Confidence Men: Wall Street, Washington, and the Education of a President
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86 “The financial storm that reached gale force”: Ben S. Bernanke, “Reducing Systemic Risk,” speech, Jackson Hole, Wyoming, August 22, 2008, available at www.federalreserve.gov/newsevents/speech/bernanke20080822a.htm.
88 As fears about the company’s exposure to toxic CDOs grew in January and February: Heidi N. Moore, “Can what Happened to Bear Happen to Other Banks?” Wall Street Journal, March 18, 2009, available at http://blogs.wsj.com/deals/2008/03/18/repos-just-where-do-the-other-banks-stand/.
89 An odd twist on the repo market: Study by Metrick and Gorton available at http://econ-www.mit.edu/files/3918.
89 “The Panic of 2007”: Gary Gorton, “The Panic of 2007,” August 4, 2008, available at www.kansascityfed.org/publicat/sympos/2008/gorton.08.04.08.pdf.
90 “I thought my talk went badly”: Gary Gorton, interview with the author, October 2010.
Chapter 5
92 Of the first fifteen polls covered that month . . . Obama was ahead in just four of them: Presidential polling statistics for the 2008 election available at http://www.realclearpolitics.com/epolls/2008/president/national.html.
92 “Wall Street’s Fears”: Jenny Anderson and Ben White, “Wall Street’s Fears on Lehman Bros. Batter Markets,” New York Times, September 10, 2008, available at www.nytimes.com/2008/09/10/business/10place.html.
93 “It was one of those situations where you knew an earthquake might happen”: Barack Obama, “Oval Office interview,” interview with the author, February 14, 2011.
96 “The thing about these Brits is that they always talk and they never close”: Andrew Ross Sorkin, Too Big to Fail.
97 “The good news is that in fifty-three days”: Quotes taken from text of Obama’s September 12, 2008, campaign speech in Dover, New Hampshire, available at www.realclearpolitics.com/articles/2008/09/obamas_remarks_in_dover_new_ha.html.
107 “You know what, Greg?”: Exchanges with Fleming and Thain based on extensive on-the-record interviews with Fleming by the author, February 2010, as well as others familiar with the deal.
109 “Worse,” said Wolf: Robert Wolf, multiple interviews with the author 2009–2011, scene and quotes.
109 At 1:45 a.m., a few hours into Monday, September 15, Lehman Brothers filed: Andrew Ross Sorkin, “Lehman Files for Bankruptcy; Merrill Is Sold,” New York Times, September 14, 2008, available at http://www.nytimes.com/2008/09/15/business/15lehman.html?pagewanted=all.
109 $40 billion in commercial real estate . . . and other exotic asset-backed securities and derivatives: Lawrence McDonald, A Colossal Failure of Common Sense: The Inside Story of the Collapse of Lehman Brothers (New York: Crown Business, 2009), p. 298.
111 He threw the jacket into his box: Carmine Visone, interviews with the author, September 2009, scene and quotes.
Chapter 6
112 On Tuesday, Moody’s and Standard & Poor’s downgraded ratings on AIG: Hugh Son, “AIG Credit Ratings Cut, Threatening Quests for Funds,” Bloomberg, September 16, 2008, available at http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aX_zVXoWfK54.
113 Federal Reserve announced it was lending $85 billion to AIG: Edmund L. Andrews, “Fed rescues AIG with $85 billion loan for 80% stake,” New York Times, September 17, 2008, available at http://www.nytimes.com/2008/09/17/business/worldbusiness/17iht-17insure.16217125.html.
113 Speaking in Elko, Nevada: Taken from text of September 17, 2008, speech, transcript available at http://www.realclearpolitics.com/articles/2008/09/.
114 “This is a one-hundred-year situation”: All quotes from the September 18, 2008, meeting with Paulson, Bernanke, and members of the Senate and House of Representatives are based on several accounts of the meeting and an in-depth packet obtained by the author April 2009.
116 John McCain was holding a rally in Cedar Rapids, Iowa: McCain speech, September 18, 2008, Cedar Rapids, Iowa, available at http://www.realclearpolitics.com/articles/2008/09/mccains_economic_remarks_in_ce.html.
116 “What we’re looking at right now is to provide the Treasury and the Fed”: Obama remarks on the economy, September 19, 2008, available at http://www.washingtonpost.com/wp-dyn/content/article/2008/09/19/AR2008091901960.html.
120 “I’d like to hear what Senator McCain has to say”: Alter, The Promise, p. 11.
121 “When President Bush took office”: Quotes taken from speech on the House floor, September 29, 2008, transcript available at www.nytimes.com/2008/09/30/washington/30pelositranscript.html?pagewanted=all.
125 Eras end with a whisper: Ron Suskind, “Change,” New York Times, November 11, 2008, available at www.nytimes.com/2008/11/16/magazine/16change.html.
126 “You need to ask yourself why you want to do this”: David Axelrod, interviews with the author, November 2008.
128 “a single word: tomorrow”: Barack Obama, “Speech Before Election Night,” Manassas, Virginia, November 3, 2008; the author covered and reported on the speech.
131 “This victory alone is not the change we seek”: Barack Obama, “Grant Park Victory Speech,” Chicago, Illinois, November 4, 2008.
132 He took her raised hand and gently lowered it . . . Not tonight: The author covered Obama’s speech at Grant Park, Chicago, Illinois, on November 4, 2008.
Chapter 7
134 “Leave your friends at home”: Scene and quotes based on multiple interviews with participants from the meeting, 2011.
136 “Rahm is a little intense”: Peter Baker, “The Limits of Rahmism,” New York Times Magazine, March 8, 2010, available at http://www.nytimes.com/2010/03/14/magazine/14emanuel-t.html.
137 “I’m not into this whole alpha-senator thing”: Peter Orszag, interview with the author, August 27, 2010, scene and quotes.
143 “All you economists dress the same!”: Peter Orszag, interview with the author, October 2010.
151 Romer . . . listened to Obama invoke FDR’s example: Christina Romer, “The Great Crash and the Onset of the Great Depression,” Quarterly Journal of Economics, August 1990, pp. 597–624, available at http://emlab.berkeley.edu/users/cromer/CRomerQJE1990.pdf; “What Ended the Great Depression?” Journal of Economic History, December 1992, pp. 757–84, available at http://elsa.berkeley.edu/~cromer/What%20Ended%20the%20Great%20Depression.pdf.
151 “The first thing out of your mouth was ‘No, you’re wrong’?!”: Christina Romer, interview with the author, December 2010, scene and quotes.
151 On Monday, November 24, Obama unveiled his newly minted economic team: November 24, 2008, transcript available at http://www.nytimes.com/2008/11/24/us/politics/24text-obama.html.
152 “whatever happened before, it was okay”: Peter Orszag, interview with the author, August, 2010.
152 “He’s just not very good at politics”: Christina Romer, interviews with the author, December 2010.
153 Romer pushed for a larger stimulus, at around $1.2 trillion: Ryan Lizza, “Inside the Crisis: Larry Summers and the White House Economic Team,” New Yorker, October 12, 2009, available at www.newyorker.com/reporting/2009/10/12/091012fa_fact_lizza, in addition to interviews by the author with several senior White House officials.
156 “Reagan spoke to America’s longing for order”: Barack Obama, The Audacity of Hope: Thoughts on Reclaiming the American Dream (New York: Crown, 2006), p. 31.
158 “What speeches can accomplish”: David S. Broder, “Obama Asks Nation to Rise to the Challenge of His Words,” Washington Post, January 20, 2009, available at http://www.washingtonpost.com/wp-dyn/content/article/2009/01/20/AR2009012002299.html.
Chapter 8
162 “no such thing as ‘shovel-ready’ projects”: Peter Baker, “The Education of a President,” New York Times Magazine, October 12, 2010, available at http://www.nytimes.com/2010/10/17/magazine/17obama-t.html.
162 “A long-term investment program should not be put together hastily”: Alice Rivlin, “Budget Policy Challenges,” testimony in front of the House Budget Committee, Washington, D.C., January 27, 2009, available at www.brookings.edu/testimony/2009/0127_budget_rivlin.aspx.
164 “You know, a good many years have passed since I last appeared before this committee”: Paul Volcker, comments during the confirmation hearing of Timothy Geithner in front of the Senate Finance Committee, Washington, D.C., January 21, 2009, available at www.washingtonpost.com/wp-srv/politics/documents/transcript_geithner_012109.html.
167 “They were basically picking winners and losers”: Maria Cantwell, interview with the author, September 2009.
168 “We want to make sure that the standardized part of those markets”: Comments during the confirmation hearing of Timothy Geithner in front of the Senate Finance Committee, Washington, D.C., January 21, 2009, available at www.washingtonpost.com/wp-srv/politics/documents/transcript_geithner_012109.html.
174 “I saw a wire story where you had that give-and-take with Cantwell”: Scene and quotes based on interviews with members of the transition team, September 2010.
175 “I am disappointed that we are even voting on this”: Senator Michael Enzi, Senate Finance Committee Vote on the Confirmation of Tim Geithner, full transcript provided by off-the-record source.
177 “Mr. President, the deck is stacked against you”: Scene based on interviews with senior White House officials and meeting attendees.
178 “Thank you, Mark. I want you to channel Daschle”: Scene and quotes based on interviews with senior White House officials and meeting attendees, December 2010 and January 2011.
184 The major difference? What Sweden had started . . . with government support and cash infusions: Carmen M. Reinhart and Kenneth S. Rogoff, “Banking Crisis: An Equal Opportunity Menace,” paper, December 17, 2008, available at www.economics.harvard.edu/files/faculty/51_Banking_Crises.pdf.
184 “won’t be possible until January 21”: Paul Krugman, “The Good, the Bad, and the Ugly,” from his blog The Conscience of a Liberal, in the New York Times, September 28, 2008, available at krugman.blogs.nytimes.com/2008/09/28/the-good-the-bad-and-the-ugly/.
Chapter 9
189 The black sedan was speeding back from Capitol Hill: Alan Krueger, multiple interviews with author, scene and quotes.
192 “He’s creating a space where solutions can happen”: John Podesta, interview with the author, March 2009.
193 “Tell your boss, Geithner, he shouldn’t be coming to things like this . . . job of saving the economy”: Alan Krueger, interviews with the author, June 2010.
194 Ignagni now clutched the microphone: Karen Ignagni, transcript of March 5, 2009, White House Summit on Health Care, scene and quotes, available at www.whitehouse.gov/the_press_office/Closing-Remarks-by-the-President-at-White-House-Forum-on-Health-Reform.
195 “Look, it’s like the president said, you’ve got to be hopeful and you’ve got to include Republicans”: Zeke Emanuel, interview with the author, March 2009.
196 “Larry fancies himself very good at politics”: Christina Romer, interviews with the author, December 2010.
196 “We’ve gone from a moment when we’ve never had a less social-science-oriented group”: Larry Summers, interview with the author, March 2009.
198 He continued to view people as rational: Daniel Kahneman and Amos Tversky, “Prospect Theory: An Analysis of Decisions under Risk,” March 1979, Econometrica, vol. 47, no. 2, available at http://www.hss.caltech.edu/~camerer/Ec101/ProspectTheory.pdf.
198 “There are 226 cancer drugs”: Billy Tauzin, interview with the author, March 2009.
215 “ ‘dauntingly fit’ stud on the tennis court”: Jim Impoco, May 1, 2009, available at http://nymag.com/daily/intel/2009/05/tim_geither_is_fleet-footed_tk.html.
219 “Right there, Rahm killed it”: Christina Romer, interviews with the author, January 2011.
Chapter 10
224 “Of every twenty deals . . . So that’s three out of twenty”: Interview with Charles Hallac by the author, November 2009.
227 Rattner and his Wall Streeters balked at the ouster: Oval Office meeting on auto bailouts based on interviews with numerous officials attending the auto meetings, 2009–2011.
229 “Many of these people are nearing fifty . . . they won’t get rehired—by anyone”: Interview by the author with Ron Bloom, July 2009.
233 Which is what the House did . . . taxing at 90 percent any bonus above $1 million: Carl Hulse and David M Herszenhorn, “House Approves 90% Tax on Bonuses After Bailouts,” New York Times, March 19, 2009, http://www.nytimes.com/2009/03/20/business/20bailout.html.
233 Meanwhile, reports emerged, with White House fingerprints: “Dodd: Administration pushed for language protecting bonuses,” CNNPolitics, March 18, 2009, available at http://articles.cnn.com/2009-03-18/politics/aig.bonuses.congress_1_aig-bonuses-new-language-amendment?_s=PM:POLITICS.
234 “My administration is the only thing between you and the pitchforks”: Meeting of the thirteen bankers on March 27, 2009, based on interviews with White House officials and attendees from Wall Street, 2009–2011.
238 “I am reiterating our request . . . plenty of advice from Larry Summers and Secretary Geithner on this subject”: Letter obtained by the author from a source wishing to remain off the record who was involved closely with financial reform.
239 “You don’t blow the big game and then still get a trophy”: Ed Markey, speaking in front of the House of Representatives, March 19, 2009, available at markey.house.gov/index.php?option=com_content&task=view&id=3575&Itemid=244.
243 A few days before . . . the Public-Private Investment Program was formally released: March 23, 2009, PPIP Treasury press release available at http://www.treasury.gov/initiatives/financial-stability/investment-programs/ppip/Pages/publicprivatefund.aspx.
245 “Secretary Geithner, good luck with your very important work”: Timothy Geithner, Meet the Press, March 29, 2009, scene and quotes.
Chapter 11
249 “Our credibility is being put on the line”: Multiple sources present at the meeting, interviews with the author, scene and quotes.
250 “After all that happened over the past two months . . . was just unconscionable”: Christina Romer, interviews with the author, December 2010.
256 “Rodge is afraid right now and so is the industry”: The author attended and spoke, on April 21, 2009, at Mr. Fleming’s Yale Law School class.
257 In a key passage that roiled the news cycles . . . keep silent about the deepening financial distress inside Merrill: Examination of Kenneth Lee Lewis, taken at the State of New York, Office of the Attorney General, New York, on February 26, 2009, at 4:30 p.m., before Sara Freund, a shorthand reporter and a notary public of the State of New York, available at online.wsj.com/public/resources/documents/ExhibitA-cuomo04232009.pdf.
258 “I don’t know why Lewis pushed to do this”: Greg Fleming, interviews with the author, April 2009.
262 I can’t run health care: E-mails, obtained by the author, between Rahm Emanuel and Peter Orszag.
263 “I don’t want even one molecule of energy spent on anything other than the stress tests!”: Alan Krueger, interview with the author, March 2011.
265 “Sheila Bair and Brooksley Born recognized that the financial security”: Press release, John F. Kennedy Presidential Library and Museum, March 25, 2009, available at www.jfklibrary.org/About-Us/News-and-Press/Press-Releases/2009-Profile-in-Courage-Award-Recipients-Announced.aspx.
267 The previous spring . . . Krueger launched one of the most ambitious unemployment studies in recent years: Alan Krueger and Andreas Mueller, Job Search and Job Finding in a Period of Mass Unemployment: Evidence from High-Frequency Longitudinal Data, Princeton University, January 2011, available at http://www.irs.princeton.edu/pubs/pdfs/562.pdf.
272 “doesn’t have the luxury of coming back to this a year from now”: Tom Daschle, interview with the author, April 27, 2009, scene and quotes.
Chapter 12
274 Rogoff was putting the finishing touches on a book with . . . Carmen Reinhardt: Carmen M. Reinhart and Kenneth Rogoff, This Time Is Different: Eight Centuries of Financial Folly (Princeton, New Jersey: Princeto
n University Press, 2009).
275 Obama’s Socratic approach left one participant feeling slighted: April 27, 2009, economists’ dinner based on accounts of several participants in interviews in November 2010.
278 He remembered, as many did, the notable exchange between Alan Greenspan and Bill Clinton: Bob Woodward, The Agenda: Inside the Clinton White House (New York: Simon & Schuster, 1994).
279 “you are the president”: Peter Orszag, interview with the author, January 2011, scene and quotes.
283 What does it take to lead the world’s most powerful nation?: David Axelrod, interview with the author, May 2009, scene and quotes.
285 “How do you deleverage an entire economy?” Paul Volcker, interview with the author, May 2009, scene and quotes.
293 And it was a big number: May 11, 2009, letter to the president from the “Providers” alliance: PhRMA, SEIU, AMA, AHA, AHIP and AdvaMed, available at graphics8.nytimes.com/packages/pdf/politics/20090511_HealthGroups_Letter.pdf.
295 “Initial reaction to it . . . a number like seventy-two percent supporting it”: Joel Benenson, quotes at the Economic Club of Canada, from July 31, 2009, Washington Post, available at www.washingtonpost.com/wp-dyn/content/article/2009/07/30/AR2009073001547.html.
296 “The President misspoke”: Robert Pear, “Health Care Leaders Say Obama Overstated Their Promise to Control Costs,” New York Times, May 14, 2009, available at www.nytimes.com/2009/05/15/health/policy/15health.html.
296 The providers flip-flopped: Providers’ debacle based on interviews with Karen Ignagni, Peter Orszag, and other, off-the-record, sources, 2010.
297 “What you’ve done is IMMORAL!”: Peter Orszag, interviews with the author, August 2010.
297 That’s when Cantwell lifted her hold on him: Maria Cantwell, press release, available at http://cantwell.senate.gov/news/record.cfm?id=313039.
297 In a press conference back on May 13, Geithner released an outline: CNN, May 13, 2009, available at http://money.cnn.com/2009/05/13/news/derivatives.fortune/index.htm.