Plus, Thain threw in a couple of passes to Onesie-ville, which exponentially sweetened the deal in Lewis's eyes.
Lewis, it turned out, had jumped tracks. Thain, now Merrill's CEO, had supposedly had an epiphany that Saturday--as recently as the previous Wednesday he'd resisted a plan to sell his company. But sitting at the Fed, he panicked. He called Lewis, who'd long been interested in Merrill's 16,000 retail brokers, and on September 15 they announced a deal. In the dawning era, retail banking was much more attractive than the I-banking model Lehman offered.
Dog-hating Brits to the rescue!
That left as a potential buyer only Barclays, the London-based bank that had entered the picture just a few days earlier. Barclays told Treasury it wanted Lehman, but with conditions. "It wanted to scoop out the good assets," one senior Treasury official says. It wanted to leave behind over $50 billion in bad assets.
Some at Lehman argued that it had plenty of assets to back a loan, the same type that sealed the Bear Stearns sale. But the government wasn't working on that assumption. "Bank of America, Barclays, and a number of people on the Street had said, 'With Lehman's assets, you're going to lose money,' " explained a Treasury official. "The Fed cannot lend money if the indication is that it's going to lose money."
In related news, AIG just asked for 650 billion more dollars today. No, just playing. It was $950 billion.
Paulson and Geithner sequestered the heads of the leading investment banks in one of the Fed's many grand, wood-paneled conference rooms. The bankers feared the consequences of a Lehman meltdown, but they were more worried about their own futures. "It's like Louis the XIVth said: Alone against everyone," said one Lehman executive.
"Why should we save Lehman?" one asked. "What about AIG? Where does it end?"
And chest-bumping, we were also chest-bumping, never forget the chest-bumping!
By Sunday morning, Geithner and Paulson seemed to have persuaded the bankers to guarantee Lehman assets, up to perhaps as much as $70 billion. That appeared to put the Barclays deal on track.
At 10 a.m. Sunday, McDade e-mailed Gelband, who was at Simpson Thacher helping Barclays with its due diligence. They had a deal.
"We were high-fiving," said one person at Simpson Thacher.
Then at 10:15, McDade e-mailed back: "There might be a problem."
If only he'd thought to avail himself for the meeting, he could've asked this question in person! Drats! Ah, well, it was worth it to see Entourage in real time.
On Sunday night, September 14, McDade returned to Lehman headquarters.
"They've mandated that we file for bankruptcy."
Fuld, until that moment Wall Street's longest-serving CEO, was shocked. "Can they do that?" he asked.
Not being insensitive, because it is a disease, but this typical bulimic behavior, and the money quote probably had more to do with the sheet cake Fuld just shoveled into his mouth, and the fact that he'd just caught glimpse of his "huge hips" in the mirror than the Lehman thing news.
"Dick never believed zero was an option. He believed at end of day, good guys win," said one Fuld associate. And Fuld believed he was one of the good guys.
"I feel like I want to throw up," Fuld said.
There are two d's in this conversation, though only one is a proper noun.
A couple of days later, Paulson called Fuld, probably the last time they spoke. "You did everything humanly possible," he said.
Time the fuck out. The name on the front of the building was going to be changed, sure, we expected that. But Fuld didn't get to keep his office? That's not right.
These days, Fuld attends to details of the bankruptcy. He's no longer ensconced at Club 31, as employees once referred to the executive floor. Indeed, most traces of Fuld's Lehman have been assiduously removed. As a first order of business, Barclays hung its own name on each floor, though those who look closely can still see a dusty shadow of the Lehman name. Fuld is in temporary quarters on the 45th floor of the Time & Life Building until the end of the year, when he leaves with no severance or bonus.
Richest story of all time comin' at ya.
[One day]...Fuld received a letter from a former employee. Michael Petrucelli, who had been at Lehman for fifteen years, had sold mortgage-backed securities. Petrucelli still revered Fuld; it was the old style. He recalled how he'd once introduced himself at Valbella, a Greenwich restaurant. Fuld sat at a front table in a room off to the left, upstairs, Petrucelli recounted, as if to jog Fuld's memory. At the moment of that brief encounter, Lehman was already under siege. "We are with you," he'd told Fuld at the time.
Then a few days before the bankruptcy, Petrucelli had been laid off, seven figures of savings decimated and, to add to the injury, Barclays refused to pay promised severance and health benefits.
"This is all shameful," Petrucelli wrote Fuld.
Shortly thereafter, on October 8, Fuld picked up the phone. It was 1 p.m. He called Petrucelli on his cell. His lawyers might not have liked it, but Fuld had to reach out.
"Mike, I'm sorry you got caught up in this," Fuld began. "I'm going to try to help fix this."
Fuld was anguished. He knew the world was indifferent to his predicament. "Not that anyone on this committee cares," he'd told Congress.
It turned out, that Petro, his nickname at Lehman, did. And so Petro started to console Fuld. Maybe it could only be one of the troops to whom Fuld could open up.
"I can't believe this fucking happened," Fuld told Petrucelli. "I believed in the firm. I thought we were going to get through this."
Petro jumped in. "Think of all the good things you did," he told Fuld.
Fuld took a breath, "I know," he said.
Then he got angry again. "Understand, I spent 42 years there. I spent 42 years building and living this company. I can't believe this happened."
Earlier: Dick Fuld: Desperate Woman