She’s the anchor of CNBC’s Closing Belland host and managing editor of the nationally syndicated Wall Street Journal Reportwith Maria Bartiromo. Her stock in trade is making sense of how the market performs each day.
In her latest book, The Weekend That Changed Wall Street: An Eyewitness Account, with the help of writer Catherine Whitney, she casts her insider’s gaze on the tumultuous fall weekend in 2008, when 158-year-old investment firm Lehman Bros. crumbled, and the big players of finance scrambled to make a deal for the sale of the firm to avoid what many thought would lead to a domino crash resulting in a global financial meltdown.
Thanks to interviews with former Treasury secretary Henry Paulson, former AIG chairman Hank Greenberg, former CFO of Lehman Bros. Erin Callan, former presidentBill Clinton and many others, Bartiromo retraces that weekend with a fast-paced account. What gives her an edge is that she’s known many of them for years and can provide telling details about where they live, what they look like, how they dress and their characters.
Since we know how it all ends — Lehman failed, and the markets are still standing — most of the fun comes from her behind-the-scenes reporting of that slice of time.
Bartiromo, a columnist for USA TODAY, sets the stage in her opening chapter, describing the 2006 holiday party held at Steve and Christine Schwarzman’s Park Avenue apartment. She reveals that well-known financier Saul Steinberg, Bartiromo’s father-in-law, used to own this 24,000-square-foot apartment — she had her engagement party there. Schwarzman, chairman of the Blackstone Group, bought it for more than $30 million in 1999.
The high-profile party was crowded with well-known Wall Street faces. The host was dressed as James Bond, 007, and “scantily clad Bond girls” roamed the party serving drinks, she writes. A few months later, she goes to Schwarzman’s 60th birthday bash at the Armory in New York and is amazed that it’s decorated as a replica of the couple’s Park Avenue living room.
“Looking back on those parties, I can recall the giddiness in the air, the extravagance, the excess,” she writes. “It is burned in my memory — the sight of all those incredibly accomplished and wealthy men and women laughing and drinking.”
The heart of the book is the story of the September weekend that the “titans of capitalism” gathered with Paulson, then-New York Fed president Timothy Geithner and then-SEC chairman Christopher Cox to face the “blunt reality that Lehman Bros. … could not open for business the following Monday without a rescue — and that rescue was in their hands,” she writes.
When the “big weekend,” arrives, she “had been working the phones and text messaging for hours.” The talk: Would Lehman survive until Monday, or would the Fed backstop a purchase, as it had done with Bear Stearns six months earlier? “Most people I spoke with said to me, ‘Maria, this is the worst thing I’ve ever seen.’ ”
Midway through her Closing Bell show on Friday, Lehman was on the ropes, and her “BlackBerry started buzzing with the news that Geithner had called a major-league powwow for later that evening, and the principals of the big firms were heading down to the Federal Reserve.”
The men “plowed through the rain-drenched streets of lower Manhattan, each filled with a deep inner turmoil,” she reports. “The idea that they would finance a competitor was anathema to them. ‘Let’s say we got together and saved Lehman,’ one banker speculates. ‘Do we then get together and save the next firm and the next firm?’ ”
At the end of the weekend, the CEOs had failed at the core mission, to save Lehman Bros., she writes.
But her story goes further. There’s an intriguing section that details her interviews during 2007 with Angelo Mozilo, then chairman of Countrywide Financial, once the largest mortgage lender in the U.S. “As the cracks were starting to appear in the real estate industry, he was on the defensive, feeling misunderstood and wrongly targeted,” she writes. “Like some of his counterparts, he was quick to blame the media for the aura of crisis where he felt none existed.”
Great bit, considering that on Oct. 15, 2010, the Securities and Exchange Commission announced that Mozilo will pay a total financial settlement of $67.5 million that will be returned to investors who were hurt. Mozilo’s financial penalty is the largest paid by a public company’s senior executive in an SEC settlement.
Bartiromo dips into the looming AIG bailout that was being hashed out that same weekend. She recounts the back story of the sale of Merrill Lynch to Bank of America, and how the pending implosion of Citigroup was kept tightly under wraps.
One eye-opening exchange is her interview with Elizabeth Warren, then the chair of the Congressional Oversight Panel, charged with reviewing TARP.
“When I asked her, ‘Where has the TARP money gone?’ I was taken aback by her answer,” she writes. ” ‘We not only do not know. We’re never going to know,’ ” Warren explains to her. Why? Paulson had failed to establish even minimal reporting procedures, she’s told.
Bartiromo’s final analysis: “The Lehman weekend changed Wall Street, not because of the failure of a single investment bank … (but) because it was a stunning moment when the confidence of a nation and the world was blown,” Bartiromo writes. “Capitalism is not a tangible entity with inherent value, like a precious jewel. Its value is wholly dependent on public trust.”
The Weekend That Changed Wall Street:
An Eyewitness Account
By Maria Bartiromo
Portfolio, $26.95, 232 pages