It's one of the best stories you'll read this year.
At nightfall everyone hunkered down for long hours studying Bear’s numbers, especially its mortgage book. By dawn, however, many Morgan executives were having second thoughts. The more they studied the securities Bear owned, the worse it looked. Bear, for instance, had initially estimated it had $120 billion in so-called risk-weighted assets, those that might go bad. By Sunday morning, Morgan executives felt the actual number was closer to $220 billion.“We all kind of slept on it,” says one executive involved in the talks, “or not slept on it, kind of closed our eyes for a half-hour, and realized that if you take a step back and remove yourself from the enormity of it, what we were being asked to take over, from a risk factor, was gargantuan.” And it wasn’t just the financial risk. The morning’s New York Times carried a piece on Bear, by veteran reporter Gretchen Morgenson, that dredged through all the seamiest aspects of Bear’s recent history. Steve Black walked around the eighth floor making sure everyone read it. “That article certainly had an impact on my thinking,” remembers one Morgan executive. “Just the reputational aspects of it, getting into bed with these people.” He shudders.
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