When the bank chiefs assembled that Friday evening it was clear from the start that there would be little sympathy from the government. ibid.
Few ever imagined that America’s fourth largest investment bank would fall so far and so fast. ibid.
Dick Fuld was to become the longest serving chief executive on Wall Street. ibid.
Dick Fuld also had an insatiable appetite for profits. ibid.
He had not been invited to the crisis meeting of chief executives. ibid.
Bank of America announced it had bought Merrill Lynch for fifty billion dollars. ibid.
The so-called sub-prime mortgage scandal was born. ibid.
The real money for Wall Street banks came not from selling mortgages to home owners but from selling bundles of these loans among themselves and other institutional investments. ibid.
It [Lehman’s] borrowed more and more money ... It’s called leverage. ibid.
Repossession rocketed and house prices slumped. ibid.
At their peak Lehman’s shares were worth eighty-five dollars each; they were now worth three cents. ibid.
Lehman’s was the catalyst for the crash in 2008. ibid.
Lehman Brothers is a hell of a lot bigger than Bear Stearns. The market is terrified. Yeah, but the Bear bail out ... The very large Bear Stearns’ assistance package created in expectation, false accounting and direct intervention from you. Too Big to Fail 2011 starring William Hurt & James Woods & Cynthia Nixon & Paul Giamatti & Edward Asner & Bill Crudup & Matthew Madine & Michael O'Keefe et al, director Curtis Hanson, Jim Wilkinson to Hank Paulson
All I can do is call Warren Buffett. ibid. Hank Paulson
There’s going to be a run on this bank. ibid. Lehman board meeting
The amount of debt your country carries is a terrible vulnerability. ibid. Chinese to Paulson
Geithner: You want me to allow them to raise their leverage so they can buy a bank that’s about to fail because it was over-leveraged?
Paulson: You have a better idea? ibid. business breakfast
We got a real problem here. Mr Flowers, my people tell me you are the man to talk to. We’ve got a real problem here. It looks very much like we are about to run out of cash. ibid. Robert Willumstad, CEO AIG
The closer they get to Lehman the more it looks like a toxic waste dump. ibid. Paulson to Geithner
Got anybody at Treasury who wasn’t at Goldman? ibid. Christopher Cox, SEC chairman
We are not bailing out Lehman. ibid. Paulson
Monday morning Lehman will no longer be able to honour its obligations. ibid. Paulson to meeting of bankers
Seventy fucking billion and no collateral. ibid. Geithner to Paulson
The Federal Government is snaking my deal? ibid. Dick Fuld
Lehman’s gone. ibid. Paulson to wife
Business in America’s going to be shutting down. ibid. Jeffrey Immelt, General Electric
Too big to fail? Well here it is. ibid. Paulson
What do I say when they ask me why it wasn’t regulated? ibid. Press Relations woman
We need an announcement tonight to calm the market; we need legislation next week. ibid. Paulson
Buying toxic assets is not going to work. ibid.
How do you get a healthy bank to accept a capital injection? ibid.
They almost bring down the US economy as we know it, but we can’t put restrictions on $125 billion? ibid. press woman
Following the passage of TARP banks made fewer loans and markets continued to tumble. Unemployment rose to over 10% and millions of families lost their homes to foreclosure. ibid. caption
In 2010 compensation on Wall Street rose to a record $135 billion. Ten banks now hold 77% of all US bank assets. They have been declared too big to fail. ibid.
Have you taken a large home loan? Or did you put your savings in stocks, mutual funds or bonds? If not, you can relax. But all of us who did are living on borrowed time. This is the story of the greatest financial crisis of our time: the one that is on its way. Overdose: The Next Financial Crisis; viz Johan Norberg, Financial Fiasco, 2010
In 2003 it [interest rates] was cut all the way to 1%. ibid.
Greenspan argued that the Fed should never remove the punch bowl. But rather start refilling it when the party started to peter out. And if things went bad, the Fed would clean up the mess and tend to the hangover. ibid.
The big banks dared to make riskier loans because they had started repackaging loans and selling them to others as securities. ibid.
The rating agencies that rate securities gave the mortgage-backed bonds their highest rating ... The rating agencies were being paid by the sellers of securities. ibid.
The difference is that this bubble is much bigger. ibid.
Even banks who don’t want the money will be forced to take it, so that the public won’t know which banks are on the brink of collapse. ibid.
Congress approves the biggest financial bail-out in history: $700 billion. ibid.
President Bush gives billions of dollars to General Motors and Chrysler. ibid.
On February 7th 2009 Obama approves a stimulus package worth $787 billion; with the Bush stimulus package from year before US politicians have now spent close to $1 trillion to stimulate the US economy. ibid.
We have been saved from the consequences of one burst bubble by inflating a hundred new ones all around the world. ibid.
Bush almost racked up more US debt that all presidents before him combined. ibid.
Sir Humphrey: Well, you’re a banker. Surely you read the Financial Times?
Sir Desmond the banker: Can’t understand it. Full of economic theory. Yes, Minister s2e6: The Quality of Life, BBC 1981
Difficult for the board to walk four hundred yards to lunch. And impossible to walk back afterwards. ibid. Sir Desmond to Jim et al
It’s the greatest bank robbery in world history. And the banks are doing the robbing. Gerard Celente
Let them take their losses. Gerard Celente
Each time and every time a bank makes a loan, new bank credit is created – new deposits – brand new money. Graham F Towers, governor Bank of Canada 1934-1954
Has Financial Development Made The World Riskier? Raghuram Rajan, Chief Economist IMF paper to annual Jackson symposium banksters’ conference 2005
My main concern has to do with incentives. Raghuram Rajan
It’s very easy to generate performance by taking on more risk. And so what you need to do is compensate for risk-adjusted performance and that’s where all the bodies are buried. Raghuram Rajan
What is robbing a bank compared with founding a bank? Bertolt Brecht, The Threepenny Opera
It's getting hard to wrap your brain around subprime mortgages, Wall Street’s fancy name for junk home loans. There's so much subprime stuff floating around – more than $1.5 trillion of loans, maybe $200 billion of losses, thousands of families facing foreclosure, umpteen politicians yapping – that it’s like the federal budget: It’s just too big to be understandable.
So let’s reduce this macro story to human scale. Meet GSAMP Trust 2006-S3, a $494 million drop in the junk-mortgage bucket, part of the more than half-a-trillion dollars of mortgage-backed securities issued last year. We found this issue by asking mortgage mavens to pick the worst deal they knew of that had been floated by a top-tier firm – and this one’s pretty bad.
It was sold by Goldman Sachs (Charts, Fortune 500) – GSAMP originally stood for Goldman Sachs Alternative Mortgage Products but now has become a name itself, like AT&T and 3M.