1
00:00:04,713 --> 00:00:08,007
We have no intention of dismantling
the regulatory agencies.

2
00:00:08,550 --> 00:00:12,929
However, we must come to grips
with inefficient and burdensome regulations.

3
00:00:13,430 --> 00:00:16,724
We will eliminate those that are
unproductive and unnecessary.

4
00:00:16,809 --> 00:00:21,020
Tearing down these antiquated walls
and granting banks significant new authority.

5
00:00:21,730 --> 00:00:23,648
In a victory
for the banking industry,

6
00:00:23,732 --> 00:00:25,608
Congress has approved legislation

7
00:00:25,693 --> 00:00:27,902
which will allow commercial
and investment banks

8
00:00:27,986 --> 00:00:32,365
to merge and form institutions
of unprecedented size and global reach.

9
00:00:35,619 --> 00:00:41,833
I think it's very important for us not
to introduce regulation for regulation's sake.

10
00:00:42,334 --> 00:00:43,918
I do believe in the American dream.

11
00:00:45,462 --> 00:00:48,005
Owning a home is a part of that dream.

12
00:00:49,967 --> 00:00:56,097
We are taking action to bring many thousands
of Americans closer to owning a home.

13
00:00:56,432 --> 00:00:59,892
This project not only is good
for the soul of the country,

14
00:00:59,977 --> 00:01:02,019
it's good for the pocketbook
of the country as well.

15
00:01:02,688 --> 00:01:05,440
The housing market
has reached frantic proportions.

16
00:01:05,524 --> 00:01:08,484
It seems that everybody is building,
buying or selling.

17
00:01:08,569 --> 00:01:11,404
The Dow
and the S&P both breaking records.

18
00:01:11,488 --> 00:01:15,116
Profits soared 93 %
at Goldman Sachs this year.

19
00:01:15,951 --> 00:01:20,079
Hotshot traders and bankers
can expect to take home 10, 25,

20
00:01:20,164 --> 00:01:22,790
and in some cases, $50 million.

21
00:01:22,875 --> 00:01:25,918
Things that are too good to be true, are.

22
00:01:26,003 --> 00:01:27,837
When you see something coming...

23
00:01:27,921 --> 00:01:28,921
The real estate bubble...

24
00:01:29,006 --> 00:01:29,964
- Housing bubble...
- Bubble...

25
00:01:30,048 --> 00:01:31,758
...don't put it off.

26
00:01:31,842 --> 00:01:33,593
Take action immediately.

27
00:01:33,677 --> 00:01:36,220
Will there be a soft landing,
or will the bubble burst?

28
00:01:40,517 --> 00:01:43,269
The new story, the mortgage meltdown.

29
00:01:43,353 --> 00:01:45,772
This morning in the mortgage meltdown,
new numbers showing

30
00:01:45,856 --> 00:01:48,775
that a record number of Americans
are losing their homes.

31
00:01:48,859 --> 00:01:52,445
More than 70 mortgage companies have failed
in the last few months in America,

32
00:01:52,529 --> 00:01:56,866
and now the biggest of the big companies,
the Bear Stearns, the big banks,

33
00:01:56,992 --> 00:01:58,576
are caught holding the bag.

34
00:02:01,830 --> 00:02:05,208
The fifth largest
investment bank in the country, Bear Stearns,

35
00:02:05,292 --> 00:02:08,836
is being sold for just $2 a share to JPMorgan.

36
00:02:08,921 --> 00:02:12,131
It's being assisted by the government,
which is stepping in to guarantee

37
00:02:12,216 --> 00:02:16,761
some $30 billion
in Bear's toxic real estate assets.

38
00:02:19,389 --> 00:02:23,976
You've got to imagine that Hank Paulson
didn't think he signed up for this

39
00:02:24,061 --> 00:02:27,605
when President Bush picked him
to become Treasury Secretary.

40
00:02:27,981 --> 00:02:31,901
Hank Paulson may now have to undo
some of the deregulation measures

41
00:02:31,985 --> 00:02:35,863
that he and his peers on Wall Street
pushed through when he ran Goldman.

42
00:02:37,825 --> 00:02:40,827
Treasury Secretary Hank Paulson
telling Matt Lauer this morning,

43
00:02:40,911 --> 00:02:44,622
"We're all over it.
I've got great confidence in our markets.

44
00:02:44,706 --> 00:02:46,290
"They're resilient. They're flexible."

45
00:02:46,375 --> 00:02:51,087
Ali, the truth is that Bear Stearns is only
a very small fraction of this story.

46
00:02:51,797 --> 00:02:55,633
Our economy could face far worse
than a recession.

47
00:02:58,595 --> 00:03:01,806
In the wake of Bear's collapse,
Lehman Brothers is scrambling

48
00:03:01,932 --> 00:03:06,185
to reassure investors about the impact
of the mortgage crisis on its own assets.

49
00:03:06,270 --> 00:03:09,021
Insurers of the firm under a great deal
of pressure this morning.

50
00:03:09,106 --> 00:03:11,858
Dick Fuld, a 39-year veteran of Lehman

51
00:03:11,942 --> 00:03:15,444
and the longest-running CEO
of a major investment bank on Wall Street,

52
00:03:15,529 --> 00:03:18,906
has pulled the firm back
from the brink during other crises,

53
00:03:19,449 --> 00:03:24,662
but today, for the first time that I'm hearing it,
investors are questioning his leadership.

54
00:03:24,746 --> 00:03:26,038
- Motherfucker.
- One key question

55
00:03:26,123 --> 00:03:27,748
investors have for Lehman Brothers,

56
00:03:27,833 --> 00:03:30,835
"What's the true earnings power
of this investment bank's business?"

57
00:03:39,469 --> 00:03:41,387
- Hey.
- Get up here.

58
00:03:41,471 --> 00:03:43,306
We gotta start stacking sand bags.

59
00:03:43,473 --> 00:03:44,599
What are you talking about?

60
00:03:44,683 --> 00:03:49,770
We're down 21 %.
On paper, I just lost $90 million, personally.

61
00:03:51,356 --> 00:03:53,691
With investors
pummeling Lehman shares,

62
00:03:53,775 --> 00:03:55,443
the big question this morning is,

63
00:03:55,527 --> 00:03:57,528
"What options does Fuld have?"

64
00:03:57,613 --> 00:03:59,947
So far, he has failed to raise new capital

65
00:04:00,032 --> 00:04:02,783
while virtually all of his rivals
have already done so.

66
00:04:02,993 --> 00:04:07,330
And now, hedge fund manager David Einhorn
is publicly questioning the accuracy of...

67
00:04:07,414 --> 00:04:08,497
Anything good?

68
00:04:09,333 --> 00:04:13,002
It's a red-tailed hawk, first one this year.

69
00:04:13,253 --> 00:04:14,420
Dick Fuld's on one.

70
00:04:14,504 --> 00:04:16,756
...to provide credible answers.

71
00:04:16,840 --> 00:04:18,591
So let's go through
a couple of those, uh,

72
00:04:18,675 --> 00:04:20,718
what you call discrepancies, because...

73
00:04:25,015 --> 00:04:27,516
- Tough morning?
- We show top-quality earnings,

74
00:04:27,601 --> 00:04:29,852
- we beat every prediction.
- Yeah.

75
00:04:29,937 --> 00:04:33,731
It's the damn short-sellers.
You know the game, short and distort.

76
00:04:33,815 --> 00:04:35,858
They're rumormongers
and they're making a killing.

77
00:04:36,026 --> 00:04:37,944
What are your plans for a capital raise?

78
00:04:38,153 --> 00:04:40,529
We're way ahead of you. Now, let me be clear,

79
00:04:42,240 --> 00:04:44,533
we don't need the cash.

80
00:04:45,827 --> 00:04:48,037
You know, it's about perception.

81
00:04:48,121 --> 00:04:49,747
Buffett, Buffett.

82
00:04:51,375 --> 00:04:53,709
We're thinking of reaching out
to Warren Buffett.

83
00:04:53,794 --> 00:04:54,794
Great.

84
00:04:55,587 --> 00:04:58,214
You and Buffett go back, right?

85
00:04:59,383 --> 00:05:01,676
Do me a favor and call him.

86
00:05:01,760 --> 00:05:03,344
Tell him Lehman is rock solid.

87
00:05:03,720 --> 00:05:07,139
As Treasury Secretary,
I can't advocate for a specific investment.

88
00:05:10,727 --> 00:05:14,897
Hank, you want me to raise capital or not?

89
00:05:15,816 --> 00:05:18,484
Lehman Brothers is
a hell of a lot bigger than Bear Stearns.

90
00:05:18,568 --> 00:05:19,902
The market is terrified.

91
00:05:20,445 --> 00:05:23,239
When I was running Goldman,
I never even conceived

92
00:05:23,323 --> 00:05:25,783
of asking the Treasury Secretary
to cut a deal for me.

93
00:05:25,867 --> 00:05:27,284
Yeah, but the Bear bailout created...

94
00:05:27,369 --> 00:05:28,619
Please don't call it a bailout.

95
00:05:28,704 --> 00:05:33,040
Okay, the very large Bear Stearns
purchase assistance package

96
00:05:33,125 --> 00:05:34,834
created an expectation.

97
00:05:34,918 --> 00:05:36,585
Fuld's counting on
direct intervention from you.

98
00:05:37,045 --> 00:05:39,088
Buffett's a simple solution.

99
00:05:40,757 --> 00:05:42,091
I think you make the call.

100
00:05:42,259 --> 00:05:47,179
As what? Warren's friend? His former banker?
The Treasury Secretary?

101
00:05:47,264 --> 00:05:49,432
No. Fuld's calling him.

102
00:05:49,766 --> 00:05:51,308
Hopefully he'll jump in and we can all relax.

103
00:05:51,393 --> 00:05:55,354
Relax? We just buried one investment bank,
we got another one that's barely breathing.

104
00:05:55,439 --> 00:05:58,190
This is a confidence game.
People lose faith in Lehman,

105
00:05:58,275 --> 00:06:00,026
these banks are gonna drop like dominoes

106
00:06:00,110 --> 00:06:03,487
and I don't have the authority
to do a thing about it.

107
00:06:03,572 --> 00:06:07,116
We're late. We've been late on everything.

108
00:06:07,284 --> 00:06:10,369
Neel's team is working on
some kind of a disaster scenario.

109
00:06:10,454 --> 00:06:12,288
We're calling it the "Break the Glass" plan,

110
00:06:12,372 --> 00:06:14,498
what to ask Congress for
if your back's against the wall.

111
00:06:14,791 --> 00:06:15,958
Money.

112
00:06:17,794 --> 00:06:19,837
Is what you ask them for.

113
00:06:21,298 --> 00:06:25,134
The problem is, Congress won't move
until we've already hit the iceberg,

114
00:06:25,218 --> 00:06:26,635
and at that point, it may be too late.

115
00:06:26,720 --> 00:06:31,599
So you're saying, with the full weight
of the United States Treasury behind me,

116
00:06:31,683 --> 00:06:34,935
all I can do is call Warren Buffett?

117
00:06:35,645 --> 00:06:38,773
Hi, Warren. It's Hank.

118
00:06:39,399 --> 00:06:41,567
I understand you've been talking to Dick Fuld.

119
00:06:41,651 --> 00:06:47,406
You know my misgivings, Hank,
about investment banks.

120
00:06:47,491 --> 00:06:50,367
As soon as they started
trading for themselves,

121
00:06:50,452 --> 00:06:52,078
the risk managers lost control.

122
00:06:52,162 --> 00:06:54,663
I had a very unpleasant time
with Salomon Brothers.

123
00:06:54,748 --> 00:06:56,832
That's fair enough.

124
00:06:58,335 --> 00:07:02,213
But we both know that investment banking
is a profitable business.

125
00:07:02,422 --> 00:07:05,841
I figure it made you a billion or so, huh?

126
00:07:05,926 --> 00:07:10,012
I gotta believe that if the price was right,
you wouldn't just walk away.

127
00:07:10,097 --> 00:07:14,683
You know a good deal when you see one.
What say you?

128
00:07:14,935 --> 00:07:17,561
I gotta leave that to your judgment.

129
00:07:18,688 --> 00:07:20,981
People act like we're crack dealers.

130
00:07:21,066 --> 00:07:22,817
Nobody put a gun
to anybody's head and said,

131
00:07:22,901 --> 00:07:26,320
"Hey, nimrod, buy a house you can't afford.
And you know what? While you're at it,

132
00:07:26,404 --> 00:07:28,447
"put a line of credit on that baby
and buy yourself a boat."

133
00:07:28,698 --> 00:07:30,950
You heard anything from Buffett?

134
00:07:31,243 --> 00:07:35,496
He's asking for preferred shares at 40
with a dividend of 9 %.

135
00:07:35,580 --> 00:07:37,998
We were just at 66. What the fuck?

136
00:07:38,083 --> 00:07:40,042
Maybe it's just an opening gambit, Dick.

137
00:07:40,168 --> 00:07:41,710
Sounds more like a goddamn insult.

138
00:07:41,795 --> 00:07:43,212
- Let me get that, Dick.
- Thank you.

139
00:07:43,380 --> 00:07:45,339
We're at 36 right now.

140
00:07:45,882 --> 00:07:48,759
We haven't been anywhere near 66 in months.

141
00:07:48,844 --> 00:07:50,761
The markets like Buffett.

142
00:07:50,846 --> 00:07:53,639
- His name will push the price up overnight.
- I don't care who he is,

143
00:07:53,807 --> 00:07:58,811
I am not spending $360 million a year
for the pleasure of doing business with him.

144
00:07:58,895 --> 00:08:00,020
Real estate will come back.

145
00:08:00,105 --> 00:08:01,647
Koreans have been sniffing around.

146
00:08:01,731 --> 00:08:03,524
There you go. And they won't steal us blind.

147
00:08:03,608 --> 00:08:06,360
I've seen this before.
CEOs panic and they sell out cheap.

148
00:08:06,444 --> 00:08:09,446
Right now, the Street's running around
with its hair on fire,

149
00:08:09,531 --> 00:08:11,407
but the storm always passes.

150
00:08:11,491 --> 00:08:16,120
We stand strong, and on the other side,
we'll eat Goldman's lunch.

151
00:08:18,165 --> 00:08:19,915
So, what do we do about Buffett?

152
00:08:20,667 --> 00:08:23,627
Screw Warren Buffett.

153
00:08:25,797 --> 00:08:27,423
- He passed?
- Lehman dropped

154
00:08:27,507 --> 00:08:29,758
to 28 and a half this morning.
What in the world is he thinking?

155
00:08:29,843 --> 00:08:33,846
He's not thinking. He's delusional.
He thought the ask was too high.

156
00:08:35,265 --> 00:08:36,682
He's gotta raise cash.

157
00:08:36,766 --> 00:08:38,601
I told him that.

158
00:08:39,936 --> 00:08:42,104
- I spoke to Greenspan.
- Really?

159
00:08:42,314 --> 00:08:47,568
He says there's too much housing supply.
That's the problem.

160
00:08:48,862 --> 00:08:53,449
So we should buy up all the vacant houses
and burn them.

161
00:09:00,665 --> 00:09:03,959
Dick needs a buyer,
someone with a grip on reality.

162
00:09:04,127 --> 00:09:06,295
Barclays expressed some interest
a couple of months ago,

163
00:09:06,379 --> 00:09:08,130
but I don't think
the price is low enough for them.

164
00:09:09,007 --> 00:09:11,217
- Bank of America?
- Possible.

165
00:09:11,301 --> 00:09:13,177
Dick's put out feelers there before.

166
00:09:13,720 --> 00:09:15,846
We have to keep it quiet, though.

167
00:09:15,931 --> 00:09:17,932
'Cause if anyone hears
that they're trying to sell...

168
00:09:18,141 --> 00:09:20,976
Lehman'll be dead within the hour.

169
00:09:21,311 --> 00:09:23,479
The real estate investments
are killing the firm.

170
00:09:24,147 --> 00:09:26,398
We have to admit publically
we've made some mistakes.

171
00:09:26,566 --> 00:09:28,525
We need to make
a senior management change,

172
00:09:28,610 --> 00:09:30,694
signal to the market that we get it.

173
00:09:32,239 --> 00:09:35,407
- Meaning what?
- Meaning Joe Gregory.

174
00:09:35,992 --> 00:09:38,452
Get the fuck out of here.

175
00:09:40,038 --> 00:09:41,830
You are not gonna tell me
how to run my company.

176
00:09:41,957 --> 00:09:44,917
Joe hasn't had your back on risk,
and everyone knows it.

177
00:09:45,001 --> 00:09:48,337
Erin Callan's gotta go, too.
As far as the Street's concerned, she's a joke.

178
00:09:48,463 --> 00:09:52,341
Joe Gregory has been with me for 30 years.

179
00:09:53,510 --> 00:09:57,012
And you want me to kick him to the curb
because we had a bad quarter?

180
00:09:57,097 --> 00:09:58,639
It's not just a bad quarter.

181
00:09:58,723 --> 00:10:00,683
Stock hit 23.

182
00:10:00,767 --> 00:10:04,311
Twenty-three. Most of our guys are paid
in stock they can't sell for years.

183
00:10:04,396 --> 00:10:07,022
They've lost most of their net worth
over the last six months.

184
00:10:07,524 --> 00:10:11,068
You don't stabilize the price,
your traders are gonna jump ship.

185
00:10:11,236 --> 00:10:13,028
Selfish fucks.

186
00:10:13,113 --> 00:10:16,991
It's not just bankers and traders, Dick.
Clients are pulling their money.

187
00:10:17,200 --> 00:10:19,785
There's gonna be a run on this bank.

188
00:10:23,540 --> 00:10:25,541
Sources tell CNBC that both

189
00:10:25,625 --> 00:10:29,253
Erin Callan and Joseph Gregory
are out at Lehman Brothers.

190
00:10:29,379 --> 00:10:31,755
In a statement,
the company's chairman, Dick Fuld, said

191
00:10:31,840 --> 00:10:34,758
replacing Gregory
with 48-year-old Bart McDade

192
00:10:34,843 --> 00:10:38,095
has been one of the most
difficult decisions he's had to make.

193
00:10:39,806 --> 00:10:42,558
Dick, the Koreans just arrived at Sullivan.

194
00:10:43,685 --> 00:10:44,852
Let's go make this happen.

195
00:10:45,395 --> 00:10:47,730
My take is you'd be better off
staying here for now.

196
00:10:49,566 --> 00:10:51,358
We need you to be our "missing man."

197
00:10:51,901 --> 00:10:54,320
We'll go in and push the deal as far as we can,

198
00:10:54,404 --> 00:10:57,990
and then we'll bring you in at the end
to top it off.

199
00:10:58,158 --> 00:10:59,408
All right, fine.

200
00:11:00,535 --> 00:11:02,328
Okay. Okay.

201
00:11:07,917 --> 00:11:10,544
We are committed
to our presence in New York.

202
00:11:12,881 --> 00:11:15,924
But we need to know
that the underlying numbers make sense.

203
00:11:19,262 --> 00:11:21,930
We realize how things look.

204
00:11:22,015 --> 00:11:24,224
But our stock is getting hammered
by the shorts.

205
00:11:24,642 --> 00:11:26,101
The value is still there.

206
00:11:28,104 --> 00:11:31,565
We just started.
Min's excited, but we haven't heard the terms.

207
00:11:33,151 --> 00:11:34,234
Where are you?

208
00:11:34,319 --> 00:11:35,944
I just stepped out to take the call.

209
00:11:36,821 --> 00:11:38,489
Get back in there. Don't be rude.

210
00:11:39,783 --> 00:11:41,575
Okay.

211
00:11:41,659 --> 00:11:44,495
We simply take the assets
you don't find appealing,

212
00:11:45,538 --> 00:11:47,664
spin them off into a separate company.

213
00:11:49,959 --> 00:11:52,419
- You don't buy that bank.
- I'm very sorry.

214
00:11:52,504 --> 00:11:54,421
You buy the good bank.

215
00:11:57,217 --> 00:11:58,717
Look, they don't like the real estate.

216
00:11:58,802 --> 00:12:00,135
What do you mean, they don't like it?

217
00:12:00,220 --> 00:12:03,972
Dick, we're making real progress here, okay?
Let me stay on it for now.

218
00:12:20,031 --> 00:12:22,157
Min, how are you?

219
00:12:22,700 --> 00:12:24,576
Great to see you.

220
00:12:25,537 --> 00:12:27,121
I don't want to interrupt.

221
00:12:27,414 --> 00:12:29,540
Dick, great timing.

222
00:12:29,624 --> 00:12:32,167
We seem to be in sync
on the broad strokes of the deal.

223
00:12:32,710 --> 00:12:34,711
Shall we get back to the letter of intent?

224
00:12:34,879 --> 00:12:39,675
Min, I have to tell you,
I think you're making a big mistake here.

225
00:12:39,843 --> 00:12:42,344
There's great value in the real estate assets.

226
00:12:43,555 --> 00:12:45,514
How about we walk through the portfolio

227
00:12:46,182 --> 00:12:47,683
and I'll show you?

228
00:12:50,562 --> 00:12:52,354
We have looked at them.

229
00:12:52,439 --> 00:12:56,024
Then you must have looked at them
in the wrong way.

230
00:12:56,860 --> 00:12:59,653
See, I just don't wanna see you
leave money on the table.

231
00:12:59,737 --> 00:13:02,364
Perhaps we should take a break.

232
00:13:08,329 --> 00:13:10,456
Min, I'm so sorry.

233
00:13:10,540 --> 00:13:14,668
We have negotiated in good faith.
Now all of a sudden we are going backward?

234
00:13:14,752 --> 00:13:16,295
We can work with you on the price.

235
00:13:16,379 --> 00:13:18,213
It is not about the price.

236
00:13:18,590 --> 00:13:22,009
It is about the way you have conducted this.

237
00:13:27,682 --> 00:13:30,642
I'd like to thank you, all of you,

238
00:13:30,935 --> 00:13:34,229
but I don't think we have
a structure that works.

239
00:13:40,445 --> 00:13:41,653
What, that's it?

240
00:13:41,738 --> 00:13:43,530
You're just gonna pack up
and go back to Korea?

241
00:13:57,504 --> 00:13:59,463
- Hello?
- Neel, it's Dick Fuld.

242
00:14:01,090 --> 00:14:04,718
Listen, you know,
if Hank wants me to find a buyer,

243
00:14:04,802 --> 00:14:06,261
you guys need to step up and help.

244
00:14:06,638 --> 00:14:08,931
The Koreans just walked out, okay?

245
00:14:09,098 --> 00:14:10,641
Look, I'm just speaking for myself here,

246
00:14:10,725 --> 00:14:13,060
but I think you need to do
what's right for the firm.

247
00:14:13,144 --> 00:14:14,853
Do what's right?

248
00:14:14,938 --> 00:14:16,438
What is that supposed to mean?

249
00:14:16,606 --> 00:14:18,690
If your stock price keeps sliding,

250
00:14:18,775 --> 00:14:21,235
you may get an offer at a price
that doesn't look all that compelling,

251
00:14:21,319 --> 00:14:24,279
but you may have to take it
just to keep the company intact.

252
00:14:24,697 --> 00:14:26,031
What kind of price are you talking about?

253
00:14:26,282 --> 00:14:27,699
Could be...

254
00:14:27,784 --> 00:14:30,077
I mean, it might be low single digits.

255
00:14:32,664 --> 00:14:36,333
Last February, we were at 66 a share.

256
00:14:38,336 --> 00:14:42,589
Lehman Brothers is not Bear Stearns.

257
00:14:42,674 --> 00:14:46,134
We've got a great business.
Real estate's gonna come back.

258
00:14:46,261 --> 00:14:49,263
I am not fucking giving this company away!

259
00:14:49,764 --> 00:14:52,558
While the real estate market has put
Lehman Brothers shares under pressure,

260
00:14:52,642 --> 00:14:54,726
mortgage giants Fannie Mae
and Freddie Mac stocks

261
00:14:54,811 --> 00:14:58,105
are suddenly plummeting this morning,
after reports the companies

262
00:14:58,189 --> 00:15:02,067
may need to raise $75 billion
just to remain solvent.

263
00:15:02,151 --> 00:15:04,403
Because they guarantee
such an enormous percentage

264
00:15:04,487 --> 00:15:05,904
of the nation's mortgages,

265
00:15:05,989 --> 00:15:07,739
there is renewed speculation
that the government

266
00:15:07,824 --> 00:15:09,825
may have to step in and take them over,

267
00:15:10,243 --> 00:15:13,620
a possibility Barack Obama has now raised
on the campaign trail.

268
00:15:13,705 --> 00:15:16,415
If Fannie Mae and Freddie Mac collapsed,

269
00:15:16,499 --> 00:15:22,588
then probably the financial system
would receive such a body blow

270
00:15:22,672 --> 00:15:25,173
that it could be disastrous.

271
00:15:25,508 --> 00:15:29,511
Freddie just dropped another 8 %.
Fannie's down 5 %.

272
00:15:30,138 --> 00:15:34,808
There's no bottom here.
We need to do something. Now.

273
00:15:36,269 --> 00:15:37,936
We're working on a proposal for Congress,

274
00:15:38,021 --> 00:15:40,731
see if we can get the authority
to put some money in.

275
00:15:40,815 --> 00:15:44,985
I'd rather not go that way, but if we get there...

276
00:15:45,069 --> 00:15:47,779
I think we're already there.

277
00:15:49,741 --> 00:15:52,618
- How much are you gonna ask for?
- A blank check.

278
00:15:53,328 --> 00:15:56,705
It has to be enough of a statement
to reassure the market.

279
00:15:56,789 --> 00:16:00,500
They need to think I've got
a bazooka in my pocket.

280
00:16:00,585 --> 00:16:04,671
I'm not saying that we use it,
but if we have the authority,

281
00:16:04,756 --> 00:16:08,508
everyone who's dumping their shares
will calm down, back off.

282
00:16:09,385 --> 00:16:12,054
Okay, if you're going to Congress,
why don't we give to the banks, too?

283
00:16:12,138 --> 00:16:14,389
'Cause Lehman's looking like shit
and Merrill's not far behind.

284
00:16:14,557 --> 00:16:17,225
We'll be lucky to get them to move
on Fannie and Freddie.

285
00:16:17,310 --> 00:16:19,686
We do what we can do.

286
00:16:30,907 --> 00:16:33,367
Secretary,
Mrs. Paulson, over here.

287
00:16:33,910 --> 00:16:35,285
Over here, please.

288
00:16:36,162 --> 00:16:38,080
Mr. and Mrs. Paulson.

289
00:16:38,748 --> 00:16:39,956
Secretary Paulson, over here, please.

290
00:16:40,041 --> 00:16:41,833
Mrs. Paulson. Thank you.

291
00:16:43,169 --> 00:16:44,336
Mrs. Paulson.

292
00:16:45,088 --> 00:16:46,546
Mr. Paulson.

293
00:16:46,631 --> 00:16:49,132
Mr. and Mrs. Paulson, this way, please.

294
00:16:52,595 --> 00:16:54,513
Mr. Secretary, please.

295
00:16:54,597 --> 00:16:56,306
- I've got her.
- You should take her.

296
00:16:57,934 --> 00:16:59,768
Right over here, Secretary Paulson, please.

297
00:16:59,852 --> 00:17:00,936
Secretary, over here.

298
00:17:01,020 --> 00:17:02,104
Big smile. Thank you.

299
00:17:02,855 --> 00:17:04,189
That's just what I need.

300
00:17:04,273 --> 00:17:07,317
Press photos of the Treasury Secretary
waving the Chinese flag.

301
00:17:07,402 --> 00:17:12,447
Paulson the Communist.
The look on your face was priceless.

302
00:17:14,409 --> 00:17:17,160
Hank, I must ask you
about Fannie and Freddie.

303
00:17:19,914 --> 00:17:25,168
We have hundreds of billions invested.
You've assured us the investment is safe.

304
00:17:25,253 --> 00:17:28,046
And it is, absolutely.

305
00:17:29,424 --> 00:17:32,551
We're watching a great deal
of our money disappear.

306
00:17:32,635 --> 00:17:36,722
Share prices have dropped 60 %
in the last two months.

307
00:17:36,806 --> 00:17:39,307
Carrying your bazooka around
has not helped matters.

308
00:17:40,351 --> 00:17:43,562
Congress gave you the power.
Perhaps it is time to use it.

309
00:17:43,646 --> 00:17:47,399
The market will stabilize.
We just have to give it some time.

310
00:17:47,859 --> 00:17:51,361
There was an approach last month
from Russia.

311
00:17:52,488 --> 00:17:55,240
They have considerable holdings
in Fannie and Freddie as well.

312
00:17:56,242 --> 00:17:58,910
They suggested we coordinate,
and without warning,

313
00:17:58,995 --> 00:18:02,414
dump hundreds of billions of Fannie
and Freddie's bonds onto the market.

314
00:18:05,918 --> 00:18:07,878
- That would be...
- Chaos.

315
00:18:08,838 --> 00:18:13,383
The amount of debt your country carries
is a terrible vulnerability.

316
00:18:19,140 --> 00:18:22,768
- But you...
- We declined, respectfully.

317
00:18:25,521 --> 00:18:27,606
Even in the US, it seems

318
00:18:27,690 --> 00:18:32,360
the relationship between the government
and private industry isn't so simple.

319
00:18:36,616 --> 00:18:38,241
Was it a threat?

320
00:18:38,326 --> 00:18:41,953
No, no, it was a friendly reminder

321
00:18:42,038 --> 00:18:45,999
that with a single phone call to Moscow,
they can take down the entire US economy.

322
00:18:53,883 --> 00:18:58,470
The book says
Fannie and Freddie are a nightmare.

323
00:18:58,554 --> 00:19:01,223
They are in the hole easily
tens of billions of dollars.

324
00:19:01,307 --> 00:19:03,558
Another few weeks,
they're gonna start defaulting on their debts.

325
00:19:03,643 --> 00:19:07,562
- We're gonna have to step in.
- I don't see how we can avoid it.

326
00:19:10,358 --> 00:19:13,568
Turns out a bazooka's not that useful
unless you fire it.

327
00:19:15,655 --> 00:19:17,697
Lehman's down another 10 %.

328
00:19:17,782 --> 00:19:20,325
You are not gonna let me
get down a single bite, are you?

329
00:19:20,409 --> 00:19:21,618
This is why I have oatmeal.

330
00:19:21,702 --> 00:19:24,329
Dick is trotting around the world
with his hat in his hands,

331
00:19:24,413 --> 00:19:26,164
no one will give him any money.

332
00:19:26,249 --> 00:19:28,333
Korea walked out on him.
Mexico told him to shove it.

333
00:19:28,417 --> 00:19:30,544
No one's interested.
All the dumb money's already in.

334
00:19:30,628 --> 00:19:32,420
What about B of A? Are they still in the mix?

335
00:19:32,547 --> 00:19:36,675
And Barclays is sniffing around again,
now that they think it's a fire sale.

336
00:19:36,759 --> 00:19:38,552
- That's promising.
- I don't know.

337
00:19:38,636 --> 00:19:42,347
The British, they do a lot of talking.
They never close.

338
00:19:44,350 --> 00:19:47,310
- B of A is still our best bet.
- This can't be another Bear.

339
00:19:47,395 --> 00:19:50,355
Absolutely not.
They want Lehman, they buy it outright.

340
00:19:50,439 --> 00:19:52,107
But they may need
a little hand-holding, though.

341
00:19:52,191 --> 00:19:54,651
They just bought Countrywide.
They're spread a little thin.

342
00:19:55,111 --> 00:19:58,280
You may have to give them a break
with the capital requirements.

343
00:19:58,447 --> 00:20:01,741
You want me to allow them
to raise their leverage

344
00:20:01,826 --> 00:20:05,287
so they can buy a bank that's about to fail
because it was overleveraged?

345
00:20:06,956 --> 00:20:08,957
You got a better idea?

346
00:20:09,750 --> 00:20:12,377
Breaking news just coming in.
Sources telling CNBC

347
00:20:12,461 --> 00:20:16,840
that the government has just taken control
of Fannie Mae and Freddie Mac.

348
00:20:16,924 --> 00:20:18,884
Back in July, you remember,
Hank Paulson said

349
00:20:18,968 --> 00:20:22,721
that he wanted the power to step in,
but he probably wouldn't use it.

350
00:20:22,805 --> 00:20:26,349
It certainly sounds like Paulson
just pulled the trigger on that bazooka.

351
00:20:26,434 --> 00:20:28,435
Despite the move to nationalize
Fannie and Freddie,

352
00:20:28,519 --> 00:20:31,771
the market is still
in negative territory across the board.

353
00:20:31,856 --> 00:20:35,025
Investors now focusing their attention
on Lehman Brothers,

354
00:20:35,109 --> 00:20:38,486
amid fresh reports that the nation's
fourth-largest investment bank

355
00:20:38,571 --> 00:20:40,280
may be on the brink of bankruptcy.

356
00:20:40,489 --> 00:20:41,907
Rodge.

357
00:20:41,991 --> 00:20:43,491
Chris.

358
00:20:43,576 --> 00:20:45,035
Bring your money today, huh?

359
00:20:48,623 --> 00:20:51,291
Make sure Fuld's not keeping
any bad news out of the mix.

360
00:20:51,375 --> 00:20:54,336
It's "open kimono," to quote Dick.

361
00:20:54,670 --> 00:20:55,837
There's a revolting image.

362
00:20:59,508 --> 00:21:02,469
Did, uh,
you get a look at the numbers?

363
00:21:03,054 --> 00:21:05,972
The real estate's the issue.
They got it marked at 30 billion.

364
00:21:06,057 --> 00:21:10,060
It's worth maybe half of that.
Don't look so nervous.

365
00:21:10,144 --> 00:21:13,355
You're about to get a Wall Street bank
for the price of a hot dog.

366
00:21:13,856 --> 00:21:16,983
I know that Paulson told Ken Lewis
that he's not gonna pay for this.

367
00:21:17,068 --> 00:21:18,610
And I don't see how we can do it

368
00:21:18,694 --> 00:21:20,570
unless the government
takes some of the downside.

369
00:21:20,863 --> 00:21:22,656
Paulson is posturing.

370
00:21:22,740 --> 00:21:25,784
He'll write a check just like he did
for Jamie Dimon on the Bear deal.

371
00:21:25,868 --> 00:21:29,788
He has to. He can't lose another major bank
in an election year.

372
00:21:29,872 --> 00:21:34,292
Besides, the guy made, like,
a half a billion bucks at Goldman Sachs.

373
00:21:34,377 --> 00:21:37,253
He lets Lehman die?
Goldman's biggest competitor?

374
00:21:37,338 --> 00:21:39,005
Makes him look like
he's still working for Goldman.

375
00:21:39,090 --> 00:21:41,883
He's just doing it out of a desk at Treasury.

376
00:21:44,220 --> 00:21:46,096
Where are the donuts?

377
00:21:47,098 --> 00:21:49,557
Exactly. If you're the CEO
of one of these financial firms,

378
00:21:49,642 --> 00:21:52,227
you've already seen
what the government was willing to do.

379
00:21:52,311 --> 00:21:54,771
Why wouldn't you
play chicken with them and say,

380
00:21:54,855 --> 00:21:58,108
"Sure, I'll help you out.
But you gotta throw in a sweetener,

381
00:21:58,192 --> 00:21:59,943
"just like you did for those guys"?

382
00:22:01,404 --> 00:22:04,531
They just assume
I'm gonna bail out Dick Fuld,

383
00:22:04,615 --> 00:22:07,575
like I'm the guy behind the elephant
with the shovel.

384
00:22:07,660 --> 00:22:11,454
They're all drawing a line from Bear
and Fannie and Freddie right to Lehman.

385
00:22:11,539 --> 00:22:13,373
There's no way the taxpayers
are gonna go for another bailout.

386
00:22:13,457 --> 00:22:16,084
- Very large purchase assistance package.
- Large purchase assistance package.

387
00:22:16,252 --> 00:22:19,337
We need to come up
with a private-sector solution,

388
00:22:19,422 --> 00:22:21,423
get the investment banks to bridge the gap.

389
00:22:21,507 --> 00:22:25,260
Okay, but that's never gonna work
unless they believe that you've drawn a line.

390
00:22:25,344 --> 00:22:28,430
I know you don't like leaking,
but let us reach out to the press.

391
00:22:34,895 --> 00:22:35,979
Okay.

392
00:22:39,066 --> 00:22:41,693
Mr. Flowers, there's a call for you.

393
00:22:41,777 --> 00:22:45,780
Bob Willumstad from AIG. He's very insistent.

394
00:22:51,162 --> 00:22:54,622
Mr. Flowers.
My people tell me you're the man to talk to.

395
00:22:55,041 --> 00:22:56,458
We've got a real problem here.

396
00:22:56,751 --> 00:22:58,126
Yeah? What kind of problem?

397
00:22:58,294 --> 00:23:01,296
It looks very much like
we are about to run out of cash.

398
00:23:01,630 --> 00:23:02,797
AIG?

399
00:23:02,882 --> 00:23:04,883
We've sent over a document.
It's a spreadsheet.

400
00:23:04,967 --> 00:23:07,802
It's confidential, of course,
but it might give you some insight.

401
00:23:08,179 --> 00:23:10,472
I'm in the middle of Lehman.
I'm working with B of A.

402
00:23:11,307 --> 00:23:13,475
Is there any way
you could come over tomorrow?

403
00:23:13,976 --> 00:23:17,395
I'll take a look at the numbers and we'll talk.

404
00:23:23,069 --> 00:23:25,236
Mr. Flowers.

405
00:23:28,699 --> 00:23:30,116
Somebody put the TV on.

406
00:23:30,451 --> 00:23:32,869
CNBC's talking about Lehman.

407
00:23:37,583 --> 00:23:42,504
A person familiar with Paulson's...
Treasury Secretary Hank Paulson's thinking,

408
00:23:42,588 --> 00:23:45,298
and he is saying there will be
no government money

409
00:23:45,591 --> 00:23:47,759
in the resolution of this situation.

410
00:23:47,843 --> 00:23:50,178
They're saying two things
make the Lehman deal different.

411
00:23:50,262 --> 00:23:52,764
The market's been aware
and had time to prepare

412
00:23:52,848 --> 00:23:55,058
for over six months. And the second is...

413
00:23:55,142 --> 00:23:57,769
Is that just TV bullshit?

414
00:23:57,853 --> 00:24:00,939
Or is that Paulson sending us a message?

415
00:24:01,690 --> 00:24:02,774
Chris?

416
00:24:10,366 --> 00:24:11,533
Yeah? Sorry.

417
00:24:15,037 --> 00:24:18,456
What exactly does "a person familiar with
the Treasury Secretary" mean?

418
00:24:18,666 --> 00:24:20,708
That could mean a lot of things.

419
00:24:21,127 --> 00:24:22,460
Did one of your staffers do this?

420
00:24:22,545 --> 00:24:24,546
Please tell me
someone got fired 10 minutes ago.

421
00:24:24,630 --> 00:24:26,464
The leak came from me.

422
00:24:29,009 --> 00:24:32,387
Hank, a public statement like that
can have a lot of unintended consequences.

423
00:24:32,471 --> 00:24:35,348
We had to send a message to the other banks.
They need to step up.

424
00:24:35,432 --> 00:24:37,392
I don't have another rabbit
I can pull out of my hat.

425
00:24:39,311 --> 00:24:42,105
Rodgin Cohen just called me.

426
00:24:42,189 --> 00:24:44,941
The B of A team is sitting there
playing Brickbreaker on their phones.

427
00:24:45,025 --> 00:24:46,234
They don't want this deal.

428
00:24:47,069 --> 00:24:50,488
The deal is hanging by a thread
because the closer they get to Lehman,

429
00:24:50,573 --> 00:24:52,866
the more it looks like a toxic waste dump.

430
00:24:53,033 --> 00:24:56,452
Which is why at the end of the day
we may have to help them,

431
00:24:56,537 --> 00:25:00,039
which would be a lot easier
if we didn't publicly state that...

432
00:25:00,124 --> 00:25:02,167
We can't, Tim! Legally, we can't!

433
00:25:02,334 --> 00:25:07,589
Legally, we haven't figured out how yet.

434
00:25:09,091 --> 00:25:12,510
I am concerned

435
00:25:13,262 --> 00:25:18,349
we are limiting our options
at a time when we have very few,

436
00:25:18,434 --> 00:25:20,101
if any, available.

437
00:25:23,105 --> 00:25:28,735
I want all the CEOs in a room.
We've got the weekend.

438
00:25:28,819 --> 00:25:30,904
We lock them in a room at the Fed

439
00:25:31,155 --> 00:25:34,574
and we don't let them out
until they have a solution on Lehman.

440
00:25:35,117 --> 00:25:36,534
Your oatmeal's getting cold.

441
00:25:36,619 --> 00:25:39,621
They'll figure it out.
They'll all throw in some money.

442
00:25:41,624 --> 00:25:45,293
Tim is advocating strongly
that we reconsider some kind of Fed support.

443
00:25:45,544 --> 00:25:49,714
Tim wants us to pick up the tab on everyone.
I can't be Mr. Bailout.

444
00:25:50,674 --> 00:25:54,010
The Lehman hole is twice what Bear's was.

445
00:25:54,094 --> 00:25:56,638
Investors are pulling their accounts.
You want to lend into a run?

446
00:25:56,847 --> 00:25:57,847
Uh-uh.

447
00:25:58,641 --> 00:26:00,475
What about Barclays?
Are they still interested?

448
00:26:00,643 --> 00:26:03,311
They can't afford the risk
any more than B of A can.

449
00:26:04,063 --> 00:26:06,814
I don't doubt your ability
to talk anybody into submission,

450
00:26:06,899 --> 00:26:09,567
but it is still a long shot.

451
00:26:09,652 --> 00:26:12,862
And there's a very real possibility
that Lehman goes under.

452
00:26:12,947 --> 00:26:15,198
There's a deal to be made here.

453
00:26:16,992 --> 00:26:18,993
I'm gonna make the deal.

454
00:26:19,578 --> 00:26:22,830
With just a little more than
an hour left until the market closes,

455
00:26:22,915 --> 00:26:25,416
shares of Lehman Brothers
have taken another tumble.

456
00:26:25,501 --> 00:26:29,587
The stock is now trading at a new low,
under $4 a share.

457
00:26:29,672 --> 00:26:34,300
And judging from the selling,
there doesn't appear to be a bottom in sight.

458
00:26:37,638 --> 00:26:40,139
So, Blankfein has a speech
he's trying to get out of,

459
00:26:40,224 --> 00:26:41,266
but the rest have confirmed.

460
00:26:41,350 --> 00:26:43,559
- Tell him it's not optional.
- Yeah.

461
00:26:43,811 --> 00:26:46,104
Good afternoon, Chairman.
Thank you so much for joining us.

462
00:26:46,814 --> 00:26:50,275
- Whose plane is this?
- Uh, that's a rental.

463
00:26:50,359 --> 00:26:51,985
Hank put it on his card.

464
00:26:52,069 --> 00:26:55,029
Sir, you know Neel and Michele Davis,
Public Affairs.

465
00:26:55,114 --> 00:26:56,155
Hi. Pleasure.

466
00:26:56,240 --> 00:26:58,449
- This is Dan Jester, our new numbers guy.
- Hi.

467
00:26:58,534 --> 00:27:00,285
I talked him into coming out of retirement.

468
00:27:00,369 --> 00:27:02,870
- Excuse me? Retirement?
- He was with us at Goldman.

469
00:27:03,080 --> 00:27:05,248
Got anybody at Treasury
who wasn't at Goldman?

470
00:27:05,332 --> 00:27:09,002
Chairman, just to be clear,
there's no question of conflict of interest.

471
00:27:09,086 --> 00:27:11,796
Hank sold all of his Goldman stock
before he took office.

472
00:27:11,880 --> 00:27:14,215
- I wasn't implying anything.
- Sorry.

473
00:27:14,300 --> 00:27:17,385
We're a little touchy
about the whole "Government Sachs" thing.

474
00:27:18,053 --> 00:27:19,846
Shall we?

475
00:27:23,434 --> 00:27:27,812
B of A keeps finding more toxic assets.
They want you to reconsider a Jamie deal.

476
00:27:27,896 --> 00:27:31,482
They'll split the first billion in losses, but
they want you on the hook for the next 40.

477
00:27:31,567 --> 00:27:32,859
You did it for Bear.

478
00:27:34,153 --> 00:27:35,945
Greg, let me get back to you.

479
00:27:36,405 --> 00:27:39,991
What, do I have to tattoo it on my forehead?
We are not bailing out Lehman.

480
00:27:40,075 --> 00:27:41,659
Wall Street has a gambling problem.

481
00:27:41,744 --> 00:27:45,830
If government keeps covering their losses,
they never learn anything.

482
00:27:47,708 --> 00:27:49,375
- What?
- I didn't know if you wanted

483
00:27:49,460 --> 00:27:53,838
to keep lecturing me on moral hazard
or if I should just call B of A back.

484
00:27:54,548 --> 00:27:57,759
We need to keep them at the table until
they come up with a private-sector solution.

485
00:27:57,843 --> 00:27:59,427
Tell them to stay with us.

486
00:28:01,096 --> 00:28:02,889
- Alistair, hello.
- Hello, Henry.

487
00:28:02,973 --> 00:28:05,099
Hold on one second.

488
00:28:06,602 --> 00:28:08,561
Chancellor of the Exchequer.

489
00:28:08,645 --> 00:28:12,023
I understand Barclays is one
of your potential buyers for Lehman.

490
00:28:12,107 --> 00:28:14,817
My banks are already under
a great deal of stress.

491
00:28:14,902 --> 00:28:16,611
I don't want to become overextended.

492
00:28:16,695 --> 00:28:19,155
Lehman is problematic,
but there's value there.

493
00:28:19,239 --> 00:28:23,451
We will find a way to make it attractive.
Just stay with us.

494
00:28:23,952 --> 00:28:25,119
Talk soon then.

495
00:28:25,204 --> 00:28:26,454
Bye.

496
00:28:26,663 --> 00:28:31,167
We'll keep Barclays in the mix,
but B of A is still our best bet.

497
00:28:31,668 --> 00:28:35,213
We've got the CEOs of every
major bank coming here tonight.

498
00:28:35,297 --> 00:28:38,341
We have to make it clear
that this is their problem,

499
00:28:38,425 --> 00:28:41,844
that we are their advisors and their allies,

500
00:28:41,929 --> 00:28:45,973
but we are not their safety net.

501
00:28:47,142 --> 00:28:48,476
What should we expect from these guys?

502
00:28:59,446 --> 00:29:01,239
Jamie is smart.

503
00:29:01,323 --> 00:29:04,450
He doesn't have as much cash to work with
since he bought Bear.

504
00:29:06,870 --> 00:29:08,746
Lloyd's a superstar.

505
00:29:09,873 --> 00:29:11,707
Goldman's the smartest shop on the block.

506
00:29:11,792 --> 00:29:15,169
And just because I used to be his boss,
it doesn't mean he's gonna listen to me.

507
00:29:17,256 --> 00:29:20,091
John Mack, he used to run
around the floor screaming,

508
00:29:20,175 --> 00:29:23,511
"There's blood in the water!
Let's go kill someone!"

509
00:29:24,263 --> 00:29:26,347
He's a fighter.

510
00:29:28,225 --> 00:29:32,019
Thain was my number two at Goldman.
He's selfish. He's a pragmatist.

511
00:29:32,104 --> 00:29:35,356
He knows if Lehman goes, Merrill's next.

512
00:29:37,359 --> 00:29:40,361
Vikram Pandit is the new guy at Citigroup.

513
00:29:41,947 --> 00:29:45,533
No one knows if he's running Citi
or if Citi's running him.

514
00:30:08,724 --> 00:30:11,893
Thanks for coming down here
on such short notice.

515
00:30:12,811 --> 00:30:16,606
Monday morning, Lehman will no longer
be able to honor its obligations.

516
00:30:19,401 --> 00:30:22,236
We have two potential buyers.
B of A and Barclays.

517
00:30:22,321 --> 00:30:26,824
Neither will take the company unless
someone else finances part of the deal.

518
00:30:26,909 --> 00:30:30,203
The government is not in a position to step in.

519
00:30:31,497 --> 00:30:34,582
I did the last one. You're gonna do this one.

520
00:30:34,708 --> 00:30:36,042
Where's Dick Fuld?

521
00:30:36,126 --> 00:30:38,377
Dick's in no condition to make any decisions.

522
00:30:38,462 --> 00:30:41,464
We're breaking you
into three groups.

523
00:30:41,757 --> 00:30:46,385
The first one will try to value
Lehman's toxic assets.

524
00:30:46,762 --> 00:30:49,972
The second one will work on some sort
of structure for you all to invest in Lehman.

525
00:30:50,390 --> 00:30:54,018
And the third one works
on the lights-out plan.

526
00:30:54,353 --> 00:30:56,604
If Lehman files for bankruptcy,
we need to figure out

527
00:30:56,688 --> 00:30:58,898
how to contain the damage to the rest of you.

528
00:30:59,191 --> 00:31:00,274
Christ.

529
00:31:00,442 --> 00:31:02,151
We've all seen this coming for miles.

530
00:31:02,236 --> 00:31:05,363
I don't think a Lehman bankruptcy
takes down our firms.

531
00:31:05,447 --> 00:31:07,949
What, are we crossing our fingers?

532
00:31:08,116 --> 00:31:13,120
You're asking us to save a competitor.
Let's not act like you're doing us a favor.

533
00:31:13,664 --> 00:31:17,375
Gentlemen, gentlemen,
you are great Americans

534
00:31:17,459 --> 00:31:19,335
undertaking a patriotic duty.

535
00:31:19,836 --> 00:31:22,964
Your travail will earn you the love

536
00:31:23,215 --> 00:31:25,466
and gratitude of your country.

537
00:31:25,717 --> 00:31:27,802
I think it was Thomas Paine
who said, "These are..."

538
00:31:27,886 --> 00:31:30,096
Lehman is a trading partner
for every bank in this room.

539
00:31:30,180 --> 00:31:32,890
Their failure will be
a massive blow to all of you.

540
00:31:32,975 --> 00:31:34,517
This is your problem.

541
00:31:34,685 --> 00:31:37,562
We can all argue about how we got here.

542
00:31:37,646 --> 00:31:41,232
Deregulation, derivatives,
Dick Fuld made bad decisions.

543
00:31:41,608 --> 00:31:44,819
We're all responsible.
It's a catastrophic mess.

544
00:31:45,737 --> 00:31:48,656
The government's done whatever it can do.
It's on you now.

545
00:31:49,116 --> 00:31:51,492
You need to fix it and you need to pay for it.

546
00:31:51,743 --> 00:31:53,703
Let me be clear.

547
00:31:54,997 --> 00:31:59,500
We will remember anyone who is not helpful.

548
00:32:23,275 --> 00:32:25,109
Do you notice a little pattern here?

549
00:32:25,193 --> 00:32:27,945
We don't deal with things until there's
some kind of emergency on the table.

550
00:32:28,030 --> 00:32:30,114
Yeah,
we don't deal with things until Friday.

551
00:32:30,198 --> 00:32:31,324
Some kind of a weekend thing.

552
00:32:31,408 --> 00:32:32,450
When were we gonna figure out

553
00:32:32,534 --> 00:32:34,619
exactly how to handle
the failure of an investment bank?

554
00:32:34,703 --> 00:32:36,329
Let's do it over a weekend.

555
00:32:36,413 --> 00:32:39,790
I talked to a person who is
monitoring the situation out there,

556
00:32:39,875 --> 00:32:44,003
and the person said they all want
the same deal Jamie Dimon got,

557
00:32:44,087 --> 00:32:46,130
and they're not going to get it.

558
00:32:46,298 --> 00:32:49,383
Just a heads up,
Chris Flowers is in the lobby.

559
00:32:49,468 --> 00:32:52,386
He's consulting for B of A on Lehman.

560
00:32:53,722 --> 00:32:56,182
Hank pushed Flowers out of Goldman.

561
00:32:56,266 --> 00:32:59,894
Yesterday, we thought Lehman was holding
30 billion in crap. Today it's 70.

562
00:33:00,020 --> 00:33:03,397
$70 billion in assets
that we're valuing with a dartboard.

563
00:33:03,482 --> 00:33:04,732
No, we're gonna work this out.

564
00:33:05,067 --> 00:33:07,318
Unless you step in, we're ending this.

565
00:33:07,402 --> 00:33:08,694
Don't forget about Dick.

566
00:33:08,779 --> 00:33:12,740
Yeah, Dick Fuld keeps calling,
hammering us to raise the price.

567
00:33:14,868 --> 00:33:16,869
Excuse me.

568
00:33:20,499 --> 00:33:25,378
70 fucking billion and no collateral?

569
00:33:27,422 --> 00:33:29,590
If Lehman Brothers
fails this weekend,

570
00:33:29,675 --> 00:33:33,928
there's little doubt amongst the people
I speak to that Merrill Lynch will be next.

571
00:33:34,012 --> 00:33:36,180
Confidence is a very fragile thing.

572
00:33:36,264 --> 00:33:39,934
And in our financial markets,
it is eroding very quickly.

573
00:33:40,018 --> 00:33:45,106
Lehman's not gonna make it. We're next.
We need to do something right now.

574
00:33:45,482 --> 00:33:48,776
B of A's the only one out there.
I can put in a call.

575
00:33:48,860 --> 00:33:50,945
- It screws Lehman, but...
- Lehman screwed themselves.

576
00:33:51,029 --> 00:33:56,534
Paulson has drawn a line in the sand.
Lehman is dead. Make the call.

577
00:33:59,788 --> 00:34:03,124
We'd like you guys to look
at taking a stake in Merrill,

578
00:34:03,208 --> 00:34:05,960
something in the neighborhood of 10 %.

579
00:34:06,128 --> 00:34:09,797
I don't know if I can generate
any interest in 10 %,

580
00:34:10,632 --> 00:34:13,592
but if the whole company's in play,

581
00:34:13,677 --> 00:34:15,803
I bet that's something that we'd consider.

582
00:34:15,971 --> 00:34:17,930
Us and Lehman?

583
00:34:18,849 --> 00:34:20,725
Deal this size, there's only room for one.

584
00:34:27,566 --> 00:34:32,486
It is a lot of risk, no question,
but if you stay in the game,

585
00:34:32,571 --> 00:34:34,989
- we all will find a private solution.
- Absolutely.

586
00:34:37,284 --> 00:34:41,662
Don't get scared by the numbers.
We'll figure it out. Lehman is worth owning.

587
00:34:41,747 --> 00:34:44,457
Guys, you got a second?

588
00:34:48,044 --> 00:34:49,920
I was at AIG yesterday.

589
00:34:50,005 --> 00:34:54,592
Next Wednesday,
they got a $5 billion hole, minimum.

590
00:34:55,761 --> 00:34:59,513
I called Warren Buffett.
He wouldn't touch it with a stick.

591
00:35:00,682 --> 00:35:01,932
We're looking into it.

592
00:35:02,017 --> 00:35:03,976
It's a very big company.

593
00:35:06,354 --> 00:35:10,357
Thanks, Chris. I appreciate all your help.

594
00:35:17,532 --> 00:35:19,533
They're not on top of it.

595
00:35:26,291 --> 00:35:28,375
Look at this.

596
00:35:31,922 --> 00:35:34,423
Is this even possible?

597
00:35:34,925 --> 00:35:36,258
AIG?

598
00:35:36,551 --> 00:35:37,593
Holy shit.

599
00:35:39,554 --> 00:35:41,138
Get into this.

600
00:35:43,475 --> 00:35:44,517
John.

601
00:35:50,190 --> 00:35:52,775
Do you see what's happening here?

602
00:35:53,568 --> 00:35:55,444
Are you watching out for yourself?

603
00:35:55,529 --> 00:35:59,990
I'm not thick. I'm working on something.

604
00:36:03,620 --> 00:36:05,996
You're talking to B of A.

605
00:36:07,999 --> 00:36:09,333
I'm sorry.

606
00:36:10,377 --> 00:36:12,920
I know it's not good for Lehman,
but I have to take care of Merrill.

607
00:36:13,088 --> 00:36:15,464
Let me worry about Lehman.

608
00:36:16,424 --> 00:36:19,134
Barclays is still in the game.

609
00:36:21,471 --> 00:36:22,596
Just get it done.

610
00:36:33,859 --> 00:36:37,361
B of A is gonna buy Merrill.

611
00:36:39,906 --> 00:36:41,699
We need to make Barclays work.

612
00:36:43,034 --> 00:36:45,327
I thought you said the British never close.

613
00:36:46,037 --> 00:36:49,915
They're here. They seem to really want it.

614
00:36:50,000 --> 00:36:53,210
If we hold their hands, they'll close.

615
00:36:53,295 --> 00:36:58,674
Rodgin, what the fuck? I can't get Geithner.
I can't get Paulson.

616
00:36:58,758 --> 00:37:01,594
I can't even get my own goddamn employees
to pick up the phone.

617
00:37:01,678 --> 00:37:03,637
There's a lot happening down here, Dick.

618
00:37:03,722 --> 00:37:05,139
Oh, fuck.

619
00:37:05,724 --> 00:37:07,933
You know what? You tell Geithner,

620
00:37:08,018 --> 00:37:11,061
he doesn't pull my ass out of the fire,
Merrill's gonna be next.

621
00:37:11,187 --> 00:37:12,313
He knows that.

622
00:37:12,397 --> 00:37:16,775
Dick, he just told me
they're working on a solution for Merrill.

623
00:37:20,196 --> 00:37:22,156
Those cocksuckers are gonna bail out Merrill?

624
00:37:22,240 --> 00:37:23,824
No, no, not the Fed.

625
00:37:24,117 --> 00:37:27,870
There's no private buyers.
There's just B of A and...

626
00:37:29,456 --> 00:37:31,498
They're gonna put B of A
together with Merrill?

627
00:37:31,583 --> 00:37:34,084
We still have Barclays. Hank feels that...

628
00:37:34,169 --> 00:37:37,963
The federal government is snaking my deal?

629
00:37:39,299 --> 00:37:41,800
I cannot fucking believe this shit!

630
00:37:44,471 --> 00:37:46,221
B of A made a deal with Merrill?

631
00:37:46,306 --> 00:37:48,307
Yeah, Lehman's still our problem.

632
00:37:49,017 --> 00:37:51,143
I don't think I can take another day of this.

633
00:37:51,227 --> 00:37:54,521
You're getting out of a Mercedes
to go to the New York Federal Reserve.

634
00:37:54,606 --> 00:37:57,316
It's not a Higgins boat on Omaha Beach.

635
00:38:06,034 --> 00:38:08,786
Okay, okay, we've been here a long time.

636
00:38:09,871 --> 00:38:12,122
Let's stop fucking around.

637
00:38:12,207 --> 00:38:15,125
Main Street wants Wall Street to pay.

638
00:38:15,210 --> 00:38:18,045
They think we're overpaid assholes.

639
00:38:19,047 --> 00:38:21,590
There's no politician
who's gonna sign off on a bailout.

640
00:38:21,675 --> 00:38:25,594
Why would you bail out people
whose sole job is to make money?

641
00:38:25,679 --> 00:38:29,598
So, let's make this real simple.

642
00:38:30,600 --> 00:38:34,478
Hank thinks he can sell
the good parts of Lehman to Barclays,

643
00:38:34,562 --> 00:38:38,899
but someone has to take the real estate crap
that's weighing down the company.

644
00:38:38,984 --> 00:38:40,734
Nobody knows how much this shit is worth,

645
00:38:40,819 --> 00:38:42,945
but we know somebody has to buy it
to make a deal.

646
00:38:43,405 --> 00:38:47,282
I don't like it. Nobody likes it.

647
00:38:47,826 --> 00:38:50,244
Let's just suck it up and do it.

648
00:38:50,620 --> 00:38:56,000
How many of you can kick in a billion dollars
to stop Lehman from going down?

649
00:38:58,920 --> 00:39:01,505
I'm in. One billion.

650
00:39:14,019 --> 00:39:16,186
Okay.

651
00:39:21,484 --> 00:39:24,236
Goldman's in for a billion.

652
00:39:31,578 --> 00:39:32,995
John?

653
00:39:34,289 --> 00:39:35,414
Yeah?

654
00:39:41,421 --> 00:39:42,463
Yes.

655
00:39:45,050 --> 00:39:46,133
Yeah.

656
00:39:49,262 --> 00:39:50,304
Yes.

657
00:39:55,643 --> 00:39:57,895
We did it. Barclays came through.

658
00:39:58,146 --> 00:39:59,813
Too goddamn right!

659
00:39:59,898 --> 00:40:04,443
Barclays won't touch the real estate assets,
but the other banks agreed to cover those.

660
00:40:06,488 --> 00:40:10,324
Call the board. Get everybody here.
We got a deal to make.

661
00:40:10,533 --> 00:40:11,700
Okay.

662
00:40:21,920 --> 00:40:23,003
Did you get him?

663
00:40:23,088 --> 00:40:25,506
Geithner doesn't return my calls.

664
00:40:26,341 --> 00:40:27,966
We can't get hold of any of those people.

665
00:40:28,051 --> 00:40:30,928
At the end of the day,
they can't sign the deal without our say-so.

666
00:40:31,012 --> 00:40:33,138
Yes, but do they know that?

667
00:40:36,768 --> 00:40:37,893
Yes.

668
00:40:38,812 --> 00:40:42,689
Yes, by all means,
now that he deigns to call, put him through.

669
00:40:43,024 --> 00:40:45,692
Sir Callum, sorry I haven't gotten back to you.

670
00:40:45,777 --> 00:40:49,363
We're just sorting through
this Barclays deal for Lehman.

671
00:40:50,365 --> 00:40:52,491
As Barclays' regulator,

672
00:40:52,575 --> 00:40:55,494
we have serious concerns
about this proposed arrangement.

673
00:40:55,578 --> 00:40:59,456
What? Are you saying
you won't approve the deal?

674
00:40:59,541 --> 00:41:03,001
Even if we were comfortable
with the agreement, which we are not,

675
00:41:03,086 --> 00:41:07,089
Barclays would need at least 30 days
for shareholder approval.

676
00:41:07,173 --> 00:41:11,885
No, no, no, no, no, no. He can't.
He can't do this.

677
00:41:11,970 --> 00:41:14,638
- Can they stop the deal?
- Yeah, of course they can stop the deal.

678
00:41:14,722 --> 00:41:16,640
But even if they don't stop it,
the delay will kill it.

679
00:41:16,724 --> 00:41:20,185
Let's call the Chancellor
of the Exchequer right now.

680
00:41:20,395 --> 00:41:25,190
None of those assets
would be part of Barclays.

681
00:41:26,317 --> 00:41:30,529
Yes, but if the FSA were to...

682
00:41:31,030 --> 00:41:32,281
We need stability.

683
00:41:32,365 --> 00:41:35,075
Of course.

684
00:41:35,160 --> 00:41:38,036
...must be to the British financial system.
Surely you see that.

685
00:41:38,121 --> 00:41:39,246
Yeah.

686
00:41:39,873 --> 00:41:42,249
I wish you good night and good luck.

687
00:41:43,418 --> 00:41:45,586
Good night to you, too.

688
00:41:53,303 --> 00:41:55,762
"We don't want to import your cancer."

689
00:42:08,359 --> 00:42:09,776
Those of you

690
00:42:11,237 --> 00:42:14,364
who didn't want to assist the Barclays deal,

691
00:42:14,449 --> 00:42:17,117
you can breathe a sigh of relief.

692
00:42:18,328 --> 00:42:19,411
The deal's not gonna happen.

693
00:42:19,495 --> 00:42:21,747
- Hey, we have the money.
- Deal's dead.

694
00:42:22,749 --> 00:42:25,125
British regulator won't sign off.

695
00:42:25,210 --> 00:42:26,793
There must be some pressure you can exert.

696
00:42:26,878 --> 00:42:29,463
Trust me, I've done everything I can.

697
00:42:29,797 --> 00:42:31,215
The British,

698
00:42:33,301 --> 00:42:35,260
they grin-fucked us.

699
00:42:38,556 --> 00:42:42,226
Paulson's got 100,000 employees.
Geithner has 200 lawyers.

700
00:42:42,310 --> 00:42:44,728
Frigging Chris Cox has 3,000 people.

701
00:42:44,812 --> 00:42:47,522
Not a single one of those assholes
could pick up a phone,

702
00:42:47,607 --> 00:42:50,108
call the British, find out
if there was a deal to be made

703
00:42:50,193 --> 00:42:53,862
before they spend the weekend
sweating us for cash?

704
00:42:53,947 --> 00:42:55,280
Somebody dropped the ball.

705
00:42:55,365 --> 00:42:57,199
They didn't drop the ball.

706
00:42:57,283 --> 00:42:59,076
They dropped the ball,
kicked the coach in the nuts

707
00:42:59,160 --> 00:43:01,203
and took a crap in the quarterback's mouth.

708
00:43:01,287 --> 00:43:02,829
Of course.

709
00:43:05,792 --> 00:43:07,918
The Fed will do something.

710
00:43:09,128 --> 00:43:10,295
They have to.

711
00:43:15,385 --> 00:43:17,135
We've got to announce
the Lehman bankruptcy now.

712
00:43:17,220 --> 00:43:20,847
If Asia opens and this isn't locked down,
everyone's gonna assume the worst.

713
00:43:20,932 --> 00:43:23,141
The sell-off will kill the Merrill-B of A deal.

714
00:43:23,226 --> 00:43:25,602
- Who's gonna make the announcement?
- I think it's gotta be SEC.

715
00:43:25,687 --> 00:43:26,812
Yeah.

716
00:43:28,731 --> 00:43:29,856
Okay.

717
00:43:33,194 --> 00:43:35,320
Let's do it here. How soon can we set that up?

718
00:43:35,405 --> 00:43:36,738
Right away.

719
00:43:36,823 --> 00:43:39,533
We could use the main floor,
the entrance hall.

720
00:43:39,617 --> 00:43:42,160
With the statue behind me? Excellent.

721
00:43:46,332 --> 00:43:48,875
Did Lehman actually agree to file?

722
00:43:57,760 --> 00:43:59,261
Chris, call Lehman.

723
00:43:59,345 --> 00:44:00,929
Make sure they file right now.

724
00:44:01,639 --> 00:44:02,681
Absolutely.

725
00:44:14,986 --> 00:44:16,862
AIG's a huge problem.

726
00:44:16,946 --> 00:44:19,656
The books are a mess.
But from what I can tell,

727
00:44:19,741 --> 00:44:22,659
half the banks in the world
are in bed with these guys.

728
00:44:22,744 --> 00:44:24,911
Everyone who had
a piece-of-crap mortgage security

729
00:44:24,996 --> 00:44:28,415
bought insurance on their risk from AIG,
and I mean everyone.

730
00:44:28,499 --> 00:44:30,834
How could they let this happen?

731
00:44:30,918 --> 00:44:34,963
They must have figured
real estate would never go down, ever.

732
00:44:35,715 --> 00:44:37,632
Hank, Lehman still hasn't filed.

733
00:44:40,303 --> 00:44:43,930
Cox has to make his announcement.
Asia's opening.

734
00:44:44,015 --> 00:44:45,182
Has he talked to them?

735
00:44:45,266 --> 00:44:47,476
He hasn't even called yet.

736
00:44:47,560 --> 00:44:50,145
We told Fuld about Barclays.
We said Cox was gonna call.

737
00:44:50,229 --> 00:44:53,398
He's got his entire board sitting there, no call.

738
00:44:54,108 --> 00:44:55,233
Cox is like a deer in the headlights.

739
00:44:55,985 --> 00:44:57,944
Son of a bitch!

740
00:45:03,951 --> 00:45:07,746
You are their regulator.
Call the Lehman board now.

741
00:45:07,830 --> 00:45:10,415
Hank, it's a complicated situation where...

742
00:45:10,500 --> 00:45:12,417
Asia's opening.

743
00:45:12,502 --> 00:45:14,252
They don't announce,
the market goes in the toilet.

744
00:45:14,337 --> 00:45:17,381
We have to consider the appropriate role
of government here.

745
00:45:17,465 --> 00:45:19,549
Can I, as Chairman of SEC,
move forward and...

746
00:45:19,634 --> 00:45:22,052
You guys are like the gang
that can't shoot straight.

747
00:45:22,136 --> 00:45:23,804
This is your job.

748
00:45:24,806 --> 00:45:27,974
Make the damn phone call.

749
00:45:35,274 --> 00:45:37,025
Chris, this is Dick Fuld.

750
00:45:37,110 --> 00:45:41,780
The board is in session. Everyone is here.
All the directors and the firm's counsel.

751
00:45:41,864 --> 00:45:45,242
We understand
the Barclays deal has imploded.

752
00:45:46,702 --> 00:45:52,416
We were hoping you might have some option
that we haven't thought of yet.

753
00:45:53,042 --> 00:45:56,461
Um, the markets are in turmoil, as you know.

754
00:45:57,088 --> 00:45:59,214
A Lehman bankruptcy will help

755
00:45:59,298 --> 00:46:02,050
settle that uncertainty
and, we believe, calm the market.

756
00:46:02,135 --> 00:46:04,886
Both the Fed and SEC
are in agreement about this.

757
00:46:04,971 --> 00:46:08,807
Let me...
I'm sorry, let me see if I understand this.

758
00:46:08,891 --> 00:46:12,686
Are you directing us
to put Lehman into bankruptcy?

759
00:46:12,770 --> 00:46:14,563
Give us a moment.

760
00:46:15,982 --> 00:46:17,732
- He's muted.
- What the hell was that?

761
00:46:20,862 --> 00:46:22,904
Tell them to file.

762
00:46:22,989 --> 00:46:26,074
Everything said in that meeting
is or will be public record.

763
00:46:26,159 --> 00:46:28,285
I can't tell a private company
to file for bankruptcy.

764
00:46:28,369 --> 00:46:31,538
I don't have that power. Do I?

765
00:46:35,960 --> 00:46:37,043
Do it.

766
00:46:49,474 --> 00:46:55,061
The decision to file for bankruptcy protection
is one the board needs to make.

767
00:46:56,022 --> 00:47:00,358
It is not the government's decision.
But we do believe

768
00:47:02,737 --> 00:47:04,696
that the situation should be resolved.

769
00:47:04,864 --> 00:47:07,365
So you're not directing us to file?

770
00:47:07,909 --> 00:47:11,661
I'm not saying anything more
than I've just said. Thank you.

771
00:47:24,842 --> 00:47:26,760
Take the vote.

772
00:47:28,429 --> 00:47:30,680
- Mr. Akers?
- Yes.

773
00:47:30,765 --> 00:47:32,349
Sir Christopher?

774
00:47:34,227 --> 00:47:35,352
Yes.

775
00:47:35,436 --> 00:47:37,354
Admiral Evans?

776
00:47:37,438 --> 00:47:40,148
I'm sorry, but yes.

777
00:47:40,942 --> 00:47:42,484
Chairman Fuld?

778
00:47:45,613 --> 00:47:46,947
Dick?

779
00:47:52,912 --> 00:47:54,037
Yes.

780
00:47:57,667 --> 00:48:00,752
- Mr. Hernandez?
- Yes.

781
00:48:02,338 --> 00:48:05,257
- Mr. Ainslie?
- Yes.

782
00:48:06,133 --> 00:48:08,426
- Mr. Berlind?
- Yes.

783
00:48:08,928 --> 00:48:11,555
- Mr. Cruikshank?
- Yes.

784
00:48:11,639 --> 00:48:14,891
- Dr. Kaufman?
- Yes.

785
00:48:14,976 --> 00:48:16,643
- Mr. Macomber?
- Yes.

786
00:48:19,772 --> 00:48:20,981
P?

787
00:48:21,899 --> 00:48:24,484
- Lehman's gone.
- Oh, honey.

788
00:48:24,569 --> 00:48:26,236
I should have known the British
were gonna be a problem.

789
00:48:26,320 --> 00:48:28,863
I spoke to them two days ago.
I should have read between the lines.

790
00:48:32,243 --> 00:48:37,414
You can't take all this on.
There's a lot of other people involved.

791
00:48:37,498 --> 00:48:40,417
It's on me. I'm Treasury Secretary

792
00:48:40,501 --> 00:48:42,961
and the fourth-largest investment bank
in the country

793
00:48:43,045 --> 00:48:44,796
failed on my watch.

794
00:48:45,756 --> 00:48:47,382
I mean...

795
00:48:50,177 --> 00:48:52,012
I don't know what's gonna happen.

796
00:48:54,515 --> 00:48:56,266
Miss you, too.

797
00:49:42,855 --> 00:49:44,230
Yo, taxi!

798
00:49:58,204 --> 00:50:00,246
Jim, I'm in Midtown.

799
00:50:01,082 --> 00:50:02,916
The ticker is...

800
00:50:04,335 --> 00:50:05,960
What the hell am I looking at?

801
00:50:06,045 --> 00:50:08,380
Hank, it's good.

802
00:50:13,052 --> 00:50:15,220
"It is oddly reassuring

803
00:50:15,304 --> 00:50:18,014
"that the Treasury Department
and the Federal Reserve

804
00:50:18,099 --> 00:50:19,516
"let Lehman Brothers fail."

805
00:50:19,600 --> 00:50:21,643
Okay, here it is. Here it is.

806
00:50:21,727 --> 00:50:24,020
"Government intervention
would have been seen

807
00:50:24,105 --> 00:50:27,774
"as a sign of extreme peril
in the global financial system

808
00:50:27,858 --> 00:50:30,694
"or extreme weakness
on the part of federal regulators."

809
00:50:30,778 --> 00:50:33,071
The New York fucking Times.

810
00:50:33,155 --> 00:50:36,157
Yeah, and it's not just them. It's everybody.

811
00:50:36,242 --> 00:50:38,618
Thank you, Senator. I appreciate it.

812
00:50:39,995 --> 00:50:42,372
Congress is liking it.

813
00:50:42,456 --> 00:50:44,207
I'm not sure they should be
so happy about this,

814
00:50:44,291 --> 00:50:47,377
but they like that we let Lehman go.

815
00:50:47,461 --> 00:50:52,674
You stood strong. You've got brass balls.
It's what people need at a time like this.

816
00:50:53,467 --> 00:50:54,759
What is the market doing?

817
00:50:54,844 --> 00:50:58,346
Europe's only down a little.
Dow Jones futures only off 3 %.

818
00:50:58,431 --> 00:51:00,432
So you need to build on this
at the press conference.

819
00:51:00,516 --> 00:51:03,810
The story is we did everything
we could for Lehman.

820
00:51:03,894 --> 00:51:05,562
- We did.
- And the takeaway is...

821
00:51:05,646 --> 00:51:07,272
No more bailouts.

822
00:51:08,607 --> 00:51:10,024
Mr. Secretary.

823
00:51:10,109 --> 00:51:11,818
How should we read
what happened with Lehman?

824
00:51:12,027 --> 00:51:16,573
Read it as I think it's important
to maintain the stability

825
00:51:16,657 --> 00:51:20,243
and orderliness of our financial system,

826
00:51:20,327 --> 00:51:23,788
and, um, the

827
00:51:26,125 --> 00:51:28,585
moral hazard is something
I don't take lightly.

828
00:51:28,669 --> 00:51:30,837
- Mr. Paulson.
- Mr. Secretary, sir.

829
00:51:30,921 --> 00:51:34,424
How do you see the health
of the banking system today?

830
00:51:34,508 --> 00:51:36,092
The way the markets are performing today,

831
00:51:36,177 --> 00:51:38,595
it's a testament to how the financial industry
has come together

832
00:51:38,679 --> 00:51:41,473
in an extraordinary set of circumstances.

833
00:51:41,557 --> 00:51:45,769
The American people can remain confident
in the soundness and the resilience

834
00:51:45,853 --> 00:51:49,439
of the financial system. Thank you all.

835
00:51:49,523 --> 00:51:52,525
- Mr. Secretary.
- Mr. Paulson.

836
00:51:53,152 --> 00:51:54,194
What?

837
00:51:54,278 --> 00:51:57,322
Dow is falling off a cliff.
Four hundred points already.

838
00:51:57,406 --> 00:51:59,449
And the credit markets are frozen.

839
00:51:59,533 --> 00:52:02,118
Goldman and Morgan Stanley
are getting slammed by withdrawals.

840
00:52:02,203 --> 00:52:04,287
The Lehman thing's killing them.

841
00:52:06,040 --> 00:52:10,210
I should talk to the President
about how we'll contain the damage.

842
00:52:10,377 --> 00:52:12,837
Before you speak to the President,

843
00:52:13,547 --> 00:52:14,798
we've got another problem.

844
00:52:16,634 --> 00:52:17,967
AIG.

845
00:52:18,302 --> 00:52:22,013
Mr. Geithner is working with AIG
on a private-sector solution

846
00:52:22,097 --> 00:52:26,768
and the Secretary is monitoring
their progress very carefully.

847
00:52:26,852 --> 00:52:30,855
He's in close contact
with the Congressional leadership, most...

848
00:52:30,940 --> 00:52:32,816
White House wants a briefing on AIG.

849
00:52:32,900 --> 00:52:36,277
You're more informed about that than we are.
We've got the same information you do.

850
00:52:36,403 --> 00:52:39,322
No, we don't believe
that Lehman's bankruptcy

851
00:52:39,406 --> 00:52:41,449
is taking down all of Wall Street.

852
00:52:41,534 --> 00:52:42,826
Okay, but how do you explain...

853
00:52:42,910 --> 00:52:47,914
The AIG situation may have been,
you know, exacerbated by the...

854
00:52:47,998 --> 00:52:49,749
And Barney Frank's office.

855
00:52:51,752 --> 00:52:53,628
- Yeah.
- A surprise?

856
00:52:54,547 --> 00:52:56,047
No, AIG has been struggling...

857
00:52:56,131 --> 00:52:59,133
Why didn't you guys head off
this situation six months ago?

858
00:52:59,510 --> 00:53:03,096
Because the requisite magic wand
wasn't available, Doug.

859
00:53:03,347 --> 00:53:06,724
But if we do find one,
you will be among the very first to know.

860
00:53:08,435 --> 00:53:10,436
Blankfein on four, urgent.

861
00:53:10,521 --> 00:53:11,938
I have to go.

862
00:53:13,190 --> 00:53:14,232
Hey, Lloyd.

863
00:53:14,316 --> 00:53:16,693
The goddamn British
bankruptcy administrator

864
00:53:16,777 --> 00:53:19,112
froze all of Lehman's customer accounts.

865
00:53:19,196 --> 00:53:21,531
You didn't square this
with the British before you did it?

866
00:53:21,615 --> 00:53:23,074
Geithner on five.

867
00:53:23,158 --> 00:53:26,703
People are freaking out.
They can't get their money.

868
00:53:27,496 --> 00:53:29,539
Not investors, clients.

869
00:53:29,623 --> 00:53:32,166
If customers think their money
wasn't safe with Lehman,

870
00:53:32,251 --> 00:53:33,793
they're not gonna trust us either.

871
00:53:33,878 --> 00:53:37,005
No one will do business with us.

872
00:53:37,089 --> 00:53:39,007
You're gonna have to hang on.

873
00:53:39,091 --> 00:53:40,133
Tim.

874
00:53:40,342 --> 00:53:42,886
Dan spoke to Moody's.
They're downgrading AIG tonight.

875
00:53:42,970 --> 00:53:46,097
Would have happened anyway, but Lehman
put the whole thing into hyperdrive.

876
00:53:46,181 --> 00:53:47,724
How far down are they?

877
00:53:47,808 --> 00:53:49,309
French Finance Minister on six.

878
00:53:49,393 --> 00:53:51,019
They don't know.

879
00:53:52,146 --> 00:53:53,938
We're working on it.

880
00:53:54,982 --> 00:53:56,190
Christine.

881
00:53:56,275 --> 00:53:58,067
How could you let this happen with Lehman?

882
00:53:58,485 --> 00:53:59,736
What on earth were you thinking?

883
00:53:59,820 --> 00:54:02,530
We did everything we could, Christine.

884
00:54:02,615 --> 00:54:06,701
You allowed it to fail, Hank.
It was a horrifying mistake.

885
00:54:06,785 --> 00:54:09,287
It is having catastrophic
consequences all over Europe.

886
00:54:09,371 --> 00:54:11,915
And AIG would be even worse.

887
00:54:11,999 --> 00:54:15,627
The European banks
have tremendous exposure to AIG.

888
00:54:15,836 --> 00:54:18,838
We need assurance you will not
fail to act, as you did with Lehman.

889
00:54:18,923 --> 00:54:21,633
It is not just an American problem.

890
00:54:22,843 --> 00:54:24,010
Thank you so much for...

891
00:54:24,345 --> 00:54:25,386
John Mack.

892
00:54:27,181 --> 00:54:28,848
- John.
- John, one.

893
00:54:30,809 --> 00:54:33,436
The fallout
from Lehman is killing us.

894
00:54:33,520 --> 00:54:37,357
The short-sellers are all over us.
We're down 10 % already.

895
00:54:37,441 --> 00:54:39,734
You guys have no idea
what's going on out here.

896
00:54:40,986 --> 00:54:42,278
How are your earnings?

897
00:54:42,363 --> 00:54:44,781
Strong. We're gonna announce Friday.

898
00:54:44,865 --> 00:54:45,907
Announce now.

899
00:54:47,952 --> 00:54:49,869
Okay, Lloyd, sorry.

900
00:54:50,204 --> 00:54:53,122
Hank, if depositors see
they can't get their assets out of Lehman,

901
00:54:53,207 --> 00:54:57,085
the next step is gonna be a massive pullout
from all the investment banks.

902
00:54:57,169 --> 00:54:58,586
Jeff Immelt from GE.

903
00:55:00,172 --> 00:55:02,465
Jesus, what's Immelt calling you for?

904
00:55:02,549 --> 00:55:05,802
I have to go. Jeff.

905
00:55:05,886 --> 00:55:07,595
You gotta know what's going on out here.

906
00:55:08,055 --> 00:55:11,224
We're having trouble funding
our day-to-day operations.

907
00:55:11,684 --> 00:55:14,978
Our finance division is infecting
the rest of our business.

908
00:55:15,062 --> 00:55:16,562
General Electric?

909
00:55:16,647 --> 00:55:19,983
This thing is spreading way past Wall Street.

910
00:55:20,067 --> 00:55:22,193
I get that nobody wants to touch mortgages,

911
00:55:22,277 --> 00:55:25,822
but we're making planes
and engines, light bulbs.

912
00:55:26,490 --> 00:55:28,199
We're a healthy company.

913
00:55:28,283 --> 00:55:30,994
If we can't finance our day-to-day operations,

914
00:55:31,078 --> 00:55:34,330
every business in America's
gonna be shutting down.

915
00:55:43,382 --> 00:55:45,633
- Where's AIG?
- It closed at $2.

916
00:55:45,718 --> 00:55:49,512
Tim thinks we need to do something big.
Ben agrees, and so do I.

917
00:55:49,596 --> 00:55:51,514
What can we do? AIG's not even a bank.

918
00:55:51,598 --> 00:55:56,519
The Fed can lend to non-banks
under unusual and exigent circumstances.

919
00:55:56,603 --> 00:55:59,856
We're thinking of taking over
80 % of the company.

920
00:56:02,609 --> 00:56:05,111
Hank, we can't.

921
00:56:05,195 --> 00:56:07,905
This morning we were lecturing
the entire country on moral hazard.

922
00:56:07,990 --> 00:56:10,867
AIG has collateral. They have assets.

923
00:56:10,951 --> 00:56:14,412
Lehman didn't. We couldn't lend into a hole.

924
00:56:14,496 --> 00:56:15,955
It's not the same story.

925
00:56:16,040 --> 00:56:17,832
Nobody's gonna care.

926
00:56:17,916 --> 00:56:21,044
It's another bailout with no legislation.

927
00:56:21,128 --> 00:56:23,004
The Hill's gonna go crazy.
The country's gonna go crazy.

928
00:56:23,088 --> 00:56:26,841
The plane that we flew in on this morning,
leased from AIG.

929
00:56:26,925 --> 00:56:29,093
Construction downtown, AIG.

930
00:56:29,845 --> 00:56:35,099
Life insurance, 81 million policies
with a face value of 1.9 trillion,

931
00:56:35,184 --> 00:56:37,894
billions of dollars in teachers' pensions,
it's everywhere.

932
00:56:37,978 --> 00:56:40,521
You want too big to fail? Here it is.

933
00:56:41,106 --> 00:56:44,442
You got a better idea?
The suggestion box is wide open.

934
00:56:51,992 --> 00:56:53,951
I hate to do this right now,

935
00:56:54,036 --> 00:56:56,329
but I'm gonna have to have
a press call first thing,

936
00:56:56,413 --> 00:56:58,331
and I really don't know
what I'm gonna tell them.

937
00:56:58,791 --> 00:57:03,836
Tell them Lehman exacerbated AIG.
The simultaneous payouts of CDOs

938
00:57:03,921 --> 00:57:06,380
and credit default swaps
put catastrophic pressure on...

939
00:57:06,465 --> 00:57:08,049
Go back further.

940
00:57:09,259 --> 00:57:12,136
The global pool of investment capital...

941
00:57:12,221 --> 00:57:15,932
She has to do this in English.
Start with the homeowners.

942
00:57:16,016 --> 00:57:18,684
Okay, okay, here's how you explain it.

943
00:57:20,521 --> 00:57:25,900
Wall Street started bundling home loans
together, mortgage-backed securities,

944
00:57:26,193 --> 00:57:29,403
and selling slices
of those bundles to investors.

945
00:57:29,488 --> 00:57:31,447
And they were making big money,

946
00:57:31,532 --> 00:57:34,117
so they started pushing the lenders, saying,

947
00:57:34,201 --> 00:57:35,785
"Come on, we need more loans."

948
00:57:35,994 --> 00:57:39,413
The lenders had already given loans
to borrowers with good credit,

949
00:57:39,498 --> 00:57:42,375
so they go bottom-feeding.
They lower their criteria.

950
00:57:42,459 --> 00:57:47,171
Before, you needed a credit score of 620
and a down payment of 20 %.

951
00:57:47,381 --> 00:57:49,966
Now, they'll settle for 500, no money down.

952
00:57:50,050 --> 00:57:52,051
And the buyer, the regular guy on the street,

953
00:57:52,136 --> 00:57:53,928
assumes that the experts
know what they're doing.

954
00:57:54,012 --> 00:57:56,597
He's saying to himself,
"If the bank's willing to loan me money,

955
00:57:56,682 --> 00:57:58,432
"I must be able to afford it."

956
00:57:58,684 --> 00:58:00,560
So he reaches for the American dream.

957
00:58:00,644 --> 00:58:01,978
He buys that house.

958
00:58:02,062 --> 00:58:05,481
The banks knew securities based on
shitbag mortgages were risky.

959
00:58:05,566 --> 00:58:06,816
You'll work on "shitbag."

960
00:58:06,900 --> 00:58:10,403
So to control their downside,
the banks started buying a kind of insurance.

961
00:58:10,487 --> 00:58:13,447
If mortgages default,
insurance company pays,

962
00:58:13,699 --> 00:58:15,241
default swap.

963
00:58:15,325 --> 00:58:19,537
The banks insure their potential losses
to move the risk off their books

964
00:58:19,621 --> 00:58:21,622
so they can invest more, make more money.

965
00:58:21,707 --> 00:58:23,833
And while a lot of companies
insured this stuff,

966
00:58:23,917 --> 00:58:27,378
one was dumb enough to take on
an almost unbelievable amount of risk.

967
00:58:27,546 --> 00:58:29,797
- AIG.
- And you'll work on "dumb."

968
00:58:29,882 --> 00:58:32,049
And when they ask me why they did that?

969
00:58:32,342 --> 00:58:34,385
- Fees.
- Hundreds of millions in fees.

970
00:58:34,469 --> 00:58:37,013
AIG figured the housing market
would just keep going up,

971
00:58:37,097 --> 00:58:38,431
but then the unexpected happens.

972
00:58:38,515 --> 00:58:40,683
Housing prices go down.

973
00:58:40,767 --> 00:58:42,560
The poor bastard
who bought his dream house,

974
00:58:42,644 --> 00:58:44,729
the teaser rate on his mortgage runs out.

975
00:58:44,813 --> 00:58:47,190
His payments go up. He defaults.

976
00:58:47,274 --> 00:58:51,527
Mortgage-backed securities tank.
AIG has to pay off the swaps,

977
00:58:51,612 --> 00:58:55,281
all of them, all over the world,
at the same time.

978
00:58:55,449 --> 00:58:58,326
AIG can't pay. AIG goes under.

979
00:58:59,328 --> 00:59:03,581
Every bank they insure
books massive losses on the same day.

980
00:59:04,958 --> 00:59:06,751
And then they all go under.

981
00:59:06,960 --> 00:59:08,669
It all comes down.

982
00:59:10,672 --> 00:59:12,506
The whole financial system?

983
00:59:18,055 --> 00:59:22,433
And what do I say
when they ask me why it wasn't regulated?

984
00:59:23,310 --> 00:59:25,061
No one wanted to.

985
00:59:26,939 --> 00:59:29,315
We were making too much money.

986
00:59:39,743 --> 00:59:43,996
You'll work on
"We were making too much money."

987
00:59:56,843 --> 00:59:59,345
Hey, Hank. Um...

988
01:00:02,099 --> 01:00:04,850
These are really mild, but they work.

989
01:00:06,019 --> 01:00:10,856
I know the whole Christian Scientist thing,
that you don't take medicine.

990
01:00:12,484 --> 01:00:14,443
But you need to sleep.

991
01:00:17,072 --> 01:00:21,867
- Jim...
- Hank, not just for your own sake. Okay?

992
01:00:27,541 --> 01:00:28,833
You don't look so good.

993
01:00:33,588 --> 01:00:38,384
Just minutes ago, CNN has confirmed
that the Federal Reserve is negotiating

994
01:00:38,468 --> 01:00:40,970
to rescue insurance giant AIG.

995
01:00:41,054 --> 01:00:45,349
The negotiations could include
an $85 billion temporary loan

996
01:00:45,434 --> 01:00:47,643
to stave off AIG's imminent collapse.

997
01:00:47,728 --> 01:00:49,145
This is a blockbuster, folks.

998
01:00:49,229 --> 01:00:51,522
About this time last night,
many on Wall Street

999
01:00:51,606 --> 01:00:53,774
were fearing total disaster today.

1000
01:00:53,859 --> 01:00:57,570
So, another federal bailout
of another Wall Street giant.

1001
01:00:57,654 --> 01:01:00,448
Again, as we mentioned,
big, big financial news.

1002
01:01:00,532 --> 01:01:03,868
And this affects almost everyone
out there who has a 401 .

1003
01:01:03,952 --> 01:01:08,331
The news comes about three and a half hours
after the stock exchange closed on...

1004
01:01:08,415 --> 01:01:10,082
Motherfucker.

1005
01:01:10,959 --> 01:01:15,296
We wanna go straight right now to Ali Velshi
to kind of give us a bottom line on this, Ali.

1006
01:01:15,380 --> 01:01:16,547
And then we're gonna get
a lot more in depth...

1007
01:01:16,631 --> 01:01:18,966
AIG securing an 85...

1008
01:01:19,051 --> 01:01:20,968
The credit markets are still frozen solid.

1009
01:01:21,053 --> 01:01:23,471
We keep dumping money
into these companies

1010
01:01:23,555 --> 01:01:25,765
so the markets will stabilize,

1011
01:01:26,558 --> 01:01:27,641
and nothing helps.

1012
01:01:27,726 --> 01:01:29,810
We can't keep doing this.

1013
01:01:30,771 --> 01:01:34,940
We rescued Bear with no legislation,
AIG with no legislation.

1014
01:01:36,526 --> 01:01:38,778
People think Fannie and Freddie
was a bait-and-switch.

1015
01:01:38,862 --> 01:01:42,365
I don't like it any more than you do,
but they were exceptional situations.

1016
01:01:42,449 --> 01:01:45,451
This situation demands an endgame

1017
01:01:45,535 --> 01:01:48,913
that does not rely on
unilateral action from the Fed.

1018
01:01:48,997 --> 01:01:50,331
This is a democracy.

1019
01:01:50,415 --> 01:01:52,958
We cannot be men behind the curtain
pulling the strings.

1020
01:01:53,293 --> 01:01:57,671
We need some kind of an overall solution
that heals the entire system.

1021
01:01:57,756 --> 01:01:59,715
And it has to be legitimate.

1022
01:01:59,800 --> 01:02:01,342
We've been putting off going to Congress.

1023
01:02:01,426 --> 01:02:03,094
It's two months before an election.

1024
01:02:03,178 --> 01:02:08,891
They can't vote yes to a massive bailout
of the entire banking system.

1025
01:02:08,975 --> 01:02:10,434
- They'd never get reelected.
- Hank...

1026
01:02:10,644 --> 01:02:14,438
We go to Congress,
publically state we don't have the firepower

1027
01:02:14,523 --> 01:02:18,567
to control this anymore, and then they say no,

1028
01:02:19,528 --> 01:02:22,988
that is really the nightmare scenario.

1029
01:02:23,532 --> 01:02:26,826
The nightmare scenario's
already here, my friend.

1030
01:02:27,744 --> 01:02:29,245
We're in it.

1031
01:03:30,682 --> 01:03:32,057
P.

1032
01:03:43,695 --> 01:03:45,738
You can't put this all on your own shoulders.

1033
01:03:45,822 --> 01:03:47,156
We're running out of options.

1034
01:03:48,742 --> 01:03:51,994
Then you just keep trying.
That's what you do.

1035
01:03:52,078 --> 01:03:54,079
Eventually something's gonna work.

1036
01:03:54,164 --> 01:03:56,916
I'm not sure that that is true anymore.

1037
01:03:58,001 --> 01:04:01,587
There's not a bank in the world
that has enough money in its vault

1038
01:04:01,671 --> 01:04:05,758
to pay its depositors. It's all built on trust.

1039
01:04:05,842 --> 01:04:11,430
And, Wendy, we are so very close.

1040
01:04:14,726 --> 01:04:18,395
Morgan Stanley, Goldman are an inch away.

1041
01:04:18,480 --> 01:04:24,026
If the other banks stop trusting them,
if they pull back on interbank lending,

1042
01:04:24,110 --> 01:04:26,445
it's over in a matter of hours.

1043
01:04:27,113 --> 01:04:31,200
And from there it goes too fast to stop, a run,

1044
01:04:31,284 --> 01:04:36,247
and not just on one bank,
I mean on the whole system.

1045
01:04:36,331 --> 01:04:40,376
And average people wondering,
"Is my money safe?"

1046
01:04:41,628 --> 01:04:43,963
They start pulling their cash.

1047
01:04:46,132 --> 01:04:50,636
And after that, lines outside the banks,
smashed ATMs.

1048
01:04:51,638 --> 01:04:53,472
A couple of weeks,

1049
01:04:54,975 --> 01:04:57,351
there's no milk in the store.

1050
01:04:58,311 --> 01:04:59,520
For the second time this week,

1051
01:04:59,604 --> 01:05:01,564
there was a massive sell-off on Wall Street,

1052
01:05:01,648 --> 01:05:05,025
the Dow Jones Industrial's
freefalling some 450 points

1053
01:05:05,110 --> 01:05:09,321
on news of a taxpayer-funded bailout
of the AIG insurance company.

1054
01:05:09,406 --> 01:05:11,490
Three of the five investment banks are gone.

1055
01:05:11,575 --> 01:05:13,909
The country's biggest
mortgage lender is gone.

1056
01:05:13,994 --> 01:05:16,704
Fannie Mae, Freddie Mac,
brought under government control.

1057
01:05:16,788 --> 01:05:20,499
The financial system is holding right now,
but for how long?

1058
01:05:20,834 --> 01:05:22,960
All the king's horses and all the king's men

1059
01:05:23,044 --> 01:05:25,087
are being brought to bear
to keep this thing together.

1060
01:05:52,240 --> 01:05:54,533
- Hi, Tim.
- I'm on the Street, Hank,

1061
01:05:54,618 --> 01:05:57,286
and people are just
going about their business.

1062
01:05:57,370 --> 01:06:01,081
They have no idea the whole thing
is about to fall down.

1063
01:06:02,000 --> 01:06:05,628
We're gonna have to go to Congress.
We don't have a choice anymore.

1064
01:06:05,712 --> 01:06:06,837
Okay.

1065
01:06:06,921 --> 01:06:08,464
How fast do you think
you can get them to move?

1066
01:06:08,548 --> 01:06:10,716
It's gonna be at least a couple days.

1067
01:06:11,301 --> 01:06:14,178
Goldman and Morgan Stanley
are going down now.

1068
01:06:14,262 --> 01:06:15,638
We gotta do something today.

1069
01:06:15,722 --> 01:06:16,847
Like what?

1070
01:06:16,931 --> 01:06:19,475
The market doesn't like
investment banks, right?

1071
01:06:19,559 --> 01:06:21,769
The money's saying "fuck you"
to the whole business model.

1072
01:06:21,853 --> 01:06:22,895
Yeah.

1073
01:06:22,979 --> 01:06:26,065
Yeah, so merge them with commercial banks,

1074
01:06:26,149 --> 01:06:28,651
turn them into regular banks
regulated by the Fed.

1075
01:06:28,735 --> 01:06:30,152
They can use depositors' cash.

1076
01:06:30,236 --> 01:06:31,862
It will give them access
to the discount window.

1077
01:06:31,946 --> 01:06:34,990
It's cheap government cash.

1078
01:06:35,075 --> 01:06:37,826
- You wanna make them bigger?
- It's a trade-off, Hank.

1079
01:06:37,911 --> 01:06:40,954
The upside is it'll stabilize them.

1080
01:06:42,374 --> 01:06:44,583
The downside is,

1081
01:06:45,585 --> 01:06:48,337
yeah, they'll be really fucking big.

1082
01:06:48,421 --> 01:06:50,005
Do it, Tim.

1083
01:06:52,967 --> 01:06:54,259
Godspeed.

1084
01:07:12,028 --> 01:07:14,196
Uh, get me Blankfein.

1085
01:07:16,116 --> 01:07:18,117
Lloyd, call Vikram Pandit,
talk to him about a merger.

1086
01:07:18,201 --> 01:07:20,244
Tim, we're looking at all our options.

1087
01:07:20,370 --> 01:07:23,872
You don't have options, Lloyd.
There's a run on your bank.

1088
01:07:23,957 --> 01:07:25,582
You need money. Citi has deposits.

1089
01:07:25,667 --> 01:07:28,335
Citi's a mess, you're organized. Call Pandit.

1090
01:07:37,762 --> 01:07:38,804
Yeah.

1091
01:07:38,888 --> 01:07:40,848
I want you to look at merging
with Morgan Stanley.

1092
01:07:40,932 --> 01:07:43,058
What, are you kidding me? I just bought Bear.

1093
01:07:43,143 --> 01:07:44,518
We're still trying to make that work.

1094
01:07:44,602 --> 01:07:46,395
You didn't buy Bear.
You got Bear as a Christmas present.

1095
01:07:46,479 --> 01:07:50,649
The market's a fucking disaster, Jamie.
Talk to John Mack.

1096
01:07:50,734 --> 01:07:53,610
Hey, Geithner says
we should talk about a merger.

1097
01:07:53,695 --> 01:07:55,529
- You wanna do a deal?
- No.

1098
01:07:55,613 --> 01:07:57,698
Then why the fuck did he tell me to call you?

1099
01:07:57,782 --> 01:07:59,867
I'm under orders to try and help you.

1100
01:07:59,993 --> 01:08:03,078
You're a prince, Jamie. A real prince.

1101
01:08:07,000 --> 01:08:11,503
Apparently, some people seem to think
combining our firms would be a good idea.

1102
01:08:11,713 --> 01:08:14,381
I want you to know I'm flattered by this call.

1103
01:08:14,924 --> 01:08:18,677
Vikram, I'm not trying to flatter you,
believe me.

1104
01:08:18,762 --> 01:08:20,262
Geithner's calling.

1105
01:08:20,346 --> 01:08:22,931
Here comes goddamn eHarmony.

1106
01:08:23,016 --> 01:08:24,975
Hey, guess what. Jamie's not interested.

1107
01:08:28,146 --> 01:08:29,271
Do Wachovia.

1108
01:08:29,355 --> 01:08:31,315
They were writing mortgages
with their eyes closed.

1109
01:08:31,399 --> 01:08:33,442
Tim, it's a shit sandwich. Forget it.

1110
01:08:39,365 --> 01:08:41,283
I haven't been able
to reach you for four hours.

1111
01:08:41,367 --> 01:08:44,787
That is totally fucking unacceptable
on a day like today.

1112
01:08:45,038 --> 01:08:48,081
I had to run my team
through the Goldman proposal.

1113
01:08:48,166 --> 01:08:49,458
It's not gonna work.

1114
01:08:50,335 --> 01:08:52,878
You passed on Goldman
without even talking to me?

1115
01:08:53,046 --> 01:08:55,881
I don't need another trillion dollars
on my balance sheet.

1116
01:08:59,677 --> 01:09:03,722
Next time I call, pick up.

1117
01:09:05,350 --> 01:09:06,850
Fucker.

1118
01:09:07,101 --> 01:09:10,479
The problem is the toxic assets.
Let's just buy them.

1119
01:09:10,563 --> 01:09:12,397
Ooh. We'll call it Cash for Trash.

1120
01:09:12,565 --> 01:09:15,067
When the market stabilizes,
we'll unload them.

1121
01:09:15,151 --> 01:09:17,194
Hopefully, Treasury will get its money back.

1122
01:09:17,278 --> 01:09:19,738
- Is that in the Break the Glass plan?
- Basically.

1123
01:09:19,823 --> 01:09:22,741
My copy's missing some pages.
Could someone else show me the rest of...

1124
01:09:22,826 --> 01:09:24,493
It's succinct.

1125
01:09:25,203 --> 01:09:27,663
We've got one shot with Congress.

1126
01:09:27,747 --> 01:09:31,291
You want them to write a piece
of legislation based on three pages?

1127
01:09:31,376 --> 01:09:32,417
Look, guys,

1128
01:09:32,794 --> 01:09:35,128
buying toxic assets is gonna be a nightmare.

1129
01:09:35,213 --> 01:09:36,505
Nobody knows what the stuff's worth.

1130
01:09:36,589 --> 01:09:39,341
It'll take forever to untangle.
These banks are going down now.

1131
01:09:39,425 --> 01:09:40,509
So what do we do?

1132
01:09:40,593 --> 01:09:43,929
You wanna unfreeze credit, right?
You want the banks to lend people money?

1133
01:09:44,013 --> 01:09:46,682
- That's the goal.
- So give them money to lend.

1134
01:09:49,811 --> 01:09:51,144
Capital injections?

1135
01:09:51,229 --> 01:09:52,271
Dan, come on.

1136
01:09:52,355 --> 01:09:53,856
I can't believe you're pulling out the "N" word.

1137
01:09:53,940 --> 01:09:55,148
I'm not saying nationalize the banks.

1138
01:09:55,233 --> 01:09:58,569
I'm saying isolate the ones that are
really in trouble and make an investment.

1139
01:09:58,653 --> 01:10:01,864
- It's un-American.
- It's sure un-Republican.

1140
01:10:01,948 --> 01:10:05,200
You'd make the government a stockholder.

1141
01:10:05,285 --> 01:10:08,996
What, do we tell them how to manage
themselves, what to buy and sell?

1142
01:10:09,080 --> 01:10:11,957
Run them like the post office?
'Cause that works like a dream.

1143
01:10:12,041 --> 01:10:15,961
We make it temporary.
We make ourselves non-voting stockholders.

1144
01:10:16,170 --> 01:10:19,381
You can't just hand the banks
massive piles of cash.

1145
01:10:19,465 --> 01:10:21,049
Nobody's gonna go for it.

1146
01:10:21,134 --> 01:10:25,012
To the Republicans it's nationalization.
To the Democrats it's a bailout.

1147
01:10:25,096 --> 01:10:26,680
And the banks are gonna go ballistic.

1148
01:10:26,848 --> 01:10:31,810
Sorry, Dan, not gonna happen.
Kudos for out-of-the-box thinking.

1149
01:10:31,895 --> 01:10:35,314
Neel, if we go with your plan
to buy the assets,

1150
01:10:35,398 --> 01:10:36,565
how much is it gonna cost?

1151
01:10:36,649 --> 01:10:38,025
It won't work.

1152
01:10:38,109 --> 01:10:41,612
Look, the plan is three pages long,
totally vague.

1153
01:10:41,696 --> 01:10:46,074
If buying the assets doesn't work,
we'll nationalize the banks for you, okay?

1154
01:10:46,326 --> 01:10:50,120
- How much?
- To be safe, maybe a trillion.

1155
01:10:50,830 --> 01:10:53,373
The Congress will never do a trillion, never.

1156
01:10:53,541 --> 01:10:57,044
There's $11 trillion in residential mortgages.

1157
01:10:57,128 --> 01:11:02,424
There's three trillion in commercial
mortgages. That's 14 trillion, right?

1158
01:11:02,508 --> 01:11:05,552
You gotta figure about 5 % default rate.

1159
01:11:06,512 --> 01:11:09,139
5 % of 14 trillion is

1160
01:11:10,266 --> 01:11:12,225
$700 billion.

1161
01:11:15,521 --> 01:11:17,773
It's better than a trillion.

1162
01:11:21,444 --> 01:11:24,738
The only way to get this done
is to just scare them shitless.

1163
01:11:24,822 --> 01:11:28,033
That should be easy.
I'm scared shitless myself.

1164
01:11:41,047 --> 01:11:43,382
Troubled Asset Relief Program?

1165
01:11:43,466 --> 01:11:44,883
TARP, we're calling it.

1166
01:11:44,968 --> 01:11:48,261
This is your draft of the bill?

1167
01:11:48,346 --> 01:11:50,722
Subject to revision, certainly.

1168
01:11:54,018 --> 01:11:56,019
I've only got three pages here.
Am I missing something?

1169
01:11:56,646 --> 01:11:58,438
No.

1170
01:11:59,732 --> 01:12:02,609
You're just looking
for a big blank check in a hurry.

1171
01:12:02,902 --> 01:12:06,321
It's all for the banks. You don't want a penny

1172
01:12:06,406 --> 01:12:08,615
for the average Joe
that's about to lose his house?

1173
01:12:08,700 --> 01:12:10,784
There's not a scrap of oversight
built into this,

1174
01:12:10,868 --> 01:12:13,620
not for the banks or for you, for that matter.

1175
01:12:13,705 --> 01:12:18,458
You want us to simply hand over
$700 billion and trust you?

1176
01:12:18,543 --> 01:12:20,752
How is it possible you didn't see this coming?

1177
01:12:21,379 --> 01:12:23,463
If you wanna rewind the tape, we can do that.

1178
01:12:23,548 --> 01:12:26,800
But right now, the one thing
we don't have is time.

1179
01:12:27,427 --> 01:12:29,511
We need an announcement tonight
to calm the market.

1180
01:12:29,595 --> 01:12:31,221
We need legislation next week.

1181
01:12:34,976 --> 01:12:38,770
I spent my entire academic career

1182
01:12:39,772 --> 01:12:42,232
studying the Great Depression.

1183
01:12:44,944 --> 01:12:48,947
The Depression may have started
because of a stock market crash,

1184
01:12:49,032 --> 01:12:53,702
but what hit the general economy
was a disruption of credit,

1185
01:12:54,120 --> 01:12:58,707
average citizens unable to borrow money
to do anything, to buy a home,

1186
01:12:58,791 --> 01:13:01,626
start a business, stock their shelves.

1187
01:13:03,171 --> 01:13:06,339
Credit has the ability
to build a modern economy,

1188
01:13:06,466 --> 01:13:11,053
but lack of credit has the power to destroy it,
swiftly and absolutely.

1189
01:13:13,139 --> 01:13:19,061
If we do not act boldly and immediately,
we will replay the Depression of the 1930s,

1190
01:13:19,145 --> 01:13:23,982
only this time it will be far, far worse.

1191
01:13:27,320 --> 01:13:31,907
We don't do this now,
we won't have an economy on Monday.

1192
01:13:40,333 --> 01:13:41,666
Geithner.

1193
01:13:46,672 --> 01:13:48,507
We took the proposal down to Congress.

1194
01:13:48,591 --> 01:13:49,758
Are they gonna go for it?

1195
01:13:49,842 --> 01:13:51,551
They didn't like the fact that it was short.

1196
01:13:52,053 --> 01:13:53,303
I thought concise was a plus.

1197
01:13:53,387 --> 01:13:56,765
They thought it was flimsy
or arrogant or something.

1198
01:13:56,849 --> 01:13:59,684
I don't know what they think.
They couldn't get past it.

1199
01:13:59,769 --> 01:14:02,104
The market's in a death spiral.
They're gonna sink the bill

1200
01:14:02,188 --> 01:14:03,939
because the proposal is too fucking short?

1201
01:14:04,023 --> 01:14:07,567
They're working on it.
They're gonna make it longer,

1202
01:14:07,652 --> 01:14:09,528
among other things.

1203
01:14:10,613 --> 01:14:13,949
Look, just tell me you got something.

1204
01:14:16,994 --> 01:14:19,955
No. No, we're nowhere.

1205
01:14:20,039 --> 01:14:21,540
Who's left for Morgan Stanley?

1206
01:14:22,375 --> 01:14:25,794
China Investment Corporation.

1207
01:14:27,547 --> 01:14:29,047
Uh, maybe Mitsubishi.

1208
01:14:29,132 --> 01:14:31,716
No, the Japanese will never do this deal.

1209
01:14:32,176 --> 01:14:33,301
How about Goldman?

1210
01:14:33,469 --> 01:14:36,138
Goldman's looking at Wachovia,
but they're so fucked,

1211
01:14:36,222 --> 01:14:38,640
even John Mack turned up his nose.

1212
01:14:41,435 --> 01:14:42,936
You gotta get that bill passed.

1213
01:14:43,020 --> 01:14:47,566
- I'm pushing.
- Well, push harder. Please.

1214
01:14:50,653 --> 01:14:53,280
This isn't working, Hank.

1215
01:15:07,670 --> 01:15:09,254
Hank?

1216
01:15:09,380 --> 01:15:11,506
Could you excuse me a moment?

1217
01:15:33,154 --> 01:15:37,866
Oh, my God. Gao, Gao.

1218
01:15:37,950 --> 01:15:41,411
I am so sorry about this.
There's nothing we can do.

1219
01:15:41,495 --> 01:15:45,332
It's New York, you know. We're lucky
we can still buy a beer at Yankee Stadium.

1220
01:15:45,416 --> 01:15:48,168
Don't worry about it. I should quit anyway.

1221
01:15:48,586 --> 01:15:50,962
When you're ready, we'll be inside.

1222
01:15:54,383 --> 01:15:56,051
Is there any movement there?

1223
01:15:56,135 --> 01:16:00,639
They made an extremely low opening offer.
I pretended I didn't hear it.

1224
01:16:00,806 --> 01:16:04,976
The markets can't open Monday
without a resolution of Morgan Stanley.

1225
01:16:05,144 --> 01:16:07,479
We really need you to do a deal.

1226
01:16:07,647 --> 01:16:09,898
- You need to call Jamie.
- I called Jamie.

1227
01:16:09,982 --> 01:16:12,150
He doesn't want us. There's too much overlap.

1228
01:16:12,235 --> 01:16:13,568
We've spoken to him. He'll do it.

1229
01:16:13,778 --> 01:16:16,529
For what, a dollar? Why would I do that?

1230
01:16:16,614 --> 01:16:19,658
I got China Investment
and Mitsubishi kicking my tires.

1231
01:16:19,867 --> 01:16:23,203
I know those guys.
They're not gonna close a deal in time.

1232
01:16:23,412 --> 01:16:26,414
We want you to call Jamie.

1233
01:16:26,499 --> 01:16:28,625
Let me ask you a question.

1234
01:16:28,709 --> 01:16:33,505
35,000 jobs just disappeared in this city
between AIG, Lehman and Bear.

1235
01:16:33,589 --> 01:16:38,176
We make a deal with Jamie,
he'll fire 20,000 Morgan Stanley employees.

1236
01:16:38,261 --> 01:16:40,178
You think that's good public policy?

1237
01:16:40,346 --> 01:16:43,682
John, we are looking
at the whole system here.

1238
01:16:43,849 --> 01:16:45,350
The Chinese are leaving.

1239
01:16:45,434 --> 01:16:47,185
Gao found out
we're also talking to Mitsubishi.

1240
01:16:47,270 --> 01:16:48,937
I gotta go.

1241
01:16:49,021 --> 01:16:52,607
All right, get me Kuroyanagi
and a Japanese translator.

1242
01:16:52,692 --> 01:16:54,567
We're closing with Mitsubishi tonight.

1243
01:16:54,652 --> 01:16:55,986
Tim Geithner's calling again.

1244
01:16:57,280 --> 01:16:58,738
Cover your ears.

1245
01:16:58,823 --> 01:17:02,534
You tell Tim Geithner to fucking blow me.
I'm trying to save my company.

1246
01:17:05,329 --> 01:17:08,206
Put him on the schedule,
but make sure it's after lunch,

1247
01:17:08,291 --> 01:17:11,042
because that way I can
fit Madeline in beforehand. And...

1248
01:17:12,169 --> 01:17:14,879
Morgan just made a deal with Mitsubishi.

1249
01:17:15,256 --> 01:17:18,842
So we're the only bank
with our dick still in the wind.

1250
01:17:19,260 --> 01:17:21,720
I'm calling Buffett again.

1251
01:17:26,434 --> 01:17:28,810
Grandpa, they keep calling.
What if it's important?

1252
01:17:29,061 --> 01:17:31,104
They always think it's important.

1253
01:17:34,608 --> 01:17:37,402
All right, I'll make it fast.

1254
01:17:38,571 --> 01:17:40,488
Warren, thanks for calling back. How are you?

1255
01:17:40,573 --> 01:17:44,242
Just fine, Lloyd. What can I do for you today?

1256
01:17:44,410 --> 01:17:46,911
I'd like to talk to you about
taking a stake in Goldman Sachs.

1257
01:17:46,996 --> 01:17:49,581
What do you have in mind?
Sounds expensive.

1258
01:17:50,458 --> 01:17:51,875
Maybe not.

1259
01:17:54,003 --> 01:17:56,713
You better have good news,

1260
01:17:56,797 --> 01:18:00,592
because I might be dead before we finish
haggling over TARP.

1261
01:18:01,218 --> 01:18:04,137
Buffett's throwing five billion into Goldman.

1262
01:18:06,640 --> 01:18:08,558
We're off the ledge.

1263
01:18:09,226 --> 01:18:11,227
For the moment.

1264
01:18:11,395 --> 01:18:13,855
The October surprise arrived a little early,

1265
01:18:13,939 --> 01:18:16,608
with a game-changing jolt
to the White House race.

1266
01:18:17,276 --> 01:18:20,987
Call it a master stroke
or a desperate Hail Mary pass,

1267
01:18:21,072 --> 01:18:24,157
McCain announced he would
suspend his campaign

1268
01:18:24,241 --> 01:18:27,369
and asked for this Friday's
debate to be postponed

1269
01:18:27,453 --> 01:18:30,330
so he can return to Washington
to focus on the economic crisis.

1270
01:18:30,414 --> 01:18:36,378
Now is our chance to come together
to prove that Washington is once again

1271
01:18:36,962 --> 01:18:39,464
capable of leading this country.

1272
01:18:39,548 --> 01:18:42,300
Thank God he came back.

1273
01:18:42,635 --> 01:18:46,596
Like Daniel Day-Lewis
in Last of the Mohicans,

1274
01:18:46,680 --> 01:18:49,057
he will find us!

1275
01:18:51,435 --> 01:18:53,311
- They're blowing it up.
- What happened?

1276
01:18:53,396 --> 01:18:56,481
McCain wanted to swoop in and save the day,
but doesn't have any idea how to do it.

1277
01:18:56,565 --> 01:19:00,693
It's a 100-page piece of legislation
we've been carefully negotiating for days.

1278
01:19:00,778 --> 01:19:02,904
What, did he think they were
gonna sit around and spitball?

1279
01:19:02,988 --> 01:19:04,823
Yeah, when McCain got here

1280
01:19:04,907 --> 01:19:08,535
and found out that the deal
was basically done, he went apeshit.

1281
01:19:08,619 --> 01:19:11,913
The Republicans fell in behind their guy.
They wanna start all over again.

1282
01:19:11,997 --> 01:19:13,915
Democrats flipped out. Republicans dug in.

1283
01:19:14,333 --> 01:19:16,251
- Clusterfuck.
- Clusterfuck.

1284
01:19:16,836 --> 01:19:19,587
- Where's Hank?
- Still talking to McCain.

1285
01:19:20,047 --> 01:19:22,340
If you or anyone else does anything

1286
01:19:22,425 --> 01:19:26,428
that causes the next depression,
it is not gonna be on me.

1287
01:19:26,512 --> 01:19:27,762
I have a big mouth, Senator,

1288
01:19:27,847 --> 01:19:29,389
- a very big mouth.
- Hold on...

1289
01:19:29,473 --> 01:19:34,352
He's not threatening
the Republican presidential nominee, is he?

1290
01:19:34,437 --> 01:19:37,439
- Something's gotta be done.
- No, no. Excuse me, please.

1291
01:19:37,523 --> 01:19:38,857
Where are the Democrats?

1292
01:19:38,941 --> 01:19:40,692
They're right down this way.

1293
01:19:40,776 --> 01:19:42,193
- Is Nancy there?
- Yes. Yes, she is.

1294
01:19:42,278 --> 01:19:43,403
Thank you.

1295
01:19:51,745 --> 01:19:53,079
Nancy...

1296
01:19:57,418 --> 01:20:01,087
Oh, gee, Hank.
I didn't know you were Catholic.

1297
01:20:02,923 --> 01:20:05,300
I beg of you, don't blow this up.
It was a bad meeting,

1298
01:20:05,384 --> 01:20:07,051
but we need to get together on this.

1299
01:20:07,136 --> 01:20:08,970
We're not the ones trying to blow it up.

1300
01:20:09,054 --> 01:20:11,264
I just ask you to stay with us.

1301
01:20:13,726 --> 01:20:15,185
Please.

1302
01:20:16,770 --> 01:20:20,231
The House began debating the rescue bill
at 9:27 this morning.

1303
01:20:20,316 --> 01:20:22,942
At about 1:28 p.m., Congress did finally act.

1304
01:20:23,027 --> 01:20:25,445
- This is a squeaker of a vote.
- We are down to it right now.

1305
01:20:25,529 --> 01:20:27,489
It looks like the Democrats
delivered their caucus

1306
01:20:27,573 --> 01:20:29,824
and the Republicans so far have not.

1307
01:20:29,909 --> 01:20:32,118
What do you think
they could do to change the bill

1308
01:20:32,203 --> 01:20:33,995
to get a few Republican votes
over to the other side?

1309
01:20:34,079 --> 01:20:35,538
If they hang Wall Street CEOs,

1310
01:20:35,623 --> 01:20:37,207
I think that would get a few more votes.

1311
01:20:37,291 --> 01:20:40,668
I'm not sure what they could do exactly.

1312
01:20:40,753 --> 01:20:44,589
It is possible that the leadership
of the Congress would conclude

1313
01:20:44,673 --> 01:20:47,342
that there's nothing that can
get a majority of support

1314
01:20:47,426 --> 01:20:50,428
and see what Hank Paulson can do
and the administration can do.

1315
01:20:52,348 --> 01:20:53,932
Leaders are negotiating right now

1316
01:20:54,016 --> 01:20:56,351
who risks their seat.
And that's what I'm hearing.

1317
01:20:56,435 --> 01:20:58,186
Pelosi wouldn't have
brought the bill to the floor

1318
01:20:58,270 --> 01:20:59,354
if she didn't think it would pass.

1319
01:20:59,438 --> 01:21:01,856
I don't know the answer
to that, Charlie. I can't answer.

1320
01:21:01,941 --> 01:21:03,066
I'm just reading an e-mail that's coming to me.

1321
01:21:03,150 --> 01:21:06,110
I think the bottom line
is they gotta go back to the drawing board.

1322
01:21:06,195 --> 01:21:07,779
Do they have the time, though, to do that?

1323
01:21:07,863 --> 01:21:09,364
Look at the Dow Jones Industrial Average.

1324
01:21:09,448 --> 01:21:11,157
You know you're gonna get a sell-off.

1325
01:21:11,242 --> 01:21:14,160
You guys, at this point,
we just gotta hold on to the sides of the kayak

1326
01:21:14,245 --> 01:21:15,286
and ride through this because...

1327
01:21:15,371 --> 01:21:17,247
They didn't pass it.

1328
01:21:17,331 --> 01:21:20,291
- They did not pass it.
- It just wasn't enough.

1329
01:21:21,585 --> 01:21:24,587
They're gonna end up
being nine votes short, Bill.

1330
01:21:24,672 --> 01:21:25,713
Say that again, Steve.

1331
01:21:25,798 --> 01:21:27,715
I think they're gonna
end up being nine votes...

1332
01:21:27,800 --> 01:21:29,592
If they get all six...
Five of the remaining votes,

1333
01:21:29,677 --> 01:21:33,304
they'll be 10 votes short now,
if they get all five remaining.

1334
01:21:33,389 --> 01:21:35,473
The writing is on the wall there.

1335
01:21:35,558 --> 01:21:36,849
And we're here down on the floor.

1336
01:21:36,934 --> 01:21:38,226
Of course,
traders have been standing around.

1337
01:21:38,310 --> 01:21:39,936
Look, we're all here in knots...

1338
01:21:44,483 --> 01:21:47,485
The networks are waiting for you
in the press room.

1339
01:21:48,362 --> 01:21:49,946
I can't even...

1340
01:22:02,835 --> 01:22:04,335
We have to go back again.

1341
01:22:05,254 --> 01:22:06,838
They don't get to say no on this.

1342
01:22:08,257 --> 01:22:09,465
Okay.

1343
01:22:09,550 --> 01:22:10,633
The White House wants a meeting.

1344
01:22:10,718 --> 01:22:12,635
Good. We'll come up with a new strategy.

1345
01:22:12,720 --> 01:22:15,263
The White House has to push harder
on the Hill.

1346
01:22:15,347 --> 01:22:17,765
Meanwhile, we need to keep working
on what we do with the money.

1347
01:22:17,850 --> 01:22:19,100
Let's act like this is gonna work.

1348
01:22:19,184 --> 01:22:20,935
In that case, let's talk about cash injections.

1349
01:22:21,020 --> 01:22:23,146
- Here we go again.
- We can't nationalize the banks.

1350
01:22:23,230 --> 01:22:24,272
It's not nationalizing...

1351
01:22:24,356 --> 01:22:26,107
That's how Japan got itself
a decade-long recession.

1352
01:22:26,191 --> 01:22:27,191
Is that where we wanna go?

1353
01:22:29,695 --> 01:22:30,820
What else do we have?

1354
01:22:30,946 --> 01:22:32,030
Cash for Trash.

1355
01:22:32,114 --> 01:22:35,116
Buying toxic assets is still our go-to move.

1356
01:22:35,200 --> 01:22:37,785
All right. Find a way to simplify it.

1357
01:22:38,662 --> 01:22:41,456
Dan, work something up.

1358
01:22:41,540 --> 01:22:45,251
For discussion purposes,
let's see what it would look like.

1359
01:22:55,554 --> 01:22:58,306
For those who supported
the $700 billion Wall Street bailout,

1360
01:22:58,390 --> 01:23:00,516
it was a surprising and stunning failure

1361
01:23:00,601 --> 01:23:02,894
when the House of Representatives
voted to reject it.

1362
01:23:03,020 --> 01:23:05,480
It's a stinging defeat for President Bush,

1363
01:23:05,564 --> 01:23:08,232
delivered at the hands
of his fellow Republicans.

1364
01:23:08,817 --> 01:23:13,154
We put forth a plan that was big
because we've got a big problem.

1365
01:23:13,405 --> 01:23:17,241
The reality is that we're in an urgent situation.

1366
01:23:17,326 --> 01:23:20,495
And the consequences
will grow worse each day

1367
01:23:20,579 --> 01:23:21,996
if we do not act.

1368
01:23:22,081 --> 01:23:24,415
- I know. I keep telling...
- Draft of the new bill.

1369
01:23:25,250 --> 01:23:26,626
Are they having any luck with it?

1370
01:23:26,710 --> 01:23:28,461
The White House thinks
they got a better shot of pushing it

1371
01:23:28,545 --> 01:23:31,506
through the Senate side first.
Hopefully they're right.

1372
01:23:31,590 --> 01:23:33,383
They asked us to back off
and let them handle it.

1373
01:23:33,467 --> 01:23:36,511
So I'm trying to back off.

1374
01:23:42,434 --> 01:23:44,435
Buying toxic assets isn't gonna work.

1375
01:23:45,270 --> 01:23:47,730
- Why not?
- It's too slow.

1376
01:23:47,815 --> 01:23:48,856
I think I've been saying that.

1377
01:23:48,941 --> 01:23:51,192
Well, we knew it was complicated,
but how slow...

1378
01:23:51,276 --> 01:23:53,277
Two months, maybe more.

1379
01:23:54,196 --> 01:23:55,947
How is it possible we didn't know how...

1380
01:23:56,031 --> 01:23:58,950
I didn't ask how long it would take, okay?

1381
01:24:00,452 --> 01:24:02,120
Can we move on?

1382
01:24:02,788 --> 01:24:06,082
So maybe we can talk about capital injections.

1383
01:24:06,166 --> 01:24:07,834
Dan, we really can't.

1384
01:24:07,918 --> 01:24:10,128
I think we're gonna have to.

1385
01:24:10,212 --> 01:24:16,134
Even if Neel could expedite the process,
which seems unlikely,

1386
01:24:16,719 --> 01:24:20,847
the system is crumbling.
The banks need money now.

1387
01:24:20,931 --> 01:24:24,392
If cash injections are the most
efficient way to stabilize them,

1388
01:24:24,476 --> 01:24:27,562
then we can't back off

1389
01:24:27,646 --> 01:24:32,400
because we're uncomfortable being the men
who nationalized a few American banks.

1390
01:24:32,484 --> 01:24:33,818
It's faster, that's for sure.

1391
01:24:33,902 --> 01:24:37,947
It will push us back off the precipice, yes,
unfreeze the system.

1392
01:24:39,658 --> 01:24:44,287
We give them some money
and they lend it out.

1393
01:24:49,293 --> 01:24:50,460
The motion is adopted.

1394
01:24:50,544 --> 01:24:53,087
After rejecting the Bush
Administration's TARP plan

1395
01:24:53,172 --> 01:24:56,007
only four days ago,
the House passed it today.

1396
01:24:56,091 --> 01:24:59,385
The big question now, whether investors
will take comfort in the news.

1397
01:24:59,470 --> 01:25:03,055
Current indicators show the stock market
is continuing its free fall.

1398
01:25:22,868 --> 01:25:24,160
Hello?

1399
01:25:24,244 --> 01:25:26,537
Warren, it's Hank.

1400
01:25:27,206 --> 01:25:29,832
I'm sorry. It's late.

1401
01:25:31,001 --> 01:25:32,376
Am I waking you?

1402
01:25:32,461 --> 01:25:33,961
No, not at all.

1403
01:25:35,005 --> 01:25:37,089
Can I pick your brain for a minute?

1404
01:25:37,174 --> 01:25:39,383
Sure. What's the problem?

1405
01:25:40,302 --> 01:25:45,473
How do you get a healthy bank
to accept a capital injection?

1406
01:26:39,945 --> 01:26:42,780
I had to drag my ass
all the way here from California.

1407
01:26:42,865 --> 01:26:44,323
They wouldn't even tell me why.

1408
01:26:44,867 --> 01:26:46,117
Nobody knows what this is about?

1409
01:26:46,952 --> 01:26:48,327
Nope.

1410
01:26:53,834 --> 01:26:55,251
Talk to Jamie?

1411
01:26:55,335 --> 01:26:57,461
Yep. He'll be fine.

1412
01:26:58,005 --> 01:26:59,380
Did you tell him what was coming?

1413
01:26:59,464 --> 01:27:01,549
Uh, did I tell him
we're about to make him swallow

1414
01:27:01,633 --> 01:27:04,510
a capital injection he doesn't need? No.

1415
01:27:05,679 --> 01:27:08,264
I, uh... I told him we need his help

1416
01:27:08,348 --> 01:27:10,808
and I asked him very politely
not to fuck with us today.

1417
01:27:12,477 --> 01:27:13,561
He got it.

1418
01:27:15,898 --> 01:27:16,981
She's here.

1419
01:27:22,613 --> 01:27:25,865
Gentlemen. We think this is gonna work?

1420
01:27:25,949 --> 01:27:28,075
Oh, yeah. They're gonna love it.

1421
01:27:50,724 --> 01:27:54,435
We are of the view
that the United States needs

1422
01:27:54,519 --> 01:27:57,647
to take strong, decisive action

1423
01:27:59,232 --> 01:28:02,318
to arrest the stress in our financial system.

1424
01:28:03,946 --> 01:28:06,530
Through our new TARP authority,

1425
01:28:07,032 --> 01:28:11,369
Treasury will purchase preferred stock

1426
01:28:12,537 --> 01:28:14,830
in each of the banks represented in this room.

1427
01:28:17,376 --> 01:28:19,919
That stock will yield 5 % the first five years,

1428
01:28:20,003 --> 01:28:21,504
9 % after that.

1429
01:28:22,923 --> 01:28:25,633
We give you money. You lend it out.

1430
01:28:25,717 --> 01:28:30,262
It will unfreeze credit, stabilize the banks,
restore confidence.

1431
01:28:31,223 --> 01:28:34,934
Everyone will be better off
with more capital in the system.

1432
01:28:35,018 --> 01:28:38,396
And that is why all nine of you

1433
01:28:41,191 --> 01:28:43,567
will participate in the program.

1434
01:28:47,406 --> 01:28:48,906
Some of us don't need any capital.

1435
01:28:49,074 --> 01:28:50,908
You all need capital.

1436
01:28:51,576 --> 01:28:53,995
You have no idea what the market's
gonna look like in a year.

1437
01:28:54,121 --> 01:28:55,788
Neither do you.

1438
01:28:56,915 --> 01:29:00,167
I'm not one of you New York guys
with your fancy products.

1439
01:29:00,252 --> 01:29:03,295
Why am I in this room
talking about bailing you out?

1440
01:29:03,380 --> 01:29:06,674
The stronger banks will serve
as cover for the weaker banks.

1441
01:29:06,758 --> 01:29:09,343
If just some of you take it,
the money's a signal

1442
01:29:09,428 --> 01:29:12,430
that a bank is too weak to survive.
The market will devour it.

1443
01:29:13,724 --> 01:29:15,141
How much are we talking about?

1444
01:29:15,225 --> 01:29:16,892
A hundred and twenty-five billion.

1445
01:29:20,439 --> 01:29:22,189
Bank of America, 15 billion.

1446
01:29:22,274 --> 01:29:24,900
Bank of New York Mellon, three billion.

1447
01:29:25,694 --> 01:29:28,112
Citigroup, 25 billion.

1448
01:29:28,947 --> 01:29:31,449
Goldman Sachs, 10 billion.

1449
01:29:31,950 --> 01:29:34,160
JPMorgan, 25 billion.

1450
01:29:34,828 --> 01:29:36,954
Merrill Lynch, 10 billion.

1451
01:29:37,581 --> 01:29:39,707
Morgan Stanley, 10 billion.

1452
01:29:40,250 --> 01:29:42,293
State Street, two billion.

1453
01:29:42,919 --> 01:29:45,254
Wells Fargo, 25 billion.

1454
01:29:51,303 --> 01:29:54,847
What happened to buying toxic assets?

1455
01:29:55,307 --> 01:29:57,767
- Wasn't that the idea?
- It's too slow.

1456
01:29:57,976 --> 01:29:59,852
It'll be dead before we sort it out.

1457
01:29:59,978 --> 01:30:03,355
So, we're just handing the reins over to you?

1458
01:30:03,482 --> 01:30:05,399
The deal's actually pretty good.

1459
01:30:05,484 --> 01:30:07,735
You turn your nose up at this now
and we have to rescue you later,

1460
01:30:07,819 --> 01:30:09,445
the terms won't be nearly as attractive.

1461
01:30:09,654 --> 01:30:12,114
It's cheap capital.
It's not the worst idea in the world.

1462
01:30:12,324 --> 01:30:14,158
It is for those of us who already have capital.

1463
01:30:14,242 --> 01:30:18,662
We will be non-voting shareholders.
This will be a temporary measure.

1464
01:30:21,541 --> 01:30:23,375
What if we decline to be involved?

1465
01:30:24,252 --> 01:30:27,004
The Chairman of the FDIC
is sitting right there.

1466
01:30:27,672 --> 01:30:28,672
Tomorrow you'll find out

1467
01:30:28,757 --> 01:30:31,008
that you're not as well capitalized
as you think you are.

1468
01:30:31,176 --> 01:30:33,219
What kind of protections
can you offer on changes

1469
01:30:33,303 --> 01:30:34,595
for compensation policy?

1470
01:30:34,679 --> 01:30:38,265
I mean, if the government
is going to become a part-owner,

1471
01:30:38,350 --> 01:30:42,186
does that mean that the government
is going to dictate compensation?

1472
01:30:42,270 --> 01:30:44,355
Are you asking me about your bonus
right now, John?

1473
01:30:44,481 --> 01:30:46,524
I'm running a company.

1474
01:30:47,192 --> 01:30:51,112
If the Fed tells me I can't offer
competitive pay for talent,

1475
01:30:51,196 --> 01:30:54,365
you're gonna launch the biggest brain
drain this country's ever seen.

1476
01:30:54,449 --> 01:30:56,117
Is that the way you wanna run the banks?

1477
01:30:56,201 --> 01:30:58,577
Until the money is repaid to the Treasury,

1478
01:30:58,662 --> 01:31:01,664
there will be some limitations on tax
deductions and golden parachutes.

1479
01:31:01,748 --> 01:31:03,582
- Well, there you go.
- I don't really understand

1480
01:31:03,667 --> 01:31:06,919
why there needs to be
so much tension about this.

1481
01:31:07,212 --> 01:31:10,840
The country is facing the worst economy
since the Great Depression.

1482
01:31:10,924 --> 01:31:16,137
If the financial system collapses,
it will take every one of you down.

1483
01:31:24,688 --> 01:31:26,397
Give me the papers.

1484
01:31:34,239 --> 01:31:35,573
- You can't just sign it.
- Oh, no?

1485
01:31:35,657 --> 01:31:39,243
- Not without your board.
- My board's on 24-hour notice.

1486
01:31:39,327 --> 01:31:41,704
I think they'll go along with it.

1487
01:31:41,788 --> 01:31:45,457
And if they don't, they'll fire me.

1488
01:31:52,090 --> 01:31:53,674
Anyone else?

1489
01:31:59,723 --> 01:32:01,599
Are they gonna do it?

1490
01:32:02,434 --> 01:32:05,102
They're calling their boards.

1491
01:32:05,187 --> 01:32:07,354
- That's a good sign.
- If they do go along with this,

1492
01:32:07,439 --> 01:32:09,690
we should announce
something alongside the injections, uh,

1493
01:32:09,774 --> 01:32:13,027
maybe a program to buy up mortgages.

1494
01:32:13,111 --> 01:32:14,695
I'm not rushing out some half-assed plan

1495
01:32:14,779 --> 01:32:16,572
just to make it look like
we're doing something.

1496
01:32:16,656 --> 01:32:20,075
Maybe we just beef up the restrictions
on how they spend the money,

1497
01:32:21,912 --> 01:32:23,662
something to take the stink off.

1498
01:32:23,747 --> 01:32:26,165
Put more restrictions on it, they won't take it.

1499
01:32:31,504 --> 01:32:33,714
One thing too many for today.

1500
01:32:35,800 --> 01:32:39,053
They almost bring down
the US economy as we know it,

1501
01:32:39,137 --> 01:32:41,555
but we can't put restrictions
on how they spend

1502
01:32:41,640 --> 01:32:44,808
the $125 billion we're giving them

1503
01:32:44,893 --> 01:32:48,145
because they might not take it.

1504
01:33:20,637 --> 01:33:22,137
What's this?

1505
01:33:23,598 --> 01:33:25,224
That is, um,

1506
01:33:26,851 --> 01:33:28,686
a poison dart frog.

1507
01:33:29,437 --> 01:33:32,523
Wendy took it in Guyana.

1508
01:33:45,787 --> 01:33:47,329
Is this yours?

1509
01:33:52,961 --> 01:33:54,670
Al Capone's.

1510
01:33:57,007 --> 01:33:58,382
Eight out of nine are in.

1511
01:33:58,466 --> 01:34:01,010
- B of A is still waiting on its board, but...
- It's gonna go through.

1512
01:34:03,805 --> 01:34:05,556
I'll call the Speaker's office.

1513
01:34:05,640 --> 01:34:08,517
And, uh, we're gonna get you
on the phone with the President.

1514
01:34:08,768 --> 01:34:10,352
Okay.

1515
01:34:14,274 --> 01:34:19,486
Dow is up 900 points
just because we were meeting.

1516
01:34:22,282 --> 01:34:24,408
Well, that's good.

1517
01:34:26,036 --> 01:34:27,911
That's good.

1518
01:34:29,039 --> 01:34:31,081
It was the right thing.

1519
01:34:32,417 --> 01:34:34,001
Absolutely.

1520
01:34:34,127 --> 01:34:36,045
I was prepared for more blowback.

1521
01:34:37,714 --> 01:34:41,508
They didn't have a choice. They knew that.

1522
01:34:43,428 --> 01:34:46,513
Well, I certainly hope that they...

1523
01:34:47,849 --> 01:34:48,891
What?

1524
01:34:51,311 --> 01:34:55,064
I hope they use the money
the way we're asking them to.

1525
01:34:55,482 --> 01:34:59,818
They will lend it out, won't they?

1526
01:35:02,030 --> 01:35:17,795
Of course they will.