Money and Power (114 page)

8.
“If an investment bank”: Author interview with Eliot Spitzer.

9.
Nicholas W. Maier account of “spinning”: From his videotaped deposition, May 9, 2005, Brattleboro, Vermont, as a result of litigation in the U.S. District Court for the Southern District of New York,
In Re: Initial Public Offering Securities Litigation.

10.
“Hank, you’ve been cutting”: Transcript of January 2003 Goldman presentation at Salomon Smith Barney investor conference.

11.
“News of that comment”: Author interview with David Schwartz.

12.
“I’m the guy”: Author interview with Henry Paulson Jr.

13.
“I really liked both guys”: Ibid.

14.
“You know something?”: Ibid.

15.
“John will be greatly missed”:
NYT,
March 25, 2003.

16.
“John A. Thain”: Ibid.

17.
“He thought it was unfair”: Author interview with Henry Paulson Jr.

18.
“I actually thought”: Ibid.

19.
“There’s no pretense”: Author interview with John Thain.

20.
“There were a lot of public policy”: Ibid.

21.
“didn’t say anything for several hours”:
Forbes,
November 11, 2005.

22.
“I told him I thought”: Author interview with Henry Paulson Jr.

23.
“These were not easy”: Ibid.

24.
“We managed the transition”: Ibid.

25.
“Our bankers travel on the same planes”: Boris Groysberg and Scott A. Snook,
The Pine Street Initiative at Gold-man Sachs
, Harvard Business School, Case 9-407-053, November 14, 2006.

26.
“an interesting blend”: Ibid.

27.
“I am happy to do business”: Author interview with Sam Zell.

28.
The account of the NYSE/Archipelago merger was taken from the many public filings the companies made with the SEC as part of the merger.

29.
“Wall Street has been buzzing”:
WSJ,
April 27, 2005.

30.
“We needed someone”: Author interview with John Thain.

31.
“We kept it from becoming irrelevant”: Ibid.

32.
“The New York Stock Exchange”: Author interview with Henry Paulson Jr.

33.
“I questioned whether”: Ibid.

34.
“magical hold at the summit”: “Behind the Brass Plate,”
The Economist
, April 27, 2006.

35.
“The idea of being Treasury secretary”: Todd Purdum, “Henry Paulson’s Longest Night,”
Vanity Fair,
October 2009.

36.
“There are no dress rehearsals”: Henry Paulson Jr.,
On the Brink
(New York: Business Plus, 2010), p. 39.

37.
“I think I surprised and delighted him”: Purdum, October 2009.

38.
Details from Paulson’s confirmation hearing are from the June 27, 2006, public transcript.

39.
Biographical details about Lloyd Blankfein: Author interviews with Lloyd Blankfein.

40.
“But Lloyd always teased”: Author interview with Richard Kalb.

41.
“He was brilliant”: Author interview with Rabbi Abner German.

42.
“He was very personable”: Author interview with Richard Kalb.

43.
“You survive at either”: Author interview with Robert Steel.

44.
“We were completely unprepared”: Author interview with David Drizzle.

45.
“Many of the people”: Author interview with Roy Geronemus.

46.
“As exam period approached”: Author interview with David Drizzle.

47.
“became more studious”: Ibid.

48.
“to keep certain large”: Lloyd Blankfein’s entry in Harvard University’s class of 1975 twenty-fifth reunion brochure, 2000.

49.
“We were street fighters”:
Fortune,
March 2, 2008.

50.
“He was clearly bright and energetic”: Charles D. Ellis,
The Partnership
(New York: Penguin Press, 2008), p. 265.

51.
“That’s probably not”: Ibid., p. 266.

52.
“It’s not about hanging onto”: Lloyd Blankfein comments at a breakfast sponsored by
Fortune
magazine on October 15, 2009.

53.
“in order to gain credibility”: Author interview with Jacob Goldfield.

Chapter 18: Alchemy

1.
“It’s all about IQ”: Rich Karlgaard, “Microsoft’s IQ Dividend,”
WSJ,
July 28, 2004.

2.
Biographical details about Josh Birnbaum as well as his career at Goldman Sachs are from author interviews with Josh Birnbaum.

3.
“When securitization arrived”: Author interview with Sandy Lewis.

4.
“three I’s of new markets”:
WSJ,
July 5, 2008.

5.
Information on the Markit investigation is from Robert Lenzner,
Forbes,
July 14, 2009.

6.
E-mails and documents about the ratings agencies are from the October 2008 U.S. House of Representatives hearing by the Committee on Oversight and Government Reform.

Chapter 19: Getting Closer to Home

1.
Except where noted, this account comes from numerous conversations with the Goldman traders involved, plus from nine hundred pages of documents released in April 2010 by the U.S. Senate Permanent Subcommittee on Investigations as part of its investigation into the role Goldman Sachs played in the near collapse of the financial system in 2007 and 2008.

2.
“When Paulson and [Paolo] Pellegrini”: Gregory Zuckerman,
The Greatest Trade Ever
(New York: Crown Business, 2009), p. 154.

3.
“If you want to keep selling”: Ibid.

4.
“heroic”: Author interview with Josh Birnbaum.

5.
“It was a joke”:
Time,
July 27, 1981.

6.
“I can give you one hundred”: Author interview with David Viniar.

7.
“The world was good, right?”: Ibid.

8.
“One of my jobs at the time”: Author interview with Dan Sparks.

9.
“We were seeing signs”: Ibid.

10.
“That was kind of a first sign”: Ibid.

11.
“The words we used”: Author interview with David Viniar.

12.
“trade Goldman’s own capital”: Kate Kelly, “How Goldman Won Big on Mortgage Meltdown,”
WSJ,
December 14, 2007.

13.
“What you really needed”: Author interview with David Viniar.

14.
“I had senior guys”: Author interview with Dan Sparks.

15.
“It was
tough,
okay?”: Ibid.

Chapter 20: The Fabulous Fab

1.
Unless otherwise indicated, information about Fabrice Tourre and Goldman’s involvement in the ABACUS transaction has been taken from the nine-hundred-plus pages released in April 2010 by the U.S. Senate Permanent Subcommittee on Investigations, from e-mails released publicly by Goldman Sachs, and from documents filed in the April 2010 SEC lawsuit against Goldman Sachs and Tourre.

2.
“This was the trade”: Author interview with Dan Sparks.

3.
he “briefly lost his cool”:
WSJ,
April 26, 2010.

Chapter 21: Selling to Widows and Orphans

1.
Unless otherwise indicated, information about Fabrice Tourre and Goldman’s involvement in the ABACUS transaction has been taken from the nine-hundred-plus pages released in April 2010 by the U.S. Senate Permanent Subcommittee on Investigations, from e-mails released publicly by Goldman Sachs, and from documents filed in the April 2010 SEC lawsuit against Goldman Sachs and Tourre.

2.
“bright line”: Author interview with Dan Sparks.

3.
“I don’t think”: Ibid.

4.
“We lost a ton”: Ibid.

5.
581-page report: Final report of Michael J. Missal Bankruptcy Court Examiner, February 29, 2008.

6.
“In other words”: Matt Taibbi,
Rolling Stone,
July 9–23, 2009.

7.
“The simultaneous selling”: Ibid.

8.
“We started marking our clients”: Author interview with Dan Sparks.

Chapter 22: Meltdown

1.
Unless otherwise indicated, information about Fabrice Tourre and Goldman’s involvement in the ABACUS transaction as well as
on the effect Goldman’s marks had on other Wall Street firms has been taken from the nine-hundred-plus pages released in April 2010 by the U.S. Senate Permanent Subcommittee on Investigations, from e-mails released publicly by Goldman Sachs, and from documents filed in the April 2010 SEC lawsuit against Goldman Sachs and Tourre.

2.
“Definitely some people were shocked”: Author interview with Josh Birnbaum. Much of the account of the collapse of Bear Stearns’s two hedge funds in 2007 comes from William D. Cohan,
House of Cards
(New York: Doubleday & Co., 2009).

3.
“Ben shared my concerns”: Henry Paulson Jr.,
On the Brink
(New York: Business Plus, 2010), p. 63.

4.
“All these CEOs”: Ibid.

5.
“If you had called me”: Author interview with Stan O’Neal.

6.
“stunning strategy”: Peter Eavis, “Questions Arise About Goldman’s Blowout Quarter,”
Fortune,
October 15, 2007.

7.
“For more than three months”:
NYT,
November 19, 2007.

Chapter 23: Goldman Gets Paid

1.
“interconnected”: Author interview with Robert Steel.

2.
Except where indicated, much of the detail about AIG, AIG Financial Products, and Goldman’s collateral calls on AIG come from William D. Cohan, “Collapse of the House of Hank,”
Institutional Investor,
April 2010, and from documents released in 2010 and 2011 by the Financial Crisis Inquiry Commission.

3.
“They were one hundred percent right”: Author interview with David Viniar.

4.
Personal evaluation forms of Josh Birnbaum, Dan Sparks, Mike Swenson, and Fabrice Tourre were found in documents released in April 2010 by the U.S. Senate Permanent Subcommittee on Investigations.

5.
“The structured-products traders”:
WSJ,
December 14, 2007.

6.
“The good thing we did”: Author interview with Dan Sparks.

7.
SEC interviews Sparks:
WSJ,
May 15, 2010.

8.
“I guess it depends”: Author interview with Josh Birnbaum.

Chapter 24: God’s Work

1.
“Our history of good performance”:
WSJ,
January 11, 2011.

2.
“I think there are a lot of things”: Author interview with Lloyd Blankfein.

3.
“The first thing you need to know”: Matt Taibbi,
Rolling Stone,
July 9–23, 2009.

4.
“That
Rolling Stone
article”: Author interview with Lloyd Blankfein.

5.
“This is not an unalloyed”: John Gapper,
Financial Times,
December 24, 2009.

6.
“If Lloyd had a twin brother”: Warren Buffet, speech at the 2010 Berkshire Hathaway annual meeting, as reported by Reuters, May 1, 2010.

7.
“we never had any”:
Financial Times,
April 22, 2010.

8.
“Goldman became”: Author interview with Steve Schwarzman.

9.
“Front-running is illegal”: Author interview with Eliot Spitzer.

10.
“to embrace conflicts”:
NYT,
May 19, 2010.

11.
“My take on the whole firm”: Author interview with Sandy Lewis.

12.
“In a crisis”: Author interview with Lloyd Blankfein.

13.
“I think the big challenge”: Author interview with Clayton Rose.

14.
“The fundamental problem”: Author interview with Charles Elson.

15.
“You settle with the SEC”: Author interview with Jim Cramer.

16.
“at least ironic”: Author interview with Lloyd Blankfein.