House of Cards by William D. Cohan

desk. I spent a lot of time with Bob Upton and Treasury trying to figure out, ‘Where do we stand?' I had a lot of meetings to figure out, ‘What's our plan?' We're into Plan C at this point…. I was not in any of the meetings with JPMorgan or Barclays or whoever else it was that we talked to about trying to do something strategic.” Was his role something like keeping a finger in the dike? “Yes, but I was running out of fingers. It was an eerie thing. I gave a presentation to the sales force Tuesday night, basically the same speech. Took them through our balance sheet in liquidity and where we stood, and Tuesday night felt really good that hundreds of people at the firm are listening and I'm telling them the truth—I'm not making this stuff up, I'm not just trying to make them feel better. Twenty-four to thirty-six hours later, I was unable to speak. In terms of how quickly did it happen, and could it possibly happen that quickly, it really did. It really went from Wednesday morning to Thursday afternoon, twenty-four hours from solvent to dead. It seems inconceivable.”
    Around six on Thursday night the senior Bear Stearns executives gathered in Sam Molinaro's sixth-floor office. In attendance were, among others, Schwartz, Molinaro, Friedman, Begleiter, Upton, and John Stacconi, the treasurer of the securities company. “We go through the cash position, and there's a lot of questions as to how accurate is it,” Friedman explained. “It's hand-scribbled on a piece of legal pad. The firm was not really set up—most firms are not—to do real-time cash accounting. You come in in the morning and you reconcile your bank accounts and you see where you stand, and try to put this all together. To try to do it on the fly in the evening was like scribbles. But the bottom line is $2.5 billion of cash. Over here, I've got this spreadsheet that I got from the repo desk of money they already know that they're losing tomorrow, and that's $14 billion. They know they're going to need at least $1 billion or so that they're going to have to borrow out of the cash reserve. Basically, if nobody else pulls any money, we're down to zero when we open the day. Not a good place to begin. We go round and round, challenging the numbers, but they're pretty accurate. Then we're like, ‘Okay, what now?’”
    Remembered Begleiter: “We still had cash, but we had items we had to repay in the morning”—for instance, a multibillion-dollar cash repayment to Citigroup. “When the team finished going through everything related to our cash situation, I remember saying, ‘Guys, we need advice; it is not clear that we should repay Citi. At some point our responsibilities shift from working for the stockholders to working for the debt holders. It's essentially all the money we have left and we'd have to send it out to just one party first thing in the morning.' Everybody knew this. I was just the first one who said it. Whether we repaid Citi or not, given the other likely cash requests on Friday, it was clear to me that this was the end. We were gone as an independent, viable firm. If you're talking about seminal meetings, that meeting on Thursday at 6 P.M. in Sam's conference room, that's when I realized we were done.”
    “What are my options?” Molinaro asked Upton. Since the previous Friday, Upton reported to Molinaro, the firm's cash had declined to $5.9 billion, from $18.3 billion, and Bear still owed Citigroup $2.4 billion. “Mr. Molinaro buried his head in his hands, Mr. Schwartz looked ashen and left abruptly,” the
Wall Street Journal
reported.
    Regulators from both the SEC and the New York Fed began arriving on the sixth floor. They were put in separate conference rooms and told to cool their heels. Molinaro called Vincent Tese, the lead independent director on the Bear Stearns board. He was in Jupiter, Florida, just north of his Palm Beach home, having dinner at Buonasera Ristorante with his fellow director Fred Salerno, a former