>> rose: welcome to the program. tonight from 102 floors up at the new one world trade center, we show you the sights of new york and connecticut and new jersey. >> and the rebuilding of this building, the word i think that was used today was rebirth it's the rebirth of this area from businesses an people and residences all coming back in this year. >> rose: also 102 floors up this evening a conversation with george clooney. >> and i feel that we continually try to do that, which is try to make films that would not be made if we didn't do it. and then-- cuz you know they're going to take it all away at some point. and so when they do-- . >> rose: they will say george who george clooney george who? >> tell them i'm busyment i'm on the phone with anybody but me. and so i understand that. and i know how it works. so until that moment i want to play with it as much as i

can and push the limits as much as i can. >> rose: we conclude this evening with tim geithner, former secretary of the treasury. >> there is this fundamental conflict at the heart of the financial crisis which is the things you have to do if you care about reducing the risk of mass unemployment. or things that at their core are going to seem deeply immoral, unfair to the average person cuz the things you have to do to keep the economy from falling off a cliff keep the lights on the financial system look like you are aiding the enemy. and at their core there's no-- there's no overlap between what works and what is popular or appealing. >> rose: one world trade center, a sneak preview, george clooney and tim quitener when we continue >> rose: funding for "charlie rose" has been provided by:

>> rose: additional funding provided by: >> and by bloomberg, a provider of multimedia news and information services worldwide. captioning sponsored by rose communications from our studios in new york city, this is charlie rose. >> rose: we begin this evening 102 floors up in lower manhattan, from the one world trade center. this morning my colleagues at cbs nora o'donnell and gayle king and i got a rare opportunity to see what you will be able to see. we all remember 9/11. now what has come in that space, a remarkable new building with a wide expanse of new york and more.

here are my colleagues reflecting on our extraordinary experience this morning. >> rose: welcome to one world trade center. i'm sitting with my two fabulous coanchors of cbs this morning gayle king and nora o'donnell. we had a remarkable experience. we did the first ever live television show from the top of the brand-new one world trade center an one world observatory. we are on the 102nd floor. we can see everywhere. we can see up the hudson. we can see down the east river into the atlantic. we can see the physical presence of this great city as you have never seen it before. >> it's so true carlie that the star of the show really is the viewment but what this building represents is so much more than that. and that's what i keep thinking, when you come in this building you can't help but feel what the people feel who are working here, who built it. one guy said to me no hatter how bad a day is when i walk in here no matter how challenging, i look out here and have great appreciation and gratitude. >> i agree. you think about what happened to this city on

9/11 and around the country and the rebuilding of this building. the word i think that was used today was rebirth. it's the rebirth of this area from businesses and people and residences all coming back this area, and the strength of this tower the symbol of it. you know 1776 feet high. the largest in america. the largest in the western hemisphere. i think it's so american right. >> i do too. >> and the pride of the workers who built this, i mean reflecting-- this was more than just a building for them. >> yeah. >> and they did that so if you come and experience this one world trade center when you first come in, you'll see on the walls videos more than 25 hours of videos with the men and women who helped put this building together from the steelworkers to the electricians, many who have family connections who are also builders their stories i think are incredibly important. >> my favorite bite was a construction worker who said you could consider it the middle finger of new york that is one way. other people in the building say it is a metal-- mehta

physical fist bump. >> you can also look out and see the empire state building, the hudson river the east rifer. you can see all the great landmarks of new york. you can also see how this is a tiny island. this si tiny island from this perch. and yet all of this has grown-up over the years the context is amazing. >> i think one of the things that struck me this morning was seeing the statue of liberty. because my grandmother was the oldest of ten kids and came over by herself when she was in her 20s from ireland. came through ellis island. >> rose: which is right next to it. >> right there, to see it from there vantage point very moving. >> there is no misstep there is no bad view. that is the thing. they want people to am could. all the things that charlie nora and i have seen today they want the public to come and he is this. >> i would say run don't walk. may 29th is when it opens. >> also joining me 102 floors up at the new one world trade center actor george clooney. he talked about his life his marriage and his new

movie tomorrowland. >> you and i have been friends for a while. >> uh-huh. >> you get married. >> yeah. >> i send you an e-mail. >> yeah. >> you say to me your return e-mail says i've never been happier, you can't imagine. >> yeah. >> rose: how has your life changed? >> that is a good question. you know, i suppose, well there's some obvious things closet space. >> rose: yes. >> rose: another decision maker. >> oh, a real decision maker actually. much smarter decision maker. i have a great partner. i have a great-- i have someone who i can talk to about anything and usually i would find her opinion better than anybody else's i could ask. and someone who i could-- care more about than i have cared about anybody. so it's really nice. >> rose: i mean i think it was the golden globes she was sitting out there you

know. and you saying what you said how she changed your life and what she meant to you. and then they did a cuttaway of her. and the pride from her was equally strong. i mean it was almost like it is not supposed to be this good. >> i know, well i have to say, we do have a really fun time. we really love each other. we really get along. and that-- you know it's something really exceptional for me particularly. and i think for her too. and we are having a really fun time charlie. >> rose: how long was it between the time that you met her. >> yes. >> rose: and you thought oh my god. >> well, i'll tell you it happened pretty quickly am i knew fairly quickly that i wanted to spend the rest of my life with amalment but you know, i have to say when i asked her you know we had never talked about it. so it was all-- it wasn't like maybe we should get parried. lit reallyly i dropped it on her and she really-- wow. >> rose: this is the ring and everything. >> everything, yeah.

>> rose: where were you? >> is with in my home. and i cued up a play list of some of my aunt rosemary songs and i asked her. and i sort of thought you know why shouldn't i that my aunt rosemary would have sang. at that point i thought maybe that is a good song to ask her. and we go back to the play list now and we laugh about it. it took about 28 minutes before she said yes. she kept saying-- . >> rose: did she say i'm thinking, i'm thinking. >> what is his name? your money or your life. (laughter) >> i'm thinking i'm thinking. no, it was a funny thing though because there was this shall it -- she kept saying oh my god and wow. we just sat there. >> rose: totally unexpected. >> and finally i said listen, i'm 53 at the time and or 52 i think at the time. i said you know you know i have been on my knee now for about 28 minutes so i got

to get an answer out of this. cuz i'm going to throw a hip out. >> rose: i'm not 20 any more. >> i might not be able to stand back up. so it was a complete surprise for her. and it was-- for us, it was just a great you know we just have been happy ever since. everything sort of fell into place, going to venice is a place that i spent a lot of time before. it is great. i have been with you in venice before. >> rose: exactly. but i mean you don't-- you don't expect it. all of a sudden you realize man, i'm ready for this. >> yeah, it wasn't that i was ready for this. it wasn't that i was looking for it. it was just that --. >> rose: in fact, you said you were not looking for it. >> exactly. well n fairness i did say that in 1994,. >> rose: you have a long memory. >> so anyway i feel as if i wasn't really looking at all. i just feel like in walked this person that i couldn't imagine not spending another day with. >> rose: should it be surprised enough that you probably married a woman

smarter than you are. >> the bar is fairly low charlie. that wasn't so hard but it was-- i must say it is very fun to be able to-- she's my spell checker too. i will write things and she'll go-- you don't actually spell it like that. >> rose: it is really-- to marry someone that has a really interesting life apart from hollywood. >> well, the things that she does have great meaning. there are consequences when what she does works and doesn't work. and they're much bigger than the kind of consequences that i deal with. >> rose: human rights as such. >> human rights and just basic rights. >> rose: a shared passion. >> sure, of course. absolutely. i grew up with that ingrained in us. i grew up a child of the '60s which dealt with all kinds of human rights and civil rights. everyone felt that you could singularly be a part of something and have an affect on it.

she sort of proved it to be true. >> rose: -- >> she reminded me of that often. >> rose: this movie. >> yeah. >> rose: you an i both have a pax for the future. >> uh-huh. >> rose: this is a movie about the future. and the ability to shape the future. >> uh-huh. >> rose: tell me more. >> well, bradbury who directed it and wrote it with -- >> he doesn't do bad films. and his look, the way he was looking at it was the idea that-- that we look now at television and we turn it on. and it's as you know it's rough, the news out there it's a tough time for us. it hurts your soul after a period of time. and you see it out there. and it's all these things that, quite honestly we had just as bad in the 60see if you think about between the riots and assassination vietnam. >> rose: vietnam, civil rights. >> everything going on. we thought the world was

blowing up then too. but we had the space program. and there was this thing. i remember cronkite was so excited about by the apollo mission. i remember all of us were just wrapped up in the idea that we could do something. >> rose: it was the president. >> the president. >> rose: we'll put a man on the moon in ten years. >> which is insane when rockets just exist. >> rose: and the russians were doing this. >> they were. and the idea that we did it. we said we can do that. and still to the day we always think of it as an apollo project the idea we could do something in ten years. we still talk about it we only did it the once. and brad's thought was that we've gotten away from the idea that each individual has the ability to change and shape the future. and that sort of the darkest parts of our future that we look at and see are not inevitable. that there are things you can do to change it. and i loved the idea i loved the overarching theme

of it. and i thought if that is a movie he wants to make for a summer film i'm in. i think it's a great idea. >> rose: you play frack a guy who is a boy genius. >> yes. >> rose: went to the world trade center and comes away with a big idea. and then there is a young woman. >> right. >> rose: who you become kind of what? >> well, i think as a young man he's enamoured with her. and sort of fascinated with her and becomes disenchanted as time goes on. and as we see in life you know, there's sort of a corelation between us between those characters and sort of how we feel our progress for the last 30 years in some ways has gone. you know, we-- when i was growing up, we thought we would be flying around in jettison cars by now in bubbles you know. and we feel as if we didn't sort of achieve half of those things. even though we've done you know smart phones the

world is completely different. but there are parts of us that think maybe we didn't fulfill all of those. >> do you think about the fact that technology has taken us so far yet you see things in sudan and other places where you go and where i go, middle east where there are conflicts that are so passionate in their different views. >> sure. >> rose: that a war that never changes nobody is making a difference. >> and i don't know-- i'm not sure, the differences are so instrumental. you know we had great successes with the darfur movement in 2006 2005 where we made the word we the he have gel calls the studentsing i was part of that movement made the word darfur synonymous with genocide synonymous with atrocities and made it harder for that to happen. but what happens when you do that is that everybody slaps

everybody on the back and goes home and says well, we took care of that. and of course it has to be sustained. and it's hard to do that. >> rose: -- >> look at the sub saharan africa right now between the congo ands with's going on in somalia now. we are having difficult times and trying to figure things out. we have you know, i am an optimist and i think that we will eventually as a world, not we as in united states but we as the world are going to slowly figure it out. it just takes a long time. and so i want to be part of the process that when you look back on your life and they say well what did you do. i want to say will with i participated. you know did we succeed probably not not to are for the most part. i never thought we would succeed completely. but i always feel as if well there's a chance. >> that's why you go into

the arena. >> sure, if you don't then it's really to stand back and say well it's just hopeless. but i wasn't raised that way. >> rose: but you have to take your shots too. you can't do everything. >> right. >> rose: because people will say there he comes again. >> you have to pick them. you can't just be that person in every xz at every cause, unfortunately. as much as you would like to be involved in as many as possible. you have to pick them and you have to be invested-- informed on them am you have to immerse yourself, you have to go to the place, spend time. because there are mistakes you'll make early. the mistakes are really, you know, for the best intentions you'll try to help one village which will throw out of balance the whole area. so what you realize is you have to get there and understand what exactly is going on. >> rose: and how do you do what you just suggested make sure that your interest and your participation is not simply temporary, that you have a long and sustaining relationship with an issue that you care about. >> the funny thing. the first time i went to south sudan which was we

were on the border of darfur and sneaking into darfur my father and i went. a little girl was there. and she kept saying, i was throwing up because i had eaten some bad goat. and-- . >> rose: goat can be bad. >> goat can get you. >> rose: you should try camel. >> i can live without the camel. and this little girl came, i was sick and she came up, tiny tiny tiny little girl. and she was holding on to my finger like this. and she was speaking to me. and i is didn't understand. and the translator came and she said when did you say. and she said when will you come back. i said tell her i will be back. and she giggled and kind of walked off and said something. and i asked the translator. she said that's what you always say. and that sort of convinced me that i'm sure that's the truth. that she has seen people like me come and go all the time. so i thought my job has to be more permanent than that. i have to be more involved. we're continuing. i have a-- we have a satellite over the area that

we've had -- now we are doing some interesting stuff. now we're-- because the money can't be used on the international market the these people are still able to buy bombers and rock epts. they're buying them from something-- with something besides the sudanese pound. so we're tracking the money and now and following it all the way through all the banks and how it is laundered. it's been a really amazing project to find where that money is going. >> rose: one of the things about being who you are is that you can go to a prime minister and say can you lend us some helicopters. >> i've done that yeah. you have 33 c-147s. do 11 of them have-- we have three south korean pilots. we need three. >> rose: we can handle it. >> you have-- sometimes you have luck with that. and sometimes you don't. >> rose: no harm in asking. >> no harm in asking.

listen, i think every citizen, not just of the united states but of the world, given the opportunity to meet with a certain people i have testified in front of the senate and asked for things. it's certainly not a right or left issue because the quite honestly there is a tremendous amount of christian right that have been the biggest supporters of the things we're trying to accomplish in most of subsu har an africa. >> why is that, because they simply see the problem? or do they view it as a religious? >> there are several different twists to it. there are a great many people who you know, there is just a great generosity of spirit that they see people having a very difficult time and want to help, this is also with aids in africa was a big deal to them. there is certainly an element of it that is christians versus muslims version. which is one of those things that you always have to try to avoid because it actually isn't the case in most of those places. it really isn't that simple at all. >> your friends with the president.

>> sure. >> you have said that. >> uh-huh. >> and proudly so. >> uh-huh. >> is he doing enough? >> well, that's a good question. is he doing enough i would make the argue that i-- i don't think anybody could do enough. so the answer would be he isn't. but i don't know-- you know president bush did a lot too. and it wasn't enough. but i don't know what you would do. we constantly argue about the differences that you could make here are carrots and sticks and what we're able to use lip do-- dip lo patically not militarily because there is no version that works, we're to the going into the largest country in africa and try to correct it militarily it would just be a foley am but there are things that we can do diplomatically. an we've had some good suggest zses with that ever o the years. there are still things we can hold against them and hold out for them to take. and we have had some success with it we have suggested some.

they have done other things. and you know, it's a long long process. >> rose: talk about your career now. >> now we're in trouble. >> rose: yes, we are you produce things. >> uh-huh. >> rose: you produced argo. >> uh-huh. >> rose: you are producing something for hbo gloria steinham. >> uh-huh. and we just produced a movie with sandy bullock called our brand is crisis which say fun film funny comedy. >> rose: in some movies you simply act as are you doing in this one. >> sure, uh-huh. >> rose: with jodi foster directing. >> money-- . >> rose: just acting there. >> yup. >> rose: some you both direct and act and write. >> yes. >> rose: monument men. >> ides of march. >> rose: how do you choose what you want to do. >> that's a good question. you know grant who is my partner and has been my buddy for 30 some years you know grant very well.

we, from the time we were in acting class in 1982 today we, you know we always thought well, if we ever got the opportunity, we would just do the things we want to do. now it doesn't always work out that you just do the things you want to do. but the ones that we write and i direct and he produces those are the ones he we are want to do. i like the-- we diddides of march which you were kind enough to be a part of. we liked the idea of having this discussion about how do people get elected and what do you do. what are the deals that are made. we liked those subversive sort of story like that. and quite honestly good night good luck was written we wrote that because i was disturbed with our lack of accountability by the you know, by the press as the son of a newsman in asking the tough questions before we went to war. >> rose: before we went to war in iraq.

>> uh-huh. and how we were frightened by the idea of being called a traiter by asking questions which to me i always thought was the most patriotic thing you could do. >> rose: absolutely. and there are is power in questions, as you know. >> yeah. >> rose: your dad in good health. >> great health, yeah. 32 inch waste running around. he does 350 sittups a day. >> rose: don't you put him in every movie. >> no, just the one. >> rose: only one. >> i had him in the last shot of monuments men and i screened the movie for him the first credit is in loving memory of nick clooney. and he said what the hell. i was like well, you never know it's easier to take it away than it is to put it in. >> rose: but for the future in terms of the kind of things, where do you see your life. we have established you have never been happier. >> yeah. >> rose: we have established that you have a variety of interests. >> uh-huh. >> rose: we've established that you can do more than one thing in your own chosen profession. >> sure. >> rose: so give me a sense of where george sees his future. >> well, i think-- i think

that probably it will become more about hine the camera lighting and directing and liss acting. i think that is just a natural progression of actors. it's not much fun aging on camera. >> rose: tell me about it. >> you know. and so i'm fine with that. i'm much more interested in the process of filmmaking than i am necessarily being in front of the camera right now. >> rose: are you growing as a film maker? >> sure i hope. listen, you know you keep trying things. sometimes it works sometimes it doesn't. but the main idea is you have to be interested in telling stories. which i still am. and as long as you want to tell stories that you think wouldn't get made if you don't make them you know that's the thing. i have been given sort of this toy box to play with. and in it i get to make films that studios can't make, directly. they wouldn't just go okay. so i say i will work for nothing and we'll get all these other people and we'll

make it a low budget version of it. and we'll forced to be made. well, nobody wants to do a black and white film about edward r. murrow, quite honestly. >> rose: but you did. >> but i did, and we wanted to and there are reasons for that. and i feel that we continually try to do that. which is try to make films that would not be made if we didn't do it. and you know, cuz they're going to take it all away at some point so when they do-- . >> rose: they'll say george who. george who? >> tell them i'm busy. i'm on the phone. >> rose: he's in a meeting. >> i'm on the phone with february but me. so i understand that. and i know how it works. so until that moment, i want to play with it as much as i can and push the limits as much as i can. >> rose: one person who escaped that as clint. >> yeah, yeah, yeah. >> rose: because he did exactly what are you doing. >> it's true. >> rose: he became a director understanding that at some point there would be a huge demand if he could show that he could make good films with taste. >> right, sure. well, his first one play misty for me. >> rose: the one thing i

don't have in my life is children. >> yes. >> rose: do you ever think about that? >> i don't really. i haven't really. >> rose: really never thought about it. >> i mean i thought about it i suppose. but i haven't really-- it hasn't been high on my list of-- i've been asked it a lot lately because i'm-- because i've gotten married and am doing a movie with kids in it you should see how creative the way they ask me are. you see a qouning boy-- . >> rose: you see why i ask you. you got such a great dad. >> yeah, yeah yeah. >> rose: an are you so close to him you know. >> uh-huh. >> rose: that must be a powerful emotion for you. >> it is. and i'm really close with my mom too. both my parents-- . >> rose: i just know nick better because he is in the business. >> and you see him but i'm really close to may family. >> rose: family is important. >> oh, yes big time, my sister i'm very close to. and i have a niece and nephew, my nephew was just made prom king. >> rose: prom king. >> prom king from the high

school that i went to where i was no named. >> rose: not prom king. >> i was not. >> rose: i was mr. joe college. much better than prom king. >> was this a duke. we have a real-- . >> rose: he went to kentucky. >> i'm a uk fan i'm from kentucky. and so this year's really hard on me because he's been rubbing it in about duke. >> rose: kentucky did not make it past the semifinals. >> no, it did not. but we do have more banners hanging than duke. and that's important. >> rose: great team, great competition. >> it's fun, i'm telling you i had to go to duke this summer. i had some neck issues i have to work on. >> rose: duke medical center. >> duke medical center. >> rose: all right! >> and while i was there the doctors came in and they got me a signed christian laettner picture. just to rub it right in just here, here enjoy that. >> rose: i didn't realize they were that cruel. >> they were awful it threw my neck out. >> rose: it's always goods to see you.

>> you too. >> rose: thank you for taking the time. >> i'm happy to see you. and congratulations on everything. >> rose: and i hope we look at this magnificent city and are you living in london and l.a., that you will at least think about spending more time here. >> oh, i-- i just spent three months here. >> rose: and she loved teaching at colombia. >> she loved teaching there. and i think they liked her teaching at columbia. >> rose: i know they did. so george cloone , back in a moment. my thanks to cbs news the team at cbs this morning the executive producer and my colleagues nora o'donnell and gayle king for allowing us to show you these remarkable vistas from a new place in new york city. >> rose: tim geithner is here, president of the private equity firm former treasury secretary under president obama. he qefer saw the government's response to the financial crisis. in 2007 as president of the new york fed he deskrised a controversial rescue of bear stearns. the following year he was at

the centre of the government's decision to allow lehman brothers to fail. he writs about all of this and more in stress test refleks on financial crisis it is currently out in the paperback. and i'm currently pleased to have tim geithner back at this table. welcome. >> nice to see you charlie. >> rose: can i just clear this up. did you say in the acknowledgment which i missed that i had asked you were you going to write a back and you said no. >> no chance of that. >> rose: no chance of that. >> yeah. >> rose: what does that tell us. >> you know i thought about it a lot. >> rose: and then he died-- decided. >> i wanted to give people a chance to sit in our shoes and look at that terrible mess of choices through our eyes. and understand better, at least, why we chose to do what we did. they may-- it may not convince them that we were perfect, with everything right. they might choose differently but a better bases. >> rose: it is essential for someone in your position to do that. you actually said i thought was really good it talks about the power of questions for me. this is what you said were

the key questions. why did this happen. and how did we let it happen. how did we decide who got bailed out? why didn't we nationalize the banks or let more banks fail? how did we convince the left we were wall street wingmen while convincing wall street we were-- in suits? why didn't we do more or less physical stimulus? why isn't the economy booming again? and what really happened with leeman anyway? couldn't we have put the fire back then? and so in this book and this is a paperback, you answer those questions. >> i try to do so. >> rose: so before i move to the future, so what are you doing now? >> what am i doing now? >> rose: yes. >> i'm working for this sort of classic long horizon growth investing firm with global business, learning a new craft, trying to do something new. >> rose: a good experience for you because people thought you were off wall street and you spent most of your life in public service. >> i was a civil servant initially. so it's a new thing for me.

>> rose: is do you learn different things from it other than this sort of-- doing of, you know investment strategy? >> it's a very different craft. are you fundamentally trying to figure out who has got a really good idea are they able to do it? and sort that out in a world that's full of capital. there is a lot of capital out there chasing a lot of ideas. and it's a different thing. but i'm also doing some teaching at yale and i'm trying to design a kind of a war college for financial crises. or a you know we have the national transportation safety board that goes back and looks at every accident trying to figure out what happened where you might call it like a master craft in the financial crisis management for the next generation of practitioners because these things are terrible and devastating. >> rose: do you think we are significantly better prepared to deal with countrieses that you had to face in 2008? >> we're better in some ways. we're fundamentally better in some ways but we're worse in other ways.

we're better in the sense that the system the financial system that exists today after these reforms after the crisis is a much more stable system. a much more conservatively run system. and we did the most important things you can do which is force these institutions to run with less risk. so you know the world sun certain. things are going to happen in the future and you want them to be more stable against the risk of plausible threats to the economy. or from within the institutions. and i think there's been dramatic progress on that front. >> we're a little worse in other ways, which is that congress in the part of the reforms, took away some of the emergency authorities that were so important in the crisis in preventing a second grade depression. so-- . >> rose: emergency powers for the fed. >> for the fed and f.d.i.c.. >> and you know, there is this thing about financial crises which is you know the things you have to do to protect people from the risk of mass unemployment are deeply unpopular. they seem immoral.

they look like you are aiding the arson-- arsonists and understandly maybe, in some sense. the natural reaction of people is to say you know no more aid for the arsonists. but you know, if you go too far, just like if you were to put fire stations out of existence, you make people more vulnerable in the future. and i think that's something we will have to fix in the future. >> rose: there is enough capital now within financial institutions so that they are, because of new requirements and stricter requirements they are much more likely not to be in trouble. >> yeah, and that's the most important thing. you can't see the future. you can't predict the nature and timing and source of the next crisis. you have to assume they're going to happen. what you want to do is make sure these firms run with much thicker shock absorbers against that uncertain world. and this book is called stress test. one of the most important things we did in the crisis an reforms was to basically say we want you to run with enough internal protections and safeguards so you could with strap something like a

great depression. and in doing that you make a great depression less likely. >> rose: and some of them cried and said you are stunting our growth. >> yeah. i mean we did dramatically change the economics of finance. >> rose: and economics of investment banking. >> we did. and but in ways i think are important and good for the health of the economy going forward. but it wasn't, it wasn't pleasant. and it wasn't designed to be pleasant for the people in that business. >> rose: is actually trying to take some risk out of the system, and make sure that there was protection an important achievement. >> the most important achievement. and it's one of the-- there's two things that determine how bad these crises are. the probability they happen how bad they are. one is how successful you are in building a system with thicker levels of capital, shock absorbers, safeguards against risk. that is essential and very important. i think what we did in that

context is hugely valuable. but the other thing that matters is how governments respond faced with the threat of panic and collapse. and that requires a sets of emergency authorities and tools deployed very aggressively. and in that context as i said, we're slightly, i would say on balance a little worse off. >> rose: if you had-- if that kind of emergency authority was in place in 2008 what would have been different? >> oh, i think that that's a really good question. i think that one of the reasons why this crisis was so terrible was our authority going into the crisis was quite limited. again maybe understandly limited because people are worried that the moral hazard involved and the morality and the political costs of intervention of these crises are so offensive, better not to have that authority but it is a very painful lesson we learned so if we had more authority earlier, than i think we could is done a lot of things.

we would have had a bad recession. and a bad crisis. but we could have, i think made the costs of the average person substantially less. >> rose: would you have saved lehman? >> i don't know how to answer that. >> rose: that is a question because -- >> i don't know how to answer that question. let's think of it this way. what's it's deal? you know, the world's uncertain. you're not sure who is solvent who is insolvent. you certainly don't want to step in and protect everybody. you don't want to do that you have to do a kind of form of triage in medicine. trying to separate out. you know who is fundamentally strong enough to withstand and survive this, and who is so central to the functioning of the economy that it would be devastating to let them fail. and you have to draw a circle, a fire break around them and make sure you can defend that. but there will be people outside that fire break who will be caught up in the storm or caught consumed by the fire. and that's a necessary thing and it probably desirable

thing. however painful it is to say that. but where you draw that inloo, if you have perfect authority, that's a hard thing to say a hard thing to know. >> rose: hank paulson said at the time he didn't have authority to do more. >> my view is again you know it's not like national security. in our country, we give the president of the united states a standing set of authorities. they're not unlimited. they're not unqualified. there's checks and balances around them to respond to an existential threat that could threaten the national security of the country. in finance we don't do that because of the fear and this is what moral hazard is the fear of moral hazard is in finance people think fire stations cause fires. it's not true. >> rose: yeah. >> fires sort of tend to happen. other causes and you need the fire station to put them out. because of that fear we don't invest on the side of the central bank or the president with the type of broad discretion to step in and protect the country for these kind of things. and for that reason we want into this crisis very ill-equipped. and the fed was really the only authority available at

that time. and congress did not give the fed the authority to lend to an institution even if they were important. what congress gave the fed the authority to do is to lend against collateral. even if it wasn't a bank it could be an investment bank f there was a serious crisisment and we thought it was essential to do that. but you had to be able to make a judgement that there is a reasonable chance there was collateral available to cover your losses. in the jpmorgan bear stearns case you know we found a willing buyer strong enough to take on the vast bulk of the risk in bear stearns and we with our authority were able to say okay we're going to finance a piece of-- a small piece of that risk. and we lent against collateral. and we thought there was a reasonable chance we would be repaid and we earned a few couple billion dollars for the taxpayer in doing that. in the lehman case there were two important differents. one is lehman was much bigger. and it was perceived to be much more risky. and the world was much more fragile so there was not this long list of willing

buyers willing to stip and buy-- . >> rose: you saved aig. >> we did. in the aig case, they had a set of businesses around the world that were generating and were likely to do so for the foreseeable future quite a lot of income. and we could lend against that legally. and our judgement was at that time, because the world was so fragile, that where we had the authority to act we would err on the side of acting. but we couldn't, the imperative didn't change the scope of our authority. we just thought in that case we had the ability to use it we should use it. >> rose: as you know david boist is representing hank greenberg suing the government. based on a decision having to do with the negotiations. you were a witness in that. i assume it's not fun to be cross examined by david boyd. but the conventional wisdom is that what he started off with was a case that nobody thought he could win. and now he's looking at a situation where people think he may well win at the district court level.

>> yeah. >> rose: his argument is that the negotiation was too-- was not necessary. it was necessary to do something for them but the negotiations were too hard too huff tough too demanding, the rates at 14% was too high and none of that was necessary. >> it is interesting. if you asked me today, if you told me today i would be sitting here six years from the crisis and we would be being sued in court in not one but two cases for essentially being too tough. >> rose: right. >> on institutions that were at the centre of the crisis i would have found that totally implausible. but right, i think you're stating their case. which is that we were too tough on them. and we exacted terms as a condition for assistance that were unnecessarily tough. but i mean really? i mean-- . >> rose: it is your incede allity that i want to hear. >> the idea that we were too hard on them i find you know, i find it hard to

accept. >> rose: cuz your point is if we hadn't done that there would have been nothing. >> of course not. >> rose: if you had done it at a more generous -- >> a sweeter terms. >> rose: sweeter terms it would have still accomplished that and would not have simply said to the stockholders we now own 80% of what you formally own. >> one great thing about our country is when governments take actions like this you can test them. you can test their merits and legality in court. and that's a good thing. that is great about our country. >> rose: but what are the consequences if he wins. >> oh you know it will be one more step in the wheels of justice. and the law underneath this case has already been tested in one other court, same basic facts where the government prevailed. but we'll work through this. i'm very confident that we did the best thing for the country given the tools at hand and acted appropriately. again, i think that you know this was not designed to be

fun for the recipients. and it shouldn't be-- . >> rose: but was it, that is the question questioned. was it designed to punish them? >> no it's designed to balance a bunch of different objectives, you want to protect the taxpayer for the risks you're taking and to the being too generous. because if you set up a system which is too generous for the recipients of the exceptional assistance and emergency, then the fear is that they will take too much risk in the future. >> rose: this is what i will go on. but this is what warren buffett said. tim's book will forever be the definitive work on what causes financial panic and what must be done to stem them when they occur. and that people have praised what you and hank and ben bernanke did at a moment of great crisis. at the same time people can come and look at it on individual cases. >> which they should. >> rose: and say whether it is ask lehman or aig or the stress test or -- the stimulus. >> obviously we're human. and we didn't have perfect knowledge or perfect choices it was a very messy terribly damaging crisis even with all the things that ultimately we did that got some traction.

was'sed cause we're invested in. what we are trying to do is improve the odds that our successors have better tools make better choices because these things are so devastating. >> rose: there is, there is also this, the idea and you acknowledge this, there is the question you know how did we convince the left we were wall street's wingman while convincing wall street we would from shall did -- in suits. how is this that you and hank and ben were not able to speak to the country in a way that they understood what the stakes were? >> yeah, well it was-- you know, we weren't that good at it. >> rose: yeah. >> but not to take us off the hook. but there is this fundamental conflict at the heart of financial crises which is the things you have to do if you care about reducing the risk of mass unemployment. or things that at their core

are going to seem deeply immoral, unfair to the average person. cuz the things you have to do to keep the economy from falling off a cliff, keep the lights on the financial system look like you are aiding the enemy. and at their core there's no-- there's no overlap between what works and what is popular or appealing. and that's why governments typically, we're a lucky country in many ways. governments typically do such a terrible job of managing these things. and you can see in the last 100 years of history, even in the last six years of history, you can see governments adopt a very different response than we did in the hopes of crafting something more popular with the price of much worse outcomes for their people. much worse outcomes. i mean europe is a different set of challenges. >> rose: i was going to say let's go to europe. but i will say that. so the problem is in a

situation like this, how do you say to people this is going to be painful to you and it may not even seem fair to you and it doesn't seem fair to you because somebody on wall street got bailed out, they will say. look what happened to me on main street. and are you saying the oh sorry about that. we understand. we appreciate your pain. but we have to save the economy. >> yeah. it's a-- again i certainly won't speak for them. i was not great at that. it's very hard for me to do it. never found a way to do it in a way that is compelling. but i think one of the challenges is that these kinds of panics that we have they kind of running the entire financial system that we had in this crisis which is the center of the crisis t happened so rarely. we hadn't had something like this since the great depression so there's no memory. there's no people who live through that. there's no-- there's no experience to help provide a more better foundation for understanding. because it seems so strange and new and rare. and these things were all

fresh to people. i think that made it harder. but you know ultimately the, a neighborhood for effective responsible, i think, moral responsibility policy in this area is no-man's land politically. there's no chance that the right or the left we're going to embrace the set of things that were going to be necessary and out mately were so effective. >> since you mentioned europe, how bad is europe? and what's going to happen to greece and what's going to happen to their membership in the european union, i mean the european euro zone and what are the germans going to do. >> i don't think we know yet. but i would say it's better though. i mean you know their fires got really bad again in really early 2010. and from that period until maybe like late 2012 it was terrible, at the edge of collapse. i think since then they've

been doing a set of things to gradually improve. >> with the new government? >> well, i would say that-- i was talking about greece, about europe as a whole. greece is very hard because you know what the europeans are trying to do is try to make the whole monetary union of europe make it more viable. and that requires a set of reforms that are deeply hard politically for a lot of countries. and if they if they try to protect governments from the need to make those decisions they're going to create a weaker europe. less likely to holding to some they need to be very tough, i think because they have to make sure that in this case, they're improving the incentives for future governments to do some things that will be hard politically to do. that are sort of essential for those economies to work and work together. and i think they're likely to hold it together. i think they've looked into the abyss. looked at the alternative, they don't find it very

attractive. >> it's interesting looking back one more time before we talk about china today and the global economy is one everybody, how long ago was it everybody was worried about the deficit? who is really worried about the deficit today. and what happened. did, in fact the economy perform in a way that you and others suggested so that the fear of the deficit and the debt turned out not to be because of the power within the economy to deal with it? >> well, i think the fear is it's going to come back. because we -- >> we haven't done anything billion structural problem. >> we've done some things but if you look over the decades, we've still got an unsustainable set of commitments which we have to figure out how to bring into balance. but the deficit, the near term deficit came down from 10% of gdp to below 3% of gdp in five years. and maybe more important than that, the changes to how people use health care and provide health care are dramatically slowing the rate of growth in health-care costs. >> rose: a huge part of the economy. >> huge part. those two things together

make even the long-term picture better than it was. but we purchased those improvements in the near term deficit at the price of pretty damaging cuts in a set of core public investments. which were probably going to have to figure out how to repair. because you are being to if you leave those in place two longs you leave the productive ca approximatesity weaker so don't take too much comfort from the fact that we achieved much more progress than we thought we would. >> rose: but nothing to deal with long-term debt we have. >> well, the long-term is mostly health care. that is if we have done a fair amount. >> rose: what is go did going on in china as they look at their place in the global economy. >> i think china that say great question, there is an economy facing really daunting wall changes. you wouldn't trade ours for theirs, you really wouldn't even with all their rising power. but still tremendous increase in their relative economic power. and a lot of uncertainty we all have about what do they want to do with that power.

is it going to be a stabilizing force. a force for good globally? or are they going to have ambitions that will lead them overtime to be more destabilizing. >> in terms of their economic posture or military. >> i meant as hair national security posture. >> because clearly they're doing that now in terms of the forward projection of their power. >> they are doing some of that now. it's hard to know exactly what you should interpret from that. but they will have a dramatic increase from not just their economic but their military capacity over time, what mat ers though is not just that, what are their intentions and that is harder to judge at this time. >> it seems to far they have made some specific decision they do want to play a role. and i think they assume and would you know this you not only spent a lot of time there, but you speak mandarin and you negotiated with them over the four years you were in government. what is your take with respect to zi jinping and what he wants to achieve for china. >> i just don't think we know yet.

i think they're having a debate internally about it. like we have rich debates in the united states. they have a richer debate than people give them credit for. >> rose: what is the debate. >> i think the debate is what do they want to become and how shall they use their power, what are their interests. they are a very pragmatic fundamentally very pragmatic leadership, i think. and you can see on the economic side there is such a deep pragmatism underlying what they do on the reform side. on the national security side you know they're feeling in a way trying to find what their interests are. and again for us the question is how do we improve the odds that they interpret their interests as consistent with you know being a stabilizing force in the world. or do they decide to interpret their interests as requiring more aggressive assertions. >> and what is it about them we don't understand. >> again you know part of it is just that they're a very different system from ours and it's a less accessible system for to us understand because, you know they're not a democracy. they don't have a

consist-- contested. part of it is just because they're having such a rapid change on increasing their relative power such a dramatic change, that i think they don't even know what they want yet. and that makes it harder. >> but my impression is that they are beginning to come be more comfortable with it. and appreciate it. >> yeah. >> i think you see them acting on that basic premise i agree with you. but i think it would be-- you wouldn't want to extrapolate from that to suggest that that suggests underlying these actions, some strategy of aggression destable leadsing expansion, that would be fullly with our interests, it's possible. but i don't think you can interpret that from the things you're seeing them do today which is sort of test the limits of the current boundries. >> when you look around the world, what worries you the most? >> really good question. i think that it's a messy dark sad world we live in. that is the natural state of the world in many ways. and i think that there's a lot out there that you know could damage our interests

and but i think the thing that really worries me is the challenges of politics we face in the yoonteded states today and everywhere, which are getting in the way of governing. and making it possible for our government and we're better at this than most countries are still but it's true elsewhere. and this gap between the magnitude of the problems we face, that only governments can help solve and the capacity of governments to address them is a growing gap. >> rose: have you seen hamilton. >> i have. it's fantastic. >> rose: someone with your knowledge of economics what did you think? it was american history. >> it is great history and of course it's based on the wonderful book by ron chernow which is a fantastic book. and it's the story about an amazing man. >> rose: alexander hamilton. >> and the people around him and the president of washington, it just transform difficult things. the scale of things they did is just amazing.

>> rose: and done in rap too which is very young actors african-american, hispanic, thomas jefferson the man who plays thomas jefferson also playing la fayette it is wonderful. but also you learn things about history i didn't know. i read the book and had him on the show. but until then i didn't know that hamilton was an immigrant. i didn't know hamilton was george washington's chief of staff during the war. >> it's amazing. >> when he was in his late --. and the other thing that was neat about it, it reminded you about how divisive the politics were at that time. and how dip the fissures were in the political system then. and yet, even at that time they found the ability to do things, and you know today you look at what we deal with in politics today. and you wonder how we got to be a great country. but that play helps you remember why we got to be a great country. >> rose: great to you have here. >> nice to see you. >> rose: the book is called stress test it say "new york times" best-seller. it is as "the new york times" said an intimate take on the financial crisis

comprehensible and harrowing. and now in paperback. i look forward to whatever your next book will be. and it has to do with sort of how do you strategize and how do you think about financial crisis that would be a valuable edition as well. >> thank you, charlie. >> rose: thank you for joining us. see you next time. for more been this program and earlier episodes visit us yen line at pbs.org and charlie rose.com. captioning sponsored by rose communications captioned by media access group at wgbh access.wgbh.org

announcer: the following kqed production was produced in high definition. ♪ >> must have soup! >> the pancake is to die for! >> it was a gut-bomb, but i liked it. >> i actually fantasized in private moments about the food i had. >> i didn't like it. >> you didn't like it? >> dining here makes me feel rich. >> and what about dessert? pecan pie? sweet potato pie?