"Greed Is Still Good on Wall St.":
Andrew Ross Sorkin on the Lessons of the Crisis
Posted Oct 23, 2009 07:35am EDT by Aaron Task in Newsmakers, Banking
Related: JPM, MS, GS, AIG, BAC, C, XLF
In "Too Big to Fail," NY Times columnist Andrew Ross Sorkin provides behind-the-scenes details on the scramble of Wall Street during the great credit crisis of 2008.
What's interesting is how much of that scramble occurred before Lehman Brothers' mid-September bankruptcy vs. after, when the world was fixated on systemic risk.
Recalling the market's sharp rally in the spring of 2008 after the Fed engineered JPMorgan's takeover of Bear Stearns, "we all thought the world was going to be a better, safer place," Sorkin says. "But throughout that period, behind the scenes, the government was involved in all sort of intervention efforts. They saw the train coming down the track, and everybody sorta tried to get out of the way but obviously don't get out of the way on time."
While much of the focus was on saving Lehman Brothers, Sorkin also reports on the following:
Goldman Sachs held a board meeting in June 2008 in which they discussed becoming a bank holding company and potentially buying AIG. (Goldman executives also met with Hank Paulson in Moscow during that trip, Sorkin reveals.)
AIG petitioned then NY Fed president Tim Geithner about the possibility of becoming a bank holding company, which would give them access to the Fed's discount window.
Attempts by Hank Paulson, Tim Geithner and other officials to spur mergers between Wachovia and Goldman Sachs, Morgan Stanley and JPMorgan, Goldman and Citigroup, and more!
Efforts by regulators to get various investors - including Warren Buffett and China's sovereign wealth funds - to put capital in any number of financial institutions.
"Almost everyone who's still in office or power thinks of themselves today as a survivor," Sorkin says. "I'm not sure they appreciate that they're only survivors to the extent we the American public helped bail them out and what the responsibility they now have is to the community."
So we asked Sorkin if any of the CEOs who attended his book launch party in NYC this week have expressed a sense of humility, or just learned any lessons from their collective near-death experience.
You'll have to watch the accompanying video to get the details, but you can probably guess the answer.
AI
