. >> his whole stream and hank paulson's strategy and bernanke's strategy will be we will be ensuing confidence into the system broadly. the second you don't, it will be harder to give it to everybody else. therefore the whole thing doesn't work. do you agree with that? >> that's what they thought. but what i was arguing at the meeting is the opposite would occur. we were a aaa rated bank. the stock market went down by 40. the book is written after the fact. >> and he should acknowledge that piece. >> he didn't even acknowledge what you said. he said in the book -- to me when i said i don't want or need 25 billion, he quotes himself saying you need more capital than you think. >> right. >> and i responded that you don't understand that we have more capital than you think.

in fact, hank paulson, former treasury secretary, even came out and said in his memoirs, he said the russians approached the chinese and said if we dump all our holdings of american debt now, we can crater the american economy. and, in fact, the russians did, the chinese did not. but the russians did, and it worsened our economic situation substantially. >> host: you've got a follow-up, "game plan: how to protect yourself from the coming cyber economic effect." >> guest: well, as a part of my research i not only did what happened in 2008-2009, but i got into the chinese doctrine which was written in a book called unrestricted warfare, two senior colonels in the pla wrote this in 999. and they -- 1999. and they said the best way to to beat america is cyber attacks on the infrastructure or ruining the current is i. so i -- currency. so i not only looked at what happened in 2008-2009, but i looked forward to what could

hank paulson and ben bernanke and i, we were completely committed and worked well together. we debated but were on the same page. going into that weakened, you could hear the pressure they were under politically from their political advisers to try to stand back and not step in preemptively and create more failure. ultimately, i think we were completely on the same page and we worked very well together and took enormous risk in protecting people from the risk of a great recession in that context. >> charlie: was there an idea after bear stearns we have to say to this wall street community we're not out here to rescue everybody? >> it's the right thing to say because you don't want people living with the expectation they can expect -- >> charlie: and how powerful an argument in terms in your own mind was that in terms of the decision not to rescue? >> it's the paradox of the crisis. it had no relevance to lehman. in lehman's case, the problem was we had no willing buyer. financial crisis aren't like national security. we don't equip the government, president of the united sta

hank paulson said we were three days away from atms not working. >> three days away? >> three days away. people were buying gold and talking about burying it in their backyards because of the expectation they would have to rely on that. >> what did europe and asia say? >> in some ways, it was worse around the world. we are a very strong country. the panic we experienced was being replicated around the world. you saw trade finance stopped, just like this. immediately. in some ways, that made our crisis much harder, because with the world much weaker, and the world fading as we were wrestling with our crisis -- >> then comes tarp. as you know, people look at this and say the problem was you had to do this for the financial system, and the other view is that the bad guys got away with it. they set the fire and we took care of them. how do you see them now in terms of whether you created, because of your mindset, because of where you had been, because of the people you knew, that there was a better way of rescuing the financial system? >> i have listened to these debates

she let there, the former fdic chairman and hank paulson, the treasury secretary, now we have tim geithner, who was at one point ahead of the new york fed and moved over to be president obama's treasury secretary. we see an effort here to set history. there will be a number of others ,oming out -- ben bernanke currently at the brookings institution working on his book now. also barney frank, the democratic congressmen who led the house effort on tarp will be releasing one soon. as you well know, these books and movies can be equal parts history and sometimes they're just put out to settle scores. what former officials have fared the best so far? >> that's a great point. the insider account is as washington as a gets. it's not even the people writing them, it's people participating anonymously. i think what you've seen from tim geithner in his public comments and you see in the book as well, they are trying to get their viewpoint of history on the record. they want people to know where they are coming from because as you and i have talked to people who officiated in this -- who participated

hank paulson testified that he wanted to testify only about china. he didn't want to talk about the subprime issue. i said fine. i knew my colleagues didn't spend a lot of time on china. we got on the subject matter of the mortgage, the growing problems of mortgages. we had 90 hearings in 2007 on the subject matter. some of the first witnesses were people actually cap lady what they thought this could result in in terms of foreclosures in the country. the first witness talked about having one million foreclosures. they were highly really fueled -- ridiculed as being engaged in hyperbolic political talk were nothing like that could ever happen. we learned millions of foreclosures happened over the coming years. despite that activity, it was a refusal to it knowledge the growing problem -- to acknowledge the growing problem. in 2008, you have bear stearns. many thought this was a on e-all problem. a ludicrous proposition when you think back. with the book talked about was a wonderful in september of 2008, everybody rallied and save the country. where w

in 2006, hank paulson says this in his memoir, he told the president he wanted to try again. a lot of the president's people said, no it's, it's too much trouble. he got the right to do it. he talked to us and fannie mae and freddie mac were reformed and he was given the authority he wanted in the first two years of democratic control. i mean, that's -- what happened is you have this general deregulatory view. in 2006, as chris and i were about to become chairs after the 2006 election, i was asked to go to a chamber of commerce conference at which they were discussing the serious problems facing the american financial community -- overregulation. people go back and look at it. they were complaining there would never again be as many initial public offerings in america because we were too stringent. sarbanes-oxley, etc. chuck schumer and mike bloomberg commissioned a report for mckenzie saying we had to loosen it. harvard law school. so as we took office, there was a staunch defense on the part of people who said they were the market defenders of an unrestricted subprime regim

hank paulson said his signature policy pulled worse than torture and the president said he was treatednt. these are some barbs timothy gijener received. in the new book, stress test out today. geithner was tasked with the impossible, fixing an economy on the brink of collapse. his solution, to spend $700 billion of taxpayer money to bail out wall street's biggest banks as sparked populist fury. geithner said washington insiders warned him he may never be able to aswaj people's anger. >> the basic reality is that people wanted blood. and you could -- you could take your pick. you could take out your favorite investment banker and slit their throat in the alley and the next day people would want more. >> and he leaves behind an economy that's still not a clear cut victory. >> what do you make of where we are in the economy and what do you think of the markets? >> i think the country still has a lot of challenges and we have very high rates of poverty and tremendous increase in equality and americans as a whole feel less confident that they are going to be able to build a better life for

so it was a perilous moment, hank paulson said i think justifiably that we were three days away were from the atms not working. so we were very close, it was happening around the world. around the world. and you know, i tell in the book about how you can hear really the giants of the global economy, some of the strongest institutions in the world, you could hear the fear and the panic in their voice. because anybody living in that world at that time, running a business at that time, knew that they were at the edge of losing the capacity to function. >> you conclude in your book that you may have helped save the economy that lost the country what dow mean by that? >> i meant, the thing about financial crises, the deep panics like we face is the things you have to do to protect people from the risk of mass unemployment are deeply unfair and totally counterintuitive because they involve doing things that look like you are rewarding the people, the arson and it's a tragic inherent thing in effective response to panics because if you don't do that then the risk is much more damage to the

. >> his whole stream and hank paulson's strategy and bernanke's strategy will be we will be ensuingdence into the system broadly. the second you don't, it will be harder to give it to everybody else. therefore the whole thing doesn't work. do you agree with that? >> that's what they thought. but what i was arguing at the meeting is the opposite would occur. we were a aaa rated bank. the stock market went down by 40. the book is written after the fact. >> and he should acknowledge that piece. >> he didn't even acknowledge what you said. he said in the book -- to me when i said i don't want or need 25 billion, he quotes himself saying you need more capital than you think. >> right. >> and i responded that you don't understand that we have more capital than you think. and my point of all of these problems is these decisions were being made by people who really didn't understand the risk in financial institutions. he was head of the new york federal reserve and did not snow something that everybody else knew, that city was in trouble. >> and he does say in the book that bob ruben's time

that he was more out in front on trying to do something for lehman brothers then ben bernanke and hank paulsonght then perhaps we knew at the time. at the end of the day they reach the same conclusion, the -- that there was no way for the them legally to step in. >> another surprising revelation in the book, larry summers nationalizing the institutions and kicking out the ceos and getting rid of the board the way they did with fannie mae and freddie mac. thehere was he on this? >> conversation took place. spoke specifically about citigroup. they didd of the day not have the cash to do it. >> that's money, that was already up there. 700 billion was in the offer. >> does he have any regrets about missing an opportunity to perform the financial sector for the better? >> the other critique made is there was a moment he could've made everything different because everything is pretty much the same now. >> so far he expresses regret that he and other regulators did not see the price is coming sooner. the fed he that should have. i sense there were opportunities within dodd frank. he did not like ever

i was sort of lucky at that point in the fall of '08 because hank paulson and ben bernanke had to carryth people about the challenges without adding to the fear and the loss of confidence. >> reporter: housing remains the story. the prices have risen faster than income in this country. and affordability is now becoming a problem. and you say the one thing you wish you had done was to help the homeowner more. >> i wish we'd had the ability and the capacity and the resources and the authority to do more. it is gradually healing. it's just you going to take a while for that to happen. >> reporter: how long? >> if you think baseball season, most people would say it's still early innings in housing. it has a ways to go to get back to what people feel is a little bit more normal conditions. >>> geithner also told us the government has tools that could help more homeowners today but he believes politics gets in the way. >>> apple is moving to a new electronics. dr. dre co-founded the company that makes high-end headphones and offers a music streaming service. >> the $3 billion deal the largest

one from republican secretary of the treasury, hank paulson, who said as a general rule i don't believe that tax cuts pay for themselves. and then mr. allen greenspan, who initially said, in '01 and '03, he thought the tax cuts would pay for themselves. however, upon review of those tax cuts, he came back, when he was -- in response to a question on "meet the press" from david gregory, the question was: you don't agree with the republican leaders who say tax cuts pay for themselves. mr. greenspan: they do not. so, all of your republican colleagues are being asked to vote for $155 billion increase in the deficit, which they all say they want to bring down. i'm sure they will get up and rationalize like in 1981, 2001 and 2003 the tax cuts would magically grow the economy so they would not exacerbate the deficit. and the 33 years i've been in congress, that has not been our experience. so, mr. leader i very sincerely hope we can join together in a bipartisan way and support this legislation because it's the right thing to do in terms of growing manufacturing and it's the right thing to do

hank paulson came and testified, that he wanted to testify only about china. he didn't want to talk about the sub prime issue. a setting of my colleagues would not spend a lot of time in china and the subject matter the mortgage. we help 90 hearing in 2007 on the subject matter out of the next 12 months. i remember some of the first witnesses were people actually calculating what they thought the result was in terms of foreclosures in the country. the first talked about having a million foreclosures in this highly ridiculed the next day or two has been aging hyperbolic talking that they might that could possibly happen. so 4.5 to 5 million. despite all of that activity, it was just a refused to acknowledge the growing problem in the residential mortgage. st. patrick's day weekend, to fascinate, we have bear stearns. many thought this was a one-off album. it was a ludicrous proposition . so people talk about it wasn't wonderful in september of 08 everyone rallied in a the country. there is a lot of information out there it goes next, as evan about what was occu

future, the individuals at the fed, tim geithner at the new york fed and the treasury department, hank paulsonple know how finance work and understand structuring and securitization and that was a larger part of this problem than simply the loans defaulting. it was the entire structure that was sitting on top of these loans. >> i'm not sure people had any concept at the time of just how big this thing had gotten. >> want to say one quick thing to a point nathan made. these bankers, and rightfully so, these bankers were bailed out because in some ways, would you argue, or some would argue, that they gave out these home loans too easily back in the day, and that's what ended up causing the crisis. again no, ax to grind one way or the other. that's what the nay sayers would say about the bailout. the bankers who gave the bad loans in the first place were the ones who got bailed out. >> and leveraged them a ton of times, that's the problem. >> right. >> the impact is still being borne by the banks. i'm not saying i'm crying for them, but look recently within the last couple of weeks news on b of a

republican secretary of the treasury, hank paulson, who said as a general rule, i don't believe that tax cuts pay for themselves. and then mr. alan greenspan, who initially said in 2001 and 2003 that he got the tax cuts would pay for themselves. however, upon review of those , on ats, he came back response to a question on "meet david gregory. the question was, you don't agree with the republican leaders who say tax cuts a for themselves. mr. greenspan -- "they do not." republicanour colleagues are being asked to vote for a $155 billion increase in the deficit. which they all say they want to bring down. up ande they will get rationalize as they did in 1981, in 2001, 2003 that those tax the will magically grow economy's so that they would not exacerbate the deficit. been in3 years i have congress, that has not been our experience. so, mr. leader, i very sincerely hope we can join together in a bipartisan way and support this theslation, because it is right thing to do in terms of growing manufacturing and it is the right thing to do in bringing down our deficit to pay for it and i yi

hank paulson can attest that they want to come and test only about china. he did want to talk about the subprime issues i said come talk about china. i knew my colleagues would not spent a lot of time on china. as he got into the subject matter of the mortgage, growing problems with mortgages, we held 90 hearings, i did come in 2007 on the subject matter over the next 12 months. some of the first witnesses were people who actually typed with what they thought this would result in terms of foreclosures in the country. the first witness talked about having a million foreclosures, highly ridiculed the next day or two as being hyperbolic political talk but nothing like that could possibly happen because we learned for a half to five in foreclosures occurred over the coming years. despite all of that activity it was just a refusal to acknowledge the growing problem in the residential mortgage market. and, of course, on st. patrick's day weekend, 2008 you have bear stearns. many thought this was a one off problem. ebitda was a systemic issue. a ludicrous proposit

he hints there was disagreement between him and ben bernanke and hank paulson over what to do about lehmans. here's what he had to say about that tense weekend. >> if you think back to that moment, all the political pressures on his at that time were to stand back and let the fire burn. monday morning the editorial pages rarely agree, were thrilled that it had failed and we had not prevented it. it praised us for us. until three days later that were clamoring for us to come in and put out the fire. the overwhelming political consensus on the right and left was you guys should stand back and let the fire burn. but they were competent, courageous people and they were not willing to listen to those voices. >> just for the viewers to understand what the disagreement was. >> people in washington had been coming out and saying, people who worked for hank, saying we will not put any public money at risk in helping prevent the failure of lehman. that was a -- they felt that was justifiable because thought it was going to be in negotiation. that was a sensible aversion. but there was no way we were

he was, as you know, undersecretary of the treasury under hank paulson for domestic.like weinberg is banks without conflicts of interest. this is hard to have in this day in age. we will focus back on the client again. they are investing their own money. they have competing clients. they are trying to get into all sorts of things. it's one of the old-fashioned ways of doing things like wall street used to do when the old goldman sachs people used to do. let's keep both what's good and good for our clients in mind. >> some of these smaller boutique banks have succeeded some have succeeded. evercore has done well. so it's not a given. >> no. it takes great leadership. you have joe perella. >> he's a force of nature. >> peter weinberg. and bob steele. the best executive and manager and visionary i have ever seen. you put the three together, it's like what i'm writing about in my book. if you get the right team of innovators, you'll succeed. >> my next book is called the innovators. it's about the people who actually developed the computer, the internet. we talk so much a

bailout was a bad idea that they should have let those those firms fail and that what happened was hank paulson henry paulson the treasury secretary looked at all of that from the viewpoint of someone on wall street so to him the economy is wall street and so when he sees that thirty of his friends i'm just making up that number best be something like that when thirty of his friends are going to lose eighty percent of their wealth he thinks that's catastrophic i think that's capitalism i think that's profit and loss and we need the loss as well as the profit but he looked at the world that way and then one of these huge bailouts they should have had these bailouts what bernanke he should have done is done what greenspan did during the eighty seven crash and the worry about y2k in one thousand nine hundred nine which was put a lot of liquidity into the system but don't bail out specific banks and specific financial firms but it was a just too big a you know you can only put so much liquidity and i you can put a lot in but they had to come to the rescue of some of these institutions no it was do

government they were two of the biggest and earliest bailouts of the financial crisis hank paulson the treasury secretary at the time place the companies into conservatories shift and provided them with hundreds of billions of dollars in backstop financing there was one catch though the government never wiped out the existing common or preferred shares because doing so would have bankrupt bankrupted some major midsize american banks which have been encouraged by regulators to use the preferred stock as bank capital cities now chemistry under council structure rules would dictate that the common preferred shares should have should have been wiped out but the government didn't want to do that and hedge funds piled in thinking that these things had huge optionality values and they were right now once the conservatorship and now once in conservatorship the government required and fred to issue super preferred stock to the treasury department stock which they do which they wouldn't repaid to the government before all other creditors at a rate of ten percent so they jumped in the line now wh

our magic so i mean isn't this the case with we see bernanke and these others i mean a member hank paulson give us a big check and we'll make the market bad just go away so yeah there are doctors and african potentates and wall street bankers their own reading from the same book written by eric pickles. the other thing is is that you know bankers and finance do not create wealth all the people out there working in consuming they create wealth but we have this economy and bankers say we created that wealth you owe us give us more money you know they hold us to ransom like witch doctors this guy prophet as he killed down in guyana said this is no joke or an issue of patriotism i have work for the success of the team and i feel cheated that i have not been paid. oh google profit is the keel. i think i remember the quote from the film fiction about samuel l. jackson was. you know see how that turned up but you know this guy pickles he is bringing gross to his local chip shop i mean there is definitely some of g.d.p. growth happening around that. however just this is also the story from guyana

one from republican secretary of the treasury, hank paulson, who said as a general rule i don't believe that tax cuts pay for themselves. and then mr. alan greenspan who initially said in 2001 and twee he thought the tax -- 2003 he thought the tax cuts would pay for themselves. however, upon review of those tax cuts, he came back when he was -- response to a question "meet the press" from david gregory, the question was, you don't agree with the republican leaders who say tax cuts pay for themselves. mr. greenspan, they do not. so that all of your republican colleagues are being asked to vote for $155 billion increase the deficit, which they all y they want to bring down, i'm sure they'll get up and rationalize in 1981, 2001, 2003, that those tax cuts would magically grow the economy so that they would not exacerbate the deficit. in the 33 years i've been in congress that has not been our experience. so mr. leader, i very sincerely hope that we can join together in a bipartisan way and support this legislation because it's the right thing to do in terms of growing manufacturing and it's