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tv   Book TV  CSPAN  November 27, 2009 5:00pm-6:00pm EST

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murphy is for that context and i wonder if you have any vision for how we can restore hope for the farmer. >> the question is from a manacle has lived here all his life, how can we restore hope for the farmer in iowa, given some of, and this is my word and maybe not yours, but plight recalled the sort of deprivations of some of the big agriculture. i think that number one, people have to talk honestly about what happens when for instance a town is financially vulnerable and they have a meat packing plant and the people that buy the
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meatpacking plant come to town and hold the town hall meeting and there is plenty of evidence of this and say we will buy your packing plant, but if we do, the union will be dissolved immediately. and if it isn't, then we won't buy your packing plant. what are you going to say? no? in the case of oelwein they lost 2,000 jobs that were part of -- it was part of their meat packing industry. 2,000 jobs out of 7500 people at that point? the revenue source of that is incredible, right? and unfortunately the fact that so many people had good jobs in a cingular industry is what made them vulnerable. so i think that, you know, number one, people have to talk about things like that, and at the same time -- and part and parcel of that the farming
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component which is essentially that it gets harder and harder to hold on to what you have if you are essentially disallowed from selling your product to multiple buyers, and you know, i mean, there is political precedent for combating this in the form of his theodore roosevelt who was famous for what is colloquially referred to as busting up the trusts, you know, and sort of pushing their rewind button a little bit on capital some away from the vertical monopoly back to frankly a more natural state. and it's not coincidental that
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these companies he forcibly broke up were meatpacking companies and meatpacking is just one form of the farming conundrum that you're talking about. so, you know, but you have to start talking about it honestly first. that's number one. [applause] >> thank you very much >> nick reding is also the author of "the last cowboys at the end of the world." his writings appeared and outside, food and wine and fast company. for more information, visit did you know you can view
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booktv programs online? go to type the name of the author, book or subjected to the search area in the upper left-hand corner of the page. select the watch link. now you can view the entire program. you might also explore the recently on book tv box or featured programs box to find a view recent and featured programs. "new york times" reporter and columnist anrew ross sorkin talks about what you a financial crisis and the government's response. he spoke at credit suisse in new york city during an event hosted by the policy association. it's about one hour. i thought i would spend a little bit of time talking about the process, how this book was created for those of you that have had an opportunity to either read the book or see exurbs, there's been a couple out there now. i thought i could walk you through a little bit of that
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because i seem to get a lot of questions about how and why these people but tell me some of the things they did. i thought i would talk a little bit about the story and really without ruining it hopefully where the surprises are, and finally a little bit about hopefully some of the lessons that have been learned, which was more than anything the goal when i started this project which was i considered what happened over the past year in an odd way industry. you talked about it being a suspense thriller and one of the hard things to do as an author is especially when you know the end of the story of how to construct something so that there is enough surprises and new information and new twists and turns to engage the reader to read the book for me sort of like it probably did for many of you on september 15th, september 15th, 2008 was the monday after lehman brothers filed bankruptcy at 1:45 a.m. in
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the morning. merrill lynch and then sold to banc of america, and aig, i had just finished writing the front page story, was now teetering. it was the new domino list was actually had not been focused on on that time. and i got home and it was about 2:30 in the morning, and i was excited is the wrong word, freaked out is probably closer to the word, and wanted to talk to somebody, anybody about what had just happened. i couldn't even believe what had happened and i sort of had a front-row seat for most of the weekend, because i had been working the phones trying to figure out the story. and so of course the only person i could talk to was someone sleeping which was my wife whom i woke up and was none too happy to hear about any of this. i'm not sure she thought was the interesting or that she cared. and of course to me this was all so dramatic and i told her the whole story and i said you know, it's like a movie, and she is a
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literary agent and she sort of looked at me for half a second before rolling over and she looked and said no, it is like a book, andrew, and so that is how this all began. [laughter] and for the next week or to lie didn't really want to write a book. i'd never written more than frankly a couple thousand words in the newspaper maybe three or 4,000 words and was very daunted by the idea of ever putting together as many chapters as far in this book. actually when i started -- don't be freaked out by the size of the book. i know it's a little thick but that wasn't the ambition. its thick paper but it reads like danielle steel. [laughter] so the next couple of weeks i continued to be reporting for "the new york times" and the story took on a life of its own. it wasn't just a story about lehman brothers anymore or about aig, it was about capitalism and socialism and government intervention and goldman sachs
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and morgan stanley and all of these other things happened, and i guess a week or two later i started really thinking about the book and happily in the midst of the crisis i guess i was a vulture a few well, i took advantage of the crisis and sold this book and then spent an inordinate amount of time trying to figure out what the book could be. for better or worse i actually didn't know when i started this, except that i knew there was a puzzle that needed to be put together and that there was much more that it must have happened behind the scenes than frankly the headlines that i had been riding with others. and my goal in a way was to get behind the scenes and tell almost as a human drama. i covered wall street the last ten years and i thought of this frankly less about institutions in a way that were too big to fail so much as i thought about it as people who in their own we thought they were too big to fail and i wanted to tell that story from a human perspective,
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because i felt so many of these people -- i think from the outside we think of them as infallible, and frankly they are actually -- de mabey wealthy but they are not that different than the rest of the world. and then i spent an inordinate amount of time trying to figure out structure. people think about how do you structure a book. it's something i hadn't thought much about, and you know, people were doing books about bear stearns and lehman brothers and all these things but to me it was about the interconnectedness of these people that on a new, and you have lawyers and bankers and people on all sides of these things 20 ways and backwards and it was how do you tell the story of all these things because in the and they were all connected. and i saw, or resaw a movie called crash, if anybody knows that movie, and that is actually the model for the book, which is that you're really telling the story of three or four or five different plot lines, if you
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will, that all seem to be happening somewhat independently of each other, but of course they are not independent at all and has the story progresses the cataclysmic we in this case come together. and that is the way i saw this and i saw lehman brothers being one strand of the story, dick fould be in another major protagonist of the strand. i saw the whole government hanging tim and ben, i now use them by firstname. i know i probably shouldn't be doing that. and then aig being another strand, merrill lynch being a mother, and frankly when i start i didn't know where goldman sachs and morgan stanley would be but of course they become their own story lines, and jpmorgan oddly enough into the being of the glue between many of the strands because their involvement. i don't think they have their own plot line but you see them sort of pop up back-and-forth. and then i went about trying to get within the up being over 200 people to sit with me for over
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500 hours to really try to reconstruct the record, and that was the goal of this product or in anything was to get for the pivotal moments later, where the meetings word, who was saying what to whom, and i started to doing only a handful of interviews, and i wanted it all on the record. and i sat there with my tape recorder and it was not going very well i must tell you. and people said -- a. person, ceo said to me about three interviews and said bob woodward or jim stewart would never do it this way. if you really are after -- if you want to know what i said to my wife, you know, i can't do this on the record. and so i actually switched in some ways my approach, which was to do this all on a sort of background basis so that
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everybody but have card launch frankly to tell me everything but if you were to ask me whether hank paulson participated in this book i wouldn't tell you and that is how and why i think actually so many people did participate in this book. the other thing doubles remarkable about the experience was just how much people told me and how much -- how many pieces of notes they kept. that is something i didn't expect. i didn't think during this crisis the would have had time to keep notes, b, some of them would be stupid enough to keep notes, and number three, how many people were privy to so many of these conversations, and so one of the things that happened actually very early on was an ad with a ceo, who sat down and he came with his notes from that fateful weekend at the federal reserve. and these notes i will tell you were better than any reporter's notes i have seen in my life. he had paulson: quote.
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he had drawn out contemporaneously at the time where everybody sat at, and at the end of the meeting, he literally hands me the folder says good luck and i said why are you giving me this stuff? and he said for the same reason i took the notes. i thought, you know, this was history in the making, and so i think that for some people, i don't want to see all people because there was a lot of spending that went on leader and we will get to that, but for some people that was about reconstructing the record and some people felt, oddly enough, in that very moment that they were part of history. the other piece of it, which i didn't appreciate as a reporter, and i do this at the paper but not in this way, is once you get to a certain point, there were some people who didn't want to play at all if you will. i would call them up, they would say i'm not plan to do an interview with you. this is crazy.
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why would i do that? there becomes a moment when you can tell them listen, i know you are ed jon house at 10:30 in the morning on this specific saturday morning. i know the five people who were there were these five people. i know that you were eating a chicken wrapped sandwich at about noon and your son called because he was late for his lacrosse game. and when you get to that point in the reporting process, those who are less inclined to participate sometimes feel persuaded. [laughter] -- if you will, that maybe it's a good idea. of course there was also this element of people who were trying to protect or in some cases we write their legacies. people who wanted -- who recognized that maybe this book would work, and if it did it might have an impact on their legacies, and therefore wanted to spin or put their best foot forward if you will.
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and i spent an inordinate amount of time trying to avoid letting those people do that. i let them participate obviously, but one of the great things was that by the end of the process, i almost had to much information. it was like roh shimano, you talk to fifer and people from the same meeting and they give you their different memory of what happened and i literally sit there with transcripts, going through the various quotes and, you know, and is trying to match them and then going back to them almost in this sort of journalistic diplomacy if you will tell everybody was in some agreement and he would sit there and some of these interviews were quite tedious and that i would ask a horrible questions about did you go left, did you go right, what were you drinking, or you finished with the drink? people remember all the details. i remember a guy saying he kept sucking on the ice cubes. so there were these little things, and you're sort of looking for this human element throughout to try to tell the
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story, and not only to tell the story of what is coming on on the street or in washington, but when they get home what do they say and what are they thinking about? and so that for me is the goal to bring back the curtain and tells the story. the surprises to me, you know, when i started the project as i said when i began i didn't know whether i would be able to tell you anything you have not read before. that is why actually worried about the most. so much was coming out in the papers. every day there was a new story, and so how were you going to tell this in a compelling way? and i have to say i got very lucky in that people were much more open than i thought they would be and they started telling me things that actually changed the shape of the book in effect when i first started even before the crash concept came to me i was planning on doing this
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as six or seven days in september. that was my regional fault. and i started finding out, i don't know if you remember going into that fateful weekend you kept hearing bear stearns, i'm sorry, not their stearns but bankamerica and barclays were the ones that had shown up at weekend. well, as you start peeling the on ne bac you realize that isn't the case at all. that barclays was actually approached in april by the u.s. government behind the back of dick fould to take over the company. you find out later that bank of america didn't show up for the first time in september but actually had a secret meeting where kenneth lewis and dick fould met with each other at the new york fed in july. you find out that t.a.r.p. plan that we think or thought was written in september asking for $700 billion was very nearly
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written in a memo april 15th and presented to ben bernanke. it was called break the glass, as an break the glass in case of an emergency. and so, as i started peeling the story back it became clear to me that the story actually wasn't about six days any more, it was about much more, and was a much longer period, and that's when the book for those of you that haven't had a chance to read it, starts the day after bear stearns is sold for $2 a share to jpmorgan. and i use that moment as a sort of an inflection point both on wall street and washington in that it was clearly a major and important policy shift for washington. it created this issue of moral hazard, a discussion we haven't been having in this country before, and it also put pressure on lehman brothers and the rest of the dominoes in ways i'm not sure we even appreciate. for me the spring and summer
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didn't feel that bad. i remember lloyd telling people i think in april april that the worst was behind. i actually remember dick fould saying the same thing, so there was this almost sense of complacency during this period that nothing was happening, but behind the scenes and paulson is calling warren buffett trying to put the arm on him back in march to make an investment in lehman brothers. and so, i try to take you through the spring and summer period as you are marching into the fall, and what you soon realize is a lot of these folks saw this train barreling down the track. and everybody in their own way is trying to get out of the way and of course sadly nobody gets out of the way fast enough. and there is this mad dash effort to create mergers for lehman brothers, to figure out what to do at aig.
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i don't want to ruin it for you but there is a meeting in which i had a reader actually stop me in the street the other day and out when ball willing stat, running aig, literally goes to see tim geithner in august and says you know, we are thinking maybe we want to become a primary dealer, bank holding company or something that might help a month and a half before of course the cataclysm develops. by the way, dick fould makes the same plea in july. of course we now all know one of the ways that goldman sachs and morgan stanley were saved is by turning them into a bank holding companies. so it all comes in many ways will circle. and i think hopefully when you get a chance to see how -- when you get to see the train barreling down the track it may even in a way change your perception of the outcome.
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the other thing surprising to me and i don't know if the people of the audience appreciate like i do, i remember when i feel like the world was about to fall off its axis in the days the market was stumbling. but i didn't really think it was going to affect the real economy, and so there is a moment actually two days after aig, i'm sorry, two days after lehman, a day after aig come in the treasury department and hank's office, where he calls this an economic 9/11, and the conversation is no longer about wall street. it's actually about the next dominoes, and the next dominoes are morgan stanley, goldman sachs, and we are talking by the way about these companies being wiped out by in some of their destinations by monday. and the domino after that was actually the more interesting one that i had not been thinking about at all, which was general electric, and this sense that this was really going to spill over in a different way that big and small companies were not going to be about to admit payroll, next week.
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there were rumors jpmorgan was no longer lending to citigroup. bank of america was no longer lending, even day-to-day debt to mcdonald's franchise fees. that is what we were talking about in this sort of economic apocalypse almost, and so we were trying to read the bricker behind that so you could actually see it was the goal of the book, and i hope -- i hope i've done some of that. the question i get asked and i will open a to questions in a second, is whether any lessons have been where and a year later and i've spent an inordinate amount of time with these people, and i will tell you almost sadly i am not sure that there has been many lessons learned at all. i said this on a couple of other broadcasts before, but many of the people still in charge now think of themselves and even
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call themselves survivors. that's the phrase they use. and they use it in the same way people described cancer survivors. and i think that's actually a very misguided way to think about what happened because i think there is a lack of appreciation in many ways they were rescued by everyone in this room as taxpayers. and i think all of this, the crisis, the story hopefully raises some fundamental questions about capitalism, which we have an exporting so successfully around the world and what these firms and regulation, where the responsibilities are going to lie going forward. because that's the real question. for many years we have done business is operated in the name of the shareholder typically for very good reasons. numbers the question of who is the shareholder when you look at citigroup or bank of america and can you do this in the name of
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the shareholder and what happens when he put the rest of the system and the country at risk. and so i think those are sort of some fundamental questions that do get raised locally as a result of the book but i think those are the questions that are going to be asked and part of the national conversation for many years. the last piece i will leave you with before we start talking with the group is about regulation. are there steps that could have been taken to prevent this or mitigate this? the answer that i frequently received is ten years ago and i would argue the seeds were sown in 2008. hank paulson would probably argue to you that in fact as you are watching throughout the book dick fould runaround trying to make deals and everybody trying to do all of these things that actually he was too far gone.
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and so, the question becomes what were those fundamental issues, and there's a number of flashbacks in the book glass-steagall, the combination of the investment banks and commercial banks, whether you want to have the casino attached to the house if he will. there are clearly questions about capital requirements. how much money does a bank need to keep at any given time? what should the rainy day fund look like and that number had come down to the point there really was no question and i would argue today when you hear about wall street bonuses or profits on the street one of the things that i would hope we would start thinking about is whether those profits and bonuses should be actually put back into the bank for the rainy day. by the way it cuts both ways by doing that because if you don't think banks are lending today if you raise the requirement they will be landing tomorrow either, so it is a complicated issue.
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the final thing, and i think we're starting to see this with barney frank and the geithner proposals is this idea of a resolution of 40, which is the idea of being able to wind down an investment bank hedge fund, insurance company, the lehman, aig and franklin long-term capitalists of the world in an orderly way. the bankruptcy code today is not a very good system for winding the company's down and what you think about happened to lehman brothers it was more the code than anything else because it is within the preceding this cabalism. money got locked up. actually not in the united states but london, in the u.k., and there wasn't just investors that had the money locked up, investors around the world, and part of the spiral downward that week was a result more than anything else of the fact that this money was locked up and all of these investors started having to settle down all of their other assets and it turned
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into this vicious cycle and this fire sale, and so that becomes very, very important. so to the extent that we can actually have a resolution of 40 which would be similar by the way to the authority that the fdic has for commercial banks or the way that the government took over freddie and fannie, which we can talk about as well. on that note, and i hope and we can talk about characters. we haven't really talked about white cats and the black cats. there are some her like moments i thought i would open up the floor to you. [applause] go for it. either or. you can do both. we will get to both. >> to questions.
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first, how is possible, even from point of your propaganda, to talk about socialism, meaning about my intention, if obvious is a government just tried to save capitalism, and second question, you mentioned in your book [inaudible] can you say a couple things about this meeting? >> i'm going to address moscow first because i'm not sure how to address the capitalism question that you raised. but one of the things i spent inordinate amount of time looking at was the concept of the goldman sachs conspiracy. hank's role as former ceo and three-year member of goldman sachs and to the extent there's an argument that he saved goldman or did certain things to save goldman sachs to kill everybody else or what have you. and i will tell you there are moments in the book i would call
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them wind sing slash kringen moments where you say why is this happening, what is he doing? one of those is a scene in moscow in june of 200 eight at mine:30 p.m., and i believe the marriott marquee in his hotel suite with, and you are going to die, i almost died when i first heard this, the meeting with the entire board of goldman sachs. and left of course off the official calendar. and so, you do say to yourself what is he doing? by the way, just to give you the context, goldman sachs has a board meeting and will be out of the year they go do what they call various brick countries, and they had done a trip to the middle east, so this year they were doing of russia. just so happened that hank paulson happened to be in moscow on his own trip, and i do
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believe that the troops actually were coincidental, having now reported this out, and but the problem, if there's a problem, was that between hank and some of the people of goldman sachs, they thought it would be a good idea to consider this a sort of many social reunion. one of the officials actually in fairness to him called the general counsel what treasury to ask is this kosher, and for better or worse the general counsel said that while he hated the optics and he didn't like the way it looks, as long as it is considered a social event and no business is taking place, it is okay. so they have the meeting.
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were they optics are not great and also suggest actually the week after that when there is a real question about what to do about goldman sachs and morgan stanley were as many of you probably nano he went to get a waiver so he could deal with goldman sachs and there was during that fateful weekend, the weekend after lehman brothers, a real push by tim geithner, he wanted them to merge with
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somebody and convinced himself that they could not open this on monday without doing it. in fact, tim became -- some of the ceo's and started calling him a harmony because he would call up. and try to find a matchmaker. [laughter] there was a very funny scene where he calls up lloyd and says you really have to call with citigroup so we're talking about merging goldman sachs and citigroup. and lloyd thinking this call was rewired assuming that tim had called to let him know calls up lloyd and says i imagine you know i am supposed to be calling you. lloyd's says, no, i didn't know you'd be calling me. and i think lloyd is a little frustrated and says there are some people in the world that think we might need to talk or to merge. i'm going to get the lines a little austere.
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and he says, i am very glad for your call. now at this point lloyd thinks he is being put on. he says i'm not calling with any flattery in mind. [laughter] and has it goes. that deal obviously doesn't happen but there is another move later in the weekend two actually merge goldman sachs and wachovia. at one point there is a discussion about actually the government putting up $100 billion to support the transaction. and that deal almost falls apart or ends up falling apart in part because of the optics, there's a discussion at the new york fed for people say this just doesn't make sense, how can we do this? warren buffett ends up getting a phone call from a guy named byron who was a banker at goldman saying which you like to invest in a combined goldman wachovia firm and by the way half the board of wachovia has shown up at this point that
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sunday afternoon to goldman sachs offices to actually potentially vote on this deal. and by the way one other little fact that is kind of fun -- hank ends up calling the only board member he knows that wachovia to say, you should take this seriously. you talk about conflicts and optics and things, i won't say more. and so that deal obviously flows apart but one of the things that warren says to byron which analysts thought was rather remarkable piece said and warren oss this great perspective because he's a million miles away from new york and says, why would you even be asking me this. of course, this deal isn't going to happen. how is it possible that the government is going. >> a deal by goldman sachs when it is being merged with wachovia, the ceo was bonspiel who was a former undersecretary of the treasury under paulson and a former goldman man. of course, the deal, warren as
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the voice is was correct in the deal literally hours later was not happening. i said earlier this idea that the book has very few heroes and that is true but there is one moment that i think is actually somewhat her wrote that i want to talk about witches that afternoon, that sunday afternoon john mack running morgan stanley at the time, now becoming chairman of the firm, he is trying to get a deal done with the japanese with mitsubishi, recall the end of actually doing that deal. and hank olson and tim geithner do not think the deal is going to happen in don't believe john, they don't believe the japanese to move fast, they have a view that this deal is never more to happen in that monday morning morgan stanley is never going to get the deal off and then goldman sachs is going to greater and there for general electric will so they call up
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john and by the way they had a prior call the jaime diamond at jpmorgan and said it will likely to take a look of fine this companies of this is going to be another second bear stearns likely. the column john and now it is ben, tim and hank on the phone, you have the three amigos. [laughter] this is tough stuff because if you know these three gentlemen they can play the heavy on the want to appear in the and they say to john, we need you. to sell your company right now. to jpmorgan for a dollar a share. mind you, the company -- it's a value as of friday was much higher than the value of a dollar a share and john him by the way when someone who i walked into this book not think it would even be a character in its, and clearly by the whitehead also made mistakes over the years in terms of putting on more risk. many of he should have and was himself staring at the economic abyss.
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he says i don't understand why this is good public policy. if we do this deal we are going to lose 45 -- 50,000 jobs in new york and have already lost 10, 20, 30,000 jobs before. and he stands up to them and, in fact, the response from tim is this isn't about public policy, this is about soundness of the system. and john says i won't do it, i want to to the firm, i won't do to the people, and i think that it is a heroic moment in that in truth it's arguable who that morgan stanley would not have existed had he not said that today. and so there are these moments, there are positive moments in what is otherwise a very sad story. but i did not want to raise that moment for you because i didn't want you to think that if you read this book you were going to cry and completely. [laughter] there were a lot of questions and we really should get to them, i apologize. >> thank you.
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four years ago this year i joined bankamerica, very different scenario than the days when we thought we were responsible for people's deposits as well as everything else. moving on with the goldman sachs story and tying it, and aig, the decision the government supporting aig give enough money to make whole all the counterparties and one of the cul-de-sacs play in. >> absolutely and that was something that i spent a lot of time on. moi so here is the sad part. i will make you cry. the decision to put to the first deal together, the first $85 billion deal together was made on tuesday morning in the course of what had to be frankly three or four hours.
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the conversations, the most pivotal discussions about whether to do this, why to do this, how to structure it or frankly shorter than the conversation we're having now. and that's not an excuse but an explanation for how we got where we did in. again there is an optical issue and i am not -- the last thing i wanted is considered an apologist for goldman sachs because i'm not. boyda shows about the meaning. the first meeting on monday and he is there for about half an hour. now, why did he show up and no other co show up? is been a discussion in the press. when you actually see what happens very interestingly tim geithner calls of jaime and says you need to send a team down. hendon says we should get on speaker and conference call and we should call avoided because originally what they wanted to do was create a consortium, a private consortium to solve the problem.
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so jaime and it tim call-up lloyd and say we have the situation, we're going to have a meeting at 1145 and if you are lloyd your thinking to yourself jaime is coming because i was on the phone with them and they're sending the team and this is such a big deal we should send the senior troops, here we go. of course, jamie doesn't come and finally end up about a half-hour into would i think lloyd thinks that this entire situation is now below his paper rating. [laughter] because jaime is there he shouldn't be there. and so he leaves. the term sheet interestingly not enough, the 85 billion in the way it was structured was not written by the government actually. it was written by jpmorgan and the goldman sachs at some level while the less. when they were coming to terms of the day before about how to create a consortium that put together these terms and
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literally the government the next morning when it became clear that that deal was not going to happen took the term sheet and appropriated for itself. i wouldn't tell you there's a problem with that except for the fact that clearly goldman sachs and jpmorgan were tried to take money off the deal. in the government probably shouldn't have, maybe they should have been. by the way of the time if this was going to be the deal of market, if this would have been a free market version we should be following the same thing, the taxpayers should get the same deal that jpmorgan and goldman sachs would have wanted and arguably the deal they would have wanted was also going to put the screws to aig in another way and obviously as you know now even with i think in three recent not only did we have to pump more money in the change the terms completely because there were so treacherous that the company would go out of business all over again so that's not a great explanation but let me answer one more piece
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of that which was where was goldman sachs on the line or what goldman sachs really at risk and i think the answer and you heard it defend itself and say we were hedged and this and that -- it's true and false and the following web. they were hedged, directly hedged and that they bought cbs protection, considered insurance and they bought it very cheaply about a year earlier because they have been having these collateral proceeds with a two board meetings remarkable were they are fighting with price waterhouse cooper saying why we think that the value, the valuations when one thing and aig thinks there's something very different and yet chrysler -- price waterhouse cooper says the both for them. in goes back to this whole issue. why so to their credit they did
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want by the protection and the assurance and carry who was the president of the company actually boasts to some people that morning that if aig goes down we actually may make $50 million to de. so there incentive who think would actually be for aig to die. now that's not true either because there was a sense that if aig went everybody else goes. hall the other counterparties to everything else that goldman sachs has sold it would have represented the destruction of the symptom and there for goldman sachs. when they have also gone out of business like everyone else? perhaps. it is a complicated question but that's the answer. again interestingly we have tadpole senate in the press as being sort of at some level of this villainous fellow who made this decision. i was suggesting you for better
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or for worse and i didn't know before reporting out the story that particular deal was orchestrated by tim geithner and hank was a part of it frankly at all. which for whatever it's worth but that's the answer. it may not be satisfying i know, but it's what the reporting bears out. >> mw did you play out the one of scenario appearing in the minds of the what if they had taken lehman out and save the lehman as they did the bear stearns. willis the wink -- the thinking in the paulson mind? >> there to pieces of this. i always start with the question what if they had let bear stearns go. that's always to me because that is the pivot point for the rest of the story if you will. and interestingly enough i imagine given that lehman stock dropped 40 percent the day after bear was saved and they're
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almost was a run on lehman then that arguably lehman would have gone at of business in march of 2008 and that i don't know, aig probably was going to be in a deposition at that point but you could argue the point. on the lehman front you have a couple of issues that are coming together, a confluence of political pressure. and i think you'll see this in terms of the mind-set in washington at that point. hank had been getting killed, just killed in washington for saving bear, for not taking over fannie and freddie which by the way is only seven days prior so there is an element that we are getting killed and scream that here. there's also an element of the ceo's and everybody else and we have seen this coming, talking
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about lehman for a long time, cleared out that it will be okay and there was a bad. you actually will see ceo is effectively saying we know where this is going to end and be prepared ourselves so at some level there was a sense of almost being embolden to think that things would not play out the way they did. "the new york times" by the way, talking about a public opinion, wrote an editorial that to say after lehman goes applauding hank paulson for letting lehman brothers go. so you can really sense where the public was at that point on those issues. had de saint lehman brinkley my neck story would have been they couldn't have saved it for the same reasons. because political pressure at that point would have been too much. the real question was could of they got a resolution authority in july. good of a forest them to take a deal earlier in the game.
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those of the questions i asked and it's a counterfactual issue but i think had hank paulson announced that the world is going to be on fire in a couple of months and i need to get my foes now, and we saw he tried to do that with a bazooka on fannie and freddie that there would not have been the public support to do that. in that if you recall congress didn't even sign it t.a.r.p. the first time in the world like it was on fire then so i'm not sure you would have gone there. the next question becomes could have did so the company earlier lehman brothers. the answer is clearly -- i would is a clearly -- this answer is there are opportunities to do things and rosie they're not taken or there was no opportunity or that you thought there was or it was going to be under, it's interesting to think as a ceo and again on not apologizing for any of this. but if the stock's trading at $30 a are you prepared to
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announce your shareholders you're selling the company at $20? shareholders don't seem to like that kind of thing. [laughter] so is really much more complicated than i even saw it and hopefully the book it's that sort of a new laws of the issue that a lot of these people were grappling with. as not to say they did the right thing. there were more mistakes than you can imagine but i did want to get you to the point were you understood why there thinking what they thought. >> is wall street in fundamentally different place today than it was a year ago? and the second question. >> i can answer that easily know. >> what is your take on the widespread feeling that wall street has been made whole while a main street and the rest of the country is so suffering for the mess is the degree? >> i feel that average, i have the same -- the first answer is no in one word.
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the second answer is i have the same outrage that you do in that there is this massive disconnect. you hear about the economy stabilizing, you hear about the bonuses, profits on wall street and yet your neighbor doesn't have a job. i think that's the fundamental disconnect and also revolves i think a lot around the idea of rewarding failure. more than anything else because these firms clearly did fail and yet many of them seem like there be rewarded. and some of we probably -- at some level we probably have to support the idea or get behind the idea that some of these firms are doing better. we want to have -- we want to have our cake and eat it too in a strange way which is we want them to do better, we just don't want them to do that much better. so where is that line and i don't know the answer. i think part of the other problem is that the profits that
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are being made are not made because they're handing out mortgages and i think we would feel a lot better if that was the case. with the unemployment numbers the way they are, in the massive debt we're going to be going, i cannot imagine the situation gets better that much quicker. and the real question is will wall street continue on this path and i imagine it will unless something changes. i imagine coming by the way from washington because i don't see it coming from a corner office, the youth was in washington i don't think has fundamentally shifted. i think it is the truth. >> two follow-up on that, it's interesting to hear you describe tim geithner as one of the heavies in your book concerning with his move back to d.c. he has gotten a little bit of reputation in the news as been credits --
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>> heavy to be fair -- heavy on the phone when he wants to press seven to do something, not necessarily -- actually has a little lighter touch. >> i guess my point is that he's very much a mover of what's going on in your book as opposed to in d.c. he is seen as summer since i've been in administration or she liber or barney frank on the hill. i do think that change of perspective is because of change of venue or something that's having influence down there that we're not seeing at this time? >> i misunderstand -- >> you seem to -- you seem that compared to your reporting what he was doing here at the event as opposed to in the treasury he has lost seven of influence may be and am wondering is that a perception or do think that is the case? >> one no, listen, at the time i would tell you that the mover, the one with to influence was
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hank paulson. hank was the mover and tim was the second if you will. obviously then played a huge role but much more so on the monetary power issue then -- he had no interest in being involved in the dealmaking. that was so far for him. he just wasn't involved. today 2i think that he has less power than before? arguably, he actually has more power but obviously the other thing happening is the power play is going on in washington where she lapeyre is asserting the power in much greater voice. larry wasn't there before. larry can be a powerful guy when he wants to be. the dynamic is still grim. i would suggest to you though that he has lost or gained power. arguably given his position he probably has more power than he used to for whatever it's worth.
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>> we can try to do some of these after words in the back. >> and there were supposedly too big to fail. other random writes a column for the new york times and says that lehman, it only lehman had been slightly more risky we would have saved them. >> the answer to that question and at this point i think is no. and i don't like being held hostage by these firms and naturally that's what it feels like it because we do have to continue to prop them up. until we actually have the rights legislation in order to do it and i think that when you
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get to the point where you can unwind these companies in an orderly way we probably should. i don't think that they should be left at this stage, but i think in total and actually have the mechanism to do that. letting them fail simply is a show of populist outrage which we all feel, is only counterproductive. thank you all for being here. i really appreciated, thank you. >> thank you very much. [applause] i hope you are pleased with the lectures and night. and don't forget to that he will be autographing new books. and thank you for coming out. >> andrew ross sorkin is the chief of mergers and acquisitions reporter with the new york times and also the founder and editor of the online
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financial report "dealbook". for more information visit the in allison bartlett latest book specie to -- "the man who loved books too much" is about a rare book dealer who was brought to justice. the event is 50 minutes. [applause] >> thank you for that kind
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introduction and think of her coming. in a few minutes i'm going to read some from "the man who loved books too much" but first i thought i would answer a couple questions that came up frequently while i was working on this project i've been walking down the streets especially early on in the of project and now run into some and i haven't seen a long time and they would say, was going on these days and i will say it's a story about a rare book feet in the man who spent three years tracking him down. and this almost is this a response to -- it's a novel you were working on? and i would explain this is non-fiction. and the second response was, what you're does it take place in and i would explain it is a modern story. so after repeating the same answers over i thought i ought to be more precise about what i'm working on so i don't have to keep answering the same questions so from then on whenever iran into somebody they would say so when are you
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working on i would say it is a nonfiction story about a modern-day rare but they and the man who spent three years tracking him down. and this would elicit a couple responses. so it's a novel you are writing? [laughter] and the second, what year does it take place? [laughter] so i want to clarify once and for all its nonfiction. it is true and it takes place in the last few years. a third question i was asked probably even more than the other two was how did you find your story. well, i found the story while i was visiting my friend one day. he unfortunately, his brother had died several months earlier and among his blogging as he had left a very old book, it was an agent german botanical book published in 1630 that was a medicinal reference guide, sort of like rahm emanuel said. it was gorgeous, where about 12 pounds, had been oppressed class on the side and hand
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painted illustrations up plans for how to. and with the book there was a nut. from his brother that said a friend of my check this out from a library and forgot to return its. and i didn't have time to get around to it so would you please return it to this library anonymously. so when the malcolm pulled this beautiful old book out i thought the most extraordinary book i've ever seen but i also thought it's got to be stolen. who could check a book like this out of the library? so i left his house that day and i kept thinking about this book and at that point i knew nothing about rare books. but i was wondering is the story in the note true, if not how could i find out who this book belong to. i had no idea of there was some way of tracing the old book so the next morning i still thinking about the book so i went to the internet and tied something like stolen rare books and i have to tell you for a
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writer always on the lookout for a great stir this was like opening a treasure chest -- there was one story after the other. some of which have happened years before, some of fannie and freddie, and among all the stories the thieves to i found most interesting are not those who stole it to resell the books and make a lot of money and the majority of thieves do that. but the ones who was really captured by were those who steal at of a love for the books and building their own collections. so one of the stories i came across was written by a man named candice dinner guest who was a rare book dealer in salt lake city and he had written a small piece for an antiquarian booksellers association about how he has spent three years tracking down this thief named in john gilkey. so i called mr. sanders and i said it would you be able to tell your story and h


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