By Edward Angly, copyright 1931




The President and the Bankers


OCTOBER 2, 1930.

During the past year you have carried the credit system of the nation safely through a most difficult crisis.  In this success you have demonstrated not alone the soundness of the credit system, but also the capacity of the bankers in emergency.

Address before the annual convention of The American Bankers Association, Cleveland.


OCTOBER, 1931.

On September 8, I requested the governors of the Federal Reserve banks to endeavor to secure the co-operation of the bankers of their territory to make some advances on the security of the assets of closed banks or to take over some of these assets, in order that the receivers of those banks may pay some dividends to their depositors in advance of what would otherwise be the case pending liquidation.  Such a measure will contribute to free many business activities and to relieve many families from hardship over the forthcoming winter, and in a measure reverse the process of deflation involved in the tying up of deposits.





THE GREATEST RISK IS NOT TAKING ONE [so if you tried to restrain this you’d seem profoundly: weak, whiny, defeatist, controlling, unrealistic, counterproductive, opinionated, manipulative, negative, moralistic, etc.  Sure, post-scandal AIG CEO Edward M. Liddy said, “I have seen the good side of capitalism.  But over the past six months, since agreeing to take the reins of AIG and reviewing how it was run in prior years, I have also seen instances of the bad side of capitalism,” but one could also call the gutsiness of AIG in its PIG era, “character-building,” giving plenty of backbone and fortitude.]

—AIG ad

FEBRUARY 26, 2009

What happens to AIG has the potential to trigger a cascading set of further failures which cannot be stopped except by extraordinary means.  Permitting AIG to fail would be even more serious today than in September [the disastrous Lehman Brothers bankruptcy], especially in view of the support of the U.S. government.  Public confidence in financial institutions is at a nadir and it is questionable whether the economy could tolerate another shock to the system that a failure of AIG would produce.

statement to the Treasury Department
begging for $30 billion more of a bailout,
to add to the $152 billion it had already gotten

(So the public is supposed to have more faith in Wall Street if artificial guv’mint intervention is the only thing that could save them?)


Our Firm

  • Lives the mission... connects it to business execution

  • Promotes & protects the Firm... its brand, culture & economic health

  • Fosters teamwork & trust across the Firm

  • Enacts a powerful future for the Firm through vision & strategy

Our Clients

  • Delivers the Firm to customers; provides the best resources, practices, and ideas from across the Firm

  • Constantly seeks to understand what’s on the customer’s mind, runs the business accordingly

  • Drives for origination expansion... with existing and prospective customers  [Therefore, “Introduction to Management” didn’t mean just management of office personnel, etc.]

Our Shareholders

  • Acts as a shareholder... keeps expenses lean while investing in the future

  • Operates within the risk appetite of the Firm while achieving the best returns possible [You say that partial liars’ loans for commercial real estate are acceptable (See the Lehman Brothers’ ad at the bottom of this webpage.)?  OK, if that’s what you want...]

Our People

  • Recruits the best people; assimilates & mentors them effectively

  • Demonstrates respect for others and for work/life balance and diversity... cares

  • Develops his/her people... provides for stretch assignments, training, succession

  • Sets a high performance bar, and makes tough and timely decisions on poor performers

  • Provides regular feedback & accountability, ties them to objectives and metrics

  • Builds global and diverse teams & capability

Personal Leadership

  • Acts with the highest integrity... has the courage to do the right thing

  • Is a good and committed communicator... with employees, clients, partners

  • Challenges outdated conventions [What did they consider to be outdated conventions, stodginess in banking?], searches for opportunities to change & grow

  • Keeps ego in check... is viewed as approachable & open minded

  • Makes him/herself visible and available... to clients, employees, and in regions, communities

—Lehman Brothers,
Introduction to Management course book,
which tends to be about good people skills


Similarly, although regulators in the United Kingdom generally were more permissive than U.S. regulators regarding derivatives trading, they took a much harder line in questioning the “suitability” of complex derivatives, such as structured notes.  Laws in both the United States and the United Kingdom required that the seller of financial instruments take into account the sophistication of the buyer, and not sell “unsuitable” financial instruments.

Frank Partnoy,
Infectious Greed,
How Deceit and Risk Corrupted the Financial Markets


(This embroidered Lehman Brothers barbecue apron certainly appeals to unsophisticated decision-making in buying risky investments, but as long as the investments aren’t complicated, that seems fine!  Of course, there’s no telling how arcane “Lehman Brothers high yield” got, i.e. the “nuclear waste” of derivatives!)


APRIL 15, 2009

I look at Wall Street and whether it’s Bear Stearns or Lehman Brothers, I was hearing that—oh, for years.  The guys at Lehman were the smartest guys on the Street.  They’re great geniuses and everything else.  Well, they’re all gonzo.  I mean, they’re—it’s—the firm was wiped out.  The head man is going to be fighting lawsuits for the rest of his life.  [Oh, poor Fuldie!]

—Donald Trump,
interview on Larry King,
about his book Think Like a Champion,
on how victims of the meltdown could take care
of themselves best by empowering themselves


Our goal is to allow thrifts to operate with a wide breadth of freedom from regulatory intrusion.

—James Gilleran,
director of the Office of Thrift Supervision

MARCH 17, 2004

Throughout his entire career Weill has created successful businesses out of smaller, seemingly unworkable pieces; filled product vacuums no one else even realized were void; and forced issues that no one else had the gumption to tackle.  His daring dealmaking tactics were never more evident than while forming Citigroup, as he lobbied Congress to deregulate the financial services industry and ousted his co-CEO in a public power struggle.

—Publisher’s Notes,
Amey Stone and Mike Brewster,
King of Capital, Sandy Weill and the Making of Citigroup


(on the back cover)



There are those who believe that the very existence of Citigroup poses a major risk to the United States and its citizens.  According to this argument, huge global banks like Citigroup have become “too big to fail.”  If Citigroup somehow teetered toward bankruptcy, the thinking goes, the U.S. government would be obliged to stave off widespread financial panic by bailing it out, leaving taxpayers to foot the bill.

As long as Weill continues to manage these risks as well as he has, he will likely remain at the helm of Citigroup.

...Banks were eventually punished harshly through legislation passed later in 1933.  The landmark Glass-Steagall Act—enacted the year Weill was born—was one of the defining pieces of financial legislation in American history.  More than just a law, the Act was a regulatory broadside at the banking industry.  It divided the financial world into investment banks, which underwrote and traded securities, and commercial banks, which took in deposits and lent companies money.

The law would stand essentially unchanged for 65 years until Weill devised the epic merger that created Citigroup and pushed Congress to repeal the anachronistic legislation.

...That Steinberg, who went on to become one of the iconic corporate raiders of the 1980s, was taken aback by the hunger and aggressiveness of Carter, Berlind & Weill [in 1968] speaks volumes about the firm at that time.

...It’s a basic fact of life on Wall Street that within the froth and speculation of a bull market are sown the seeds of later financial meltdowns.

...Rohatyn’s Crisis Committee established the Big Board Special Trust Fund to provide capital to firms in danger of toppling over.  There were some firms that everyone wanted to see stay afloat, fearing their demise would start a chain reaction and bring down all of Wall Street with it.  One of those firms [in 1970] was Hayden Stone.

... Many felt burned by their involvement with Wall Street.  They weren’t swayed by arguments that Hayden Stone had to be saved or all of Wall Street might fall like dominos.  “They said, let the whole damn thing go down,” recalls Hartzog.  But because they all had millions in Hayden Stone stock, most could be convinced to go along.  The investors buckled one-by-one until just one was left, Jack Golsen of LSB Industries.  Recalls Hartzog:

Golsen was so mad and upset we didn’t even bother with him until we got everyone else.  He thought the firm deserved to fail and shouldn’t be able to scrape through the situation.  He was willing to sacrifice all the money he had for principle.  Nobody in New York understood that.

Years later, some observers believed that Golsen’s perspective had merit, that Wall Street had brought the calamity on itself and shouldn’t have been bailed out.

...Kempner remembers the Shearson negotiating team as tough, but fair.  “Was it a tough negotiation?  All successful people are tough, or they aren’t successful,” Kempner says.

...Peter Solomon, a former vice chairman of Shearson Lehman Brothers, says Weill’s basic psychology played a role.  “He always wanted to be king of the world,” Solomon says.  “His goal has always been to be the biggest.  It’s what he is.  He always wanted to go one level more.”

...Mergers of two huge companies often draw opposition because they create organizations that are seen as just too powerful.  One worry is that the new company becomes so large and influential that, if it ever teetered on bankruptcy, the federal government would have to bail it out, much as it did with the airline industry following the September 11 terrorist attacks.  The costs of such federal bailouts are inevitably passed on to taxpayers.  A corollary of this “too-big-to-fail” theory is that because companies understand all too well that a federal bailout awaits if business tanks, they are inclined to take undue risks.

This concern was at the center of much of the opposition to the Citicorp-Travelers deal.  Consumer advocate Ralph Nader, one of the merger’s biggest critics, believed that by allowing the two gigantic financial services companies to merge, the government was essentially granting them state-sponsored immunity from market conditions.  Nader called the groundswell of Congressional support for the merger an example of “state capitalism or corporate socialism,” when he testified at a Congressional hearing on financial reform just days after the merger was announced. He further argued:

What we are seeing here is not only explicit, ongoing, often subtle subsidization of the banking industry by federal government agencies, but we are seeing the “too-big-to-fail” approach....  So we are dealing here in a sense with Uncle Sam, the ultimate guarantor of a supposedly capitalistic financial sub-economy.  That has very, very important consequences.

As it turns out, however, Citigroup has turned the “too-big-to-fail” theory on its head.  The truth is that Citigroup, under Weill, is so well-diversified that there seems little chance of it running into crippling financial problems.  Citigroup’s reach and global nature—two of the reasons people ask whether it’s become too large—are actually two of its major strengths.  Few companies in the world can boast such geographic diversification, coupled with strength across disparate businesses.  Crises that have buffeted the bank in the past—bad real estate loans, poor bets on technology, emerging market loan defaults-would hardly put a dent in today’s Citigroup.

...In the two weeks before announcing the merger, Weill made calls to President Clinton, Treasury Secretary Robert Rubin and Federal Reserve Chairman Alan Greenspan, giving them advance warning that a major deal was coming.  Weill and Reed knew the deal violated the 1933 Glass-Steagall Act requiring that commercial and investment banking be kept separate and didn’t want to spring the news on Washington.  Giving advance notice also enabled Weill and Reed to make their case about why such a deal should be allowed to go through before the public weighed in.

...[Arthur] Levitt said [when testifying before Congress], in part:

The development of American financial services has already outstripped the legislative framework that governs those services. The question is no longer whether financial modernization will take place, nor even when it will take place. The only remaining question is how—by banking regulators continuing to enlarge the gaps in the old law or by Congress articulating a more comprehensive vision through a new law?

...[after Glass-Steagall was repealed]  Only time would tell whether the freedom to acquire new companies and expand into new businesses around the world will ultimately come back to haunt Weill and Citigroup [and those who’d have to bail them out].  So far, it hasn’t.

—Amey Stone and Mike Brewster,
King of Capital, Sandy Weill and the Making of Citigroup


MARCH 8, 2009

Citi’s always been a problem child.

— Richard C. Shelby,
Senator, Alabama

FEBRUARY 17, 2009

A new and particularly difficult set of regulatory challenges arises because of financial markets’ recently proved conclusion that certain financial institutions have become too big to fail, a description that gives them a highly market-distorting special competitive advantage in the pricing of their debt and equities.

In any event, we need not rush to reform.  Private markets are imposing far greater restraint at the moment than would any of the current sets of new regulatory proposals.

—Alan Greenspan,
speech to the Economic Club of New York


Less talk.  Make it happen.

—Royal Bank of Scotland ad


MARCH 22, 2009

[Vince] Cable’s [Liberal Democrat treasury spokesman] unidentified whistleblower described how [in the offices of RBS]:

• The lobby outside Goodwin’s office was decorated with wallpaper costing £1,000 a roll.

• £5.3m was spent refurbishing a grade I listed building for his hospitality use.

• £100,000 a month was spent on part-time chauffeurs.

• Fruit was flown in from Paris.


—Jill Treanor,
The Guardian

(It’s very clear why they wanted to minimize talking and maximize action.)

APRIL 1, 2009

A couple of windows were broken at the Royal Bank of Scotland [during sometimes-violent protests], which is Britain’s equivalent of AIG.  It is the poster boy for bad capitalism, if you like.

—Richard Quest,
British correspondent,

APRIL, 2006

[The dispersion of credit risk through financial innovations] has helped to make the banking and overall financial system more resilient.

—International Monetary Fund

MAY 8, 2006

[New acquisition, giant mortgage lender Golden West Financial] are obsessed with conservative underwriting....  They have no subprime origination.

—G. Kennedy Thompson,
CEO, Wachovia

JANUARY 17, 2007

As you’ll recall, I have been pretty pessimistic on the housing market for the last couple of years... so... we’ve been diversifying our mix of businesses....  We tightened underwriting, we decreased production volume by about half in the subprime area... and we decreased the subprime portfolio....  As the housing market has softened as expected, what I have really seen is a continued very good performance out of most parts of the portfolio.

—Kerry K. Killinger,
CEO, Washington Mutual


I never had a clue about the amount of off-the-cliff activity that was going on at Washington Mutual, and I was in constant contact with the company.  There were people at WaMu that orchestrated nothing more than a sham or charade.  These people broke every fundamental rule of running a company.

—Vincent Au,
president of Avalon Partners, an investment firm

APRIL 16, 2007

Our view regarding the quality of the Golden West underwriting practices has just continued to grow stronger.

—Don Truslow,
Chief Risk Officer, Wachovia

APRIL 22, 2007

If we believe the [Bear Stearns internal report is] ANYWHERE CLOSE to accurate, I think we should close the funds now....  If [the report] is correct, then the entire subprime market is toast.

—Matt Tannin,
Bear Stearns portfolio manager

APRIL 25, 2007

So from a structural point of view, from an asset point of view, from a surveillance point of view, we’re very comfortable with exactly where we are.

—Matt Tannin,
Bear Stearns portfolio manager

JULY 17, 2007

I think proactive, aggressive risk management has put us in an exceptionally good position....  We have seen significant reductions in our exposure to lower-rated segments of the market.

—Jeffrey N. Edwards,
CFO, Merrill Lynch

APRIL 23, 2009

NEW YORK—Federal Reserve Chairman Ben S. Bernanke and former Treasury Secretary Henry M. Paulson Jr. threatened to remove the management and board of Bank of America unless it acquired ailing investment house Merrill Lynch late last year, according documents released today by New York State Attorney General Andrew Cuomo.

...Paulson told New York investigators that he made the threat to remove the leaders of Bank of America at the request of Bernanke, the documents state.  The two men were gravely concerned about the danger to the wider financial system.

—Tomoeh Murakami Tse and David Cho,
Washington Post

JULY 20, 2007

Because the way these [“pick a payment option,” adjustable-rate mortgage] loans are underwritten, we’re not seeing any meaningful increases in losses in the portfolio, and we don’t expect to see any rises in losses as we look forward over the next few quarters.

—Don Truslow,
Chief Risk Officer, Wachovia

MAY 2, 2007

The consumer has to be an idiot to take on one of those loans [Option Adjustable Rate Mortgages], but it has been one of our best-performing investments.

—John Devaney,
hedge-fund manager

AUGUST 23, 2007

[An analysts’ report that Countrywide had liquidity problems] was totally irresponsible and baseless....  every one of these [crises] you come out of stronger, better, and with less competition.

—Angelo Mozilo
CEO, Countrywide, to CNBC

MAY 13, 2009

Countrywide Financial Corp.’s former Chief Executive Officer Angelo Mozilo may become the highest ranking executive to be targeted by U.S. regulators investigating the subprime mortgage crisis.

Securities and Exchange Commission attorneys notified Mozilo weeks ago that they plan to recommend the agency file civil-fraud claims against him, the Wall Street Journal reported today, citing unidentified people.  The agency may claim he violated insider-trading laws or withheld material information from investors, the newspaper said.

Bloomberg News

JUNE 4, 2009

This is the tale of two companies.  Countrywide portrayed itself as underwriting mainly prime quality mortgages using high underwriting standards.  But concealed from shareholders was the true Countrywide, an increasingly reckless lender assuming greater and greater risk.

—Robert Khuzami,
director of the SEC’s Division of Enforcement,
when charges were filed

AUGUST, 2007

It is hard for us, without being flippant, to even see a scenario within any kind of realm of reason that would see us losing one dollar in any of those transactions.

—Joseph Cassano,
 head of AIG’s London’s office,
invested $500 billion in credit default swaps,
veteran of Drexel Burnham Lambert



The next time someone calls you a one-way, egotistical son-of-a-bitch, don’t forget to thank them.  They have just provided a strong endorsement of your mental health.  “Self-esteem” is a buzz word these days, and it’s about time.  The higher it is, the better you get along with yourself, with others, and the more you’ll accomplish.

—Harvey B. Mackay,
Swim with the Sharks Without Being Eaten Alive:
Outsell, Outmanage, Outmotivate, and Outnegotiate Your Competition

(Collins Business Essentials)

OCTOBER 23, 2008

We had the ability now to get cheap and easy credit.  It’s like somebody offering you crack.  You don’t have to buy it.

—Ali Velshi,
explaining why “you” were one of
the “Ten Most Wanted Culprits of the Collapse”

MARCH 17, 2009

In our fury over the bonuses at AIG, we should not forget the PIGs there who pocketed millions while endangering the global economy....

Joseph Cassano started out at Drexel Burnham Lambert under Michael Milken, “the Junk Bond King.”  Drexel imploded in 1990 and Milken landed in prison.

AIG promptly hired a team of Drexel people to start a Financial Products unit, Cassano among them.  Cassano became the head and began dealing in securities known as “credit default swaps” out of one office in Wilton, Conn., and another in England, dubbed “the London casino.”

—Michael Daly,
New York Daily News

(Hey, I know who we should promptly hire to preserve our strong business and credit rating!  Some of those who worked under that Milken guy who was just arrested, and who worked on an investment known as “junk”!  Sure, we have a strong reputation, but they have a Reagan-Revolution-trendy reputation!)

MARCH 26, 2009

And Representative E. Scott Garrett, a Republican from northern New Jersey, said government authority to take over failing institutions needed to be carefully structured “to avoid a lot of unintended consequences.”

— Edmund L. Andrews and Louise Story,
New York Times

(On the other hand, the consequences of too little government intervention seem to be just consequences of the way that life sometimes turns out.)

DECEMBER 5, 2007

We are confident in our marks and the reasonableness of our valuation methods.  We have a high degree of certainty in what we have booked to date.

—Martin Sullivan,

FEBRUARY 26, 2009

It is questionable whether the economy could tolerate another shock to the system that a failure of AIG would produce.  The value of the US dollar might fall, Treasury borrowing costs could rise, and the agency would face doubts about the ability of the US to support its banking system.

statement to the Treasury Department
begging for $30 billion more of a bailout,
to add to the $152 billion it had already gotten


MARCH 3, 2009

The crisis-stricken insurance company AIG has crashed $61.7bn (£43bn) into the red with the biggest corporate loss in US history after being crippled by policies protecting troubled banks against default on loans and derivatives.

—Andrew Clark,
The Guardian

(In the realm of Financial Darwinism, Drexel’s reputation falls under the “plumage paradox,” in that sure, it’s dangerous, but it attracts people by looking flashy, though before 1980 this wouldn’t have looked attractive.  Then a “productive” and venturesome attitude toward junk bonds, now a “productive” and venturesome attitude toward junk mortgages.)

MARCH 6, 2009

One of the reasons we had to rescue AIG was the fact that it was going to bring down Europe.

—Representative Paul Kanjorski,
after a subcommittee hearing on systemic risk

(as on page 4)

FEBRUARY 26, 2009

Systemic risk is the risk imposed by inter-linkages and interdependencies in a system or market, which could potentially bankrupt or bring down the entire system or market if one player is eliminated, or a cluster of failures occurs at once.

beginning of the statement to the Treasury Department
begging for $30 billion more of a bailout,
to add to the $152 billion it had already gotten

MARCH 17, 2009

This is a situation where AIG is extorting money from the taxpayers, saying give it to us or we’ll blow ourselves up.  They’re like a kid who says, “I’ll hold my breath if you don’t give me something or other.”...  What the AIG employees are doing is incredible.  There’s a piece in today’s Times saying some of those employees said, if you don’t give us the bonuses, we’ll take the inside knowledge of the books of AIG, speculate against AIG, and drive it down even further.  That is criminal.  People are in Walter Reed with life threatening wounds for saving this country.  And these people are extorting this country.

—Ben Stein,
interview on Larry King Live

DECEMBER 13, 2007

Our global franchise and brand have never been stronger, and our record results for the year reflect the continued diversified growth of our businesses.

—Dick “There’s a Reason Why I’m Not Called Richard” Fuld,
CEO, Lehman Brothers


Welcome to Merrill Lynch’s Financial Boot Camp, a high-touch, high-focus financial literacy program offered exclusively to the offspring of ultra-high-net-worth (UHNW) clients around the globe by the firm’s Global Wealth Management division “designed to give the next generation a higher level of understanding and comfort with money,” according to its mission statement....  This is a fine example of how the wealth management industry has developed into one of the most sought after segments in financial services—it is no longer simply based on transactions with well-established clients, but has begun to focus on investing in relationships that will be of value in the future.

How the World’s High-Net-Worth Grow, Sustain, and Manage Their Fortunes,
by Merrill Lynch, Inc. & CapGemini

NOVEMBER 8, 2008

“The mortgage business at Merrill Lynch was an afterthought — they didn’t really have a strategy,” said William Dallas, the founder of Ownit Mortgage Solutions, a lending business in which Merrill bought a stake a few years ago.  “They had found this huge profit potential, and everybody wanted a piece of it.  But they were pigs about it.”

—New York Times

FEBRUARY 27, 2008

There are no current plans to go back to the market for capital because we have all of those other levers that are turned on, producing capital, putting us into an increasingly—into a comfortable position based on where we are in the market right now.

— Daniel H. Mudd,
CEO, Fannie Mae

MARCH 11, 2008

Dear Jim: Should I be worried about Bear Stearns in terms of liquidity and get my money out of there? --Peter

Cramer says: “No!  No!  No!  Bear Stearns is not in trouble.  If anything, they’re more likely to be taken over.  Don’t move your money from Bear.”

—Jim Cramer,

MARCH 12, 2008

Our liquidity and balance sheet are strong....  We don’t see any pressure on our liquidity, let alone a liquidity crisis.

—Alan Schwartz,
CEO, Bear Stearns, to CNBC

(Less than 36 hours later, Bear Stearns sought emergency funding from the Federal Reserve.)

MAY 9, 2009

Bear Stearns Cos., the 85-year-old Wall Street firm known for its tough trading culture, was rescued from impending bankruptcy by a deal with J.P. Morgan Chase & Co. on March 16, 2008—making Bear the first major casualty of the financial crisis.  The firm spiraled from being healthy to practically insolvent in about 72 hours.

The meltdown began in earnest the evening of Thursday, March 13, 2008, when Bear executives made a shocking discovery: They were nearly out of cash.  Faced with a slew of withdrawals from worried clients and a sudden pullback from lenders, the firm had less than $3 billion on hand—not enough to open for business on Friday.

—Kate Kelly,
author of Street Fighters: The Last 72 Hours of Bear Stearns, the Toughest Firm on Wall Street,
Wall Street Journal

MARCH 14, 2008

It seems like I showed up in an interesting moment during an interesting time.

—George W. Bush,
to the Economic Club of New York,
and got a response of laughter


(What, me worry?)


MARCH 14, 2008

The problem that Bear Stearns and other financials face is a great unwind of leverage.  A company is only as solvent as the perception of its solvency.

—Meredith Whitney,
Oppenheimer research analyst

MARCH 25, 2008

We should also convene a meeting of the nation’s top mortgage lenders.  Working together, they should pledge to... do everything possible to keep families in their homes and businesses growing.

—John McCain

MAY, 2008

This is unbelievable.  Most of these letters now have the same wording.  Obviously they are being counseled by some other person or by the Internet.  Disgusting.

—Angelo Mozilo,
response to an e-mail from a lender
asking Countrywide to modify the
terms of his loan so he wouldn’t lose his home of 16 years,
an adjustable-rate mortgage that he was told he could refinance in a year

JUNE 4, 2009

Citing e-mail messages in which Mr. Mozilo referred to Countrywide loan products as “toxic” and “poison,” S.E.C. officials said he misled investors about growing risks in the company’s lending practices from 2005 through 2007.  During this time, he also profited by selling stock in the company, gaining $140 million.

...“Frankly, I consider that product line [subprime second mortgages] to be the poison of ours,” Mr. Mozilo wrote, according to the S.E.C.

And in an e-mail message on March 28, 2006, Mr. Mozilo referred to 100 percent loan-to-value subprime mortgages as “the most dangerous product in existence and there can be nothing more toxic,” the S.E.C. said.

—Gretchen Morgenson,
New York Times

DECEMBER 3, 2007

Three months ago, regulators asked lenders to work with borrowers to minimize foreclosures.   They have been disappointed by the results.

Bloomberg News

SEPTEMBER. 10, 2008

We are on the right track to put these last two quarters behind us.

—Dick Fuld

SEPTEMBER. 10, 2008

Our liquidity pool also remains strong at $42 billion....  Throughout the market volatility of the past six months, our liquidity and funding framework has served us extremely well, and we remain focused on increasing the funding available in our bank entities and mitigating any liquidity risks to our secured and unsecured funding positions.

— Ian Lowitt,
CFO, Lehman Brothers

SEPTEMBER 17, 2008

(due to Lehman Brothers’ bankruptcy on the fifteenth)

OCTOBER 6, 2008

Chairman Waxman, Ranking Member Davis and members of this distinguished committee, today there is unprecedented turmoil in our capital markets.  Nobody, including me, anticipated how the problems that started in the mortgage markets would spread to our credit markets and our banking system and now threaten our entire financial system and our country.

—Dick Fuld,
beginning of prewritten testimony before Congress

OCTOBER 23, 2008

But by 1999, the marketplace had outgrown these post-depression rules.  The increasingly global market led the Congress and a Democratic president to adopt the Gramm-Leach-Bliley Act, repealing Glass-Steagall, and allowing commercial banks to diversify and underwrite in trade securities.  That was not regulation for deregulation’s sake.  These activities were seen by many as actually reducing risk for banks through diversification, and allowing banks to compete in a rapidly globalizing marketplace.

—Congressman Davis,
during Congressional hearings

OCTOBER 23, 2008

That is what I find most disturbing.  We are not dealing with people who are dumb.  We are dealing with, by far, the most sophisticated, thoughtful people about the way markets work who created the major problems.

—Alan Greenspan
Testifying Before Congress


[Without this rousing faith, too many losers would have too many excuses, and even legitimate excuses have a price.]

FEBRUARY 17, 2009

Also—and looking back, this is the most numbing aspect—there were no provisions to renegotiate [securitized] loans if the borrower got in trouble.  In other words, if the borrower is dealing with a bank, the borrower is in trouble, you renegotiate.  With a securitized mortgage, the way they were set up, this was not possible.

So what that meant is that the only option was foreclosure.  Foreclosure meant the home was put on the market.  All these homes on the market from foreclosure drove down housing prices, making the problem worse.  And we’re still stuck in that situation today.  We can’t figure out a way to deal with these foreclosures just because of the way the institutions were set up.  And I don’t know of anybody who saw this.  There were people who predicted crises; I don’t know of many people who saw this coming.

—Mark Gertler,
New York University,
interviewed on Frontline

APRIL 20, 2009

In the end banking is a very good business unless you do dumb things.  You get your money extraordinarily cheap and you don’t have to do dumb things.  But periodically banks do it, and they do it as a flock.

—Warren Buffett,
interview with Fortune Magazine


I used to think if there was reincarnation, I wanted to come back as the president or the pope or a .400 baseball hitter.  But now I want to come back as the bond market.  You can intimidate everybody.


—James Carville

(The Great Wall Street Bailout had to have been the ultimate case of Atlas Shrugged, since either we gave the financiers the money, or they would have stopped doing what we needed them to do, in a way that couldn’t simply be put back to normal once they’d stopped.)

FEBRUARY 13, 2009

We’ve got to work with banks to ensure that bad debts are identified and revealed.  If we don’t get these bad assets out of the system [at government expense], banks will not lend.

—Alistair Darling,
Chancellor of the Exchequer

FEBRUARY 10, 2009

Regarding the


Because the new program is designed to bring private sector equity contributions to make large-scale asset purchases, it not only minimizes public capital and maximizes private capital.  It allows private sector buyers to determine the price for current troubled and previously illiquid assets.

—Treasury Department,
fact sheet about the bank rescue plan

(as if their judgment had been proven trustworthy.  Yet maybe trustworthiness can make no difference, since either we get the bad assets out of the system or banks won’t lend, since they’re the ones who are the most motivated to direct the money to where it could be used the most profitably, and since the prices would have to end up as the natural market values.  Such is pragmatism.)

MARCH 13, 2009

The International Monetary Fund research of some 122 financial and economic crises shows that turnaround can’t happen unless you clean up the bad assets and recapitalize the banks.

—Robert Zoellick,
President of the World Bank

(Of course, like any other realism, this is irrespective of what the banks did to cause everyone’s problems.)

MARCH 15, 2009

The lesson of history is that you do not get a sustained economic recovery as long as the financial system is in crisis.  We’ve seen some progress in the financial markets, absolutely.  But until we get that stabilized and working normally, we’re not gonna see recovery.  But we do have a plan.  We’re working on it.  And I do think that we will get it stabilized, and we’ll see the recession coming to an end probably this year.  We’ll see recovery beginning next year.  And it will pick up steam over time....

Let me just first say that of all the events and all of the things we’ve done in the last 18 months, the single one that makes me the angriest, that gives me the most angst, is the intervention with AIG.  Here was a company that made all kinds of unconscionable bets.  Then, when those bets went wrong, we had a situation where the failure of that company would have brought down the financial system.

It makes me angry.  I slammed the phone more than a few times on discussing AIG.  I understand why the American people are angry.  It’s absolutely unfair that taxpayer dollars are going to prop up a company that made these terrible bets, that was operating out of the sight of regulators, but which we have no choice but the stabilize, or else risk enormous impact, not just in the financial system, but on the whole U.S. economy....

I think the biggest risk is that, you know, we don’t have the political will.  We don’t have the commitment to solve this problem, and that we let it just continue.  In which case, you know, we can’t count on recovery.

—Ben Bernanke,
interview on 60 Minutes

(So we don’t get a quick recovery unless the banks get what they want, no matter what they did, how much of the bailout money would go to executives who contributed to the problem, etc.  If we don’t give it to them, it would seem that our commitment was too weak so we let the problem continue, that we are the sort of people who self-help books would blame for letting their own problems happen.)

March 19, 2009

These guys look for holes in the system, for ways they can do trades without government interference.  Whatever is unregulated, all the action is going to pile into that.

—an unnamed “government source involved with the AIG bailout,”
quoted in Rolling Stone

SEPTEMBER 25, 1961

As might be expected, the subsidies [given, just after the Civil War, to railroad companies to build the transcontinental railroad] attracted the kind of promoters who always exist on the fringe of the business community and who are constantly seeking an “easy deal.”

—Alan Greenspan,
which was included in some Ayn Rand publications

(So this is what his values and fears, consider to be the wrong business climate attracting unsavory characters.  His book The Age of Turbulence says that on his first date with Andrea Mitchell in 1984, who he eventually married, “It might not be everybody’s idea of first-date conversation, but at the restaurant we ended up discussing monopolies.  I told her I’d written an essay on the subject and invited her back to my apartment to read it....  But we did go to my apartment and I showed her this essay I’d written on antitrust for Ayn Rand.  She read it and we discussed it.”)

MARCH 31, 2009

Instead of banks being as they should be, stewards of peoples’ money, too many of them became speculators with peoples’ futures.  And I say to you this plainly: This old world of the old Washington consensus is over, and what comes in its place is up to us.

—Gordon Brown,
British Prime Minister

APRIL 27, 2008

And the banks—hard to believe in a time when we’re facing a banking crisis that many of the banks created—are still the most powerful lobby on Capitol Hill.  And they frankly own the place.

—Dick Durbin,

JUNE 18, 2009

Government does not create wealth.  The major role for the government is to create an environment where people take risks to expand the job rate in the United States.

—George W. Bush,
Washington Times
(the “Moonie newspaper”)







JANUARY 9, 2009

They applied the modern American business playbook: Borrow heavily to grow fast.  The strategy worked—until the credit crisis threw out those rules.

—Wall Street Journal

(And, of course, such ambitious, optimistic people wouldn’t seem to be deadbeat bums.)

        APRIL 15, 2009

Nonresidential real estate conditions continued to deteriorate over the past six weeks.  Demand for office, industrial and retail space continued to fall, and there were reports of increases in sublease space.  Rental concessions were rising.  Property values moved lower as reality “set in.”  Construction activity continues to slow, and several Districts noted increased postponement of both private and public projects.  Nonresidential construction is expected to decline through year-end, although there were some hopeful reports that the stimulus package may lead to some improvement.

Commercial real estate investment activity weakened further.  Contacts said a decline in credit availability and markdowns on commercial property were keeping buyers and sellers on the sidelines.

The Fed Beige Book


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My Story

  To The [Abuse] Survivors ♥♥♥♥♥

Men Dying for Love

On Doping

Index of “Oh, Yeah?

Victim Correction as a Panacea, the Summary (Top of Page 1)

(Page 2)(Main Page 3)

Cancer Victims Corrected Too

The Main Victim Correction as a Panacea

 Documentation On the Social Problem of Unnaturally Rampant Depression

 Standard Rationales for Victim Correction as a Panacea

 Schopenhauer on Predators

 Emphasis on Victim-Self-Blaming

Darwinist Lehman Brothers’ INSIDE Sales Tips

Darwinist Lehman Brothers’ INSIDE Introduction to Management Book

Out of the Same Mold as the Great Crash of 2008

Message for Intellectuals in the Islamic World

Candace Newmaker’s Experience

Breaking Important Confidences for Your Own Good

A Glimpse Into the Soul of Victim Correction

Cigarette Industry and Victim Correction

Niebuhr’s Ideas on Our Nature and Destiny

Herbal Experiences for Women

Some Ideas for Rapport