Tuesday, October 20, 2009

What if Bank of America had acquired Lehman, instead?

It's a question loosely floated by author Andrew Ross Sorkin in his new book, Too Big To Fail: the Inside Story of How Wall Street and Washington Fought to Save the Financial System - and Themselves. In an excerpt published on Dealbreaker today:

As the dinner was ending, Mr. Geithner, approached Mr. Lewis and, leaning close, whispered, “I believe you have a meeting with Dick.” “Yeah, I do,” Mr. Lewis replied.

Mr. Geithner gave him directions to a side room where the two could speak in private. He had apparently already given Mr. Fuld the same instructions, because Mr. Lewis noticed him across the room looking back at them like a nervous date.

* * * * * * * * * * * * *

Seeing Mr. Fuld start to walk in one direction, Mr. Lewis headed in the other; with half of Wall Street looking on, the last thing either of them needed was to have word of their meeting get out. The two men eventually doubled back and found the room. Mr. Fuld explained that he would want at least $25 a share from Bank of America to buy Lehman; Lehman’s shares had closed that day at $18.32. Mr. Lewis thought the number was far too high and couldn’t see the strategic rationale. Unless he could buy the firm for next to nothing, the deal wasn’t worth it. But he held his tongue.

Two days later, he called Mr. Fuld back.

“I don’t think this is going to work for us,” Mr. Lewis said as diplomatically as he could, while leaving open the possibility that they could discuss the matter again.

Hat-tip: Dealbreaker.

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