The Magician’s Memorial - Chapter 266



Only Noblemtl

266. Hyenas of Wall Street (1)

A closed meeting was held at the Federal Reserve conference room.

President Bush did not attend today, but that did not diminish the weight of the meeting.

It meant that the president had handed over full authority to the Federal Reserve and the Treasury.

He meant that he would not interfere in any way and that this issue should be resolved through mutual consultation as much as possible.

Excluding the officials, there were two people who attended the meeting.

Dimon and I were the two people in the financial world on Wall Street who had subscribed to the largest number of subprime mortgage bond insurance policies.

As we sat down, the Deputy Minister of Finance expressed his gratitude.

It was the vice minister who had a slightly larger microphone, perhaps because he had a social role today.

“I would like to express my deepest gratitude to the two people who came a long way to visit us.”

“How can I refuse the call of the United States government? I am a person who always wishes for the development of the United States.”

“Does a person like that have an astronomical amount of insurance bonds? It’s not like he has a grim face.”

A member of the Federal Reserve Board raised his voice.

He probably seemed to be someone along the lines of Chairman Bernanke, and seemed to intentionally raise his voice to score points with Chairman Bernanke.

“I’m sorry. It looks like you’re very angry with me. Then I’ll just get up. Please contact me again when your anger subsides.”

“Fintech banks will also rise up. I attended the meeting without knowing that this was the atmosphere. It’s very rude of you to call someone all the way to Washington.”

Dimon and I stood up at the same time.

He didn’t just pretend to get up, he actually walked out the door of the conference room.

Then the finance ministry officials hurriedly rushed out and caught us.

“The Federal Reserve has been under a lot of attack in the media these days. So I think emotions have become a bit heightened. I will definitely caution you.”

“I am truly sorry to the Ministry of Finance, but we cannot proceed with any negotiations with such an attitude of treating us like subordinates. Rather, just tell them to notify us and we will either agree or oppose.”

“I am truly sorry. If you come in now, I will apologize to the Federal Reserve board.”

The Vice Minister of Finance was embarrassed.

Dimon and I looked at each other, narrowed our eyes, and went back into the conference room.

As I sat back down with a stern expression, the person from the Federal Reserve who reacted violently apologized.

“···I was unable to control my emotions. I would like to apologize.”

“What do you do when the Federal Reserve, which leads not only the U.S. economy but also the world economy, acts so emotionally? So, this situation…”

Dimon took a hit.

Although the ending was intentionally vague, the implication was that the main culprit of the subprime mortgage crisis was the Federal Reserve.

It was a provocation meant to raise the other person’s emotions.

I don’t know what we talked about while we were out, but he didn’t react too strongly.

“Everyone, please calm down. Since you are experts, I will skip the explanation and just tell you the main points of these negotiations. Most financial companies on Wall Street are experiencing great difficulties. If action is not taken immediately, more than 50% of financial companies may go bankrupt. “In particular, the insurance you two have is becoming the biggest problem.”

It should have been like this from the beginning.

The reason they called us was to express their regrets.

In what negotiation room does a person with regrets raise his voice?

The Fed remained extremely quiet, and the Deputy Minister of Finance continued speaking.

“The insurance money alone is at least 300 to 400 billion dollars. If this problem is not solved, no financial company will be able to survive.”

I looked at Dimon.

As far as I know, the combined insurance money of the two companies was $300 billion.

However, the Deputy Secretary of the Treasury’s statement that it could be up to $400 billion meant that Dimon had signed more insurance in the meantime.

Frown.

Dimon closed and opened one eye at an incredible speed.

It seemed as if he was asking for a compliment, so I smiled inwardly and answered the Vice Minister of Finance’s words.

“I believe you will not make such a request to remove the entire insurance amount.”

“The United States is a liberal democratic country. We have no intention of making such an unreasonable demand. We will try to negotiate within common sense. For example, if the company you want has assets, we will help you as much as possible.”

Shopping time has finally begun.

It was as if the Treasury Department and the Federal Reserve had promised to put it in our mouths as long as we chose fruit with high sugar content and the right size.

“First of all, I want to know the exact list of insolvent financial companies and their detailed amounts.”

“I have already prepared. If you look at the screen in front of you, the situation of large financial companies is summarized.”

It was data prepared simultaneously by the Treasury and the Federal Reserve.

The size of the deficit and amount of loss were indicated in much more detail than we knew.

And some groups even had a V sign.

“I want to know what the V sign means.”

“This is a company eligible for emergency funding determined through consultation with the Ministry of Finance and the Federal Reserve. Of course, this is only possible with the consent of both parties. If the insurance payment issue is not resolved, it will be difficult to avoid bankruptcy even if we receive funding.”

There were only a few companies with the V sign.

However, as expected, AIZ, the largest insurance company in the United States, was marked with a large, bold V.

“The sign next to AIZ Group looks a little different from other companies.”

“AIZ must be saved at all costs, so we marked it like that. If AIZ collapses, the American people will suffer great damage. So, please understand.”

The will to save AIZ was clearly visible.

They were finance ministry officials who even showed their willingness to accept any proposal we made if it could be saved.

“I have a proposition for you. If you help SAVE Investment Company acquire AIZ, I will cancel my insurance.”

“···Are you saying you want to take over AIZ?”

He showed his teeth for the first time.

If it could acquire AIZ, the largest insurance company in the United States, SAVE Investment Company could instantly transform into a financial company with the largest insurance company in the United States.

“Can you handle it? The size of SAVE Investment Company alone will never be able to properly manage AIZ. In fact, an even bigger bomb may be created.”

“I can fully afford it. I will explain in detail later how I will cover it. First, I would like to discuss the acquisition price.”

I had no intention of spending a lot of money to acquire AIZ.

AIZ stock price was currently around $20, but the moment the loss was properly announced, it was set to fall to around $3.

“If you acquire it at the current stock price, I will not stop you. Not only will we provide active support from the Treasury and the Federal Reserve, but we will also provide a certain amount of debt relief.”

“We cannot buy it at the current stock price. We will buy it at the price after all of AIZ’s non-performing assets and losses are disclosed.”

“How much do you think AIZ stock price will fall?”

“I think it will go down to at least $4.”

“Are you saying you’re going to acquire the largest insurance company in the U.S. for just $4? This is completely…”

The Federal Reserve Board of Directors raised its voice again.

Perhaps because he was receiving attention, his words were blurred.

Probably ‘absolute robbery!’ It seemed like he wanted to say this.

“I just want to acquire it at the correct price. To be honest, it would be more profitable for me to collect the insurance money without acquiring it. However, I want to acquire AIZ even if it means taking a big loss for the U.S. government and the American people.”

“Does that make any sense now? It’s only four dollars!”

“Calm down. Let me tell you, $4 is too low a price. Of course, if the losses are properly reported, the stock price will fall further than it is now, but shouldn’t we still get half the price?”

If it’s half the price, you mean $10?

The price was more than twice as high as what I asked for.

Approximately $150 billion. It was possible if almost all of SAVE Investment Company’s funds were invested.

However, I had no desire to give up insurance money and pay up to $150 billion.

“Considering the acquisition cost and the insurance money given up, the amount is well over $200 billion. Don’t you think the terms are too harsh for me? Would the U.S. government be able to provide that amount of support to one company?”

“······.”

“No matter what, isn’t $4 too much? I suspect that this situation was planned to acquire AIZ at a low price.”

The Deputy Minister of Finance keeps his mouth shut.

However, the Fed spat harsh words on his behalf.

It was as if I had intentionally caused the subprime mortgage crisis, and it seemed like the intention was to shift the responsibility of the Federal Reserve onto me.

“I had no idea I had that much influence.”

“Even large forest fires start with small cigarettes. Who knows whether the cigarette you discarded caused this incident?”

Are you going to come out like this?

Up until now, I had been trying to control myself as much as possible, but when I heard such harsh words, I was bound to become a pushover if I just tolerated it.

“This incident can be seen as a large-scale fraud perpetrated by Wall Street financial companies. But what did the Federal Reserve, which is supposed to monitor the fraud, do? Was it incompetent and did not know? Or did it pretend not to know? If the latter, it can be seen as an accomplice to the fraud. .”

“Are you saying that the Fed has committed a fraud? What!”

“They accused me of being a fraudster, so I did the same. And I have been raising my voice for several years to prepare for this situation. If possible, please display this information on the screen.”

I handed over a USB to the Deputy Minister of Finance.

The Deputy Minister of Finance skimmed through the data contained in the USB drive on his laptop, sighed, and displayed the data on the screen.

“As you can see from the data, we have submitted reports to the Federal Reserve on a regular basis. We have sent you detailed figures on the risks and ramifications of this incident. But have you even read them?”

“Hmm, I can’t look at and respond to every single report that comes into the Fed.”

“I warned you so much, but you didn’t even see it, so why are you saying I am the main culprit of this incident? I did my best to prevent this incident, and signing up for a subprime mortgage insurance product was a last resort. But what did the Federal Reserve do? ”

“······.”

It was Yeonjun who had become completely dumb.

Compared to us, which is just an investment company on Wall Street, the Federal Reserve has done almost nothing, so there is nothing to say.

“I understand the feeling of wanting to avoid responsibility, but please don’t put the blame on me. If you have a conscience, shouldn’t you ask someone to hand over the bundle after saving him from drowning in the river?”

“Everyone is so angry. Why don’t we calm down and start negotiating the AIZ acquisition price again?”

Chairman Bernanke finally spoke.

Until now, the chairman had only been sitting on the sidelines, but as the situation became difficult, he was stepping forward.

“Four dollars! Honestly, that’s the amount I’m losing.”

“Give us a little more help. How about $7? The Federal Reserve and the U.S. government will actively help.”

“Four dollars! Anything more than that is difficult.”

I really wanted to say this line.

Famous lines from Korean dramas, $4!

Since it wasn’t me who was disappointed, he had to accept my offer.