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One by one, the investors’ interest withdrew—there were simply too many toxic loans on WaMu’s books and too much uncertainty about the scope of the losses. Chase and Citi were the last two to remain in, but when Lehman Brothers filed for bankruptcy on September 15, market conditions worsened significantly and WaMu experienced another $10 billion in deposit withdrawals. It was unlikely that WaMu would survive unless it started borrowing from the Federal Reserve Board’s discount window. However, Fed lending—like FHLB lending—is heavily collateralized, meaning that the more a bank borrows from those sources, the more expensive it becomes for the FDIC to resolve. For that reason, the law prohibits the Fed from lending to a failing institution, and as a matter of courtesy, the Fed typically consults with us before lending to a troubled bank and does so only with our consent. As WaMu continued to hemorrhage deposits, David Bonderman reached out to Fed Governor Kevin Warsh for help. Kevin referred the call to Don Kohn, who had been our primary contact on the WaMu situation. Don and I held a conference call with Bonderman on Saturday, September 20, and I was shocked at the combative way Bonderman pressed Don for access to Fed lending. Don held firm. We told Bonderman that he needed to continue with efforts to sell or recapitalize the bank.
Bull by the Horns
Sheila Bair
In 1914, Britain, hard pressed to finance its fighting forces, adopted measures to discourage demands for gold, thereby abandoning the gold standard in everything but name; meanwhile, the value of a pound in dollars sank from $4.86 to a 1920 low of $3.20. In an effort to recoup its lost glory, Britain resumed a full gold standard in 1925, tying the pound to gold at a rate that restored its old $4.86 relation to the dollar. The cost of this gallant overvaluation, however, was chronic depression at home, not to mention the political eclipse for some fifteen years of the Chancellor of the Exchequer who ordered it, Winston Churchill.
Business Adventures
John Brooks
He worked harder than anyone. “Fitness was almost a religion to him,” one teammate would say of him. “I am a slave to baseball,” Gehrig said. A willing slave, a slave who loved the job and remained forever grateful at just the opportunity to play.
Discipline Is Destiny
Ryan Holiday
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