[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, 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.
Does raw human emotion dictate your financial decisions? Or are we rational calculators of our own self-interest? Nova: Mind Over Money, PBS 2010
Our behaviour is bizarre when it comes to money. ibid.
So what did Adam Smith mean by ‘rational and self-interested behaviour’? ibid.
This link with emotion makes many rational economists reject the idea of bubbles. ibid.
Keynes said emotions could cause prices to soar and then collapse. ibid.
In 1792 Thomas Jefferson adopted the dollar as this country’s official monetary unit. Jefferson in particular spoke eloquently of the dangers of paper money. Money, Banking and the Federal Reserve, 2006
For more than twenty years the living standards of middle class Americans have steadily declined. ibid.
For most families one income no longer pays the bills. ibid.
The roots of our economic ills can be traced to central banking and our present monetary system. ibid.
There was no longer a one to one ratio of paper to gold. Now there could be three or four pieces of paper in circulation for every unit of gold in the vault. ibid.
This system became known as Fractional Reserve Banking. ibid.
Wall Street swiftly adopted the fear of bank failures to sell the idea of a central bank or lender of last resort. ibid.
In November of 1910 under the guise of a duck-hunting trip six men took a secret train ride to an exclusive private club on Jekyll Island, Georgia, to write a Central Banking Act. The classified gathering read like a Who’s Who of American banking. ibid.
When the Fed was established in 1913 it cut reserve requirements in half over the next four years doubling the money supply by the end of World War I. But the Fed’s real power lies in its monopoly to create money. ibid.
The Federal Reserve system adds another inflationary layer to an already unstable banking system. ibid.
Roosevelt confiscated the people’s gold. ibid.
There is not now nor has there ever been any direct control over the Fed by the president or Congress. The meetings of the Federal Reserve Board are held in secret. And nobody knows exactly what goes on. ibid.
A recent attempt to open the Fed to public scrutiny came in 1993 ... An independent audit of the Fed’s operations ... The proceedings of the open market committee video-taped with detailed minutes released within a week ... The President chooses the twelve heads of the Fed’s regional banks instead of powerful bankers. Predictably, Fed’s Chairman Alan Greenspan resisted the changes. What was surprising was the President Bill Clinton’s position. He declared the reforms would ‘run the risk of undermining market confidence in the Fed’. ibid.
Despite the established view, Greenspan and the Fed and big commercial bankers are not the inflation fighters they pretend to be; the Fed and its allied banks are not part of the solution to inflation and the business cycle, they are the problem itself. ibid.
A titan of Wall Street prepares to address his staff in New York, London and around the world. He wants to put an end to rumours the firm is in trouble. Crisis? What crisis? Twelve weeks later the bank went bust. It was the biggest bankruptcy in history. The Fall of Lehman Brothers, 2009
The weekend that changed the world. ibid.
For months Wall Street had been worried about Lehman’s because of the bank’s massive property investments. ibid.
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 $50 billion. ibid.
The so-called subprime 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 an 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 banksters
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