The rise and fall of Chris Flowers

By Felix Salmon
September 1, 2009
William Cohan has a long profile of Chris Flowers in Fortune, and the big-picture takeaway is that Flowers's career trajectory is something of an arc -- or even an Alpine peak. Flowers started off at warp speed, becoming the youngest-ever partner of Goldman Sachs at age 31; after leaving during the nasty Corzine-Paulson fight (Flowers was a Corzine loyalist) he used his Goldman connections to make the most legendary private-equity investment of all time, buying Long Term Credit in Japan for $1.1 billion, renaming it Shinsei, and selling it four years later for $10 billion.

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William Cohan has a long profile of Chris Flowers in Fortune, and the big-picture takeaway is that Flowers’s career trajectory is something of an arc — or even an Alpine peak. Flowers started off at warp speed, becoming the youngest-ever partner of Goldman Sachs at age 31; after leaving during the nasty Corzine-Paulson fight (Flowers was a Corzine loyalist) he used his Goldman connections to make the most legendary private-equity investment of all time, buying Long Term Credit in Japan for $1.1 billion, renaming it Shinsei, and selling it four years later for $10 billion.

Since then, it’s all been downhill for Flowers, and Cohan spares him none of the gruesome details: the extra billions pumped into Shinsei and lost; the disastrous European investments, including $1.5 billion for 24.9% of Hypo Real Estate; the second and third funds which are being marked at zero in the secondary market; the Sallie Mae fiasco; the fairness opinion Flowers provided to Ken Lewis, saying that he was paying a perfectly reasonable price for Merrill Lynch. Even his marriage has fallen apart.

Weirdly, Flowers doesn’t seem to have lost a large percentage of his own fortune in all this. Cohan says Flowers is still worth about $1.5 billion — more than he made from the Shinsei deal — which raises the question of what all that money is invested in. A large chunk of it, I’m sure, is Goldman stock; the rest is not clear. Flowers’s investors are very angry at him, and Cohan implies that it’s because he’s lost a lot of their money. That’s probably half of it — but the other half is that Flowers doesn’t seem to have lost all that much himself.

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Comments
2 comments so far

Isn’t that standard practice at Goldman? Recommend people to one thing then do another?

Posted by zach | Report as abusive

That LBO for SLM was a debacle…easy to say so now, of course. But in April 2007, it was very difficult to determine how additional value could be sucked out by levering on top of a levered consumer finance company.

I’d call it standard practice, period. Good for you but I’ll be saving my own arse with something else.

Posted by Griff | Report as abusive
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