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Thursday, October 15, 2009
Mack at Penn: I told Geithner where to get off

Morgan Stanley boss John Mack visited Penn's Wharton School last month and told students and faculty how he kept the US Government from forcing him to sell the company for $1. Reporters were barred, but Wharton published an account last night at www.knowledge.wharton.upenn.edu, and the in-house version is a fun read. Though it'd be more fun if it hadn't already been recounted, since Mack spoke, in New York Timesman Andrew Ross Sorkin's book Too Big to Fail... Excerpts from the Mack at Wharton version:

"During the depths of the global financial meltdown in September 2008," Mack needed to raise billions quick to keep his company in business. He reached out to Chinese bankers, to Warren Buffett. But "his effort to negotiate such a deal on a Sunday afternoon with Japan's leading bank - Mitsubishi UFJ Financial Group - kept getting interrupted by phone calls from Geithner and Paulson, begging him to call JPMorgan Chase's CEO, Jamie Dimon" to arrange the shotgun merger.

"After the second interruption, this time from Paulson, Mack recalled that he was already at the end of his rope. 'I'm on the phone for three or four more minutes and [my assistant] comes back and says, 'Tim Geithner is on the phone and he wants to talk to you now!'" Mack said he refused, instructing his assistant to tell Geithner to go have sex. Using the familiar Anglo-Saxon term.

"Mack stayed on the phone as Mitsubishi agreed to invest up to $8.4 billion in Morgan Stanley... 

"Mack... recounted what he had told Paulson, Bernanke and Geithner in their first phone call: 'Let me ask a question of the three of you. I have 45,000 employees. In New York City, you have AIG, Lehman Brothers, Bear Stearns, Merrill Lynch and the other layoffs -- probably 45,000 jobs that they lost. From a public-policy standpoint, does [merging Morgan Stanley with JPMorgan Chase] make sense?'...

No hard feelings re Paulson, Geithner and Bernanke?  At the time, he says he told them, "'I have the utmost respect for the three of you.'" But no $1 deal: "'I'll take the firm down'" first.

"A year later, Morgan Stanley is alive and doing well. On January 1, the now-64-year-old Mack will hand over the CEO duties to current co-president James Gorman.... But Mack still believes in the markets. "I own gold, I own index TIPS to inflation, I own a certain integrated oil company and master limited partnerships in oil and gas ... and of course I own Morgan Stanley stock." The next crisis, he added,"won't be in my lifetime."

Posted by Joseph N. DiStefano @ 10:16 AM  Permalink | 2 comments
Comments   
Posted 12:01 PM, 10/15/2009
fjayhoenemeyer
Deal guys come & deal guys go (r.i.p. bruce ), but worms like turbo timmy ,we're stuck with forever
Posted 08:24 PM, 10/18/2009
kwhitehouse
Joseph: You have the wrong URL for Knowledge@Wharton. It's http://knowledge.wharton.upenn.edu/ (no 'www'). To go directly to the John Mack piece, it's: http://knowledge.wharton.upenn.edu/article.cfm?articleid=2357
2 comments
About Joseph N. DiStefano
Joseph N. DiStefano writes this blog to feed his PhillyDeals column, which is printed in the business pages of The Philadelphia Inquirer every Sunday, Tuesday, Wednesday, Thursday and Friday. Joe has worked at the Inquirer, mostly, since 1988. He has also written for Bloomberg and Gannett, authored the book Comcasted, majored in economics at Penn, and fathered six children. Reach Joe at 215-854-5194 and JoeD@phillynews.com

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