got the wrong idea. i am a experts i just need the blessing oa pen. [laughtery . .

>> and he said, -- so anyway, we did this. i actually had to ask h everything. iust don't know that much about guided missiles, and shot down9 fighter bombers.ñr probablyçzo w1+ñ i don't have n argentinian publisher. and when he wrote his author's note in the front of it, the forward, he said, i have tried to tell my story as if i was recounting it to an old friend, and for this task i cse patrick robinson, who was obliged to se very quietly, very patiently, and do a great deal of listening, none of which are his lg suits. that's what he said in the book. [laughter] >> but we did this.

i really didn't know about -- who does unless they have served in a warship. you don't reallynow anything about it. and firing very -- the fir war fought on computer, you know, firing missiles and all that. very high-tech stuff. since then he has been my adviserriting these navy thrillers and submarine books, and finally when i got t talking to larry about doing this, and reazing i knew even less about finance -- i didn't know what a bond was. i thought it had something to do with roger moore. and i called the admiral, and i said, sandy, i'm about to embark on a book, and the subject about which know absolutely nothing. and he says, as far as i can tell it's never stopped you before. [laughter] >> so, larry and i set sail on

this adventure, and he came over, and he was very -- it was the hardest portrait i have ever done. not only did i not know anything aboutt, i didn't know what his story was i didn't know how we were going to get from a to z. iidn't know the story. i knew this bank had gone bust, and everybody heard about it. andt was very difficult. he had to come over to eland four times, f about nine days each time. and leave -- lefte when he went become to new york, left me to write four chapters, and that was really very difficult. he h my -- my son stepped in as researcher, and they had a computer linepen to each other almost all day, and he sen over massive magazines, journals,

books, the office looked like a minefield, and i was constantly left with 41,000 words to write, and him in new york, and i had a question on every line. d most people would have had a question on every five paces, but i didn't know anything about it. and he was amazingly patient, and he knew what he wanted to do, and he did have an a story that it took incredible courage. he was aking monstrous enemies of people who had a hundred million in the bank and they were just taking money from the organization, all the time making vast decisions that were bringing the company very, very slowly it to knees, and of course larry knew about as much about writing a book of this

kind as i knew about submarine warfare. we had to kind of attack it from -- i was always trying to write at for him, but it was difficul for instance, it quickly became apparent that we had three major themes, and they were, that lehman brothers weren't all stupid. the two men had run the place were spectacularly stupid. that came out as the book goes along. but three time the cleveress people in the country -- there were about ten -- were actually in the boardroom -- the executive committee saying, you have to sto this. this cannot be allowed to gon. his close friend was thumping at the table saying, out there is an iberg and we're going

straight at it. even the titanic swerved. and again and again the were borrowing money and losing money, and i knew they had tse three meetings, larry had the documents where they were warned, we're going to go down for 600 billion in debt. and you can buy the navy with that. and that's is what they owed and they couldn't possibly have paid it back, and there were these three warnings in front ofe, and when i came to write it, this was my part. i had to make it jump, and i remember saying about three things. i said, three times they were ignored. it was probably the wst triple since st. peter denied christ. and that's what a ghost writer is supposed to do gather these things together and make them kind ofome alive. now, the book made "the new york times" list aft five days, and

i hope it will continue. it's a good book. larry was unbelievably brave. i mean, h really spilled the beans. i was always saying to him, are you sure you want to say that? he said, that what happened and that's what we're going to say. and at the enof -- end of it, he picked five of the most important people in lehn brothers, the biggest brains in the corporation who had helped him and who he verified things with, and each one of them read the book from cover to cover, and not one of them made o serious change. not one. and he had told a story that was not only spectacularly truthful, about it was a -- it took a lot of courage to do it, and he did

it, and god knows i was really proud of him. he never once flinched. i said, this guy has to have us both put in a cement jacket. he said, hell with it. put him in one. you know, you're talng about ople who ruined, who ruined thousands of people. they had to leave their bonuses behind and all that kind of thing, which was terrible. people who had worked a lifetime at lehmans walked out and their million shares or half a million shares at 75 bucks was suddenly wort nothing. it was just the most terrible thing you can imagine. now, that really is about as ch as i can tell you all i did was sit and write the story. i will read you a couple of bits if you would like, which will show you what it was like to write this stuff for larry, not knowing that much about it, and trying to make it all spring to

life, which is quite difficult. hang on. this is a bit about when delta went bust. they had an analyst in that firm called james castle, who had beenaying that delta could not survive. now, that's a pretty big thing to say about an airline tha has 145 boeing in the packing lot. sh said, couldn't happen. i tell you a bit about this. jane had been telling us for several months that delta's a caidate for bankruptcy and that 11 minutes after 5:00 on the aftnoon of september 14, 2005, she was proved right. it flashed on to my screens delta airline files for bankruptcy protection, and i swear god the collective heart of lehman brothers skipped six beats.

larry mccart the was not in, and as the bond trader, i had markets to make. i was on my feet in an instance. big joe was right there next to me, armed and ready to trade. dlta's nonconvertible bond. i opened up a line to larry and i could see jane making abee line -- beeline for my desk. she was always there, and there would be panned mope yum as millions of delta bonds were going to be launched on to the market by people trying to get the hell out of. the many of those bondholders were our best clients. we were dutbound to buy them, and millions of dollars worth of delta airlines bonds that no one wanted any longer. holy shit. my blood was pump, alex was

standing right at my shoulder said, quietly, steady, larry, we're ready for this. i looked to jane, who was unsmiling. stay focused. there was 52 cents. no matter how many come up for sale. what larry had once said about her flashed through my mind. jane can tell you what delta airline said and she was once in first class on a morningneath from jfk to berlin and what it costs them. there's nothing she doesn't know about the company. i was in the position of most of the bondholders. ey would do damn near anything they could do to get out. and it would mean an avalanche of selling. millio of dollars depended on my decision, and every eye in the entire floor was trained on us. everyone waiting for my first call, and the price i would buy at and the price i would sell. t to whom. iemember thehone around me

ringing, and then suddenly northwest airlines also declared bankruptcy. it was one of those audible gasps around the floor. the noise you hear in a bill ball par wn a fast ball rips past the batter on a full count in the ninth. jesus christ, i thought the roof was going to fall in. we got hit by northwest bondholders bailg out. it was too late for strategy. the high-yield sales, he hurled his arm into the air and said, larry, i have aig on the wire, and they're a seller. where are you on delta. where are you on five million. for a split second i hesitated. mike yelled, they have 5 million to go that's win i called it, 16.18. and at that point lehman brothers was committed to an

$800,000 busy. standing up the traders, the no-going-bk phrase, and our first trade of delta was now cast in marble. i heard mark cry out the confirmation to the customer. you're done. sonds later, we got hit again. terrance parker on the lean. where are you on delta? five million up. people were desperate, trying t get rid of their holdings. i called th same price, 16, but the words were hardly out of m mouth when we got hit again for another five million and then again. instantly i dropped the price, 15.17, and our client grabbed it. the best bond sales, say, i got silver point on the line. where are you on delta right now, five up? three more sell orders came flashing in. besides me joe was talking in all directions, hit, buy, lift,

10 million up, where are you on the follow? he was a trading machine, and on that day he was at his best. everyone was shouting this, salesmen, traders, mlions o dollars trading hands, all of them in the same direction, outward. i dpped again to 13 and still the sell orders came in, the ratio of sellers to buyers what ten to one. i got h immediate more for seven million larry on the phone bought $5 million, and then my best salesman says i have a buyer at 15. fiv million up. right here was the only buy so far. sitting next to me jane said, quietly, we're stealing tm, larry, they're still wth 52 crepts. trust me. and that's the kind of thing this book is full of. and it's -- that was being run really by larry's boss, and i was goes to read you a bit about

him but i think he is a colorful enough fellow and i have talked long enough. so that is what it was like trying to create that from someone would wasn't in the room, who was across the atlantic ocean, and i'm going to turn it over to him now and he can tell you all about this book. [applause] >> he is a tough act to follow. get this up @ittle bit. i want to thank everybody for coming and spending some of our beautful sunday with us. when i saul the weather forecat i was a little nervous, didn't think anyone would show up. it's nice to have everybody here. we came up on friday evening, made the trip from manhattan and it's always worth the trip. i love coming back to the cape and beingithur family. i grew up here, and the story of

lehman brothers around that weekend of september 15th, you ow, real it was a day at that time capitalism changed forever, our world changed forever, and it was tough weekend not only for though lehman employees but for so many people rson the cotry that didn't really realize that their lives would change, businesses, credit lines have been cut on credit cards, 401ks have become 201(k)s, and most of the problems emanate from one of the most mysterious place on wall street. the lehman brothers floor, and it's a tragedy that never should have happened, and i sting there -- i was down on the mat. i felt lik muhammad ally was standing on top of me and the referee is giving me the count, andhere were so many of us that were down, but i was really

down. i just wanted to dig deep down inside into that reserve that we all have, and to try to make lemonade out of lemons, and i reached out to jane and patrick and they were ne enough to he me out, give me me time, and andrew, patrick's agent, was extremely helpful in articuting the project and helping me understand what we were about to endeavor upon, and i will never forget, as i'm sitting there, the next day on the on the tarmac at jfk, and i think it was a delta flight actually, and you're sitting there, you know, i'm on the tarmac and hear the engines and you'rd racing down the way and i just rlized at that point, my

life is going to change forever, and i really wanted to do this, like we said earlier, to expose the few that hurt so many. this is -- there were so many wonderful people at lehman brothers so many people in the middle of the ship that were calling out warnings. not everybody that wor on wall street is an investment banker beautifuing in five, ten, $20 million a year. it's true if you made it to the executive commitow of lehman brothers, that was like winning the lottery. the pulled down 20 to 25 bones, and they were yes men and women 0 who were silent to richard fold. the beginning of thetory is really one of the most -- what i'm most prowled about the story, y walk into any book

store in the country you see piles of books wherein about the crisis, and at lot of them are academics, and wanted to make this a human story and bring main street inside wall street and help people to understand what actually happens in an investment bank, how it actually works. if you remember the- lehman brothers is58-year-old investment bank. 158 years. lehman brothers survived the civil war, t gat depression, survived world war 1, world war ii, the korean war, the nix impeachment. lehman bthers survive so much that it survived 9/11, but what she couldn't survive was a change in investment policy. the reason it survived i it w in the moving business.

let me explain. campbell soup corporation, 80 years ago, wanted to build their first plant. they wanted to make the first investment, create jobs. they came to lehman brothers and they needed $10 million,nd lehman broths did traditional investment banking. itas a black-tie-in svelte bank, and therates it that $10 million, and gave it to campbell soup and they sold bonds and stocks to do it, and they made a fee, and that fee is a traditional iestment banking fee, creates jobs. that's the moving businessnd what we started to see onhe trading floor in 2004 and 2005 and 2006, you cld clearly see was blood kurdleing scare through the years going forward. lehman was getting deeper and deeper into what is call the storage busines they were takin bigger bets, getting long assets, colmercial

real estate, residential real estate, they cldn't sell, and they were trying chase the big boys. they were trying to chase goldman sachs, blackstone. really wanted to role the dicd and get to be -- we were right in the middle of the back. lehman brothers was the fourth largest investment bank. we h smaller investment banks lower and bigger investment banks above us, and after the glass stiegel actas taken apart in 2000, and patrickid a wonderful job explain what happed. that alead -- the graham lease act allowed the big commercial banks to complete against lehman so put lehman brothers in a very, very dangerous position, because now lehman brothers is small to mid-size investment bank, and now weave citigro, bank america, these large, massive commercial banks with

massive deposits -- you have to remember, an investment bank like lehman brothers doesn't take in deposits. it invests money around the world and sells stocks and bonds, about it doesn't have people'soney in the bank the way bank of america and citigroup do. they have over a trillion dollars of real money in those banks and those are savings accounts and checking accounts, paychecks from hard-working people, and what we started to see in 2004 and 2005 a 2006 on the trading floor of lehman brothers was a very clear increase in leverage. lehman brothers was incasing our debt to try to compete with the big boys, and we got deeper and deeper and deeper involved into businesses and into investmes that were very, very difficult to move as the years went on, and lehman got deeper

and deeper into the storage business. in writing this book, i reached out to so many people. 150 people up and down the firm. and i will never forget in those days in september, october, and november, and especially december, when people found out i was writing this book with the hall of fame ghost in patri robertson, m phone rank off the hook, and the executive committee members were calling me. people i knew somewhat distantly but all of a suddebecame me ve good allies. people on the risk committee reached out to me. people were so upset that this wonderful, wonderful institution had been destroy, and as i peeled back the onion, the one horrifying thing learned was those men up on the 31st floor had a deep, dark secret. they didn't wanto be exposed for all they didn't understand.

the 21st century brought a lot of changes. one of theost dangerous changes it brought us all is 21st century financial products, securitization and the risks that were taking place in the martplace were so much greater. the dominoes were getting bigger and bigr and bigger and closer and closer and closer together. lehman brothers in essence was one big domino, and as i peeled back the onion and spoke to many people throughout the firm, i realized that itasn't just me that never saw richard fold. we articulate this very well in the book. we never saw the man on the trading floor. we never saw any members of the board of the executive committee on the trading floor. it wasn'tust us. it was high-level risk-takaries in the bank,eople that knew,

thoroughly understand credit derivatives and in her words what warren buffet calls financial weapons of ms destruction. he had experts in these areas, and they were not being consulted. we had brilliant, brilliant financial talent that was not being consulted because those men upstairs, like i said, dn't want to be exposed for all they didn't underand. and then through 2006, 2007, we started to see people stand up. brave people. courageous people started to stand up. i will never forget, jim fix in 2005. michael gelband were in a meeting with the traders and risk-takers and research analysts and he started to do something which is very unusual. most people on wall street are very politically correct and also very financially correct in

terms of not wanting to upset the people on the 31st floor, and michael gelband -- i never forget how he started to question these evil financial products in the system, these evil mortgages, mortgages that started out at 2% and then two or three or -- maybe a year and a half later, two years later, were up at eight, ne, 10, 11%, resetting, andhe commissions th mortgage people around our country, the incentives to sell the most evil products, and michael gelband and others were concern that the gdp would be punched right in the gut as the mortgage resets start to hurt families, and as -- you reall at some point have to pay the pipe, and there's so many of these products. i will never forget the warning

about subprime, the warnings -- i never heard of -- i didn't know muc about subprime in 2005, and this ishe first time i was exposed to these words, subprime, these mortgage resets, words all over the american vernacular today, i was ang the best an bravest and smartest people who were starting to call the warnings, and one by one the warnings we ignored and these wonderful people were silenced. at lehman brothers you kept your head down or you lost your job. and i saw a chief risk officer, global risk manager of the year in 2005 in one meeting, one investment banking meeting she was questioning whether or not lehman should get into one of this big lbo deals, richard told her to shut up.

this is the top of culture that we had in lehman brothers, really a culture of fear, @nd the tragedy was that we were going faster and faster and faster right toward that iceberg, and one by one by one, great people ce a lot about were silenced. and there's so many lessons here for us all. i think going forward we need boards of directors that are more accountable. if you think about it, lehman brothers was at the t of the market was a $750 billion investment bank. $750 blion of risk, and we only had 18 billion of real net tangible equity. so we had $750 billion worth of stock, bonds, commercial and residential re estate and only 18 bill0s only real money. that's 44 to one. and the board of directors never complained or said a thing or

questioned thi type of dangerous leverage. our board was filled with inexperienced pegple, silent people, not financial experts, and i think going fwa, we have to have ards of direors -- if you have systematically risky back, a giant domino you have to have financial experts on the board, people that understand credit devatives and commercial real estate. you have to have experts on these boards. and the other thing, i was very enuraged on friday, i noticed that aig had made aove to permanently detach their chairman and ceo roles. in other words, on wall street in 2007, you had a proliferation of ceo that were also chairmen of the board, and patrick, as we were writing the book, h he said he dn't understand much about finance. he said to me, larry, that's really the fox loong after the chicken coop, wouldn't you say? and i couldn't agree more.

you're talking about a situation where lehman was -- had actually become a monarchy. you had men in incredible position of power to the point where they appointed a cfo in 2000, late 2007 tt had no experience ever cfo on wall street ...

>> look at the leverage dollar

around wl street and the different banks. and there be accountability because capitalism cannot work without transparency. we he to have transparency of risk we cannot have investment banks or black boxes. from the bottom of my heart i wrote this book becausee never ever want this to happen again an i still live six blocks from lehman brothers and occasionally 1/3oys per week i walk by and i promise myse and promised myself i will not look up and il not look up a see where we hasuch a wonderful time and we had said jade greet group of people i promise myself

that in the and it always look up and i am so proud i worked at such a great place. thank you very much [applause] >> whos it the u.s. represents the u.s. treasury? that they are supposed to oversee? there was a woman appointed years ago she started to point* all the loopholes where the money was disappearing within our government and she was silenced and removed the issue was finding out where it was going. our government does not want us or did not want to hurt to find it.

and still does not want us to know. dow was will then it in a great position of power and was silenced. >> there are state attory general's every state has an attorney general. those or relieve the chief financial regulator almost the secretary of the treasury they're the most important person in that state in charge of regulation. there have been a lot of state torney generals who have tried to get involved are very tive attorney general's have tried to point* out the horrible business practices of countrywide. you sit on the trading floor of the men brothers and you hear about these genesis of the problem the state attorney general's back in 2006 are starting to question these business practices. was on the trading floor

talking to one of hour best alyst who said the state of south carolina is doing this or the state attorney general of massachetts is doing that. a lot of those people were ignored. one of the tragedies of the failure of the men brothers is tim geithner was head of the new york fed. in those lt days of lehman brothers in september when all of theailout happening but in that last weekend when we hathe best and brightest o sunday said tranfourteen we had our executive comttee begging the government for help because they had helped bear stearns and freddie mac and fannie mae and we wanted help and tim geithner chairman when of hour big break eders and mysteriously fox news has

recently reported his cellphone was turned off that sunday evening when the mayor brothers w reaching out for assistance. lehman broths i hate to bailouts. i despise them but lehman brothe was put to sleep they took the palo employed over the face of lehman brothers. they really did. >> because of a lot of people say it was a moral hazard moment some people wanted to make a stand i think there's a long history of tensions between richard fuld -- richard fuld and hank paulson he was say many year ceo head of goldman sachs if dazed and the wee large competitors goldman sachs is

the oligopoly. merrill lynch, lehman brothers and bear stearns is gone. so these banks are making more money than ever. >> citigroup? >> bank of america, citigroup, jpmorgan and goldman sachs. >> morgan stanley would be number five of. >> how has writing this book change youfinancial career? >> a lot in this sense i will not be on the sell side which means that will n be working at a trading desk with richard fuld. [laughter] or any of these guys. but i find interesting one week ago friday i got a call from steve shaw, i would call him the nuclear physicist type

that really deeply the plate understood credit derivatives and he was s happy about the book in his role and he wanted to thank patrick for the portrayal of the credit analyst did he felt proud and he said wh don't you come up on the trading floor? i went there it was 5:30 p.m. on a friday afternoon. and the trading floor was half full. this is barclays that bought the remnants o lehman brothers brokerage it i the trading floor on seventh avenue i am not at the scene of the crime of back on the scene the sae trading floor are used to worknd i notice the corner office i said who is that man in the corner office? and steve said that is bob diamond price said bob diamond the seal of barclay's capital? he said yes and how things have changed.

in the sense that you have lessons are being lrned you know, how this ceo of barclays capital right there on the trading floor with the best and the brightest paying close attention to what is going on, not on the 31st floor completely away from t battlefield. >> you made a comment that the beginning fact this was the end of capitalm in america. >> not the end but it has been changed forever because first and foremost, you have the fed window the federal government is now assisting banks through their primary dealer credit facility you have investmen banks that are having access for getting help from government that started essentially with bear stearns then you have the t.a.r.p and

all of these things the we passed in september, the initiatives t really help securitization and lending start up again and because you see tse programs with the t.a.r.p and a the talf a goldman sachs and morn stanley are based holding companies. lehman brothers requested that in the-- before the bankruptcy and tim geithner said no and goldman sachs has been allowed but going forward in the short term you will have a pendulum swing were you will have a period of over regulation in terms of minute regulation of capital,ess leverage, less real freedoms because the problem is that things got so opaque and dark capitalism does not work without transparencies so the risks

were so difficult to see that i think the regulators would force more visibility and that will change capitalism foreve >> why beginning in 2005? what hapned before that tt broughall of this change john? >> in terms of the problem? >> deregulation and? >> deregulation is fine if you have good leaders watching the rest. what happened is you have the deregulation and that started that things moving but you haveo remember, before the market cracked in 2007, that summer, we have a 40 month period were the s&p 500 did not decline more than 8% this you have an incredible period of tranquillity it brought on the proliferaon of what i

call the peacetime generals the started to have of major invement banks and commercial banks. chk prince was heading up citigroup and he really was thought a risk taker. he is a lawyer. he have a lawyer running it and have our number two guy, these guys were consumed on the 31st floor with a wonderful things like philanthro, a diversity of birds, richard fuld $200 million art collection, the mayor brothers you have the top. think about it. they are sitting on top of $750 billion of risky and across the street people are consumed with the bizarre things that have nothing to do with all the risk a growing day by day by day.

>> [inaudle] >> they did atehn brothers buds they were annihilated and lost a lot of their wealth. they didut everybody else did not. >> by volume literally >> what is your handle? [laughter] >> i noticed your comments that you are worried about financial conditions would you care to comment? >> yes. i think the patient was on the operating table and getting life-support a couple months ago. we do the patient some experimental drugs the quantitative leasing we had ner done that before we have alwa cut interest rates to revive the economy tt is what we hav always done. we never did quantitative using which really it is an experimental drug.

the economy is on a sugar high because of the liquidity that has been pumped in but we cannot expect the patient on life support and on experimental drugs me able to run the race. so i am just devising caution that we had a wonderful rally that you do have and the bear market an incredible vicus short-term rally which turns into people chasing the next bull market. but things,e willot go back to the old low but i think halfway back but then have a natural progression out of this. >> if we been-- lehman brothers goes back to he any sense how will but today if it bottoms out and it seemed to be a response to the lehman failure? >> i am glad the u.s. that i

despise the bailouts buthen they i have done my best to mathematically figure with the help of some great people when they let lehman fail, that, rember it ag fell the three days later, a merrill lynch, and made the other bailouts incredibly, incredibly more expensive. lehman was let go on sunday night but then aig had the is complicated contracts and a risk that became incredibly more expsive after lehman failed. aig, the initial testaments on theig bailout worth 30 or 40 billion and within a month and a half the government is telling us it will be $200 billion t bail out aig and some of that money goes to goldman sachs because they weren the other side so it

was going on but i think the failure lehman brothers cost the u.s. taxpayer ,140,000,000,000 dub box -- 140 million. you would see a natural on wind. wh should have happened he would bring in a u.s. bancorp, ken lewis when they sad merrill lynch geiner and paulson ne essentially put ken lewis in they have a lot and ordered him to bail out merrill lynch. if you put people in headlocks you could put the seal of u.s. bancorp and said phe reason that is important you can have 700 billion worth of commercial residential

real-estate oil, ld, stocks andonds they had a lot of assets when you have a company that goes into bankruptcy come you have a reorganize the -- a reorganize there come in and they are just interted in selling assets and unwinding their risk and this was the most horrifying of unwind in theistory of all bankruptcy is. no preparation. of the documents, the initial document was only5ages long this is almost a 700 billion-dollar bankruptcy and the initial document that they've presented to the judge's only 15 pages long. this document should ha been pre-hundred pages to articulate how they would unwind theirisk per after it failed to have this and why did that was so nasty that is where when you're sittingt home and you remember how the stock marketent down every day that is because lehman was

then there unwind a it was bringing down dominoes witter the wching dominoes fall and that hurt so many people. if lehman was saved you could have the situation where these assets were sold in an orderly and controlled way instead of the crazy and haphazard and irresponsibly sold the way they were. >> how long will the be before the market recovers? >> honest god warren buett is that even know the answer but. >> 10 years? >>t will not be a the shape recovery people say it will but it will beore like a w shaped recovery that could take five yea. >> or 10 years? >> it could. the s&p 500-1972 was 810 and

in 1982 it was a hundred 10. you have some periods wre it there is low or negative growth. >> if you think having these board of directors is so important area are on u.s. treasury cannot follow the money that the government is spending seven make you have to start somewhere. lehman brothers, whei explaithis to do prick, he gets up at 5:45 a.m. and he is scratching his head he cannot believe, there a hairs all over the place he said you were telling the. [laughte >> making movies with spencer tracy. [laughter] >>n our board of directors.

[laughter] it is obvious what they were doing. they were sitting on top of all of this risk, they had a steamroller and a good thing going they wanted as many silence the average age of the bod was 74? they were from a different era, and admiral from the navy. the biggest 10 at south america? i think goi forward if john mack retires the ceo, he should be should have a requirement that he has to me on tha lehman board so you could have financial experts on these boards and that would back them because lehman was

$750 billion domino with the most irresponsible board and the world. >> when next question is if they were bailed out by the same? >> that is the problem i have with merrill lynch. it is disgusting. meill lynch w destroyed by kelewis come i am sorry bankamerica was destroyed because ken lewis dd not proper understand the off-balance sheet risk that it is one of the largest bks who has innocent people's money, they were investing or products in very dangerous things now camp louis is still the ceo of bank of america even though he lost all of that money. that is the moral hazard and that i why i hate bailoets. but i also feel if you let

people go like lehman brothers, it can rlly hurt a lot of people the way it has program writing this book not just for the men to 83 employees but for the intention of helping may's three i am getting wonderful e-mails and atwitter from peop that they say for the first time i uerstand finance and that makes me feel really good. >> [inaudible] what about the movie? [laughr] >> patrick is rking on that. we do have the aio on cd. [laughter] how do they compel such a part

of private figure? >> is a bit amazing? i don't know if you thought this but darrell issa had theshearings over the last moh than half and he brought up 10 at lewis and ben bernanke and hank paulson and you could see the atttion because now he is out of the half block but his already made these purchases of countrywide, ken lewis the ceo of bank of america boht countrywide first i think under orders and i think he bought merrill lynch second under orders and the nature is they really needed, we joke around, the bank ofmerica became the fourth branch of the u.s. government and he felt it was patriotic and long term be made investments but horrific investments they paid billion for merrill lynch

anweighted but we can have they could have bought it at 12. i cann explain it. >> that would defeat the purpos but the point* was to convince the markets they were worth that much. >> it is a poker game the al wato let everybody addie's they will let them go but nobody else and we will solve the crisis. another deep dark fairy, a lot of people feel they let lehman go because they were sure the t.a.r.p would be passed. i don't think that t.a.r. would have passeif the men had been failed because it did t pass the first vote but two days later. >> will we be gobbled up than just have three banks that we are controlled by? >> that is one of the problems.

that is one o my grea allies in the book there is a scene where there was a meeting with some of good great people pushed up the lehman brothers or were silenced after t ckup in june 2008 they were asked to comeback there was a meeting in alex's apartment, the new leadership with lehman and there is a scene in the book where they talk about that problem of these big banks and really not enough boutiques or creativity. theanks have gotte bigger bigger if the dominoes have gotten bigger and alex leans back and says these banks are too big to fail, they are too big to succeed. i hope in other words, citigroup for bank of america has become so big that you

cannot have a ceo analyzell of the risk and that is one of the dangers which is why i hope they force the banks to break up into smaller banks so you can come pence -- compartmentalized >> that woman's said because we're supporting the and i am guilty, chase citigroup and j.p. becau we have their credit cards, we should have credit unions. >> yes. of those of the great things that he articulates so beautifully and simply the securitization process of lending. when my dad bought our first phone he sat face-to-face with a banker that was a member of the community and fall to in sports and charities and things like at and with the

21st centurq they're broadest the securitizations are you have a lender and icelandic lending money through lehman three mortgage broker and eventuallyo some bus driver in newport beach would make a $300,000 loan with no income buried on his mortgage applications and we do need to go back to the smaller banks. >> that is one of the classics know people with no inacom or new job or no assets. [laughter] >> $400,000 peyear bus driver he did not have to put his then come down as the occupation bus driver? income? 400,000 they all have these massive mortgages they could not possibly pay bac the moment of glory is the

people that led to it to the brokerage house did not care becausthey sold it under lehman and lehman did not care because they sold ito vice land. they that it was some kind of the day wore. [laughter] >> i was listening to patrick d he was very informative and very educational presentation and there is a part where you talk about stockton california and in our country we had crazy lending view had pockets where it was extremely concentrated one of those crazy pockets was stockton and you were telling donny about a scene when things started to break in 2008 y had people leaving homes and taking the copper

wires and everything possible the refrigerators and putting them in the back of the truck and you literally had traffic lights at 2:00 in the morning these people trying to get out of stockton? stock dan california. it is true. there is a massive asparagus patc10 by 20 miles. they jus put up city a massive sprawling because all of these people. >> also arod the whole play is. theyuickly realized something was not right when they worked out they have the hiest amount of illiteracy and the highest demand of crime of any count of any i