Asia shifts to debt markets
1 January, 2013Discovery Channel Magazine: The Financial Crisis, Era by Era
1 January, 2013Discovery Channel Magazine, January 2013
Friday September 12, 2008. At 4pm, as the rattled New York market closed, the New York Federal Reserve began calling the chiefs of America’s biggest banks. The message: there’s a meeting at 6pm, and your attendance is compulsory.
None of the chief executives were surprised; as the accompanying article shows, it had been clear for months that the banking system was spiraling towards collapse. Bear Stearns had fallen and been pushed into a merger with JP Morgan in March; the huge mortgage guarantors, Freddie Mac and Fannie Mae, had been taken over by the state in September to stop them from collapsing; and by now Lehman Brothers was on the brink of collapse, insurer AIG little better, and Merrill Lynch in increasing peril too.
Gradually the bankers ditched what they were doing, with varying degress of disgruntledness. Goldman Sachs CEO Lloyd Blankfein was at a conference where he had just agreed to let Hillary Clinton speak first; after receiving his call from the Fed, he told her he’d have to swap back again. Jamie Dimon, who ran JP Morgan, cancelled a dinner with his daughter’s boyfriend’s parents, who he was meeting for the first time. It was pouring with rain and the traffic was bumper to bumper; John Mack, CEO of Morgan Stanley, told his driver to use a bike lane alongside the West Side Highway. Hank Paulson, the treasury secretary, had flown in from Washington but his Secret Service Chevrolet Suburban was wedged in the Holland Tunnel between New Jersey and Manhattan, making him late for the very meeting he had just called.
33 Liberty Street, the New York Federal Reserve building, looks like an ancient financial landmark should: stone stocky, grand, imposing, the sort of place that should have gold in the vault (which it does, and plenty of it). It has hosted its fair share of important meetings since its 1924 inauguration, but few were as important as this.
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