Free Web NovelAfter seeing Obama, Jamie Dimon couldn't take his eyes off him in shock.
Obama also stopped in his tracks after recognizing Jamie Dimon's face.
But only for a moment.
Like the politician he was, Obama quickly regained control of his expression and put on his trademark calm smile.
Perhaps wanting to give Jamie Dimon a moment to recover as well, he glanced around the room before greeting them.
“Hello, Chairman Dimon. And Charlie. It's been a while.”
I stood up and welcomed Obama.
“Obama. Welcome. Thanks for making the trip.”
“Not at all. I happened to have business in New York.”
After hearing our exchange, Jamie Dimon looked back and forth between Obama and me in disbelief before approaching.
“Charlie, is Senator Obama the candidate you're supporting?”
“Yes, Chairman. Senator Obama and I go way back. Long before the last presidential election.”
Jamie Dimon's eyes widened even further.
During the previous presidential election, nobody had imagined Obama would become a presidential candidate, so his reaction was only natural.
Obama extended his hand toward Jamie Dimon.
“It's an honor to meet you, Chairman Dimon.”
Jamie hesitated briefly before taking his hand.
“The honor is mine, Senator.”
After the handshake, Obama continued with a serious expression.
“I didn't know Chairman Dimon would be here.”
“I didn't know the senator was coming either.”
“Now, now. Let's not do this. Why don't we sit down and talk first?”
I guided both men to the sofa.
An awkward atmosphere lingered.
I looked at them one after another before speaking.
“I arranged this meeting because I expected today's result from the Fed and the Treasury.”
Both men turned their attention toward me.
“I expected them to decide to rescue Bear Stearns.”
“How did you know that, Charlie?”
At Jamie Dimon's question, I shrugged.
“You'll find out eventually. That's not important right now. Since they've decided to save Bear Stearns, they'll need congressional approval.”
The emergency three-hundred-million-dollar support package could be provided without congressional approval.
But financial assistance exceeding thirty billion dollars couldn't be carried out solely by the Fed and the Treasury.
“How much do you think the bailout will cost, Charlie?”
Obama asked.
He wasn't ignorant about economics, but he wasn't deeply immersed in it either.
“At least thirty billion dollars.”
“What? Thirty billion?”
Obama's eyes widened.
Apparently the figure was much larger than he'd expected.
“Yes. But that's only the first round of funding. It'll go far beyond that. You should assume it'll exceed one hundred billion dollars.”
“...Are they insane? Even if it's a financial company, is there really any reason to spend that kind of money saving it?”
Before I could answer, Jamie Dimon spoke first.
“Because it'll go bankrupt if they don't.”
“Bankrupt? What happens then?”
“It'll send a massive shock through the financial markets and amplify panic. Bear Stearns' stock will collapse. Other financial stocks will follow. Then the entire market index will plunge.”
Obama frowned slightly and tilted his head.
“Don't stock markets go up and down all the time anyway?”
“Yes, they do. But the impact will last. And honestly... the stock market won't be the biggest problem.”
Obama stared at Jamie Dimon, silently asking him to continue.
This time, I picked up where Jamie left off.
“Bear Stearns' collapse will spread to other financial institutions. Banks much larger than Bear Stearns could face liquidity crises. And when banks start wobbling, investors will rush to withdraw their money. That's when the real hell begins.”
“...It gets that bad?”
“Yes. Wall Street's banks are connected like a spiderweb. When one falls, the others topple like dominoes. That's reality.”
“So you're saying they have to keep bailing them out?”
I nodded calmly.
“That's how Wall Street works. And Wall Street sits at the center of the American economy.”
Obama sighed and shook his head.
“Obama. How is Hillary Clinton reacting? Have you heard anything?”
Obama hesitated briefly before answering.
“Hillary will support the bailout package. She has deep ties to Wall Street. It'll definitely influence her decision.”
Jamie Dimon nodded as though he agreed.
“Hillary is a candidate who represents Wall Street's interests. She probably won't make a decision that goes against them. What about you, Senator Obama?”
“I plan to oppose it completely.”
Obama looked directly at Jamie Dimon as he spoke in a firm voice.
The answer clearly caught him off guard.
Jamie's eyes widened.
“The bailout package is an attempt to solve Wall Street's problems with taxpayer money. The burden will ultimately fall on ordinary Americans. In the long run, we'd be better off liquidating bad assets and strengthening financial regulations.”
Jamie Dimon blinked several times, unable to respond.
“I don't claim to be an economic expert. But I believe this happened because financial institutions assumed the government would rescue them no matter how much risk they took. That kind of thinking could lead to an even bigger disaster in the future.”
As Obama pointed out the issue of moral hazard, Jamie's expression twisted slightly.
“That's why I'll oppose the bailout package. That's my position.”
Jamie sighed deeply and looked at me as if asking for help.
Smiling, I turned to him.
“Jamie, I actually agree with the moral hazard argument. Even after receiving bailout money, executives still walk away with astronomical bonuses, don't they?”
“Well...”
“I know. Their base salaries are low, and most of their compensation comes through performance bonuses. But those same executives made disastrous investments, lost enormous amounts of money, and survived only because of government assistance. Shouldn't they be forced to give something up too? Am I wrong?”
Jamie Dimon was a man whose thinking had been shaped entirely by Wall Street.
“Can you honestly guarantee this won't happen again? Of course not. Even if Bear Stearns' executives are replaced, the new executives will simply collect those bonuses instead. Everyone will be lining up for those positions. That's reality.”
Jamie couldn't answer.
His reaction was exactly what I expected.
I turned back to Obama.
“Obama. Do exactly what you believe. Oppose it completely. Murdoch's newspapers and television networks will support your position with favorable coverage and commentary.”
“But... what happens if we keep resisting? The American economy isn't really going to collapse, is it?”
“So what if it does? First you need to win the presidential election. No, before that, you need to win the Democratic primary.”
Obama was still far behind Hillary.
In fact, calling it a disadvantage hardly captured the gap.
“I'm not telling you to oppose it forever. Just delay it as much as possible. Then revise the bailout package to your liking and pass it.”
There was no way to block the legislation indefinitely.
If it never passed, the American economy truly could collapse.
If something couldn't be stopped, then the best strategy was to buy time and ensure the bailout package included an inspector who would move according to my interests.
The Financial Stability Oversight Committee would naturally be filled by the Fed, the government, and financial regulators.
That was a separate matter.
The important thing was ensuring Obama got to appoint the Special Inspector General.
“Obama. I'll send an economic expert to your campaign as a special advisor. Listen to him. If the Fed and Treasury submit legislation, revise it before passing it.”
“...America is really going to be okay, right?”
“Of course. It'll stumble. But it'll get back up quickly. That's America.”
Obama let out a deep sigh before finally nodding.
“Let's do it.”
I spent a long time explaining my plans to both men.
Naturally, I didn't reveal everything.
Even so, Jamie Dimon's eyes grew so wide they couldn't have widened any further.
Obama also listened with a grave expression, nodding repeatedly.
“Obama, hold a press conference tomorrow and announce that you cannot accept the Fed's and government's decision. And then...”
I laid out everything he needed to do.
I also assigned tasks to Jamie Dimon.
“Jamie, clean out JPMorgan Chase's bad assets as thoroughly as possible. That's the only way you'll emerge from this crisis even bigger than before. Especially if Citigroup collapses. We should split it up and divide the pieces between us, shouldn't we?”
Neither JPMorgan Chase nor we could absorb all of Citigroup.
The best approach would be to discard the worthless parts and carve up the valuable assets.
For that to happen, JPMorgan had to remain healthy.
“And JPMorgan Chase should support Obama's campaign as well. It'll be good for all of us.”
Jamie didn't answer immediately.
I could tell exactly what was troubling him.
“Obama will become president. No, I'll make sure he becomes president. We're all in the same boat now. The moment Obama enters the White House, you'll soar with wings.”
“Hah... I'll support Senator Obama personally. But corporate support will require discussion.”
“Will that be difficult?”
Jamie glanced at Obama before answering cautiously.
“...More than half the directors on the board support Hillary. Convincing them won't be easy.”
“Impossible?”
“If I force the issue, it's possible. But Dreamhigh and President James would have to publicly support Obama first.”
“That's not difficult. I'll speak with James myself.”
That night, a new alliance was formed inside my penthouse.
Jamie Dimon dreamed of becoming the president of Wall Street.
Obama dreamed of becoming President of the United States.
The ambitions of everyone gathered in that room stirred beneath my plans.
Turning my head slightly, I looked out the penthouse window.
The lights of New York sparkled brightly beyond the glass.
Almost as though they were blessing us.
I stared at them for a moment before speaking.
“Don't betray me. If you do, you'll see a side of me you won't like.”
At my cold warning, both men swallowed nervously.
After sending them away, silence returned to the room.
I walked over to the window.
The night of New York seemed even brighter than before.
Time passed quickly.
The clock counting down toward Bear Stearns' collapse continued ticking away.
While preparing the legislation, the Federal Reserve kept Bear Stearns alive through its discount window.
Whenever financial crises emerged, the Fed had always used the discount window to provide liquidity, ease market stress, and reduce systemic risk.
It had done so during Black Monday in 1987.
During the Russian financial crisis in 1998.
And after the terrorist attacks in 2001.
But that method only worked for short-term liquidity shortages.
Eventually, the U.S. Treasury would have to issue government bonds, raise capital, purchase bad assets, and inject funds directly.
Then, at last, the Emergency Economic Stabilization Act of 2007 (EESA) was introduced in the House of Representatives.
“What do you think the result will be?”
Han Kyungyeong and I waited together.
After a long sigh, Han Kyungyeong answered.
“The details are awful. Really, unbelievably awful.”
I nodded.
“Yeah. Public opinion is ice cold. And moral hazard is a huge issue too.”
The bill's core provision was TARP—the Troubled Asset Relief Program—which would purchase toxic assets.
Manager Ma entered the living room.
Han Kyungyeong and I immediately looked at him.
“Did the results come out?”
“They did. The bill was rejected. Two hundred fifty votes against, one hundred eighty-three in favor.”
Looks like Obama worked harder than I expected.
The opposition vote count was much higher than I had predicted.
At that moment, Manager Ma's phone rang loudly.
“Go ahead and answer it.”
Bowing slightly, Manager Ma walked toward the window and picked up the call.
“So what now, Muhyuk?”
“They'll revise the bill and submit it again. We just need to drag things out as long as possible.”
While speaking with Han Kyungyeong about future plans, Manager Ma finished his call and returned.
“Boss. Lorenze has been attacked.”
“What?”
I frowned sharply.
“Who got attacked?”
