- 7 months ago
The inside story of how big bets and hopes of billions of dollars in revenues led instead to the 2008 financial crisis, harming banks, in particular Bank of America.
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00:59Tonight on Frontline...
01:11You're either growing or dying.
01:13So we grew.
01:14They created the largest bank in America.
01:17He wants to give the middle finger to New York and to Wall Street.
01:21Merrill Lynch is this hugely prestigious brand.
01:24They had long sought this prize.
01:26John Thain was a hero.
01:27Ken Lewis finally is on top of the financial world.
01:31But it was troubled from the beginning.
01:33The market was in complete chaos.
01:37This became a game of survival.
01:39There are major doubts suddenly.
01:41The government took over.
01:43You can't leave this room until you agree to take this money.
01:46We nationalized the banks in the U.S. on that day.
01:49There is no power on Wall Street anymore.
01:52The government holds all the cards.
01:54That old way of putting on a party.
01:56It's over.
01:57Tonight on Frontline...
01:59Breaking the Bank.
02:012008.
02:02The housing bubble had burst.
02:04The elevator fell over the past week.
02:06there remains fears that it hasn't yet reached ground for.
02:09The markets were teetering.
02:112008, the housing bubble had burst.
02:28The elevator fell over the past week.
02:30There were main spheres that it hasn't yet reached ground before.
02:34The markets were teetering.
02:35Profits in the banking industry are plunging.
02:39Nobody knew how bad it was going to get.
02:47On one weekend in September, the entire American financial system would be changed.
02:55It began with a phone call.
02:57About 4 or 5 o'clock, the various officials from the Federal Reserve started phoning the bank chiefs.
03:13Cell phones started going off, and they said, you need to be down here at 6 o'clock.
03:17We want to talk to you.
03:18I got a phone call about 5 o'clock saying, be at the Fed at 6 o'clock that evening.
03:28I was in Merrill Lynch's Midtown facilities, and I live in Westchester, so I was trying to get out of the city early because the traffic's always bad on a Friday night.
03:37I went by myself, and for the most part, the CEOs of the large investment banks and commercial banks were all there by themselves.
03:47So everybody converged.
03:51At that point, it was just the CEOs of the main houses and various senior advisors.
03:57That night at the New York Federal Reserve, the issue was Lehman Brothers.
04:05Wall Street's fourth largest investment bank, heavily invested in the mortgage market, was in a death spiral.
04:12Bring everybody in the room, the interested parties, and you say, look, we have to solve this problem, and you lock the door until they come up with a solution.
04:19The secretary of the treasury, Henry Paulson, had convened the meeting.
04:23Paulson thought perhaps he could get everybody together, create a big old fund, and try to resolve Lehman.
04:33Tim Geithner, the president of the New York Federal Reserve, led the meeting.
04:38Tim Geithner says, somebody needs to buy Lehman.
04:42You need to figure out how to rescue Lehman, because otherwise they're going to go bankrupt.
04:46Inside the Fed, the picture of Lehman Brothers was a financial institution that was melting away before its eyes.
04:56They said to us, we collectively had to find a solution for this, and this is the important part.
05:04The government was not going to provide any form of assistance.
05:08Convening a council of powerful Wall Street bankers came naturally to Hank Paulson.
05:15He used to be one of them.
05:18Paulson comes from the great breeds of masters of the universe that have come from Wall Street.
05:24Henry Paulson came from Goldman Sachs.
05:27He was a very powerful Wall Street figure.
05:30Paulson made his fortune in the freewheeling 90s, when the unregulated free market was king.
05:40Paulson does not have the mentality of a regulator.
05:42He has the mentality of an investment banker.
05:44That the market rewards and the market punishes, so you don't need a lot of regulation.
05:50And at the Fed that night, and throughout the weekend,
05:54Paulson would push the bankers to handle the Lehman crisis on their own.
05:57It was a very high-stakes game of signaling that he was playing.
06:02He wanted to show these guys, you know, all of his old buddies on Wall Street,
06:07that they were going to need to step up and do something themselves.
06:12But the bankers left the Fed that night uneasy.
06:15They knew that Lehman's books carried tens of billions of dollars in liabilities from toxic mortgages.
06:21And they didn't want to touch it.
06:23And they also knew Lehman wasn't alone.
06:28It is about so much more than just Lehman.
06:33It's about Merrill.
06:35It's about Citi.
06:36It's about all the banks.
06:38Everyone's carrying in the back of their mind a list, a hit list of who's next to go down.
06:45And it's Merrill.
06:47They're next in size.
06:48They're next in problems.
06:49They've already admitted that they have a whole bunch of toxic assets on their balance sheet.
06:53You know, the CEOs talked openly with John in the room, Thane in the room, saying,
07:00well, you know, if we try to save Lehman Brothers, that's all great.
07:05But we're going to be back here next weekend, and we're going to be talking about Merrill.
07:09I did not want to be the equivalent of Lehman the following weekend sitting there.
07:15He was absolutely dead next, and dead next of the two appropriate terms.
07:2253-year-old John Thane was one of the newest CEOs in the room, a graduate of MIT and Harvard Business School.
07:30His career had been a rocket ride.
07:33He's been on Wall Street for years.
07:35He was the number two guy at Goldman Sachs.
07:36He was Hank Paulson's number two, considered a very tough manager, considered a pretty smart guy.
07:41You know, he had been this golden boy at Goldman Sachs.
07:45Doesn't get the top job, though.
07:48He's passed over for the top job, and he jumped ship early, perhaps smartly.
07:53Goes to the New York Stock Exchange as the CEO.
07:56He was Mr. Fix-It.
07:57He could go into any situation, and he had, with the New York Stock Exchange and a number of other settings,
08:02and had taken companies that were having problems and had made them work.
08:08And Merrill Lynch had plenty of problems.
08:11Once conservative and careful, they'd abandoned caution for the quick riches of exotic mortgage-backed securities.
08:18They got into it very heavily.
08:21They courted a lot of non-prime lenders, and they let money to them, bought their mortgages, and sold them into bonds.
08:27And they thought the gravy train would never end.
08:30When Thane took over, the housing bubble had burst, and Merrill was a mess.
08:34This was an opportunity to prove that he could be the CEO of a big firm.
08:40He could get the job that he couldn't get at Goldman Sachs.
08:43And he could turn Merrill Lynch around.
08:45But Thane had little time to turn Merrill around.
08:50It's a little bit like you're in a very attractive boat that has a hole in it,
08:56and you're trying to bail, but more water's coming in faster than you can get it out.
09:03And that's really what we were in over the course of really all of 2008.
09:09That September weekend, as the crisis meetings at the Fed wore on, Thane realized he would have to act.
09:16I really changed my thought process and just focused on,
09:21all right, what can I do to make sure that Merrill Lynch doesn't go the way of Lehman.
09:27Hank Paulson was also worried about his former deputy's bank.
09:31He had come to the realization that no one was prepared to buy Lehman.
09:36But if Lehman failed, Paulson had to keep the contagion from spreading to Merrill,
09:41threatening the entire economy.
09:42Every single part of Wall Street at this point is plugged into another part of Wall Street.
09:49And if I go down, I can now drag down that guy,
09:53and if he goes down, he can drag down that guy, and he can drag down that guy.
09:56And this is a huge web that connects everyone in these completely unforeseen ways.
10:02So if just one company goes down, in this case Lehman,
10:05it can drag everyone else with him.
10:07Hank was super intense and super focused and super worried.
10:10He's a worrier.
10:11The calls he was getting were getting him really worried and, you know,
10:15not able to sleep because what are we going to do about this?
10:19Paulson decided the key to reassuring the market was finding a buyer to keep Merrill alive.
10:25And he had one in mind.
10:29A bank outside of Wall Street.
10:31Bank of America is the story of some of the most ambitious, aggressive bank builders on the face of the planet.
10:46They're sharks, but they're not Wall Street sharks.
10:49It's a different type of sea that these people are swimming around, swimming in.
10:58What had first been North Carolina National Bank had grown into a formidable southern competitor to Wall Street,
11:06Nations Bank.
11:06Hugh McCall ran it in the 80s and 90s.
11:12After the Civil War, most of the capital in the South was wiped out.
11:16What I saw as part of my goal in life was to see that we had our own banks in the South that could finance southern industry and southern businesses and southern individuals.
11:25And I set out to do that and, candidly, have been fairly successful at it.
11:33They bought and bought and bought and they would buy one bank and then they'd buy another bank and get bigger and bigger and bigger.
11:40Even if they got bought by someone else, they were the ones who ended up taking over the show.
11:46Even the bank's name was acquired.
11:49They bought the California-based chain Bank of America in 1998.
11:53You're either growing or dying.
11:56There's no middle ground.
11:58You can't hold what you have.
12:00That doesn't work in business.
12:02So we grew.
12:05When he retired, McCall chose one of his longtime mergers and acquisition specialists, Ken Lewis, to run it all.
12:14Well, I'm really nobody when you look at my background.
12:18I came from a very modest beginning.
12:20My mother raised my sister and I, so a one-parent family, and she was a nurse.
12:27This is not somebody with an Ivy League background.
12:30This is not somebody with blue-blood parents.
12:34This is somebody sort of driven by a need to prove himself,
12:39especially to prove himself against people from Wall Street.
12:44Someone once described Ken Lewis to me as the most competitive person in the history of the United States,
12:51including the Union Army.
12:53He practiced smiling, which is not Ken Lewis's default expression.
12:59He started wearing glasses to soften his features.
13:03He would talk and tape himself while talking to catch, you know, the pauses.
13:09So this was quite a makeover for Ken Lewis.
13:12He wants to give the middle finger to New York and to Wall Street,
13:16and he wants to beat them at their own game.
13:18And I think he revels in it.
13:20The idea that these guys in Charlotte can be beating up the guys on Wall Street.
13:25Lewis took over at a critical moment when the rules limiting bank mergers were being dismantled.
13:33A race to become the biggest superbank was on.
13:36He wrote out a wish list of companies he wanted to acquire or businesses he wanted to be in.
13:44And one by one, year after year, he made that happen.
13:49Fleet Boston, MB&A, Countrywide, LaSalle, U.S. Trust.
13:56Ken's eyes have always been bigger than his stomach.
13:58That's part of his problem.
14:00He's always been a dealmaker.
14:02I mean, that's kind of his modus operandi.
14:04That's how, you know, Bank of America was built.
14:09So during that weekend meeting at the Fed,
14:12Paulson's idea that Bank of America could be a lifeline to Merrill was gaining traction.
14:18On Saturday morning, Thayne made a fateful telephone call.
14:23I walked outside of the Federal Reserve
14:26and called from my cell phone standing outside on the street.
14:30John called and said,
14:32I think we should talk.
14:34I said,
14:35Ken, I think we should talk about a strategic arrangement.
14:41He said,
14:42I'd like to do that.
14:44Lewis' corporate jet was waiting at the Charlotte airport.
14:51I said,
14:52I can be there around, I think it was 2 o'clock,
14:55and so I'll meet you at our apartment.
15:01We agreed to meet at their corporate apartment
15:03in the Time Warner Center at 2.30 in the afternoon.
15:06This is like music to Ken Lewis' ears.
15:12Because Ken Lewis had wanted to buy Merrill Lynch for a while.
15:18They had long sought this prize,
15:20and they had, you know, over the years,
15:22approached Merrill several times.
15:24Merrill Lynch has this big, huge brokerage network.
15:26It basically deals with, you know,
15:28millions of small investors,
15:31and, you know, small investors that are very rich, too,
15:34across the country through these brokerage offices
15:36that has 16,000 brokers
15:37and probably manages through those brokers
15:40trillions, a couple trillion dollars worth of assets.
15:42So that's what he wanted.
15:43For Ken Lewis,
15:45it was the final crowning item on his list.
15:48Merrill Lynch is this hugely prestigious brand.
15:52It's a little akin to Holiday Inn
15:55getting to buy the Ritz Hotel.
15:58And the Ritz is down on their luck,
16:00and they turn to Holiday Inn,
16:01and they say,
16:01Will you save us?
16:02And Holiday Inn says,
16:03Sure.
16:05Ken Lewis waited alone for John Thain
16:08at the Bank of America corporate apartment
16:10in the Time Warner building.
16:13It's just the two of us,
16:13and so I proposed to him
16:16that we would be interested in selling
16:19a 9.9% stake in Merrill to Bank America,
16:22and we would want them to provide us
16:24with a large credit facility.
16:26But Ken Lewis hadn't flown to New York
16:28to take a minority position in Merrill Lynch.
16:31I responded to John,
16:33That's not really what I have envisioned here.
16:35I want to buy the whole company,
16:37not invest 9 to 10%.
16:39And Thain says,
16:40Well, I didn't come here to sell Merrill Lynch.
16:45And Lewis' response is,
16:47Well, that's what I want.
16:48You have to remember that,
16:50you know,
16:50I had only been the CEO of Merrill Lynch
16:54for nine months,
16:55so the last thing in the world
16:57that I want to do
16:58is sell the company.
17:00That was a hard decision.
17:02In the end,
17:04Thain realized he had no choice.
17:06He agreed to sell Merrill Lynch
17:08to Bank of America
17:09for $50 billion.
17:12It was just this really defining moment
17:14of these two men.
17:14It was clear who had the leverage that weekend.
17:23By late Saturday afternoon,
17:25Lewis had sent his deal team over to Merrill
17:28to look at the books.
17:30They would have to work fast.
17:33Hank Paulson was adamant
17:34the deal had to be done by Monday morning.
17:36In 48 hours,
17:40you can't do due diligence.
17:41You can't really take a bank's books,
17:44go through them,
17:45and figure out where their liabilities are,
17:47where their risks are,
17:49who's been hiding what
17:50in order to try and get a good bonus this year.
17:52It's impossible to know within 48 hours
17:55what you're actually buying.
17:56The reason Paulson was so insistent
18:01was that with no buyers
18:03and no government bailout,
18:05Lehman Brothers was headed for bankruptcy.
18:08They had this meeting,
18:09and one of the advisors,
18:11Harvey Miller,
18:12very well-known bankruptcy lawyer on Wall Street,
18:15and he warned them in this meeting,
18:16this will be financial Armageddon.
18:19He warned them what to expect Monday morning
18:22if Lehman was put into bankruptcy.
18:23Paulson desperately needed to give the markets
18:27some good news
18:28when they opened on Monday morning.
18:31The way the government
18:32and Hank Paulson and Tim Geithner
18:34and Ben Bernanke were perceiving
18:35what was going to happen on Monday morning,
18:38Bank of America was going to save the system
18:40because even though Lehman Brothers
18:42was going to go down,
18:43the next domino,
18:44Merrill Lynch, was going to stay up.
18:46And that was very, very important.
18:49Hank in particular
18:50was very strongly encouraging me
18:55to make sure that I got a transaction done
18:58prior to the opening on Monday.
19:02By Sunday evening,
19:04at the offices of Bank of America's law firm,
19:07the broad outlines of the deal were set.
19:09But there was a problem.
19:11The night that they are signing this deal,
19:15the conversation
19:16is not about the strategic imperatives
19:18of doing this deal.
19:19The conversation becomes about
19:21how much money are we going to give
19:23to the management?
19:24What kind of side letters
19:25can we have written into this contract?
19:29You know,
19:29they were supposed to sign the deal
19:30at 10 o'clock at night.
19:32It ends up going to 1, 2 in the morning
19:34because they're talking about comp
19:36at a time when Rome is burning.
19:40Comp.
19:41Compensation.
19:43Bonuses.
19:44The bankers from Charlotte
19:46were now dealing with Wall Street.
19:49Someone from the Merrill team left,
19:51went out of the room,
19:52and came back with a piece of paper
19:54for the top five executives at Merrill.
19:57The paper came back
19:58and it said $40 million for John Thain
20:00and other high eight-digit figures
20:02for the other four on his team.
20:04In the end,
20:07Bank of America agreed
20:08to let Merrill spend
20:09up to $5.8 billion
20:11on the comp.
20:13If you're Ken Lewis
20:14and you just ponied up
20:16this enormous amount of money
20:17for this company,
20:19and five hours later,
20:20the conversation is not
20:21how are we going to make
20:22a great combined company together,
20:24but is how much money
20:25can we line John Thain's pockets with,
20:29that would sour you too.
20:33Selfish things.
20:34Start to crop up
20:35at the very end.
20:37And frankly,
20:38it extends things
20:40to the point
20:41that I have never really
20:42been real happy
20:43by the time
20:44that champagne pours.
20:46Usually,
20:47you're mad at each other
20:48by then,
20:49and you drink it politely
20:51and then leave.
20:54And that was about
20:55how I felt
20:55with this one.
20:56If you spend time
20:58and talk to people
20:59who were in that room
21:00that evening,
21:00they would tell you
21:01the moment they signed
21:03the deal,
21:03they knew there was
21:04a problem.
21:06Lewis and Thain
21:07finally signed the deal.
21:10It would take effect
21:11on January 1st.
21:15At Lehman Brothers,
21:16they spent the night
21:17drawing up
21:18the bankruptcy papers.
21:19The next morning,
21:26as Hank Paulson planned,
21:28the stock markets
21:29would wake up
21:30to the official announcement
21:31of the merger
21:32of Bank of America
21:33and Merrill Lynch.
21:34The press conference
21:37was in Bank of America's
21:38beautiful new headquarters.
21:45The two of them
21:47came in
21:47and they paused
21:49and shook hands
21:50and it was actually
21:51an awkward moment
21:52because so many photographers
21:55wanted to capture it
21:56that they shook hands
21:57over and over
21:59and over and over
22:00and over again.
22:01Despite the bitter
22:02backroom dealings,
22:04it was a moment
22:05of triumph
22:05for Thain and Lewis.
22:08It was a crowning
22:09achievement
22:09for both these men.
22:11You know,
22:11one of them
22:12had faced execution,
22:13the other one
22:13his entire life
22:14had been driven
22:16to build
22:17the largest bank
22:18in the U.S.
22:19and both of them
22:21managed to square
22:22the circle
22:22on that day.
22:25John Thain
22:25was a hero.
22:26He got $29 a share
22:28for his shareholders.
22:29That's what
22:29he's supposed to do.
22:30He's supposed to be
22:31working for shareholders.
22:33He was the guy
22:34who saved Merrill
22:35from falling down
22:36the same hole
22:37that had just sucked
22:38in Lehman.
22:40For Lewis,
22:41this day on September 15th,
22:42he finally is on top
22:44of the financial world.
22:46Bank of America
22:46would become
22:47the largest bank
22:48by assets in the country.
22:50Larger than Citigroup,
22:51larger than J.P. Morgan.
22:53Merrill had been saved.
22:56Ken Lewis
22:56and Hank Paulson
22:57had each gotten
22:58their wish.
23:03That same morning
23:04in Washington...
23:05Lehman announcing
23:06early this morning
23:07it will file for bankruptcy,
23:08confirming all those reports.
23:09It's been particularly
23:10unsettling.
23:11Hank Paulson
23:12and his staff
23:12were waiting to see
23:13how the markets
23:14would react
23:15to the Lehman bankruptcy
23:16and the Merrill merger.
23:18We hoped the Merrill
23:20purchase would stop
23:21the domino effect.
23:22That was definitely
23:22why we thought
23:24it would be good news
23:25on Monday morning.
23:28And it looked like
23:29it might be true.
23:31Paulson headed
23:32to the White House
23:33to reassure the markets.
23:35Good afternoon, everyone,
23:36and I hope you all
23:37had an enjoyable weekend.
23:42Yeah, yeah.
23:44The Fed and the Treasury
23:45thought that Lehman
23:48could go under
23:49without causing
23:49a major conflagration
23:51and that it would be
23:53a big event
23:54but it wouldn't
23:54cause a cataclysm.
23:57The American people
23:58can remain confident
23:59in the soundness
24:00and the resilience
24:01of our financial system.
24:04Paulson had bet
24:04the markets
24:05would take care
24:06of themselves.
24:08Thank you very much.
24:11He would soon discover
24:12he was wrong.
24:16Everything freezes
24:17and that's what
24:19causes the crisis.
24:20And it really started
24:22because Lehman Brothers
24:23went into bankruptcy.
24:24No one forecasted
24:25that this was going
24:26to happen
24:26but it turns out
24:27that this one decision
24:28made all the difference.
24:31Paulson had miscalculated.
24:33The first sign of trouble,
24:37the credit markets
24:38began to freeze.
24:40Hank was very nervous.
24:42He was getting calls
24:43from large manufacturing
24:44companies that were
24:45struggling because
24:46of the credit markets
24:47being frozen.
24:48Then the banks
24:49stopped lending.
24:51The longer it went on,
24:53the more trouble
24:54the economy was going
24:55to be in.
24:57The meltdown
24:58was happening.
25:01I'm sure that Paulson
25:02is sitting there
25:02and he doesn't strike me
25:04as the most reflective guy
25:06necessarily,
25:06but he must have been
25:07sitting there.
25:07Everybody was sitting there
25:08saying,
25:09my God,
25:09we may be presiding
25:10over the Second
25:11Great Depression.
25:11This is the utter nightmare
25:16of an economic policymaker.
25:17You're sitting there
25:18and you may have just
25:18made the decision
25:19that destroyed the world.
25:21Absolutely terrifying moment.
25:30Three days after
25:31Lehman's bankruptcy,
25:34Paulson headed to Congress.
25:35He had decided
25:39to dramatically
25:40change his approach.
25:42At that point,
25:44Paulson bowed
25:46to the inevitable.
25:47One thing Paulson said
25:48to me in an interview
25:49is when the situation
25:52changes,
25:52you have to be willing
25:53to change
25:54with the situation.
25:56Fed Chairman Ben Bernanke
25:57joined Paulson
25:58for the emergency meeting.
26:02On Thursday,
26:03late afternoon,
26:04they go to
26:05Nancy Pelosi's office
26:07and there's a meeting
26:09of the senior legislators
26:12from both parties
26:13in both House
26:14and Senate.
26:16It was obviously
26:16a big meeting.
26:17I had no idea
26:18I was going to hear
26:18what I heard.
26:21Paulson now believed
26:22government intervention
26:23was necessary
26:24and he'd need
26:26hundreds of billions
26:26from Congress
26:27to do it.
26:29They said they needed
26:29authority to use
26:31$700 billion
26:31to stop the credit market.
26:35Sitting in that room
26:36with Hank Paulson
26:37saying to us
26:38in a very measured tone,
26:39no hyperbole,
26:41no excessive adjectives,
26:43that unless you act,
26:44the financial system
26:45of this country
26:46and the world
26:47will melt down
26:47in a matter of days.
26:48Bernanke said,
26:52if we don't do this tomorrow,
26:54we won't have an economy
26:55on Monday.
26:58There was literally
26:59a pause in that room
27:00where the oxygen left.
27:03Paulson received the money,
27:05$700 billion
27:06known as TARP,
27:08Troubled Asset Relief Program.
27:10On October 12th,
27:13he acted.
27:14I got a phone call
27:15on Sunday
27:15from Secretary Paulson
27:17and he basically said,
27:18Ken, I need you to be
27:19in Washington Monday
27:20and he said,
27:22I really can't tell you
27:23a lot about it.
27:24With the Merrill merger
27:25not yet complete,
27:27Paulson also invited
27:28John Thane.
27:29He said,
27:30be at the Treasury
27:31at 3 o'clock tomorrow.
27:33I said,
27:34well, what's the topic?
27:35You'll find out
27:36when you get there.
27:37I said,
27:37well, who's coming?
27:39You'll find out
27:40when you get there.
27:41See you at 3.
27:42Click.
27:45Seven other heads
27:46of the nation's
27:47largest banks
27:48received a similar summons.
27:51They turn up
27:53at 3 o'clock
27:54and they all file
27:55into the conference room
27:57which is across the hall
27:58from Mr. Paulson's office.
28:02They were told
28:03to sit on one side
28:04of the table.
28:05The titans
28:07of the finance world
28:08are arrayed
28:09almost like school children
28:11waiting to hear
28:12from the Treasury Secretary
28:14about a subject
28:15they're probably
28:16by then
28:17slowly beginning
28:18to figure out.
28:20John Thane's seat
28:21was in the middle.
28:22Lewis was put
28:23at the end.
28:25At first,
28:26I wondered
28:26why I was down
28:27toward the end
28:28and then it hit me
28:32obviously
28:32that it was
28:33in alphabetical order
28:34and how else
28:36would you do it?
28:39Paulson got right
28:40down to business.
28:41Because it's Paulson
28:42who's not a man
28:43who beats around
28:44the bush
28:45it became clear
28:46relatively quickly
28:47what he was proposing.
28:49he says
28:50he says
28:50I've got here
28:52documents that say
28:53the U.S. government
28:54is going to make
28:55an injection of capital
28:56into each one
28:57of your companies.
28:59Paulson was about
29:00to spend
29:01125 billion dollars
29:03of that TARP money
29:04from Congress.
29:05They go through
29:07in a very
29:08very rapid way
29:10that
29:10each of us
29:12is going to
29:13take
29:14this
29:15taxpayer money
29:17the TARP money
29:17and he basically
29:20says
29:20you can't
29:22leave this room
29:22until you agree
29:23to take this money.
29:25We're all
29:26going to do it
29:26for the good
29:27of the country
29:28for the good
29:28of the system
29:29and it's not
29:31really discretionary.
29:34It was
29:34unprecedented.
29:35In return
29:36for billions
29:37of dollars
29:38the government
29:39would take
29:39an ownership
29:40stake in the banks.
29:42Some bankers
29:42fought back.
29:43It was a very
29:45contentious meeting.
29:48Lots of questions
29:49lots of doubts.
29:52Richard Kovacevich
29:53chairman of
29:54Wells Fargo
29:54led the charge.
29:57Kovacevich
29:57stood up
29:58and said
29:58I don't want
29:58the money.
29:59I don't need
30:00the money.
30:00I don't want
30:01the money.
30:02I want to have
30:02nothing to do
30:03with this.
30:04But Ken Lewis
30:05took a different view.
30:07Ken Lewis says
30:08it's our patriotic
30:09duty to do this.
30:09Let's stop fighting.
30:11Do this deal
30:12right this moment.
30:13We are so
30:14intertwined
30:15with the U.S.
30:16that it's hard
30:17to separate
30:18what's good
30:18for the United States
30:19and what's good
30:20for Bank of America.
30:22And so don't do it
30:23on the basis
30:24of us being told.
30:26Do it on the basis
30:27that things could
30:28get a lot worse
30:28in America
30:29and therefore for us
30:30and they're almost
30:32one and the same.
30:34Lewis also knew
30:35that he could expect
30:36two TARP shares
30:37Merrill Lynch's
30:39and his own.
30:40He also said
30:42look guys
30:43we all know
30:44how this is going
30:44to end.
30:45We're going to sign
30:46this piece of paper.
30:47So he played
30:48a little bit
30:49of the elder statesman
30:50role explaining reality
30:53although they all
30:54understood reality
30:55quite well.
30:57And if any bank
30:58didn't sign on
30:59Paulson had
31:01a potent weapon.
31:03There's a threat
31:04in the background.
31:05If you don't get
31:05with the program
31:06and if you don't sign
31:07this piece of paper
31:08tomorrow morning
31:09you could turn on
31:09the television
31:10and see Hank Paulson
31:11talking about your bank
31:13in a negative way
31:14and that's going
31:15to destroy you.
31:17Paulson's notes
31:18prepared for the meeting
31:19show he gave
31:20the bankers no choice.
31:23If a capital infusion
31:24is not appealing
31:25you should be aware
31:26that your regulator
31:27will require it
31:28in any circumstance.
31:31Paulson gave
31:31each man
31:32a single piece of paper
31:33spelling out
31:34the conditions.
31:35before they had
31:37to leave town
31:38that night
31:39they were told
31:40return this document
31:41with your signature
31:42on it
31:42and all nine
31:43of them did so.
31:50The next day
31:51Paulson told the country
31:52about his new way
31:53of doing business.
31:57Today we are taking
31:58decisive actions
31:59to protect
32:00the U.S. economy.
32:03In one day
32:04everything had changed.
32:07The Treasury
32:08will purchase
32:08equity stakes
32:09in a wide variety
32:11of banks and thrifts.
32:13I think
32:14we nationalized
32:15the banks
32:15in the U.S.
32:16on that day.
32:18Seriously.
32:19We substantially
32:20nationalized them.
32:20The government
32:21got a lot of say
32:21in how they're run,
32:22a lot of constraints,
32:24a lot of responsibilities,
32:26a lot of downside risk
32:28was taken on that day.
32:30Government owning
32:31a stake
32:31in any private
32:32U.S. company
32:33is objectionable
32:34to most Americans,
32:36me included.
32:38Whether you like it or not,
32:39whether we think
32:39we have control
32:40of these firms or not,
32:42they're nationalized firms.
32:43They're owned
32:44by the U.S. taxpayer.
32:47The Secretary of the Treasury
32:49had become
32:50the most powerful
32:51banker in the nation.
32:54Oh, this is the realm
32:56of the puppet master.
32:56This is the realm
32:57of the,
32:59we're going to give you
33:00some money,
33:00but we're also going
33:01to tell you
33:01how to run the game.
33:03I'm going to pull the strings.
33:04I'm going to make it happen
33:05a certain way
33:06and use this bank
33:07as an instrument
33:09of some kind of plan
33:12to try to save this economy.
33:14So Hank Paulson,
33:15the happy capitalist warrior
33:16who spent his life
33:18pursuing and defending
33:20free markets,
33:21is now the biggest
33:23interventionist
33:24treasury secretary
33:25we've had
33:26since the Great Depression.
33:34As the fall wore on,
33:36for Paulson,
33:37one hopeful sign of life
33:38in the banking system
33:39was Bank of America.
33:41The pending Merrill Lynch merger
33:43still looked like a good deal.
33:45They were still
33:46a pillar of strength.
33:47Within a system
33:48where there was
33:49very little strength,
33:50they looked like
33:51they were stronger
33:52from the outside.
33:55But the view
33:56from the inside
33:57revealed something else.
33:59The marriage
34:00between Bank of America
34:01and Merrill Lynch
34:02was already
34:03showing signs of strain.
34:06Almost from the beginning,
34:07there was just
34:08huge frustrations
34:09about pairing up
34:10with Bank of America.
34:14People at Merrill Lynch
34:15compare themselves
34:15like the Tiffany's
34:16of Wall Street
34:17and they're meeting
34:18up with Walmart.
34:19I mean,
34:19it's just
34:19the Walmart
34:20of banking.
34:23The average salary
34:24at Bank of America
34:25at this point
34:25is about $75,000.
34:28The average salary
34:30at Merrill Lynch
34:31is, I think,
34:32something like
34:32$235,000.
34:36So,
34:37they have vastly
34:38different expectations
34:39for what it means
34:40to be a Merrill Lynch
34:41person
34:41versus a Bank of America
34:42person.
34:43The gunslingers
34:45go to Merrill
34:46and the conservative
34:47branch goes to B of A.
34:49You know,
34:49and I think
34:50one of the comments
34:50that were made
34:51by one of the workers
34:52at Merrill,
34:53I don't want to go work
34:54with a bunch
34:54of toaster salesmen.
34:56And with the official
34:57merger looming,
34:59there was trouble
34:59at the top
35:00between Lewis
35:01and Thane.
35:02The issue?
35:04Those bonuses.
35:06Thane was still
35:06a Wall Street man
35:07for having successfully
35:09sold Merrill
35:10to Lewis,
35:11Thane wanted a cut
35:12of the Bank of America
35:13deal worth
35:14as much as
35:15$10 million.
35:17Thane had lobbied
35:18behind the scenes
35:19very hard
35:19the compensation
35:20committee of Merrill Lynch
35:21to get a bonus,
35:23which just infuriated
35:25people at various levels,
35:27including on the board.
35:30In the end,
35:31Thane didn't get
35:31his bonus,
35:33but he made sure
35:34his top executives did.
35:38At the same time,
35:40on Merrill's trading floor,
35:42they learned Thane's
35:43fourth quarter results
35:44were going to be disastrous.
35:47Thane still had
35:48a lot of stuff
35:48on his balance sheet
35:49that was junk.
35:51The assets continue
35:52to deteriorate.
35:54That's what keeps happening.
35:56The markets were brutal.
35:59Merrill's toxic assets
36:00were eating a hole
36:01in the balance sheet.
36:02There was a period
36:03where the loss estimates
36:05were jumping by
36:06sometimes $2 or $3 billion
36:09over two or three days.
36:11That's a pretty big number.
36:14As the Merrill losses
36:16mounted up in New York,
36:18in Charlotte,
36:19Bank of America's
36:20stockholders
36:20were about to vote
36:21on whether to approve
36:22the merger.
36:24There were people
36:25inside Bank of America
36:25who felt like
36:26this number was
36:27big enough
36:29to disclose
36:30that investors
36:31should know about this
36:32before they vote.
36:34But Ken Lewis
36:35decided not to tell
36:36the stockholders.
36:38He insists
36:39he didn't know
36:40the extent
36:40of Merrill's losses.
36:42He says
36:43he had enough losses
36:44of his own.
36:45We had this meltdown.
36:47The economy
36:47was deteriorating
36:48at such a rapid rate.
36:49A lot of companies
36:50were having bad quarters.
36:52We were seeing it
36:53in our own numbers.
36:54And so I was dealing
36:54with that,
36:55coming to the realization,
36:56hey, we're going
36:57to have a loss.
36:58And there's no use
37:00kidding about it.
37:03The merger
37:03was approved.
37:05But by mid-December,
37:06the truth
37:07about Merrill's
37:08balance sheet
37:08was unavoidable.
37:10Ken Lewis
37:11has a meeting
37:12where he is told
37:14the projections
37:15for the losses
37:16that Merrill Lynch
37:17will have to report
37:18in the fourth quarter.
37:20And the losses
37:21are enormous.
37:22They're over
37:22$15 billion.
37:24They're larger
37:25than anything
37:26that has been
37:27announced previously.
37:29Ken Lewis now knew
37:30the Merrill merger
37:31could break his bank.
37:34I don't think
37:35he anticipated
37:36the market
37:37deteriorating
37:38the way it did.
37:40And certainly
37:40he did not anticipate
37:41how stunning
37:42the losses
37:43would become.
37:44I believe
37:45that's when
37:45Ken Lewis felt,
37:47you know what,
37:47I made a mistake here.
37:49And this is happening
37:49at a time
37:50when Bank of America
37:52doesn't have
37:52a lot of excess capital
37:54to offset those losses.
37:55So it's very,
37:57very bad news.
38:00Ken Lewis
38:01wanted out
38:02of the deal.
38:03I think there was
38:04a view
38:04that there truly
38:05was what they call
38:06a MAC,
38:07a material adverse change,
38:08something material
38:10had changed
38:11that they did not
38:11see coming.
38:13Ken Lewis
38:14told Paulson
38:15he was considering
38:16invoking the MAC
38:17to get out
38:18of the Merrill deal.
38:22Paulson was stunned.
38:23He told Lewis
38:25to come to Washington
38:25immediately.
38:27So Lewis
38:28goes to Washington,
38:29D.C.
38:30on December 17th
38:31to meet with
38:32Bernanke
38:32and Paulson
38:34and tells them
38:36we can't do this.
38:38The losses are too big.
38:39We're going to pull out.
38:42I can't say a lot
38:43about the negotiations,
38:45but what I would say
38:46is they had their view
38:47of both
38:48what that would do
38:50to Bank of America
38:50and what that would do
38:51to the financial system.
38:55Hank Paulson
38:56and Ben Bernanke
38:56say,
38:58if you do that,
38:59you'll destroy
39:00the tiny shard
39:02of a banking system
39:03that we still
39:04have left remaining.
39:06You can't pull out
39:07of this deal.
39:09Keep in mind
39:09these are men
39:10who have been through
39:11Lehman Brothers.
39:12They don't want this,
39:14they don't need it,
39:14and it can't happen.
39:17Lewis' options
39:18were limited.
39:20His new powerful partner,
39:22the Secretary of the Treasury,
39:23was calling the shots.
39:25The government
39:26had already had
39:27$20 billion
39:27inside Bank of America.
39:30It's its regulator.
39:32It's a bank.
39:34It's really kind of hard
39:35to tell the government
39:36to go shove it
39:38when it says
39:39we need you
39:40to do this deal.
39:42He is in
39:43a really tough spot.
39:44He's almost downed
39:45if he does
39:45and downed if he doesn't.
39:46Paulson got tough.
39:51Got a very strong voice,
39:53got a very strong will.
39:55I think he could
39:56convince anybody,
39:58and in this case
39:58Ken Lewis,
40:00that if you don't
40:01follow along,
40:02if you don't go along
40:03with the program,
40:04you won't be part
40:05of the program anymore.
40:07Meaning,
40:07we'll toss you right out.
40:10You have to
40:11buy Merrill,
40:13and we will make sure
40:14that happens.
40:15up to and including
40:17removal of management,
40:19removal of the board.
40:22From where Ken Lewis
40:23sought,
40:24I've had several people
40:25describe to me
40:25the Bank of America
40:26thought it was a threat
40:27and they needed to do this.
40:29There was a time
40:31where that discussion
40:32was held,
40:33but we in fact
40:36decided on our own,
40:40not anything to do
40:42with that,
40:43that it was the best interest
40:44of all involved
40:45to go forward.
40:48Ken Lewis blinked.
40:50The full force
40:51of the government
40:52is being brought upon him.
40:55The rules of the game
40:56have changed.
40:58Ken Lewis is on top
40:59of the financial services world,
41:01but he's not in charge.
41:04The government
41:04holds all the cards
41:06at the end of the day.
41:10Paulson then explained
41:11the offer
41:12that Lewis could not refuse.
41:14Another $20 billion
41:15and a promise
41:17to cover another
41:18$118 billion
41:19on Merrill's toxic assets.
41:21The deal was kept
41:23a secret
41:24from stockholders,
41:26from Wall Street,
41:27and the taxpayers
41:28for almost one month.
41:31Then,
41:31after the merger
41:32was completed,
41:33the story broke.
41:36Citigroup and Bank of America
41:37have been losing money
41:38at a furious pace.
41:39In this country,
41:40two major banks
41:41sank deeper into the red
41:42despite billions more
41:44from the government
41:44to prop the model.
41:45The stock market
41:46has been falling
41:47day after day
41:48and now news
41:49that the biggest banks
41:50need more money.
41:52Between January 15th
41:53and January 20th,
41:54Bank of America's stock
41:55drops more than 45%.
41:57The bank's shotgun marriage
42:00with Merrill Lynch
42:01in September
42:01was on the rush.
42:03Merrill reported
42:04worth $15 billion
42:05in losses
42:06for the fourth quarter
42:07of 2008.
42:09It shocked the market.
42:10Even though the market
42:11was looking for something bad,
42:12it wasn't expecting that.
42:14It wasn't expecting
42:15a $15 billion loss.
42:16There are major,
42:20major doubts suddenly
42:21about this bank's ability
42:23to make it through
42:26this crisis intact.
42:29B of A stock
42:30starts to tank
42:30in ways it hasn't
42:32in decades.
42:33It's down to, like,
42:341980s levels.
42:37The magnitude
42:38of the loss, obviously,
42:40at Merrill Lynch
42:41really stunned people.
42:42And so it was
42:43a bad day
42:45and it did shock
42:46a lot of people
42:46and disappointed
42:48a lot of people.
42:50In a matter of days,
42:52Lewis went from
42:53king of Wall Street
42:54to embattled CEO.
42:57His shareholders
42:58were up in arms.
43:00There was just
43:01an immediate
43:01public outcry.
43:02They were just furious
43:03at what he had done.
43:06They start calling
43:07for Ken Lewis' head.
43:09They want to know
43:10why these losses
43:11weren't disclosed earlier,
43:14why the talks
43:14with the government
43:15weren't disclosed earlier.
43:17I mean,
43:18what kind of dealmaker
43:19was Ken Lewis anyway?
43:21In effect,
43:22by buying Merrill,
43:24he had damaged
43:25Bank of America.
43:27It felt at that moment
43:28that it was going to be
43:29tough for him
43:30to keep his job.
43:32Bank of America
43:33needed to change
43:34the subject,
43:35take the heat
43:36off Ken Lewis.
43:38This became a game
43:39of survival
43:39in Charlotte
43:40for Ken Lewis,
43:41and he needed
43:42to blame somebody,
43:44and somebody
43:44had to be responsible
43:45for what was going on.
43:47That somebody
43:48was John Thane.
43:51Thane paid out
43:52$4 billion
43:53in company bonuses
43:54just days
43:55before the merger cuts.
43:57He also was lavishly
43:58redecorating
43:59his office space
44:00to the tune of
44:00$1.2 million,
44:02courtesy...
44:03All of a sudden,
44:04this character
44:05who seemed like Clark Kent,
44:07who seemed like
44:08this great guy,
44:10this pillar of character
44:11and strength,
44:13was really the villain.
44:18The hero becomes
44:19the villain.
44:22He was thrown
44:23under the bus.
44:25He makes a couple
44:26of stupid decisions,
44:28definitely,
44:29you know,
44:30some stupid moves,
44:32and the public
44:34turns on him
44:35entirely.
44:36It's pretty amazing.
44:40Not just the public.
44:42On January 22nd,
44:44CNBC had a scoop.
44:46Three, two,
44:46one, and...
44:48Breaking news
44:49from Charlie Gasparino
44:51on the CNBC Newsline.
44:53More news out
44:54of Merrill.
44:54Charlie!
44:55Bank of America
44:56and Merrill,
44:56Ken Lewis,
44:57the CEO of Bank of America,
44:58will hold
44:59an emergency meeting
45:00with John Thane,
45:01the CEO of Merrill Lynch,
45:02today.
45:02I got a tip
45:03that Lewis
45:03was flying down
45:04to Merrill.
45:05Everybody knew
45:06that Thane
45:06was on the ropes.
45:08And then I went
45:09to my sources
45:10at Bank of America
45:10and they basically said,
45:11yeah, he's all but done.
45:14CNBC has learned
45:14that Ken Lewis,
45:16the CEO of B of A,
45:17is meeting,
45:18or going to meet
45:18with John Thane
45:20later this afternoon
45:21right here around 11.30,
45:22essentially to decide
45:23his future,
45:24which will be very interesting.
45:25I have CNBC on
45:26in my office
45:26so I can see
45:27the headlines
45:28are, you know,
45:29that I'm going
45:31to get fired.
45:33Ken flew from
45:35Charlotte to New York,
45:37walked into
45:40John's office
45:41and said,
45:44John,
45:44it's not going
45:45to work out
45:45and I'm sorry,
45:47I wish you
45:48the very best
45:48and then left.
45:50It wasn't
45:50a very long conversation.
45:52There really wasn't
45:53very much for me
45:54to say
45:54because this
45:55wasn't a negotiation.
46:05Thane was gone,
46:06but Ken Lewis
46:08now faced
46:09a new problem,
46:10the new president.
46:11We arrived
46:13at this point
46:14due to an era
46:15of profound
46:16irresponsibility.
46:18I mean,
46:18I'd like to throw
46:19these guys
46:19in the brig.
46:20I mean,
46:20too many
46:21Wall Street executives
46:22made imprudent
46:23and dangerous decisions.
46:24And they're thinking
46:25the greed.
46:26They're thinking
46:26take care of me.
46:27What gets people upset
46:27are executives
46:28being rewarded
46:29for failure.
46:31With Hank Paulson
46:32out of treasury,
46:34the new administration
46:35was calling the shots
46:36from the White House.
46:37There ain't gonna be
46:38any $40 million
46:39jets being bought.
46:41I mean,
46:41it's been outrageous.
46:42And I will not
46:43tolerate it as president.
46:45The power
46:46on Wall Street
46:47has clearly shifted.
46:48There is no power
46:49on Wall Street anymore.
46:49The power
46:50is in Washington.
46:52The chairman
46:53of the board
46:54of these banks
46:55now lives
46:56at 1600
46:57Pennsylvania Avenue.
47:00Now you need
47:01the approval
47:01of only one man.
47:03He's a new board member.
47:04Lewis' new board member
47:08was demanding
47:09that the banks
47:10fundamentally change
47:11the way they do business.
47:14Totally adamant
47:15on the part
47:15of the president.
47:16We gotta come in
47:17with a bang.
47:19It's like you're
47:19moving into a new house
47:21and the roof's on fire
47:22and the basement
47:22is flooded
47:23and there's gas
47:24in the kitchen.
47:24There's a dog
47:25in the backyard.
47:27The question is
47:28how do you make
47:28this house livable?
47:30And the answer is
47:30you demand accountability
47:31and responsibility
47:32and where there need
47:34to be fundamental changes
47:35require these companies
47:37to make fundamental changes.
47:41Here you will come to the border
47:42and before the cops
47:44start something you need to do.
47:45And on Capitol Hill
47:46the mood was no different.
47:51With their vaults
47:52now filled
47:53with taxpayer dollars
47:54Lewis and the other bankers
47:57were fair game.
48:00They're gonna have to do this
48:01every now and then.
48:02They're gonna be called
48:02before Barney Frank
48:03and the rest of Congress
48:05and they're gonna have
48:05the Congressional Committees
48:06and they're gonna get
48:07yelled at and grandstand upon.
48:10Let me be frank.
48:11My constituents in Illinois
48:12are angry and so am I.
48:14What did the banks
48:15do with the taxpayers' money?
48:18I cannot believe
48:19no one's prosecuted you on this.
48:21I think most Americans
48:23when they saw that
48:23thought of the heads of tobacco.
48:25That's where we're at.
48:27We have an industry
48:28that's just vilified
48:29to that point
48:30and the frustration
48:31is so high.
48:33It was chilling
48:34to watch that.
48:35I mean just to see them all
48:36lined up next to each other.
48:38As a matter of fact
48:39Bank of America
48:40you paid yourself
48:4130 million dollars
48:43in fees
48:43just to accept
48:45our tarp money.
48:46I don't know
48:46what you're talking about.
48:48The whole thing
48:49frankly had a bit of
48:50political theater
48:51element to it
48:53of that particular hearing.
48:55There seemed to be
48:55a little bit of a contest
48:56of who could get these guys
48:58by the scruff of the neck
48:59and slap them around the most.
49:02It was clear
49:03we were there
49:03to take a public whipping
49:04and we did.
49:06I just tried to
49:07think of it that way
49:08and think of it as
49:09this too will pass
49:10and just get through it.
49:13There has been
49:14wide speculation
49:16that some of our
49:16larger banks
49:17around the nation
49:18may end up
49:19being nationalized
49:21do you feel
49:22that your bank
49:23should be considered
49:24one of those banks
49:24at risk?
49:26Are you talking to me?
49:27Yeah.
49:30Absolutely not.
49:32I don't know
49:32why you would ask
49:33the question.
49:34I think we saw
49:35in Ken
49:35before Congress
49:37the defiance
49:40sometimes impatience
49:43pride
49:44anger
49:45competitiveness
49:46all of the qualities
49:48that have been there
49:50for a long time.
49:55Then the president
49:56insisted Lewis
49:57and the other backers
49:58come to the White House.
50:04The CEOs came
50:06to the White House.
50:07I'm not exactly sure
50:09what they were expecting
50:10but the president
50:11was firm with them
50:12and said
50:13the American people
50:15blame you personally
50:16for where we are.
50:19The president
50:19made it pretty clear
50:20when he talked to us
50:21we're between you
50:22and the pitchforks guys
50:24and you need to
50:25just acknowledge that.
50:27The president said
50:29you guys need to
50:30get with the program
50:32because the only thing
50:34between this massive
50:35backlash against you
50:37is if we can get
50:39the economy back on track.
50:41It was a new day.
50:43The president
50:44openly signaling
50:45that he was in charge
50:47insisting they
50:48increase lending
50:49and limit
50:50executive compensation
50:52and foreclosures
50:53or else.
50:58Since that meeting
50:59Bank of America's
51:00stockholders
51:01stripped Ken Lewis
51:02of his chairmanship.
51:04Federal regulators
51:05ordered him
51:06to find new directors
51:07and he had to sell off
51:09parts of his company
51:10to raise cash
51:11to satisfy
51:12new government regulations.
51:14Lewis says
51:15he now deeply regrets
51:16taking the tarp money
51:17from Paulson
51:18both times
51:20and all that has followed.
51:24Little did I know
51:26the pain that would
51:27invoke with the Congress
51:29giving us the whipping
51:31that day
51:31the constant articles
51:33in the paper
51:34about how bad we are
51:35and then things
51:37around compensation
51:38and how you run
51:39your bank.
51:41It was a clear
51:42example of
51:43no good deed
51:44goes unpunished.
51:47But at the White House
51:49they have little sympathy
51:50for bankers' complaints.
51:52They created
51:53the structures
51:54themselves
51:54that got them
51:55into this position.
51:57It wasn't the government
51:57who created this problem.
51:59They created this problem.
52:01Maybe they find it
52:02inconvenient
52:02that there's
52:03a whole lot
52:04of responsibilities
52:04that come along
52:06with the government
52:07being their lender
52:08of last resort
52:09and saving them
52:10when they actually
52:11fell into the pit of fire.
52:14But, you know,
52:15that's where we are.
52:19As far as Washington
52:21is concerned,
52:22they're still sorting
52:23through the financial wreckage.
52:24This is the kind
52:27of disaster
52:27like
52:29the aftermath
52:30of the Great Depression
52:31and the crash of 29
52:32that causes people
52:35to say
52:35there's something
52:36fundamentally wrong here
52:37and there's something
52:38fundamentally broken
52:39and we can't fix it
52:41with a new agency
52:43or, you know,
52:44just a piecemeal approach.
52:46We have to kind of
52:46tear down the structure
52:47and start all over.
52:50But whatever happens,
52:52the era that propelled
52:55John Thane,
52:56Ken Lewis,
52:57and Hank Paulson
52:58to the top
52:59of the financial world
53:00is over.
53:04Well, the party's over.
53:07The financial institutions
53:08are down for the count.
53:14This is one of those
53:15pivot points
53:16in American history.
53:19That old economy,
53:20that old way
53:21of looking at things,
53:23that old way
53:23of putting on a party.
53:25It's over.
53:27It's over.
53:28This report continues
53:45at Frontline's website.
53:48Watch the program again
53:50online
53:50and see some video extras.
53:54Get inside the debate
53:55over bank nationalization,
53:56including our podcast interview
53:58with former IMF
53:59chief economist
54:00Simon Johnson.
54:01We nationalized the banks
54:03in the U.S.
54:04on that day.
54:06Explore the interviews
54:07conducted for this report.
54:09We are so intertwined
54:10with the U.S.
54:12For the good of the country,
54:13for the good of the system.
54:14We're going to give you
54:15some money,
54:15but we're also going to tell you
54:16how to run the game.
54:17The rise of Bank of America,
54:19the future of super banks,
54:20and more.
54:22Then join the discussion
54:23at PBS.org.
54:25Next time
54:35on Frontline World
54:36in Ghana.
54:37It's the dirty little secret
54:38of the high-tech industry.
54:39Do you know
54:40who has access
54:41to your recycled hard drive?
54:43If somebody gets
54:43your hard drive,
54:44he can get
54:45every information
54:46about you.
54:48And in Egypt,
54:49a competition
54:50to turn around
54:51the Middle East.
54:52Some people
54:54who laughed at me,
54:55they are now shareholders.
54:56These stories and more
54:57on the next
54:58Frontline World.
55:07Frontline's
55:07Breaking the Bank
55:08is available on DVD.
55:11To order online,
55:12visit shoppbs.org
55:14or call
55:151-800-PLAY-PBS.
55:17Frontline is made possible
55:43by contributions
55:44to your PBS station
55:45from viewers like you.
55:49With major funding
55:50from the John D.
55:51and Catherine T.
55:52MacArthur Foundation,
55:53committed to building
55:54a more just,
55:55verdant,
55:55and peaceful world.
55:57And additional funding
55:58from the Park Foundation.
56:01Additional funding
56:01for this program
56:02is provided
56:03by the Corporation
56:04for Public Broadcasting
56:05and the Nathan Cummings Foundation.
56:09This is PBS.
56:29and the
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