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Defoliating JC Flowers
William Cohan has a great takedown of J. Christopher Flowers and his struggling private equity firm in Fortune.
The story sheds light on how Flowers lost a good deal of money for his investors over the past few years and how this has tarnished the reputation he earned years ago at Goldman Sachs.
Cohan also does a great job chronicling the Flowers’ publicity machine, which excels at getting him linked in the business press to numerous potential deals. Even though Flowers’ firm never completes many of the deals he’s said to have interest in.
But the most intriguing part of Cohan’s story is Flowers’ claim that he was one of the people who alerted former Treasury Secretary Hank Paulson to the desperate situation facing American International Group a week before Lehman Brothers collapsed. Flowers says he learned of AIG’s terrible plight in early September when the giant insurer reached out to him as potential savior.
Apocalypse Then
How bad was the financial crisis in the bleak depths of September?
At today’s House Oversight subcommittee hearing on the Bank of America/Merrill Lynch merger, Representative Paul Kanjorski, the Pennsylvania Democrat, tried to coax Hank Paulson, the former Treasury secretary, to describe the potential doom and gloom policy makers were contemplating as the TARP proposal was being drafted.
Paulson was reluctant to be drawn out on what he and others had feared, but said that “when a financial system breaks down… the number of unemployment we were looking at was much greater than the number we are looking at now.”
Get the bazooka ready
(Corrects paragraph 9 to read “$1.25 trillion of mortgage bonds” instead of “$1.25 billion”.)
It has been almost a year since Hank Paulson asked Congress to give him a bazooka so he could show markets who’s boss. Instead, it was the markets that put the former Treasury Secretary in his place, and they still look very much in control.
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The Wall
