Bernanke, Paulson Saved the World With TARP: Gregg

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Sept. 12 (Bloomberg) -- Judd Gregg, CEO at Securities Industry & Financial Market Association, recalls his personal experience in meetings with former U.S. Treasury Secretary Hank Paulson about the TARP program and the public perception of the program. He speaks on Bloomberg Television's "Bloomberg Surveillance."

Do you agree that hank paulson never got the message that it was a bailout for main street and not just the banks?

I think it is absolutely true.

I remember when we were asked to come up to the capital about 9:30 at night about negotiating tarp and secretary paulson and chairman bernanke came into the room and without any homonyms, chairman number 90 said, his secretary paulson doesn't get what he needs in the area of resources and looks ability, the entire banking system will fail and it will take with it every or most banks in america and we will go into one of the most severe potentially recessions or depressions in history.

There are estimates we were getting that up to 25% unemployment.

Talking about main street shutting down.

We had anecdotal evidence of major corporations that were incredibly strong, which are common names, not being able to move their money from one thing to another so they could open their branches.

We were on the verge of a massive crisis and the crisis would have affected the banking industry dramatically, but it would have affected americans even more dramatically because they would've had no way -- as the secretary alludes to the fact, the public perception is it was a bailout of the big eggs in the financial system.

It was demonized.

I happen to think chairman bernanke and secretary paulson saved the world, basically, financially, and made as capable of having a recovery that was actually doable versus being in a depression for a long time.

It became a four letter word and the politics of the day and totally misrepresented.

I heard secretary paulson speak last week and he didn't talk about it.

To me this is not about lehman, it is about aig.

So much more of this blowup was to do a -- what to do with aig.

A bailout to aig, to the european banks, which were hugely related to aig.

Where does aig fit into this?

It could have been a total disaster.

Much more than limits gekko yes.

Thank you.

Is shut down all the credit markets.

It is like every car transportation system in the world shuts down and there is no energy.

The system was shutting down, but there was a huge amount of money pouring in try to take on the banks coming in from a lot of funds.

I don't know where the money is coming from.

I can tell you no one knew it was going to happen at the end of the day, it was a scary, scary time and paulson and bernanke are going to go down in history as heroes for stepping up to this crisis.

Within this lehman, aig nexen is, i would say aig is not getting nearly the focus it should, are we in a better place now?

We are in a better place in the sense our banking system is much more highly capitalized, that many of the markets that were at issue here, the derivative markets are getting more transparency.

We have a system of basically putting in place living wills and we have the capacity to do stress tests.

I think we are much more sensitive to the underlying problems that were significant at the time.

Going down the road, there could still be another problem.

It has not been solved.

You have a huge contingent liability.

The simple fact, our banking and capital industry has moved forward effectively.

Senator gregg, thank you for joining us.

Bill george, thank you as well.

Let's round out the hour, the yen is stronger for a second day in a row.

U.s. equity market.

This text has been automatically generated. It may not be 100% accurate.

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