i talked to hank paulson and tim geithner. do not understand whether the fed alone could have saved lehman. mr. bernanke: absolutely not. the only tool we had was lending against good collateral and that meant we could save a firm that was illiquid, but was fundamentally solvent. lehman -- as a bankruptcy judge verified, lehman was very much in the red, did not have enough collateral. we felt that if we had lent money to lehman, we would have facilitated all of the other creditors escaping and left the government with a failed firm. charlie: did you anticipate what was going to happen if lehman went bankrupt? mr. bernanke: we tried everything we could. we expanded the collateral against with which we would lend. we knew it was going to be bad. i think it was worse than we expected. charlie: aig came and you had no choice. mr. bernanke: it was the world's largest insurance company. on top of the lehman failure, it would have brought the system down. charlie: how close did the system come? mr. bernanke: scarily close. whether or

charlie: describe the relationship between you and hank paulson and tim geithner. mr. rnanke: three very different people with different backgrounds, but quite competent entry. -- complement three. hank is a consummate wall street guy. very energetic, always on the phone. it was important for us to be able to understand what is going on in the markets. i was the academic, a quieter personality, analytical. higheithner, also very energy, had spent his career at the treasury department helping the u.s. treasury to with financial problems around the world. he had cut his teeth helping deal with the asian crisis of the 1990's. we had a diverse set of backgrounds and skills and working together, it was a good combination. charlie: what was the biggest source of disagreement? mr. bernanke: we were under so much pressure and controversy externally, for the most part, we banded together. tim wass disagreement, urging hank not to say what he said in the beginning, that the government was not going to provide support. i believe it was a tactical statement. -- he was hoping that c

the team we had was hank paulson, me and tim geithner.tephanie: you all had to work with the banks, and those bank leaders at a time and even after when mainstream hated the banking industry so very much. when you talk about bad actors or who weren't standup partners, what was it like working with the banks? ben: they were in a lot of stress at that point. there were a few who were stronger. obvious we and jpmc helped rescue bear stearns, for example. but a number of them were under a lot of stress. we're trying to find solutions. stephanie: i hate when we have to go to commercial! david: the good news we are coming back to ben bernanke he. we will also have tom keene. he will share his morning must read on bloomberg . ♪ the only way to get better is to challenge yourself, and that's what we're doing at xfinity. we are challenging ourselves to improve every aspect of your experience. and this includes our commitment to being on time. every time. that's why if we're ever late for an appointment, we'll credit your account $20. it's our

number one is the idea that you and hank paulson, then secretary of the treasury, decided to observobstricste as to what youd do at the team of the lehman crisis because you didn't want people to think you didn't have the tools to do what was necessary. >> when lehman failed, the financial system went almost into cardiac arrests. we were very worried about runs on other companies. so for a few days we agreed to be vague about it and deflected questions about that. whether that was the right decision, i don't know, but an honest choice based on our concern about panic getting worse. >> rose: what were the consequences of that decision, not to really lay it out that you didn't feel like you had the power? >> well, we were kind of in a lose-lose situation. if we explained we didn't have the power, that would have created fear because people would say who's next, what can they do? if we had said given what we didn't explain that we didn't have the power, i think there was a feeling what we had done was arbitrary that we had arbitrarily decided to let lehman fail and save a.i.g., when in fact as i

we think of it is this good thing, not always but hank paulson treasury secretary told a story about being in beijing for the summer olympics hearing that the russians trying to get the chinese to hold fannie and freddie securities to create chaos in the global economy. then there's this chinese -- if they want fannie and freddie to fail it's going to be the end of the global financial system as we know it. so then there was this idea that if the two companies were to go down, the securities were everywhere and it would be at the foreign relations and delivery catholic in all the banks that held the securities on their own balance sheet and it would shut down the mortgage market. so is this perception that we could inflict these companies fail. >> host: having so much interconnectedness and such a large market, even if you are not sure of the probabilities tammy and freddie are going to fail if the consequences are so dire that you have an outcome in what they were saying, you would rather ask and and the wrong then roll the dice. >> host: there's a huge fight over whether they reall

hank paulson, risky business. we've got to know the price. got to know this. i think it's very useful to have all these coming to talk to their stakeholders with credibility, but they're all coming to the same answer, we have to deal with this. long-term we have to get ourselves off carbon because otherwise the consequences -- i think i was saying at lunch, the earth will be fine but the ecosystems may not make it. but we'll make it. ok. is this it? all right. thank you very much. i appreciate it. thank you. [applause] [captions copyright national cable satellite corp. 2015] [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org] [indiscernible] >> next, live, your calls and comment on "washington journal". then newsmakers with ellie angle. after that they hope -- house oversight committee hearing. >> tonight on q&a, national law journal -- supreme ft. worth bonded -- correspondent tony return --his report supreme court new term. court dealt with it. court said that he probably de

hank paulson, risky business. we've got to know the price. got to know this. i think it's very useful to have all these coming to talk to their stakeholders with credibility but they're all coming so -- to the same answer, we have to deal with this. long-term we have to get ourselves off carbon because otherwise the consequences -- i think i was saying at lunch, the earth will be fine but the ecosystems may not make it. but we'll make it. ok. is this it? all right. thank you very much. i appreciate it. thank you. [applause] [captioning performed by national captioning institute] [captions copyright national able satellite corp. 2015] >> on the next "washington journal," west wing reports founder and editor in chief paul brandous discusses the response to russian air strikes in syria. a preview of the house g.o.p. leadership elections and the latest on the upcoming congressional spending deadlines. and a former russia and you're asia officer looks at russia's military operations in syria. >> sunday on q and a, the national law journal's tony morrow on the cases

you know what i said to hank paulson? i said, hank, your guys, your millionaire and billionaire friends caused this problem, how about your millionaire and billionaire fans paying for the bailout, not working families in this country. so, no, i would not have let the economy collapse. but it was wrong to ask the middle class to bail out wall street. by the way, i want wall street now to help kids in this country go to college free with a wall street speculation tax. >> we'll talk about that in a minute. you have said neither party has the guts to take on wall street. is the system rigged? >> there is a reality that i think we all need to recognize with respect to the power of the financial sector. let me go back a minute and say that on this tarp program, i introduced a piece of legislation calling for a windfall profits tax on the executives of any of these companies that got more than $5 million, that it was time for them once they got their compensation and their bonus to split the rest of the money they made with the

hank paulson and i had a conversation, a very forceful conversation of what they wanted morgan stanleydo, which if here members, i was not going to do that. they wanted us to sell the firm for two dollars a share. to jpmorgan. was tim whoess, it wanted that. david: would jamie dimon have bought it at that? had a fewwe conversations where tim cap saying call jamie and jamie didn't want to do it and i didn't want to do it, but when the head of the new york fed is pushing you to make the calls, you make the call. stephanie: you look at the last two years and the problems banks have faced since these acquisitions, is it fair because when we look and say it was the fed that pushed the banks into these trades? not fair.that's to talk about to get us in this position -- when you just made money and the market is going your way and you can borrow or sell high and securitize and people are making 20% or 30% with their stock, someone's got to blow the whistle. they got carried away and leverage was wild. when you think about the leverage these firms had, including morgan stanley, it was absurd.

bush's treasury secretary hank paulson, and bush council of economic advisors chair greg mankiw have all advocated for some form of a carbon fee, as the efficient way to correct a market failure. the market failure where we all have to pick up the costs of carbon pollution for the fossil fuel industry. no wonder they spend so much money around here. that market failure is a sweet deal for the fossil fuel fellows, but it is not good free market economics. in a 2013 "new york times" op-ed, former republican e.p.a. administrators bill ruckelshaus, christine todd whitman, lee thomas and william riley wrote a market-based approach like a carbon tax would be the best path to reducing greenhouse gas emissions. end quote. republicans in congress are being squeezed. on one side they see unequivocal scientific consensus, compelling economic theory, and mounting public opinion all pointing toward the need for strong action on climate. on the other side, they see rich and powerful polluters who fund their politics and who make heavy-handed threats against any republicans who might dare to cross

in mortgage backed securities and it looks like it was failing. ,nd the government then decided hank paulson secretary of treasury, and ben bernanke come the chairman of the federal reserve, they decided to rescue bear stearns. i say this is one of the biggest -- major errors that it's ever been made. theof the poorers decision government has ever made that made a crisis to rescue an investment bank like bear stearns but they did it. i call it the original sin. when they did it, they sent a signal to all of the rest of the market that they are going to , alle all large banks large financial institutions. they will not let them fail and that changes the way the managers of these institutions decided to operate. yourse normally when assets go down, your capital goes down on a you look weak or nearly insolvent, you go to the market and you sell more shares. because you want to tell your creditors that you have plenty of equity under the obligation that you owe to them. government is going to rescue everybody, what is the reaction of managers or creditors? creditors stop being worried about thei

we will pay some of the debts and this is the difference that we did after hank paulson and ben bernanke us to work on this so that the debts -- some of the debts would be paid to prevent them from spiraling out of control. any debt that is paid by the way with taxpayer money is recovered by an assessment on the large financial institutions. but there's no more too big to fail. if you can't pay your debts and you are a financial institution you are put out of business under our law. what you then have is the secretary of treasury is mandated to step in and pay in some of the debts, not all, enough to keep this from becoming a downward spiral, any penny that's paid for is recovered from large financial institutions. >> we've got to go. >> i'm opposed to too big to fail. i've been opposed to it for a long time but i will just say this, republicans have established a very good beach head here of pro growth tax reform which flattens the rates and broadens the base. i think it's a big plus in an economy which is growing in a stagnant 2%. i don't think the democrats have a growth plan and i th

. >> been bernanke, hank paulson, george w.things that a lot of us did not like. the economy survived. history will be kind it ronan, you took note of pete davis' bid on snl trump day. it argues that trump is driving millennials to vote against him. whole take on them is -- if the numbers are to be believed, donald trump is forever going to fly with millennials. he's outpolling in that particular demographic every other candidate in the r republican party. >> is he really? >> he is. there are several elements that seem tailored. his tack plan he rolled out would cut taxes for 50% of millennial women. that's a huge play at millennials that -- >> do you think millennials are reading that and saying i like donald trump because of his tax man? >> to a limited extent. they remain democratic in the ways you would expect. hillary clinton still wallops the competition if you put them head to head. it's a smaller lead than president obama had. >> they turned out for obama in 2008. will they vote in those numbers? >> i think it seems unl

i was at a dinner that hank paulson had in washington as part of this roundtable.there were about 20 people around the table, and everyone was talking about their business in china. the worst was an auto supplier who said their business was flat. in the auto sector was actually reported down a few percent. his business was flat. as i sort of trying get a feel has a lottuff, china of complex issues. not just gdp. they are moving ahead, and they are reorienting their economy away from exports, to the consumer. fed, ishe back to the the rate hike off the table for the fed for this year, in your judgment? steve s: you have to ask janet yellen. people of been asking for years. stephanie: do you care? steve s: i don't care. we doesn't make much of a difference. interest rate hikes of 25% that people have been talking about for 2.5 years -- really. if you haven't discounted a lot of this stuff, they have the issue that raising interest rates is probably a good thing. however, the problem is that because the u.s. currencies appreciated against a most everyone in the world,

. >> you had principals basically saying it on -- on in trial, bernanke geithner hank paulson. >> thatings they said intentionally maid aig political scapegoat not our wourdz that is secretary paulson's words er and bernanke geithner sent out to make aig a political scapegoat tried to blame everything on aig to escape the blame that they had, for creating the -- >> it works okay. >> it works. >> plays with upon lupopulous i terms of candidates what hillary clinton is doing, bernie sanders what do you want to say i saw recently you decided to back jeb bush. >>e i can't well i have known him a long time i thought he did a great job as governor. in florida. i think he would be good president has a lot of experience. >> what do you want to say, specifically regarding this, government overreach, big government, and all free stuff has become common place, corners of politics in marker from bernie sanders tell knee what you would like to see from candidacy as it relates to government overreach. >> well, i think they got to put back into focus what the framers of constitution believe they have

the daily cape and why we're whipping and hank the tank paulson would have to come out with his bazookautting rates to zero would be the catalyst, always that the government and-- >> now we're talking a profit decline 4%, right? >> it was the exact same thing in 2008 profits didn't have the back stop that they've had at the tops of other, you know, market moves in october. so, again, market moves in october that are now only going up because the government's going to stop gravity, this is the problem. >> i wish the central banks would get out of the way. >> they can't. maria: in europe, not going to get out of the way in japan. dagen: that's why i wish that-- >> they're more in the way today than they've ever been because they're panicking. maria: they're more powerful, the federal reserve with a balance sheet more than trillions of dollars. and alcoa looking to split and the stock was up 5% when they announced the split, but you pan gary both side it's probably a fake out. don't buy it yet. listen to gary's prediction, it's spot on. >> when you see something like that at the end of the

paulson was treasury secretary. >> obviously ben bernanke was fed chairman. you look at testimony in hanked but i got my hands on it, they had no clue the train was coming down the pike until literally the last minute and they scrambled. neil: gary kaltbaum, the argument after the fact, this is where bernanke echoed this in prior speeches and conference and the like, look we were flying by the seat of our pants. we were melting down fast and furious. we were seeing what stuck. i'm sort of trivializing here. all of this qe and quantitative easing easing and buying up treasury notes and bonds and interest rates near zero today that was a means of propping up global financial system falling out of bed. in retrospect, do you think he was right? had he not done that we would be in deeper doodoo now? >> look i think there is no doubt something had to be done. he was guy who made the decision, but here is the problems. he is taking victory laps on a race that is not over yet and we have every economic statistic, every data point, every asset price based on 15 to $20 trillion of printed money. ze