendars and others, making them only partially reliable. Paulson’s secretary, who kept these records, appears to have included phone calls in which neither side connected and sometimes did not record phone calls when they did. Because she recorded the times of the calls electronically, every call is listed in five-minute increments, even for calls that lasted no more than 30 seconds. (more…)

16 Oct

Goldman Email: Pep-Talk for the Troops and Clients

gs email excerpt

On Thursday, September 18th 2008, a Goldman Sachs trader based in London sent this somewhat cavalier email to colleagues and clients. Little did he know, but Goldman Sachs was in much more trouble than had been reported. With Morgan Stanley facing a run on the bank, as reported in Too Big to Fail: How Wall Street and Washington Fought to Save the Financial System — and Themselves, Goldman Sachs was worried about its own fate. Only 24 hours later, Goldman Sachs would begin secretly seeking merger deals with Citigroup and Wachovia at the behest of the U.S. government. By the end of the weekend, both deals were aborted, but Goldman, like Morgan Stanley, became a bank holding company, a desperate effort to restore confidence with the implicit backing of the government.

This email was quickly sent around Wall Street as an example of the arrogance and misinformation that remained rampant even at the height of the financial crisis. (more…)

16 Oct

Wells Fargo’s Offer Letter to Wachovia

wells excerpt

On October 2, Bob Steel, the CEO of Wachovia, received a frantic phone call from Sheila Bair, the chairwoman of the F.D.I.C., just as his plane was about to takeoff. Well Fargo, she said, was about to make a bid for Wachovia, topping an earlier agreed deal with Citigroup. When Steel landed, Wells Fargo’s CEO, Richard M. “Dick” Kovacevich, sent him an email on his Blackberry with this letter attached. Four hours later, Wachovia agreed to the new deal, as reported in Too Big to Fail: How Wall Street and Washington Fought to Save the Financial System — and Themselves.

The deal between Wells Fargo and Wachovia sent Citigroup’s Vikram Pandit into a panic and began a series of anxious phone calls in the middle of the night. Some observers suggest that while the deal saved Wachovia — and gave its shareholders a higher price — it may have ultimately led to investors’ loss of confidence in Citigroup. Bair, who orchestrated the original deal between Citigroup and Wachovia, appeared to switch allegiances, in part, because Wells Fargo’s bid required no additional support from the FDIC. However, Citigroup, the loser in the takeover talks, has now become one of the largest recipients of taxpayer aid. (more…)