Free House of Cards by William D. Cohan

thirty-eight-year-old research analyst at Oppenheimer who covered a number of Wall Street brokerages and banks, was also trying to comprehend what she was hearing about Bear Stearns that week. Whitney had become very well known around Wall Street during the fall of 2007 when she alone predicted that problems at Citigroup were worse than everyone thought, and she was right. On Saturday, March 8, Whitney was getting her hair colored at the fashionable Pierre Michel Salon on East 57th Street when she received a phone call telling her that Marcel Ospel, of UBS, was in New York trying to sell PaineWebber for around $9 billion to JPMorgan as a way to raise badly needed capital. Since Whitney knew that Ospel rarely left Zurich, hearing that he was in New York on a mission—which proved impossible—sent her scurrying on Monday morning to the investor relations department at JPMorgan. She concluded quickly that while JPMorgan would have liked to own PaineWebber and was one of the few banks around that appeared to be weathering the financial storm and thus would have been a serious potential buyer, even JPMorgan could not afford to pay the $9 billion all-cash purchase price that Ospel wanted.
    When she finished speaking with JPMorgan, Whitney headed fromher office on 42nd and Madison to have sushi for lunch at Nobu 57, on West 57th. On the way, she began hearing rumors about Bear Stearns's and Lehman's solvency. She called people she knew at several of their competitors and discovered that these traders were very worried about having Bear Stearns as a counterparty on their trades. That night, she flew to London. By the time New York opened for business she had already had a meeting with an institutional client and had heard the news about the Fed making available its unprecedented lending facility to investment banks. Although she was a little concerned about the lack of specifics in the Fed's announcement, “My first reaction was, ‘Oh, this is going to be completely fine.’”
    But as the details emerged, she learned that the funds would not be available until March 27. She also learned that the supposed beneficiaries of the Fed's largesse were basically indifferent to it because access to the funds was weeks off. Whitney thought, “What the fuck is going on? This doesn't make any real sense. By Wednesday, I'm seeing accounts all day and a client calls me and I was like, ‘This is an orderly unwind, I just feel it. I just absolutely feel it.’” She worried that, given the increasing lack of liquidity in the overall financial system, “if the counterparties are an issue, meaning ‘I don't trust you and you don't trust me,' and there's no liquidity in the system and we're already careening towards a pretty significant recession, if this happens, then we go into a depression.”
    She called back the traders she'd spoken to on Monday—the ones who'd voiced serious concern that day about having Bear Stearns as a counterparty—but now they clammed up and acted as though there was no problem at all. “When the brokers were saying, ‘Yeah, of course, we're still trading,' I'm like, ‘Fucking liars.' When people outright lie to you that you deal with all the time, then you know there's serious panic there.” She fired off an e-mail. “Bear's the next Drexel, isn't it?” she wrote to one of her sources. She concluded: “It's possible. Unfathomable. But possible.”
    Whitney is perhaps one of Wall Street's most pessimistic research analysts, and she began to look at what was happening to Bear Stearms through that lens. She knew that many of Bear Stearns's businesses were contracting, and she knew that Goldman Sachs, Morgan Stanley, and Lehman Brothers had been telling her they had been taking market share from Bear Stearns's prime brokerage business as hedge funds withdrew their cash. “This is it—Bear's out,” she thought. “Because all of Bear's businesses are in runoff. So if people start pulling assets, they can't