Hank Paulson: Financial Crisis a 100-Year Storm

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Sept. 12 (Bloomberg) -- Former U.S. Treasury Secretary Hank Paulson reflects on the 2008 financial crisis and discusses the health of the U.S. banking system. He speaks with Tom Keene on Bloomberg Television's "Street Smart." (Source: Bloomberg)

He is the 74th treasury secretary and i was flabbergasted two years, six months, 10 days.

I would have thought you were treasury secretary for 10 years.

That's what it felt like.

Did it flyby to only be be there two years, six months and 10 days?

It went quickly but i hit the ground running.

I had a year before the crisis to build relationships of trust with the president and that was clearly critical.

President bush was engaged in this.

The man was totally engaged.

He was a great loss.

He was accessible all the time.

I could get him early or get him laid.

What he did during the crisis is -- i could get him early or get him late.

I was his wartime general.

We had a good working relationship.

If you were the wartime general, what was mr.

Geithner ? i work for the president.

Geithner was a close partner.

The relationship that ben bernanke, tim geithner, and i had worked ordinary.

They were true partners.

The level of cooperation, mutual trust, it made the working relationship very unusual.

I saw him 10 days before and i literally did not recognize him from his exhaustion.

You would have to be a ceo to really understand what he was going through.

You have that respect it as a former ceo at goldman.

What was dick fuld going through?


Every ceo on wall street was tested.

This was a 100-year storm.

They were given the problems they had not seen in their lifetime and it was totally new.

Many of them working to keep the installment.

To be there and go down with your ship is very, very sad.

Your speech at the economic club of new york, you highlighted this.

It was something necessary for speaker pelosi's constituents and everyone else.

The public saw this as a bailout for wall street rather than a rescue for the economy.

Looking at the movie in my reading of the article, this is number one for hank paulson.

You did not get this to mainstream.

I was unable.


It was a difficult thing to do.

Communications of that broad audience, i thought it should be obvious that as treasury secretary of america, everything i was doing was to save the american people.

I knew how bad it would be if the system collapsed.

It was a communications challenge because i did not want to what i feared to come upon us.

The more i talked about what it would be -- i agree.

If it is the ancient american challenge of this trust of the east coast elite , out of michigan, you go to dartmouth, even though you are an east coast elite even though you were doing this from chicago.

Why they trust guys like you?

Where i was at my best was working with smaller groups, colleagues in the administration building trust based upon credibility, working together, be a nonpartisan.

I think, for me, as a public speaker going broadly first of all, for people to understand what we did and agree with it, you have to understand how severe the crisis was.

You had to understand that if the system collapsed it could be the great depression all over again.

They could lose their jobs.

I did not want to say it quite that bluntly because we were on the edge.

What i had to decide between communicating and stability, i always opted for stability.

What are your best practices for the elite to transfer their message to main street?

Lloyd blankfein has been far more successful.

Is that the message?

Is there another way to do this?

To do this job right anywhere today and particularly in the united states running any big global company is much more difficult than it has ever been.

There are many demands on a ceo.

One of the demands is speaking to the public and helping the public to understand you and your company, your business, and its value to society.

Banks are a huge part of our economy.

Our financial system, our banking system is the strongest in the world.

It's the most transparent.

It's the most efficient.

Its core strength.

It has problems, but it is an honorable profession.

Let's talk about the movie and move forward.

That is where your voice cracked in the trailer.

That's the heart of this.

You don't want to do this again.

Are you confident we cannot do this again?

This is the question i get asked of the most.

We will certainly have another financial crisis as well as we have bouts of panic there will be crises.

Most of them are manageable.

What we need to do is avoid these massive disruptions, like the great depression or this 2000 a crisis that easily could have been so.

I say the following.

The system today is much safer than it was.

We've made a lot of progress but we have more work to do.

We need to fix the number of flawed government policies beginning with fannie mae and freddie mac.

Let's talk about the issue of capital and leverage.

The simplistic answer from so many conservatives is to put more capital on the books.

Why is this so hard?

Why do jamie dimon and other elites fight the simplistic idea of just putting more capital on the books?

I'm a big believer that it is the best defense against failure.

We want capital and liquidity.

The banks are already much better capitalized.

Is it enough or do they need to be more like ubs and credit suisse?

We have the new regulations put out by the federal reserve and other regulators which call for a capital surcharge for the biggest financial institutions.

I think that's a very good first step.

On top of that, regulators now have the tools so they can manage the failure of any large institution.

Hank on hank.

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


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