We have no intention of dismantling
the regulatory agencies.
However, we must come to grips
with inefficient and burdensome regulations.
We will eliminate those that are
unproductive and unnecessary.
Tearing down these antiquated walls and
granting banks significant new authority.
In a victory for the banking industry,
Congress has approved legislation
which will allow commercial
and investment banks
to merge and form institutions
of unprecedented size and global reach.
I think it's very important for us not to
introduce regulation for regulation's sake.
I do believe in the American dream.
Owning a home is a part of that dream.
We are taking action to bring many thousands
of Americans closer to owning a home.
This project not only is good
for the soul of the country,
it's good for the pocketbook
of the country as well.
The housing market has reached
frantic proportions.
It seems that everybody is building,
buying or selling.
The Dow and the S&P both breaking records.
Profits soared 93%
at Goldman Sachs this year.
Hotshot traders and bankers
can expect to take home 10, 25,
and in some cases, $50 million.
Things that are too good to be true, are.
When you see something coming...
The real estate bubble...
- Housing bubble...
- Bubble...
... don't put it off.
Take action immediately.
Will there be a soft landing,
or will the bubble burst?
A new story, the mortgage meltdown.
This morning in the mortgage meltdown,
new numbers showing
that a record number of Americans
are losing their homes.
More than 70 mortgage companies have failed
in the last few months in America,
and now the biggest of the big companies,
the Bear Stearns, the big banks,
are caught holding the bag.
The fifth largest investment bank
in the country, Bear Stearns,
is being sold
for just $2 a share to JPMorgan.
It's being assisted by the government,
which is stepping in to guarantee
some $30 billion
in Bear's toxic real estate assets.
You've got to imagine that Hank Paulson
didn't think he signed up for this
when President Bush picked him
to become Treasury secretary.
Hank Paulson may now have to undo
some of the deregulation measures
that he and his peers on Wall Street
pushed through when he ran Goldman.
Treasury secretary Hank Paulson
telling Matt Lauer this morning,
"We're all over it.
I've got great confidence in our markets.
"They're resilient. They're flexible."
Ali, the truth is that Bear Stearns is only
a very small fraction of this story.
Our economy could face far worse
than a recession.
In the wake of Bear's collapse,
Lehman Brothers is scrambling
to reassure investors about the impact
of the mortgage crisis on its own assets.
Insurers of the firm under a great deal
of pressure this morning.
Dick Fuld, a 39-year veteran of Lehman
and the longest-running CEO
of a major investment bank on Wall Street,
has pulled the firm back
from the brink during other crises,
but today, for the first time that I'm hearing it,
investors are questioning his leadership.
- Motherfucker.
- One key question
investors have for Lehman Brothers,
"What's the true earnings power
of this investment bank's business?"
- Hey.
- Get up here.
We gotta start stacking sand bags.
What are you talking about?
We're down 21%. On paper, I just
lost $90 million, personally.
With investors pummeling Lehman shares,
the big question this morning is,
"What options does Fuld have?"
So far, he has failed to raise new capital
while virtually all of his rivals
have already done so.
And now, hedge fund manager David Einhorn
is publicly questioning the accuracy of...
Anything good?
It's a red-tailed hawk, first one this year.
Dick Fuld's on one.
... to provide credible answers.
So let's go through a couple of those,
what you call discrepancies, because...
- Tough morning?
- We show top-quality earnings,
- we beat every prediction.
- Yeah.
It's the damn short-sellers.
You know the game, short and distort.
They're rumormongers
and they're making a killing.
What are your plans for a capital raise?
We're way ahead of you.
Now, let me be clear,
we don't need the cash.
It's about perception.
Buffett, Buffett.
We're thinking of reaching out
to Warren Buffett.
Great.
You and Buffett go back, right?
Do me a favor and call him.
Tell him Lehman is rock solid.
As Treasury secretary,
I can't advocate for a specific investment.
Hank, you want me to raise capital or not?
Lehman Brothers is a hell of a lot bigger
than Bear Stearns.
The market is terrified.
When I was running Goldman,
I never even conceived
of asking the Treasury secretary
to cut a deal for me.
Yeah, but the Bear bailout created...
Please don't call it a bailout.
Okay, the very large Bear Stearns
purchase assistance package
created an expectation.
Fuld's counting on
direct intervention from you.
Buffett's a simple solution.
I think you make the call.
As what? Warren's friend? His former banker?
The Treasury secretary?
No. Fuld's calling him.
Hopefully he'll jump
in and we can all relax.
Relax? We just buried one investment bank,
we got another one that's barely breathing.
This is a confidence game.
People lose faith in Lehman,
these banks are gonna drop like dominoes
and I don't have the authority
to do a thing about it.
We're late. We've been late on everything.
Neel's team is working on
some kind of a disaster scenario.
We're calling it the "Break the Glass" plan,
what to ask Congress for
if your back's against the wall.
Money.
Is what you ask them for.
The problem is, Congress won't move
until we've already hit the iceberg,
and at that point, it may be too late.
So you're saying, with the full weight
of the United States Treasury behind me,
all I can do is call Warren Buffett?
Hi, Warren. It's Hank.
I understand you've been talking to Dick Fuld.
You know my misgivings, Hank,
about investment banks.
As soon as they started
trading for themselves,
the risk managers lost control.
I had a very unpleasant time
with Salomon Brothers.
That's fair enough.
But we both know that investment banking
is a profitable business.
I figure it made you a billion or so, huh?
I gotta believe that if the price was right,
you wouldn't just walk away.
You know a good deal when you see one.
What say you?
I gotta leave that to your judgment.
People act like we're crack dealers.
Nobody put a gun
to anybody's head and said,
"Hey, nimrod, buy a house you can't afford.
And you know what? While you're at it,
"put a line of credit on that baby
and buy yourself a boat."
You heard anything from Buffett?
He's asking for preferred shares at 40
with a dividend of 9%.
We were just at 66. What the fuck?
Maybe it's just an opening gambit, Dick.
Sounds more like a goddamn insult.
- Let me get that, Dick.
- Thank you.
We're at 36 right now.
We haven't been anywhere near 66 in months.
The markets like Buffett.
- His name will push the price up overnight.
- I don't care who he is,
I am not spending $360 million a year
for the pleasure of doing business with him.
Real estate will come back.
Koreans have been sniffing around.
There you go. And they won't steal us blind.
I've seen this before.
CEOs panic and they sell out cheap.
Right now, the Street's running around
with its hair on fire,
but the storm always passes.
We stand strong, and on the other side,
we'll eat Goldman's lunch.
So, what do we do about Buffett?
Screw Warren Buffett.
- He passed?
- Lehman dropped
to 28 and a half this morning.
What in the world is he thinking?
He's not thinking. He's delusional.
He thought the ask was too high.
He's gotta raise cash.
I told him that.
- I spoke to Greenspan.
- Really?
He says there's too much housing supply.
That's the problem.
So we should buy up all the vacant houses
and burn them.
Dick needs a buyer,
someone with a grip on reality.
Barclays expressed some interest
a couple of months ago,
but I don't think
the price is low enough for them.
- Bank of America?
- Possible.
Dick's put out feelers there before.
We have to keep it quiet, though.
'Cause if anyone hears
that they're trying to sell...
Lehman'll be dead within the hour.
The real estate investments
are killing the firm.
We have to admit publically
we've made some mistakes.
We need to make
a senior management change,
signal to the market that we get it.
- Meaning what?
- Meaning Joe Gregory.
Get the fuck out of here.
You are not gonna tell me
how to run my company.
Joe hasn't had your back on risk,
and everyone knows it.
Erin Callan's gotta go, too.
As far as the Street's concerned, she's a joke.
Joe Gregory has been with me for 30 years.
And you want me to kick him to the curb
because we had a bad quarter?
It's not just a bad quarter.
Stock hit 23.
Twenty-three. Most of our guys are paid
in stock they can't sell for years.
They've lost most of their net worth
over the last six months.
You don't stabilize the price,
your traders are gonna jump ship.
Selfish fucks.
It's not just bankers and traders, Dick.
Clients are pulling their money.
There's gonna be a run on this bank.
Sources tell CNBC that both
Erin Callan and Joseph Gregory
are out at Lehman Brothers.
In a statement,
the company's chairman, Dick Fuld, said
replacing Gregory
with 48-year-old Bart McDade
has been one of the most
difficult decisions he's had to make.
Dick, the Koreans just arrived at Sullivan.
Let's go make this happen.
My take is you'd be better off
staying here for now.
We need you to be our "missing man."
We'll go in and push the
deal as far as we can,
and then we'll bring you in at the end
to top it off.
All right, fine.
Okay. Okay.
We are committed
to our presence in New York.
But we need to know
that the underlying numbers make sense.
We realize how things look.
But our stock is getting hammered
by the shorts.
The value is still there.
We just started. Min's excited,
but we haven't heard the terms.
Where are you?
I just stepped out to take the call.
Get back in there. Don't be rude.
Okay.
We simply take the assets
you don't find appealing,
spin them off into a separate company.
- You don't buy that bank.
- I'm very sorry.
You buy the good bank.
Look, they don't like the real estate.
What do you mean, they don't like it?
Dick, we're making real progress here, okay?
Let me stay on it for now.
Min, how are you?
Great to see you.
I don't want to interrupt.
Dick, great timing.
We seem to be in sync
on the broad strokes of the deal.
Shall we get back to the letter of intent?
Min, I have to tell you,
I think you're making a big mistake here.
There's great value in
the real estate assets.
How about we walk through the portfolio
and I'll show you?
We have looked at them.
Then you must have looked at them
in the wrong way.
See, I just don't wanna see you
leave money on the table.
Perhaps we should take a break.
Min, I'm so sorry.
We have negotiated in good faith.
Now all of a sudden we are going backward?
We can work with you on the price.
It is not about the price.
It is about the way you have conducted this.
I'd like to thank you, all of you,
but I don't think we have
a structure that works.
What, that's it?
You're just gonna pack up
and go back to Korea?
- Hello?
- Neel, it's Dick Fuld.
Listen, you know,
if Hank wants me to find a buyer,
you guys need to step up and help.
The Koreans just walked out, okay?
Look, I'm just speaking for myself here,
but I think you need to do
what's right for the firm.
Do what's right?
What is that supposed to mean?
If your stock price keeps sliding,
you may get an offer at a price
that doesn't look all that compelling,
but you may have to take it
just to keep the company intact.
What kind of price are you talking about?
Could be...
I mean, it might be low single digits.
Last February, we were at 66 a share.
Lehman Brothers is not Bear Stearns.
We've got a great business.
Real estate's gonna come back.
I am not fucking giving this company away!
While the real estate market has put
Lehman Brothers shares under pressure,
mortgage giants Fannie Mae
and Freddie Mac stocks
are suddenly plummeting this morning,
after reports the companies
may need to raise $75 billion
just to remain solvent.
Because they guarantee
such an enormous percentage
of the nation's mortgages,
there is renewed speculation
that the government
may have to step in and take them over,
a possibility Barack Obama has now raised
on the campaign trail.
If Fannie Mae and Freddie Mac collapsed,
then probably the financial system
would receive such a body blow
that it could be disastrous.
Freddie just dropped another 8%.
Fannie's down 5%.
There's no bottom here.
We need to do something. Now.
We're working on a proposal for Congress,
see if we can get the authority
to put some money in.
I'd rather not go that
way, but if we get there...
I think we're already there.
- How much are you gonna ask for?
- A blank check.
It has to be enough of a statement
to reassure the market.
They need to think I've got
a bazooka in my pocket.
I'm not saying that we use it,
but if we have the authority,
everyone who's dumping their shares
will calm down, back off.
Okay, if you're going to Congress,
why don't we give to the banks, too?
'Cause Lehman's looking like shit
and Merrill's not far behind.
We'll be lucky to get them to move
on Fannie and Freddie.
We do what we can do.
Secretary, Mrs. Paulson, over here.
Over here, please.
Mr. and Mrs. Paulson.
- Secretary Paulson, over here, please.
- Mrs. Paulson. Thank you.
Mrs. Paulson.
Mr. Paulson.
Mr. and Mrs. Paulson, this way, please.
Mr. Secretary, please.
- I've got her.
- You should take her.
- Right over here, Secretary Paulson, please.
- Secretary, over here.
Big smile. Thank you.
That's just what I need.
Press photos of the Treasury secretary
waving the Chinese flag.
Paulson the Communist.
The look on your face was priceless.
Hank, I must ask you
about Fannie and Freddie.
We have hundreds of billions invested.
You've assured us the investment is safe.
And it is, absolutely.
We're watching a great deal
of our money disappear.
Share prices have dropped 60%
in the last two months.
Carrying your bazooka around
has not helped matters.
Congress gave you the power.
Perhaps it is time to use it.
The market will stabilize.
We just have to give it some time.
There was an approach last month
from Russia.
They have considerable holdings
in Fannie and Freddie as well.
They suggested we coordinate,
and without warning,
dump hundreds of billions of Fannie
and Freddie's bonds onto the market.
- That would be...
- Chaos.
The amount of debt your country carries
is a terrible vulnerability.
- But you...
- We declined, respectfully.
Even in the US, it seems
the relationship between the government
and private industry isn't so simple.
Was it a threat?
No, no, it was a friendly reminder
that with a single phone call to Moscow,
they can take down the entire US economy.
The book says Fannie
and Freddie are a nightmare.
They are in the hole easily
tens of billions of dollars.
Another few weeks, they're gonna
start defaulting on their debts.
- We're gonna have to step in.
- I don't see how we can avoid it.
Turns out a bazooka's not that useful
unless you fire it.
Lehman's down another 10%.
You are not gonna let me
get down a single bite, are you?
This is why I have oatmeal.
Dick is trotting around the world
with his hat in his hands,
no one will give him any money.
Korea walked out on him.
Mexico told him to shove it.
No one's interested.
All the dumb money's already in.
What about B of A?
Are they still in the mix?
And Barclays is sniffing around again,
now that they think it's a fire sale.
- That's promising.
- I don't know.
The British, they do a lot of talking.
They never close.
- B of A is still our best bet.
- This can't be another Bear.
Absolutely not.
They want Lehman, they buy it outright.
But they may need
a little hand-holding, though.
They just bought Countrywide.
They're spread a little thin.
You may have to give them a break
with the capital requirements.
You want me to allow them
to raise their leverage
so they can buy a bank that's about to fail
because it was overleveraged?
You got a better idea?
Breaking news just coming in.
Sources telling CNBC
that the government has just taken control
of Fannie Mae and Freddie Mac.
Back in July, you remember,
Hank Paulson said
that he wanted the power to step in,
but he probably wouldn't use it.
It certainly sounds like Paulson
just pulled the trigger on that bazooka.
Despite the move to nationalize
Fannie and Freddie,
the market is still
in negative territory across the board.
Investors now focusing their attention
on Lehman Brothers,
amid fresh reports that the nation's
fourth-largest investment bank
may be on the brink of bankruptcy.
Rodge.
Chris.
Bring your money today, huh?
Make sure Fuld's not keeping
any bad news out of the mix.
It's "open kimono," to quote Dick.
There's a revolting image.
Did you get a look at the numbers?
The real estate's the issue.
They got it marked at 30 billion.
It's worth maybe half of that.
Don't look so nervous.
You're about to get a Wall Street bank
for the price of a hot dog.
I know that Paulson told Ken Lewis
that he's not gonna pay for this.
And I don't see how we can do it
unless the government
takes some of the downside.
Paulson is posturing.
He'll write a check just like he did
for Jamie Dimon on the Bear deal.
He has to. He can't lose another major bank
in an election year.
Besides, the guy made
a half a billion bucks at Goldman Sachs.
He lets Lehman die?
Goldman's biggest competitor?
Makes him look like
he's still working for Goldman.
He's just doing it out
of a desk at Treasury.
Where are the donuts?
Exactly. If you're the CEO
of one of these financial firms,
you've already seen
what the government was willing to do.
Why wouldn't you
play chicken with them and say,
"Sure, I'll help you out.
But you gotta throw in a sweetener,
"just like you did for those guys"?
They just assume
I'm gonna bail out Dick Fuld,
like I'm the guy behind the elephant
with the shovel.
They're all drawing a line from Bear
and Fannie and Freddie right to Lehman.
There's no way the taxpayers
are gonna go for another bailout.
- Very large purchase assistance package.
- Large purchase assistance package.
We need to come up
with a private-sector solution,
get the investment banks to bridge the gap.
Okay, but that's never gonna work unless
they believe that you've drawn a line.
I know you don't like leaking,
but let us reach out to the press.
Okay.
Mr. Flowers, there's a call for you.
Bob Willumstad from AIG.
He's very insistent.
Mr. Flowers.
My people tell me you're the man to talk to.
We've got a real problem here.
Yeah? What kind of problem?
It looks very much like
we are about to run out of cash.
AIG?
We've sent over a document.
It's a spreadsheet.
It's confidential, of course,
but it might give you some insight.
I'm in the middle of Lehman.
I'm working with B of A.
Is there any way
you could come over tomorrow?
I'll take a look at the
numbers and we'll talk.
Mr. Flowers.
Somebody put the TV on.
CNBC's talking about Lehman.
A person familiar with Paulson's...
Treasury secretary Hank Paulson's thinking,
and he is saying there will be
no government money
in the resolution of this situation.
They're saying two things
make the Lehman deal different.
The market's been aware
and had time to prepare
for over six months. And the second is...
Is that just TV bullshit?
Or is that Paulson sending us a message?
Chris?
Yeah? Sorry.
What exactly does "a person familiar with
the Treasury secretary" mean?
That could mean a lot of things.
Did one of your staffers do this?
Please tell me
someone got fired 10 minutes ago.
The leak came from me.
Hank, a public statement like that
can have a lot of unintended consequences.
We had to send a message to the other banks.
They need to step up.
I don't have another rabbit
I can pull out of my hat.
Rodgin Cohen just called me.
The B of A team is sitting there
playing Brickbreaker on their phones.
They don't want this deal.
The deal is hanging by a thread
because the closer they get to Lehman,
the more it looks like a toxic waste dump.
Which is why at the end of the day
we may have to help them,
which would be a lot easier
if we didn't publicly state that...
We can't, Tim! Legally, we can't!
Legally, we haven't figured out how yet.
I am concerned
we are limiting our options
at a time when we have very few,
if any, available.
I want all the CEOs in a room.
We've got the weekend.
We lock them in a room at the Fed
and we don't let them out
until they have a solution on Lehman.
Your oatmeal's getting cold.
They'll figure it out.
They'll all throw in some money.
Tim is advocating strongly
that we reconsider some kind of Fed support.
Tim wants us to pick up the tab on everyone.
I can't be Mr. Bailout.
The Lehman hole is twice what Bear's was.
Investors are pulling their accounts.
You want to lend into a run?
What about Barclays?
Are they still interested?
They can't afford the risk
any more than B of A can.
I don't doubt your ability
to talk anybody into submission,
but it is still a long shot.
And there's a very real possibility
that Lehman goes under.
There's a deal to be made here.
I'm gonna make the deal.
With just a little more than an hour left
until the market closes,
shares of Lehman Brothers
have taken another tumble.
The stock is now trading at a new low,
under $4 a share.
And judging from the selling, there
doesn't appear to be a bottom in sight.
So, Blankfein has a speech
he's trying to get out of,
but the rest have confirmed.
- Tell him it's not optional.
- Yeah.
Good afternoon, Chairman.
Thank you so much for joining us.
- Whose plane is this?
- That's a rental.
Hank put it on his card.
Sir, you know Neel and Michele Davis,
Public Affairs.
Hi. Pleasure.
- This is Dan Jester, our new numbers guy.
- Hi.
I talked him into coming out of retirement.
- Excuse me? Retirement?
- He was with us at Goldman.
Got anybody at Treasury
who wasn't at Goldman?
Chairman, just to be clear,
there's no question of conflict of interest.
Hank sold all of his Goldman stock
before he took office.
- I wasn't implying anything.
- Sorry.
We're a little touchy
about the whole "Government Sachs" thing.
Shall we?
B of A keeps finding more toxic assets.
They want you to reconsider a Jamie deal.
They'll split the first billion in losses, but
they want you on the hook for the next 40.
You did it for Bear.
Greg, let me get back to you.
What, do I have to tattoo it on my forehead?
We are not bailing out Lehman.
Wall Street has a gambling problem.
If government keeps covering their losses,
they never learn anything.
- What?
- I didn't know if you wanted
to keep lecturing me on moral hazard
or if I should just call B of A back.
We need to keep them at the table until
they come up with a private-sector solution.
Tell them to stay with us.
- Alistair, hello.
- Hello, Henry.
Hold on one second.
Chancellor of the Exchequer.
I understand Barclays is one
of your potential buyers for Lehman.
My banks are already under
a great deal of stress.
I don't want to become overextended.
Lehman is problematic,
but there's value there.
We will find a way to make it attractive.
Just stay with us.
Talk soon then.
Bye.
We'll keep Barclays in the mix,
but B of A is still our best bet.
We've got the CEOs of every
major bank coming here tonight.
We have to make it clear
that this is their problem,
that we are their advisors and their allies,
but we are not their safety net.
What should we expect from these guys?
Jamie is smart.
He doesn't have as much cash to work with
since he bought Bear.
Lloyd's a superstar.
Goldman's the smartest shop on the block.
And just because I used to be his boss,
it doesn't mean he's gonna listen to me.
John Mack, he used to run
around the floor screaming,
"There's blood in the water!
Let's go kill someone!"
He's a fighter.
Thain was my number two at Goldman.
He's selfish. He's a pragmatist.
He knows if Lehman goes, Merrill's next.
Vikram Pandit is the new guy at Citigroup.
No one knows if he's running Citi
or if Citi's running him.
Thanks for coming down here
on such short notice.
Monday morning, Lehman will no longer
be able to honor its obligations.
We have two potential buyers.
B of A and Barclays.
Neither will take the company unless
someone else finances part of the deal.
The government is not
in a position to step in.
I did the last one.
You're gonna do this one.
Where's Dick Fuld?
Dick's in no condition
to make any decisions.
We're breaking you into three groups.
The first one will try to value
Lehman's toxic assets.
The second one will work on some sort of
structure for you all to invest in Lehman.
And the third one works
on the lights-out plan.
If Lehman files for bankruptcy,
we need to figure out
how to contain the
damage to the rest of you.
Christ.
We've all seen this coming for miles.
I don't think a Lehman bankruptcy
takes down our firms.
What, are we crossing our fingers?
You're asking us to save a competitor.
Let's not act like you're doing us a favor.
Gentlemen, gentlemen,
you are great Americans
undertaking a patriotic duty.
Your travail will earn you the love
and gratitude of your country.
I think it was Thomas Paine
who said, "These are..."
Lehman is a trading partner
for every bank in this room.
Their failure will be
a massive blow to all of you.
This is your problem.
We can all argue about how we got here.
Deregulation, derivatives,
Dick Fuld made bad decisions.
We're all responsible.
It's a catastrophic mess.
The government's done whatever it can do.
It's on you now.
You need to fix it and
you need to pay for it.
Let me be clear.
We will remember anyone who is not helpful.
Do you notice a little pattern here?
We don't deal with things until there's
some kind of emergency on the table.
Yeah, we don't
deal with things until Friday.
Some kind of a weekend thing.
When were we gonna figure out
exactly how to handle
the failure of an investment bank?
Let's do it over a weekend.
I talked to a person who is
monitoring the situation out there,
and the person said they all want
the same deal Jamie Dimon got,
and they're not going to get it.
Just a heads up,
Chris Flowers is in the lobby.
He's consulting for B of A on Lehman.
Hank pushed Flowers out of Goldman.
Yesterday, we thought Lehman was holding
30 billion in crap. Today it's 70.
$70 billion in assets
that we're valuing with a dartboard.
No, we're gonna work this out.
Unless you step in, we're ending this.
Don't forget about Dick.
Yeah, Dick Fuld keeps calling,
hammering us to raise the price.
Excuse me.
70 fucking billion and no collateral?
If Lehman Brothers fails this weekend,
there's little doubt amongst the people
I speak to that Merrill Lynch will be next.
Confidence is a very fragile thing.
And in our financial markets,
it is eroding very quickly.
Lehman's not gonna make it. We're next.
We need to do something right now.
B of A's the only one out there.
I can put in a call.
- It screws Lehman, but...
- Lehman screwed themselves.
Paulson has drawn a line in the sand.
Lehman is dead. Make the call.
We'd like you guys to look
at taking a stake in Merrill,
something in the neighborhood of 10%.
I don't know if I can generate
any interest in 10%,
but if the whole company's in play,
I bet that's something that we'd consider.
Us and Lehman?
Deal this size, there's only room for one.
It is a lot of risk, no question,
but if you stay in the game,
- we all will find a private solution.
- Absolutely.
Don't get scared by the numbers.
We'll figure it out. Lehman is worth owning.
Guys, you got a second?
I was at AIG yesterday.
Next Wednesday,
they got a $5 billion hole, minimum.
I called Warren Buffett.
He wouldn't touch it with a stick.
We're looking into it.
It's a very big company.
Thanks, Chris. I appreciate all your help.
They're not on top of it.
Look at this.
Is this even possible?
AIG?
Holy shit.
Get into this.
John.
Do you see what's happening here?
Are you watching out for yourself?
I'm not thick. I'm working on something.
You're talking to B of A.
I'm sorry.
I know it's not good for Lehman,
but I have to take care of Merrill.
Let me worry about Lehman.
Barclays is still in the game.
Just get it done.
B of A is gonna buy Merrill.
We need to make Barclays work.
I thought you said the British never close.
They're here. They seem to really want it.
If we hold their hands, they'll close.
Rodgin, what the fuck? I can't get Geithner.
I can't get Paulson.
I can't even get my own goddamn employees
to pick up the phone.
There's a lot happening down here, Dick.
Fuck.
You know what? You tell Geithner,
he doesn't pull my ass out of the fire,
Merrill's gonna be next.
He knows that.
Dick, he just told me
they're working on a solution for Merrill.
Those cocksuckers are
gonna bail out Merrill?
No, no, not the Fed.
There's no private buyers.
There's just B of A and...
They're gonna put B of A
together with Merrill?
We still have Barclays. Hank feels that...
The federal government is snaking my deal?
I cannot fucking believe this shit!
B of A made a deal with Merrill?
Yeah, Lehman's still our problem.
I don't think I can
take another day of this.
You're getting out of a Mercedes
to go to the New York Federal Reserve.
It's not a Higgins boat on Omaha Beach.
Okay, okay, we've been here a long time.
Let's stop fucking around.
Main Street wants Wall Street to pay.
They think we're overpaid assholes.
There's no politician
who's gonna sign off on a bailout.
Why would you bail out people
whose sole job is to make money?
So, let's make this real simple.
Hank thinks he can sell
the good parts of Lehman to Barclays,
but someone has to take the real estate crap
that's weighing down the company.
Nobody knows how much this shit is worth,
but we know somebody has to buy it
to make a deal.
I don't like it. Nobody likes it.
Let's just suck it up and do it.
How many of you can kick in a billion
dollars to stop Lehman from going down?
I'm in. One billion.
Okay.
Goldman's in for a billion.
John?
Yeah?
Yes.
Yeah.
Yes.
We did it. Barclays came through.
Too goddamn right!
Barclays won't touch the real estate assets,
but the other banks agreed to cover those.
Call the board. Get everybody here.
We got a deal to make.
Okay.
Did you get him?
Geithner doesn't return my calls.
We can't get hold of any of those people.
At the end of the day,
they can't sign the deal without our say-so.
Yes, but do they know that?
Yes.
Yes, by all means,
now that he deigns to call, put him through.
Sir Callum, sorry I
haven't gotten back to you.
We're just sorting through
this Barclays deal for Lehman.
As Barclays' regulator,
we have serious concerns
about this proposed arrangement.
What? Are you saying
you won't approve the deal?
Even if we were comfortable
with the agreement, which we are not,
Barclays would need at least 30 days
for shareholder approval.
No, no, no, no, no, no. He can't.
He can't do this.
- Can they stop the deal?
- Yeah, of course they can stop the deal.
But even if they don't stop it,
the delay will kill it.
Let's call the Chancellor
of the Exchequer right now.
None of those assets
would be part of Barclays.
Yes, but if the FSA were to...
We need stability.
Of course.
... must be to the British financial system.
Surely you see that.
Yeah.
I wish you good night and good luck.
Good night to you, too.
"We don't want to import your cancer."
Those of you
who didn't want to assist the Barclays deal,
you can breathe a sigh of relief.
The deal's not gonna happen.
- Hey, we have the money.
- Deal's dead.
British regulator won't sign off.
There must be some pressure you can exert.
Trust me, I've done everything I can.
The British,
they grin-fucked us.
Paulson's got 100,000 employees.
Geithner has 200 lawyers.
Frigging Chris Cox has 3,000 people.
Not a single one of those assholes
could pick up a phone,
call the British, find out
if there was a deal to be made
before they spend the weekend
sweating us for cash?
Somebody dropped the ball.
They didn't drop the ball.
They dropped the ball,
kicked the coach in the nuts
and took a crap in the quarterback's mouth.
Of course.
The Fed will do something.
They have to.
We've got to announce
the Lehman bankruptcy now.
If Asia opens and this isn't locked down,
everyone's gonna assume the worst.
The sell-off will kill
the Merrill-B of A deal.
- Who's gonna make the announcement?
- I think it's gotta be SEC.
Yeah.
Okay.
Let's do it here.
How soon can we set that up?
Right away.
We could use the main floor,
the entrance hall.
With the statue behind me? Excellent.
Did Lehman actually agree to file?
Chris, call Lehman.
Make sure they file right now.
Absolutely.
AIG's a huge problem.
The books are a mess.
But from what I can tell,
half the banks in the world
are in bed with these guys.
Everyone who had
a piece-of-crap mortgage security
bought insurance on their risk from AIG,
and I mean everyone.
How could they let this happen?
They must have figured
real estate would never go down, ever.
Hank, Lehman still hasn't filed.
Cox has to make his announcement.
Asia's opening.
Has he talked to them?
He hasn't even called yet.
We told Fuld about Barclays.
We said Cox was gonna call.
He's got his entire board
sitting there, no call.
Cox is like a deer in the headlights.
Son of a bitch!
You are their regulator.
Call the Lehman board now.
Hank, it's a complicated situation where...
Asia's opening.
They don't announce,
the market goes in the toilet.
We have to consider the appropriate role
of government here.
Can I, as Chairman of SEC,
move forward and...
You guys are like the gang
that can't shoot straight.
This is your job.
Make the damn phone call.
Chris, this is Dick Fuld.
The board is in session. Everyone is here.
All the directors and the firm's counsel.
We understand
the Barclays deal has imploded.
We were hoping you might have some option
that we haven't thought of yet.
The markets are in turmoil, as you know.
A Lehman bankruptcy will help
settle that uncertainty
and, we believe, calm the market.
Both the Fed and SEC
are in agreement about this.
Let me...
I'm sorry, let me see if I understand this.
Are you directing us
to put Lehman into bankruptcy?
Give us a moment.
- He's muted.
- What the hell was that?
Tell them to file.
Everything said in that meeting
is or will be public record.
I can't tell a private company
to file for bankruptcy.
I don't have that power. Do I?
Do it.
The decision to file for bankruptcy
protection is one the board needs to make.
It is not the government's decision.
But we do believe
that the situation should be resolved.
So you're not directing us to file?
I'm not saying anything more
than I've just said. Thank you.
Take the vote.
- Mr. Akers?
- Yes.
Sir Christopher?
Yes.
Admiral Evans?
I'm sorry, but yes.
Chairman Fuld?
Dick?
Yes.
- Mr. Hernandez?
- Yes.
- Mr. Ainslie?
- Yes.
- Mr. Berlind?
- Yes.
- Mr. Cruikshank?
- Yes.
- Dr. Kaufman?
- Yes.
- Mr. Macomber?
- Yes.
P?
- Lehman's gone.
- Honey.
I should have known the British
were gonna be a problem.
I spoke to them two days ago.
I should have read between the lines.
You can't take all this on.
There's a lot of other people involved.
It's on me. I'm Treasury secretary
and the fourth-largest investment bank
in the country
failed on my watch.
I mean...
I don't know what's gonna happen.
Miss you, too.
Yo, taxi!
Jim, I'm in Midtown.
The ticker is...
What the hell am I looking at?
Hank, it's good.
"It is oddly reassuring
"that the Treasury Department
and the Federal Reserve
"let Lehman Brothers fail."
Okay, here it is. Here it is.
"Government intervention
would have been seen
"as a sign of extreme peril
in the global financial system
"or extreme weakness
on the part of federal regulators."
The New York fucking Times.
Yeah, and it's not just
them. It's everybody.
Thank you, Senator. I appreciate it.
Congress is liking it.
I'm not sure they should be
so happy about this,
but they like that we let Lehman go.
You stood strong. You've got brass balls.
It's what people need at a time like this.
What is the market doing?
Europe's only down a little.
Dow Jones futures only off 3%.
So you need to build on this
at the press conference.
The story is we did everything
we could for Lehman.
- We did.
- And the takeaway is...
No more bailouts.
Mr. Secretary.
How should we read
what happened with Lehman?
Read it as I think it's important
to maintain the stability
and orderliness of our financial system,
and the
moral hazard is something
I don't take lightly.
- Mr. Paulson.
- Mr. Secretary, sir.
How do you see the health
of the banking system today?
The way the markets are performing today,
it's a testament to how the financial
industry has come together
in an extraordinary set of circumstances.
The American people can remain confident
in the soundness and the resilience
of the financial system. Thank you all.
- Mr. Secretary.
- Mr. Paulson.
What?
Dow is falling off a cliff.
Four hundred points already.
And the credit markets are frozen.
Goldman and Morgan Stanley
are getting slammed by withdrawals.
The Lehman thing's killing them.
I should talk to the President
about how we'll contain the damage.
Before you speak to the President,
we've got another problem.
AIG.
Mr. Geithner is working with AIG
on a private-sector solution
and the Secretary is monitoring
their progress very carefully.
He's in close contact
with the Congressional leadership, most...
White House wants a briefing on AIG.
You're more informed about that than we are.
We've got the same information you do.
No, we don't believe
that Lehman's bankruptcy
is taking down all of Wall Street.
Okay, but how do you explain...
The AIG situation may have been,
you know, exacerbated by the...
And Barney Frank's office.
- Yeah.
- A surprise?
No, AIG has been struggling...
Why didn't you guys head off
this situation six months ago?
Because the requisite magic wand
wasn't available, Doug.
But if we do find one,
you will be among the very first to know.
Blankfein on four, urgent.
I have to go.
Hey, Lloyd.
The goddamn British
bankruptcy administrator
froze all of Lehman's customer accounts.
You didn't square this
with the British before you did it?
Geithner on five.
People are freaking out.
They can't get their money.
Not investors, clients.
If customers think their money
wasn't safe with Lehman,
they're not gonna trust us either.
No one will do business with us.
You're gonna have to hang on.
Tim.
Dan spoke to Moody's.
They're downgrading AIG tonight.
Would have happened anyway, but Lehman
put the whole thing into hyperdrive.
How far down are they?
French Finance Minister on six.
They don't know.
We're working on it.
Christine.
How could you let this happen with Lehman?
What on earth were you thinking?
We did everything we could, Christine.
You allowed it to fail, Hank.
It was a horrifying mistake.
It is having catastrophic
consequences all over Europe.
And AIG would be even worse.
The European banks
have tremendous exposure to AIG.
We need assurance you will not
fail to act, as you did with Lehman.
It is not just an American problem.
Thank you so much for...
John Mack.
- John.
- John, one.
The fallout from Lehman is killing us.
The short-sellers are all over us.
We're down 10% already.
You guys have no idea
what's going on out here.
How are your earnings?
Strong. We're gonna announce Friday.
Announce now.
Okay, Lloyd, sorry.
Hank, if depositors see
they can't get their assets out of Lehman,
the next step is gonna be a massive pullout
from all the investment banks.
Jeff Immelt from GE.
Jesus, what's Immelt calling you for?
I have to go. Jeff.
You gotta know what's going on out here.
We're having trouble funding
our day-to-day operations.
Our finance division is infecting
the rest of our business.
General Electric?
This thing is spreading
way past Wall Street.
I get that nobody wants to touch mortgages,
but we're making planes
and engines, light bulbs.
We're a healthy company.
If we can't finance our
day-to-day operations,
every business in America's
gonna be shutting down.
- Where's AIG?
- It closed at $2.
Tim thinks we need to do something big.
Ben agrees, and so do I.
What can we do? AIG's not even a bank.
The Fed can lend to non-banks
under unusual and exigent circumstances.
We're thinking of taking over
80% of the company.
Hank, we can't.
This morning we were lecturing
the entire country on moral hazard.
AIG has collateral. They have assets.
Lehman didn't. We couldn't lend into a hole.
It's not the same story.
Nobody's gonna care.
It's another bailout with no legislation.
The Hill's gonna go crazy.
The country's gonna go crazy.
The plane that we flew in on this morning,
leased from AIG.
Construction downtown, AIG.
Life insurance, 81 million policies
with a face value of 1.9 trillion,
billions of dollars in teachers' pensions,
it's everywhere.
You want too big to fail? Here it is.
You got a better idea?
The suggestion box is wide open.
I hate to do this right now,
but I'm gonna have to have
a press call first thing,
and I really don't know
what I'm gonna tell them.
Tell them Lehman exacerbated AIG.
The simultaneous payouts of CDOs
and credit default swaps
put catastrophic pressure on...
Go back further.
The global pool of investment capital...
She has to do this in English.
Start with the homeowners.
Okay, okay, here's how you explain it.
Wall Street started bundling home loans
together, mortgage-backed securities,
and selling slices
of those bundles to investors.
And they were making big money,
so they started pushing the lenders, saying,
"Come on, we need more loans."
The lenders had already given loans
to borrowers with good credit,
so they go bottom-feeding.
They lower their criteria.
Before, you needed a credit score of 620
and a down payment of 20%.
Now, they'll settle for 500, no money down.
And the buyer, the
regular guy on the street,
assumes that the experts
know what they're doing.
He's saying to himself,
"If the bank's willing to loan me money,
"I must be able to afford it."
So he reaches for the American dream.
He buys that house.
The banks knew securities based on
shitbag mortgages were risky.
You'll work on "shitbag."
So to control their downside, the banks
started buying a kind of insurance.
If mortgages default,
insurance company pays,
default swap.
The banks insure their potential losses
to move the risk off their books
so they can invest more, make more money.
And while a lot of companies
insured this stuff,
one was dumb enough to take on
an almost unbelievable amount of risk.
- AIG.
- And you'll work on "dumb."
And when they ask me why they did that?
- Fees.
- Hundreds of millions in fees.
AIG figured the housing market
would just keep going up,
but then the unexpected happens.
Housing prices go down.
The poor bastard
who bought his dream house,
the teaser rate on his mortgage runs out.
His payments go up. He defaults.
Mortgage-backed securities tank.
AIG has to pay off the swaps,
all of them, all over the world,
at the same time.
AIG can't pay. AIG goes under.
Every bank they insure
books massive losses on the same day.
And then they all go under.
It all comes down.
The whole financial system?
And what do I say
when they ask me why it wasn't regulated?
No one wanted to.
We were making too much money.
You'll work on
"We were making too much money."
Hey, Hank.
These are really mild, but they work.
I know the whole Christian Scientist thing,
that you don't take medicine.
But you need to sleep.
- Jim...
- Hank, not just for your own sake. Okay?
You don't look so good.
Just minutes ago, CNN has confirmed
that the Federal Reserve is negotiating
to rescue insurance giant AIG.
The negotiations could include
an $85 billion temporary loan
to stave off AIG's imminent collapse.
This is a blockbuster, folks.
About this time last night,
many on Wall Street
were fearing total disaster today.
So, another federal bailout
of another Wall Street giant.
Again, as we mentioned,
big, big financial news.
And this affects almost everyone
out there who has a 401(k).
The news comes about three and a half hours
after the stock exchange closed on...
Motherfucker.
We wanna go straight right now to Ali Velshi
to kind of give us a bottom line on this, Ali.
And then we're gonna get
a lot more in depth...
AIG securing an 85...
The credit markets are still frozen solid.
We keep dumping money
into these companies
so the markets will stabilize,
and nothing helps.
We can't keep doing this.
We rescued Bear with no legislation,
AIG with no legislation.
People think Fannie and Freddie
was a bait-and-switch.
I don't like it any more than you do,
but they were exceptional situations.
This situation demands an endgame
that does not rely on
unilateral action from the Fed.
This is a democracy.
We cannot be men behind the curtain
pulling the strings.
We need some kind of an overall solution
that heals the entire system.
And it has to be legitimate.
We've been putting off going to Congress.
It's two months before an election.
They can't vote yes to a massive bailout
of the entire banking system.
- They'd never get reelected.
- Hank...
We go to Congress,
publically state we don't have the firepower
to control this anymore,
and then they say no,
that is really the nightmare scenario.
The nightmare scenario's
already here, my friend.
We're in it.
P.
You can't put this all
on your own shoulders.
We're running out of options.
Then you just keep trying.
That's what you do.
Eventually something's gonna work.
I'm not sure that that is true anymore.
There's not a bank in the world
that has enough money in its vault
to pay its depositors.
It's all built on trust.
And, Wendy, we are so very close.
Morgan Stanley, Goldman are an inch away.
If the other banks stop trusting them,
if they pull back on interbank lending,
it's over in a matter of hours.
And from there it goes
too fast to stop, a run,
and not just on one bank,
I mean on the whole system.
And average people wondering,
"Is my money safe?"
They start pulling their cash.
And after that, lines outside the banks,
smashed ATMs.
A couple of weeks,
there's no milk in the store.
For the second time this week,
there was a massive sell-off on Wall Street,
the Dow Jones Industrial's
freefalling some 450 points
on news of a taxpayer-funded bailout
of the AIG insurance company.
Three of the five investment banks are gone.
The country's biggest
mortgage lender is gone.
Fannie Mae, Freddie Mac,
brought under government control.
The financial system is holding right now,
but for how long?
All the king's horses and all the king's men
are being brought to bear
to keep this thing together.
- Hi, Tim.
- I'm on the Street, Hank,
and people are just
going about their business.
They have no idea the whole thing
is about to fall down.
We're gonna have to go to Congress.
We don't have a choice anymore.
Okay.
How fast do you think
you can get them to move?
It's gonna be at least a couple days.
Goldman and Morgan Stanley
are going down now.
We gotta do something today.
Like what?
The market doesn't like
investment banks, right?
The money's saying "fuck you"
to the whole business model.
Yeah.
Yeah, so merge them with commercial banks,
turn them into regular banks
regulated by the Fed.
They can use depositors' cash.
It will give them access
to the discount window.
It's cheap government cash.
- You wanna make them bigger?
- It's a trade-off, Hank.
The upside is it'll stabilize them.
The downside is,
yeah, they'll be really fucking big.
Do it, Tim.
Godspeed.
Get me Blankfein.
Lloyd, call Vikram Pandit,
talk to him about a merger.
Tim, we're looking at all our options.
You don't have options, Lloyd.
There's a run on your bank.
You need money. Citi has deposits.
Citi's a mess, you're
organized. Call Pandit.
Yeah.
I want you to look at merging
with Morgan Stanley.
What, are you kidding me?
I just bought Bear.
We're still trying to make that work.
You didn't buy Bear.
You got Bear as a Christmas present.
The market's a fucking disaster, Jamie.
Talk to John Mack.
Hey, Geithner says
we should talk about a merger.
- You wanna do a deal?
- No.
Then why the fuck did
he tell me to call you?
I'm under orders to try and help you.
You're a prince, Jamie. A real prince.
Apparently, some people seem to think
combining our firms would be a good idea.
I want you to know I'm
flattered by this call.
Vikram, I'm not trying to flatter you,
believe me.
Geithner's calling.
Here comes goddamn eHarmony.
Hey, guess what. Jamie's not interested.
Do Wachovia.
They were writing mortgages
with their eyes closed.
Tim, it's a shit sandwich. Forget it.
I haven't been able
to reach you for four hours.
That is totally fucking unacceptable
on a day like today.
I had to run my team
through the Goldman proposal.
It's not gonna work.
You passed on Goldman
without even talking to me?
I don't need another trillion dollars
on my balance sheet.
Next time I call, pick up.
Fucker.
The problem is the toxic assets.
Let's just buy them.
We'll call it Cash for Trash.
When the market stabilizes,
we'll unload them.
Hopefully, Treasury will get its money back.
- Is that in the Break the Glass plan?
- Basically.
My copy's missing some pages.
Could someone else show me the rest of...
It's succinct.
We've got one shot with Congress.
You want them to write a piece
of legislation based on three pages?
Look, guys,
buying toxic assets is gonna be a nightmare.
Nobody knows what the stuff's worth.
It'll take forever to untangle.
These banks are going down now.
So what do we do?
You wanna unfreeze credit, right?
You want the banks to lend people money?
- That's the goal.
- So give them money to lend.
Capital injections?
Dan, come on.
I can't believe you're
pulling out the "N" word.
I'm not saying nationalize the banks.
I'm saying isolate the ones that are
really in trouble and make an investment.
- It's un-American.
- It's sure un-Republican.
You'd make the government a stockholder.
What, do we tell them how to manage
themselves, what to buy and sell?
Run them like the post office?
'Cause that works like a dream.
We make it temporary.
We make ourselves non-voting stockholders.
You can't just hand the banks
massive piles of cash.
Nobody's gonna go for it.
To the Republicans it's nationalization.
To the Democrats it's a bailout.
And the banks are gonna go ballistic.
Sorry, Dan, not gonna happen.
Kudos for out-of-the-box thinking.
Neel, if we go with your plan
to buy the assets,
how much is it gonna cost?
It won't work.
Look, the plan is three pages long,
totally vague.
If buying the assets doesn't work,
we'll nationalize the banks for you, okay?
- How much?
- To be safe, maybe a trillion.
The Congress will never
do a trillion, never.
There's $11 trillion in
residential mortgages.
There's three trillion in commercial
mortgages. That's 14 trillion, right?
You gotta figure about 5% default rate.
5% of 14 trillion is
$700 billion.
It's better than a trillion.
The only way to get this done
is to just scare them shitless.
That should be easy.
I'm scared shitless myself.
Troubled Asset Relief Program?
TARP, we're calling it.
This is your draft of the bill?
Subject to revision, certainly.
I've only got three pages here.
Am I missing something?
No.
You're just looking
for a big blank check in a hurry.
It's all for the banks.
You don't want a penny
for the average Joe
that's about to lose his house?
There's not a scrap of oversight
built into this,
not for the banks or
for you, for that matter.
You want us to simply hand over
$700 billion and trust you?
How is it possible you
didn't see this coming?
If you wanna rewind the
tape, we can do that.
But right now, the one thing
we don't have is time.
We need an announcement tonight
to calm the market.
We need legislation next week.
I spent my entire academic career
studying the Great Depression.
The Depression may have started
because of a stock market crash,
but what hit the general economy
was a disruption of credit,
average citizens unable to borrow money
to do anything, to buy a home,
start a business, stock their shelves.
Credit has the ability
to build a modern economy,
but lack of credit has the power to
destroy it, swiftly and absolutely.
If we do not act boldly and immediately,
we will replay the Depression of the 1930s,
only this time it will be far, far worse.
We don't do this now,
we won't have an economy on Monday.
Geithner.
We took the proposal down to Congress.
Are they gonna go for it?
They didn't like the fact that it was short.
I thought concise was a plus.
They thought it was flimsy
or arrogant or something.
I don't know what they think.
They couldn't get past it.
The market's in a death spiral.
They're gonna sink the bill
because the proposal is too fucking short?
They're working on it.
They're gonna make it longer,
among other things.
Look, just tell me you got something.
No. No, we're nowhere.
Who's left for Morgan Stanley?
China Investment Corporation.
Maybe Mitsubishi.
No, the Japanese will never do this deal.
How about Goldman?
Goldman's looking at Wachovia,
but they're so fucked,
even John Mack turned up his nose.
You gotta get that bill passed.
- I'm pushing.
- Push harder. Please.
This isn't working, Hank.
Hank?
Could you excuse me a moment?
Oh, my God. Gao, Gao.
I am so sorry about this.
There's nothing we can do.
It's New York, you know. We're lucky
we can still buy a beer at Yankee Stadium.
Don't worry about it. I should quit anyway.
When you're ready, we'll be inside.
Is there any movement there?
They made an extremely low opening offer.
I pretended I didn't hear it.
The markets can't open Monday
without a resolution of Morgan Stanley.
We really need you to do a deal.
- You need to call Jamie.
- I called Jamie.
He doesn't want us.
There's too much overlap.
We've spoken to him. He'll do it.
For what, a dollar? Why would I do that?
I got China Investment
and Mitsubishi kicking my tires.
I know those guys.
They're not gonna close a deal in time.
We want you to call Jamie.
Let me ask you a question.
35,000 jobs just disappeared in this city
between AIG, Lehman and Bear.
We make a deal with Jamie,
he'll fire 20,000 Morgan Stanley employees.
You think that's good public policy?
John, we are looking
at the whole system here.
The Chinese are leaving.
Gao found out
we're also talking to Mitsubishi.
I gotta go.
All right, get me Kuroyanagi
and a Japanese translator.
We're closing with Mitsubishi tonight.
Tim Geithner's calling again.
Cover your ears.
You tell Tim Geithner to fucking blow me.
I'm trying to save my company.
Put him on the schedule,
but make sure it's after lunch,
because that way I can
fit Madeline beforehand. And...
Morgan just made a deal with Mitsubishi.
So we're the only bank
with our dick still in the wind.
I'm calling Buffett again.
Grandpa, they keep calling.
What if it's important?
They always think it's important.
All right, I'll make it fast.
Warren, thanks for
calling back. How are you?
Just fine, Lloyd. What
can I do for you today?
I'd like to talk to you about
taking a stake in Goldman Sachs.
What do you have in mind?
Sounds expensive.
Maybe not.
You better have good news,
because I might be dead before we finish
haggling over TARP.
Buffett's throwing five
billion into Goldman.
We're off the ledge.
For the moment.
The October surprise arrived a little early,
with a game-changing jolt
to the White House race.
Call it a master stroke
or a desperate Hail Mary pass,
McCain announced he would
suspend his campaign
and asked for this Friday's
debate to be postponed
so he can return to Washington
to focus on the economic crisis.
Now is our chance to come together
to prove that Washington is once again
capable of leading this country.
Thank God he came back.
Like Daniel Day-Lewis
in Last of the Mohicans,
he will find us!
- They're blowing it up.
- What happened?
McCain wanted to swoop in and save the day,
but doesn't have any idea how to do it.
It's a 100-page piece of legislation
we've been carefully negotiating for days.
What, did he think they were
gonna sit around and spitball?
Yeah, when McCain got here
and found out that the deal
was basically done, he went apeshit.
The Republicans fell in behind their guy.
They wanna start all over again.
Democrats flipped out. Republicans dug in.
- Clusterfuck.
- Clusterfuck.
- Where's Hank?
- Still talking to McCain.
If you or anyone else does anything
that causes the next depression,
it is not gonna be on me.
I have a big mouth, Senator,
- a very big mouth.
- Hold on...
He's not threatening
the Republican presidential nominee, is he?
- Something's gotta be done.
- No, no. Excuse me, please.
Where are the Democrats?
They're right down this way.
- Is Nancy there?
- Yes. Yes, she is.
Thank you.
Nancy...
Gee, Hank. I didn't know you were Catholic.
I beg of you, don't blow this up.
It was a bad meeting,
but we need to get together on this.
We're not the ones trying to blow it up.
I just ask you to stay with us.
Please.
The House began debating the rescue bill
at 9:27 this morning.
At about 1:28 p.m.,
Congress did finally act.
- This is a squeaker of a vote.
- We are down to it right now.
It looks like the Democrats
delivered their caucus
and the Republicans so far have not.
What do you think they could do
to change the bill
to get a few Republican votes
over to the other side?
If they hang Wall Street CEOs,
I think that would get a few more votes.
I'm not sure what they could do exactly.
It is possible that the leadership
of the Congress would conclude
that there's nothing that can
get a majority of support
and see what Hank Paulson can do
and the administration can do.
Leaders are negotiating right now
who risks their seat.
And that's what I'm hearing.
Pelosi wouldn't have
brought the bill to the floor
if she didn't think it would pass.
I don't know the answer to that, Charlie.
I can't answer.
I'm just reading an e-mail
that's coming to me.
I think the bottom line
is they gotta go back to the drawing board.
Do they have the time, though, to do that?
Look at the Dow Jones Industrial Average.
You know you're gonna get a sell-off.
You guys, at this point, we just gotta
hold on to the sides of the kayak
and ride through this because...
They didn't pass it.
- They did not pass it.
- It just wasn't enough.
They're gonna end up being
nine votes short, Bill.
Say that again, Steve.
I think they're gonna end up
being nine votes...
If they get all six...
Five of the remaining votes,
they'll be 10 votes short now,
if they get all five remaining.
The writing is on the wall there.
And we're here down on the floor.
Of course,
traders have been standing around.
Look, we're all here in knots...
The networks are waiting for you
in the press room.
I can't even...
We have to go back again.
They don't get to say no on this.
Okay.
The White House wants a meeting.
Good. We'll come up with a new strategy.
The White House has to push harder
on the Hill.
Meanwhile, we need to keep working
on what we do with the money.
Let's act like this is gonna work.
In that case, let's talk
about cash injections.
- Here we go again.
- We can't nationalize the banks.
It's not nationalizing...
That's how Japan got itself
a decade-long recession.
Is that where we wanna go?
What else do we have?
Cash for Trash.
Buying toxic assets is still our go-to move.
All right. Find a way to simplify it.
Dan, work something up.
For discussion purposes,
let's see what it would look like.
For those who supported
the $700 billion Wall Street bailout,
it was a surprising and stunning failure
when the House of Representatives
voted to reject it.
It's a stinging defeat for President Bush,
delivered at the hands
of his fellow Republicans.
We put forth a plan that was big
because we've got a big problem.
The reality is that we're
in an urgent situation.
And the consequences
will grow worse each day
if we do not act.
- I know. I keep telling...
- Draft of the new bill.
Are they having any luck with it?
The White House thinks
they got a better shot of pushing it
through the Senate side first.
Hopefully they're right.
They asked us to back off
and let them handle it.
So I'm trying to back off.
Buying toxic assets isn't gonna work.
- Why not?
- It's too slow.
I think I've been saying that.
We knew it was complicated, but how slow...
Two months, maybe more.
How is it possible we didn't know how...
I didn't ask how long it would take, okay?
Can we move on?
So maybe we can talk
about capital injections.
Dan, we really can't.
I think we're gonna have to.
Even if Neel could expedite the process,
which seems unlikely,
the system is crumbling.
The banks need money now.
If cash injections are the most
efficient way to stabilize them,
then we can't back off
because we're uncomfortable being the men
who nationalized a few American banks.
It's faster, that's for sure.
It will push us back off the precipice, yes,
unfreeze the system.
We give them some money
and they lend it out.
The motion is adopted.
After rejecting the Bush
Administration's TARP plan
only four days ago,
the House passed it today.
The big question now, whether investors
will take comfort in the news.
Current indicators show the stock market
is continuing its free fall.
Hello?
Warren, it's Hank.
I'm sorry. It's late.
Am I waking you?
No, not at all.
Can I pick your brain for a minute?
Sure. What's the problem?
How do you get a healthy bank
to accept a capital injection?
I had to drag my ass
all the way here from California.
They wouldn't even tell me why.
Nobody knows what this is about?
Nope.
Talk to Jamie?
Yep. He'll be fine.
Did you tell him what was coming?
Did I tell him we're about to make him swallow
a capital injection he doesn't need? No.
I told him we need his help
and I asked him very politely
not to fuck with us today.
He got it.
She's here.
Gentlemen. We think this is gonna work?
Yeah. They're gonna love it.
We are of the view
that the United States needs
to take strong, decisive action
to arrest the stress
in our financial system.
Through our new TARP authority,
Treasury will purchase preferred stock
in each of the banks
represented in this room.
That stock will yield
5% the first five years,
9% after that.
We give you money. You lend it out.
It will unfreeze credit, stabilize
the banks, restore confidence.
Everyone will be better off
with more capital in the system.
And that is why all nine of you
will participate in the program.
Some of us don't need any capital.
You all need capital.
You have no idea what the market's
gonna look like in a year.
Neither do you.
I'm not one of you New York guys
with your fancy products.
Why am I in this room
talking about bailing you out?
The stronger banks will serve
as cover for the weaker banks.
If just some of you take it,
the money's a signal
that a bank is too weak to survive.
The market will devour it.
How much are we talking about?
A hundred and twenty-five billion.
Bank of America, 15 billion.
Bank of New York Mellon, three billion.
Citigroup, 25 billion.
Goldman Sachs, 10 billion.
JPMorgan, 25 billion.
Merrill Lynch, 10 billion.
Morgan Stanley, 10 billion.
State Street, two billion.
Wells Fargo, 25 billion.
What happened to buying toxic assets?
- Wasn't that the idea?
- It's too slow.
It'll be dead before we sort it out.
So, we're just handing
the reins over to you?
The deal's actually pretty good.
You turn your nose up at this now
and we have to rescue you later,
the terms won't be nearly as attractive.
It's cheap capital.
It's not the worst idea in the world.
It is for those of us
who already have capital.
We will be non-voting shareholders.
This will be a temporary measure.
What if we decline to be involved?
The Chairman of the FDIC
is sitting right there.
Tomorrow you'll find out
that you're not as well capitalized
as you think you are.
What kind of protections
can you offer on changes
for compensation policy?
If the government
is going to become a part-owner,
does that mean that the government
is going to dictate compensation?
Are you asking me about your bonus
right now, John?
I'm running a company.
If the Fed tells me I can't offer
competitive pay for talent,
you're gonna launch the biggest brain
drain this country's ever seen.
Is that the way you wanna run the banks?
Until the money is repaid to the Treasury,
there will be some limitations on tax
deductions and golden parachutes.
- There you go.
- I don't really understand
why there needs to be
so much tension about this.
The country is facing the worst economy
since the Great Depression.
If the financial system collapses,
it will take every one of you down.
Give me the papers.
- You can't just sign it.
- Oh, no?
- Not without your board.
- My board's on 24-hour notice.
I think they'll go along with it.
And if they don't, they'll fire me.
Anyone else?
Are they gonna do it?
They're calling their boards.
- That's a good sign.
- If they do go along with this,
we should announce
something alongside the injections,
maybe a program to buy up mortgages.
I'm not rushing out some half-assed plan
just to make it look like
we're doing something.
Maybe we just beef up the restrictions
on how they spend the money,
something to take the stink off.
Put more restrictions on
it, they won't take it.
One thing too many for today.
They almost bring down
the US economy as we know it,
but we can't put restrictions
on how they spend
the $125 billion we're giving them
because they might not take it.
What's this?
That is
a poison dart frog.
Wendy took it in Guyana.
Is this yours?
Al Capone's.
Eight out of nine are in.
- B of A is still waiting on its board, but...
- It's gonna go through.
I'll call the Speaker's office.
And we're gonna get you
on the phone with the President.
Okay.
Dow is up 900 points
just because we were meeting.
That's good.
That's good.
It was the right thing.
Absolutely.
I was prepared for more blowback.
They didn't have a choice. They knew that.
I certainly hope that they...
What?
I hope they use the money
the way we're asking them to.
They will lend it out, won't they?
Of course they will.
Of course they will.