also tonight former treasury are secretary hank paulson and his book "on the brink q and bill and janet cohen on "race issues." recent toyota recalls have questioned the government's enforcement auto safety standards, along with dave, president and ceo of the alliance of automobile manufacturers which represents toyota and detroit news reporter dave who covered the recent congressional hearings discuss federal oversight of car safety standards. we welcome your calls and tweets. it's underway at 8 p.m. eastern live on c san. and here's of portion of one of those recent corrosional hearings, starting with the opening statement of the executive vice president of the toyota corporation. >> my name is yew hiv yam da. i am the chief engineer for our company. i was fortunate to be the chief engineer of the first generation prius. i helped plan and develop the first hybrid in the world and this hybrid led over auto makers to realize they importance of environmentally-friendly technology. toyota testified to congress last year to show as the priority has traditionally been the point. first, 5th,

they did that with president bush and when hank paulson went together and forced congress to approve a $7 billion bailout for wall street. the government can do that. whether we have a process so we don't have to go in and provide that kind of assistance in the future. this is a much better plan. it provides accountability for wall street instead of just a blank check whenever there is a crisises. we don't need to go back to the patterns of the past, ron. >> keith, i would say this. i did not agree with the t.a.r.p. bailout and this administration has used the t.a.r.p. bailout funds for their own personal slash fund. >> we're not going to agree on that. >> if we talk about serious regulatory reform you need to have fannie mae and freddie mac in there. those two entities aren't in here makes me believe that the democrats aren't serious. >> this is a red herring. the republicans have been using this distraction trying to throw this out there. if we don't get the government enterprises in the loop we're not doing serious financial reform. this is a trick on the part of the republicans t

it's an interesting thing here hank paulson in his memoir, former secretary paulson says major financialcrisis in 46 years and jaime diamonds says it's every five to seven and larry summers said four to eight years, you get the picture. there's something happening in the financial system with some regularity. how big will it be next time? that's the key question. tim geithner says these things are rare, but that assumes looking at random occurrences and we haven't changed our structure. i would say the levees, the protecting against flood have been undermined over the past 30 to four years and we should worry about is more regular shocks, identified by mr. paulson and mr. summers, hitting us before it had a chance to strengthen the levees and we haven't strengthen them as i thank you know because powerful players in the financial sector and their allies to not want reform. they see it as contrary to their interests. and it is, i think to the people who run the biggest banks. is not contrary to our interests and the interests of society. secretary tim geithner also says in this regard we

obama, but if people will go back to the speech that george bush's secretary of the treasury, hank paulson made in march of '08, you will see what we're trying to do here. the bills are very close. one we will insist on the house in independence for the consumer financial protection agency. we simply have -- it doesn't work when people whose main job is bank regulation and the safety and soundness of banks then get consumer protection as an afterthought. another one where some of the republicans objected, the idea that you should not be allowed to make large numbers of loans to people and then sell off the entire right to be repaid. we want you to retain risk. if you want to get insurance, you have to keep the risk. if people were allowed to sell off the loan and have no responsibility, they will lend in appropriately. there is the issue that the republicans tried to say is the bailout bill, which is the phonest issue i've seen in a long time. >> that's saying something. >> it is. >> you've seen a lot of phony things in your time up there. >> and this is about triply phony. it says any mon

and credit for getting us out should be shared by ben bernanke, hank paulson, and the obama administration. the bank bailouts will end up costing the taxpayer less than any previous bailout of the financial system in the last 30 or 40 areas. on other fronts, obama has been able to get his health care plan passed, although a majority of americans remain anxious about what it will mean and more crucially, about what it will cost. in foreign policy, the surge in afghanistan is succeeding with some success and he has managed to get countries to take a step forward in preventing the spread of nuclear weapons and nuclear materials. now, obama's poll numbers are still pretty bad, but polls are often a snapshot of conventional wisdom from the past. if the trends i'm talking about continue, the poll numbers will change. on the show today, we have a fascinating set of conversations. to try to understand where the economy is, whether or not this recovery is robust, and whether global trends, what's happening in greece, could still pull us into a second dip, we talk to the man who oversees the financi

bush and secretary hank paulson, two republicans in the republican administration. >> andrea, you're. i vigorously opposed the wall street bailout when the bush administration bought it. and we are vigorously opposing intents to make wall street bailouts permanent under this so-called financial services bill under this administration. >> what do you think of the derivative regulation that came out of the senate agricultural committee just today. >> i'm not familiar with it. let me be clear. you know, i think there is a need, you know, for some of these boutique financial instruments to be regulated, like ordinary, you know, financial instruments. there's more consumer protections we can pass. but i have to tell you, the extension of authority here to the treasury, to the fdic that allows them to pick winners and losers in the marketplace, that keeps alive this deeply flawed concept that some institutions are too big to fail. i just think it's an approach the american people have utterly rejected across political lines in this country, and they want to see us do what republicans are o

and i'm sure if fed chairman ben bernanke and hank paulson had to do it all over again, they would have probably -- they may have made some changes here or there. but the fact is, we were about to go off a cliff. and -- i mean, we were looking at an economic apocalypse and it may have been imperfect and maybe it should have been done somewhat differently. but it did stabilize the credit markets. and it did keep us from going into something that looked more like the great depression just a lot more complicated. but having said that -- and i say this as someone who thought that it was something that was necessary. that we really needed to do. in a million years you will never be able to convince the american people that t.a.r.p. was necessary or good. and it is real, real, real clear in the polling focus groups, that sort of thing, that they don't get t.a.r.p. they don't get the bailouts and the takeovers. they are really, really, really upset about it. and i think in some ways, some of our policymakers -- there may have been a reticence to sort of, you know, level with people about what

the people that kind of our really good in institutions, the geithner's and the bernanke's and hank paulson moynihan, bank of america. there are people that really good within these firms. but these firms don't usually have people sitting around thinking about details, the bad things, what bad can happen, or taking a step back. chuck prince's same something we have to keep dancing until the music is over. that was sort of the attitude on wall street were maybe i'm a little worried about this product that i've got i am selling to investors, but if i don't sell it, if i don't put it on my books, someone else will and i will lose maybe a few cents per share, et cetera. that's a real problem on wall street where we don't really have the people that speak different. we'll have enough of these people they're part of the issue is the hedge fund will because it pays so well. and it draws out -- it doesn't draw talent, the moynihan's and the bernanke, all those kinds of people that play by the rules. the hedge fund guys are very entrepreneurial. it's one reason i enjoyed writing about them. they spe

people that kind of the -- are really good in the institutions, the geithners and the bernanke, hank paulsonmoynihan, bank of america. they're people that really could within these firms. but these firms don't really have people sitting around thinking about the tails, the bad things. what bad could happen and taking a step back. chuck prince is saying we have to keep dancing until the music is over. that's still the attitude on wall street. yeah, maybe i'm a little worried about this product that i've got on my books or that i'm selling to investors. but if i don't sell it, if i don't put it on my books then someone else will and i'm going to lose a few cents in the next per share et cetera and that's a real problem on wall street where you don't really have the people that think a little differently and the hedge fund world pays so well and it draws out talent but it doesn't draw out talent the moynihans and the bernankes and all those kind of people they're as smart as the hedge fund people. it's what i enjoy writing about them. they think a little bit outside the box. no smarter or sharp

secretary robert rubin and secretary hank paulson. >> a lot of people out there are going to ask, withdrop? >> regulators, the politicians, the public are out for scalps and goldman is the biggest scalp of all. >> reporter: goldman sachs knows that. over the weekend, a voice mail from goldman's ceo. the extensive media coverage on the s.e.c.'s complaint is certainly uncomfortable but given the anger directed at financial services, not completely surprising. inside the bank, a belief goldman is being made a scapegoat for the kind of product pushed by many of the big investment banks and there is concern over maintaining their most powerful commodity, their clients' trust. how many people within the bank truly knew about this investment? >> this was not a secret. what is interesting to see is whether the senior people knew details of how this deal was sold to investors. >> one legal scholar said this is going to be war. >> goldman doesn't play nice, everybody knows that. they actually usually feel they don't have to answer to anyone. >> reporter: we've now learned the only employee with

hank paulson in his memoir, former treasury secretary paulson says major financial crisis occurs every 46 years. james dimon, says it's every five to seven years. larry summers says it's every four to eight years. you get the picture. something happens in the financial system with some regularity. how big will it be next time? that's the key question. geithner says these things are rare. but that is overlooking a random occurrences and we haven't changed our structure. i would say that the levees that protect against flood have been undermined over the past 30, 40 years. and we should worry about these more regular shocks, identify them, hitting us before have a chance to strengthen the levees. and we haven't had a chance to strengthen the levy, i think you know, because powerful players in the financial sector and their allies do not want reform. they see it as contrary to their interest. and it is. i think country to the interest of the people who run the biggest banks. it is not contrary to our interest. secretary geithner also said in this regard that we will not lose very much mon

then i bought hank paulson spoke on the brink he was the secretary the treasury and his daily routine had to be much like the one that is described opening then use paper is what is this? i don't agree with everything for much of what paulson did but i think history will judge him well because he was probably the right person in that job at the time. it was a hellacious job and he had a lot of tough decisions to make and he did that very systematically. lehman brothers. sorry. [laughter] actually was not quite that way but that's what people think. in 2008 and paulson and the middle of the meltdown he goes to a meeting in washington and says what went wrong? morgan stanley, a heads of goldman sachs, heads of jpmorgan chase, , etc. come here is what they tell him. things you could find on the editorial page of "usa today." they are not interesting. lack of transparency. lack of discipline. unmanageable risk. uncontrolled hedge funds and the one that i like best, agreed. [laughter] i will buy that. none of these are wrong. it is just that none of them ask the most preliminary question n

it's an interesting thing hank paulson in his memoir former treasury secretary paulson says major financial crisis occurred and jamie dimond, the head of jpmorgan chase says it is every four to eight years you get the picture. if something happens in the financial system how big will it be the next time, that is the key question geithner said these things are rare but that assumes we're looking at random occurrences and we haven't changed our structure. i would say that the levees protecting against the flood have been undermined in the past 30 to 40 years. and we should worry about the more regular shocks identified by mr. paulson and mr. diamond and mr. sellars hitting us before we have had a chance to strengthen the levees and we haven't strengthened the levees as i think you know because the powerful place in the financial sector and the allies do not want reform. they see it as contrary to their interests. and it is letting contrary to the interest of the people that run the biggest banks. it is not contrary to our interest or to the interest of the society. now psychiatry geithner als

. >> is there any chance that paulson, for example, hank paulson, the former treasury secretary, knew that this was taking place? >> the s echec has been very targeted, they named one very specific goldman trader who was involved in that. >> 31-year-old guy working in london, yes? >> who was involved in instructing these products. so again i think we have to be very careful about speculating on how high in goldman this might go. but the fact that goldman is being accused of this, it's a really big deal and i think it also will have a great impact on the financial reform debate. we have seen a real tough thing of the position there and actually they're talking now about saying firms should be banned from trading credit derivatives if they want to have government backing. that would be huge. that would be revolutionary. >> and what do you think is the likelihood of that taking place, that financial firms will be much harshly regulated in the future? >> well, i think now that there has been a lot of momentum behind the financial reform bill and i think that that momentumo the charges wil

and i will never forget the day when a republican treasury secretary, hank paulson, looked me in the eye and all my colleagues and said, capitalism was on the brink of collapse and i -- and i will tell you, mr. president, i asked him a number of questions that day about the role that credit default swaps played in this and derivatives. an to be totally candid with you, he just -- he just didn't have an answer. he just was so concerned about saving off this -- staving off this collapse. now, it was too late -- it was too late to stop wall street's crisis from impacting our -- the rest of our economy. business lending plummeted. now, i know that you know this, mr. president. businesses -- small businesses have created 64% of all the new jobs in the last 15 years. and when those good, strong businesses couldn't get credit, some of them just couldn't keep the doors open. and i can tell you none of them expanded. they couldn't. they didn't have the capital. retail spending fell by 14% driven by historic declines in consumer confidence. and because consumer spending accounts for 70% of our

and i'm sure if fed chairman ben bernanke and hank paulson had to do it all over again, they would have probably -- they may have made some changes here or there. but the fact is, we were about to go off a cliff. and -- i mean, we were looking at an economic apocalypse and it may have been imperfect and maybe it should have been done somewhat differently. but it did stabilize the credit markets. and it did keep us from going into something that looked more like the great depression just a lot more complicated. but having said that -- and i say this as someone who thought that it was something that was necessary. that we really needed to do. in a million years you will never be able to convince the american people that t.a.r.p. was necessary or good. and it is real, real, real clear in the polling focus groups, that sort of thing, that they don't get t.a.r.p. they don't get the bailouts and the takeovers. they are really, really, really upset about it. and i think in some ways, some of our policymakers -- there may have been a reticence to sort of, you know, level with people about what

save the economy from complete collapse and i was in the room, when chairman ben bernanke and hank paulson, president bush's treasury secretary told members of congress, some of you, how serious the situation was. they told us if we failed to enact the t.a.r.p., we risked another great depression. we were staring into the abyss, when we heard it i think there was a collective gulp in the room. ben bernanke talked about it. in his very professorial, nonexaggerated, nonhyper bollic tones and you now how serious it was, and republicans and democrats did the right thing and the bush administration which proposed it signed it into law. so, it is important to emphasize the current financial reform proposal also contains multiple safeguards. to make sure that taxpayers are never again on the hook for rescuing the financial system. i think that is very important. any costs incurred in winding down financial institution, would be covered by the industry, sort of the way it is in the banking industry with the fdic. we certainly can and should work to prevent any more taxpayer bailouts. but we also n

tim geithner was working with hank paulson during that time. there's the consistency and approach related to what goldman people and someone wanted. robert rueben, another ceo just were i got there, just before i got there, was very instrumental in deregulating the problem that is we have under clinton's administration. they have the theories of both goldman ties as well as deregulatory actions no matter who is in control politically that culminate to create a situation where we see crisis and wonder how it happens. >> host: you used w to -- to be with bear stearns as well. >> guest: yes. >> host: what did you do? >> guest: i restructured. and i was involved. when i was bear stearns in london, and i worked on a lot of different types of analysis. i worked in giving suggestions to investors on which government bonds to buy which were better and worse. and a lot of the analytical type of advice. i think when you are in the environment, and that's why i have to look at it from outside and really dissect it, you don't think about the ramifications

if you remember, barbara rubin, hank paulson became treasury secretary. a is more of a bankers banker on wall street. he is being forced to be more contrite with the public now, and that is what we expect to see. host: what can you tell us about wall street, what is the mood up there? guest: first of all, they are happy that good times are bad, bonuses and profits are back. that is, in large part, thanks to the government. government programs have really helped the financial sector. bankers are not overly happy with the kind of regulations that they will face now, but what ever they are, they want them to pass. they hate uncertainty. if they do not know the future, they cannot create future products. the sec has made many concerned because if they win, there could be more suits about financial products, rules about disclosure, and people being charged with wrongdoing. host: were you surprised that a suit was filed? guest: it was quite striking. usually you hear about a case against a firm and the company usually settles. we are still learning about the ba

secretary hank paulson then pivoted quickly and said that will not work.o instead we will put money directly into the large financial institutions. we did that. they are now making money big time, paying out those big bonuses, but the rest of the economy is still struggling, and foreclosures continued to climb. host: so what is next with tarp? where are we and where is it headed? guest: 4 the bank of bailout part we're getting a lot of that money back. we seem to be doing pretty well. there will probably be some that will not pay. whether or not the automobile companies will be able to pay depends on whether consumers buy them. whether or not they have a good product and a good business model. there is still trouble with aig, wondering whether we will cover all that money. most of the big banks are coming back. that part of the program has worked. there are other pieces dealing with small-business lending, and in particular with mortgage foreclosures. that part of the program has been much slower to get started. it is not that the oversight panel is trying

hank paulson, who was the former ceo of goldman sachs -- >> host: when you were there, right? >> guest: when i was there. of course, the treasury secretary that was involved in a portion of the bailout. the other person, tim geithner, was working with hank paulson during that time, so there's a consistency and approach related to what goldman people and someone like paulson wanted. robert rubin, another former co-ceo of goldman sachs before i got there, just before i got there, was very instrumental in deregulating the banking system to deinvolve into the problems that we now have under clinton's administration. they would have these series of goldman ties as well as deregulatory actions that culminate to create a situation where we see crisis and then wonder how that happens. >> host: you used to be with bear stearns as well. >> guest: yes. >> host: what did you do for them? >> guest: again, i've always been involved in structuring, therefore, i do know these very well. and i left to write about them, but i wasn't uninvolved. and when i was at bear stearns, it was in london,

when former treasury secretary hank paulson decided to let lehman brothers go into bankruptcy, our global credit markets froze and creditors and counterparties panicked and headed for the hills. instead of imposing market discipline, it only prompted more bailouts and almost brought down the entire financial system. it ultimately took 18 months to close out the case on lehman brothers, an eternity for financial institutions that market-to-market and fund their balance sheets on an intraday basis. bankruptcy is even more an unattractive option when one consider lehman was an investment bank, while today's megabanks operate under the bank holding company umbrella. it is virtually impossible to have an integrated resolution of a large and complex bank holding company. the bank subsidiary would go into fdic resolution, the insurance affiliates would go into state liquidation procedures, the securities affiliates would go into chapter 7 while other affiliates and the overall holding company would go into chapter 11. a plan this unwieldy is no plan at all. in fact, the only way to truly elimina

i was in the room when chairman bernanke and hank paulson, president bush's secretary, told members ofcongress just how serious the situation rise. they told us that if we fail to enact the tarp, we risk another great depression. we were staring into the abyss. when we heard it, i think there was a collective goal in the room. ben bernanke talked about it and is very professorial, and you knew how serious it was. so congress came together and did the right thing. republicans and democrats, and the bush administration which had proposed it signed it into law. so it is important to emphasize that the current financial reform proposal also includes multiple safeguards to make sure taxpayers are never again on the outlook for rescuing the financial system. i think that is very important. any cost incurred in winding down financial institutions would be covered by the industry. sort of the way it is in the banking industry with the fdic. we certainly can and should work to prevent any more taxpayer bailouts. but we also need to close the book on the last one and make sure that taxpayers get

guest: this guy john paulson -- let me note, he has no relation to hank paulson, former treasury secretary, he's unrelated to him -- john paulson has had a really interesting creemplet he's been in banking a long time, but he was kind of unheard of by most people until he figured out how that there were cracks in the housing market and he mounted a huge short position against the mortgage market n. 2007, that position fielded him $3.7 billion personally in a personal profit. so he really scored big on this. he was a big client of goldman, and he went to goldman, as well as to other banks, and asked them if he could help design mortgage securities that he could bet against, because he wanted to bet against more and more of them because he was so sure of his bet and he wanted to do it bigger size so that he would make more money when housing collapsed. host: this sounds like going a horse track and convincing the horseracing establishment to set up a race. you're going to help set up the race, and then you're going to control the gambling on the horses. >> so, you know, every day people come

secretary hank paulson then pivoted quickly and said that will not work. so instead we will put money directly into the large financial institutions. we did that. they are now making money big time, paying out those big bonuses, but the rest of the economy is still struggling, and foreclosures continued to climb. host: so what is next with tarp? where are we and where is it headed? guest: 4 the bank of bailout part we're getting a lot of that money back. we seem to be doing pretty well. there will probably be some that will not pay. whether or not the automobile companies will be able to pay depends on whether consumers buy them. whether or not they have a good product and a good business model. there is still trouble with aig, wondering whether we will cover all that money. most of the big banks are coming back. that part of the program has worked. there are other pieces dealing with small-business lending, and in particular with mortgage foreclosures. that part of the program has been much slower to get started. it is not that the oversight panel is tryi

you have hank paulson, pond by george w. bush, the treasury secretary, former head of goldman sachs, involved in all of this. we've been watching the testimony of robert rubin with citigroup, earned $100 million over the last eight or nine years, former treasury secretary. and you have people outside of wall street saying, what is going on here? guest: yes, and you have bob rubin proteges now running the treasury support, larry srms in the white house as the chairman of the national economic council, so it allows people to believe that goldman sachs had friends in high places, that the bailout was arranged because they wanted it, and that's what -- that's a conspiracy theory, though. you can't prove that, and goldman doesn't want people to believe that, so this was part of their attempt to convince people that they had some kind of fix in with government officials. their point of view is that they actually did not need a bailout, that they were completely hedged, that their exposures were covered. when a.i.g. failed, or when

and i'm sure if fed chairman ben bernanke and hank paulson had to do it all over again, they would have probably -- they may have made some changes here or there. but the fact is, we were about to go off a cliff. and -- i mean, we were looking at an economic apocalypse and it may have been imperfect and maybe it should have been done somewhat differently. but it did stabilize the credit markets. and it did keep us from going into something that looked more like the great depression just a lot more complicated. but having said that -- and i say this as someone who thought that it was something that was necessary. that we really needed to do. in a million years you will never be able to convince the american people that t.a.r.p. was necessary or good. and it is real, real, real clear in the polling focus groups, that sort of thing, that they don't get t.a.r.p. they don't get the bailouts and the takeovers. they are really, really, really upset about it. and i think in some ways, some of our policymakers -- there may have been a reticence to sort of, you know, level with people about what

make sure washington understands just how serious the situation was and i think larry and tim and hank paulson and a bunch of people here who to date you can second-guess some of the things that paulson and geithner did but last -- but that morning, nobody knew how things would turn out and they have to make a very big decisions and you have to bear on the side of throwing as many things at the problems you can and hopefully one of them will work. i think history will show that they got this country through a very difficult time. my perception of all of this financial crisis, and i did not mean to make light of those who lost their jobs or houses, because it is tragic. but why did we get into this situation? i would blame everybody. we all wanted more credit, easier credit. we were out there encouraging home ownership as a social policy and incidentally, 90% of the people that got their homes would have not gotten without this expensive programs still have their homes. the matter how tragic the 10% is, i think history probably show it was a good thing for america to encourage homeownership and

i was in the room when chairman bernanke and hank paulson, president bush's treasury secretary, toldembers of congress, some of us just how serious the situation was. they told us if we failed to enact tarp we'd risk another great depression. we were staring into the abyss. when we heard it i think there was a collective gulp in the room. ben bernanke talked about it in his nonexaggerated, nonhyper tones. so congress came together and did the right thing, republicans and democrats, and the bush administration, which proposed it, signed it into law. so it's important to emphasize that the current financial reform proposal also contains multiple safeguards to make sure taxpayers are never again on the hook for rescuing the financial system. i think that's very important. any costs incurred in winding down financial institutions would be covered by the industry. sort of the way it's done in the banking industry with the fdic. we certainly can and should work to prevent any more taxpayer bailout, but we also need to close the book on the last one and make sure that taxpayers get back eve

paulson talks about his new memoir "on the brink" with berkshire hathaway warren buffett. he talks in response collapse. this event was part of the greater omaha chamber of commerce 2010 annual meeting. >> well, hank i want to thank you for coming us. you honor us. i should declare right off the bat that i am a friend of hank's. i have been so for some years. i admired him before he took the job. i get my ear him a lot more after the job is done as the secretary of the treasury. the name of this book is "on the brink," and that is exactly where we were in september and october of 2008. at that time, our economy, our financial world went into cardiac arrest, and we had four people in the operating room we were fortunate as a country to have in place. we had hank, we had been bernanke, we had tim geithner and sheila bair the head of the fdic. i really -- i know a lot of people in finance and a lot of people in business, i know a lot of people in government, and i can't think of for that would have done a better job of getting us through that. now it's kind of a fashionable to look back and pick at one aspect or another of what was happening then, but our country's financial system froze up during th