PANIC! The Untold Story of the 2008 Financial Crisis

foreigner because there is a tower technology in the middle of trying to mess up now you know we have in the middle of the coach mess. I'm going back and forth about that it's a disaster Professor Tycoon Tycoon, can you imagine putting different administrations? No, it's incredible. For someone, I changed my mind after going through all this housing stuff. It is difficult to keep people in their homes. You know, if they can't afford to stay there, this dinner is an extraordinary moment that brought together all the actors in the

financial

crisis

.

2008

, the people who are actually in the room at that time to have a conversation about what went right and what went wrong, things like that in the

financial

panic

of

2008

, there is no manual for these things, there is no sheet route, there is no instruction manual on what to do.

Are we trying to think of the most hated moment of the

crisis

? Yes, there were many candidates. I think the most hated program by far was AIG, but when you think about this group of people, Hank Paulson, Ben Bernanke and Tim. You and Geithner think about your different experiences, your sensitivity, how you approach life, oh my God, and Hank, you have the negotiator, his word is his bond, if he says he's good at something, he's good at it, we've been told. There have been a lot of policies that have to do with employment and growth. Ben Bernanke was a professor of economics at Princeton.

His entire career he was thinking and studying the Great Depression. It was the moment when I have a research paper that I will give on Thursday about the document. from Brookings are all meetings and then there's Tim Geithner, you know, some people thought he looked too young for the job or he looked like he worked on Wall Street, but he was a government guy and he'd spent his entire career in government working on

panic

s. global financials. I remember McConnell told him in January we are against almost everything you are doing and we are going to fight you on all of it and it is working for us.

It's quite remarkable to think about how they came together and what ultimately happened. The 2008 financial crisis went much further. the confines of Wall Street's honorary rebound the bad news is how the public understands and thinks about what happened because of the financial crisis today there is distrust in the government there is distrust in large institutions there is distrust in this idea of ​​the elites that has led to populism that we Let's see in our current policy that it is a straight line, um, foreign to millions of American homeowners, as the housing market slowdown has turned some mortgages into ticking time bombs.

A failed mortgage may not threaten the entire financial system. Millions of them could. 34 subprime mortgage companies have gone bankrupt. just in the last few months Stearns hair is hurting the stock cut in half, investors generally cut today and on Friday they may not have enough money on hand to stay in the business if you are used to thinking about problems, it is very intuitive that if I have a bazooka and people know you have it, maybe you don't have to use it, they have no idea how bad they have it, no, the Dow Jones fell more than 500 points after two mainstays of the street will collapse over the weekend.

Lehman Brothers. filed for bankruptcy, the DOW Industrials ended with its worst one-day point loss in hi

story

, 777 points, if our nation continues on this path, the economic damage will be painful and long-lasting, so this is no longer just a Wall Street crisis, it's an American crisis and it's the American economy that needs this rescue plan. How many of you want to pay the mortgage for your neighbor who has an extra bathroom and can't pay his bills? Raise your hand unless President Obama is listening we are tired of the one percent of the one percent and what they have done to the country what they have done to the world government is over this American slaughter stop here and stop stop right now good morning, welcome to the White House in the first quarter of 2006, the US economy grew at a rapid pace. annual rate of 5.3 percent, the fastest growth in two and a half years, we had 5.2 million new jobs since August 2003.

When I became chief of staff in early 2006, the president gave me the mandate To renew the cabinet, I felt that the president needed a Treasury Secretary who had experience in the markets and whom the markets respected, and Hank Paulson really stood out: he is the leader of Goldman Sachs, perhaps the most successful financial institution in the hi

story

of the world at that time. Josh Bolton, who was George Bush's chief of staff, called and made a proposal. I talked to people around me and no one told me that was the right thing to do first. He said his family would be against it.

His wife was a friend and classmate. from Hillary Clinton my wife Wendy clearly didn't want to. I didn't want to, so I turned him down a couple of times. I think it's a Renaissance. It came largely from work from years ago when I was in the White House that I went to. the great sense of time in the Nixon White House six weeks before the storming of the water gate and what Andy didn't like had to do with the whole political scene, but a few weeks later they came back and it occurred to me why why I was changing This was, you know, out of fear of failure and I'm telling you as soon as I realized it, I just backed off on a dime.

I got to the treaty room there in the White House, he was reluctant but he wanted to serve the country and me. I assured him one thing that I think was important to Hank and that was that when he picked up the phone he called me. I would answer. In other words, he wouldn't have to fight through many staff levels. He accepted. come and one of the best decisions I made in my presidency good morning welcome to the White House. I am pleased to announce that I will be nominating Henry Paulson to be Secretary of the Treasury.

The strength of our economy is rooted in entrepreneurship and competitiveness. The zeal of the American people and our free and open market is truly a marvel, but we cannot take it for granted. I didn't know Hank before he came to Washington. It was customary for the chairman of the FED and the secretary of the Treasury to meet at least once a week, during breakfast or lunch, we both liked oatmeal, so we used to have oatmeal for breakfast in my dining room or in the dining room of the treasure. Hank was a market specialist, he had been very successful on Wall Street, he has a lot of energy. and I am very different people.

I tend to be personally quite calm. I was an economics professor and that's it. I liked being an economics professor and never expected to be at the Federal Reserve or in the government, but in 2002 I got a call from the White House. They needed a seat on the Federal Reserve Board of Governors. Would I be interested? You know, I recognized that I had spent my academic career studying monetary policy in financial markets and maybe I could put some of that into practice and, furthermore, it was just a few months after 9/11 and I felt it was important for me to do some service. public today.

I am honored to announce that I am nominating Ben Bernanke to be the next Chairman of the Federal Reserve. You could say that Ben was the academic who grew up studying the mistakes made in the Great Depression, why financial systems matter to economies. You know, Hank has been his life in the markets and I would spend my life in the policy world really dealing with financial crises. I met him when he became president of the New York Fed. The New York Fed is probably the most important of the 12 federal reserve banks and the president of the New York Fed has traditionally been the Fed's eyes and ears on Wall Street.

I think we all had something in common: You know, anyone who has grown up in the markets understands that the markets are not always self-correcting, so I think we all shared a view about this tenuous fragility of the system that we really trusted. On the other hand, when I arrived in July 2006 I thought there was a good chance that in the two and a half years I was in Washington we would be facing a financial crisis, but the things I was worried about turned out not to be the biggest. problem was March 13, which happens to be my birthday, I was in Avra, there are Greek restaurants here with my parents, my family, the CEO of Bear Stearns called me, it was maybe nine at night and he said, Jamie , I need 29 billion dollars before.

Asia opens up or we're going to have to declare bankruptcy and I said Alan: I can't lend you twenty, but nine million dollars overnight. They are Stearns, one of the most admired brands in the United States. Now one of the most threatened firms has been hit. Due to the constant rumors of an imminent liquidity problem, what happened at Bear Stearns was the first true demonstration of what the crisis was like, because it was a crisis of confidence. The prisoners owned a large part of the real estate business and had taken some of the worst risks. Suddenly, all kinds of investors on Wall Street said, "I don't think Stearns Bear is good for money, and not only do I think they are good for money, but I have to get my money out of there immediately.

Bear Stearns is the The biggest victim so far of the nation's mortgage disaster, the company has become a model of the housing bubble. We knew that its excesses in the real estate sector we completely lost. Homeownership very sadly passed away. a haven to an investment when I joined Goldman Sachs in 1974. The industry was growing in many ways, you saw an evolution in modern finance, you started to see different forms of securitizations Mortgage-backed securities really emerged in the decade. 1980. They started as a very good idea that made a lot of sense and that was a way to take mortgages, package them and sell the cash flows so that an investor would buy a portion of all these mortgages and the mortgages would pay that investor and the.

The idea was that it made investing in mortgages a lot less risky because instead of just investing in me, we were investing in a thousand people as we moved into securitization, we had cheaper mortgages if you could afford a 20 down payment, but if You couldn't, let's say you have five percent, let's say one percent, let's say you have zero percent, we came up with all this. ways to get loans for more people, you know, it certainly was exciting at the time when we were going to spread the American dream everywhere. It's a record year for housing and shows no signs of an early 2000s baby.

The price. The level of debt to finance a house was very low, very attractive, these exotic loans have skyrocketed in the last three years. Interest-only loans. Loans with adjustable rate. No down payment options. People who made like a thousand dollars a month working as a gardener. a hairstylist saying they made ten thousand dollars a month because you could do these things called stated income loans, which became known as liar loans, where you could just say "this is what I make" and no one would check it, so that he could get away with a murder lawsuit. for these houses Million Dollar Plus is outbid, you have speculators buying multiple houses, people are flipping your neighbor who is not as smart as you but bought a couple of houses anyway and flipped them, now he drives a car better than you and you Say yes, that makes a lot of sense.

I wish I had started earlier, when the real estate market heated up. There were asset management companies around the world that wanted a way to profit from most things on Wall Street. Start with a concept that generates many advantages. The thing about Wall Street is that they take everything to the extreme, they take thousands of mortgages and they staple them together and they go to the investors and say, what do you want? You want insurance, you want risky, we got all these mortgages, there was an incentive to Cut these loans because along the way there was a profit and a fee to collect for each institution that in some way touched each part of the loan.

Goldman Sachs' quarterly profits increased by 93. Everyone was making a lot of money because of the real estate market, including globalization's top executives. They will earn between 20 and 50 million dollars each. This is the vumoo. 2000 people were making that much money. I could make 10, 15, 20, 30, 100, 200 million dollars, so there was this competition that was ridiculous. Chuck Prince was the CEO of Citigroup. and had an amazing line saying that while the music plays, You Gotta Dance, big bonuses are driven simply by profits and competition, everyone was looking at the success of Goldman Sachs, Morgan Stanley and Lehman Brothers, all of which They are making more and more profits. a company will distribute a record compensation of $16.5 billion, so there was notable pressure on everyone to keep dancing abroad.

This was the belief that home prices would never go down. The unstable real estate market began to crack at its foundations. Markets particularly affected. MiamiVegas. In northern Virginia and right here in D.C,House prices have historically been somewhat disconnected in different parts of the country, but this housing bubble ended up being national and had implications for the entire economy. The real estate bubble that everyone knows has burst. This is the hangover. after that big frat party you went to, house prices started to fall, the economy started to slow down, those adjustable rate mortgages are now owed to the people who bought these adjustable remortgages when they started to reset, they couldn't afford to make the higher payments they attempted. to refinance them with the price of their houses falling in value so they couldn't refinance them foreclosures have gone up over a thousand percent some people are starting to default on their mortgages now that it's starting to impact it was a very, very bad thing, a lot of people lost their homes, a lot of people lost their savings, that drop in home prices is like an infection that is now spreading throughout the US economy, the system is not designed to work in an environment where home prices are going down, so these mortgage-backed securities start to fall apart and you have problems.

Investor confidence in the mortgage financing space is not doing well. There is little transparency and therefore a little confidence in these securities that financial institutions were struggling with. I looked at a mortgage-backed securities offering. I would have had to read more than 300,000 pages to analyze that mortgage. It had some of the smartest people in America. I don't understand what some of these instruments meant and it's like inventing more and more products to achieve higher and higher returns, I was taking bigger and bigger risks, unfortunately, maybe this is the weakness of the street back then, maybe a lot, believe. discipline was lacking, we were ourselves Lehman Goldman bear Stearns others took them out of the risk they took us out was out of control today bear Stern's shares fell almost 50 percent a loss of three billion dollars in Quick change in Bear Stearns during the last 48 hours reintroduces anxieties about what is not known until the total lack of confidence in their Stearns are running against the bank, the Fed's work by alarm if it clarifies to us that the bearish Stearns was not going to exist on Monday if there was no solution and the markets were so fragile and so interconnected that we were going to have to do some pretty nasty things if we wanted to save the American economy for the American people and I came in and said Bear Stearns is failing and we have to do something about it and My First reaction was why they made bad investments.

Hey and unfortunately the people who invested in Bear Stearns and unfortunately the ones they worked for were bear companies, they will have to pay the price of working for an entity that made a bad investment. He said you don't understand. If they fail, it will affect the international financial system. I am told that there is no authority for the Fed or anyone else to guarantee the obligations of a failed non-bank entity. There's nothing scarier than feeling a huge sense of responsibility and not having the authorities that you need, you know, we had each other in a sense to talk about options and strategies and that helped a lot.

Ben 10 and I spoke several times a day, we always treated the three of them as an entity and the president. I always wanted to know when I would get a recommendation from Hank. He would have been in Timfield. I remember having a conference call where Hank, Timmy and I talked about the implications for the financial system if Bear Stearns were to fail and what we could do. We decided that morning was to buy some time for the weekend. Congress gave the Fed this emergency tool that we could use in an extreme crisis to lend to an institution that wasn't a bank, so we had authority to lend, but the Fed didn't. done something like this since the Great Depression Ben Bernanke made a really bold decision to extend the loan for 28 days the Fed basically agreed to help finance about $30 billion in risky assets for the bears this was the first major intervention that We did and it was a difficult decision.

I was a registered Republican. I believed in market solutions to economic problems, but I was a student of the Great Depression abroad. I went to graduate school. I knew I wanted to study economics, but I didn't know in what area and I said. For me, the Great Depression was one of the most important events of the 20th century: approximately one-third of all banks in the United States failed, and that, in turn, created a tremendous contraction in the amount of credit available to households and businesses. common. My grandfather's pharmacies. It continued to fail in the 1930s and created enormous difficulties for many years afterward, when I was a policymaker, I took very seriously the idea that allowing the financial system to collapse and the credit system to collapse was going to be extremely dangerous for the entire society. economy and that's why it was so important to make the loan bear Stearns was forced to take out an emergency loan funded by all of us the taxpayer bailout spurred investors to dump Stern's bearish stock while Stearns was going down President Bush I was scheduled to be on Wall Street to give a speech at the Economic Club of New York 43rd President of the United States President showed me the speech It had a line that said there could be no bailouts I started by saying you could accept that Leave aside the lack of bailouts President Bush attempted to downplay a bleak situation.

It seems I showed up at an interesting time. I wasn't happy with that. You know I'm a free seller. I told people you know that and I firmly believed it and I still believe it. By the way, but Hank is a persuasive guy and I trusted him, so what became clear was that the only thing the Fed was allowed to do was prevent an investment bank from disintegrating and, fortunately, JP Morgan was a buyer, It is a really risky process. The thing about buying a big investment bank was a house on fire that was collapsing Hank and Tim were I want you to buy you want to buy you should buy it I said we'll do everything we can to help I can't be irresponsible JP Morgan I can't end up a floundering giant afterwards about this he wanted to own the Stearns bear there was no doubt about it I went to bed one Saturday night thinking we had a deal at one point on Sunday I called to hang up and he says Hank, we can't do it, it's too long a bridge away and then we started working on what could be done to do it, that's why we had this idea.

If the Fed could fund this 30 billion, we can handle the rest. Pearson has a bag of, let's say garbage, let's say it's garbage and no one wants to buy all the Bear Stearns garbage and garbage. Jamie Diamond says I'll buy Bear Stearns, but you guys will have to share the trash with me, Tim Geithner. and Ben Bernanke and Hank Paulson have to take out the trash, it would be like Fox bailing out NBC. JP Morgan Chase joins the Federal Reserve in a frantic attempt to bail out its Stearns that was highly controversial because that was essentially Proto's first bailout.

I woke up on Monday and thought it was the highest price in the century, people thought Jamie had stolen the bear and people thought Hank had basically given away the store by taking on 30 billion dollars of terrible crap and that was the beginning Of this debate in the country about what was happening, how bad it was going to be and whether we should do any of this during the crisis, none of us could convince the public that what we did was not for Wall Street, but for Wall Street. Street. because the American people should have done a better job of explaining that the financial system was so concentrated and so intertwined that if you want to stop the bleeding you have to go to the source and the source is Wall Street and if you don't stop the bleeding on Wall Street you kill the economy an extraordinary period they were holding their presidential elections we had these two candidates running against President Bush because he was very unpopular we need to bring real change to Washington and we have to fight for it That was a bad period for President Bush.

Remember that we are still in the middle of the war in Iraq and that President Bush was generally unpopular with the public, in part because when you are president you don't make decisions based on your personal popularity. You don't have to have a PhD to know how to spend taxpayer money on Wall Street, that may be fine in New York, but if you get to Midland, Texas, it's not fine. You know, it was pretty clear what the audience wanted to hear. It's very easy to tap into that mainstream and being against bailouts and putting government money into something became the operating standard while regulators were asleep at the switch.

Both are important, but in the end the markets went away, the real estate market in simple terms is collapsing as 2008 progressed. The crisis intensified, we were all worried about Fannie Freddie, but we didn't know how serious the situation was. Fannie Mae and Freddie Mac are the backbone of the US mortgage market and hold about half of all mortgages in the US. Fannie and Freddie may not have enough money available to stay in business. The first thing you need to understand about Fannie and Freddie is that they are very important to the machinery of everyone's daily lives.

Anyone who has a mortgage is very likely to be hit by Fannie and Freddie. They were publicly traded companies, like any company. you would invest in companies like Starbucks, Apple, or Google, and yet they were known as government-sponsored companies because there was this idea that the US government backed their debt, so if they ever couldn't pay it, the US government would intervene. They have a government money printing machine where governments implicitly say that if everything goes wrong, we will foot the bill. That was a guarantee. It was not written anywhere on the paper. In reality it did not exist and that is why it became known for this. term called an implied guarantee, there was no guarantee, but the market assumed there was, so there were management teams and shareholders making money with a government guarantee, they secured something on the order of five trillion dollars, something close to half of all mortgages in the United States. were insured and resold by Fannie and Freddie, the fear was that if Fannie and Freddie defaulted, it would throw the global financial system into chaos.

The company's stock prices have fallen more than 85 percent since the credit crisis began last August. They have announced huge losses. Their stocks are diving so I needed to ask Congress for enough money to calm the markets thanks to Secretary Paulson and the Chairman of the Federal Reserve we thank Chairman Bernanke for his participation this was a difficult political question with members of Congress I felt we needed expansionary authorities One of the proposals you suggested was an increase in the Treasury credit line to prohibit credit. I have some concerns and I suspect my colleagues do too about not having any limit, if I asked for 100 billion it wouldn't be enough and I certainly knew I couldn't ask for a number starting with t billion.

How much money are you looking at here? I would ask that it not be specified for some of us, it sounds a bit like a blank slate that you are potentially talking about. Spending a billion dollars here, we're a little skeptical. One of the difficult things about testimony was that you had multiple hearings, so you're sitting at this table, with the glass of water, and you're looking at the senators, and so you're trying. to answer their questions, but at the same time you know that you are talking to the television camera facing the American public and then a staff member behind you hands you a piece of paper that says Dow Jones drops 180 points.

So, you are also talking to the markets. I considered those hearings to be largely theater. I was concerned about saving the financial system for the American people. These guys want to save the financial system, but they wanted to get elected, but I really believed what I thought. I said when I was testifying I said: you know if you give us unspecified authorities it will be so powerful that we won't have to use them if you have a water gun in your pocket you might have to take it out if If you have a bazooka and people know you have it, you may not have to remove it.

You're not likely to get it out. By having something that is not specified, confidence will increase, and by increasing confidence, the probability will be greatly reduced. will it ever be used, you know, he had this tremendously valuable skill which is how to convince people to do something that they didn't think was in their interest. It was Hank in that case and others who laid down the law and said, you know. this is what is going to happen. I'm about to do something that can be done, it will mark thedifference and my criterion is for the benefit of the taxpayer.

The sense of urgency is something I think all of us have, at least most of us. Here, I appreciate, look, we're in the middle of this and it's getting worse and the Treasury Secretary says, I've got it. I need these some of these tools. We are in the eye of the hurricane. At that time I had the Bazooka and I didn't think we were going to have to eliminate it, but the most aggressive investors get very quickly to where the most fearful investors are faster than you can imagine, so it was only a matter of time until we would have to use it. the Bazooka, Fannie and Freddie's takeover was like a military operation Hank was General Fannie and Freddie were politically powerful entities, I mean really powerful, they made people rich, most of them were very well connected, we had to do it in a way that they didn't.

I didn't anticipate it, otherwise they would have used political and other forces to prevent it. I remember talking to President Bush about this and he asked me how is it possible to achieve this without them knowing and fighting, and I remember it just coming out of my mouth. The first sounds you will hear will be when your heads hit the ground oh, this is the full Paulson there were some bitter pills the CEOs were replaced they were going to lose their golden parachutes history was made when Washington took the reins of the two organizations that support o They guarantee almost half of the mortgage loans in the United States.

Today's action should accelerate stabilization in the housing market, ultimately benefiting financial institutions who naively thought that maybe we brought down the Hammer, as I told President Bush, maybe this is what it will take to put out the Hammer. fire started with a Fanny bang of over 300 points. We called him on Saturday night. He was fast asleep. It was an optimistic dream. My phone rang. It was Barack Obama on that call. He said, "Look, I know I'm going to be president of." The United States, yes, at that time I was pretty sure that I was going to win the elections and I already felt that I had some responsibilities for an economy that I was going to have to manage quite soon.

This company for my home state we lose. Follow up, okay, I thank Hank, he was consistently direct, honest and transparent with us and I ended up developing a good relationship with him and trusting him, and I was impressed that if this went wrong, we could have a depression and any political advantage Whatever short term I could get out of this was not something I was going to be interested in at all, he very kindly warned me that you better take care of the Republican candidate because if I start hearing populist anti-bailout relics for him. I'm going to have to start talking that way.

Two years ago there was a man who stood up and warned us about the problems at Fannie Mae and Freddie Mac. It was John McCain, John McCain's speech. and Sarah Balin I encouraged everyone to call me Hank. I didn't want to be Mr. Secretary, but somehow I don't know what it was about that first call, the way he immediately started saying Hank, the tone of voice just bothered me. a little bit of the wrong way people in Florida are and should be outraged by huge financial institutions going under due to their own bad practices and now asking the public to bail them out regardless of what their other feelings may or may not have been, she certainly understood where the problem was.

The public was on the bailouts in early September, there was so much bailout fatigue, there was so much opposition, not only to what we did in the Beres Turner case, but also to the Fannie Freddie receivership, people didn't I had an idea of ​​the dangers of what was happening in the economy. like a house of cards, but the bottom could still fall, sending markets into free fall. I grew up on the treasury in a series of crises that happened in other countries, really starting in '94 with the Mexican financial crisis. Then I experienced a whole wave. of its really devastating emerging market financial crisis in Thailand Korea Brazil Indonesia in Indonesia fears of financial disaster took to the streets with long lines forming outside supermarkets I could see, you know, how deep the depressions were, how tragic they were the costs and how difficult it was for people.

Discovering a way to overcome it had a great impact on me, of course, panics were different from all other crises and in case of panic, you have to use overwhelming Force because you have to convince people that it is safe not to run , Do not panic. and to do that you have to raise a wall of money, blame it's taking a beating right now with a drop of about 35 percent; hasn't traded this low since 1998. Lehman Brothers in particular, they were both leveraged but, more importantly, they had taken on an enormous amount of real estate and that real estate was being marked down further every day, another tough day for Lehman stock Brothers today, CEO Dick Fold is actively buying across the brokerage firm Dick Fold was looking for capital, he contacted us.

I had conversations with them. I went down. One Friday night, I remember and I looked at some 200 and some 10K pages and I wrote a lot of adults on them they still have the 10K and when I finished everything, I knew we weren't going to make a deal that week in September they were close to the options week. debate now is what role the government will play in all this president Secretary Hank Paulson and vegetarian Ben Bernanke are behaving like socialists and should resign that's what Kentucky Senator Jim Bunning says they should both be fired first because Bernanke was not watching the store and Paulson because he didn't tell the truth to the Banking Committee.

Hank in particular was getting a lot of pressure for being the bailout king and things like that if it's 200 billion dollars for this bailout. It was $300 billion from the housing bailout. It was $30 billion to Bear Stearns. I mean, where does this end now? There are rumors that Lehman could be in Rome and the government would obviously come to the rescue Lehman I called Dick Fold frequently We had told him repeatedly that the government cannot provide capital. The source was close to Treasury Secretary Hank Paulson, saying that no government money will be used to resolve this situation.

He spreads the word on the street, we are not in the rescue. business I called Hank telling him you'll regret it because it won't be solved without more public money. He said I understand this was a tactic plain and simple if we didn't communicate that all the other Wall Street banks would do it. I think the Federal Reserve would be there to put in capital. We had two potential buyers for Lehman. The first was Bank of America. The second potential choir was a British bank called Barclays. We figured there would be some bad assets to look forward to. keep the FED out of this if possible and get the CEOs of other Wall Street firms involved in buying or holding those assets somehow.

Wall Street titans and top government officials have gathered in emergency meetings fighting to prevent the collapse of the giant investment bank Lehman Brothers. I summoned the heads of major companies in New York for the world's best financial brains that night. are in pressure negotiations to resolve the fate of Lehman Brothers this is like the five families of every important person on Wall Street this is Jamie Dimon of JP Morgan this is John Thain of Merrill Lynch a fellow Citigroup Lloyd Blankfein of Goldman Sachs John Mack from Morgan Stanley I thought it was exactly the right thing to do.

They had a problem to solve and their problem was my problem. All the CEOs were scared and were afraid of what the fall of Lehman could mean. I said, "You know you're all exposed to what we don't have the means to protect you from. You're being given a task. Hank and Tim are the school teachers who tell the kids that they're going to divide them into groups to get to an agreement to fence these assets. No, I don't think I want to do this, but it was complicated, I mean all of a sudden you're looking at all this data: the banking crisis forces another long weekend of work both in Washington and in.

New York Top executives from rival banks met under tight security to discuss plans to buy Lehman in whole or in parts It turns out that one of the potential buyers actually had no interest in Lehman Bank. of America is in advanced talks to buy Merrill Lynch, a shotgun wedding organized in two days and the fact that Bank of America bought Merrill Lynch took another serious problem off our hands, but Barclays sure seemed very interested and identified the assets that should left behind and I think the banks were largely on board to step up and take it on.

We were all under the impression that there was a major problem: the British government Tim Geithner and Hank. Paulson received a phone call, they spoke to several people, including the banking supervisor, but the one who made the decision was the former checker, the Treasury Secretary essentially of the United Kingdom, whose name was Aleister dear, and the British said that Barclays would buy Lehman. It would be like importing cancer from the US. Hank called and said the British won't let them know that the British Bank is taking over Lehman and is going bankrupt. He was very angry, it was a very unpleasant surprise.

Hank told the staff that the British smile at us. and Hank walked into the other room and told the CEOs that it's over Wall Street in crisis mode this morning Lehman Brothers says they're filing for Chapter 11 bankruptcy today the newspaper and the hour the tutorial Monday morning I I would say Express relief that the FED had not intervened I will tell you that none of the three of us looked at that as a positive event We didn't know how bad it was going to be but we knew it was bad Good afternoon everyone and I hope you had a good weekend nice, yeah, Monday afternoon I was at the White House in front of the press corps, you know, putting on the best face I could in Lima, as you know we're going through a difficult period in our financial markets right now.

Lima was a big mistake. and I think maybe those who were involved in that decision will still defend it, but I think when you look at the subsequent Tremors, I think that's considered one of the most colossal mistakes of all time, there's a lot of retrospective analysis and so on, I think people It is necessary to keep in mind that all of these decisions had to be made in real time and in situations of high time pressure, we could have lent money to Lehman, but it would not have been enough to prevent the company from going bankrupt.

There was a broad-based race underway. throughout the company, not only in its short-term financing but in derivatives and in many other aspects of its business, so the company was not salvageable for people who believe that if they had saved Lehman then there would be no business. financial. crisis you are being naive if it wasn't Lehman it would have been Morgan Stanley it would have been someone because the fundamentals were so bad the Dow Jones fell 4.4 today over 500 points the worst one day point drop since 9/11 . Lehman. I remember calling my management team and telling them they were going to see the worst week in the financial history of the United States.

There was a huge liquidity problem. The market for bank loans was drying up. Do you know any institutions in the United States? States Caterpillar GM Ford Chrysler Harley-Davidson anyone whose existence depended on the ability of its customers to borrow or their manner of borrowing at the time. I think people thought I knew it was Dire, we were a few days away from ATMs not working. I could see the crisis spreading very, very quickly from Wall Street to Main Street. That week, one of the largest McDonald's franchisees in the country calls Ken Wilson, who works for Hank Paulson, the treasure, and literally tells him, "I don't think I'm going to do it." They'll be able to do payroll next week, think about that and you might say, why couldn't McDonald's do this?

Guess how they rely on Bank of America to get their act together and they're worried that Bank of America won't do it. the markets were affecting the real economy the market to close people cutting hiring cutting investment cutting spending to protect themselves and you were looking at what looked like it could be a Great Depression I described it as an economic Pearl Harbor the panic of 1929 was nothing like the system had stopped a day after the bankruptcy of Lehman Brothers and the liquidation of Merrill Lynch attention turned to AIG, the world's largest insurance company American International Group is seeking emergency financing as it struggles to stay afloat AIG was effectively guaranteeing all the Other Wall Street banks, wait a minute, all their insurance is from an insurance company that is about to go bankrupt.

Now you watch the fire spread from one company to the next and then everyone looks and says AIG shouldraise at least $40 billion and fast. AIG, the situation continued to get worse and they told us that they were not going to survive until the day they needed a balloon, so it was 85 billion dollars, kind of imagine that the Federal Reserve can lend with collateral and we essentially decided that despite that the AIT loan will be so large that there was enough value in all of these insurance companies that we could take it as collateral. AIG may not have been too big to fail, but it was certainly too interconnected with the economy to fail Tuesday night, the AIG Saga is at least temporarily stuffing the turkey with $85 billion and firing the CEO isn't enough for the market as a whole we are now talking about Morgan Stanley going under if Morgan goes down Goldman goes down the two remaining independent investment banks Goldman and Morgan Stanley are extremely vulnerable, we work quite aggressively with financial institutions.

He was on the phone urging them to raise capital. Hank and Tim, and mainly Hank was putting pressure on at least Morgan Stanley to find a way to get outside financing. Tim said he'd pick up the phone and call Jamie, he'll buy your bank. I said, Tim, yes, you'll buy it for two dollars a share. He said I don't care what he pays for you. I want you to do it and I told him in one of my more. stupid moments, well, I won't do it, first I will take down the company and hang up on him, who does that on Thursday he came with Bernanke with Geithner.

I started talking to the president about how we're going to need some money. Legislative authority, we're out of ammunition, we needed to put capital into the banking system, but Hank's concern about the capital injections was that it would look like the government was nationalizing or taking over the banking system, so his idea was to buy assets in trouble. That's why it was called the Canvas Troubled Asset Relief Program. About halfway through the conversation, the president interrupted Hank and asked Ben a question. I asked him that we're heading into a great depression and Bernanke said, "You know, it looks like that's the way it's going to be and you've got to make up for it." your mind, you know, you care and what I cared about was the people who would be suffering, they were already starting to get hurt, the people who were losing their homes, payrolls couldn't be covered and I could only imagine what a Great Depression if so.

Now imagine how bad it would really be when we walked out of that meeting, the president turned to us and said if this is Hoover or Roosevelt, I'll most certainly be Roosevelt, usually the Secretary of the Treasury keeps me informed about the markets, but I haven't heard from him in a couple of weeks during that time we've had Lehman Brothers Merrill Lynch and then AIG, so I called him, it was three in the afternoon to say, can you be here at nine? the next morning, to which Madam President said, tomorrow morning will be too late, so we planned a meeting for five o'clock that day, Frank Paulson and the president, and Bernanke came in and Sharon Bernanke told the group if they don't give Hank.

Paulson what you need in 72 hours the entire banking system, the United States will fail and then the world banking system will fail, on top of that, one of the most sobering periods I have ever experienced, you must be kidding me, why are we meeting for the first time now? We have 72 hours in any case. I think I might have underestimated in my predictions how bad things were going to be. The secretary described what they wanted to do so we've tried a lot of models and we have what we call our plan to break the glass we were going to buy problem assets you don't know how but we were going to buy problem assets but every 15 minutes Majority Leader Reed would say how much is this going to cost a hundred billion dollars no no no no, Hank said no, no, no, we knew it couldn't start with a t.

He couldn't ask for a billion. It wasn't going to be able to go unspecified again, so the biggest number we thought we could get was 700 billion and We thought you knew 500 billion sounds big, but 700 billion 500 billion 700 billion a lot of people don't. You know the difference basically we wanted it to be as big as possible without scaring Congress so blowing up in our faces I said we need the authorities immediately and Harry Reid says Congress doesn't do anything immediately and it was after that when we all left and late in The night we had pressure, we reached a bipartisan agreement to work together to try to solve this problem and do it in an expeditious manner.

I am very impressed with Chairman Bernanke, Secretary Paulson. I have said on several occasions that we look forward to working with him and we are eager to see his proposal, which we expect to receive in a matter of hours, not days. We are meeting to work for a quick solution that points to the right thing, of course, that was the best thing that happened for next week because after that it was a difficult process, today in the name of Main Street, Congress had the opportunity to ask some tough questions about the $700 billion Wall Street bailout why we are being asked to allocate $700 billion to keep CEOs in their offices while families are kicked out of their homes why we have a week to determine the $700 billion that must be appropriated or this country's financial systems will go down the drain.

I share the indignation that people feel. It's embarrassing to see this and I think it's embarrassing for the United States of America. His point of view is correct, the same as that of all our viewers, if you take a risk and you win money, that's fine for you, but if you lose money we don't expect the United States of America to be there to save you. Anything that looks like a bailout is unpopular. Too many people on Wall Street have been betting recklessly instead of winning. the solid investments that we expected from them the other madness of this all this is that it happens in the middle of a presidential election if you give me your vote we will win the general elections and you and I together we are going to change the country and we are going to change the world God bless God bless America thank you not only have I assured Paulson that we are not going to play politics with this, in fact I contacted McCain and suggested that we should make a statement expressing confidence that we can get through this difficult period now This is not the time to engage in politics.

He asks me on the phone what you would think about the possibility of suspending the campaign and I tell him, well, I'm not sure it's a good idea for you and me to be in Washington. That's only going to politicize the situation. It might be half an hour, maybe less, before David Pluff, my campaign manager, gets a call saying, listen, John will be out in two minutes to announce that he's suspending the campaign. I said no, no, that. He can't be right. I just spoke to McCain half an hour ago. Well, sure enough, this afternoon, John McCain launched an explosive political spectacle tomorrow morning.

I will suspend my campaign and return to Washington. I'm directing my campaign to work with the Obama campaign. to delay Friday night's debate, so there was some cursing in the room which was irritating, to say the least. I came and called Bush and told him that he was going to interrupt his campaign and that he wanted to come back and help solve the problem and the president said that's just the stupidest thing I've ever heard. There was a flurry of dramatic events today when economic policy and power politics collided, so I'm sitting there saying, "My God, if he opposes what we're doing, we're going to lose the Republicans." we can lose the Democrats and there goes our economy there goes our financial system here comes another Great Depression it seems to me that John McCain is trying to divert attention from his failed campaign reminds me of Andy Kaufman as a Powerful Mouse August McCain is coming to save the day, Barney Frank, the chief Democratic negotiator, said it was the longest Hail Mary pass in football history and that Mary's president was in a leadership meeting of both houses of Congress, including Senator Obama and I, appreciated to Dead Set for the meeting he didn't have.

I want to meet, but he knows that if he had said no, it would have hurt his campaign a lot. I called Senator Obama at that time and told him that he was having a meeting at the White House and I would like him to come, President Bush. He almost apologized and said, look, I don't know how well this is going to work, we'll try to make it as serious and constructive as possible. I mean, well, I appreciate that Mr. President, I'll be there, it was a high-stakes drama. It was the strangest meeting. You know, sometimes history is stranger than fiction.

I want to thank the leaders of the House and Senate for attending. I appreciate our presidential candidates for being here too. We are in a serious economic crisis in the country. We know we have to do something as quickly as possible. President Bush kindly yields to me as spokesperson and I thank you, Mr. President, Leader Reed and I have decided that we are going to yield our time to Senator Barack Obama. very wise about it, he said, listen, I've been in contact with Hank Paulson and I'm watching this crisis very closely. At that time he had been quite immersed in these issues and was quite familiar with them and I asked him for my proposal, Mr.

President, we want to act responsibly, we believe that it is important that taxpayers' money is not wasted. He gave a well-crafted presentation and then the president called McCain and McCain said, "I'll wait my turn," and there's a kind of deflation in the room. John didn't have much to say, the problem was that I think John still hadn't really thought about exactly what his approach would be at that moment. He knew that campaign was amazing. He knew that he couldn't have developed another plan. McCain did not. I don't want to talk if I said right, I think the Republicans have a perfect right to offer that plan.

Someone said, no one doubts it, but what do you think about it? And it was like that, let's just say it just wasn't there. I didn't think he did it. a plan, they thought it was a really cool campaign Gambit, they were playing checkers not chess, they had only thought one move ahead, it was a situation where I felt they hadn't looked after him well, his team needed to make sure he had an agenda . that he was applying and didn't and the meeting descended into a bit of chaos. Barney Frank started yelling at him where's your plan? where is your plan?

McCain would not say what he thought about the meeting plan. broke down into a shouting match it was chaos and disorder this turned into a food fight Barney Frank yelling at a Republican guy and it got out of control and I basically said the meeting was over, ended the meeting, brought the meeting In the end, it was the most horrible and disheartening White House meeting I had ever experienced. I asked him not to use the White House as a political backdrop. I told him because we are going to scare the markets, you get out of here and start. giving people what happened at the meeting and this that and the other the markets are unstable the way they are and we don't want to be a part of making them more unstable I think you're waiting for a bigger game than me Richard Shelby ran out We went out and told him to the press that our plan was a disaster and that there was no support for it, we had not forgotten the agreement, there are still many different opinions, so mine is wrong from the beginning and all the Democrats ran to Roosevelt's room.

We're talking about what Obama is going to say at the press conference afterwards. I was a little naive because I thought, geez, these are all my friends. I've been working with them. I've been talking to them regularly and I was worried that they were going to run out and what the press was going to say, so I came storming in like I shouldn't have and they were all crowded around Barack Obama and I walked up to him like he was one of them. They and they looked at Me and said: get out of here! This is a famous meeting where Hank Paulson, only half ingested, gets down on his knees and begs Nancy Pelosi not to torpedo the tarp legislation.

Hank got down on one knee and said Adam, Speaker, please bring the bill to the floor and I said, well, you know it's not us, we want a solution, you have to get the votes on your side. I was at the Treasury and President Bush came to see me. Part of leadership is recognizing what's going on on your team, and it was pretty clear that Hank was worried sick, so I tried to go to Wendy, his girlfriend, and I said, Wendy, you've got to put him to rest. I don't know if it had any effect, but at least he had a friend, I said, Well, if you really want to know what's bothering me, I don't want to be Hendra Miller, you know, Andrew Milland was Herbert Hoover's Treasury Secretary during the Great Depression and he laughed and I said, well, that's what It's very funny, I mean, no one knows him, they know about Hoover, the country should have confidence and the ability of the government to avoid a crisis.

I learned this firsthand on 9/11. One of the jobs of a leader during a crisis is to not only project calm but to project confidence that we will deal with the situation and lo and behold, my administration started with acrisis and ended with one, there will be ample opportunities to debate the origins of this problem, now is the time to solve it in our nation. There have been moments in history that require us to come together across partisan lines to address important challenges. This is such an important moment in terms of getting the canvas. There were three or four sticking points, but one that was very big was compensation.

You know, Congress said that if they're going to do something for Wall Street, they should be willing to sacrifice the issue: If people are going to keep their bonds while we bail them out, there had to be some Old Testament justice for the sins that you committed. and that we are all asking you to pay when you go down that road no bank will accept capital or help from the government unless it is willing to go bankrupt, they couldn't understand the idea that there will be any public voice in the private sector that pays what? You mean you would tell the private sector who could get paid?

And we look at Hank and Ben, but really what do you mean you want 800 billion dollars? You know we're not the ones who said Lehman should go bankrupt when you needed it at 30 billion dollars for the beginning of Bear, you found out where it was, what do you mean you made 800 billion, the payment was a recognition that you had screwed up Hank's first job was to come to an agreement on what the parameters of the tarp legislation would be? it would be that we put it on the floor sometime after midnight in one of those sessions.

I remember getting a call from leader Reed who said Hank had just thrown up in a trash can. I was in a small cubicle and picked up the dry trash. I gasp and make a lot of noise, so Rahm Emanuel came in right away. He has, you know, I wouldn't call it chest pains anyway, whatever it is, I think he was, uh, he had some breathing problems. Senator Greg and I are with them. Robin and I don't. I don't know if this was real or not and I told ROM I said well let's get the doctor Hank Paulson said there are no doctors there are no doctors I know I've been through this before it's okay I looked at Greg and I we both said the same thing This will never come out of the room because if I ever got to the market and the secretary treasurer heard, I don't know if it was a panic attack or something, but basically I had a breathing challenge that the market couldn't handle. psychologically, so there was a Blood Oath between Senator Greg and me.

I never told Nancy, I never told Steady, I never told anyone wrong, she said we have to solve this quickly, the implication is that if we didn't, then we would have the Secretary of the Treasury. fainting or worse, that wasn't a tactic, but if it had been, it was for the best because it was surprising how quickly we came together and came to an agreement. Good evening, for the last few hours, the chairs of our committees have been working with the secretary. Paulson and other members of the administration to resolve our differences so we can move forward with the package to stabilize the market, the most important thing is to protect American taxpayers, we wrote the bill, we brought it to the floor and we got to the day. before the vote and I said I never miss a vote because I know I have my names I want to see your names the president said you have to vote of course you will vote yes this is an emergency but you have to vote yes Small businesses, stores of family groceries, they don't get this break when they make bad financial decisions, they go out of business, but the rich and famous Fat Cats of Wall Street, New York, are hoping that Joe's six-pack will perk up and pay for all this. nonsense, it's pretty clear that the Republicans are for it, I mean, there was a lot of anger and uh, I didn't come to Washington to bail out Wall Street, you know I didn't either, but you know it's necessary under this plan, ultimately , the federal government will become the guarantor of the last resort and madam speaker that puts us on the slippery slope of socialism.

I remember talking to Senator Kyle and asking him how his constituents' calls on the mat were going. He said, well, it's about 50 50. 50 no and 50 percent hell. No, if I didn't think we were on the verge of an economic disaster, it would be the easiest thing in the world for me to say no to this John. Boehner had warned me that he hits Hank. When you look at House Republicans, a third of them are knuckle-draggers, another third of them are in danger of losing their seats in this election and believe they are likely to lose their seats. and I don't want to make an unpopular vote so you're fishing in a small pond defend the American taxpayer reject this bailout and vote no I went to Hank's office and I said, you know, look, the speaker put this up for a vote, they wouldn't do it. that's if they didn't have the votes to take it to the top, so we're looking at it and looking at it and looking at it, nothing moves and it's 2 12, as you know, just floating, it was a classic political vote. it was a bad vote if you were conservative it was a bad vote if you were liberal so the rank and file members came in assuming their leadership had the votes to approve it they came in early and voted they didn't leave and they couldn't It is not found that the EAS has 205, the votes against are 228.

The motion is not adopted. The stock market is down. The Dow Jones Industrial Average is down almost 500 points. I was watching the vote on television and watching the stock market at the same time. falling and falling and falling and telling myself that the entire US economy is at risk and that Congress cannot coordinate to take the necessary actions to help us stop this crisis. I was very sad, very heartbroken, we knew it was going to be the end. I voted, but Wall Street is extremely upset, said the Republicans abandoned Bush. I don't think Boehner and Blunt knew they couldn't deliver, but I remember walking up to him and putting my finger on John Boehner's chest.

I told him you better fix it. this and you better fix it quick I said this is your problem, not ours, we are trying to help, we need everyone to calm down, relax and get back to work, the main problem for the market right now is fear, always I thought he was planning the worst. but I assumed with all the leaders on board, naively, I've been in Washington for a couple of years and assumed it would pass. Part of it was also that every step of the way we would have half the votes and they would have that divorce because we believed this had to be bipartisan it was very, very discouraging, everyone called me that night and his voice broke and he apologized. with me because he knows he owns this feeling of failure because he was not successful on that first vote and I remember saying to him I said, "You're going to get this pass.

You know where the United States is. We're going to find a way to get through this. We need to work." as quickly as possible. We need to do something. Continue to consult with Congressional leaders to find a way to move forward to do something as soon as possible. The Dow Jones Industrial Average lost 777 points, which is the most points lost. since the first iteration of the canvas dropped and the market corrects at 1.4 trillion, which is sort of the ultimate focus group facing the increasing pressure of unstable markets. Senate leaders pledge to pick up the $700 billion portion of the bill.

Josh and the team came up with a different strategy and executed it to send Congress back to the Senate the first time the time to act is now if we don't act The wheels of our economy will grind to a halt Congress began to hear from its constituents what is happening with my 401k what is happening with our economy then that led to a reversal, the applauses are 74 and the no's are 25. The amendment is agreed upon if the second vote goes down. uh I might have found a cave somewhere in my head for a while we literally passed a bill to send a signal to the markets in the end here it's 800 billion dollars we'll figure it out later so how did you react Wall Street to the big rescue?

The Dow actually closed 157 points lower, so as we were getting this legislation through Congress, the situation was getting worse, we had both. Largest bank failures in US history with Wachovia and Washington Mutual WAMU in the last five days the Dow Jones has fallen more than 1,800 points and 18 percent, the largest weekly drop in its entire 112-year history , we needed something that would work much faster and be more powerful, we had several ideas for Capital programs to put capital into the banks and we had our teams working around the clock to figure out what would work, so while we were working on this the Saturday night I was exhausted, I fell fast asleep, my phone rang and he answered the phone and said Hank, this is Warren and my mom has a handyman named Warren.

I'm saying why he calls me, but it was Warren Buffett. He presented the idea, which was the germ of what we did. He made a suggestion. at the beginning of October in a way of doing it that I thought the government would do very well with. In fact, I thought it might make more sense to try to put more capital into banks than to try to buy these assets. So I sent it to Hank, and he came to me and said what we just passed in Congress is not going to work. I said, "You've got to be kidding me." Now you tell me that his plan now was to give the money directly to Wall Street. he says it's the only chance we have I told him we'll do it until he has some time to chat with CNBC if you want to tell us you're here to meet with the treasury secretary okay I'm sorry could you discuss it today sir ?

Serena, can you tell us why you are here today, on Columbus Day weekend, after the charpet passed? Hank summoned the heads of the major US banks to the treasury. I walked in and, you know, nine of us lined up there and on the other side there's Hang Ben Tim, you know a bunch of other officials and they said they have an idea that they want us to take this canvas money. You know you're 25 billion and you're 10. On this basis they calculated about two percent, I think, in Risquared assets. They also knew full well that some people didn't need it and there are a couple of people there who did.

Nobody wants to take the money publicly because if someone takes it then the market says: "Well, they must be terrible, let's get everything out so they don't." It was actually a pretty big decision, twisting your arms and forcing everyone to take it, he was very popular, if you don't take it and need it later, it won't be six percent preferred, and I'm going to take your firstborn and make it. I will accept completely. I understood that I don't like to be harsh. I hated some of the things I saw people in government do that I thought were abusive.

I really believed we needed to do this for the good of the system. He had this document and I said: well. Give it to him here and I signed it and I turned it over on the desk and the victim said: Aren't you going to go to your meeting? I said no when the Secretary of the Treasury tells me we don't do this and we get in trouble. I'm going to get punished, that's all I need to know, and I said, look, if I'm lucky, my board is going to fire me. I'll get out of all this madness.

Foreigners come out, try to talk to us, everyone you know brushes them off. a little, they're going to work here well, man, and that's why the headline the next day said that not only were they rescued, but they were ungrateful. I am here to oppose the bailout plan because it is a massive transfer of wealth from American workers to the elite. The institutions and the super rich Hank called and said I asked him to take all the money, plus I think 700 other banks across the country is probably the biggest bailout ever. I think the intervention saves depression, but I can't prove it.

I mean, I can talk. to them with sad faces in the Rotary clubs and in the heartland of America and they say, man, we stopped a depression and they will look at me and say no, you spent our money to bail out Wall Street. I think there are still a lot of people who believe that. We bailed out companies and helped Wall Street because we were trying to help our friends in the financial industry and not because of our interest in defending the American economy. That's absolutely false, but I guess I have to live with that Obama in New York.

At the end of October, maybe a week or two after the lists thing, I remember saying to him: "You know, we came out of the panic, but it wasn't over yet, it's going to take a lot more things, still, Barack Obama will become what has been." It has been a long time coming, but tonight, because of what we did on this day, change has come to America, just remember that if this financial crisis taught us anything it is that we cannot have a prosperous Wall Street while Main Street suffers. feverish plateaus but not broken. We didn't know how fast the economy was.

The foreclosure rate is skyrocketing and there is no end in sight, so we are going to have to have a housing strategy, but even as we celebrate tonight we know that the challenges that tomorrow will bring are the greatest of our lifetime. has at least five institutions thatThey are bombs ready to explode at any moment. Welcome to the witness. She had been talking to Barack Obama daily and stigmatized him. My credibility was wearing thin. It looks like you're flying a 700 billion dollar plane. I was looking forward to hearing from him after the election and getting support and backing, etc., and instead I heard one of the members of his transition team, guess what, Mr.

Treasury Secretary, he had his last conversation with the The president of more big-name companies made plans to lay off workers. The bank that received billions of free taxpayer money then turns around and cuts off credit to a local business and then doesn't authorize workers to receive a cent by leaving with three days' notice. We are outraged by the nine weeks that passed between the time Barack Obama was elected president and the time he was sworn in. It was hell. Circuit City will close and eliminate 3,000 jobs. The nation's unemployment rate hit a 14-year high. panic or stop the panic, but the system was very broken at that time, really frozen in the Capitol today, the need to prevent the auto industry from imploding, we pray that you remove the veil between the people of this nation and the people in a I thought, but Barack Obama had the political courage to do the right thing and do what the public did not want to hear.

All the money came back and they came back with a profit of 50 billion dollars, the money they put into the banks and the insurance companies. When you look at how the US economy recovered, you know that growing at two percent during the third quarter of 2009 in our system worked very well, which is why the Tarp Capital program is the most successful and widely hated program in the history of humanity. dinner at the Federal Reserve to, you know, say goodbye to Hank, it's been a really difficult time for him and I'm sure he was relieved that he wouldn't have the responsibility anymore, but we knew that we could still count on him and that we could call him and talk to him, something as stressful as working for 18 months during the crisis, the first year I was out of government was by far the most difficult period for me, I sat on the sidelines with my heart and throat, but I look at it now and I say, wow, you know, the continuity of policies.

President Obama, we met for the first time at the end of October and at the end of our meeting he said that perhaps he would have to ask you to come work with me in Washington and I was deeply reluctant to do that. he encouraged me not to do it said said Mr. President uh you don't want to bring me up um you know I've been on the front lines of this maybe what you need is a clean break but I trusted Tim As someone who is a non-ideological technician, he It was my best bet. Good morning, you know, ultimately, if the president asked you to serve your country and you believe in him or her, it's a difficult thing for me to do today.

Vice president. Elect Biden and I are pleased to announce the appointment of Timothy Geithner as Secretary of the Treasury. We did a whole host of things to keep the mortgage markets open. Lower interest rates. We help people refinance. We help people stay in their homes. President Barack Obama is launching the next step in his multi-pronged plan to revive the US economy - a $75 billion program to help struggling homeowners - but if you remember the public debate there was a Huge opposition to bailing out homeowners too, this is America, how much do you guys want to pay?

Your neighbor's mortgage has an extra bathroom and he can't pay his bills. Raise your hand President Obama, are you listening? It's Rick Santelli's famous speech that many people see as the initial expression of what became the Tea Party. The Tea Party begins. With the announcement of the housing program and they say that this is all for lazy people and rewarding people who don't deserve it, we should have a tea party. I wasn't surprised by the public reaction because a year after we spent over a trillion dollars, people are still going to feel worse and all they're going to see is that there's a lot of money going to the people who perpetrated some of these things. terrible Financial crises are often followed by a populist backlash, but I think it's important to understand that some governments have long-term trends in the United States, including wage stagnation, reduced upward mobility for people, lack of opportunities, there are a lot of things that have contributed to the current moment.

The financial crisis didn't help, but it obviously exacerbated some underlying tensions in the United States. In the United States, two of AIG's former CEOs were questioned about a retreat in which just a week after being bailed out by taxpayers, its executives spent $440,000 on oceanfront rooms, rounds of golf and trips to the sea. resort spa and salon, where manicures, facials and pedicures were performed. and their massages while the American people paid the bill. One of the worst days I had was when we found out that AIG was contractually obligated to pay bonuses to some of the people in the financial products division and I knew that was a catastrophe and there was a big political problem.

Americans had to bail out AIG, but most Americans still lost 40 of their retirement plans. If they had taken that action, they would have lost 70 percent. I think it was clear that there was going to be fraud. The core of the challenge was again this basic aspect about justice and morality. How can you find a way to protect the public interest? Without creating a bunch of private beneficiaries, the people who took out insurance with AIG to guarantee their retirement plans received a 100% refund so they suffered very little loss and I'm giving a yes or no to that answer because it's a poorly phrased question.

The fact that the American public hates what we did is not surprising because in many ways it is an anti-American display of Wall Street, it definitely worked, being screwed right now and being harmed by many of the powers that be if we want to see change. in the sense that people are struggling to pay their mortgages, incomes haven't increased this whole time, and people at the top are acting like they don't suck since 2000, you've taken home over $480 million. Are these figures basically accurate? I guess they are and that whole attitude is that people think there are two rule books, one for the elite and one for everyone else, and that started the populist revolt, ladies and gentlemen, please welcome.

The fuse was lit in 2008 and Donald Trump was the explosion. He is the result of the financial crisis, there are many Washington bureaucrats who do not want things to change, we are going to take care of this country for our children, our grandchildren and our great-grandchildren, and we are not going to let people into our country destroy our country, crises generate populism and yes, the economy goes hand in hand with politics and if one breaks, the other breaks and it will take very strong leadership to unite this country because we are very polarized abroad. speech I I is funny, but not that funny, right, I think maybe because we were very different in our own way, we had different skills, we had different personalities, we had different experiences, but we trusted each other, so you know me.

I look back and I don't know how we would have gotten through this if I didn't have these guys as partners. I remember looking at my wife's face in the morning when she read about something we had done and she liked seeing how she could do it. I didn't convince her and really that was the best we could do, that was the best we could do. We designed a strategy that was effective in making the economy grow rapidly and people thought we gave away hundreds of billions of dollars to the banks, who paid up. themselves in compensation and the country lost those resources, but in effect we designed a strategy in which we forced them to pay for that and the taxpayer obtained a significant direct gain, but I don't think that is enough for the people, at one point Michelle Smith came to see me. she said it is necessary to have a town hall with the staff, people come up to them in the supermarket and ask them what the hell they are doing.

I guess what makes me a little more optimistic is that we have shown in the past that when there is a real threat, whether it's 911 or a financial crisis or a war or whatever, that we can come together and I think we will if that It happens and remember that we were also lucky, you know that we had large enough financial resources. To actually do something, not many countries have that privilege. It's really fun to see them all again, although it's a bit painful, too foreign.