"♪ Too Big to Fail ♪ Original Air Date on May 23, 2011 == sync, corrected by elderman ==" "We have no intention of dismantling the regulatory agencies." "However, we must come to grips with inefficient and burdensome regulations." "We will eliminate those that are unproductive and unnecessary." "Tearing down these antiquated walls and granting banks significant new authority." "(Female anchor) In a victory for the banking industry," "Congress has approved legislation which will allow commercial and investment banks to merge and form institutions of unprecedented size and global reach." "I think it's very important for us not to introduce regulation for regulation's sake." "I do believe in the American dream." "Owning a home is a part of that dream." "We are taking action to bring many thousands of Americans closer to owning a home." "This project not only is good for the soul of the country." "It's good for the pocketbook of the country as well." "(Male anchor) The housing market has reached frantic proportions." "It seems that everybody is building, buying or selling." "(Female anchor) The Dow and the SP both breaking records, profits soared 93% at Goldman Sachs this year." "Hotshot traders and bankers can expect to take home" "$10, $25, and in some cases $50 million." "Things that are too good to be true, are." " When you see something coming" " The real estate bubble." " Housing bubble" " Bubble." "Don't put it off." "take action immediately." "Will there be a soft landing or will the bubble burst?" "(Male anchor) The new story-- the mortgage meltdown." "This morning in the mortgage meltdown, new numbers showing that a record number of Americans are losing their homes." "More than 70 mortgage companies have failed in the last few months in America." "and now the biggest of the big companies-- the Bear Stearns-- the big banks are caught holding the bag." "(Maria Bartiromo) The fifth largest investment bank in the country," "Bear Stearns, is being sold for just $2 a share to J.P. Morgan." "It's being assisted by the government which is stepping in to guarantee some $30 billion in Bear's toxic real estate assets." "You've got to imagine that Hank Paulson didn't think he signed up for this when President Bush picked him to become Treasury Secretary." "Hank Paulson may now have to undo some of the deregulation measures that he and his peers on Wall Street pushed through when he ran Goldman." "(Bartiromo) Treasury Secretary Hank Paulson telling Matt Lauer this morning" ""We're all over it." "I've got great confidence in our markets." "They're resilient." "They're flexible."" "(Allan Chernoff) Ali, the truth is that Bear Stearns is only a very small fraction of this story." "our economy could face far worse than a recession." "(David Faber) In the wake of Bear's collapse," "Lehman Brothers is scrambling to reassure investors about the impact of the mortgage crisis on its own assets, shares of the firm under a great deal of pressure this morning." "Dick Fuld, a 39-year veteran of Lehman and the longest-running CEO of a major investment bank on Wall Street, has pulled the firm back from the brink during other crises." "But today, for the first time that I'm hearing it, investors are questioning his leadership." " Motherfucker." " One key question investors have for Lehman Brothers:" "What's the true earnings power of this investment bank's business?" " ( phone rings )" " Hey." "Get up here." "We gotta start stacking sandbags." "What are you talking about?" "We're down 21%." "On paper," "I just lost $90 million personally." "With investors pummeling Lehman shares, the big question this morning is-- what options does Fuld have?" "So far he has failed to raise new capital while virtually all of his rivals have already done so." "And now hedge fund manager David Einhorn is publicly questioning the accuracy of the firm's numbers." "Anything good?" "It's a red-tailed hawk, the first one this year." "Dick Fuld's on one." "(Einhorn) They haven't been able to provide credible answers." "(Maria Bartiromo) So let's go through a couple of those what you call discrepancies, because" "Tough morning?" "We show top-quality earnings." "We beat every prediction." " Yeah." " It's the damn short-sellers." "You know the game-- short and distort." "They're rumormongers." "And they're making a killing." "What are your plans for a capital raise?" "We're way ahead of you." "Now let me be clear:" "we don't need the cash." "You know, it's about perception." "Buffett, Buffett." "We're thinking of reaching out to Warren Buffett." "Great." "You and Buffett go back, right?" "Do me a favor and call him." "Tell him Lehman is rock solid." "As Treasury Secretary, I can't advocate for a specific investment." "Hank, you want me to raise capital or not?" "(Jim Wilkinson) Lehman Brothers is a hell of a lot bigger than Bear Stearns." "The market is terrified." "When I was running Goldman, I never even conceived of asking the Treasury Secretary to cut a deal for me." "Yeah, but the Bear bailout created" "Please don't call it a bailout." "Okay, the very large Bear Stearns purchase assistance package created an expectation." "Fuld's counting on direct intervention from you." "Uh, Buffett's a simple solution." "I think you make the call." "As what?" "Warren's friend?" "His former banker?" "The ?" "No." "Fuld's calling him." "Hopefully he'll jump in and we can all relax." "Relax?" "We just buried one investment bank;" "We got another one that's barely breathing." "This is a confidence game." "People lose faith in Lehman-- these banks are gonna drop like dominos and I don't have the authority to do a thing about it." "We're late." "We've been late on everything." "Neel's team is working on some kind of a disaster scenario." "We're calling it the break-the-glass plan-- what to ask Congress for if your back's against the wall." "( Snickers ) Money..." "Is what you ask them for." "The problem is, Congress won't move until we've already hit the iceberg, and at that point it may be too late." "So you're saying, with the full weight of the United States Treasury behind me, all I can do is call Warren Buffett?" "Hi, Warren." "It's Hank." "I understand you've been talking to Dick Fuld." "You know my misgivings, Hank, about investment banks." "As soon as they started trading for themselves, the risk managers lost control." "I had a very unpleasant time with Solomon Brothers." "That's fair enough." "But we both know that investment banking is a profitable business." "I figure it made you a billionaire somewhat." "I gotta believe that if the price was right, you wouldn't just walk away." "You know a good deal when you see one." "What say you?" "I gotta leave that to your judgment." "People act like we're crack dealers." "Nobody put a gun to anybody's head and said," ""hey, Nimrod, buy a house you can't afford." "And you know what?" "While you're at it, put a line of credit on that baby and buy yourself a boat."" "You heard anything from Buffett?" "He's asking for preferred shares at 40 with a dividend of 9%." "We were just at 66." "What the fuck?" "Maybe it's just an opening gambit, Dick." "Sounds more like a goddamn insult." " Let me get that, Dick." " Thank you." "We're at 36 right now." "We haven't been anywhere near 66 in months." "The markets like Buffett." "His name will push the price up overnight." "You know, I don't care who he is," "I am not spending $360 million a year for the pleasure of doing business with him." "Real estate will come back." "The Koreans have been sniffing around." "There you go." "And they won't steal us blind." "I've seen this before-- C.E.O.s panic and they sell out cheap." "Right now the street's running around with its hair on fire, but the storm always passes." "We stand strong, and on the other side we'll eat Goldman's lunch." "So what do we do about Buffett?" "Screw Warren Buffett." "He passed?" "Lehman dropped to 28 1/2 this morning." "What in the world is he thinking?" "He's not thinking." "He's delusional." "He thought the ask was too high." "He's got to raise cash." "I told him that." "I spoke to Greenspan." "Really?" "He says there's too much housing supply." "That's the problem." "So we should buy up all the vacant houses and burn them." "Dick needs a buyer-- someone with a grip on reality." "Barclays expressed some interest a couple of months ago," "But I don't think the price is low enough for them." "Bank of America?" "Possible." "Dick's put out feelers there before." "We have to keep it quiet though." "If anyone hears that they're trying to sell..." "Lehman will be dead within the hour." "The real estate investments are killing the firm." "We have to admit publically we've made some mistakes." "We need to make a senior management change," "Signal to the market that we get it." "Meaning what?" "Meaning Joe Gregory." "Get the fuck out of here." "You are not gonna tell me how to run my company." "Joe hasn't had your back on risk, and everyone knows it." "Erin Callan's gotta go too." "As far as the street's concerned, she's a joke." "Joe Gregory has been with me for 30 years." "And you want me to kick him to the curb because we have a bad quarter?" "It's not just a bad quarter." "The stock hit 23." "23." "Most of our guys are paid in stock they can't sell for years." "They've lost most of their net worth over the last six months." "You don't stabilize the price," "Your traders are gonna jump ship." "Selfish fucks." "It's not just bankers and traders, Dick." "Clients are pulling their money." "There's gonna be a run on this bank." "Sources tell CNBC that both" "Erin Callan and Joseph Gregory are out at Lehman Brothers." "In a statement, the company's chairman Dick Fuld said" "Replacing Gregory with 48-year-old Bart McDade has been one of the most difficult decisions he's had to make." "Dick, the Koreans just arrived at Sullivan." "Let's make this happen." "My take is you'd be better off staying here for now." "We need you to be our missing man." "We'll go in and push the deal as far as we can," "And then we'll bring you in at the end to top it off." "All right, fine." "Okay." "We are committed to our presence in New York." "( Speaks Korean )" "But we need to know that the underlying numbers make sense." "( Phone buzzing )" "We realize how things look." "But our stock is getting hammered by the shorts." "The value is still there." "We just started." "Min is excited, but we haven't heard the terms." "Where are you?" "I just stepped out to take the call." "Get back in there." "Don't be rude." "Okay." "We simply take the assets you don't find appealing, spin them off into a separate company." "( Phone buzzing )" " You don't buy that bank." " I'm very sorry." "You buy the good bank." "They don't like the real estate." "What do you mean, they don't like it?" "Dick, we're making real progress here, okay?" "Let me stay on it for now." "Min, how are you?" "Great to see you." "I don't want to interrupt." "Dick, great timing." "We seem to be in sync on the broad strokes of the deal." "Shall we get back to the letter of intent?" "Min, I have to tell you," "I think you're making a big mistake here." "There's great value in the real estate assets." "How about we walk through the portfolio and I'll show you?" "We have looked at them." "Well, then you-- you must have looked at them in the wrong way." "I just don't want to see you leave money on the table." "Perhaps we should take a break." "Min, I'm so sorry." "We have negotiated in good faith." "Now all of a sudden we are going backward?" "We can work with you on the price." "It is not about the price." "It is about the way you have conducted this." "I'd like to thank you, all of you, but I don't think we have a structure that works." "What, that's it?" "You're just gonna pack up and go back to Korea?" "( Phone buzzing )" " Hello." " Neel, it's Dick Fuld." "Listen, you know, if Hank wants me to find a buyer, you guys need to step up and help." "The Koreans just walked out, okay?" "Look, I'm just speaking for myself here, but I think you need to do what's right for the firm." "Do what's right?" "What is that supposed to mean?" "If your stock price keeps sliding, you may get an offer at a price that doesn't look all that compelling, but you may have to take it just to keep the company intact." "What kind of price are you talking about?" "Could be" "I mean, it might be low single digits." "Last February we were at 66 a share." "Lehman Brothers is not bear stearns." "We've got a great business." "Real estate's gonna come back." "I am not fucking giving this company away!" "While the real estate market has put Lehman Brothers shares under pressure, mortgage giants Fannie Mae and Freddie Mac stocks are suddenly plummeting this morning after reports the companies may need to raise $75 billion just to remain solvent." "Because they guarantee such an enormous percentage of the nation's mortgages, there is renewed speculation that the government may have to step in and take them over-- a possibility Barack Obama has now raised on the campaign trail." "If Fannie Mae and Freddie Mac collapsed, then probably the financial system would receive such a body blow that it could be disastrous." "Freddie just dropped another 8%." "Fannie's down 5%." "There's-- there's no bottom here." "We need to do something now." "We're working on a proposal for Congress, see if we can get the authority to put some money in." "I'd rather not go that way, but if we get there..." "Uh, I think-- I think we're already there." "How much are you gonna ask for?" "A blank check." "It has to be enough of a statement to reassure the market." "They need to think I've got a bazooka in my pocket." "I'm not saying that we use it, but if we have the authority, everyone who's dumping their shares will calm down, back off." "Okay, well, if you're going to Congress, why don't we give to the banks too?" "'Cause Lehman is looking like shit and Merrill's not far behind." "We'll be lucky to get them to move on Fannie and Freddie." "We do what we can do." "( Crowd cheering )" "( Camera shutters clicking )" "(Reporter) Secretary, Mrs. Paulson, over here." "(Reporter #2) Over here, please." "(Reporter #3) Mr. and Mrs. Paulson." " Secretary Paulson." " Mrs. Paulson." "Thank you." "(Female reporter) Mrs. Paulson." "Mr. Paulson." "(Male reporter) Mr. and Mrs. Paulson, this way, please." "(Male reporter #2) Mr. Secretary, please." "I got her." "( Chuckles )" "(Male reporter #3) Right over here, Secretary Paulson, please." "Big smile." "Thank you." "That's just what I need-- press photos of the Treasury Secretary waving the Chinese flag." "( Chuckles ) Paulson the Communist." "The look on your face was priceless." "Hank, I must ask you about Fannie and Freddie." "We have hundreds of billions invested." "You've assured us the investment is safe." "And it is, absolutely." "We're watching a great deal of our money disappear." "Share prices have dropped 60% in the last two months." "Carrying your bazooka around has not helped matters." "Congress gave you the power." "Perhaps it is time to use it." "The market will stabilize." "We just have to give it some time." "There was an approach last month from Russia." "They have considerable holdings in Fannie and Freddie as well." "They suggested we coordinate and without warning dump hundreds of billions of Fannie and Freddie's bonds onto the market." "That would be..." "Yes." "The amount of debt your country carries is a terrible vulnerability." "But you-- we declined respectfully." "Even in the U.S. it seems the relationship between the government and private industry isn't so simple." "Was it a threat?" "No no, it was a friendly reminder that with a single phone call to Moscow they can take down the entire U.S. economy." "Well, the book says" "Fannie and Freddie are a nightmare." "They are in the hole easily tens of billions of dollars." "In another few weeks they're gonna start defaulting on their debts." "We're gonna have to step in." "I don't see how we can avoid it." "Turns out a bazooka's not that useful unless you fire it." "Lehman's down another 10%." "You are not gonna let me get down a single bite, are you?" "That's why I have oatmeal." "Dick is trotting around the world with his head in his hands and no one will give him any money." "Korea walked out on him." "Mexico told him to shove it." "No one's interested." "All the dumb money's already in." "What about B of A?" "Are they still in the mix?" "And Barclays is sniffing around again, now that they think it's a fire sale." "That's promising." "I don't know." "The British-- they do a lot of talking." "They never close." "B of A is still our best bet." "This can't be another Bear." "Absolutely not." "They want Lehman-- they buy it outright." "But they may need a little hand-holding." "They just bought Countrywide." "They're spread a little thin." "You may have to give them a break with the capital requirements." "You want me to allow them to raise their leverage so they can buy a bank that's about to fail because it was overleveraged?" "You got a better idea?" "Breaking news just coming in:" "Sources telling CNBC that the government has just taken control of Fannie Mae and Freddie Mac." "Back in July, you remember, Hank Paulson said that he wanted the power to step in, but he probably wouldn't use it." "It certainly sounds like Paulson just pulled the trigger on that bazooka." "Despite the move nationalize Fannie and Freddie, the market is still in negative territory across the board." "Investors now focusing their attention on Lehman Brothers amid fresh reports that the nation's fourth largest investment bank may be on the brink of bankruptcy." " Rodge." " Chris." "Bring your money today, huh?" "Make sure Fuld's not keeping any bad news out of the mix." "It's open kimono, to quote Dick." "There's a revolting image." "Did you get a look at the numbers?" "The real estate's the issue." "They got it marked at $30 billion." "It's worth maybe half of that." "Don't look so nervous." "You're about to get a Wall Street bank for the price of a hot dog." "I know that Paulson told Ken Lewis that he's not gonna pay for this." "And I don't see how we can do it unless the government takes some of the downside." "Paulson is posturing." "He'll write a check just like he did for Jamie Dimon on the Bear deal." "He has to." "He can't lose another major bank in an election year." "Besides, the guy made, like, a half a billion bucks at Goldman Sachs." "He lets Lehman die-- Goldman's biggest competitor-- makes him look like he's still working for Goldman;" "he's just doing it out of the desk at Treasury." "Where are the donuts?" "Exactly." "If you're the CEO of one of these financial firms, you've already seen what the government was willing to do." "Why wouldn't you play chicken with them and say," ""Sure I'll help you out." "But you gotta throw in a sweetener, just like you did for those guys"?" "( turns off TV )" "They just assume I'm gonna bail out Dick Fuld like I'm the guy behind the elephant with the shovel." "They're all drawing a line from Bear and Fannie and Freddie right to Lehman." "There's no way the taxpayers are gonna go for another bailout" "(together) A very large purchase assistance package." "We need to come up with a private-sector solution, get the investment banks to bridge the gap." "Okay, but that's never gonna work, unless they believe that you've drawn a line." "I know you don't like leaking, but let us reach out to the press." "Okay." "Mr. Flowers, there's a call for you-- Bob Willumstad from A.I.G." "He's very insistent." "Mr. Flowers." "My people tell me you're the man to talk to." "We've got a real problem here." "Yeah?" "What kind of problem?" "It looks very much like we are about to run out of cash." "A.I.G.?" "We've sent over a document." "It's a spreadsheet." "It's confidential, of course, but it might give you some insight." "I'm in the middle of Lehman." "I'm working with B of A." "Is there any way you could come over tomorrow?" "I'll take a look at the numbers and we'll talk." "Mr. Flowers." "Somebody put the TV on." "CNBC's talking about Lehman." "...Person familiar with Paulson's" "Treasury Secretary Hank Paulson's thinking, and he is saying there will be no government money in the resolution of this situation." "They're saying two things make the Lehman deal different:" "The market's been aware and had time to prepare for over six months;" "And the second is..." "Is that just TV bullshit, or is that Paulson sending us a message?" "Chris?" "( Coughs )" "( Chuckles )" "( Clears throat )" "Yeah?" "Sorry." "What exactly does" ""a person familiar with the Treasury Secretary" mean?" "That could mean a lot of things." "Did one of your staffers do this?" "Please tell me someone got fired 10 minutes ago." "The leak came from me." "Hank, a public statement like that can have a lot of unintended consequences." "We had to send a message to the other banks." "They need to step up." "I don't have another rabbit I can pull out of my hat." "Rodgin Cohen just called me." "The B of A team is sitting there playing brick breaker on their phones." "They don't want this deal." "The deal is hanging by a thread because the closer they get to Lehman the more it looks like a toxic waste dump." "Which is why at the end of the day we may have to help them, which would be a lot easier if we didn't publicly state that" "We can't, Tim." "Legally we can't." "Legally we haven't figured out how yet." "I am concerned we are limiting our options at a time when we have very few, if any, available." "I want all the C.E.O.s in a room." "We've got the weekend." "We lock them in a room at the Fed and we don't let them out until they have a solution on Lehman." "Your oatmeal's getting cold." "They'll figure it out." "They'll all throw in some money." "( Chuckles )" "Well, Tim is advocating strongly that we reconsider some kind of Fed support." "Tim wants us to pick up the tab on everyone." "I can't be Mr. bailout." "The Lehman hole is twice what Bear's was." "Investors are pulling their accounts." "You want to lend into a run?" "What about Barclays?" "Are they still interested?" "They can't afford the risk any more than B of A can." "I don't doubt your ability to talk anybody into submission, but it is still a long shot." "And there's a very real possibility that Lehman goes under." "There's a deal to be made here." "I'm gonna make the deal." "(David Faber) With just a little more than an hour left until the market closes, shares of Lehman Brothers have taken another tumble." "The stock is now trading at a new low-- under $4 a share." "And judging from the selling, there doesn't appear to be a bottom in sight." "So Blankfein has a speech he's trying to get out of, but the rest have confirmed." " Tell him it's not optional." " Yeah." "Good afternoon, Chairman." "Thank you so much for joining us." "Whose plane is this?" "Uh, that's a rental." "Hank put it on his card." "Sir, you know Neel and Michele Davis, public affairs." "Hi." "Pleasure." "This is Dan Jester-- our new numbers guy." "Hi." "I've talked him into coming out of retirement." " Excuse me?" "Retirement?" " He was with us at Goldman." "Got anybody at Treasury who wasn't at Goldman?" "Chairman, just to be clear, there's no question of conflict of interest." "Hank sold all of his Goldman stock before he took office." "I wasn't implying anything." "Sorry." "We're a little touchy about the whole government-Sachs thing." "Shall we?" "B of A keeps finding more toxic assets." "They want you to reconsider a Jamie deal." "They'll split the first billion in losses, but they want you on the hook for the next 40." " ( Laughs )" " You did it for Bear." "Greg, let me get back to you." "What do I have to-- tattoo it on my forehead?" "We are not bailing out Lehman." "Wall Street has a gambling problem." "If government keeps covering their losses, they never learn anything." "What?" "I didn't know if you wanted to keep lecturing me on moral hazard or if I should just call B of A back." " ( Phone ringing )" " We need to keep them at the table until they come up with a private-sector solution." "Tell them to stay with us." " Alistair, hello." " Hello, Henry." "Hold on one second." "Chancellor of the Exchequer." "I understand Barclays is one of your potential buyers for Lehman." "My banks are already under a great deal of stress." "They don't want to become overextended." "Lehman is problematic, but there's value there." "We will find a way to make it attractive." "Just stay with us." "Talk soon." "Bye." "We'll keep Barclays in the mix, but B of A is still our best bet." "We've got the C.E.O.s of every major bank coming here tonight." "We have to make it clear that this their problem, that we are their advisors and their allies, but we are not their safety net." "What should we expect from these guys?" "(Paulson) Jamie is smart." "He doesn't have as much cash to work with since he bought Bear." "Lloyd's a superstar." "Goldman's the smartest shop on the block." "And just because I used to be his boss, it doesn't mean he's gonna listen to me." "John Mack used to run around the floor screaming," ""there's blood in the water!" "Let's go kill someone!"" "He's a fighter." "Thain was my number two at Goldman." "He's selfish." "He's a pragmatist." "He knows-- if Lehman goes, Merrill's next." "Vikram Pandit is the new guy at Citigroup." "No one knows if he's running Citi or if Citi's running him." "Thanks for coming down here on such short notice." "Monday morning Lehman will no longer be able to honor its obligations." "We have two potential buyers-- B of A and Barclays." "Neither will take the company unless someone else finances part of the deal." "The government is not in a position to step in." "I did the last one." "You're gonna do this one." "Where is Dick Fuld?" "Dick's in no condition to make any decisions." "(Geithner) We're breaking you into three groups." "The first one will try to value" "Lehman's toxic assets." "The second one will work on some sort of structure for you all to invest in Lehman." "And the third one works on the lights-out plan." "If Lehman files for bankruptcy, we need to figure out how to contain the damage to the rest of you." "Christ." "We've all seen this coming for miles." "I don't think the Lehman bankruptcy takes down our firms." "What, are we crossing our fingers?" "You're asking us to save a competitor." "Let's not act like you're doing us a favor." "Gentlemen, gentlemen, you are great Americans undertaking a patriotic duty." "Your travail will earn you the love and gratitude of your country." "I think it was Thomas Paine who said that these are" "Lehman is a trading partner for every bank in this room." "And their failure will be a massive blow to all of you." "This is your problem." "We can all argue about how we got here-- deregulation, derivatives," "Dick Fuld made bad decisions." "We're all responsible." "It's a catastrophic mess." "The government's done whatever it can do." "It's on you now." "You need to fix it and you need to pay for it." "Let me be clear:" "We will remember anyone who's not helpful." "(Steve Liesman) Do you notice a little pattern here?" "We don't deal with things until there's some kind of emergency on the table." "(Becky Quick) Yeah, we don't deal with things until Friday" "(Liesman) Some kind of a weekend thing." "When are we gonna figure out exactly how to handle the failure of an investment bank?" "Well, let's do it over a weekend." "Just I talked to a person who is monitoring" "The situation out there, and the person said they all want the same deal Jamie Dimon got, and they're not going to get it." "Just a heads up-- Chris Flowers is in the lobby." "He's consulting for B of A on Lehman." "Hank pushed Flowers out of Goldman." "Yesterday we thought Lehman was holding" "$30 billion in crap." "Today it's $70" "$70 billion in assets that we're valuing with a dartboard." "No, we're gonna work this out." "Unless you step in, we're ending this." "Don't forget about Dick." "Yeah, Dick Fuld keeps calling, hammering us to raise the price." "( Phone buzzing )" "Excuse me." "( Clears throat )" "$70 fucking billion and no collateral?" "If Lehman Brothers fails this weekend, there's little doubt amongst the people I speak to that Merrill Lynch will be next." "Confidence is a very fragile thing." "And in our financial markets it is eroding very quickly." "Lehman's not gonna make it." "We're next." "We need to do something right now." "B of A's the only one out there." "I can put in a call." "It screws Lehman, but" "Lehman screwed themselves." "Paulson has drawn a line in the sand." "Lehman is dead." "Make the call." "We'd like you guys to look at taking a stake in Merrill, something in the neighborhood of 10%." "Well, I don't know if I can generate any interest in 10%, but if the whole company's in play," "I bet that's something that we'd consider." "Us and Lehman?" "Deal of this size-- there's only room for one." "It is a lot of risk, no question, but if you stay in the game, we all will find a private solution." "Absolutely." "Don't get scared by the numbers." "We'll figure it out." "Lehman is worth owning." "Guys, you got a second?" "I was at A.I.G. yesterday." "Next Wednesday they got a $5 billion hole, minimum." "I called Warren Buffett." "He wouldn't touch it with a stick." "We're looking into it." "It's a very big company." "Thanks, Chris." "I appreciate all your help." "They're not on top of it." "Look at this." "Is this even possible?" "A.I.G.?" "Holy shit." "Get into this." "John." "Do you see what's happening here?" "Are you watching out for yourself?" "I'm not thick." "I'm working on something." "You're talking to B of A." "I'm sorry." "I know it's not good for Lehman, but I have to take care of Merrill." "Let me worry about Lehman." "Barclays is still in the game." "Just get it done." "B of A is gonna buy Merrill." "We need to make Barclays work." "I thought you said the British never close." "They're here." "They seem to really want it." "If we hold their hands, they'll close." "Rodgin, what the fuck?" "I can't get Geithner." "I can't get Paulson." "I can't even get my own goddamn employees to pick up the phone." "There's a lot happening down here, Dick." "Oh fuck." "You know what?" "You tell Geithner, he doesn't pull my ass out of the fire-- Merrill's gonna be next." "He knows that." "Dick, he just told me they're working on a solution for Merrill." "( Chuckles )" "Those cocksuckers are gonna bail out Merrill?" "No no, not the Fed." "Well, there's no private buyers." "There's just B of A and-- they're gonna put B of A together with Merrill?" "We still have Barclays." "Hank feels that-- the federal government is snaking my deal?" "I cannot fucking believe this shit!" "B of A made a deal with Merrill?" "Yeah, Lehman's still our problem." "I don't think I can take another day of this." "You're getting out of a Mercedes to go to the New York Federal Reserve." "It's not a Higgins boat on Omaha Beach." "Okay okay, we've been here a long time." "Let's stop fucking around." "Main Street wants Wall Street to pay." "They think we're overpaid assholes." "There's no politician who's gonna sign off on a bailout." "Why would you bail out people whose sole job is to make money?" "So let's make this real simple." "Hank thinks he can sell the good parts of Lehman to Barclays, but someone has to take the real estate crap that's weighing down the company." "Nobody knows how much this shit is worth, but we know somebody has to buy it to make a deal." "I don't like it." "Nobody likes it." "Let's just suck it up and do it." "How many of you can kick in a billion dollars to stop Lehman from going down?" "I'm in." "One billion." "(Blankfein) Okay." "Goldman's in for a billion." "John?" " ( Phone rings )" " Yeah." "Yes." "Yeah." "Yes." "We did it." "Barclays came through." "Too goddamn right!" "Barclays won't touch the real estate assets, but the other banks agreed to cover those." "Call the board." "Get everybody here." "We got a deal to make." "Okay." "( Sighs )" "Did you get him?" "Geithner doesn't return my calls." "We can't get hold of any of those people." "At the end of the day they can't sign the deal without our say-so." "Yes, but do they know that?" "( Phone beep)" "Yes." "Yes, by all means, now that he deigns to call, put him through." "Sir Callum, sorry I haven't gotten back to you." "We're just sorting through this Barclays deal for Lehman." "As Barclays' regulator, we have serious concerns about this proposed arrangement." "What-- are-- are you saying you won't approve the deal?" "Even if we were comfortable with the agreement, which we are not," "Barclays would need at least 30 days for shareholder approval." "No no no no no no." "He can't." "He can't do this." " Can they stop the deal?" " Of course they can stop the deal." "But even if they don't stop it, the delay will kill it." "Let's call the Chancellor of the Exchequer right now." "None of those assets would be part of Barclays." "Yes, but if the F.S.A. were to-- of c-- of course." "Yeah." "I wish you good night." "Good night to you too." ""We don't want to import your cancer."" "Those of you who didn't want to assist the Barclays deal, you can breathe a sigh of relief." "The deal's not gonna happen." " Hank, we have the money." " The deal's dead." "The British regulator won't sign off." "There must be some pressure you can exert." "Trust me, I've done everything I can." "The British-- they grin-fucked us." "Pason's got 100,000 employees." "Geithner has 200 lawyers." "Freaking Chris Cox has 3000 people." "Not a single one of those assholes could pick up a phone, call the British, find out if they're was a deal to be made before they spend the weekend was sweating us for cash?" "Somebody dropped the ball." "They didn't drop the ball." "They dropped the ball, kicked the coach in the nuts and took a crap in the quarterback's mouth." "Of course." "The Fed will do something." "They have to." "We've got to announce the Lehman bankruptcy now." "If Asia opens and this isn't locked down, everyone's gonna assume the worst." "The selloff will kill the Merrill-B of A deal." " Who's gonna make the announcement?" " I think it's gotta be S.E.C." "Yeah." "Okay." "Let's do it here." "How soon can we set that up?" "Right away." "We could use the main floor, the entrance hall." "With the statue behind me?" "Excellent." "Did Lehman actually agree to file?" "Chris, call Lehman." "Make sure they file right now." "Absolutely." "A.I.G.'s a huge problem." "The books are a mess." "But from what I can tell, half the banks in the world are in bed with these guys." "Everyone who had a piece-of-crap mortgage security bought insurance on their risk from A.I.G., and I mean everyone." "How could they let this happen?" "They must have figured real estate would never go down, ever." "Hank, Lehman still hasn't filed." "Cox has to make his announcement." "Asia's opening." "Has he talked to them?" "He hasn't even called yet." "We told Fuld about Barclays." "We said Cox was gonna call." "He's got his entire board sitting there-- no call." "Cox is like a deer in the headlights." "Son of a bitch!" "You are their regulator." "Call the Lehman board now." "Hank, this is a complicated situation where" "Asia's opening." "They don't announce-- market goes in the toilet." "We have to consider the appropriate role of government here." "Can I as chairman of S.E.C. move forward and--?" "You guys are like the gang that can't shoot straight." "This is your job." "Make the damn phone call." "Chris, this is Dick Fuld." "The board is in session." "Everyone is here-- all the directors and the firm's counsel." "We understand the Barclays deal has imploded." "We were hoping you might have some option that we haven't thought of yet." "Uh, the markets are in turmoil, as you know." "A Lehman bankruptcy will help settle that uncertainty and, we believe, calm the market." "Both the Fed and SEC are in agreement about this." "Well, let me under" "I'm sorry, let me see if I understand this." "Are-- are you directing us to put Lehman into bankruptcy?" "Give us a moment." " He's muted." " What the hell was that?" "( All chattering )" "Tell them to file." "Everything said in that meeting is or will be public record." "I can't tell a private company to file for bankruptcy." "I don't have that power." "Do I?" "Do it." "The decision to file for bankruptcy protection is one the board needs to make." "It is not the government's decision." "But we do believe... ( Clears throat )" "That the situation should be resolved." "So you're not directing us to file?" "I'm not saying anything more than I've just said." "Thank you." "Take the vote." " Mr. Akers." " Yes." "Sir Christopher." "Yes." "Admiral Evans." "I'm sorry, but yes." "Chairman Fuld." "Dick?" "Yes." "Mr. Hernandez." "Yes." "Mr. Ainslie." "Yes." " Mr. Berlind." " Yes." " Mr. Cruikshank." " Yes." " Dr. Kaufman." " Yes." " Mr. Macomber." " ( Phone rings )" "P?" " Lehman's gone." " Oh honey." "I should have know the British were gonna be a problem." "I spoke to them two days ago." "I should have read between the lines." "You can't take all this on." "There's a lot of other people involved." "It's on me." "I'm Treasury Secretary and the fourth largest investment bank in the country failed on my watch." "I mean, I" " I" "I don't know what's gonna happen." "Miss you too." "( Man whistles ) Taxi." "Jim, I'm at Midtown." "The ticker is-- what the hell am I looking at?" "Hank, it's good." ""It is oddly reassuring that the Treasury Department and the Federal Reserve let Lehman Brothers fail."" "Oh, okay, here it is." "Here it is." "Government intervention would have been seen a sign of extreme peril in the global financial system or extreme weakness on the part of federal regulators."" ""The New York" fucking "Times."" "Yeah, and it's not just them." "It's everybody." "Thank you, Senator." "I appreciate it." "Congress is liking it." "I'm not sure they should be so happy about this, but they like that we let Lehman go." "You stood strong." "You've got brass balls." "It's what people need at a time like this." "What is the market doing?" "Uh, Europe's only down a little." "Dow Jones futures only off 3%." "So you need to build on this at the press conference." "The story is we did everything we could for Lehman." " We did." " And the takeaway is..." "No more bailouts." "(All) Mr. Secretary." "How should we read what happened with Lehman?" "Read it as I think it's important to maintain the stability and orderliness of our financial system;" "and, um, the..." "Moral hazard is something I don't take lightly." "Reporters:" "Mr. Paulson." "Mr. Secretary, sir." "(Woman) How do you see the health of the banking system today?" "The way the markets are performing today-- it's a testament to how the financial industry has come together in an extraordinary set of circumstances." "The American people can remain confident in the soundness and the resilience of the financial system." "Thank you all." "(Reporters) Mr. Secretary." "Mr. Paulson." "What?" "Dow's falling off a cliff-- 400 points already." "And the credit markets are frozen." "Goldman and Morgan Stanley are getting slammed by withdrawals." "The Lehman thing's killing them." "I should talk to the President about how we'll contain the damage." "Before you speak to the President, we've had another problem." "( Whispers ) A.I.G." "Mr. Geithner is working with A.I.G." "on a private-sector solution and the Secretary is monitoring their progress very carefully." "He's in close contact with the Congressional leadership, most-- the White House wants a briefing on A.I.G." "They're more informed about that than we are." "We've got the same information they do." "No, we don't believe that Lehman's bankruptcy is taking down all of Wall Street." "(Man) Okay, so how do you explain--?" "The A.I.G. situation may have been, you know, exacerbated by the-- and Barney Frank's office." "Yeah." "A surprise?" "No, A.I.G. has been struggling" "Well, why didn't you guys head off this situation six months ago?" "Because the requisite magic wand wasn't available, Doug." "But if we do find one, you will be among the very first to know." "Blankfein on four, urgent." "I have to go." "Hey Lloyd." "The goddamn British bankruptcy administrator froze all of Lehman's customer accounts." "You didn't square this with the British before you did it?" "Geithner on five." "People are freaking out." "They can't get their money." "Not investors-- clients." "If customers think their money wasn't safe with Lehman, they're not gonna trust us either." "No one will do business with us." "You're gonna have to hang on." "Tim." "Dan spoke to Moody's." "They're downgrading A.I.G. tonight." "Would have happened anyway, but Lehman put the whole thing into hyperdrive." "How far down are they?" "French finance minster on six." "They don't know." "We're working on that." "Christine." "How could you let this happen with Lehman?" "What on earth were you thinking?" "We did everything we could, Christine." "You allowed it to fail, Hank." "It was a horrifying mistake." "It is having catastrophic consequences all over Europe." "And A.I.G. would be even worse." "The European banks have tremendous exposure to A.I.G." "We need assurance you will not fail to act as you did with Lehman." "It is not just an American problem." "(Davis) Thank you so much for..." "John Mack." "Hey-- uh..." "( Snaps fingers )" " John." " Secretary:" "John-- one." "The fallout from Lehman is killing us." "The short-sellers are all over us." "We're down 10% already." "You guys have no idea what's going on out here." "How are your earnings?" "Strong." "We're gonna announce Friday." "Announce now." "Okay, Lloyd, sorry." "Hank, if depositors see they can't get their assets out of Lehman, the next step is gonna be a massive pullout from all the investment banks." "Jeff Immelt from G.E." "Jesus, what's Immelt calling you for?" "I have to go." "Jeff." "You gotta know what's going on out here." "We're having trouble funding our day-to-day operations." "Our finance division is infecting the rest of our business." "General Electric?" "This thing is spreading way past Wall Street." "I get that nobody wants to touch mortgages, but we're making planes and engines, and light bulbs." "We're a healthy company." "If we can't finance our day-to-day operations, every business in America's gonna be shutting down." "Where's A.I.G.?" "It closed at $2." "Tim thinks we need to do something big." "Ben agrees, and so do I." "What can we do?" "A.I.G.'s not even a bank." "The Fed can lend to nonbanks under unusual and exigent circumstances." "We're thinking of taking over 80% of the company." "Hank, we can't." "This morning we were lecturing the entire country on moral hazard." "A.I.G. has collateral." "They have assets." "Lehman didn't." "We couldn't lend into a hole." "It's not the same story." "Nobody's gonna care." "It's another bailout with no legislation." "The Hill's gonna go crazy." "The country's gonna go crazy." "The plane that we flew in on this morning-- leased from A.I.G." "Construction downtown-- A.I.G." "Life insurance-- 81 million policies with a face value of $1.9 trillion, billions of dollars in teachers' pensions-- it's everywhere." "You want too big to fail?" "Here it is." "You got a better idea?" "The suggestion box is wide open." "I hate to do this right now, but I'm gonna have to have a press call first thing, and I really don't know what I'm gonna tell them." "Tell them Lehman exacerbated A.I.G., the simultaneous payouts of C.D.O.s and credit default swaps put catastrophic pressure on" "Go back further." "The global pool of investment capital-- she has to do this in English." "Start with the homeowners." "Okay okay, here's how you explain it." "Wall Street started bundling home loans together-- mortgage-backed securities-- and selling slices of those bundles to investors." "And they were making big money, so they started pushing the lenders, saying," ""come on, we need more loans." "The lenders had already given loans to borrowers with good credit, so they go bottom-feeding." "They lower their criteria." "Before, you needed a credit score of 620 and a downpayment of 20%." "Now they'll settle for 500, no money down." "And the buyer-- the regular guy on the street-- assumes that the experts know what they're doing." "He's saying to himself, "if the bank's willing to loan me money," "I must be able to afford it."" "So he reaches for the American dream." "He buys that house." "The banks knew securities based on shitbag mortgages were risky." "You'll work on "shitbag."" "So to control their downside, the banks started buying a kind of insurance." "If mortgages default, insurance company pays-- default swap." "The banks insure their potential losses to move the risk off their books so they can invest more, make more money." "And when a lot of companies insured this stuff, one was dumb enough to take on an almost unbelievable amount of risk." " A.I.G." " And you'll work on "dumb."" "And when they ask me why they did that?" " Fees." " Hundreds of millions in fees." "A.I.G. figured the housing market would just keep going up, but then the unexpected happens." "Housing prices go down." "The poor bastard who bought his dream house-- the teaser rate on his mortgage runs out." "His payments go up." "He defaults." "Mortgage-backed securities tank." "A.I.G. has to pay off the swaps-- all of them all over the world at the same time." "A.I.G. can't pay." "A.I.G. goes under." "Every bank they insure books massive losses on the same day." "And then they all go under." "It all comes down." "The whole financial system?" "And what do I say when they ask me why it wasn't regulated?" "No one wanted to." "We were making too much money." "You'll work on" ""we were making too much money."" "Hey, Hank, um..." "These are really mild, but they work." "I know the whole Christian Scientist thing-- that you don't take medicine." "But you need to sleep." "Jim" "Hank, not just for your own sake." "Okay?" "You don't look so good." "Just minutes ago CNN has confirmed that the Federal Reserve is negotiating to rescue insurance giant AIG" "The negotiations could include an $85 billion temporary loan to stave off AIG's imminent collapse." "This is a blockbuster, folks." "About this time last night, many on Wall Street were fearing total disaster today." "So another federal bailout of another Wall Street giant-- again, as we mentioned, big big financial news." "And this affects almost everyone out there who has a 401k." "The news comes about 3 1/2 hours after the stock exchange closed on..." "Motherfucker." "We want to go straight right now to Ali Velshi to kind of give us a bottom line on this, Ali." "And then we're gonna get a lot more in depth..." "AIG securing an 85..." "The credit markets are still frozen solid." "We keep dumping money into these companies so the markets will stabilize, and nothing helps." "We can't keep doing this." "We rescued Bear with no legislation," "A.I.G. with no legislation." "People think Fannie and Freddie was a bait-and-switch." "I don't like it any more than you do, but they were exceptional situations." "This situation demands an endgame that does not rely on unilateral action from the Fed." "This is a democracy." "We cannot be men behind the curtain pulling the strings." "We need some kind of an overall solution that heals the entire system." "And it has to be legitimate." "We've been putting off going to Congress." "It's two months before an election." "They can't vote yes to a massive bailout of the entire banking system." "They'd never get reelected." " Hank" " We go to Congress, publically state we don't have the firepower to control this anymore, and then they say no-- that is really the nightmare scenario." "The nightmare scenario's already here, my friend." "We're in it." "( Insects chirping )" "P." "You can't put this all on your own shoulders." "We're running out of options." "Then you just keep trying." "That's what you do." "Eventually something's gonna work." "I'm not sure that that is true anymore." "There's not a bank in the world that has enough money in its vault to pay its depositors." "It's all built on trust." "And-- and, Wendy, we-- we are so very close." "Morgan Stanley, Goldman are an inch away." "If the other banks stop trusting them, if they pull back on interbank lending, it's over in a matter of hours." "And from there it goes too fast to stop-- a run-- and not just on that one bank." "I mean, on the whole system." "And average people wondering," ""is my money safe?"" "They start pulling their cash." "And after that-- lines outside the banks, smashed A.T.M.s." "A couple of weeks-- there's no milk in the store." "(Steve Liesman) For the second time this week there was a massive selloff on Wall Street, the Dow Jones Industrials freefalling some 450 points on news of a taxpayer-funded bailout of the A.I.G. Insurance company." "Three of the five investment banks are gone." "The country's biggest mortgage lender is gone." "Fannie Mae and Freddie Mac brought under government control." "The financial system is holding right now, but for how long?" "All the King's horses and all the King's men are being brought to bear to keep this thing together." "( Phone rings )" "Hi Tim." "I'm on the street, Hank, and people are just going about their business." "They have no idea the whole thing is about to fall down." "We're gonna have to go to Congress." "We don't have a choice anymore." "Okay." "How fast do you think you can get them to move?" "It's gonna be at least a couple days." "Goldman and Morgan Stanley are going down now." "We gotta do something today." "Like what?" "The market doesn't like investment banks, right?" "The money's saying fuck you to the whole business model." "Yeah." "Yeah, so merge them with commercial banks, turn them into regular banks regulated by the Fed." "They can use depositors' cash." "It will give them access to the discount window." "It's cheap government cash." " You want to make them bigger?" " It's a trade-off, Hank." "The upside is it'll stabilize them." "The downside is, yeah, they'll be really fucking big." "Do it, Tim." "Godspeed." "Get me Blankfein." "Lloyd, call Vikram Pandit, talk to him about a merger." "Tim, we're looking at all our options." "You don't have options, Lloyd." "There's a run on your bank." "You need money-- Citi has deposits." "Citi is a mess-- you're organized." "Call Pandit." "Yeah." "I want you to look at merging with Morgan Stanley." "What, are you kidding me?" "I just bought Bear." "We're still trying to make that work." "You didn't buy Bear." "You got Bear as a Christmas present." "The market's a fucking disaster, Jamie." "Talk to John Mack." "Hey, Geithner says we should talk about a merger." " You want to do a deal?" " No." "Then why the fuck did he tell me to call you?" "I'm under orders to try and help you." "You're a prince, Jamie-- a real prince." "Apparently some people seem to think combining our firms would be a good idea." "Well, I want you to know I'm flattered by this call." "Vikram, I'm not trying to flatter you, believe me." "(Woman over intercom) Geithner's calling." "Oh, here comes goddamn eharmony." "Hey, guess what." "Jaime's not interested." "Do Wachovia." "They were writing mortgages with their eyes closed." "Tim, it's a shit sandwich." "Forget it." "Well, I haven't been able to reach you for four hours." "That is-- that is totally fucking unacceptable on a day like today." "I had to run my team through the Goldman proposal." "It's not gonna work." "You passed on Goldman without even talking to me?" "I don't need another trillion dollars on my balance sheet." "Next time I call, pick up." "Fucker." "The problem is the toxic assets." "Let's just buy them." "Ooh, call it cash-for-trash." "When the market stabilizes, we'll unload them." "Hopefully Treasury will get its money back." " Is that in the break-the-glass plan?" " Basically." "My copy's missing some pages." "Could someone else show me the rest of" "It's succinct." "We've got one shot with Congress." "You want them to write a piece of legislation based on three pages?" "(Dan Jester) Look, guys, buying toxic assets is gonna be a nightmare." "Nobody knows what the stuff's worth." "It'll take forever to untangle." "These banks are going down now." "So what do we do?" "You want to unfreeze credit, right?" "You want the banks to lend people money?" " That's the goal." " So give them money to lend." "Capital injections?" "Dan, come on." "I can't believe you're pulling out the "n" word." "I'm not saying nationalize the banks." "I'm saying isolate the ones that are really in trouble and make an investment." "It's unamerican." "It's-- it's sure unrepublican." "You make the government a stockholder-- what, do we tell them how to manage themselves, what to buy and sell?" "Run them like the post Office?" "'Cause that works like a dream." "We make it temporary." "We make ourselves nonvoting stockholders." "You can't just hand the banks massive piles of cash." "Nobody's gonna go for it." "To the Republican's it's nationalization." "To the Democrats it's a bailout." "And the banks are gonna go ballistic." "Sorry, Dan, not gonna happen." "Kudos for out-of-the-box thinking." "Neel, if we go with your plan to buy the assets, how much is it gonna cost?" "It won't work." "Look, the plan is three pages long, totally vague." "If buying the assets doesn't work, we'll nationalize the banks for you, okay?" "How much?" "To be safe, maybe a trillion." "The Congress will never do a trillion-- never." "Well, there's $11 trillion in residential mortgages." "There's $3 trillion in commercial mortgages." "That's $14 trillion, right?" "You gotta figure about 5% default rate." "5% of $14 trillion is $700 billion." "It's better than a trillion." "(Paulson) The only way to get this done is to just scare them shitless." "That should be easy." "I'm scared shitless myself." "( Chuckles )" "Troubled Asset Relief Program?" "T.A.R.P. We're calling it." "This is your draft of the bill?" "Subject to revision certainly." "Well, I've only got three pages here." "Am I missing something?" "No." "( Chuckles )" "You're just looking for a big blank check in a hurry." "It's all for the banks." "You don't want a penny for the average Joe that's about to lose his house?" "There's not a scrap of oversight built into this-- not for the banks or for you for that matter." "You want us to simply hand over" "$700 billion and trust you?" "How is it possible you didn't see this coming?" "If you want to rewind the tape, we can do that." "But right now the one thing we don't have is time." "We need an announcement tonight to calm the market." "We need legislation next week." "I spent my entire academic career studying the Great Depression." "The Depression may have started because of a stock market crash, but what hit the general economy was a disruption of credit-- average citizens unable to borrow money to do anything-- to buy a home, start a business, stock their shelves." "Credit has the ability to build a modern economy, but lack of credit has the power to destroy it, swiftly and absolutely." "If we do not act boldly and immediately, we will replay the Depression of the 1930s, only this time it will be far far worse." "We don't do this now-- we won't have an economy on Monday." "Geithner." "We took the proposal down to Congress." "Are they gonna go for it?" "They didn't like the fact that it was short." "I thought concise was a plus." "They thought it was flimsy or arrogant or something." "I don't know what they think." "They couldn't get past it." "The market's in a death spiral." "They're gonna sink the bill because the proposal is too fucking short?" "They're working on it." "They're gonna make it longer, among other things." "Look, just tell me you got something." "No." "No, we're nowhere." "Who's left for Morgan Stanley?" "China Investment Corporation." "Mae Mitsubishi." "No, the Japanese will never do this deal." "How about Goldman?" "Goldman's looking at Wachovia, but they're so fucked, even John Mack turned up his nose." "( Laughs )" "You gotta get that bill passed." "I'm pushing." "Well, push harder, please." "This isn't working, Hank." "Hank?" "Could you excuse me a moment?" "( Vomiting )" "Oh my God." "GAO, GAO," "I am so sorry about this." "There's nothing we can do." "It's New York, you know." "We're lucky we can still buy a beer at Yankee Stadium." "Don't worry about it." "I should quit anyway." "When you're ready, we'll be inside." "Is there any movement there?" "They made an extremely low opening offer." "I pretended I didn't hear it." "(Paulson) The markets can't open Monday without a resolution on Morgan Stanley." "We really need you to do a deal." " You need to call Jamie." " I called Jamie." "He doesn't want us." "There's too much overlap." "We've spoken to him." "He'll do it." "For what, a dollar?" "Why would I do that?" "I got China Investment and Mitsubishi kicking my tires." "I know those guys." "They're not gonna close a deal in time." "We want you to call Jamie." "Let me ask you a question." "35,000 jobs just disappeared in this city between A.I.G., Lehman and Bear." "We make a deal with Jamie-- he'll fire 20,000 Morgan Stanley employees." "You think that's good public policy?" "John, we are looking at the whole system here." "The Chinese are leaving." "GAO found out we're also talking to Mitsubishi." "I gotta go." "All right, get me Kuroyanagi and a Japanese translator." "We're closing with Mitsubishi tonight." "Tim Geithner's calling again." "Cover your ears." "You tell Tim Geithner to fucking blow me." "I'm trying to save my company." "Put him on the schedule, but make sure it's after lunch," " because that way I can fit Maddle in beforehand." " ( Phone chimes )" "Morgan just made a deal with Mitsubishi." "So we're the only bank with our dick still in the wind." "I'm calling Buffett again." "( Phone rings )" "Grandpa, they keep calling." "What if it's important?" "They always think it's important." "All right, I'll make it fast." "Warren, thanks for calling back." "How are you?" "Just fine, Lloyd." "What can I do for you today?" "I'd like to talk to you about taking a stake in Goldman Sachs." "What do you have in mind?" "Sounds expensive." "Maybe not." "(Paulson) You'd better have good news, because I might be dead before we finish haggling over TARP." "Buffett's throwing $5 billion into Goldman." "We're off the ledge." "For a moment." "The October surprise arrived a little early with a game-changing jolt to the White House race." "Call it a master stroke or a desperate Hail-Mary pass" "McCain announced he would suspend his campaign and asked for this Friday's debate to be postponed" "So he can return to Washington to focus on the economic crisis." "Now is our chance to come together, to prove that Washington is once again capable of leading this country." " Thank God he came back." " ( audience laughing )" "Like Daniel Day Lewis in "Last of the Mohicans,"" "he will find us!" " They're blowing it up." " What happened?" "McCain wanted to swoop in and save the day, but doesn't have any idea how to do it." "It's 100-page piece of legislation we've been carefully negotiating for days." "What, did he think they were gonna sit around and spitball?" "Yeah, when McCain got here and found out that the deal was basically done, he went apeshit." "The Republicans fell in behind their guy." "They want to start all over again." "Democrats flipped out." "Republicans dug in." "(Together) Clusterfuck." " Where's Hank?" " Still talking to McCain." "If you or anyone else does anything that causes a depression, it is not gonna be on me." "I have a big mouth, Senator-  a very big mouth." " Hold on..." "He's not threatening the Republican Presidential Nominee, is he?" " Something's got to be done." " No no." "Excuse me, please." "Where are the Democrats?" "They're right down this way." " Is Nancy there?" " Yes." "Yes, she is." "Thank you." "Nancy..." "Gee, Hank." "I didn't know you were Catholic." "( Men laugh )" "I beg of you, don't blow this up." "It was a bad meeting, but we need to get together on this." "We're not the ones trying to blow it up." "I just ask you to stay with us." "Please." "The House began debating the rescue bill at 9:27 this morning." "At about 1:28 pm Congress did finally act." " This is a squeaker of a vote." " (Man) We are down to it right now." "(Man #2) It looks like the Democrats delivered their caucus and the Republicans so far have not." "(Man #3) What do you think they could do to change the bill to get a few Republican votes over to the other side?" "(Man #4) If they hang Wall Street CEOs," "I think that would get a few more votes." "(Man #5) You know, I'm not-- I'm not sure what they could do exactly." "It is possible that the leadership of the Congress would conclude that there's nothing that can get a majority of support and see what Hank Paulson can do and the administration can do" "( overlapping argument )" "(Man #6) Leaders are negotiating right now who'll risk their seats." "And that's what I'm hearing." "Pelosi wouldn't have brought the bill to the floor if she didn't think it would pass." "(Man) I don't know the answer to that, Charlie." "I can't answer." "I'm just reading an email that's coming to me." "(Man #2) I think the bottom line is they gotta go back to the drawing board." "(Woman) Do they have the time though to do that?" "Look at the Dow Jones Industrial Average." "(Man #3) Well, you know, you're gonna get a" "(Man #4) At this point we just gotta hold on to the sides of the kayak and ride through this because" "(Man #5) They didn't pass it." " (Man #6) They did not pass it." " It just wasn't enough." "(Steve Liesman) They're gonna end up being nine votes short, Bill." "(Female anchor) Say that again, Steve." "(Liesman) I think they're gonna end up being nine votes-- if they get all six-- five of the remaining votes, they'll be 10 votes short now-- if they get all five remaining." "The writing is on the wall there." "(Man) And we're here down on the floor." "Traders have been standing around." "We're all here in knots." "( turns off TV )" "The networks are waiting for you in the press room." "I can't even" "We have to go back again." "They don't get to say no on this." "Okay." "The White House wants a meeting." "Good." "We'll come up with a new strategy." "The White House has to push harder on the Hill." "Meanwhile we need to keep working on what we do with the money." "Let's act like this is gonna work." "In that case, let's talk about cash injections." "Here we go again." "We can't nationalize the banks." "It's not nationali" "That's how Japan got itself a decade-long recession." "Is that where we want to go?" "What else do we have?" "Cash-for-trash." "Buying toxic assets is still our go-to move." "All right." "Find a way to simplify it." "Dan, work something up." "For discussion purposes, let's see what it would look like." "For those who supported the $700 billion Wall Street bailout, it was a surprising and stunning failure when the House of Representatives voted to reject it." "(Female anchor) It's a stinging defeat for President Bush delivered at the hands of his fellow Republicans." "We put forth a plan that was big because we've got a big problem." "The reality is that we're in an urgent situation." "and the consequences will grow worse each day if we do not act." "I know." "I keep telling-- draft of the new bill." "Are they having any luck with it?" "The White House thinks they got a better shot of pushing it through the Senate side first." "Hopefully they're right." "They asked us to back off and let them handle it." "So I'm" " I'm-- I'm trying to back off." "Buying toxic assets isn't gonna work." "Why not?" "It's too slow." "I think I've been saying that." "Well, we knew it was complicated, but how slow--?" "Two months, maybe more." "Oh." "How is it possible we didn't know how--?" "I didn't ask how long it would take, okay?" "Can we move on?" "So maybe we can talk about capital injections." "Dan, we really can't." "I think we're gonna have to." "Even if neel could expedite the process, which seems unlikely, the system is crumbling." "The banks need money now." "If cash injections are the most efficient way to stabilize them, then we can't back off because we're uncomfortable being the men who nationalized a few American banks." "It's faster, that's for sure." "It will push us back off the precipice, yes, unfreeze the system." "We give them some money and they lend it out." "The motion is adopted." "After rejecting the Bush Administration's T.A.R.P. Plan only four days ago, the House passed it today." "The big question now-- whether investors will take comfort in the news." "Current indicators show the stock market is continuing its freefall." "Hello." "Warren, it's Hank." "I" " I" " I'm sorry." "It's late." "Am I waking you?" "No, not at all." "Can I pick your brain for a minute?" "Sure." "What's the problem?" "How do you get a healthy bank to accept a capital injection?" "I had to drag my ass all the way here from California." "They wouldn't even tell my why." "Nobody knows what this is about?" "Nope." "Talk to Jamie?" "Yep." "He'll be fine." "Did you tell him what was coming?" "Uh, did I tell him we're about to make him swallow a capital injection he doesn't need?" "No." "I" " I told him we need his help and I asked him very politely not to fuck with us today." "He got it." "She's here." "Gentlemen." "We think this is gonna work?" "Oh yeah." "They're gonna love it." "We are of the view that the United States needs to take strong, decisive action to arrest the stress in our financial system." "Through our new T.A.R.P. Authority," "Treasury will purchase preferred stock in each of the banks represented in this room." "That stock will yield 5% the first five years, 9% after that." "We give you money;" "You lend it out." "It will unfreeze credit, stabilize the banks, restore confidence." "Everyone will be better off with more capital in the system." "And that is why all nine of you will participate in the program." "Some of us don't need any capital." "You all need capital." "You have no idea what the market's gonna look like in a year." "Neither do you." "I'm not one of you New York guys with your fancy products." "Well, why am I in this room talking about bailing you out?" "The stronger banks will serve as cover for the weaker banks." "If just some of you take it, the money is a signal that a bank is too weak to survive." "The market will devour it." "How much are we talking about?" "$125 billion." "Bank of America-- $15 billion." "Bank of New York Mellon-- $3 billion." "Citigroup-- $25 billion." "Goldman Sachs-- $10 billion." "J.P. Morgan-- $25 billion." "Merrill Lynch-- $10 billion." "Morgan Stanley-- $10 billion." "State Street-- $2 billion." "Wells Fargo-- $25 billion." "What happened to buying toxic assets?" "Wasn't that the idea?" "Paulson:" "It's too slow." "You'll be dead before we sort it out." "So we're just handing the reins over to you?" "The deal's actually pretty good." "You turn your nose up at this now, and we have to rescue you later-- the terms won't be nearly as attractive." "It's cheap capital." "It's not the worst idea in the world." "Well, it is for those of us who already have capital." "We will be nonvoting shareholders." "This will be a temporary measure." "What if we decline to be involved?" "The Chairman of the FDIC is sitting right there." "Tomorrow you'll find out that you're not as well-capitalized as you think you are." "What kind of protections can you offer on changes for compensation policy?" "I mean, if the government is going to become a part-owner, does that mean that the government is going to dictate compensation?" "Are you asking me about your bonus right now, John?" "I'm running a company." "If the Fed tells me I can't offer competitive pay for talent, you're gonna launch the biggest brain drain this country's ever seen." "Is that the way you want to run the banks?" "Until the money is repaid to the Treasury, there will be some limitations on tax deductions and golden parachutes." " Well, there you go." " I don't really understand why there needs to be so much tension about this." "The country is facing the worst economy since the Great Depression." "If the financial system collapses, it will take every one of you down." "Give me the papers." " You can't just sign it." " Oh no?" " Not without your board." " My board's on 24-hour notice." "I think they'll go along with it." "And if they don't, they'll fire me." "Anyone else?" "Are they gonna do it?" "They're calling their boards." " That's a good sign." " If they do go along with this, we should announce something alongside the injections-- maybe a program to buy up mortgages." "I'm not rushing out some half-assed plan just to make it look like we're doing something." "Maybe we just beef up the restrictions on how they spend the money-- something to take the stink off." "Put more restrictions on it-- they won't take it." "One thing too many for today." "They almost bring down the U.S. economy as we know it, but we can't put restrictions on how they spend the $125 billion we're giving them, because they might not take it." "What's this?" "That is, um..." "A poison dart frog." "Wendy took it in Guyana." "Is this yours?" "Al Capone's." "( Door opens )" "Eight out of the nine are in." "B of A is still waiting on its board, but-- it's gonna go through." "(Wilkinson) I'll call the Speaker's office." "And we're gonna get you on the phone with the President." "Okay." "( Laughs )" "Dow is up 900 points just because we were meeting." "( Paulson laughing )" "Well, that's good." "That's good." "It was the right thing." "Absolutely." "I was prepared for more blowback." "They didn't have a choice." "They knew that." "Well, I certainly hope that they" "What?" "I hope they use the money the way we're asking them to." "They will lend it out, won't they?" "Of course they will." "Of course they will." "( instrumental music playing )" "== sync, corrected by elderman =="