The banks were so large and inter-connected the government felt it had to bail them out. Because their failure could bring down the entire economy. They are Too Big To Fail. ibid.
The loans were part of an unprecedented intervention in the financial system. ibid.
Now the president decided to revive a central theme of his campaign – reforming Wall Street. ibid.
None of the bank CEOs had been fired or prosecuted. ibid.
This season New York banks set aside twenty billion dollars in bonuses. Since the crash of ’08 banks have paid out more than eighty billion in bonuses. Frontline: Money, Power and Wall Street IV
Cathy O’Neil, a mathematician, came to Wall Street in 2007 after beginning her career in academia. ibid.
For most of the last century bankers made the same salaries as lawyers, doctors and engineers. ibid.
Many American banks found London preferable to New York. ibid.
The country suddenly owed hundreds of millions of dollars of fees and penalties to its debt holders including J P Morgan. ibid.
So bankers descended on European capitals offering derivatives solutions. ibid.
Italy and J P Morgan entered into a currency swap. ibid.
Greece would also go on a massive spending spree. ibid.
Between 2001 and 2008 Greece’s debt had doubled. No-one it seemed wanted to ask any hard questions. ibid.
With the markets no longer willing to provide Greece cheap credit the country had to cut spending. People took to the streets in protest. ibid.
The five biggest banks in America have become larger ... 56% of the American economy. ibid.
‘A very cruel and destructive god.’ ibid.
On September 18th 2008 the Secretary of the Treasury Henry Paulson and the Chairman of the Federal Reserve Ben Bernanke arrived for an emergency meeting of the Cabinet. In the past seven months they have bailed out one bank and let another one fail, nationalised three of the nation’s largest companies and watched in horror as the credit markets froze. Frontline: Inside the Meltdown, PBS 2009
The road to riches for Bear [Stearns] was simple: buy hundreds of mortgages, then bundle them into securities and sell them to investors. ibid.
Bear had borrowed heavily to invest in toxic assets and other high risk securities. ibid.
They found billions in sub-prime default loans. ibid.
Bear had made credit-default-swap deals worth hundreds of billions of dollars all over Wall Street and around the world. ibid.
A shotgun marriage between Bear and J P Morgan. ibid.
30% of Bear stock was held by its own employees. At the end of the week that stock was selling for $30 a share; J P Morgan was offering $4. ibid.
This time it was the investment bank Lehman Brothers. ibid.
Moral Hazard trumped systemic risk. ibid.
The world’s largest insurance company AIG had invested tens of billions of their insurance profits in risky investments tied to the housing market. ibid.
With the market crashing, Congress felt intense pressure to reconsider Paulson’s plan to buy the toxic assets. ibid.
Paulson said the entire banking system was in trouble. ibid.
Moral Hazard was a thing of the past. ibid.
They created the largest bank in America. But it was troubled from the beginning. Government took over. Frontline: Breaking the Bank, PBS 2009
2008: The markets were teetering. Nobody knew how bad it was going to get. On one weekend in September the entire American financial system would be changed. ibid.
[Henry] Paulson would push the bankers to handle the Lehman crisis on their own. ibid.
[John] Thain realised he had no choice: he agreed to sell Merrill Lynch to Bank of America for $50 billion. ibid.
Lehman Brothers was headed for bankruptcy. ibid.
Paulson had bet the markets would take care of themselves; he would soon discover he was wrong. ibid.
Paulson received the money – $700 billion known as TARP – Troubled Asset Relief Program. ibid.
Paulson gave each man a single piece of paper spelling out the conditions. ibid.
In one day everything had changed. ibid.
The marriage between Bank of America and Merrill Lynch was already showing signs of strain. ibid.
Merrill’s toxic assets were eating a hole in the balance sheet. ibid.
Long before the economic meltdown the story of one woman who tried to warn about the threat to the financial system. Before the toxic assets poisoned the economy, she warned of their danger ... Alan Greenspan v Brooksley Born and The Warning. Frontline: The Warning, PBS 2009
Reagan made Greenspan the most powerful banker in the world – the chairman of the Federal Reserve. ibid.
In 1993 Bankers’ Trust, one of the largest banks in the country at the time, had sold derivatives to Proctor & Gamble. The lawsuit set the stage for a stunning revelation: Bankers’ Trust employees took advantage of the fact that derivatives were too difficult to understand. ibid.
Trillions of dollars and the biggest banks in the country operating in secret. ibid.
Born’s warning became a prophecy. ibid.
The Wall Street banks were pressured to bail out LTCM themselves. ibid.
Some in Congress began to clamour for regulation. ibid.
Alan Greenspan had no intention of yielding. ibid.
Congress did decide to do something about Brooksley Born – they stopped her entirely. ibid.
Wall Street was largely left to regulate itself. ibid.
We need to reconsider and rethink perhaps the very foundations of our economic and monetary system. Professor Quentin Taylor
You want to know what the mother of all bubbles was? It came out of nowhere by chance. They called it the Cambrian Explosion. Wall Street: Money Never Sleeps 2010 starring Michael Douglas & Shia LaBeouf & Josh Brolin & Carey Mulligan & Eli Wallach & Susan Sarandon & Frank Langella & Austin Pendleton & Sylvia Miles & Venessa Ferlito & Jason Clark et al, director Oliver Stone
He’s out with a new book and it is a shocker, believe me. It is called Is Greed Good? ibid.
Guys, we’re looking at an unprecedented meltdown now. ibid.
Three-quarters of the banking houses at this time are holding the same paper, and you are going to let Keller Zabel fail? ibid. Lou at the Federal Reserve
What about Moral Hazard? ibid. Bretton
You’re pretty much fucked. You don’t know it yet but you are the Ninja generation: no income, no job, no assets: you’ve got a lot to live for too. ibid. Gekko’s lecture
Greed is good: now it seems it’s legal. ibid.
They’re WMDs: they’re weapons of mass destruction. ibid.
And the beauty of the deal: no-one is responsible. Because everybody is drinking the same Kool-Aid. ibid.
The mother of all evil is speculation, leveraged debt. ibid.
It’s a bankrupt business model: it won’t work. It’s systemic, malignant and it’s global, like cancer. ibid.
No-one else in this market has had the balls to commit suicide. ibid. Gekko to Jacob
Money’s a bitch that never sleeps. ibid.
You’re not doing her any favours. And you’re not preventing it from happening again. ibid. her to him
It was one of my co-conspirators who tipped off the Feds. And that pious piranha Bretton James – he had just enough money to sink me. ibid. Gekko to Jacob
This is the greatest bubble story of all time ... They called it Tulipomania. ibid.
Your firm knows sub-primes are crap. ibid.
This is too big to fail ... There’s about seventy plus trillion out there in credit default swaps held by roughly seventeen banks, and we do not know where the bottom is. ibid. Bretton to Bill at Federal Reserve