Too Big To Fail Chapters 1-18 Actual Questions And Correct Detailed Answers.
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Course
FALI
Institution
FALI
Chapter 1 - correct answer Bear Sterns goes under and is sold under the desk to J.P. Morgan at a proposed $2 a share
Lehman Brothers stock is now down 35%
Newly appointed CFO assures people through the Wall Street Journal and temporarily raises stock
Ch...
Chapter 1 - correct answer Bear Sterns goes under and is sold under the desk to J.P.
Morgan at a proposed $2 a share
Lehman Brothers stock is now down 35%
Newly appointed CFO assures people through the Wall Street Journal and temporarily raises stock
Chapter 2 - correct answer Paulson gets a call from Dimon to raise Bear Sterns stock
from $2-$10 (not good for Lehman)
Paulson was the CEO of Goldman Sachs
Fuld asks Paulson to contact Warren Buffett to help take Lehman Bros out of trouble
Fuld and Buffett cant come to compromise on asking price
Chapter 3 - correct answer Geithner and Robert Steel, Undersecretary for Domestic
Finance for the Treasury, attend a meeting with the Senate Banking Committee. Steel dodges questions
regarding the government's role in the Bear Stearns fire sale deal.
Members of the Senate express their discontent with the government-assisted takeover and question
whether this might set a dangerous precedent for other companies on Wall Street.
Steel and Geithner defend their actions and explain that the deal was done for the good of the country
and the global financial system, not for private gain.
Chapter 4 - correct answer Fuld explains to Paulson that he blames short sellers for
Lehman's downfall. Paulson hints at selling Lehman
, Ben Bernanke, Chairman of the Federal Reserve. In 2007, Bernanke first saw signs of the emerging
financial crisis.
The largest bank in France, BNP Paribas, announced it was withdrawing finances from money market
funds associated with American mortgage loans.
Bernanke found a major problem in the system - sliced up and re-packaged mortgages called
collateralized debt obligations (CDOs) were being sold to hundreds of different investors and financial
institutions.
Paulson invites some of his advisors to a meeting with Bernanke to present a hypothetical plan for
economic recovery called "Break the Glass: Bank Recapitalization Plan." The plan states that in the event
of a financial crisis, the Treasury would purchase $500 billion from financial institutions to bail them out
- the largest government intervention to be considered in the last fifty years.
Bob Steel of Lehman Brothers calls Bob Diamond, CEO of Barclays Capital in London. Steel asks him
outright if he might be interested in buying Lehman Brothers if the situation gets worse.
Chapter 5 - correct answer Jim Cramer, a market correspondent on CNBC, visits
Lehman Brothers for an interview.
At the same time, David Einhorn, a prominent hedge fund manager with over $6 billion of assets,
prepares to speak at the Ira W. Sohn Investment Research Conference. Einhorn believes Lehman doesn't
track its illiquid assets frequently enough to know what they're worth. The speech has a damaging effect
on Lehman's shares - they fall by 5 percent the next morning.
Chapter 6 - correct answer Fuld finds his secret plan to seek overseas capital has
been leaked to the Wall Street Journal. He issues a company-wide order that no one at Lehman is
allowed to speak to the Wall Street Journal ever again.
Fuld reflects on his potential financial saviors in Korea, the Korea Development Bank
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