Free Web NovelThe sweltering summer was drawing to an end.
But inside Bear Stearns headquarters, everything had frozen over as though winter had already arrived.
Conference room, 58th floor.
Outside the windows, New York's dazzling nightscape stretched into the distance, but inside, the room was filled with a gloomy atmosphere that stood in stark contrast to the brilliant lights.
CEO Alan Schwartz stood up.
Weeks of exhaustion were written all over his face.
“Ladies and gentlemen, the situation is extremely critical. Our CDO portfolio is posting enormous losses, and claims on CDS insurance are flooding in.”
CFO Sam Molinaro raised a report packed with numbers.
“The total amount of CDS insurance claims currently filed against us amounts to approximately $23 billion. If we're forced to pay all of it, our company will immediately fall into bankruptcy.”
A suffocating silence descended upon the conference room.
Chairman Jimmy Cayne opened his mouth.
“Alan, how are the discussions with the Federal Reserve going?”
Alan let out a deep sigh.
“I spoke directly with Chairman Bernanke. They understand the seriousness of the situation, but an official bailout won't be easy. They say congressional approval must come first.”
“Are the Democrats still opposing it?”
“No. Even the Democrats are pushing strongly for approval because Hillary °• N 𝑜 v 𝑒 l i g h t •° is demanding it. If it goes to a vote, it'll probably pass without difficulty. But public sentiment is so unfavorable...”
Alan trailed off.
At that moment, one of the directors raised his hand.
“Then what options do we have?”
Alan Schwartz thought for a moment before speaking.
“First, immediate asset sales. We have to liquidate all highly liquid assets and convert them into cash. But under current market conditions, our assets are bound to be heavily discounted.”
Everyone already knew about Bear Stearns' crisis.
“Second, negotiations with our CDS counterparties. We need to discuss delaying payments or paying only part of the claims.”
In reality, this was the most practical option.
Even if Bear Stearns liquidated all its assets, it still wouldn't survive.
The CDS claims that had yet to be filed were even larger than those already filed.
Sam Molinaro added to Alan's words.
“We need to find new investors. Without a major capital injection, I don't think we'll survive this crisis.”
Chairman Cayne nodded.
“What about sovereign wealth funds from China or the Middle East? They have ample liquidity.”
“We've already contacted them and negotiations are ongoing. But China refused to negotiate outright, and the Middle East has only shown cautious interest.”
At that moment, Chief Risk Officer Michael Aronson requested permission to speak.
Chairman Cayne nodded.
“I have something to report. A significant portion of our CDO portfolio contains risks that have yet to be properly evaluated. Actual losses could be far larger than our current estimates.”
The atmosphere in the room grew even heavier.
Alan Schwartz spoke firmly.
“We need to reevaluate the entire portfolio immediately. There can't be any more hidden risks. Transparency will determine whether we survive.”
The directors all chimed in.
“Alan, keep the channels with the government open and continue negotiating. If congressional approval proves difficult, ask them to explore other forms of support.”
“The best outcome would be for someone to step in and acquire Bear Stearns. Reach out to other banks, but do it quietly. If word gets out, things will descend into even greater chaos.”
With fatigue written all over his face, Alan Schwartz nodded.
“Understood.”
* * *
At the same time, major Wall Street banks were holding emergency meetings to discuss Bear Stearns' crisis.
Inside Goldman Sachs headquarters, senior trader Jason Wright stared uneasily at the numbers filling his monitor.
Beside him stood his colleague, Sarah Kim.
“Goddamn it!”
Jason muttered while clutching his hair.
“Bear Stearns stock crashed more than thirty percent just before the market closed. At this rate, they might not even open tomorrow morning.”
Sarah replied with concern.
“What about our positions? How exposed are we to Bear?”
Jason rapidly scrolled through the screen.
“Not much directly. But we've got a fair amount of indirect exposure through CDOs and CDS. We'll need more analysis before we know the exact figures.”
At that moment, CFO David Viniar rushed into the trading floor.
“Jason, Sarah! Emergency meeting. Forty-second floor conference room in fifteen minutes.”
Jason and Sarah exchanged glances and sighed deeply.
At the same time.
Jamie Dimon stood in his office, looking out over Manhattan's nightscape while speaking on the phone.
“If Bear Stearns collapses, we'll face a liquidity crisis too.”
He listened briefly before continuing.
“...Fine. We'll discuss it in detail tomorrow morning. Quantify the impact on us if Bear Stearns goes bankrupt overnight. I'll find another way to respond.”
After ending the call, Jamie Dimon let out a deep sigh.
His eyes were filled with worry as he looked at the file labeled ‘Bear Stearns Emergency Measures’ lying on his desk.
Soon, he picked up the phone again and dialed another number.
Meanwhile, Merrill Lynch's risk management office was in chaos.
Team leader Kevin Johnson took a sip of strong coffee and issued instructions.
“Andy, reevaluate our entire MBS portfolio. Focus especially on the subprime mortgage-related stuff.”
“Yes, sir.”
After finishing, Kevin turned to another employee.
“Lisa, review all CDS contracts. Mark every contract where Bear is the counterparty.”
“Understood.”
Everyone was frantically carrying out their orders when a new employee nervously asked,
“Sir... if Bear really goes bankrupt, what happens?”
Kevin pondered for a moment.
“To be honest, I don't know either. It could trigger a domino effect, or maybe nothing happens at all. That's why we're staying up all night. Whatever happens, we have to prepare for the worst. So stop talking and get back to work!”
Though the night grew deeper, the lights of Wall Street showed no sign of going out.
Fear and tension over Bear Stearns' uncertain fate and the shockwaves it might unleash filled all of Wall Street.
* * *
“Chairman Jamie.”
— Charlie.
Late at night, Jamie Dimon called me.
— Do you really think Bear Stearns is going bankrupt?
“I can't say for certain. It'll depend on what the Treasury and the Fed decide.”
— They could collapse tomorrow.
“They'll negotiate with CDS counterparties regarding insurance payments. If those negotiations fail, they'll go bankrupt. But there's still some time left.”
Jamie Dimon let out a quiet sigh.
— If Bear Stearns collapses, we'll be affected too.
“Don't worry. JP Morgan Chase won't collapse.”
— I'll trust you, Charlie.
His voice was filled with anxiety.
To reassure him, I spoke more firmly.
“Of course. We're on the same ship. As long as you don't jump overboard, the ship we're riding won't sink. But help me with one thing. File insurance claims on the CDS contracts where Bear Stearns is the counterparty.”
— ...That'll be difficult. Wall Street will turn against us. It won't help your plans later, Charlie.
“Hm...”
— Aren't we supposed to step onto the stage when it's time for the acquisition?
Jamie Dimon hit the nail on the head.
That was why I'd brought JP Morgan Chase into this in the first place.
Using the name JP Morgan Chase as a shield was far better than having Dreamhigh step forward directly.
“All right. But eventually JP Morgan Chase will exercise those CDS contracts too.”
— Probably. I'll decide after seeing what the government and the Fed come up with.
“Understood. I'll contact you again if anything unusual comes up.” ƒгeewebnovёl.com
After ending the call with Jamie Dimon, I set down my iPhone.
“Muhyuk, what did Chairman Dimon say?”
“What else? He's asking how things will turn out.”
“He's too damn timid. He should just trust us and wait.”
“Hyung, this is his first time working with us. You have to understand.”
Just then, the door opened and Eva entered the penthouse.
“Oh! Eva!”
Han Kyungyeong waved enthusiastically.
Eva frowned slightly.
“James. Have some dignity...”
“So what? It's just us. No need to put on airs.”
Sighing deeply, Eva greeted me.
“Boss. I arranged a meeting with Bear Stearns. I'm planning to go personally.”
“Oh? Do you really have to?” fгee𝑤ebɳoveɭ.cøm
“I think the message will carry more weight if I show up myself. That's okay, right, Boss?”
I poured whisky into a fresh glass and handed it to Eva.
“You're the one in charge. Do whatever you want.”
“Even though people will know you're involved? Plenty of people know about our relationship.”
“It doesn't matter anymore. Everyone who needs to know already knows.”
Eva bit her lip as she looked at me worriedly.
Then she emptied the glass in one gulp.
“All right, Boss. How do we negotiate?”
“Strip them down to the soul. Show them every card we have and throw them into a panic.”
At that moment, Han Kyungyeong joined in.
“Ah, I want to go too! Missing such a huge event? Muhyuk, can't I come?”
“Do you think that's possible, James? Get a grip.”
“I'm joking, joking. Just trying to lighten the mood.”
Eventually, Eva and I both laughed softly at James' antics.
The three of us drank until dawn while going over the plan.
* * *
In front of Bear Stearns headquarters.
Dressed in an elegant black suit, Eva looked up at the building.
Determination shone in her eyes.
“All right, let's begin.”
As she muttered in Korean, David beside her smiled.
“What does that mean?”
“Oh, just something like ‘let's do our best.’”
“Don't worry. High-value negotiations are my specialty.”
Eva and David entered the building together.
Escorted by an employee, they arrived at the conference room on the fifty-eighth floor.
Bear Stearns executives and the legal team were already seated.
Alan Schwartz stood up.
“Miss Eva, and David. Welcome.”
“Let's skip the pleasantries and get straight to business.”
Her cold tone made Alan Schwartz's face stiffen.
Eva and David sat down.
David opened his briefcase.
“Out of the total $34.1 billion in CDS insurance claims under our contracts, we'd like to discuss only about $10 billion today.”
Alan's face went pale.
“Thirty-four point one billion dollars? That's...”
Robert, head of Bear Stearns' legal team, interrupted.
“Hold on. We should first verify whether that amount is accurate.”
As if expecting that response, David smiled confidently.
“Of course. Please review it.”
He handed the documents to Robert.
As Robert rapidly scanned through them, his expression gradually hardened.
“Cayman Global Investment, Lux Asset Management, Bermuda Capital Holdings, Panama Asset Strategy, BVI Securities... all of these...”
He could no longer continue and simply opened and closed his mouth.
There were five investment companies that had signed CDS contracts with Bear Stearns.
Cayman Global Investment Ltd. of the Cayman Islands.
Lux Asset Management S.A. of Luxembourg.
Bermuda Capital Holdings Inc. of Bermuda.
Panama Asset Strategy Corp. of the Republic of Panama.
And BVI Securities Ltd. of the British Virgin Islands.
All of them were investment companies established in different countries.
“Wait. You're saying all these contracts are connected to your side?”
Alan Schwartz asked.
David handed over another stack of papers.
“Yes. That's correct. Ah, and these are the supporting documents.”
He presented powers of attorney and related paperwork authorizing him to file the insurance claims.
Alan Schwartz practically snatched the papers and began reviewing them.
All color completely drained from his face.
