House of Cards (92 page)

NOTES

Abbreviations

Chapter 1: The Ultimate Roach Motel

4. Thornburg had a liquidity problem: SEC filings of Thornburg Mortgage.

5. UBS filing: SEC, February 14, 2008.

5. Thornburg … caught a major cold: SEC filings of Thornburg Mortgage.

6. “Financial Ebola”: Yahoo message board, March 2, 2008.

7. “one or two million light”: “Focus: A Day in the Life of Masters of the Universe,”
Independent
(U.K.), April 25, 2004.

7. fund closed in February 2008: Ron Beller letter to investors, February 28, 2008.

8. “Our mission is to be …”: Carlyle Capital Web site.

10. sixty-three thousand jobs had been lost: NYT March 7, 2008.

10. “Godot has arrived”: Ibid.

10. price of the credit default swaps:
WSJ,
March 10, 2008.

10. “were off in a world of their own”:
Australian,
May 29, 2008.

Chapter 2: The Confidence Game

15. “Being denied such a loan”: Roddy Boyd, “The Last Days of Bear Stearns,”
Fortune,
March 31, 2008.

18. “Though Bear Stearns's overall financing”:
WS],
May 28, 2008.

18. “We are now pretending”: Michael Shedlock on Mish's Global Economic Trend Analysis blog, March 10, 2008.

19. “no comment”: Interview with Dean Debuck, May 21, 2008.

25. “Bear did not get out of the way fast enough”:
SmartMoney.com
, March 13, 2008.

25. “Even if I were the most bearish”:
Bloomberg.com
, August 11, 2008.

25. At about the moment: Interview with New York Federal Reserve public information officer Calvin Mitchell.

27. “So that left only ten days”: Steven Smith,
TheStreet.com
, March 14, 2008.

27. At 5:06 on the afternoon of March 11: Copies of e-mails between Stuart Smith at Hayman Capital and Goldman Sachs. Christopher Kirkpatrick, the general counsel of Hayman Capital, did not respond to numerous requests to be interviewed.

31. “The prime brokerage withdrawals”: Interview with Roddy Boyd. JPMorgan Chase declined to answer any questions for this account.

Chapter 3: “Bear Stearns Is Not in Trouble!”

33. “Let's stay focused”:
WSJ,
May 28, 2008.

35. “Every banker knows that”: Walter Bagehot,
Lombard Street: A Description of the Money Market
(New York: BiblioBazaar, 2006), 43.

36. “Mr. Schwartz's delivery”: George Anders,
WS],
March 19, 2008.

Chapter 4: The Run on the Bank

49. “They were the ones”:
NYT,
July 13, 2008.

53. Bear Stearns had trading positions with some five thousand other firms:
WSJ,
June 23, 2008.

Chapter 5: The Armies of the Night

61. “And it was widely rejected out of hand”: Transcript, Senate Banking Committee hearing, Sen. Chris Dodd, chairman, April 3, 2008.

64. At 2 A.M. Geithner called: John Cassidy “Anatomy of a Meltdown,”
NY,
December 1, 2008.

65. “the further we got into it”: Ibid.

Chapter 6: Feeding Frenzy

74. “the final humiliation”:
Financial Times,
March 15,2008.

76. “When Bear's liquidity crisis”: NYT, M&A blog, June 30, 2008.

78. available liquidity: Bear Stearns & Co. proxy statement, April 28, 2008, 43.

Chapter 7: Total Panic

81. “It was just clear”:
WSJ,
March 18, 2008.

Chapter 8: The Price of Moral Hazard? $2

94. “We kind of slept on it”: Bryan Burrough, “Bringing Down Bear Stearns,”
Vanity Fair,
August 2008.

94. “That article certainly had an impact”: Ibid.

95. “Things didn't firm up”:
WS],
March 18, 2008.

98. “I believe this is the right action”: Ibid.

102. “That sounds high to me”: Burrough, “Bringing Down Bear Stearns.”

103. “I tell people”: Jamie Dimon on
The Charlie Rose Show,
July 7, 2008.

104. “jumped up”:
Washington Post,
November 11, 1999.

Chapter 9: The Fed Comes to the Rescue (After the Battle Is Over)

109. Two million square feet of office space:
WSJ,
March 18, 2008.

110. “What can I say?” Burrough, “Bringing Down Bear Stearns.”

114. “five-vodka event”:
WSJ,
March 18, 2008.

Chapter 10: Mooning at the Wake

116. “This is like waking up”:
NYT,
March 17, 2008.

121. “Once you have a run”: Ibid.

121. “Basically we're all wondering”:
WSJ,
March 18, 2008.

121. “The hard capitalist truth”: Ibid.

122. “Make no mistake”:
NYT,
March 18, 2008.

125. “Same with the team at Bear Stearns”: Ibid.

Chapter 11: “New Developments from Hell”

133. “What do you mean,
we”: WSJ,
May 29, 2008.

135. “Send Bear back into bankruptcy”: NYT, March 24, 2008.

135. “seething, fearful”:
NYT,
March 20, 2008.

Chapter 12: “We're the Bad Guys”

145. “There has been no evidence”:
New York Sun,
April 16, 2008.

Chapter 13: Cy

153. Just after the start: NYT, May 1, 1923.

153. “mainly rich Park Avenue”: Judith Ramsey Ehrlich and Barry Rehfeld,
The New Crowd
(Boston: Little, Brown & Co., 1989), 143.

Chapter 14: Ace

160. “He was a terrific boy”:
Daily Oklahoman,
October 7, 2000.

162. “I just thought it was”: Alan Green-berg on
The Charlie Rose Show,
January 2, 2004.

162. “that was it”: Mark Singer, “The Optimist,”
NY,
April 26 and May 3, 1999.

163. “I was very well prepared”:
University of Missouri Alumni Magazine,
October 2005.

164. In April 1957: New York Stock Exchange records.

165. “Well, the odds aren't too bad”: NYT June 11, 1989.

165. “I never put anything off”:
Daily Oklahoman,
October 7, 2000.

166. “I went to Cy”: Singer, “The Optimist.”

167. “He was the only one”: Ehrlich and Rehfeld,
The New Crowd,
147.

Chapter 16: May Day

183. When Cayne came back to the office: Marvin Davidson declined to be interviewed for this account.

Chapter 17: Haimchinkel Malintz Anaynikal

193. “We had to start”:
The Charlie Rose Show,
January 2, 2004.

194. “The implications”: Alan C. Green-berg,
Memos from the Chairman
(New York: Workman Publishing, 1996), 13.

194. “I would also like to add”: Ibid., 15.

194. “Some of the things”: Ibid., 16.

194. “appears to be”: Ibid., 17.

197. “There has been a lot of”: Green-berg,
Memos,
19.

198. “I think we should be”: Ibid., 21.

198. “Every partner”: Ibid., 20.

199. “I am well aware”: Ibid., 22.

199. “more determined than ever”: Ibid., 27.

200. “Lets make nothing but money”:
NYT,
June 12, 1983.

206. “I own stock”: NYT, June 10, 1998.

206. “From this day on”: Greenberg,
Memos,
40.

208. “a strikingly attractive”: NYT June 11, 1989.

Chapter 19: “Bullies Always Cave”

217. “loves or admires Jimmy Cayne”: David Vise,
Washington Post,
October 29, 1989.

217. “[B]ridge is a man's game”:
M,
December 1989.

218. “Cayne is a man”:
London Evening Standard,
March 31, 2008.

220. “I can't make any apologies”:
USA Today,
August 4, 1992.

Chapter 20: The Math Whiz and the Baseball Star

224. “best deal”:
Cigar Aficionado,
November/December 1999.

224. “No Wall Street CEO”:
Trader Monthly,
June 2007.

224. “No smoking anywhere”: Greenberg,
Memos,
118.

227. “moment arrived that would make”: Bloomberg, October 3, 2007.

232. “Its bet paid off”:
WSJ,
November 11, 1993.

Chapter 21: “We're All Going to a Picnic and the Tickets Are $250 Million Each”

239. “bucket shop”: Gretchen Morgenson, “Waiting for the Other Shoe to Drop,”
Forbes,
November 3, 1997.

240. “on charges of being”:
NYT,
June 6, 1997.

245. “Minute by minute”: Roger Lowenstein,
When Genius Failed
(New York: Random House, 2000), 145.

246. “Where are you”: Ibid., 156.

Chapter 22: The Fish Rots from the Head

263. “dull businesses and scandal”: Erin Arvedlund, “Who Will Buy Bear Stearns,”
Barron's,
August 7, 2000.

267. Anamarie Giambrone:
NYT,
February 28, 2002.

Chapter 23: The 10-in-10 Strategy

271. “I've never seen all these people”:
Chief Executive,
January 1, 2002.

273. “That was all nonsense”: Ibid.

274. “Bear Stearns and its impressive”:
Business Wire,
April 4, 2002.

275. “The Card Player”:
Forbes,
October 14, 2002.

277. “Investors said, ‘I don't want”: NYT November 9, 2008.

277. “The Fed's easy-money”: John Cassidy “Anatomy of a Meltdown,” NY December 1, 2008.

282. “He had come up with an approach”: NYT, June 28, 2007.

283. “eight-figure compensation”: Bloomberg, July 3, 2007.

283. 75 percent of BSAM's total revenues: Bank of America lawsuit, filed October 29, 2008, against Bear Stearns, Ralph Cioffi and Matthew Tannin.

283. He certainly lived very well: Details about Cioffi's lifestyle from
Northjersey.com
, June 18, 2008.

Chapter 24: Cayne CAPs Spector

288. On the call:
New York Post,
August 6, 2004.

292. “Consistently performing makes”: Andrew Bary “How Sweet It Is,”
Barron's,
August 2, 2004.

Chapter 25: Cioffi's Bubble

293. “pockets of severe stress”: Alan Greenspan speech at Americas Community Bankers Annual Convention, Washington, D.C., October 19, 2004.

293. “global savings glut”: Ben Bernanke speech at the Virginia Association of Economics, Richmond, Virginia, March 10, 2005.

293. “In retrospect”: John Cassidy, NY December 1, 2008.

294. “increase home ownership”: Dennis Sewell,
Spectator,
October 1, 2008.

296. “an explicit target”: Russell Roberts, “How Government Stoked the Mania,”
WSJ,
October 3, 2008.

300. “I have been waiting”:
NYT,
October 19, 2008.

Chapter 26: “The Entire Subprime Market Is Toast”

302. “Funds operating procedure”: The Commonwealth of Massachusetts in the matter of Bear Stearns Asset Management, Inc., administrative complaint, docket no. E-2007-0064, filed November 14, 2007, 3.

304. “I don't like to argue”: Ibid., 28.

305. The “investment philosophy”: This account of the Bear Stearns hedge funds is taken from a variety of sources, including the actual monthly statements sent to investors, the Bank of America complaint, the Commonwealth of Massachusetts complaint, the amended complaint filed by Barclays against BSAM, the June 18,
2008, U.S. grand jury indictment of Cioffi and Tannin, the offering memoranda of the High-Grade and Enhanced Leverage Funds, conversations with BSAM executives and the funds' investors, and a review of related e-mails.

306. testimony of Kyle Bass: “The Role of Credit Rating Agencies in the Structured Finance Market,” September 27, 2007, at a U.S. House of Representatives subcommittee hearing.

306. “In part as a response”: United States against Ralph Cioffi and Matthew Tannin, filed June 18, 2008, in the U.S. District Court for the Eastern District of New York, CR 08-415, 6.

307. Everquest Financial: Information regarding the proposed Everquest transaction was taken primarily from the Everquest S-l document filed with the SEC on May 9, 2007, and from various other sources referred to in the note for page 305.

309. At least one plaintiff: Bank of America complaint, filed October 29, 2008, 10.

312. “suggested that the houses”:
NYT,
December 6, 2006.

Chapter 27: “If There's Fraud, We're Gonna Pay”

315. get Paulden fired: Interview with Pierre Paulden. He directed me to Mike Carroll, the editor of
Institutional Investor
. Carroll did not respond to an e-mail seeking information.

317. “It's time to buy”:
WSJ,
July 11, 2007.

317. “When you read the research”: Ibid.

319. “I don't see that going forward”: Bank of America complaint, 11.

322. “broad financial concern”: Ben Bernanke testimony to House budget committee, February 28, 2007.

323. “Don't talk about”: Ibid., 11.

325. “inappropriately categorized”:
BusinessWeek,
March 15, 2007.

326. “We're very proud”: Reuters, August 6, 2007.

329. The next day, April 25: The account of the April 25, 2007, conference call with investors comes from a transcript of the call.

346. “but that the article was untrue”: Bank of America complaint, 29.

350. June 14 meeting: The account of the June 14, 2007, BSAM meeting with creditors comes from a transcript of the meeting.