00:28Hello friends, welcome to De Movie Eko.
00:30And those who watch our videos but have not yet subscribed to us, we request them to subscribe.
00:36Two friends, so in the beginning of the story we are shown a news channel, where the growing
00:42About the Hui Economy
00:59And after this began the biggest economic crisis ever, which we call the Global Financial Crisis or Great
01:06Also known as the recession, the real cause of this financial crisis was mortgage defaults, now people are facing problems.
01:27At a price of $1 per dollar, JPMorgan buys Bear Stearns, now the government needs $30 billion.
01:33You will have to deal with toxic real estate assets, which are those whose value has decreased from its original value.
01:41Cough
01:52was based on Lehman Brothers, whose stock price had fallen by more than 20 percent.
01:58Brothers CEO Richard Folt tells US Treasury Secretary Henry Paulson that his
02:04The cash reserve he has is dwindling, and Henry needs to contact Warren Buffett.
02:09For
02:09It is said that because Henry Paulson and Warren Buffett were very good friends, now after this Henry Jim Wilkinson, Neil
02:17Kashkari and Michelle set up a meeting with Davis, and during the meeting he says that Lehman Brothers
02:24is in a much worse condition than Bear Stearns. If Lehman Brothers goes bankrupt, then what happens next?
02:39It was too late to do so, after which Henry Warren called Buffett and asked him to take over Lehman Brothers.
02:46He tells him about the condition of Buffett. Now after listening to Henry, Warren Buffett gives Richard a
02:51offers, at the time Lehman Brothers' share price was trading at $36, Warren Buffett
02:58give an offer
03:03is ready to buy preferred shares with, Lehman's CFO Aaron Callan also tells him that if
03:09If he makes this deal with Warren Buffett, the price of his shares may increase, but Richard
03:15He rejects their offer saying, I am not spending 360 million annually because
03:22I do business with them
03:23I have some hobby to do, and this is a small storm, which we will do this time as usual.
03:29Richard had no idea what kind of storm he would face this time.
03:34Now, in June 2008, Lehman's senior bankers held an emergency meeting, as Lehman Brothers was no longer
03:42The stock had reached $23, and due to lack of funds, Richard had to sell it despite his reluctance.
03:48At the meeting, CFO Aaron Callan and COO Joe decide to fire Gregory, then Bart
03:54McDade is appointed as the new president and CEO, followed by Lehman, Korean
04:01Wanted to do investment deal with investors,
04:05After much negotiation by MacDade, Korean investors agreed to sign a deal to eliminate toxic assets in real estate.
04:11They get ready, but then Richard arrives and tries to convince Korean investors to take over the toxic real estate assets.
04:18seem to force the
04:20Now the Koreans do not like this behavior and due to Richard's insistence this deal gets cancelled.
04:26On the other hand, Henry leaks news to give an indirect message that this time it is on the government's side.
04:33No help will be given to bailout companies from
04:36Now, within a few days, Lehman Brothers' shares would have fallen from $23 to $4 per share.
04:42and now their condition becomes such that no one wants to buy them, now Lehman only has
04:47There were two buyers, Bank of America and British Multinational Bank Bar Place, and both these banks were also without government.
04:55Don't buy Lehman's involvement
05:05that they must somehow save Lehman Brothers from bankruptcy, and to buy their assets
05:10Buyers will have to be found, because if Lehman Brothers collapses, the US economy could suffer a huge blow.
05:17After this, the CEOs of all the major US banks were called for a meeting at the Federal Reserve in New York.
05:23It goes, but
05:24Not only was Lehman CEO Richard not invited to this meeting, Henry tells him during the meeting,
05:29The government is not in a condition to buy Lehman Brothers at this time because of the current situation.
05:35Come on, they're not in a condition to help Lehman in any way, so they
05:42banks were asked to buy Lehman's toxic assets.
05:44He suggests them to do this, and he also says that if they don't give Lehman
05:49If they buy, their banks can also collapse one after the other, because they are trading partners of Lehman.
05:55Meanwhile, Henry learns about AIG's condition from bank takeover expert Chris Flowers,
06:01AIG is a subsidiary of America's
06:14He said he called Warren Buffett to tell him about this, but Buffett refused to take such a big risk.
06:20Don't even want to touch the asset, now here we come to know about Merrill Lynch which is an investment and brokerage
06:25firm, their condition is also not good, but it is a little less bad than Lehman, now Bank of
06:32America did not buy Lehman Brothers
06:37This led Barclays to decide to buy Lehman, and also to acquire Lehman's toxic assets.
06:43They will also acquire estate assets. Now, hearing this news, Richard is very happy, but this happiness of his
06:50It doesn't last long, as the British Bank Regulator prevents Barclays from signing the deal.
06:56And this deal gets cancelled.
06:57So friends, you must have heard that confidence is a good thing, but overconfidence can harm even an intelligent person.
07:04It can ruin everything, and that's exactly what happened to Henry Paulson when he was introduced to Warren Buffett.
07:10He was getting such a good deal from them, so due to overconfidence he rejected their offer.
07:26The game is played and this matter starts being discussed in all the news channels, then Henry Paulson goes to a press
07:31He arranges a conference, and during the press conference, he reveals that he tried very hard to save Lehman Brothers.
07:38But unfortunately, they couldn't save him. Well, after this, Lehman Brothers failed.
07:44This causes chaos on Wall Street, and the financial market collapses like a house of cards.
07:49The stock market is devastated and its impact is felt in the stock markets all over the world.
07:56Now the US government had another big problem: AIG, Richard received a call from French finance minister Christine Lagarde.
08:03comes, she warns Henry
08:06It is hoped that AIG's business should not face any problems, as this could impact the European market.
08:12Now, Henry and his team are discussing whether AIG should be offered a credit default swap.
08:18The reason we are facing a problem is that most of the credit default swaps given by the investment bank have been
08:25AIG did not provide insurance, now that real estate mortgage bonds are failing.
08:29were being made, so AIG had to pay for these credit default swaps, and that's why they
08:36There is a lot of loss, now here friends if you know about credit default swap, mortgage bonds and the financial year 2008
08:44If you want to know more about the crisis, then watch our explanation video named Big Shot.
08:49You will definitely see this once, which
08:59Common banks that have taken insurance from AIG will fail, this will mean that the entire
09:05The financial system will collapse, which is something they never want to happen, so the US Treasury AIG
09:11They get them out of this situation by giving them a loan of 85 billion dollars, now on the other hand investment banks
09:18gave enough
09:29The Federal Reserve chairman meets and decides to merge investment banks with national banks.
09:36It would, but not all bank CEOs agreed with his decision, now was the time, September 2008 Morgan Stanley
09:44signs a deal with Mitsubishi, when the CEO of Goldman Sachs learns of this,
09:51He calls Warren Buffett, and he buys a steak from Goldman Sachs at a very low price.
09:57He gives it to me, Warren Buffett also agrees to his words and buys a steak worth $5 billion, now this
10:03The news eases some tension on investment banks, as credit dries out from the market.
10:10Now Henry suggests that the US government buy toxic assets, which amounted to approximately $700 billion.
10:18Now, to do this, they have a trap called The Troubled Asset Relief Program.
10:24A bill must be passed, but despite the best efforts of Henry and his team, it still fails to pass.
10:30It didn't happen, but Henry didn't give up, and after much effort, finally passed the bill on his second attempt.
10:38Then Henry's team discovers that in buying all the toxic assets, they
10:44It would take a lot of time, then they decided that they would use the trap to give capital injection to the banks,
10:51Because apart from this they had no other option, friends, capital injection means that any company
10:58To provide financial stability to the country, they invest money in it, which they give as loans to banks.
11:04Give
11:05Due to which cash flow or liquidity will increase in the economy. Now Henry is worried about that capital injection.
11:12How to convince big banks to do this, so he calls Warren Buffett late at night and asks him
11:18What would they do if they had to convince the big banks, then we'll see Henry
11:23The CEO of the investment bank was called for a meeting
11:25They call the Federal Reserve to implement their decision on capital injection, and
11:32He also knew that healthy banks that already have sufficient funding, those banks
11:38They would never accept his decision, so Henry also invited FDIC chairman Sheila Bear to the meeting.
11:44They call so that pressure can be created on healthy banks,
11:47And it was Warren Buffett who gave this idea to Henry that night, now the presence of Sheila Bear and many
11:54After negotiation, finally the CEOs of all the banks agree to agree to his proposal.
12:17still does not stabilize, the unemployment rate rises above 10%, and millions are left homeless,
12:25Now in 2009, the market finally stabilizes, and all the banks repay the loan of 124 billion dollars.
12:33Let us tell you, in 2010 the compensation rate touched a record of 135 billion dollars, and these 10 banks of US
12:41They hold 77% of banking assets, hence these banks are declared as 2 big 2 fail,
12:47And with this our story ends here, see you next time and with a new one
12:55With video.
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